As Filed with the Securities and Exchange Commission on January 24, 2005
Registration No. 333-59976
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
POST-EFFECTIVE AMENDMENT NO. 4 TO FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
DELAWARE
[State of organization]
6289 51-0380494
(Primary SIC Number) (IRS EIN)
5914 N. 300 West
Fremont, Indiana 46737
Telephone: (260) 833-1306
(address and telephone number of registrant's principal executive offices)
Mr. Michael Pacult
5914 N. 300 West
Fremont, Indiana 46737
Telephone: (260) 833-1306; Facsimile (260) 833-4411
(Name, address and telephone number of agent for service of process)
Copies to:
William Sumner Scott, Esquire
The Scott Law Firm, P. A.
940 Northeast 79th Street, Suite A
Miami, FL 33138
Telephone (305) 754-3603; Facsimile (305) 754-2668
If any of the securities being offered on the Form are to be offered on a
continuous basis pursuant to Rule 415 under the Securities Act of 1933,
check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
section 8(a) of the Securities Act of 1933 or until the registration
statement shall become effective on such date as the Commission acting
pursuant to said section 8(a), may determine.
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Prospectus - Part I
Atlas Futures Fund, Limited Partnership
Amended and Restated Prospectus to Offer
$15,000,000 of Units of Limited Partnership Interest
To Be Sold at the Net Asset Value per Unit
Computed At the End of Each Month During the Offering
The Offering
The partnership is a registered commodity pool that trades futures, options
on futures, and forward contracts.
Two general partners, Ashley Capital Management, Inc. and Mr. Michael P.
Pacult, manage us. We refer to them collectively as "the general partner."
The general partner is authorized by the partnership agreement to employ,
establish the terms of employment, and terminate investment managers called
commodity trading advisors and clearing brokers called futures commission
merchants.
The partnership will use its best efforts to sell the partnership interests
issuer direct. Neither it nor anyone else has the obligation to purchase or
support the price of the partnership interests. You must purchase at least
$25,000 in partnership interests, though the general partner may reduce this
to no less than $5,000. You have the right to rescind your subscription for
five days after it is submitted. After five days, your subscription is
irrevocable and you may only withdraw from the partnership after twelve
months by redeeming your partnership interests. There is no redemption fee.
See the redemption, lock-in and allocation of expenses provisions in this
prospectus.
All subscriptions received will be placed in a depository account maintained
by the general partner until we accept them. Interest accrued on your
subscription amount will be used to buy additional partnership interests for
you. Partnership interests are offered for sale at their net asset value as
of the close of business on the last day of the month in which the
subscription is received and become effective on the open of business on the
first day of the subsequent month.
The Risks - These securities are highly speculative and involve a high degree
of risk. Consider carefully the risk factors below and the complete
description beginning on page 5 of this prospectus.
* Our business is the speculative trading in futures, commodity options and
unregulated currency contracts selected by registered commodity trading
advisors.
* This partnership pays substantial commission and other costs. There is no
guarantee that you will receive a return on your investment.
* To receive your investment back after one year, the partnership must
currently generate a return of 9.10% and 8.84% should we sell the maximum
number of partnership interests offered.
* Transfer of your partnership interests will be restricted and there are
limitations on your right of redemption to surrender your partnership
interests in return for their value. No public market for the partnership
interests exists and none is expected to develop.
* This partnership will not make distributions. To receive a return of your
investment, you must use our redemption procedure.
* Although you will not receive distributions, you must pay annual Federal
and state income taxes on your share of any profits earned by this
partnership.
* The general partner and affiliates have conflicts of interest with regard
to the management of this partnership.
You are required to understand fully the terms of this investment.
Therefore, you are encouraged to discuss this investment with your
independent financial and tax advisers.
These securities have not been approved or disapproved by the Securities and
Exchange Commission, or any state securities commission or agency, nor have
any of them confirmed or passed upon the accuracy or adequacy of this
supplement to prospectus. Any representation to the contrary is a criminal
offense.
THE COMMODITY FUTURES TRADING COMMISSION HAS NOT PASSED UPON THE MERITS OF
PARTICIPATING IN THIS POOL NOR HAS THE COMMISSION PASSED ON THE ADEQUACY OR
ACCURACY OF THIS DISCLOSURE DOCUMENT.
Price to Public Sales Commissions Proceeds to
Partnership
Per Limited Net Asset Value None Net Asset Value
Total Maximum $15,000,000 $0 $5,463,570
A maximum of $15,000,000 in units of limited partnership interest may be
sold, of which $9,536,430 has already been sold, as of December 31, 2004;
and, the partnership has commenced trading. The proceeds to partnership,
reflected in the above table is offered pursuant to this prospectus to also
be used for trading.
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
5914 N. 300 West Fremont, Indiana 46737
Telephone: (260) 833-1306
Best Efforts/Issuer Direct
The date of this fully rested prospectus is January __, 2005
Commodity Futures Trading Commission - Risk Disclosure Statement
YOU SHOULD CAREFULLY CONSIDER WHETHER YOUR FINANCIAL CONDITION PERMITS YOU TO
PARTICIPATE IN A COMMODITY POOL. IN SO DOING, YOU SHOULD BE AWARE THAT
FUTURES AND OPTIONS TRADING CAN QUICKLY LEAD TO LARGE LOSSES AS WELL AS
GAINS. SUCH TRADING LOSSES CAN SHARPLY REDUCE THE NET ASSET VALUE OF THE
POOL AND CONSEQUENTLY THE VALUE OF YOUR INTEREST IN THE POOL. IN ADDITION,
RESTRICTIONS ON REDEMPTIONS MAY AFFECT YOUR ABILITY TO WITHDRAW YOUR
PARTICIPATION IN THE POOL.
FURTHER, COMMODITY POOLS MAY BE SUBJECT TO SUBSTANTIAL CHARGES FOR
MANAGEMENT, AND ADVISORY AND BROKERAGE FEES. IT MAY BE NECESSARY FOR THOSE
POOLS THAT ARE SUBJECT TO THESE CHARGES TO MAKE SUBSTANTIAL TRADING PROFITS
TO AVOID DEPLETION OR EXHAUSTION OF THEIR ASSETS. THIS DISCLOSURE DOCUMENT
CONTAINS A COMPLETE DESCRIPTION OF EACH EXPENSE TO BE CHARGED THIS POOL AT
PAGE 5 AND A STATEMENT OF THE PERCENTAGE RETURN NECESSARY TO BREAK EVEN, THAT
IS, TO RECOVER THE AMOUNT OF YOUR INITIAL INVESTMENT, AT PAGE 13.
THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER FACTORS
NECESSARY TO EVALUATE YOUR PARTICIPATION IN THIS COMMODITY POOL. THEREFORE,
BEFORE YOU DECIDE TO PARTICIPATE IN THIS COMMODITY POOL, YOU SHOULD CAREFULLY
STUDY THIS DISCLOSURE DOCUMENT, INCLUDING A DESCRIPTION OF THE PRINCIPAL RISK
FACTORS OF THIS INVESTMENT, AT PAGE 5.
YOU SHOULD ALSO BE AWARE THAT THIS COMMODITY POOL MAY TRADE FOREIGN FUTURES
OR OPTIONS CONTRACTS. TRANSACTIONS ON MARKETS LOCATED OUTSIDE THE UNITED
STATES, INCLUDING MARKETS FORMALLY LINKED TO A UNITED STATES MARKET, MAY BE
SUBJECT TO REGULATIONS WHICH OFFER DIFFERENT OR DIMINISHED PROTECTION TO THE
POOL AND ITS PARTICIPANTS. FURTHER, UNITED STATES REGULATORY AUTHORITIES MAY
BE UNABLE TO COMPEL THE ENFORCEMENT OF THE RULES OF REGULATORY AUTHORITIES OR
MARKETS IN NON-UNITED STATES JURISDICTIONS WHERE TRANSACTIONS FOR THE POOL
MAY BE EFFECTED.
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Table of Contents
Commodity Futures Trading Commission - Risk Disclosure Statement i
Table of Contents ii
Suitability Standards v
Summary of the Offering 1
The Partnership 1
Description of Securities Offered for Sale 1
Plan For Sale of Partnership Interests And Use of Depository Account 1
Subscription Procedure 1
Who Will Benefit From An Investment In The Partnership 1
Business Objectives and Expenses 1
Summary Risk Factors 2
Charges To The Partnership 2
Use Of Proceeds 3
Selection Of Commodity Trading Advisors And Allocation Of Equity 3
Federal Income Tax Aspects 3
Redemptions 3
Diagram of Partnership Structure & Commissions Atlas Futures Fund,
Limited Partnership 4
The Risks You Face 5
We must pay substantial charges, which may limit your ability to
receive a return on your investment. 5
You may not transfer your partnership interests and must rely on our
redemption procedures to receive your investment back. 5
Your right of redemption is limited. 5
The partnership depends upon Mr. Pacult, and his absence could cause
the partnership to cease operations. 5
General partner and commodity trading advisors will serve other
businesses and may not have adequate time to devote to the partnership. 5
There are conflicts of interest in the partnership structure which may
limit our profits. 6
You will be taxed on profits regardless of whether they are distributed. 6
You will have to pay taxes on profits in a current year which may be
lost in future years. 6
If the general partner selects a new trading advisor, it may not be as
profitable as the one replaced, and the new advisor will not be
responsible for recouping any previous losses. 6
The general partner may change the commodity trading advisors and their
allocation of equity without notice to you. 6
You will not participate in management and may not contest the business
decisions of the general partner. 6
Commodity futures trading is speculative. 6
During partnership trading, a small price movement can lead to large
losses. 6
The general partner does not control the trading advisors or their
methods and may not be able to prevent large losses. 7
The partnership may be unable to execute a trade before large losses are
incurred due to market illiquidity. 7
Changes in trading equity may adversely affect performance. 7
Failure of commodity brokers or banks could result in loss of assets. 7
When trading in foreign exchanges, if the creditworthiness of the other
parties or the value of the currency is not maintained, we may lose
the value of our positions in those markets. 7
Option trading is highly risky and requires less equity to secure a
trade, thus providing greater potential for loss. 8
If the price of a contract changes dramatically, we may not be able
to exit the position without sustaining substantial loss due to
government imposed price limits. 8
We may not be able to compete with others with greater resources. 8
Resignation of Mr. Pacult as a general partner and subsequent failure
of Ashley to maintain its net worth may cause suspension of trading or
taxation as a corporation. 8
The general partner will not advise you, and you must rely upon your
own counsel before investing in the partnership. 9
The partnership is not covered by the Investment Company Act of 1940. 9
Possibility of audit - you may be subject to audit and penalties. 9
General partner may settle IRS claim not in your best interest. 9
You may be subject to back taxes and penalties. 9
The general partner may raise the incentive fee to 27% without prior
notice to you. 9
Conflicts Of Interest 9
The general partner, the commodity trading advisors, the futures
commission merchant, the introducing broker and their principals
may preferentially trade for themselves and others. 9
Possible retention of voting control by the general partner may limit
your ability to control issues. 9
The general partner is not likely to resign, even if it would be in
your best interest. 10
The introducing broker receives a portion of the round turn commissions
and is affiliated with one of the commodity trading advisors. 10
Partnership fees may be higher than they would be if they were
negotiated. 10
Our profitability may be limited due to competition among traders
and their unaccountability for previous losses. 10
Your ability to redeem your partnership interests may be lessened due
to the nature of the general partner's compensation. 10
The commodity trading advisors may engage in high risk trading to
generate fees. 10
Mr. Pacult has sole control over the time he will allocate to the
management of the partnership. 10
No Resolution Of Conflicts Procedures 10
Interests Of Named Experts And Counsel 11
Management's Discussion And Analysis 11
The Partnership 11
The General Partners 11
Experience 11
Authority 12
Partnership Books and Records 12
The Commodity Trading Advisors 12
The Advisory Contract 12
Business Objective And Expenses 12
Explanatory Notes: 13
Securities Offered 13
You, the Investor: 14
Your subscription agreement and check: 14
Management's Discussion 14
Description of Intended Operations 14
Risk Control 14
Trading Risks 15
Fiduciary Responsibility Of The General Partner 15
Indemnification 15
Provisions of Limited Partnership Agreement 15
Provisions of Law 16
Provisions of Federal and State Securities Laws 16
Provisions of the Securities Act of 1933 and NASAA Guidelines 16
Provisions of the Clearing Agreement 16
Relationship With The Futures Commission Merchant, the Introducing
Broker and the General Partner 16
Fixed Commissions are Competitive 16
Relationship With The Commodity Trading Advisors 17
The Commodity Trading Advisors Will Trade For Other Accounts 17
Non-Disclosure Of The Commodity Trading Advisors' Methods 17
Charges To The Partnership 17
Compensation Of The Commodity Trading Advisors 17
Restrictions on Management Fees 18
Compensation of Futures Commission Merchant, Introducing Broker and
General Partner 18
Fee Paid By Partnership To The Corporate General Partner 18
Brokerage Fees Paid By the Corporate General Partner To The Futures
Commission Merchant 18
Miscellaneous Fees To Futures Commission Merchant 18
Rights of General Partner 18
Other Expenses 19
Charges To The Partnership 19
Investor Suitability 20
Potential Advantages 20
Equity Management 20
Investment Diversification 20
Limited Liability 20
Administrative Convenience 20
Access To The Commodity Trading Advisors 20
Use Of Proceeds 20
Determination Of The Offering Price 21
The General Partner 21
Identification 21
Michael P. Pacult 21
Ownership In Commodity Trading Advisors And Futures Commission Merchant 22
Trading By The General Partner; Interest In The Pool 22
Regulatory Notice 22
Trading Management 22
No Affiliation With Commodity Trading Advisors 22
Rights of the General Partner With Respect To Commodity Trading Advisor
Selection And Allocation Of Equity 22
Performance Record of the Partnership 23
The Commodity Trading Advisors 24
Clarke Capital Management, Inc. 24
NuWave Investment Corp. 24
Performance Record Of Other Programs Sponsored By The General Partner 26
The Futures Commission Merchant 27
The Introducing Broker 27
Federal Income Tax Aspects 27
Scope Of Tax Presentation 27
No Legal Opinion As To Certain Material Tax Aspects 28
Partnership Tax Status And Net Worth Of The General Partner 28
No IRS Ruling 28
Tax Opinion 28
Passive Loss And Unrelated Business Income Taxes Rules 29
Basis Loss Limitation 29
At-Risk Limitation 29
Income And Losses From Passive Activities 30
Allocation Of Profits And Losses 30
Taxation Of Futures And Forward Transactions 30
Section 988 Foreign Currency Transactions 31
Capital Gain And Loss Provisions 31
Business For Profit 31
Self-Employment Income And Tax 31
Alternative Minimum Tax 31
Interest Related To Tax Exempt Obligations 31
Not A Tax Shelter 31
Taxation Of Foreign Partners 31
Partnership Entity-Audit Provisions-Penalties 32
Employee Benefit, Retirement Plans And IRA's 32
The Limited Partnership Agreement 33
Formation Of The Partnership 33
Units of Partnership Interests 33
Management Of Partnership Affairs 33
General Prohibitions 33
Additional Offerings 34
Partnership Accounting, Reports, And Distributions 34
Income, Loss and Expense Allocations 34
Transfer Of Partnership Interests Only With Consent Of The
General Partner 34
Termination Of The Partnership 34
Meetings 35
Redemptions 35
Plan For Sale Of Partnership Interests 35
Depository Agreement 35
Subscription Procedure 36
Subscription Amounts 36
Revocation and Acceptance of Subscription 36
Net Worth Tests 36
Investor Warranties 36
Legal Matters 37
Litigation And Claims 37
Legal Opinion 37
Experts 37
Additional Information 37
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Suitability Standards
You should only invest a limited amount of the risk portion of your total
portfolio and should not invest more than you can afford to lose.
To invest the minimum $25,000 in this partnership, you must have either:
* a net worth of at least $150,000, exclusive of home, furnishings and
automobiles, or
* an annual gross income of at least $45,000 and a net worth, similarly
calculated of at least $45,000.
Residents of the following States must meet the specific requirements set
forth below. Net worth, is in all cases, to be calculated exclusive of home,
furnishings and automobiles. You may not invest more than 10% of your net
worth, exclusive of home, furnishings and automobiles, in the Fund. No
entity, including ERISA plans, should invest more than 10% of its liquid net
worth (readily marketable securities) in the Fund.
1. Alaska-Net worth of at least $225,000 or a net worth of at least $60,000
and annual taxable income of at least $60,000.
2. Arizona-Net worth of at least $225,000 or a net worth of at least $60,000
and annual taxable income of at least $60,000.
3. California-Net worth of at least $225,000 or a net worth of at least
$60,000 and annual taxable income of at least $60,000.
4. Iowa-Net worth of at least $225,000 or a net worth of at least $60,000
and an annual taxable income of at least $60,000. Minimum purchase for
individual retirement accounts and employee benefit plans in Iowa is $3,500.
5. Maine-Net worth of at least $200,000 or a net worth of at least $50,000
and an annual taxable income of at least $50,000.
6. Massachusetts-Net worth of at least $225,000 or a net worth of at least
$60,000 and annual taxable income of at least $60,000.
7. Michigan-Net worth of at least $225,000 or a net worth of at least
$60,000 and taxable income during the preceding year of at least $60,000.
8. Minnesota-Minnesota investors are deemed not to (i) represent that they
are legally competent to execute the Subscription Agreement and Power of
Attorney and (ii) make the representation in respect of risk tolerance in the
Subscription Agreement.
9. Mississippi-Net worth of at least $225,000 or a net worth of at least
$60,000 and annual taxable income of at least $60,000.
10. Missouri-Net worth of at least $225,000 or a net worth of at least
$60,000 and annual taxable income of at least $60,000.
11. Nebraska-Net worth of at least $225,000 or a net worth of at least
$60,000 and annual taxable income of at least $60,000.
12. New Hampshire-Net worth of at least $250,000 or a net worth of at least
$125,000 and an annual taxable income of at least $50,000.
13. North Carolina-Net worth of at least $225,000 or a net worth of at least
$60,000 and annual taxable income of at least $60,000.
14. Pennsylvania-Net worth of at least $175,000 or a net worth of at least
$100,000 and an annual income of at least $50,000.
15. South Carolina-Net worth of at least $100,000 or a net income in the
preceding year some portion of which was subject to maximum federal and State
income tax.
16. South Dakota-Net worth of at least $225,000 or a net worth of at least
$60,000 and annual taxable income of at least $60,000.
17. Tennessee-Net worth of at least $250,000 or a net worth of at least
$65,000 and annual taxable income of at least $65,000.
18. Texas-Net worth of at least $225,000 or a net worth of at least $60,000
and annual taxable income of at least $60,000.
In the case of sales to fiduciary accounts, the net worth and income
standards may be met by the beneficiary, the fiduciary account, or, if the
donor or grantor is the fiduciary, by the donor or grantor who supplies the
funds to purchase the partnership interests.
The foregoing suitability standards are regulatory minimums only. Merely
because you meet such requirements does not necessarily mean that a high
risk, speculative and illiquid investment such as one in the Fund is, in
fact, suitable for you.
Summary of the Offering
This summary is to assist your understanding of the offer. To be certain you
have a full understanding of the risks of this investment, you must carefully
review the entire document, including the exhibits.
The Partnership
Atlas Futures Fund, Limited Partnership:
* is a Delaware limited partnership organized on January 12, 1998
* maintains its main business office at 5914 N. 300 West, P.O. Box C,
Fremont, Indiana 46737, (260) 833-1306 with duplicate copies of its financial
records kept with Michael J. Liccar & Co., CPA, 53 West Jackson Blvd, Suite
1250, Chicago IL 60604
* is operated pursuant to a limited partnership agreement which is included
as Exhibit A
* is managed and controlled by Ashley Capital Management, Inc., a Delaware
corporation, and Michael P. Pacult, who are collectively referred to as the
general partner.
The general partner employs independent registered trading managers called
commodity trading advisors to select trades for the partnership.
Description of Securities Offered for Sale
By our previous prospectus, we sold a total of $9,536,430 of partnership
interests. We are currently offering an additional $5,463,570, in value of
partnership interests to bring the total offered since the commencement of
sales to $15,000,000. The balance of the interests will be sold at the
partnership's net asset value per partnership interest on the close of
business on the last day of the month in which the subscription agreement is
received.
Plan For Sale of Partnership Interests And Use of Depository Account
All sales will be made issuer direct through the partnership, that will use
its best efforts, which means it will try, but not guarantee, to sell the
partnership interests. To have good funds available on the last day of the
month when your subscription will be accepted, the corporate general partner
will maintain a depository account at Star Financial Bank, Angola, IN to hold
your subscription from the date of submission to the date you become a
partner.
Subscription Procedure
To purchase partnership interests, you must:
* complete and execute a subscription agreement (Exhibit D), and deliver
your executed subscription documents and check for your investment, which
should be made payable to "Star Bank for the acct. of Atlas"
* pay for at least $25,000 in partnership interests, though the general
partner may reduce this amount to not less than $5,000.
And you must have:
* the minimum net worth and income provided in the Notice to Residents of
the State of your residence if it is listed at the front of this prospectus
* or, one of the following:
* * a minimum net worth, exclusive of your home, home furnishings and
automobiles, of $150,000, or
* * a minimum annual gross income of $45,000 and a minimum net worth of
$45,000, both exclusive of your home, home furnishings and automobiles.
Who Will Benefit From An Investment In The Partnership
You are likely to benefit from an investment in the partnership if you want
to diversify your portfolio and if you have investment money available that
you can afford to lose without adverse consequences to your ability to
support your family and your lifestyle. This investment presents the
opportunity to participate in markets which are typically not represented in
most investors' portfolios and which can be profitable in both rising and
falling markets.
However, if you cannot afford the risk of losing your entire investment in
this partnership, you should not purchase these partnership interests.
Business Objectives and Expenses
We are organized to be a commodity pool to engage in the speculative trading
of:
* futures and forward contracts, which are instruments designed to permit
producers to hedge or investors to speculate in various interest rates,
commodities, currencies, stock indices and other financial instruments
* options on futures and forward contracts, which give the purchaser the
right to acquire or sell a given contract at a specified time at a specified
price, and
* other financial instruments.
We do not anticipate you will receive distributions and cannot guarantee that
we will meet our objectives or avoid substantial losses.
We are subject to substantial charges. To return after one year an initial
investment at $2,731.40 per unit of partnership interest, we must earn a
profit of 9.10%, or $248.52 per partnership interest. Although you will not
receive distributions, you will pay Federal, state and local taxes upon the
profits earned by the partnership, if any.
Summary Risk Factors
Investment in the partnership interests is speculative, illiquid, and highly
risky. You should purchase partnership interests only if you can afford to
lose your entire investment. For a complete description of the risks of an
investment in the partnership, see the Risk Factors section beginning on page
5.
* Our business is the speculative trading in futures and forward contracts,
and options on those contracts, selected by a registered commodity trading
advisor. This trading is highly leveraged and takes place in very volatile
markets.
* Past results of this partnership or the commodity trading advisors do not
guarantee future results.
* This partnership pays substantial fixed management fees and commission
costs. There is no guarantee that you will receive a return on your
investment.
* Transfer of your partnership interests will be restricted and there are
limitations on your right of redemption to surrender your partnership
interests in return for their value. No public market for the partnership
interests exists and none is expected to develop.
* This partnership will not make distributions. To receive a return on your
investment, you must use our redemption procedure.
* Although you will not receive distributions, you must pay Federal and
state income taxes on your share of any profits earned by this partnership.
* The general partner and affiliates have conflicts of interest with regard
to the management of this partnership. Specifically, all sales will be made
by the partnership, issuer direct, and no independent due diligence will be
performed in regard to interests it sells.
Charges To The Partnership
The following table identifies who is paid by the partnership, what they do
for the partnership, and their rate of compensation:
________________________________________
Entity
The general partner
(Ashley Capital Management, Inc. and Mr. Michael P. Pacult)
Nature of Service
Manages the partnership; negotiates and pays trading costs; assumes credit
risk of the partnership to the futures commission merchant
Amount of Compensation
The partnership pays the corporate general partner a 11% fixed annual
brokerage commission to clear domestic trades plus actual commissions charged
for trades made on foreign exchanges and forward markets, if any. [$2,750+]
________________________________________
The commodity trading advisors
(Clarke Capital Management, Inc.,
NuWave Investment Corp.)
Makes trades for the partnership
Clarke: 25% quarterly incentive fee on all new net profits it has generated
(this includes all new profits generated during the quarter, adjusted for
changes in trading equity and losses in previous quarters)
NuWave: 20% quarterly new net profit, calculated as immediately above; 2%
management fee on the first $2,000,000 in allocated equity; 1% management fee
on all allocated equity over $2,000,000
________________________________________
The futures commission merchant
(Man Financial, Inc.)
Accepts trades from the advisors, clears the trades; holds the partnership's
trading equity
From its 11%, the corporate general partner pays the futures commission
merchant for the per round turn commissions for trades entered by the trading
advisors.
________________________________________
The introducing broker
(Mt. Kemble Futures)
Introduces the trades from the advisors to Man, the sole futures commission
merchant
Shares the round turn brokerage commissions for trades generated by Clarke
and does not share the round turn brokerage commissions for trades generated
by NuWave.
________________________________________
The selling agent
(Atlas - Issuer Direct)
Sells investment in the partnership
None. All sales will be made by the Issuer on a best efforts basis with no
sales commission.
________________________________________
Lawyers and Accountants
(The Scott Law Firm, P.A., Frank L. Sassetti & Co., Michael J. Liccar & Co.)
Continuing legal and accounting work
The annual accounting, audit and legal costs are estimated to be $29,000,
24,000 and $7,000, respectively. [$339+ organizational and offering; $127+
annual expenses]
________________________________________
+ Each $25,000 investment pays this amount per year for these particular
expenses. When the expense is not based on a percentage, but rather a fixed
amount, we have computed the expense upon the partnership's current net asset
value.
Use Of Proceeds
The partnership has paid approximately $160,000 for organizational and
offering expenses. Upon the sale of additional partnership interests and the
lapse of twelve months from the date of each investor's investment, we will
charge each new limited partner its allocated portion of the previously paid
expenses to reimburse the prior partners. This will be done as follows:
After 12 months, the incoming partners' subscriptions will be divided by the
amount of the total subscriptions made by both the incoming and the prior
partners to obtain the percentage of the costs to be paid by all partners.
This percentage will be multiplied by the organization cost to produce the
dollar amount to be deducted from the subscription of the incoming partners.
The cash produced by that deduction will be added to the net asset value of
the partnership. This will result in an increase in the net asset value for
all partnership interests previously sold. The cash subscription amount
remaining for each incoming partner will be used to purchase partnership
interests at the increased net asset value. The incoming partners will join
with the previously admitted partners to share in the increase of net asset
value that results from the admission of future partners until either the
maximum number of partnership interests are sold or the offering terminates.
As of December 31, 2004, prior partners paid 1.40% of their total investment
in the partnership for offering expenses. Should the maximum of $15,000,000
in total partnership interests be sold, every partner will have been
allocated approximately 1.07% of their total investment to pay for offering
expenses.
Once this maximum is sold, no further allocation of initial offering expenses
will be made among the partners, and the offering expenses for any future
expenditures will be paid by the partnership when incurred.
The general partner will apply all partnership assets not allocated to pay
expenses toward trading commodities and cash reserves.
Selection Of Commodity Trading Advisors And Allocation Of Equity
The general partner has allocated 80% of trading equity to Clarke Capital
Management, Inc. and 20% to NuWave Investment Corp. to trade as commodity
trading advisors to the partnership. The trading advisors are solely
responsible for selecting the markets traded and the number of contracts per
trade entered on behalf of the partnership under the authority granted by a
power of attorney from the partnership to each trading advisor. The advisors
are authorized to make short sales, with unlimited risk of loss, on behalf of
the partnership. The general partner, without prior notice to you, in its
sole discretion, may adjust the allocation of equity between the advisors and
terminate or add trading advisors.
Federal Income Tax Aspects
Although you will not be paid distributions, you will have to pay income
taxes on profits and interest, if any, for the taxable year in which it is
earned. The partnership reports on a December 31 year end.
Redemptions
You may request the general partner to accept the surrender of your
partnership interests for cash through our redemption procedures. The
general partner will use its best efforts to comply with all redemption
requests, but may not be able to do so because of insufficient liquid assets.
You will not be allowed to make any redemption during the first twelve months
of your initial investment. There will be no charge for redemptions. See,
The Limited Partnership Agreement, Redemptions.
Diagram of Partnership Structure & Commissions
Atlas Futures Fund, Limited Partnership
Please see the previous table under Charges to the Partnership for a
description of the below parties.
The Risks You Face
Investment in the partnership interests is speculative, illiquid, and highly
risky. You should purchase partnership interests only if you can afford to
lose your entire investment. All of the following risks, except payment of
fixed expenses, are present without regard to the amount of partnership
interests sold.
We must pay substantial charges, which may limit your ability to receive a
return on your investment.
We must pay our expenses before you will realize a profit. They are:
* fixed brokerage commissions of 11% per year upon the assets on deposit
with the futures commission merchant for domestic trades plus actual
commissions charged by the futures commission merchant for trades made on
foreign exchanges and forward markets, if any
* an incentive fee of 25% to Clarke and 20% to NuWave, both commodity
trading advisors to the partnership, of their respective new net profits
* an annual management fee of 2% of the first $2,000,000 in equity allocated
to NuWave and 1% on equity above $2,000,000
* yearly expenses estimated at $60,000, of which $29,000 is paid for
accounting, $24,000 for audit services and $7,000 is paid for legal services
* variable operating expenses such as telephone, postage, and office
supplies, and
* extra-ordinary expenses such as claims and defense of claims from brokers,
partners, and other parties.
The incentive fees are determined and accrued monthly, but paid quarterly to
the commodity trading advisors. We may be subject to substantial incentive
fees in the initial quarters of any given year which will not be refunded,
even if we experience subsequent losses which produce a net loss for that
year. See Charges to the Partnership.
You may not transfer your partnership interests and must rely on our
redemption procedures to receive your investment back.
You can assign or transfer your partnership interests only with the consent
of the general partner, which will be granted only upon limited
circumstances. See The Limited Partnership Agreement, Transfer Of Units
Only With Consent Of The General Partner and the Limited Partnership
Agreement (Exhibit A).
Therefore, you must rely on our redemption procedures to receive your initial
investment adjusted to reflect profits, payment of expenses, and losses. See
The Limited Partnership Agreement, Redemptions.
Your right of redemption is limited.
Our redemption procedures provide:
* the redemption amount will be based upon the net asset value of the
partnership interests as calculated at the end of the month in which the
redemption request is received
* it must be received no less than 10 business days prior to the redemption
effective date and be approved by the general partner, and
* it may not be granted if we do not have enough liquid assets.
Subject to the foregoing limitations, the general partner intends to grant
all redemption requests received no less than ten days prior to the last
business day of the month and will use its best efforts to pay those requests
within twenty days after the last business day of the month in which the
redemption request was received. You may be prevented from redeeming your
partnership interests before they are significantly devalued. See The
Limited Partnership Agreement, Exhibit A, Redemptions.
Further, substantial redemption requests could adversely affect us by:
* the liquidation of positions too rapidly or on unfavorable terms which
prevent us from satisfaction of all redemption requests, or
* the reduction of our available trading equity at a time when we have an
opportunity to earn substantial profit.
The partnership depends upon Mr. Pacult, and his absence could cause the
partnership to cease operations.
You will be relying entirely on the ability of the general partner to select
and monitor the commodity trading advisors selected for the partnership. Mr.
Pacult is the individual general partner and the sole principal and officer
of the corporate general partner. If Mr. Pacult becomes unable to perform
his duties, we could be required to cease operations and trading until a
replacement for him is found.
General partner and commodity trading advisors will serve other businesses
and may not have adequate time to devote to the partnership.
The individual general partner currently manages other commodity pools and
both general partners expect to manage additional pools in the future. They
may negotiate better terms for advisors, clearing and other services for
those other pools in competition with this pool. The commodity trading
advisors currently manage other commodity accounts and may manage new
accounts, including personal accounts and other commodity pools. The
commodity trading advisors have developed special trading programs to trade
this partnership's account. Accordingly, there is no guarantee that our
trading results will be similar to or better than any of the trading
advisors' other accounts. Our business could be adversely affected by the
failure of either Mr. Pacult, who is the individual general partner and also
the sole principal of the corporate general partner, or the trading advisors
to devote sufficient time to the partnership affairs. See Risk Factors,
Trading Management, and The Commodity Trading Advisors.
There are conflicts of interest in the partnership structure which may limit
our profits.
Before investing in this partnership, you must consider the actual and
potential conflicts of interest that exist in our structure and operation.
Specifically, because all sales will be made by the partnership, issuer
direct, no independent due diligence of this offering will be conducted in
regard to interests it sells. See Risk Factors, Conflicts of Interest, and
the Limited Partnership Agreement (Exhibit A).
You will be taxed on profits regardless of whether they are distributed.
We do not intend to make cash distributions from profits. Regardless of
whether distributions are made, if we realize profits for a fiscal year, you
must report that income on your tax returns.
You will have to pay taxes on profits in a current year which may be lost in
future years.
We might sustain losses that offset our profits after the end of the year.
So you might never receive a distribution equal to your share of our prior
year's taxable income. See Federal Income Tax Aspects and The Limited
Partnership Agreement (Exhibit A).
If the general partner selects a new trading advisor, it may not be as
profitable as the one replaced, and the new advisor will not be responsible
for recouping any previous losses.
We rely upon two commodity trading advisors to generate profits pursuant to a
Advisory Contracts and Powers of Attorney (Exhibits F and G). Either the
general partner or a trading advisor may terminate the relationship at any
time. If this happens, or if a trading advisor becomes unable to serve us
for any other reason, the general partner may have to find one or more
alternate trading advisors. We cannot guarantee that any alternate trading
advisor will trade as profitably as the original trading advisor, or that it
would be retained on terms which are as favorable. Also, any new trading
advisor will not be obligated to recoup losses, if any, incurred by the prior
trading advisor before it is paid incentive fees on new net profits it
generates.
The general partner may change the commodity trading advisors and their
allocation of equity without notice to you.
Without prior notice to you, the general partner may change the commodity
trading advisors and the amount of equity allocated to them at any time, for
any reason.
You will not participate in management and may not contest the business
decisions of the general partner.
You may not manage or conduct our business in any way or you would be deemed
a general partner, which is not allowed by the Limited Partnership Agreement
(Exhibit A). Accordingly, you are bound by the business decisions of the
general partner.
Commodity futures trading is speculative.
Commodity futures, forward, and option contract prices have a high risk of
loss and are volatile. Specifically:
* price movements are influenced by such unpredictable variables as: changes
in supply and demand; weather; agricultural trade, fiscal, monetary and
exchange control programs and policies of governments; national and
international political and economic events; and, changes in interest rates,
governments, exchanges, and other market authorities that intervene to
influence prices;
* even if the analysis of the fundamental conditions by a commodity trading
advisor is correct, prices still may not react as predicted;
* analysis by the use of a computer program to measure price, historical
price averages, momentum and other technical factors deemed important by a
commodity trading advisor may also fail to predict price direction;
* it is possible for most of our open positions to be unprofitable at the
same time;
* price changes may reach a limit upon which trading rules require a
suspension of trading for a specified period of time. It is possible for
these limits to be reached in the same direction for successive days. This
may prevent us from exiting a position, and when the market reopens, we could
suffer a substantial loss on the position;
* losses are not limited to the margin allocated to hold the position and
may exceed the total equity in our account; and
* short positions, which have unlimited risk of loss, will be taken on our
behalf by the trading advisors.
During partnership trading, a small price movement can lead to large losses.
A small amount of money relative to the value of the contract traded, called
margin, must be deposited to place and hold a trade. The margin amount is
typically between 20% and 40% of the value of the contract traded. This
permits a large percentage gain or loss relative to the margin deposit. For
example, if at the time of purchase, 5% of the futures contract price is
deposited as margin, a 5% decrease in the position's value will cause a loss
of all the equity allocated to the trade, which could equal the entire value
of the account. The losses could be substantially more than the margin
deposited and the total value of the account.
The general partner does not control the trading advisors or their methods
and may not be able to prevent large losses.
The commodity trading advisors enter trades on our behalf directly with the
futures commission merchant. The general partner does not know the trades
before they are made, nor does it know the trading advisors' methods, the
number of contracts bought or sold, or the margin required. The trading
advisors will not notify the general partner of any modifications, additions
or deletions to its trading methods and money management principles. We may
suddenly suffer large losses before the general partner knows remedial action
must be taken.
The partnership may be unable to execute a trade before large losses are
incurred due to market illiquidity.
It is not always possible to execute a buy or sell order. Such illiquidity
can be caused by:
* a lack of interest in the contract caused by market conditions which
produce no persons willing to buy or sell, or
* the suspension of trading which may occur because the price limit for a
contract has been reached.
Most United States commodity exchanges limit price movement in a single
direction by rules referred to as price limits. Once these limits have been
reached, no trades may be executed at prices beyond the limits for a
specified amount of time, usually until the next trading day. However, given
sufficient price movement the following day, price limits may be imposed
again. Accordingly, price limits may be in effect for protracted time
periods. No trading may be made in the direction of the price movement while
the limit is in place. The frequency of the imposition of price limits or
the length of time they will be in effect cannot be predicted. This causes
illiquidity and exposure to substantial losses. These losses could exceed the
total equity in our account.
Changes in trading equity may adversely affect performance.
Commodity trading advisors often are unable to adjust to changes in the
amount of money they manage. This is because:
* the larger amount of equity under management requires larger trades to be
made, which may be more difficult to execute
* there are legal limits called position limits upon the number of positions
that may be taken on a particular commodity, and
* it may be more difficult to scale in positions, which is when a trading
advisor takes positions at different prices at different times and then
allocates those positions on a ratable basis when a change in its allocated
equity occurs.
See Appendix I for the full definitions of position limits and scale in
positions.
The commodity trading advisors will not limit the total equity they accept
and may suffer losses which cause a withdrawal of the equity they manage. A
commodity trading advisor's rate of return tends to decrease as the amount of
equity under management increases.
Failure of commodity brokers or banks could result in loss of assets.
If the futures commission merchant or other entity with which our money is on
deposit becomes bankrupt, we might only recover some, if any, of the equity
in our account. The deposits in our bank accounts will be insured for only
$100,000 and payment on insured deposits may be delayed.
When trading in foreign exchanges, if the creditworthiness of the other
parties or the value of the currency is not maintained, we may lose the value
of our positions in those markets.
Trading commodities involves entering a contract, or option to contract, for
the delivery of goods or money at a future date. The value of the contract
or option depends directly upon the creditworthiness of the parties and the
value of the item traded. The commodity trading advisors trade commodities
on United States commodity exchanges, foreign commodity exchanges, and the
inter-bank currency markets. The commodity exchange contracts and options
traded on United States exchanges are guaranteed by the members' credit.
Contracts and options upon foreign commodity exchanges and the inter-bank
currency markets are usually not regulated by specific laws and are backed
only by the parties to the contracts. It is possible for a price movement or
a devaluation of a currency in a particular contract or option to be large
enough to destroy the creditworthiness of
* the contracts and options issued by a particular party or government, or
* all of the contracts and options of an entire market.
In either of those situations, we could lose the entire value of a position
with little recourse to regain any of its value.
Option trading is highly risky and requires less equity to secure a trade,
thus providing greater potential for loss.
We expect to trade options, both puts and calls. After a position is taken,
a liquid market may not exist for any particular commodity option or at any
particular time. In an illiquid market, we may not be able to buy or sell to
offset, or liquidate, the positions we have taken.
Option trading allows us to trade with less equity on deposit. Accordingly,
the risk of loss of the entire account is great.
If the price of a contract changes dramatically, we may not be able to exit
the position without sustaining substantial loss due to government imposed
price limits.
The Commodity Futures Trading Commission and the United States commodity
exchanges have established limits referred to as Speculative Position Limits
or Position Limits. These are different from the price limits described
before. They are limits on the maximum net long or net short futures or
options positions which any person or group of persons may own, hold, or
control in futures contracts. The positions taken among all commodity
accounts owned, controlled or managed by a trading advisor and its principals
are combined for position limit purposes. Thus, a trading advisor may not be
able to hold sufficient positions for us to maximize the return on a
particular trade because it may be taking similar positions for others.
We may not be able to compete with others with greater resources.
Commodity futures trading is highly competitive. We compete with others who
may have
* greater experience
* more extensive information about developments affecting the futures
markets
* more sophisticated means of analyzing and interpreting the futures
markets, and
* greater financial resources.
Those with greater experience and financial resources have a better chance at
trading profitably. For instance, we will not maintain a warehouse to take
delivery of commodities and will not have a large capital base to allow us to
hold positions through bad times.
Resignation of Mr. Pacult as a general partner and subsequent failure of
Ashley to maintain its net worth may cause suspension of trading or taxation
as a corporation.
The North American Securities Administrators Association has established
guidelines for commodity pools structured as limited partnerships. Those
guidelines require that a sole corporate general partner maintain a net worth
during the offering period of either 5% of the offering amount or not less
than $50,000, nor more than $1,000,000. Ashley presently has insufficient
capital to meet this guideline and, therefore, the loss of Mr. Pacult as an
individual general partner could result in the suspension of sales in states
which follow the guidelines.
Any general partner wishing to voluntarily withdraw from the partnership must
give 120 days prior written notice to the limited partners. If a general
partner withdraws and the limited partners or remaining general partner
elects to continue the partnership, the withdrawing general partner shall pay
all expenses incurred as a result of its or his withdrawal.
When the sole general partner of a partnership is a corporation, the tax
rules require conditions to be met to allow the partnership to be taxed as a
partnership and not as a corporation. To be taxed as a partnership requires
that two or more of the following tests be met:
* decentralized management
* unlimited liability
* limited transferability of shares, and
* limited continuation of existence.
If we were not taxed as a partnership, the partnership income would be taxed
at corporate rates and would be distributed to the partners as dividends.
The partnership has an individual general partner and, therefore, the
unlimited liability test of a partnership is met. If Mr. Pacult resigned or
otherwise could not serve as a general partner, the partnership must either
have a substitute individual partner or be structured to satisfy the
guidelines to be taxed as a partnership.
No tax IRS ruling has been or will be requested to confirm the tax opinions
expressed in this prospectus. If we were taxed as a corporation for Federal
income tax purposes:
* our income or loss would not be passed through to you
* we would be taxed at corporate rates
* all or a portion of any distributions made to you would be taxed to you as
dividend income, and
* the amount of such distributions would not be deductible in computing our
taxable income.
See Federal Income Tax Aspects.
If Mr. Pacult resigns and Ashley becomes the sole general partner, it will
use its best efforts to satisfy the requirements necessary to permit us to be
taxed as a partnership.
The general partner will not advise you, and you must rely upon your own
counsel before investing in the partnership.
Purchasing partnership interests does not create an Individual Retirement
Account, commonly called an IRA, and the creation and administration of an
IRA are solely your responsibility. The assets of a retirement account
should be carefully diversified and you should only allocate high risk
capital to this partnership. If you invest a significant portion of your
retirement plan or IRA assets in this partnership, you could be exposing that
portion to significant loss. The general partner will not advise you in any
manner on an investment in this partnership, including matters of
diversification, prudence, interpretation of the partnership agreement, and
liquidity. Accordingly, you must rely upon the experience of qualified
legal, investment and tax counsel you select.
The partnership is not covered by the Investment Company Act of 1940.
Stock investment companies and investment advisors must be registered under
the Investment Company Act of 1940, as amended. Because the business of the
partnership, Ashley Capital Management, Inc., Mr. Pacult and the commodity
trading advisors involves only the trade of futures regulated pursuant to the
Commodity Exchange Act, none of them is required, nor does any intend, to be
registered under the Investment Company Act of 1940 or any similar state law.
Therefore, you are not protected by any such legislation.
Possibility of audit - you may be subject to audit and penalties.
If our return is audited, the IRS may make adjustments to our reported items.
If an audit results in an adjustment, you may be:
* required to file amended returns
* subject to a separate audit, and
* required to pay back taxes, plus penalty and interest.
General partner may settle IRS claim not in your best interest.
Ashley Capital Management, Inc. is named tax matters partner. This grants it
the power to settle any IRS claim on your behalf if you hold 1% or less
interest in this partnership and do not timely object to the tax matters
partner's authority, after notice. Such settlement may not necessarily be in
your best interest. See Federal Income Tax Aspects.
You may be subject to back taxes and penalties.
The Scott Law Firm, P.A. has delivered an opinion to the general partner that
this partnership, as presently operated by the general partner, will be taxed
as a partnership and not as a corporation. This opinion does not include the
tax treatment of expenses to prepare the prospectus and selling expenses
because they have to be allocated between expenses attendant to formation and
ordinary business expenses by the general partner. In addition, commodity
trading advisor fees are combined with employee business expenses and other
expenses of producing income and are deductible only if the operation of the
partnership is the conduct of a trade or business. The general partner
believes that our intended operations qualify as a trade or business.
The general partner may raise the incentive fee to 27% without prior notice
to you.
The general partner has reserved the right to raise, without prior notice to
you, the incentive fee to a maximum of 27% while lowering the total
management fees between the commodity trading advisors and general partner to
0%. The general partner will notify you of any change in fees within seven
business days.
Conflicts Of Interest
There are present and potential future conflicts of interest in our structure
and operation you should consider before you purchase partnership interests.
The general partner will use this explanation of conflicts as a defense
against any claim or other proceeding made against Mr. Pacult, Ashley Capital
Management, Inc., the commodity trading advisors, the futures commission
merchant or any principal or affiliate, agent or employee of any of them.
The general partner, the commodity trading advisors, the futures commission
merchant, the introducing broker and their principals may preferentially
trade for themselves and others.
Because the general partner, the commodity trading advisors, the introducing
broker, the futures commission merchant and their principals and affiliates
may trade for themselves and others, conflicts of interest may exist or be
created in the future. For example, if these people trade their own account,
you will not have access to their trading records. They could possibly take
their positions prior to the positions they know will be placed for the
partnership, although, they have stated they will not do so.
Possible retention of voting control by the general partner may limit your
ability to control issues.
The general partner, its principal and its affiliates may purchase an
unlimited amount of partnership interests. These persons include Mr. Pacult
as general partner. It is possible that they could purchase enough
partnership interests to retain voting control. They could then vote,
individually or as a block, to create a conflict with your best interests.
Such voting control may limit the limited partners' ability to achieve a
majority vote on such issues as:
* amendment of the Limited Partnership Agreement
* change in our basic investment policy
* dissolution of this partnership, or
* the sale or distribution of our assets.
However, neither general partner may, directly or indirectly vote on the
issue of their removal.
The general partner is not likely to resign, even if it would be in your best
interest.
It is unlikely that either general partner, Mr. Pacult or Ashley Capital
Management, Inc., would voluntarily resign, even if it would be in your best
interest, because Ashley retains a portion of the 11% paid to it, and Mr.
Pacult serves as both a general partner and the sole shareholder, director
and principal of Ashley.
The introducing broker receives a portion of the round turn commissions and
is affiliated with one of the commodity trading advisors.
The introducing broker, Mt. Kemble Futures, is affiliated with one of the
trading advisors, NuWave Investment Corp. Though Mt. Kemble will receive a
portion of the round turn commissions paid to the futures commission merchant
for trades placed by Clarke Capital Management, Inc., it will not receive any
portion of the commissions for trades placed by NuWave.
Partnership fees may be higher than they would be if they were negotiated.
The 11% annual fixed brokerage commission to Ashley Capital Management, Inc.,
corporate general partner and commodity pool operator, has not been
negotiated at arm's length. The general partner:
* accepts the credit risk of the partnership to the futures commission
merchant
* reviews the daily positions and margin requirements of the partnership,
and
* pays the futures commission merchant's charges
From the 11% annual fee paid to the corporate general partner, it must pay
round turn brokerage commissions to the futures commission merchant. Any
remaining portion of the 11% will be kept by the corporate general partner.
Conversely, the corporate general partner will pay the futures commission
merchant any round turn commissions incurred that exceed the 11% per year.
Our profitability may be limited due to competition among traders and their
unaccountability for previous losses.
The general partner has sole and absolute discretion to select and terminate
commodity trading advisors. If it appoints multiple trading advisors, each
will trade independently of the others. Also, they may compete for similar
positions or take positions opposite each other, which may limit our
profitability. If a trading advisor is replaced, the new trading advisor
will receive any earned incentive fees regardless of the previous trading
advisor's performance. As incentive fees are paid based upon each trading
advisor's performance, it would be possible for us to experience a net loss
and be required to pay out incentive fees to one or more of the traders.
Your ability to redeem your partnership interests may be lessened due to the
nature of the general partner's compensation.
The general partner receives a fee based upon our net asset value available
for trading. This gives it an incentive to withhold distributions and to
discourage redemption. The general partner will try to honor all redemption
requests within twenty days after the last day of the preceding month in
which the request was made. However, if the partnership does not have enough
liquid assets, it may not be able to honor the request on time, or possibly
at all.
The commodity trading advisors may engage in high risk trading to generate
fees.
As a general rule, the greater the risk assumed, the greater the potential
for profit. Because the commodity trading advisors receive 20% to 25% of our
new net profits, they might select trades which are too risky for us.
Mr. Pacult has sole control over the time he will allocate to the management
of the partnership.
Mr. Pacult is responsible for:
* managing this partnership
* managing three other commodity pools:
* * Bromwell Financial Fund, LP, and
* * Providence Select Fund, LP
* * TriView Global Fund, LLC
* selling limited partnership interests in all the above commodity pools,
from time to time
* performing other investor relations services as a principal and registered
representative of Futures Investment Company, a broker dealer of which he is
a 50% owner.
Mr. Pacult has also reserved the right to trade for his own account and to
form and manage other commodity pools and ventures. Mr. Pacult is solely
responsible for the allocation of his time to the management of this
partnership as well as the other projects she currently manages and will
manage in the future. Mr. Pacult manages his time, in part, by the
delegation of many of the tasks, such as trade selection and preparation of
financial reports and offering documentation, to independent commodity
trading advisors, accountants, and attorneys. Mr. Pacult believes he
presently has and will, in the future, have sufficient time to devote to the
affairs of the partnership.
No Resolution Of Conflicts Procedures
As is typical in many futures partnerships, the general partner has not and
will not establish formal procedures to resolve potential conflicts of
interest. These future potential conflicts may adversely affect both you and
us. However, the general partner has taken steps to alleviate any real or
potential conflict of interest by the establishment of segregated accounts to
hold partnership equity at the banks and futures commission merchant. Also,
the general partner has assured the partners that all money on deposit is in
the name of and for the beneficial use of the partnership.
The previous risk factors and conflicts of interest are complete as of the
date of this prospectus, however, additional risks and conflicts may occur
which are not presently foreseen by the general partner. You may not
construe this prospectus as legal or tax advice. Before making an investment
in this partnership, you should read this entire prospectus, including the
Limited Partnership Agreement (Exhibit A) and the subscription agreement.
You should also consult with your personal legal, tax, and other professional
advisors. See Investor Suitability.
Interests Of Named Experts And Counsel
The general partner has employed The Scott Law Firm, P.A. to prepare this
prospectus, provide tax advice and opine upon the legality of issuing the
partnership interests. Neither the law firm, its principal, any accountant,
nor any other expert hired by the partnership to give advice on the
preparation of this offering document have been hired on a contingent fee
basis. Nor do any of them have any present or future expectation of interest
in the general partner, the commodity trading advisors, the introducing
broker or the futures commission merchant.
Management's Discussion And Analysis
The Partnership
Atlas Futures Fund, Limited Partnership is a Delaware limited partnership
organized on January 12, 1998 and maintains its main business office at 5914
N. 300 West, P. O. Box C, Fremont, IN 46737, (260) 833-1306. It is qualified
to be a commodity pool to engage in the speculative trading of futures,
commodity options and forward contracts on currencies, interest rates, energy
and agriculture products, metals, and stock indices.
Our business objective is to let our invested capital appreciate while
controlling losses; however, there can be no assurance that we will meet this
objective.
The partnership is managed by Ashley Capital Management, Inc., a Delaware
corporation, and Mr. Michael P. Pacult.
We do not have officers, which is why there is no report of executive
compensation in this prospectus.
We operate pursuant to the terms of the limited partnership agreement
attached as Exhibit A, which:
* grants full management control to the general partner including the right
to employ independent trading managers called commodity trading advisors, and
* will terminate at 11:59 p.m. on January 12, 2019, or upon an event causing
an earlier termination.
Except for the limited partnership agreement, the partnership may not enter
any contract with the general partner or commodity trading advisor that is
greater than one year in duration. However, all such contracts are expected
to be renewed yearly and are terminable without penalty upon sixty days, or
less, written notice by the partnership.
The General Partners
The corporate general partner is Ashley Capital Management, Inc., a Delaware
corporation incorporated on October 15, 1996. It was registered as a
commodity pool operator on January 15, 1998 and maintains its main business
office at 5914 N. 300 West, P.O. Box C, Fremont, IN 46737, (260) 833-1306.
It is managed by Michael P. Pacult, its sole shareholder, director and
president.
The individual general partner is Michael P. Pacult, who was registered as a
commodity pool operator on July 28, 2003 and maintains his main business
office at 5914 N. 300 West, P.O. Box C, Fremont, IN 46737, (260) 833-1306.
Both the individual and corporate general partners, as well as the
partnership, will comply with all applicable registration requirements under
the Commodity Exchange Act as amended.
Experience
Ashley has managed this commodity pool since its inception on January 12,
1998. Mr. Pacult has been supervising individual managed commodity accounts
for over 24 years and serves in several capacities in two other commodity
pools, as follows:
- --Commodity Pool
- --Mr. Pacult Serves As
- --Bromwell Financial Fund, LP (publicly offered, began operations 7/00)
- --Individual general partner and sole principal of the corporate general
partner
- --Providence Select Fund, LP (to be publicly offered, presently in
registration)
- --Individual general partner and sole principal of the corporate general
partner
- --TriView Global Fund, LLC (to be publicly offered, presently in
registration)
- --Individual managing member and sole principal of the corporate managing
member
Authority
Mr. Pacult is the sole shareholder, director and principal of Ashley Capital
Management, Inc. and also the individual general partner, therefore, Mr.
Pacult is the sole decision maker of this partnership. Having said that, the
signature of either Ashley or Mr. Pacult, individually, may legally bind this
partnership.
The general partner is authorized to take all actions necessary to manage the
affairs of the partnership. See Article II of the Limited Partnership
Agreement attached as Exhibit A.
Partnership Books and Records
Our books and records will be maintained for six years at 5914 N. 300 West,
Fremont, IN 46737. A duplicate set of the books will be maintained by
Michael J. Liccar & Co., 53 West Jackson Blvd, Suite 1250, Chicago, IL 60604
(312) 922-6600. Liccar also prepares the Form K-1 for each partner in the
partnership. You may access our books and records by visiting either office
at a time convenient for both parties, and you may have copies made at that
time at a reasonable charge per page. The general partner serves as tax
partner for the partnership. Frank L. Sassetti, & Co., 6611 West North
Avenue, Oak Park, IL 60302 conducts our annual audit, the annual audit of the
corporate general partner, and prepares our tax returns.
The Commodity Trading Advisors
To conduct trading on our behalf, the general partner has selected two
independent commodity trading advisors, Clarke Capital Management, Inc. and
NuWave Investment Corp. Without prior notice to you, the general partner has
sole discretion to employ additional trading advisors, terminate any trading
advisor, and change the amount of equity any advisor may trade. However, the
general partner will give you notice of any change in trading advisor within
seven days of such change. Such notice will include a description of your
right to redemption.
No change in trading advisor will constitute a material change to the limited
partnership agreement or the structure of our operation. Any trading advisor
employed to trade for the partnership will be registered with the Commodity
Futures Trading Commission and will have at least three years of experience
as a trading advisor.
The Advisory Contract
The general partner has assigned a substantial portion of our assets to the
trading advisors the terms of which are governed by an advisory contract and
power of attorney between us and the trading advisor. See Exhibits F and G.
These agreements provide the trading advisors with revocable powers of
attorney, which gives them sole authority to determine
* the markets to be traded
* the location of those markets
* the size of the position to be taken in each market, and
* the timing of entry and exit in a market.
The agreements may be terminated, at any time, upon notice from one party to
the other and to the futures commission merchant.
Business Objective And Expenses
Our objective is to achieve the potentially high rates of return that are
possible through the speculative trading of futures, commodity options and
forward contracts. We do not expect to engage in any other business.
The general partner organized this partnership to be a commodity pool, as
that term is defined in the Commodity Exchange Act. It employs independent
commodity trading advisors to trade for us.
The general partner intends to allocate substantially all of our net assets
to the trading advisors to conduct this trading. The trading advisor
typically allocates 20% to 40% of the trading equity assigned to it to secure
the trading positions it selects.
Although we do not expect to make distributions, you will nevertheless be
required to pay yearly Federal, state and local taxes upon income, if any,
earned by this partnership. The general partner recommends partnership
interests be purchased as a long-term investment.
There can be no assurance that we will achieve our business objectives, be
able to pay the substantial fixed and other costs to do business, or avoid
substantial trading losses. See Charges to the Partnership.
Below is a chart explaining the expenses we expect to incur during our twelve
months of trading beginning the date of this prospectus. All interest income
is paid to the partnership. The chart below assumes the value of each unit
of partnership interest will remain constant during the next twelve months.
Expenses Per Unit of Partnership Interest
For The Next 12-Month Period Of Operations
Based Upon Current Based Upon Maximum
Offering of Units Units To Be Sold
Units to be Sold and Value 4,317 Units 6,317 Units
($11,790,949) ($15,000,000)
Selling Price per Unit (1) $ 2,731.40 $ 2,731.40
Annual Expenses (2) $ 13.90 $ 9.50
Offering Expenses (3) $ 4.63 $ 3.17
Trading Advisor's Management Fee (4) $ 10.93 $ 9.65
Trading Advisors' and General Partner's
Incentive Fees on New Net Profits (5) $ 0.00 $ 0.00
Brokerage Commissions and Trading
Fees (6) $ 291.44 $ 291.44
Selling Commission (7) $ 0.00 $ 0.00
Interest Income (8) $ (72.38) $ (72.38)
Amount of Trading Income Required to
Redeem Unit At Selling Price After
One Year (9) $ 248.52 $ 241.38
Percentage of Initial Selling
Price Per Unit 9.10% 8.84%
Explanatory Notes:
(1) Investors will purchase partnership interests at the partnership's month
end net asset value per partnership interest. As of December 31, 2004, this
was $2,731.40, which is the value used in the table. The initial value of a
partnership interest at the inception of trading on October, 1999 was $1,000.
(2) The partnership must also pay yearly expenses of approximately $29,000
for accounting, $24,000 for audit and $7,000 for legal.
(3) The partnership must pay the costs of this offering, estimated to be
$20,000.
(4) Because the interest income exceeds the offering expenses and annual
expenses, the trading advisors would earn no incentive fee if the partnership
produced only enough profits to allow you to redeem after one year your
partnership interests at the December 31, 2004 price of $2,731.40 per unit of
partnership interest.
(5) NuWave is assigned 20% of the 97% of partnership assets allocated to
trading and will be paid a monthly management fee of 1/6% (2% annually) on
the first $2,000,000 of such assets and 1/12% monthly (1% annually) on any
allocated equity beyond $2,000,000. Neither the general partner nor Clarke
will receive a management fee.
(6) Brokerage commissions and domestic trading fees are fixed by the general
partner at 11/12% monthly, 11% annually, of our assets on deposit with the
futures commission merchant plus actual commissions for trades made on
foreign exchanges or forward markets, if any. For purposes of this
calculation, we assumed 97% of our assets will be deposited with the futures
commission merchant and that the advisor frequency of trading and the number
of partnership interests outstanding during the next twelve months will
remain constant.
(7) The Issuer will make all sales on a best efforts, direct basis. No
selling commission will be charged to you.
(8) We earn interest on margin deposits with the futures commission merchant
and on our bank deposits. Based on current interest rates, interest income
is estimated at 2.65% annually of our net assets.
(9) This computation assumes there will be no claims or other extra-ordinary
expenses during the first year.
We do not represent that the above table will reflect our actual offering
expenses, operating expenses or interest income. There can be no assurance
that our expenses will not exceed the amounts projected or that there will
not be claims or other extra-ordinary expenses.
Securities Offered
We, Atlas Futures Fund, Limited Partnership, will offer and sell limited
partnership interests in this partnership at a value determined by the month
end net asset value of the partnership. See Determination Of The Offering
Price.
You, the Investor:
* will have:
* * pro rata rights to profit and losses which will vary with your
investment amount
* * the right to vote on partnership matters such as the replacement of
the general partner. See The Limited Partnership agreement attached as
Exhibit A.
* will not:
* * be responsible for our debts in excess of your investment amount;
unless:
* we become insolvent; and
* you receive distributions which represent a return on your investment
which, under certain circumstances, you would have to return to us to pay our
debts
* acquire any interest in the corporate general partner, Ashley Capital
Management, Inc., or
* manage this partnership
See Plan For Sale of Partnership Interests and Subscription Requirements.
Your subscription agreement and check:
* must be approved by the general partner before you will become a partner
and will be accepted or rejected within five business days of receipt
* becomes irrevocable and may not be withdrawn five days after submission;
unless, a longer statutory withdrawal period applies to you, and
* will be deposited and held until you are admitted into the partnership in
a segregated depository account maintained by Star Financial Bank as
depository agent.
There cannot be any assurance that additional partnership interests will be
sold. The general partner is authorized, in its sole discretion, to
terminate this or any future offering of partnership interests.
Management's Discussion
This is the continuation of the offering of our partnership interests. We:
* may conduct future offerings after the close of this offering
* intend to raise money only through offerings, such as this one, and do not
intend to borrow any money
* must pay expenses to qualify and sell our partnership interests, such as
fees for the preparation of this prospectus, sales literature, and web site
promotion as well as other expenses
* allocate all our net assets to trading and other investments, except those
assets used to pay capital and operating expenses
* have no directors, officers or employees, which is why there is no report
of executive compensation in this prospectus, and
* conduct all our business through the general partner.
Description of Intended Operations
The general partner has selected Man Financial, Inc. to serve as the futures
commission merchant and Mt. Kemble Futures to serve as its introducing
broker. The partnership has deposited its funds to the futures commission
merchant to hold as security for the trades selected by the commodity trading
advisors. The futures commission merchant has been directed to send the
general partner, before the open of business each day, a computer or fax
report which describes
* the positions held
* the margin allocated, and
* the profit or loss on the positions from the date the positions were taken
Risk Control
The general partner reviews the daily transmissions provided by the futures
commission merchant and makes appropriate adjustments to the allocation of
trading equity. Based upon the amount of available trading equity, the
trading advisors have sole discretion to:
* make specific trades,
* determine the number of positions taken, and
* decide the timing of entry and departure from each trade made.
The general partner will use its best efforts to monitor the daily value of
the partnership, which its independent accountant calculates from the daily
information provided by the futures commission merchant, and will make such
information available to limited partners upon request. However, the
accountant calculates the net asset value only at the end of the last
business day of each month. If the daily unit value falls to less than 50%
of the highest value earned through trading, then the general partner will:
* immediately suspend all trading
* provide you with immediate notice of the reduction in net unit value, and
* give you the opportunity, for 15 days after the date of such notice, to
redeem your partnership interests according to the provisions of Article IX,
Sections 9.5 and 9.6 of the Limited Partnership Agreement.
No trading shall commence until after the lapse of such fifteen day period.
See Exhibit A attached.
Trading Risks
Most United States commodity exchanges limit daily fluctuations in commodity
futures contracts prices by regulations referred to as daily price
fluctuation limits or daily limits. Once the price of a futures contract has
reached the daily limit for that day, positions in that contract can neither
be taken nor liquidated. Commodity futures prices have occasionally moved
the daily limit for several consecutive days with little or no trading.
Such an occurrence could prevent us from promptly liquidating unfavorable
positions and subject us to substantial losses. These losses could exceed
the margin initially required to make the trade. In addition, even if
commodity futures prices have not moved the daily limit, we may not be able
to execute futures trades at favorable prices. This may be caused by light
trading in such contracts or by a sudden and substantial price move in a
futures or forward contract. These limitations on liquidity are inherent in
our proposed commodity futures trading operations. Otherwise, our assets are
expected to be highly liquid.
Except for payment of offering and other expenses, the general partner is
unaware of any anticipated:
* known demands, commitments or required capital expenditures,
* material trends, favorable or unfavorable, which will affect our capital
resources, or
* trends or uncertainties that will have a material effect on operations.
Each United States commodity exchange, with the approval of the Commodity
Futures Trading Commission, and the futures commission merchant establish
minimum margin requirements for each traded contract. The futures commission
merchant will require the margin assigned for each account to be on deposit
before a trade will be accepted. The futures commission merchant may
increase the margin requirements above these minimums for any or all
contracts for its customers. Because we generally use a small percentage of
assets for margin, we do not believe that any increase in margin requirements
will materially affect our proposed operations. However, it is possible for
an increase in margins applicable to the trades the advisors select for us to
force us to liquidate positions because we cannot meet the additional margin
requirements.
Management cannot predict whether the value of our partnership interests will
increase or decrease. Inflation is not projected to be a significant factor
in our operations, except to the extent inflation influences futures prices.
Fiduciary Responsibility Of The General Partner
You have legal rights under Delaware partnership and applicable Federal and
state securities laws. In all dealings affecting this partnership, the
general partner has a fiduciary responsibility to you and all other partners
to exercise good faith and fairness. No contract shall permit the general
partner to contract away its fiduciary obligation under common law. The
limited partnership agreement conforms with the Uniform Limited Partnership
Act for the State of Delaware in regard to the definition of the fiduciary
duties of the general partner.
You have a right to initiate legal proceedings related to the partnership in
the following circumstances:
In the event, after demand from you, the general partner:
fails to take action to recover damages from third parties, you may initiate
proceedings on behalf of the partnership and, upon an appropriate award from
the court pursuant to Delaware law, obtain reimbursement of your legal fees
and costs from the amount recovered.
You may bring an action against the general partner in either Federal or
state court should you believe the general partner or others have breached
its fiduciary duty to the partnership or committed a breach of any Federal or
state securities laws.
You may seek reparations for the amount of your investment and damages should
the general partner or others breach of the Commodity Exchange Act or order
of the Commodity Exchange Commission in regard to your investment.
If the general partner acts in good faith and exercises its best judgment, it
will not be liable merely because we lost money or otherwise did not meet our
business objectives. Additionally, there are substantial and inherent
conflicts of interest in the partnership's structure which are inconsistent
with the general partners' fiduciary duties. The general partner intends to
raise the disclosures made in this prospectus and the representations you
made in the subscription agreement as a defense in any proceeding brought
which seeks relief based on the existence of such conflicts of interest. See
Conflicts of Interest.
The responsibility of a general partner to you and other partners is a
changing area of the law. If you have questions concerning the
responsibilities of the general partner, you should consult your legal
counsel.
Indemnification
Provisions of Limited Partnership Agreement
The limited partnership agreement protects the general partner from being
responsible or accountable for any act or omission, for which you, other
limited partners or the partnership itself may claim it is liable, provided
that:
* the general partner determined such act or omission was within the scope
of its authority and in the best interest of this partnership, and
* such action or failure to act does not constitute misconduct or a breach
of the Federal or state securities laws related to the sale of partnership
interests.
Specifically, if the general partner
* has acted within the scope of its authority and
* is being assessed a demand, claim or lawsuit by a partner or other entity,
the partnership will defend, indemnify and hold the general partner harmless
from and against any
* loss, liability, damage, cost or
* expense, including attorneys' and accountants' fees and expenses incurred
in defense of any demands, claims or lawsuits
which were actually and reasonably incurred and arising from any act,
omission, activity or conduct undertaken by or on behalf of the partnership.
Provisions of Law
According to applicable law, indemnification of the general partner is
payable only if:
* the general partner determined, in good faith, that the act, omission or
conduct that gave rise to the claim for indemnification was in the best
interest of the partnership
* the act, omission or activity that was the basis for such loss, liability,
damage, cost or expense was not the result of negligence or misconduct
* such liability or loss was not the result of negligence or misconduct by
the general partner, and
* such indemnification or agreement to hold harmless is recoverable only out
of the assets of the partnership and not from the partners, individually.
Provisions of Federal and State Securities Laws
This offering is made pursuant to Federal and state securities laws. If any
indemnification of the general partner arises out of an alleged violation of
such laws, it is subject to the following legal conditions.
Those conditions require that no indemnification may be made in respect of
any losses, liabilities or expenses arising from or out of an alleged
violation of Federal or state securities laws unless:
* there has been a successful adjudication on the merits of each count
involving alleged securities law violations as to the general partner or
other particular indemnitee, or
* such claim has been dismissed with prejudice on the merits by a court of
competent jurisdiction as to the general partner or other particular
indemnitee, or
* a court of competent jurisdiction approves a settlement of the claims
against the general partner or other agent of the partnership and finds that
indemnification of the settlement and related costs should be made, provided,
however, before seeking such approval, the general partner or other
indemnitee must apprise the court of the position held by regulatory agencies
against such indemnification. These agencies are the Securities and Exchange
Commission and the securities administrator of the state or states in which
the plaintiffs claim they were offered or sold partnership interests.
Provisions of the Securities Act of 1933 and NASAA Guidelines
The Securities and Exchange Commission and the various state securities
administrators believe that indemnification for liabilities arising under the
Securities Act of 1933 are unenforceable because such indemnification is
against public policy as expressed in the Securities Act of 1933 and the
North American Securities Administrators Association, Inc. commodity pool
guidelines.
Provisions of the Clearing Agreement
We clear trades through our futures commission merchant, Man Financial, Inc.
According to the clearing agreements that governs these trades, we must
indemnify Man Financial, Inc. for any reasonable outside and in-house
attorney's fees incurred by it arising from any failure for the partnership
to perform its duties under the clearing agreement.
Relationship With The Futures Commission Merchant, the Introducing Broker and
the General Partner
Ashley Capital Management, Inc., the corporate general partner, supervises
the relationship with the futures commission merchant and introducing broker,
including
* the negotiation of the round turn commission rates incurred through
trading via the commodity trading advisors, and
* review of the daily reports.
Ashley has engaged Man Financial, Inc. to serve as the futures commission
merchant to open and close the trades selected by the trading advisors. It
has also engaged Mt. Kemble Futures to introduce the trades to Man.
Fixed Commissions are Competitive
The general partner believes the fixed commission of 11% of our equity on
deposit per year to clear the partnership's domestic trades plus actual costs
for foreign markets, if any, are competitive.
In that regard, the general partner is obligated by the North American
Securities Administrators Association guidelines to obtain the best
commission rates available to us. Accordingly, the general partner has the
right to select any substitute or additional futures commission merchants or
introducing brokers at any time, for any reason.
The futures commission merchant acts for other commodity pools that have
retained either or both of the general partners of this partnership. Either
general partner or any other commodity pool may obtain rates to clear trades
from the general partner which are more favorable to their accounts than the
11% annual fixed commission the general partner charges the partnership.
Relationship With The Commodity Trading Advisors
The Commodity Trading Advisors Will Trade For Other Accounts
The commodity trading advisors will trade for their own accounts and for
others on a discretionary basis. They may use trading methods, policies and
strategies for others which differ from those used for us. Consequently,
such accounts may have different trading results from ours.
Because the trading advisors trade for themselves and others, it is possible
for them to take positions ahead of or opposite to the positions taken for
us, which presents a potential conflict of interest. See Appendix I for
Taking Positions Ahead of the Partnership.
Pursuant to Commodity Futures Trading Commission Regulation 421.03, the
trading advisors will use the average price system for those futures and
options contracts where its use is authorized, when:
* trades taken on behalf of both the partnership and a trading advisor's
other accounts are identical, and
* the prices of such trades are different.
See Appendix I for the definition of Average Price System.
The commodity trading advisors have also informed the general partner that
when the average price system is not available, trades will be filled in
order based on the numerical account numbers, with the lowest price allocated
to the lowest account number and in numerical matching sequence, thereafter.
Non-Disclosure Of The Commodity Trading Advisors' Methods
We have provided a general description of the commodity trading advisors'
methods and strategies under The Commodity Trading Advisors, Description of
Trading Program. However, the specific details of their trading methods are
proprietary and complex in nature and will not be disclosed to us or you. No
notice will be given to you of any changes the trading advisors may make in
their trading methods. See Risk Factors, No Notice of Trades or Trading
Method.
Charges To The Partnership
As an investor in this partnership, you will pay your prorate share of the
cost of our operation. These charges are described in narrative form and in
the chart which follows this narrative. In this prospectus, we have
disclosed all compensation, fees, profits and other benefits, including
reimbursement of out-of-pocket expenses, which the general partner will earn
in connection with this offering. Most of these charges were not negotiated
at arm's length, but rather were determined by the two general partners.
Compensation Of The Commodity Trading Advisors
Clarke Capital Management, Inc. and NuWave Investment Corp., the commodity
trading advisors, have been allocated equity to trade, which has been
deposited in accounts with the futures commission merchant. NuWave is paid a
1/6% monthly management fee (2% annually) on the first $2,000,000 in equity
it has been assigned to trade, and is paid a 1/12% monthly management fee (1%
annually) on assigned equity over $2,000,000.
Though no management fee is currently paid to the general partner or Clarke,
the general partner has reserved the right to change these fees at its sole
discretion. See Charges to the Partnership, Restrictions on Management Fees.
The partnership pays Clarke and NuWave incentive fees of the new net profit
produced by them, individually, of 25% and 20%, respectively. New net
profit:
* is calculated to determine how much a trading advisor has increased our
net assets through trading alone
* is based upon the net value of the equity assigned to the trading advisor
to trade
* is calculated monthly but paid quarterly
* is only paid when any losses in previous quarters have been offset by new
profits by the trading advisor, regardless of whether:
* * the general partner has changed the trading advisor's compensation,
or
* * the partnership and trading advisor have entered a new contract
* is adjusted to eliminate the effects of:
* * any new subscriptions for partnership interests
* * redemptions by partners
* * interest income paid by the futures commission merchant, and
* * any other income earned on our assets which are not related to such
trading activity, regardless of whether such assets are held separately or in
a margin account.
The following hypothetical table illustrates the quarterly incentive fee that
would be earned by a trading advisor based on the net income, as calculated
above, that it has earned for the partnership.
Qtr Net Income Incentive Fee (25%) Incentive Fee (20%)
1 $ 1,000 $ 250 $ 200
2 (200) 0 0
3 1,000 200 160
4 500 125 100
Restrictions on Management Fees
Some of the states in which we sell partnership interests require that we
comply with the North American Securities Administrators Association
Guidelines for commodity pools. These guidelines provide that:
* the total management fees, including those of the general partner and the
commodity trading advisors, may not exceed 6% of our net assets, and
* the total incentive fees, including those of the general partner and
commodity trading advisors, based upon profits earned may not exceed 15% of
new net profits.
Provided, however, without prior notice to you, the general partner has the
right to increase the incentive fee by 2% over 15% for every 1% decrease from
6% in the management fee. The general partner will notify you of any change
in fees within seven business days after they are made and afford you notice
and opportunity to redeem your partnership interests.
Compensation of Futures Commission Merchant, Introducing Broker and General
Partner
Fee Paid By Partnership To The Corporate General Partner
The corporate general partner, Ashley Capital Management, Inc., is
responsible for payment of costs to clear the trades made by the trading
advisors through the futures commission merchant, Man Financial, Inc. The
partnership pays the corporate general partner a monthly fixed rate of 11/12
of 1%, 11% annually, upon the assets on deposit with the futures commission
merchant for brokerage commissions to trade domestically plus actual
commissions charged on foreign exchanges and forward markets, if any. See
The Futures Commission Merchant.
In the opinion of the general partner, the 11% annual fixed commission that
we pay to clear our trades is fair and reasonable. This is an area of
judgment that depends upon:
* the value of similar services provided to partnerships and other accounts
managed by the same commodity trading advisor, or
* the value of similar services provided by other clearing firms for other
public commodity pools.
Brokerage Fees Paid By the Corporate General Partner To The Futures
Commission Merchant
Man Financial, Inc. charges the corporate general partner the round turn
commission at the time the trade is made. The round turn charge covers all
clearing costs, including the pit brokerage fees, National Futures
Association fees, and exchange fees. The futures commission merchant shares
the round turn brokerage commissions generated by the trades of Clarke
Capital Management Inc., but not those of NuWave Investment Corp., with the
introducing broker and is responsible for all payments to the introducing
broker.
Miscellaneous Fees To Futures Commission Merchant
We will reimburse the futures commission merchant for all delivery,
insurance, storage or other charges incidental to trading and paid to third
parties. The general partner has instructed the trading advisors to avoid
these charges and, therefore, no significant charges of this nature are
anticipated.
Rights of General Partner
Without prior notification to you, the general partner has reserved the right
to:
* add, change and delete broker/dealers as selling agents
* add, change and delete introducing brokers
* change the management and incentive fees within the limits prescribed
herein
* add, change and delete commodity trading advisors
* add, change and delete futures commission merchants
* change the fixed brokerage commission rate
* have the partnership pay a per round-turn brokerage commission as opposed
to a fixed percentage, at any time, with or without a change in
circumstances; provided, however, such brokerage commissions cannot exceed
80% of the published retail rate of the futures commission merchant and other
merchants, excluding pit brokerage fees, charged to accounts similar to the
partnership.
Other Expenses
We must pay legal and accounting fees, as well as other expenses and claims.
For each year of normal operations, we must pay yearly legal and accounting
costs of approximately $60,000, which includes $29,000 for accounting,
$24,000 for audit and $7,000 for legal services. We must also pay customary
and routine administrative expenses, and other direct expenses.
In addition, we will reimburse the general partner for direct expenses, such
as the cost to prepare and file periodic amendments and restatements of the
registration statement, prospectus, financial statements, and web site
promotion used in connection with the solicitation and sale of interests in
the partnership together with audit fees, delivery charges, statement
preparation and mailing costs, telephone toll charges, and postage.
Charges To The Partnership
The following table includes all charges to the partnership.
_________________________________
Entity
Form of Compensation
Amount of Compensation
_________________________________
General Partner
(Ashley Capital Management, Inc.)
Fixed brokerage commission
11% fixed annual charge, paid monthly, upon the assets on deposit with the
futures commission merchant for domestic trades plus actual commissions
charged for trades made on foreign exchanges or forward markets, if any.
From this amount it will pay brokerage commissions to Man Financial, Inc.
[$2,750+]
_________________________________
Selling Agent
(Atlas - Issuer Direct)
None
None. All sales will be made by the Issuer on a best efforts basis with no
sales commission.
_________________________________
Futures Commission Merchant
(Man Financial, Inc.)
Round-turn commissions paid from the fixed commissions paid by the
partnership From the 11% the partnership pays the corporate general partner,
the futures commission merchant is paid round turn brokerage commissions.
Reimbursement of delivery, insurance, storage and any other charges
incidental to trading and paid to third parties Reimbursement by the
partnership of actual payments to third parties in connection with
partnership trading
_________________________________
The introducing broker
(Mt. Kemble Futures)
Round-turn commissions paid from the fixed commissions paid by the
partnership Shares the round turn brokerage commissions for trades generated
by Clarke and does not share the round turn brokerage commissions for trades
generated by NuWave.
_________________________________
Commodity Trading Advisors
(Clarke Capital Management, Inc., NuWave Investment Corp.)
Incentive Fee
Clarke is paid 25% of the new net profits it generates for each quarter;
NuWave is paid 20% of the new net profits it generates each quarter
Management Fee
NuWave is paid a 2% management fee on the first $2,000,000 in allocated
equity and a 1% management fee on all allocated equity over $2,000,000
_________________________________
Third Parties
(The Scott Law Firm, P.A., Frank L. Sassetti & Co., & Michael J. Liccar &
Co., CPA)
Legal, accounting fees, and other actual expenses necessary to the operation
of the partnership, and all claims and other extraordinary expenses of the
partnership.
The partnership has paid approximately $160,000 for offering and
organizational expenses. Each year the partnership will pay approximately
$29,000 for accounting, $24,000 for audit and $7,000 for legal. Claims
cannot be estimated but will be paid as incurred. [$339+ organizational and
offering; $127+ annual expenses]
_________________________________
+ Each $25,000 investment pays this amount per year for these particular
expenses. When the expense is not based on a percentage, but rather a fixed
amount, we have computed the expense upon the partnership's current net asset
value.
Investor Suitability
You should only invest a limited amount of the risk portion of your total
portfolio and should not invest more you can afford to lose.
To invest the minimum $25,000 in this partnership, you must have either:
* a net worth of at least $150,000, exclusive of your home, furnishings and
automobiles, or
* an annual gross income of at least $45,000 and a net worth, as calculated
above, of at least $45,000, or
* such higher amounts imposed by your state of residence.
You may not invest more than 10% of your net worth in this partnership. The
foregoing standard and the additional standards applicable to residents of
certain states and the subscription documents are regulatory minimums only.
Potential Advantages
Commodity trading is speculative and involves a high degree of risk. See
Risk Factors. However, your investment in this partnership will offer the
following potential advantages:
Equity Management
We offer the opportunity for you to:
* place equity with registered commodity trading advisors which have
demonstrated an ability to trade profitably in the judgment of the general
partner, and
* have that equity allocated to the trading advisors in a manner which is
intended by the general partner to optimize future profit potential.
Mr. Pacult has experience managing several other commodity pools and has over
twenty-four years of experience in selecting commodity trading advisors to
manage individual investor accounts and describing to investors how managed
futures accounts work.
We expect this experience to benefit us in the quality of trading advisors
selected and in the explanation to prospective investors of our operation and
the attendant risks of investment.
Investment Diversification
If you are not prepared to spend substantial time trading various commodity
contracts or options, you may participate in these markets through a $25,000
investment in the partnership, thereby obtaining diversification from other
investments you may have in stocks, bonds and real estate.
Limited Liability
You will not be subject to margin calls and cannot lose more than your
original investment amount plus your share of distributed and undistributed
profits; provided the below bulleted legal conditions are met.
In the opinion of our legal counsel, The Scott Law Firm, P.A., there are no
circumstances, including bankruptcy of this partnership, which will subject
your personal assets that were never invested or paid from this partnership
to our debts; provided:
* the partnership's structure is maintained by the general partner, and
* you do not participate in any phase of our management other than the
exercise of your right to vote as a limited partner.
See the Limited Partnership Agreement (Exhibit A).
Administrative Convenience
We are structured to provide you with services that alleviate the
administrative details involved in trading commodities contracts directly,
including:
* providing monthly and annual financial reports showing, among other
things:
* * the value of each unit of partnership interest
* * trading profits or losses, and
* * expenses; and
* preparing all tax information relating to your investment in this
partnership.
Access To The Commodity Trading Advisors
The commodity trading advisors selected by the general partner require a
minimum account size substantially greater than the $25,000 minimum
investment required by us. For instance, Clarke currently requires a minimum
investment of $250,000 to open an account, depending on the investment
program. Accordingly, you have access to the trading advisors for a smaller
investment than is available by a direct investment in a managed account with
the trading advisor.
Use Of Proceeds
The partnership has paid approximately $160,000 in offering and
organizational expenses. Effective for partners admitted after December 23,
2003, there is no redemption charge and they must retain their full initial
investment in the partnership for at least twelve months.
At the close of business on the last day of the twelfth month, the offering
expenses of will be allocated pro rate among all partners as follows:
The incoming partners' subscriptions will be divided by the amount of the
total subscriptions made by both the incoming and the prior partners to
obtain the percentage of the costs to be paid by all partners. This
percentage will be multiplied by the organization cost to produce the dollar
amount to be deducted from the subscription of the incoming partners. The
cash produced by that deduction will be added to the net asset value of the
partnership. This will result in an increase in the net asset value for all
partnership interests previously sold. The cash subscription amount
remaining for each incoming partner will be used to purchase partnership
interests at the increased net asset value. The incoming partners will join
with the previously admitted partners to share in the increase of net asset
value that results from the admission of future partners until either the
maximum number of partnership interests are sold or the offering terminates.
As of December 31, 2004, prior partners paid 1.40% of their total investment
in the partnership for offering expenses. Should the maximum of $15,000,000
in total partnership interests be sold, every partner will have been
allocated approximately 1.07% of their total investment to pay for offering
expenses.
Once this maximum is sold, no further allocation of initial offering expenses
will be made among the partners, and the offering expenses for any future
expenditures will be paid by the partnership when incurred.
After the subscriptions are deposited in good funds to the partnership bank
account and you are accepted as a limited partner, the general partner will
transfer the money you paid to the partnership accounts at the bank and
futures commission merchant and allocate additional trading equity to the
commodity trading advisors.
At the end of each month, the fixed brokerage commissions are paid by the
partnership. At the end of each quarter, the incentive fees, if any are due,
are paid to the trading advisors. See Charges to the Partnership.
The general partner has sole authority to determine the percentage of our
assets that will be:
* held on deposit with the futures commission merchant
* used for other investments, and
* held in bank accounts to pay current obligations.
The general partner expects to deposit substantially all of our net assets
with the futures commission merchant for trading by the trading advisors.
However, approximately 3% of the previous month's net assets will be retained
in our bank accounts to pay expenses and redemptions.
All entities that will hold or trade our assets will be based in the United
States and will be subject to United States regulations.
The general partner believes that 20% to 40% of our assets will normally be
committed as margin for commodity futures contracts. However, from time to
time, the percentage of assets committed as margin may be substantially more,
or less, than such range. All interest income is used for the partnership's
benefit. To estimate interest income earned upon our deposits, the general
partner has assumed that we will receive 2.65% interest on 100% of our bank
and futures commission merchant balances.
The futures commission merchant, a government agency or commodity exchange
could increase margins applicable to us to hold trading positions or reduce
the number of contracts in a particular market that we are permitted to hold.
This could force us to liquidate positions in a market at a loss that would
not have occurred had we been permitted to hold the positions as the advisors
intended.
Determination Of The Offering Price
Currently, we are offering partnership interests at their net unit value, or
the price per unit equal to our net assets divided by the number of
outstanding units of partnership interests. This amount is calculated after
the close of business on the last business day of the month in which the
general partner accepts a duly executed subscription agreement and
subscription amount from you. You are admitted as a partner on the open of
business on the first day of business of the following month.
The General Partner
Identification
Two general partners, Ashley Capital Management, Inc. and Mr. Michael P.
Pacult, manage us. See Management's Discussion and Analysis of Financial
Condition, The General Partners.
Current audited financials for Ashley are included in this prospectus. Also,
see Experts.
You will not acquire or otherwise have any interest in Ashley, the corporate
general partner, or any partnership other than Atlas, by purchasing the
partnership interests offered by the prospectus.
Michael P. Pacult
Mr. Pacult, age 59, is:
* one of the general partners, and
* the sole shareholder, director, principal, and officer of the corporate
general partner
Mr. Pacult grew up in Detroit, MI and went to high school at Howe Military
School in Howe, IN. In 1969 he received a B.A. Degree from the University of
California, Berkeley, where he majored in English and in Zoology. Prior to
moving to Chicago in 1980 to become involved in the futures industry, he was
a part owner and Senior Vice President of a California real estate
development company.
In 1983, Mr. Pacult and his wife, Shira Del Pacult, as 50% owners,
established Futures Investment Company, an Illinois corporation, to sell
futures investments managed by independent commodity trading advisors to
retail clients. From inception to present, Mr. Pacult has been a Director
and President of Futures Investment Company, which maintains clearing
agreements with Man Financial, Inc., Refco, Inc., Dorman Trading, LLC, and
Vision Limited Partnership.
Commencing in August 2003 to present, Mr. Pacult has also been the sole
Owner, Director and President of Ashley Capital Management, Inc., the
commodity pool operator of this partnership; and from August 2003, to
present, he has been the sole Owner, Director and President of Belmont
Capital Management, Inc., a commodity pool operator of partnership that
competes with this partnership; and, from April 2003 to present, he has been
the sole Owner, Director and President of White Oak Financial Services, Inc.,
a commodity pool operator that will also compete with this partnership; and,
from October 2004 to present, he has been the sole Owner, Director and
President of TriView Capital Management, Inc., a commodity pool operator that
will also compete with this partnership. Since August 2003, he has also
served as the individual general partner of this partnership and another
public commodity pool, Bromwell Financial, LP Since April 2003, he has also
served as the individual general partner of another commodity pool,
Providence Select Fund, LP, which is presently registering its securities
with the SEC. Since October 2004, he has also served as the individual
managing member of another public commodity pool, TriView Global Fund, LLC,
which is presently registering its securities with the SEC.
His duties as a Director and Officer of the above named corporations, as a
general partner of those partnerships, and as a managing member of that
limited liability company are to make all of the decisions and supervise all
of the actions they take.
In 1995, Mr. and Mrs. Pacult were featured in a book titled Master Brokers-
Interviews with Top Futures Brokers by John Walsh that was published by the
Center for Futures Education.
Mr. Pacult also manages three other public commodity pools. Though Mr.
Pacult provides less than his full time to the business affairs of this
partnership, he devotes what time he believes is necessary to properly handle
his responsibilities as a general partner and as the principal of the
corporate general partner. See Management's Discussion and Analysis of
Financial Condition, The General Partners.
Ownership In Commodity Trading Advisors And Futures Commission Merchant
Neither Mr. Pacult, nor any of his affiliates, has any ownership in the
commodity trading advisors, the futures commission merchant, or the
introducing broker.
Trading By The General Partner; Interest In The Pool
Ashley Capital Management, Inc. and Mr. Pacult, may, from time to time, trade
commodity interests for their own accounts. The records of any such trading
activities will not be made available to you. Neither general partner will
knowingly take positions ahead of identical positions taken by this
partnership.
Regulatory Notice
The regulations of the Commodity Futures Trading Commission and the National
Futures Association prohibit any representation by a person registered with
the Commodity Futures Trading Commission or by any member of the National
Futures Association, respectively, that such registration or membership in
any respect indicates that the Commodity Futures Trading Commission or the
National Futures Association, as the case may be, has approved or endorsed
such person or such person's trading programs or objectives. The
registrations and memberships described in this prospectus must not be
considered as constituting any such approval or endorsement. Likewise, no
commodity or securities exchange, nor the Securities and Exchange Commission,
nor any other regulatory agency has given or will give any such approval or
endorsement.
Trading Management
No Affiliation With Commodity Trading Advisors
The trading advisors are not affiliated with either general partner.
Additionally, the general partner will not serve as a trading advisor or
select any other trading advisors to trade that are affiliated with either
general partner.
Rights of the General Partner With Respect To Commodity Trading Advisor
Selection And Allocation Of Equity
The general partner believes that a trading advisor should be retained on a
medium to long-term basis and should be allowed to implement fully its
trading strategy. However, the general partner may, in its sole discretion
and without prior notice to you:
* terminate the current or any future trading advisor
* select additional trading advisors, or
* change the allocation of equity to any trading advisor.
Should any change in advisors be made, you will be notified within seven
business days. The notice will also remind you of your right to request a
redemption of your partnership interest pursuant to our redemption
procedures.
The general partner periodically reviews our performance to determine if a
current trading advisor should be changed or if others should be added. In
doing so, the general partner may use computer generated correlation analysis
or other types of automated review procedures to evaluate trading advisors.
If a trading advisor is replaced, the new trading advisor will receive
incentive fees independent of the previous trading advisor's performance.
As the general partner currently engages more than one trading advisor, the
following may possibly occur:
* we may pay an incentive fee to one trading advisor which is trading
profitably while the other trading advisor produces losses which cause us to
be unprofitable overall
* because the trading advisors trade independently, they may compete for
similar positions or take positions opposite each other, which may limit our
profitability.
Performance Record of the Partnership
The following capsule shows our past performance for the period from
inception of trading in October 1999, through December 31, 2004. Past
performance is not necessarily indicative of future results.
Atlas Futures Fund, Limited Partnership
Percentage Rate of Return
(Computed on a compounded monthly basis)*
Month 2004 2003 2002 2001 2000 1999
January (5.08) 4.08 (4.86) (7.36) (2.88) N/A
February 11.26 21.04 (5.41) (4.44) (1.04) N/A
March 3.09 (3.47) 3.42 7.62 (4.46) N/A
April (0.09) 2.92 (5.24) (4.29) 1.47 N/A
May 15.08 12.60 0.00 0.86 12.16 N/A
June (2.42) (5.23) 12.85 (2.93) 4.95 N/A
July 4.15 (3.93) 5.22 3.91 (7.90) N/A
August 7.18 (2.37) 3.32 1.92 9.72 N/A
September 4.12 3.58 7.65 (5.98) (0.68) N/A
October 10.75 (1.95) (12.94) 11.62 (7.23) (0.66)
November 7.09 (8.61) (5.65) (4.05) 8.44 2.36
December (6.56) 14.78 15.99 (0.95) 18.97 (6.45)
Year 56.04 33.47 10.97 (5.70) 31.76 (4.88)
Name of Pool: Atlas Futures Fund, LP
How Offered: Publicly offered pursuant to Form S-1 Registration Statement
Name of Commodity Trading Advisor: Clarke Capital Management, Inc.
Principal Protected: No
Date of Inception of trading: October, 1999
Aggregate Subscriptions: $9,536,430
Net Asset Value of the pool: $11,790,949 on total units outstanding: 4,317
Net Asset Value Per Unit: $2,731.40
Largest Monthly Draw-Down**: 10-02/12.94%
Worst Peak-to-Valley Draw-Down***: 9-02 to 11-02/17.86%
* Rate of Return is computed by dividing net performance by beginning net
asset value for the period. For those months when additions or withdrawals
exceed ten percent of beginning net assets, the Time-Weighting of Additions
and Withdrawals method is used to compute rates of return.
** "Draw-down" is defined by applicable CFTC regulations to mean losses
experienced by an account over the specified period.
*** Worst Peak-to-Valley Draw-Down means the greatest cumulative percentage
decline in month-end net asset value due to losses sustained by a pool,
account or trading program during any period in which the initial month-end
net asset value is not equaled or exceeded by a subsequent month-end net
asset value.
The Commodity Trading Advisors
Clarke Capital Management, Inc.
The general partner has engaged Clarke Capital Management, Inc. to trade for
the partnership, and has initially assigned to it approximately 80% of the
partnership's equity, after retention of a 3% cash reserve. The general
partner, in its sole discretion, may adjust the allocation of equity
allocated any time in the future.
Clarke Capital Management, Inc., an Illinois corporation, maintains its main
business office and main business telephone at: 116 W. 2nd Street, Hinsdale,
Illinois 60521; (630) 323-5913. The books and records of Clarke will be kept
and made available for inspection at its main business office.
Business Background
The business background of Clarke and its sole principal, Michael Joseph
Clarke, for at least five (5) years is as follows:
Mr. Clarke spent the period of 2/83 through 2/85 as an independent contractor
trading equities and options for Rice, Naegele & Associates of Chicago, a
firm involved in private speculation. From 2/85 through 3/89, Mr. Clarke, as
an independent contractor, traded equities and options in a firm account of
Shatkin Investment Corp., then a clearing member of the Chicago Board Options
Exchange. From 3/89 to 11/89, Mr. Clarke, as an independent contractor,
traded equities and options in a firm account of French-American Securities,
a private investment company based in Chicago. From 11/89 to 12/9/93, Mr.
Clarke was self-employed, developing methods to trade futures and other
commodity interests and trading various personal accounts. As of December 9,
1993, Mr. Clarke has been employed as an associated person and principal of
Clarke Capital Management, Inc., a registered commodity trading advisor.
Clarke Capital Management, Inc. was incorporated in September 1993 for the
purpose of acting as a commodity trading advisor. It was registered with the
Commodity Futures Trading Commission on October 25, 1993. Clarke's required
performance disclosure is located below under Performance Record of the
Trading Advisor.
There have never been any administrative, civil, or criminal proceedings
against Clarke Capital Management, Inc. or Mr. Clarke.
Description Of Trading Program
The exact nature of Clarke's trading strategy is proprietary and
confidential. The following description is of necessity general and is not
intended to be all-inclusive.
Although the programs offered by Clarke differ in certain respects, they
share a number of common elements. Under all programs, Clarke's trading
strategy is strictly technical in nature; i.e., the programs are based upon
computer generated analysis of price movements and patterns and are not based
on analysis of fundamentals such as supply and demand, general economic
factors, or world events. Clarke has conducted analysis of these price
patterns to determine procedures for initiating and liquidating positions in
the markets in which it trades.
The general trading strategy of all of Clarke's programs is trend following.
Most, but not all, trade initiations and liquidations are in the direction of
the trend. Clarke employs techniques that utilize a number of trading models
acting independently. Each model generates its own entry and exit signals and
trades both sides of the market (long and short). With minor differences only
for long or short positions, a particular model trades all markets with the
same rules and parameters, regardless of the program.
A specially designed Clarke program trades the Atlas account. Clarke
reserves the right to change the program used to trade the partnership
account and to make adjustments in the exact entry or exit price a model uses
for the Atlas program in order to attempt to reduce the impact of slippage
from large block orders being executed at the same price. The models used in
the Atlas program are implemented through the use of computer analysis and
vary from intermediate through long-term to very long-term in time-frame
focus and testing has been done in order to select only those models that
have good performance characteristics across a wide range of conditions and
complementary performance with all other models in a program. None of the
models has been custom tailored to any individual market or group of markets.
Michael Joseph Clarke, the sole principal of the trading advisor and members
of the advisor's staff under his direct supervision, direct the trading of
the partnership pursuant to the advisory agreement attached to this
prospectus as an exhibit and the standard power of attorney to grant trading
authority to the advisor provided by the futures commission merchant.
Clarke, its principal and affiliates, have no present or future expectation
of a beneficial interest in the pool or its corporate general partner but
look solely to its incentive fee for compensation for its services.
A PURCHASE IN ATLAS DOES NOT INCLUDE A PURCHASE OF CLARKE OR ITS PROGRAM.
NuWave Investment Corp.
NuWave Investment Corp. has been registered with the Commodity Futures
Trading Commission ("CFTC") as a commodity trading advisor since February 24,
1993 and as a commodity pool operator since June 14, 2004. The Trading
Advisor is a member of the National Futures Association in such capacities
effective March 1993. The Trading Advisor operates its principal office at
1099 Mount Kemble Avenue, Morristown, New Jersey 07960, Telephone: (973) 425-
9192, Fax: (973) 425-9190, E-mail: info@NuWavecorp.com.
Business Background
Troy W. Buckner is a principal of the Trading Advisor. Mr. Buckner is a 17
year industry veteran who began his career at Salomon Brothers, Inc. as a
derivatives and program trading specialist in 1986. In 1989 Mr. Buckner left
Salomon Brothers to focus his full attention on the design and implementation
of sophisticated trading models for use in the futures and equity markets.
After five years of full time position trading based on his proprietary
methodologies, Mr. Buckner joined Classic Capital as a principal with
responsibility for the design and execution of both futures and U.S. equity
investment models. In 1995 Hyman Beck & Company hired Mr. Buckner as a
principal to develop and manage systematic, short-term investment strategies
capable of trading the world's liquid futures and currency markets. His
extensive research into innovative, non-correlated investment programs is
complemented by years of trading experience and an in-depth understanding of
market theory. As of March 2003 Mr. Buckner is listed as a principal and AP
of Mt. Kemble Futures, a registered IB set up to service the needs of
potential NuWave Investment Corp. clients in need of a clearing relationship.
Mr. Buckner graduated Magna Cum Laude from the University of Delaware in 1984
with a double major (finance/accounting) and a minor (economics) before
earning his M.B.A from the University of Chicago in 1986. John S. Ryan is a
principal of the Trading Advisor. Mr. Ryan began his career in 1998 at IBM,
where he designed corporate networks in New York City. Specializing in
systems and communications, he implemented custom solutions for top NYC law
firms and universities. After five years at IBM, Mr. Ryan was recruited by
recently formed Hyman Beck & Company to head their technology effort. At
Hyman Beck he held the titles of Principal and Director of Technology and was
credited with helping build the infrastructure that was critical to their
success. In addition to his technology role, Mr. Ryan was a member of Hyman
Beck's research team, where his programming and quantitative skills were
utilized in designing new trading systems. At the time of his departure, he
was integrally involved with the establishment of Hyman Beck's electronic
trading presence. Mr. Ryan earned his B.B.A degree in Computer Information
Systems from Bernard Baruch College, City University of New York.
Trading Program
The Combined Portfolio The Combined Portfolio evolved from the intent of the
principals of the Trading Advisor to achieve a more stable, lower volatility
return enhanced by diversification not only across different markets, but
across trading styles as well. The Trading Advisor believes, based on its
research to date, that the performance of each of its three programs, Alpha,
Pattern Recognition and Beta, exhibit a substantial degree of non-correlation
with one another as well as with other traditional strategies in any
investment arena. Combining the three programs in one portfolio provides
prospective investors with both enhanced diversification and expected cost
savings. It is common for the Alpha, Pattern Recognition or Beta programs to
hold opposite positions in any given market. Because positions for these
programs are netted within a single account, clients save needless
transactions costs that occur if these programs were managed by separate
advisors. Similarly, incentive fees are netted for the three trading programs
that comprise the Combined Portfolio. This prevents an incentive fee payment
to the Trading Advisor unless the net performance across programs warrants.
In the future, other programs and/or products may be included in the Combined
Portfolio in varying degrees. Client accounts participating in the Combined
Portfolio may thus be leveraged in a manor that reflects the addition of an
additional program. Allocation and leverage decisions are made by the Trading
Advisor with the aid of certain research studies, and combined experience, in
an effort to minimize risk and maximize profit opportunities.
Alpha Program The Alpha Program is a technical and systematic trading program
designed to provide broadly diversified, low correlation returns from a
trading style considerably different than that which is typical of the
managed futures industry. Portfolio composition includes a broad and diverse
group of domestic and international futures and currency markets. Nearly 65%
of market exposure is derived from international stock, bond and currency
markets. The remaining 35% includes various commodity markets. Alpha
positions itself to take advantage of significant longer term price moves,
often before it has become clear to market participants that such a movement
in price is underway. The program employs a series of proprietary algorithms
that highlight trading opportunities that may be with, or against, the
current trend. The result is a strategy with the ability to trade in varying
market conditions, multiple time frames, and in any liquid market. The
benefits are obvious. There is the potential for more consistent, low
correlation returns and the opportunity to manage larger pools of assets due
to the offbeat nature of trade selection, entry, and exit. History has shown
that managers of non-correlated futures portfolios are forced to trade the
very short-term. This fact typically limits asset growth significantly. The
Alpha Program, as it is applied here, generally trades the longer term time
frame. As a result, low correlations and more consistent returns are
possible. This program is offered only as a component of the Combined
Portfolio.
Pattern Recognition Program The Pattern Recognition Program is a unique,
systematic program that trades the world's 35 most liquid futures markets
while generating results that are designed to have little correlation with
other investment styles. Nearly 65% of market exposure is derived from
international stock, bond and currency markets. The remaining 35% includes
various commodity markets. The trading strategy is based upon the assumption
that markets exhibit a degree of repetitive price action that can be
identified throughout history. Factors responsible for such repetition may
include fundamental factors (economic cycles, interest rates, weather and
seasonality etc.) and human factors (fear, greed and other emotions). The
Trading Manager's experience suggests that all successful traders rely on
some form of pattern recognition, although the information they analyze to
discern repetitive price tendencies may differ. Consider discretionary
traders as an example. Their historical knowledge and experience allow them
to analyze many kinds of information that give clues to future market
direction. They study current fundamental data, economic trends, technical
factors, etc. that collectively form the current pattern of events. This
current pattern of events is evaluated in the context of history in order to
form an opinion of the likely effect on prices. Trend-followers are another
good example of pattern recognizers. They attempt to identify the "trend"
pattern in its beginning and ending stages in order to capture repetitive
profit opportunities in various markets. It is arguable that all successful
traders benefit from repetitive patterns to market price movement. If this
were not true, then it would be difficult to explain how successful traders
continue to be profitable over the long run. The Pattern Recognition Program
analyzes current price patterns in the context of history, emphasizing those
occasions where there is statistical, evidence supporting the probability
that prices will move in a particular direction. The Trading Manager believes
that markets are, in general, very efficient and that price movement is to a
large extent random. These facts do not prevent the identification of
repetitive profit opportunities, however, they merely underscore the
difficulty associated with capturing these opportunities with reasonable
consistency. With a rigorous, probabilistic methodology that identifies
repetitive historical tendencies, the Trading Manager attempts to benefit
from a modest but consistent edge and solid risk control. This program is
offered only as a component of the Combined Portfolio.
Beta Program The Beta Program is a technical and systematic trading program
designed to provide broadly diversified, low correlation returns from a
short-term trading style considerably different than that which is typical of
the managed futures industry. Incorporating a broad and diverse group of
domestic and international futures and currency markets in its trading mix,
nearly 65% of market exposure is derived from international stock, bond, and
currency markets. The remaining 35% includes various commodity markets.
Designed to take advantage of short-term volatility and the more random
nature of short-term price movements, Beta will trade with 9-day average
holding periods. It has been designed to complement the Alpha and Pattern
Recognition programs that currently make up the Combined Portfolio and will
not be offered separately. Correlation between the Beta Program and the other
two Combined components will be approximately 0.1. History has shown that
managers of non-correlated futures portfolios are forced to trade the very
short-term. This fact typically limits asset growth significantly. The Beta
Program is unique in its ability to complement both short and long term
investment styles, while maintaining significant asset capacity.
Electronic Futures Portfolio The Electronic Futures Portfolio is based upon
NuWave Investment Corp.'s fully automated, state-of-the-art trading program.
Focusing only on those futures contracts that exist and trade in a purely
electronic fashion, the portfolio's returns are generated through the
identification of short-term price dislocations. All trading is 100%
automated, allowing a rapid style of trading that would not be possible
without the aid of sophisticated computer programming. While presently
focused on domestic stock index contracts, NuWave expects to broaden trading
in this program to include several worldwide futures contracts with a
particular focus on financial futures.
Atlas Futures Fund, LP Initially to Trade the 2x Program.
ON FEBRUARY 1, 2005, NUWAVE WILL LAUNCH THE "COMBINED FUTURES PORTFOLIO 2X"
PROGRAM. ALL TRADING SIGNALS WILL BE GENERATED BY THE SAME METHOD AND THE
MARKETS TRADED WILL BE THE SAME AS THOSE USED TO ACHIEVE THE RESULTS IN THE
1X PROGRAM. INVESTORS IN THE 2X PROGRAM SHOULD EXPECT AVERAGE MARGIN USAGE
OF 12% OF ASSETS INVESTED WITH PEAK MARGIN USAGE NEAR 20%. ANNUAL
PROFITABILITY, VOLATILITY AND DRAW-DOWNS ARE EXPECTED TO BE TWICE THAT OF THE
ORIGINAL PROGRAM DESCRIBED BELOW. A PURCHASE IN ATLAS DOES NOT INCLUDE A
PURCHASE OF NUWAVE OR ITS PROGRAM.
Performance Record Of Other Programs Sponsored By The General Partner
Within the last ten years, the individual general partner of the partnership,
Michael Pacult, has managed one other commodity pool, which is publicly
offered and currently in operation, Bromwell Financial Fund, LP. The
partnership's corporate general partner, Ashley Capital Management, Inc., has
not managed any other commodity pools. As of August, 2003, Mr. Pacult became
an individual general partner and sole principal of the corporate general
partner of Bromwell. As of December 31, 2004, the total amount of money
raised for Bromwell was $2,361,928 and the total number of investors in
Bromwell was 33. In November, 2003, Mr. Pacult replaced the two trading
advisors for Bromwell because they were unprofitable. As of December, 2004,
the new trading advisor, Fall River Capital, LLC has not been profitable.
The offering of Bromwell is ongoing.
The Futures Commission Merchant
The general partner has selected an unaffiliated futures commission merchant,
Man Financial, Inc, 717 Fifth Avenue, 9th Floor, New York, New York 10022-
8101, (212) 589-6200. It holds, supervises and controls approximately 97% of
our equity, that which is used for trading by the commodity trading advisors.
Man is a registered futures commission merchant, clearing broker, and
commodity pool operator pursuant to the Commodity Exchange Act, as amended,
and is a member of the National Futures Association in such capacities. As
required by law, the general partner will provide notice to you within 21
days of any change in futures commission merchant.
At any given time, the futures commission merchant is involved in numerous
legal actions and administrative proceedings, which in the aggregate, are
not, as of the date of this prospectus, expected to have a material effect
upon its condition, financial or otherwise, or to the services it will render
to the partnership.
The futures commission merchant acts only as a clearing broker for the
partnership and, as such, is paid commissions for executing and clearing
trades. It has not passed upon the adequacy or accuracy of this prospectus.
The futures commission merchant will not act in any supervisory capacity with
respect to the general partner nor participate in the management of the
general partner or the partnership. Therefore, prospective investors should
not rely on the futures commission merchant's agreements to clear trades for
the partnership or for any other reason related to it in deciding whether or
not to purchase interests in the partnership.
The Introducing Broker
The partnership trading account was introduced to Man Financial, Inc as
futures commission merchant by Mt. Kemble Futures LLC, 1099 Mt Kemble Ave,
Morristown NJ 07960, (973) 425-9194. Mt. Kemble is a registered introducing
broker under the Commodity Exchange Act, as amended, and is a member of the
National Futures Association in such capacity. It shares in the round turn
brokerage commission paid by the partnership to the futures commission
merchant for trades entered by Clarke Capital Management, Inc. but does not
participate in the brokerage commissions for trades entered by NuWave.
Federal Income Tax Aspects
Scope Of Tax Presentation
This presentation is based on:
* the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder which were in effect on the date of this
prospectus, and
* the express intent of the general partner to:
* * operate the partnership as authorized and limited by the limited
partnership agreement, and
* * cause us to invest only our equity capital and not to borrow money to
operate the partnership , and
* the belief by the general partner that no less than ninety percent of the
income generated by us will be from interest income and the trade of
commodities.
Any change in the Internal Revenue Code or deviation from the above
intentions of operation could alter this presentation and also have adverse
tax consequences on this partnership and you. For instance, if we were taxed
as a corporation, we would pay tax and you would have to pay a second tax.
In addition, if we were taxed as a corporation, none of the deductions for
expenses would pass through to your tax return.
Any adjustment made to our return by our auditors or the IRS will flow
through to your return and could result in a separate audit of your
individual return. If we or you are audited by the IRS, significant factual
questions may arise which, if challenged by the IRS, might only be resolved
at considerable legal and accounting expense. We will report our income for
tax and book purposes under the accrual method of accounting and our tax year
will be the calendar year. During taxable years in which little or no profit
is generated from trading activities, you may still have interest income
which will be taxed to you as ordinary income.
Subject to the above scope of presentation and assumption, following is the
opinion of The Scott Law Firm, P.A. that summarizes the material Federal
income tax consequences to individual investors in the partnership.
This discussion assumes you are an individual and is not intended as a
substitute for careful planning; particularly, since the income tax
consequences of an investment in the partnership will not be the same for all
taxpayers. Accordingly, you are urged to consult your tax advisors with
specific reference to your tax situation.
No Legal Opinion As To Certain Material Tax Aspects
We will not request a legal opinion in regard to any State income tax issue.
In addition, our tax counsel cannot opine upon:
* any Federal income tax issue that involves a determination by the IRS of
the facts related to our operation, or
* any other matter that may be subject to IRS interpretation or adjustment
upon audit.
For example, commodity trading advisor fees are aggregated with employee
business expenses and other expenses of producing income, and the aggregate
of such expenses is deductible only to the extent such amount exceeds 2% of
the your adjusted gross income. The Federal income tax deductibility of
these expenses depends upon factual determinations related to our operation
by the general partner.
Partnership Tax Status And Net Worth Of The General Partner
The Internal Revenue Code, at Section 7701, provides the criteria used to
identify a corporation which cannot be present if a partnership is to be
taxed as a partnership. A partnership must have two or more of the
following:
* decentralized management
* unlimited liability
* limited transferability of shares, and
* limited continuation of existence.
The limited partnership agreement obligates the general partner to operate
the partnership in a manner which meets this test.
If we were taxed as a corporation:
* we would pay taxes at the corporate rates upon our income and gains
* items of deduction and losses would be deductible only by us and not by
you
* tax credits would be available only to us and not to you, and
* all or a part of any distributions we make to you could be taxable as
dividend income and would not be deductible by us in computing our taxable
income.
This would substantially increase the total amount of taxes paid on your
investment income and potentially limit your expense deductions.
Historically, the right of redemption, similar to your right to redeem your
partnership interests, renders a pool, such as ours, to be deemed a publicly
traded partnership, taxed as a corporation. However, the Revenue Act of 1987
provides an exception. The exception requires 90% or more of our gross
income to be derived from interest and the trade of commodities. Provided
the principal activity of the partnership is buying and selling commodities,
income may include interest, dividends, and income from the trade or holding
of futures, options or forward contracts on commodities. The general partner
intends to limit the principal business activity and sources of income so
that this exception will apply to us. In addition, the general partner has
placed restrictions upon the right of redemption. See The Limited
Partnership Agreement, Redemptions and Exhibit A, Right of Redemption.
No IRS Ruling
We have not applied for a ruling from the Internal Revenue Service regarding
our status as a partnership or with regard to any other tax aspect, nor do we
intend to seek a ruling. In the absence of a ruling, there can be no
assurance that the IRS will not attempt to take a position adverse to the
partnership and the opinions expressed in this prospectus.
Tax Opinion
Subject to the assumption that you are an individual United States resident
taxpayer, in the opinion of The Scott Law Firm, P.A., this prospectus
accurately summarizes all material Federal tax matters and consequences or
identifies those matters that cannot presently be determined. Particularly:
* we will be treated as a partnership for Federal income tax purposes;
* the allocations of profits and losses made when partners redeem their
partnership interests should be upheld for Federal income tax purposes;
* based upon our contemplated trading activities, the IRS should consider us
as conducting a trade or business; and, as a result, the ordinary and
necessary business expenses we incur while conducting our commodity futures
trading business should not be subject to limitation under Section 67 or
Section 68 of the Internal Revenue Code;
* the profit share should be respected as a distributive share of our equity
income allocable to Atlas Futures Fund, Limited Partnership; and
* the contracts we trade, as described in this prospectus, should satisfy
the commodities trading safe harbor as described in section 864(b) of the
Internal Revenue Code.
Such opinion is based on the Internal Revenue Code as of the date of this
Prospectus and a review of the Limited Partnership Agreement, and is
conditioned upon the following representations of facts by the general
partner:
* at all times, we will be operated in accordance with the Delaware Uniform
Limited Partnership Act and the Limited Partnership Agreement attached hereto
as Exhibit A
* for our first two years of operation, the aggregate deductions claimed by
the partners as their distributive shares of our net losses will not exceed
the equity capital invested in the partnership
* no creditor who makes us a loan, including margin accounts, will have or
acquire, as a result of making the loan, any direct or indirect interest in
our capital, profits or property, other than as a secured creditor
* the general partner will at all times actively direct the affairs of the
Partnership
* the general partner:
* * will possess substantial assets, exclusive of its interest in us or
any other limited partnership, which can be reached by our general creditors
within the meaning of Treasury Regulation Section 301.7701 2(d)(2) or
* * will otherwise comply with the Federal tax code with respect to
general partner requirements imposed upon general partners of limited
partnerships
* interests in the partnership:
* * will be transferable or redeemed only upon approval of the general
partner
* * will not be traded on an established securities market, and
* * will not be readily tradable on a secondary market or the substantial
equivalent thereof
* we will not be registered under the Investment Advisor's Act of 1940; and
* over 90% of our earned income will be qualifying income as that term is
defined in the Revenue Act of 1987.
* * No opinion is expressed in regard to the tax treatment of expenses
because that determination depends upon questions of fact to be resolved by
the general partner on our behalf. In addition, commodity trading advisor
fees are aggregated with employee business expenses and other expenses of
producing income, and the aggregate of such expenses is deductible only to
the extent such amount exceeds 2% of your adjusted gross income. It is the
general partner's position that our intended operations will qualify as a
trade or business. If this position is sustained, the brokerage commissions
and performance fees will be deductible as ordinary and necessary business
expenses. Syndication costs to organize the partnership and offering
expenses are subject to limitations upon deduction imposed by the Internal
Revenue Code.
Any change in the representations of the general partner or the operative
facts will prevent us and you from relying upon the tax opinion from The
Scott Law Firm, P.A.
Passive Loss And Unrelated Business Income Taxes Rules
In addition to the imposition of a corporate level tax on publicly traded
partnerships, special rules apply to partnerships in regard to the
application of the passive loss and unrelated business income tax rules. In
Notice 88-75 issued on June 17, 1988, the IRS provided guidance as to
partnership operation. The general partner intends to cause us to comply
with the applicable provisions of these guidelines. In the event our
expenses were deemed not to qualify as deductions from trading profits, your
total taxes would increase while your distributions would remain the same.
Basis Loss Limitation
Generally, the basis of your interest in the partnership for tax purposes is
equal to the cost
* decreased, but not below zero, by your share of any partnership losses and
distributions, and
* increased by your share of any partnership income.
You may not deduct losses in excess of the adjusted basis for your interest
in the partnership at the end of the partnership year in which such losses
occurred. However, you may carry forward any excess to such time, if ever,
as the basis for the interest in the partnership is sufficient to absorb the
loss. Upon the sale or liquidation of your interest in the partnership, you
will recognize a gain or loss for Federal income tax purposes equal to the
difference between the amount you realize in the transaction and the basis
for your interest in the partnership at the time of such sale. For
individuals, capital losses would offset capital gains on a dollar for dollar
basis, with any excess capital losses subject to a $3,000 annual limitation.
Accordingly, it is possible for you to sustain a loss from our operation
which will not be allowed as a deduction for tax purposes or will be limited
to a $3,000 annual limitation.
At-Risk Limitation
If you borrow money to invest in the partnership, there are at risk
limitations that will apply to you. Section 465 of the Internal Revenue Code
provides that the amount of any loss allowable for any year to be included in
your personal tax return is limited to the amount paid for the partnership
interests, or tax basis, of the amount at risk. Losses already claimed may
be subject to recapture if the amount at risk is reduced as a result of:
* cash distributions from the activity
* deduction of losses from the activity
* changes in the status of indebtedness from recourse to non-recourse
* the commencement of a guarantee, or
* other events that affect your risk of loss.
The at risk provisions must be considered should you elect to arrange debt
financing for purchasing a partnership interest.
Income And Losses From Passive Activities
Internal Revenue Code Section 469 limits the deductibility of what are called
passive losses from business activities in which the taxpayer does not
materially participate. Under temporary Treasury regulations,
* the trading of personal property, such as futures contracts, will not be
treated as a passive activity,
* partnership gains allocable to you will not be available to offset passive
losses from sources outside the partnership, and
* partnership losses will not be subject to limitation under the passive
loss rules.
Allocation Of Profits And Losses
The allocation of profits, losses, deductions and credits contained in the
Limited Partnership Agreement will be recognized for tax purposes only if the
allocations have substantial economic effect. While the general partner
believes that the Limited Partnership Agreement either meets the requirements
or satisfies a substitute capital account equivalency test, the Limited
Partnership Agreement does not meet a third requirement, that a partner must
make a capital contribution to the partnership equal to any deficit in its
capital account. Accordingly, under the regulations and the Limited
Partnership Agreement, losses would not be allocable to you in excess of your
capital contribution plus properly allocated profits less any prior
distributions. The general partner intends to allocate income and losses in
accordance with the Limited Partnership Agreement which it believes complies
with applicable Internal Revenue Code Section 704. However, no assurances
can be given that the IRS will not attempt to change any allocation that is
made among partners admitted on different dates, which could adversely affect
the amount of taxable income to one partner as opposed to another partner.
Taxation Of Futures And Forward Transactions
The commodity trading advisors selected to trade for us are expected to trade
primarily, but not exclusively, in Section 1256 Contracts, which is any:
* regulated futures contract
* foreign currency contract
* non-equity option, or
* dealer equity option.
A regulated futures contract is a futures contract:
* if it is traded on or subject to the rules of:
* * a national securities exchange which is registered with the
Securities and Exchange Commission,
* * a domestic board of trade designated as a contract market by the
Commodity Futures Trading Commission or any other board of trade, exchange or
other market designated by the Secretary of Treasury, and
* which is marked-to-market to determine the amount of margin which must be
deposited or may be withdrawn. Marked-to-market means that the position is
taken in the account on day one at that price. Each day the position is
held, it is valued for account purposes at the price of the contract on the
close of that day.
A foreign currency contract is negotiated between banks and accepted for
trade among banks and private investors. The partnership is expected to
purchase or sell these contracts to speculate on the value of foreign
currency as contrasted with the U. S. dollar. These contracts are exempt
from the Commodity Exchange Act and are excluded from marked-to-market
treatment.
A non-equity option means an option which is treated on a qualified board or
exchange and the value of which is not determined directly or indirectly by
reference to any stock, group of stocks, or stock index unless there is in
effect a designation by the Commodity Futures Trading Commission of a
contract market for a contract bond or such group of stocks or stock index.
A dealer equity option means, with respect to an options dealer, only a
listed option which is an equity option, is purchased or granted by such
options dealer in the normal course of his activity of dealing in options,
and is listed on the qualified board or exchange on which such options dealer
is registered.
All Section 1256 contracts will be marked-to-market upon the closing of every
contract, including closing by taking an offsetting position or by making or
taking delivery, by exercise or being exercised, by assignment or being
assigned; or by lapse or otherwise. Also, all open Section 1256 contracts
held by us at our fiscal year-end will be treated as sold for their fair
market value on the last business day of such taxable year. This will result
in all unrealized gains and losses being recognized for Federal income tax
purposes for the taxable year. As a consequence, you may have tax liability
relating to unrealized partnership profits in open positions at year-end.
Sixty percent of any gain or loss from a Section 1256 contract will be
treated as long-term capital gain or loss, and 40% as short-term capital gain
or loss, regardless of the actual holding period of the individual contracts.
The character of a your distributive share of profits or losses of the
partnership from Section 1256 contracts will thus be 60% long-term capital
gain or loss and 40% short-term capital gain or loss. Your distributive
share of such gain or loss for a taxable year will be combined with your
other items of capital gain or loss for such year in computing your Federal
income tax liability. The Internal Revenue Code contains rules designed to
eliminate the tax benefits flowing to high-income taxpayers from the
graduated tax rate schedule and from the personal and dependency exemptions.
The effect of these rules is to tax a portion of a high-income taxpayer's
income at a marginal tax rate of 35%. Most long-term capital gains after May
6, 2003 are subject to a maximum tax rate of 15%. A limited partner, other
than a corporation, estate or trust, may elect to carry-back any net Section
1256 contract losses to each of the three preceding years. The marked-to-
market rules do not apply to interests in personal property of a nature which
are actively traded other than Section 1256 contracts.
Section 988 Foreign Currency Transactions
A Section 988 transaction is defined as the entering or acquiring of any
forward contract, futures contract, option or similar financial instrument if
the amount to be received or to be paid by reason of a transaction is
denominated in a nonfunctional currency or is determined by reference to one
or more nonfunctional currencies. If the Section 988 transaction results in
a gain or loss, it is considered to be a foreign currency gain or loss to the
extent it does not exceed gain or loss realized by reason of changes in
exchange rates.
Capital Gain And Loss Provisions
If short-term capital gains exceed long-term capital losses, the net capital
gain will be taxed at the same rates as ordinary income. Subject to an
annual limitation of $3,000, you may deduct the excess of capital losses over
capital gains against ordinary income. Excess capital losses which are not
used to reduce ordinary income in a particular taxable year may be carried
forward to, and treated as capital losses incurred in, future years.
Business For Profit
Internal Revenue Code Section 183 sets forth the general rule that no
deduction is allowable to an individual for an activity not engaged in for
profit. These are activities other than those constituting a trade or
business or engaged in for the production or collection of income or for the
management, conservation, or maintenance of property held for the production
of income. The determination of whether an activity is engaged in for profit
is based on all facts and circumstances, and no single factor is
determinative. The general partner believes that by employing independent
commodity trading advisors with strong track records of production of
profits, it is more likely than not, that our activity will be considered an
activity engaged for profit.
Self-Employment Income And Tax
Section 1402 of the Internal Revenue Code provides that an individual's net
earnings from self-employment shall not include the distributive share of
income or loss from any trade or business carried on by a partnership of
which he is a limited partner. Therefore, you should not consider that the
ordinary income from the partnership constitutes net earnings from self-
employment for purposes of either the Social Security Act or the Internal
Revenue Code.
Alternative Minimum Tax
The alternative minimum tax for individuals is imposed on certain high income
persons as a method of collection of tax although income may to sheltered or
otherwise not subject to tax. Alternative minimum taxable income consists of
income deemed taxable without regard to availability of deductions or tax
preferences provided by the tax law. Alternative minimum taxable income may
not be offset by certain deductions, including (in certain circumstances)
interest incurred to purchase or carry interests in partnership such as this
partnership. Taxpayers subject to the alternative minimum tax could be
required to make estimated payments. The extent to which the alternative
minimum tax will be imposed or estimated payments required will depend on the
overall tax situation of each limited partner at the end of each taxable year
and, therefore, this question should be referred to your tax advisor.
Interest Related To Tax Exempt Obligations
Section 265(a)(2) of the Internal Revenue Code will disallow any deduction
for interest on indebtedness of a taxpayer incurred or continued to purchase
or carry obligations the interest on which is wholly exempt from tax. The
IRS announced in Revenue Procedure 72-18 that the proscribed purpose will be
deemed to exist with respect to indebtedness incurred to finance a portfolio
investment. The Revenue Procedure further states that a limited partnership
interest will be regarded as a portfolio investment, unless rebutted by other
evidence. Therefore, if you own tax-exempt obligations, the IRS might take
the position that any interest expense incurred by you to purchase or carry
partnership interests should be viewed as incurred by you to continue
carrying tax exempt obligations, and that you should not be allowed to deduct
all or a portion of the interest on any such loans.
Not A Tax Shelter
In the opinion of tax counsel, we do not constitute a tax shelter, as defined
in Internal Revenue Code Section 6111(c), since the general partner intends
to operate the partnership so that the tax shelter ratio will not exceed two-
to-one at the close of any of the first five years. Accordingly, the general
partner has not registered us as a tax shelter with the IRS.
Taxation Of Foreign Partners
An investment in the partnership should not, by itself, cause a foreign
partner to be engaged in a trade or business within the United States. A
foreign person is subject to a 30% withholding tax, unless reduced or
exempted by treaty, on United States source income which is not effectively
connected with the conduct of a United States trade or business. The person
having control over the payment of such income must withhold this tax.
Because we have permitted the trading advisors to trade foreign currency and
other contracts on foreign exchanges or derivative transactions such as
energy or interest rate swaps or forwards, based on current law it is
uncertain whether entering into foreign and derivative transactions may cause
us, and therefore any foreign limited partners, to be treated as engaged in a
trade or business within the United States. However, the Treasury Department
has issued proposed regulations which, if finalized in their current form,
would provide that foreign limited partners should not be deemed to be
engaged in a United States trade or business solely by virtue of an
investment as a limited partner in the partnership even if the partnership
enters into foreign exchange trades of currency and derivative transactions.
These regulations are proposed to be effective for taxable years beginning 30
days after the date final regulations are published in the Federal Register.
We may elect to apply the final regulations retroactively once they are
finalized. The Scott Law Firm, P. A. has not opined on the issues related to
the withholding by us from distributions to foreign investors as the
determination of how the treat this issue will be resolved at the end of each
taxable year or upon receipt of a redemption request and the tax opinion is
limited to tax consequences to United States residents.
Accordingly, we may be required to withhold tax on items of such income that
are included in the distributive share of a foreign partner, whether or not
the income was actually distributed. If we are required to withhold tax on
such income of a foreign partner, the general partner may pay such tax out of
its own funds and then be reimbursed out of the proceeds of any distribution
to or redemption of partnership interests by the foreign partner.
Partnership Entity-Audit Provisions-Penalties
The Internal Revenue Code provides that the tax treatment of items of
partnership income, gain, loss, deduction and credit will be determined at
the partnership level in a single partnership proceeding. The Limited
Partnership Agreement has appointed Ashley Capital Management, Inc. as the
tax matters partner to settle any issue involving any partner with less than
a 1% profits interest unless such a partner, upon notice, properly elects not
to give such authority to the tax matters partner. The tax matters partner
may seek judicial review for any adjustment to partnership income, but there
will be only one such action for judicial review to which all partners will
be bound. The Internal Revenue Code provides that a partner must report a
partnership item consistently with its treatment on the partnership return,
unless the partner specifically identifies the inconsistency or can show that
its treatment of the partnership item on its return is consistent with a
schedule furnished to the partner by the partnership. Failure to comply with
this requirement may result in penalties for underpayment of tax and could
result in an extended statute of limitations. The statute of limitations for
adjustment of tax with respect to partnership items will generally be three
years from the date of filing the partnership return.
Internal Revenue Code Section 6662 imposes a penalty for a substantial
understatement of income tax equal to 20% of the amount of any underpayment
attributable to that understatement. Understatement is defined as meaning
the excess of the correct amount of tax required to be shown on the return
over the amount of tax that is actually shown on the return. A substantial
understatement exists for any taxable year if the amount of the
understatement for the taxable year exceeds the greater of:
* 10% of the correct tax, or
* $5,000, or $10,000, in the case of a corporation other than an S
corporation or a personal holding company.
Employee Benefit, Retirement Plans And IRA's
The Employee Retirement Income Security Act of 1974 governs:
* employee benefit plans, such as:
* * a qualified pension, profit-sharing or stock bonus plan, or
* * a qualified health and welfare plan; and
* individual retirement accounts, commonly called IRAs.
You may not purchase partnership interests with the assets of a plan if we,
the general partner, the selling agent, the introducing broker, the futures
commission merchant, or any of their affiliates, agents or employees:
* has investment discretion over such plan,
* gives investment advice with respect to such plan assets for a fee, or
* is an employer maintaining or contributing to such plan.
Before you invest in us through one of these qualified plans, you should
consult your own legal and financial advisors, and the fiduciary of your plan
should take into account the facts and circumstances of your plan, and
consider applicable fiduciary standards under the above act.
Acceptance of subscriptions on behalf of employee benefit plans is not a
representation by the general partner or any other party that this investment
meets all legal requirements or is appropriate with respect to investments by
any particular plan. The person with investment discretion should consult
the attorney for the plan as to the propriety of an investment in this
partnership.
The Limited Partnership Agreement
The partnership agreement was amended and fully restated on December 23, 2003
and is attached to this prospectus as Exhibit A. Following is an
explanation of the material terms of the Limited Partnership Agreement;
however, you are urged to read the entire agreement. See Exhibit A.
Formation Of The Partnership
Our Certificate of Limited Partnership is dated and was filed on January 12,
1998 pursuant to the Delaware Uniform Limited Partnership Act.
You are not liable for our losses, debts and obligations beyond your
investment amount and your share of any of our undistributed assets, so long
as you do not take part in the management of the business of the partnership
or transact any business for the partnership other than exercise your right
to vote on partnership matters as a limited partner.
According to the Limited Partnership Agreement, this partnership will not
terminate or dissolve upon any limited partner's death, incompetence,
withdrawal, insolvency, bankruptcy, termination, liquidation, dissolution or
other legal incapacity. Also, legal representatives of such limited partner
may redeem their partnership interests, but will not have the right to
withdraw their interest or become a substituted limited partner solely by
reason of such incapacity.
Units of Partnership Interests
The amount of partnership interests you hold will determine your percentage
interest in our net assets. The value of a single unit will be calculated
from time to time by dividing the net assets of the partnership by the number
of outstanding units of partnership interests. The value of your partnership
interest will be determined by multiplying the number of units of partnership
interests you hold by the value of a single unit. Your percentage interest
in the partnership will also be determined by dividing the number of units
you by the total number of units outstanding.
Management Of Partnership Affairs
Only the general partner may manage this partnership. You will not take part
in our business or affairs nor will you have any voice in our management or
operations other than to vote on partnership matters as a limited partner.
The limited partners who collectively hold a majority of the partnership
interests must give written approval of any material change in either the
Limited Partnership Agreement or the partnership structure; provided,
however, without the limited partners' approval, the general partner is
allowed to:
* change the management and incentive fees within the limits prescribed
herein
* add, change and delete trading advisors
* add, change and delete introducing brokers
* add, change and delete futures commission merchants
* add, change and delete selling agents
* redeem and return a limited partner account
* change the commodity contracts traded, or
* change the diversification of our assets among the various types of or in
the positions held in commodity contracts.
To the extent the law permits, such limited partners who hold a majority of
the partnership interests may vote to amend any term in the Limited
Partnership Agreement and, if necessary, the Certificate of Limited
Partnership without the agreement of the general partner. This includes
removing the general partner and electing a new general partner.
The general partner may not make trades on our behalf. Trading must be done
by independent commodity trading advisors selected by the general partner.
General Prohibitions
We may not borrow from or loan money or any other assets to any person;
provided, however, this shall not apply to the incurrence of an obligation to
a futures commission merchant or debt to a partner or any of their affiliates
with respect to:
* the offering of partnership interests for sale
* registration, or
* initiation and maintenance of our trading positions.
We may not permit rebates or give-ups to be received by the general partner
or any of its affiliates. Nor may we permit the general partner or any of
its affiliates to engage in reciprocal business arrangements that would
circumvent the foregoing prohibition. However, an affiliate or the general
partner may provide goods or services, including brokerage, at a competitive
cost to us.
The general partner or its affiliates are not required to advance or loan
funds to the partnership. If the general partner makes any advance or loan
to the partnership, it will not receive interest in excess of its interest
costs, nor will it receive interest in excess of the amounts which would be
charged the partnership by unrelated banks on comparable loans for the same
purpose. The general partner shall not receive points or other financing
charges or fees regardless of the amount.
Additional Offerings
The general partner has sole discretion to:
* end any offering of partnership interests
* register additional partnership interests, and
* make additional public or private offerings of partnership interests.
You will not have any preemptive, preferential or other rights with respect
to the issuance or sale of any additional partnership interests. We have not
limited the amount of capital contributions or the maximum amount of
partnership interests that may be issued, offered or sold.
Partnership Accounting, Reports, And Distributions
You will have a capital account, and its initial balance will be the amount
you paid for your partnership interests. The net assets of this partnership
will be determined monthly, and any change from the previous month will be
passed on to your account in the ratio that your account bears to all
accounts.
The general partner has sole discretion to make distributions from profits or
net assets. On a monthly basis you will receive a report containing:
* the net unit value as of the end of both the current and previous month
* the percentage change in net unit value between the two months
* the amount of distributions during the month
* the aggregate fixed commission in lieu of round-turn brokerage
commissions, other fees, administrative expenses, and reserves for claims and
other extra-ordinary expenses incurred or accrued by us during the month, and
* any other information required by the rules of the Commodity Futures
Trading Commission.
You or your duly authorized representative may inspect our books and records
and any records related to your account, provided:
* you give adequate notice
* you do so at a reasonable time, and
* you make copies at your expense.
Income, Loss and Expense Allocations
At the end of each fiscal year, our capital gain or loss and ordinary income
or loss and expenses will be allocated to units held by all partners. You
are responsible for the proper reporting of these items on your personal
income tax return.
Transfer Of Partnership Interests Only With Consent Of The General Partner
You are admitted to this partnership and are registered on the partnership
records as the owner of the partnership interests you purchase. As a
registered investor in this partnership, you may:
* receive all distributions, allocations of losses and withdrawals, and
reductions of capital contributions, and
* vote on any matters submitted to the limited partners for voting.
You may transfer your partnership interests only with the written consent of
the general partner. The general partner may not approve the transfer if it:
* is requested before six months from the date of purchase
* is not made for all of your partnership interests or, if you are not
assigning all of your partnership interests, you will retain more than five
units of partnership interests
* will violate any applicable laws or governmental rules or regulations,
including without limitation:
* * any applicable Federal or state securities laws, or
* * the Delaware limited partnership laws
* will jeopardize our ability to be taxed as a partnership and not as a
corporation, or
* will affect characterizations or treatment of income or loss.
Termination Of The Partnership
This partnership will terminate:
* at 11:59 p.m. twenty-one years from the date of the Certificate of Limited
Partnership
* by election of the general partner, in its sole discretion, to terminate
and dissolve this partnership
* upon the dissolution, death, resignation, withdrawal, bankruptcy or
insolvency of the general partner, unless the partners, by majority interest,
vote to carry on the business and elect a new general partner
* if it does not pay its annual franchise fee and file its annual report
with the State of Delaware, which will cause it to be dissolved under
Delaware law
* upon any event which makes the continued existence of the partnership
unlawful, or
* upon the majority vote of the partners.
Meetings
We are not required to hold regular meetings, however, partners may call
meetings to vote on certain issues, including:
* amendment of the limited partnership agreement; provided, however, any
amendment which modifies the compensation or distributions to the general
partner or which affects the duties of the general partner requires its
consent;
* removal of the general partner and election of a new general partner;
* cancellation of any contract for services with the general partner,
without penalty, upon 60 days written notice; provided, however, the maximum
period of any contract between the general partner and the partnership is one
year; and, provided further, should any amendment to this partnership
agreement attempt to modify the compensation or distributions to which the
general partner is entitled or which affects the duties of the general
partner, such amendment will become effective only upon the consent of the
general partner;
* the right to approve, prior to sale, the sale or distribution, outside the
ordinary course of business, of all or substantially all of the assets of the
partnership;
* dissolution of the partnership;
* change of any of the partnership's basic investment policies or in the
structure of the partnership.
See Management of Partnership Affairs.
The general partner must receive in person or by certified mail a written
request with a check to cover the cost of sending notice of the meeting to
all partners. One or more partners who collectively own 10% or more of the
outstanding partnership interests must sign the request. The general partner
then has 15 days to call the meeting.
Redemptions
Redemption allows you to receive your share of the net assets of this
partnership. You may not redeem or liquidate any partnership interests until
twelve months after you have been allocated partnerships interests from your
subscription proceeds. The general partner must receive a written request
for redemption no less than ten business days prior to the desired effective
date of redemption. The effective date of redemption must be the last day of
the then current or a future month.
The general partner will try its best to comply with the redemption request
within twenty days following the effective date. However, you should be
aware that the general partner may be unable to timely comply with the
request if there is not enough cash. This may be because the trading
advisors cannot liquidate the positions they have taken or because there are
contingent claims on partnership assets.
If the general partner notifies you in writing, it may declare additional
redemption dates or cause the partnership to redeem fractions of units of
partnership interests.
We will not charge a redemption fee.
Plan For Sale Of Partnership Interests
We are offering and selling the partnership interests issuer direct through
the partnership. All partnership interests will be sold on a best efforts
basis, which means that the partnership will try, but not guarantee, to sell
all the partnership interests. There will be no sales commission.
Although we are offering a maximum of $15,000,000 in partnership interests,
the Limited Partnership Agreement authorizes the general partner to elect to
raise the amount authorized and sell additional partnership interests.
Accordingly, the partnership may sell an unlimited amount of partnership
interests.
Depository Agreement
New partners will be admitted to the partnership on the first business day of
the month following the month in which their subscription documents were
accepted. Until they are admitted to the partnership and assigned
partnership interests, all cash and subscription documents will be held in a
segregated depository account maintained by Star Financial Bank as depository
agent. No funds in the depository account will be available to pay
partnership debts or claims.
The interest earned on your subscription during the period it is held in the
depository account will be deposited in our account, and you will receive a
corresponding amount of additional partnership interests at the current month
end net asset value per partnership interest.
If you are investing in the partnership by transferring funds from an account
at a futures commission merchant, your funds may be invested in the
partnership on the admission date without use of the depository account.
Cash from subscriptions held in the depository account will be invested in
short-term investments that meet applicable regulatory requirements until
delivered to the partnership after the close on the last business day of the
month. These investments will be in United States Treasury Bills, bank
savings accounts, or other comparable interest-bearing instruments and
accounts that are expected to be liquid, substantially low risk investments,
with correspondingly low yields.
There cannot be any assurance that any additional partnership interests will
be sold. The general partner is authorized, in its sole discretion, to
terminate this or any future offering of partnership interests.
Subscription Procedure
To purchase partnership interests, you must:
* complete and execute an acknowledgement of suitability and a subscription
agreement (Exhibit D), and
* deliver the executed subscription documents and check to the partnership.
You should make out the check to "Star Bank for the acct. of Atlas". Your
check will then be sent to the depository agent by noon of the day following
its receipt.
Under no circumstances should you:
* make payment in cash, or
* make any checks payable to the partnership, the general partner or any of
their affiliates or any other party.
Subscription Amounts
You must purchase at least $25,000 in partnership interests; however, the
general partner may reduce this to not less than the regulatory minimum of
$5,000. You may make additional investments above $25,000 in $1,000
increments. However, you may not invest more than 10% of your net worth in
the partnership. If you have not provided collectible funds, whether in the
form of a bad check or draft, or otherwise, any partnership interests
recorded on our books in your favor shall be cancelled.
Revocation and Acceptance of Subscription
Once you have delivered your subscription agreement and sent us your check,
you may revoke your subscription within five business days after you send it
to us. After the lapse of five business days from submission, your
subscription will be irrevocable and, thereafter, you must redeem pursuant to
the terms of the Limited Partnership Agreement. The partnership interests
offered to you are subject to prior sale. The general partner has sole
discretion to reject any subscription, in whole or in part, at anytime prior
to admission of the subscriber as a partner. If your subscription is
accepted, the general partner will send you written confirmation of your
purchase, and you will be admitted as a limited partner on the first business
day of the following month.
Net Worth Tests
To purchase partnership interests, you must have at least:
* a minimum net worth of $150,000, exclusive of your home, home furnishings
and automobiles, or
* a minimum annual gross income of $45,000 and a minimum net worth of
$45,000, exclusive of your home, home furnishings and automobiles.
You may have to satisfy higher amounts if you live in certain states.
In the case of sales to fiduciary accounts, the beneficiary, the fiduciary
account, or the donor or grantor who supplies the funds to purchase the
partnership interests, if the donor or grantor is the fiduciary, may meet the
net worth and income standards.
Investor Warranties
When you execute and deliver your Subscription Agreement and Power of
Attorney, you are making representations and warranties to the general
partner, the introducing broker and the futures commission merchant.
Specifically:
(a) you are of legal age to execute the Subscription Agreement and Power of
Attorney and are legally competent to do so;
(b) you acknowledge that you have received the prospectus, including the
Limited Partnership Agreement, prior to subscribing for partnership
interests;
(c) all information you have given to the general partner or that is set
forth in the Subscription Agreement and Power of Attorney submitted by you is
correct and complete as of the date of the agreement and if there are any
changes in such information prior to acceptance of your subscription, you
will immediately furnish the revised or corrected information to the general
partner;
(d) unless (e) or (f) below apply to you, your subscription is made with your
own funds for your own account and not as trustee, custodian or nominee for
another.
(e) the subscription, if made as custodian for a minor, is a gift you have
made to the minor and is not made with the minor's funds; or, if not a gift,
the representations as to net worth and annual income apply only to such
minor.
(f) if you are subscribing in a representative capacity:
* you have full power and authority to purchase the partnership interests
and enter and be bound by the Subscription Agreement and Power of Attorney on
behalf of the entity for which you are purchasing the partnership interests,
and
* such entity has full right and power to purchase the partnership
interests and enter and be bound by the Subscription Agreement and Power of
Attorney and become a limited partner pursuant to the Limited Partnership
Agreement attached as Exhibit A.
The general partner, the introducing broker and the futures commission
merchant may rely upon any of the above representations and warranties as a
defense to any claim made against it.
Legal Matters
Litigation And Claims
Within the past 5 years as of the date of this prospectus, there have been no
material administrative, civil or criminal actions against either general
partner, the commodity trading advisors, the futures commission merchant, the
introducing broker, or any principal or affiliate of any of them. This
includes any actions pending, on appeal, concluded, threatened, or otherwise
known to them.
Legal Opinion
The Scott Law Firm, P.A., 940 Northeast 79th Street, Suite A, Miami, FL
33138, wscott@wscottlaw.com serves as special counsel to us and the general
partner with respect to:
* the offering of partnership interests
* the preparation of this prospectus
* the legality of the partnership interests offered, and
* the classification of the partnership as a partnership for tax purposes.
From time to time, the firm will also advise the general partner and us in
regard to the maintenance of our tax status, the legality of any subsequent
offers, and the legality of any transfers by partners.
The general partner has granted the firm the right to employ other law firms
to help in matters that relate to the sale of partnership interests or our
operation.
The Scott Law Firm, P.A. will not give you or any other partner legal advice.
You should seek investment, legal, and tax advice from your own legal counsel
and other professionals of your choice.
Experts
We rely on various experts to perform services for us.
Frank L. Sassetti, & Co., 6611 West North Avenue, Oak Park, IL 60302 is our
accounting and auditing expert, and is responsible for auditing the books and
records of both us and Ashley Capital Management, Inc. It has also prepared
the audited financial statements in this prospectus and prepares our tax
returns.
Michael J. Liccar & Co., CPA, 53 West Jackson Blvd, Suite 1250, Chicago IL
60604 is another accounting expert who:
* establishes our books and records
* handles the journal entries
* prepares the monthly and annual financial statements and statements of
account, and
* prepares our K-1s.
The corporate general partner serves as our tax partner. The general partner
is required by the rules and regulations of the Commodity Futures Trading
Commission to send you unaudited monthly and annual account statements, and
financial statements audited by an independent certified public accountant.
We will send you the unaudited monthly statements as soon as practicable
after the end of each month, and will send you the audited annual financial
statements within 90 days after the end of each calendar year.
Additional Information
By our general partner, we have filed a registration statement on Form S-1
with the Securities and Exchange Commission under the Securities Act of 1933
to allow us to issue and sell our limited partnership interests.
This prospectus does not contain all of the information in the Form S-1
filing, for example, the Selling Agreement and the futures commission
merchant Customer Agreements which established the partnership accounts. The
descriptions in this prospectus of these exhibits are summaries. For further
information regarding the partnership and the partnership interests offered,
you may inspect and copy our complete filings, including this prospectus, the
exhibits and periodic reports, at the public reference facilities of the
Securities and Exchange Commission at 450 Fifth Street, NW, Washington, D.C.
20549
Also, the Securities and Exchange Commission offices will send you copies of
all or any part of this filing by mail, upon payment of the prescribed rates.
This prospectus and other electronic filings made through the Electronic Data
Gathering, Analysis and Retrieval (EDGAR) system are publicly available
through the Commission's Web site, http://www.sec.gov.
In addition, our books and records will be maintained for six years at the
office of the corporate general partner Ashley Capital Management, Inc., 5914
N. 300 West, P.O. Box C, Fremont, IN 46737, (260) 833-1306, with a duplicate
set maintained at the offices of Michael J. Liccar & Co., CPA, 53 West
Jackson Blvd, Suite 1250, Chicago IL 60604, (312) 922-6600.
You are invited to review any materials available to the general partner
relating to:
* this partnership
* our operations
* this offering
* the commodity experience and trading history of:
* * the commodity trading advisors
* * the general partner
* * the introducing broker
* * the futures commission merchant, and
* * their respective officers, directors and affiliates
* the Advisory Agreements between us and the commodity trading advisors
* the Customer Agreements between us and our Commodity Brokers
* the commodity trading advisors' disclosure document
* the forms filed with the National Futures Association for any registered
entity or person related to this partnership, and
* any other matters relating to the laws applicable to this offering or this
partnership.
The officer and staff of the general partner will answer all reasonable
inquiries you may have. All the above materials will be made available at
any mutually convenient location at any reasonable hour after reasonable
prior notice.
The general partner will allow you to obtain any additional information
necessary to verify any representations or information in this prospectus and
its exhibits, assuming the general partner possess such information or can
acquire it with reasonable effort and expense. However, your review is
limited by the proprietary and confidential nature of the commodity trading
advisors' trading systems and by the confidentiality of personal information
relating to other investors.
[The balance of this page has been intentionally left blank.]
Part II
Statement of Additional Information
Atlas Futures Fund, Limited Partnership
This Statement of Additional Information is the second part of a two-part
document and should be read in conjunction with Part I of Atlas Futures
Fund's disclosure document, both of which are combined in this single
prospectus.
Table of Contents
Financial Statements
A. Atlas Futures Fund, Limited Partnership
Audited Financial Statements - years ended December 31, 2003, 2002, 2001
Financial Statements - Nine Months Ended September 30, 2004
and 2003 (Unaudited-Reviewed)
B. Ashley Capital Management, Inc.
Audited Financial Statements - December 31, 2003, 2002 and 2001
Appendix I - Commodity Terms and Definitions; State Regulatory Glossary
Appendix II - Privacy Statement
Exhibit A - Limited Partnership Agreement
Exhibit B - Request For Redemption
Exhibit C - Suitability Information
Exhibit D - Subscription Agreement and Power Of Attorney
Exhibit E - Depository Agreement
Exhibit F - Investment Advisory Contract -
Clarke Capital Management, Inc.
Exhibit G - Investment Advisory Contract - NuWave Investment Corp.
******************************************************************************
INDEX TO FINANCIAL STATEMENTS
Page
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
Independent Auditors' Report F-2
Financial Statements
Balance Sheets F-3
Schedules of Investments F-4 - F-8
Statements of Operations F-9
Statements of Partners' Equity F-10
Statements of Cash Flows F-11
Notes to Financial Statements F-12 - F-18
QUARTERS ENDED SEPTEMBER 30, 2004 AND 2003
Accountants' Review Report F-19
Financial Statements
Balance Sheets as of September 30, 2004 and
December 31, 2003 F-20
Schedules of Investments as of September 30, 2004
and December 31, 2003 F-21 - F-24
Statements of Operations for the Three and Nine Months
Ended September 30, 2004 and 2003 F-25
Statements of Partners' Equity for the Nine Months
Ended September 30, 2004 and 2003 F-26
Statements of Cash Flows for the Nine Months Ended
September 30, 2004 and 2003 F-27
Notes to Financial Statements F-28 - F-34
ASHLEY CAPITAL MANAGEMENT, INC.
YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
Independent Auditors' Report F-35
Financial Statements
Balance Sheets F-36
Statements of Income and Retained Earnings F-37
Statements of Cash Flows F-38
Notes to Financial Statements F-39 - F-40
F-1
Frank L. Sassetti & Co.
Certified Public Accountants
To The Partners
Atlas Futures Fund, Limited Partnership
Dover, Kent County, Delaware
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying balance
sheets, including the schedules of investments, of ATLAS FUTURES FUND,
LIMITED PARTNERSHIP as of December 31, 2003 and 2002, and the related
statements of operations, partners' equity and cash flows for each of the
three years in the period ended December 31, 2003. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with
auditing standards generally accepted in the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements
referred to above present fairly, in all material respects, the financial
position of ATLAS FUTURES FUND, LIMITED PARTNERSHIP as of December 31, 2003
and 2002, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2003, in conformity with
accounting principles generally accepted in the United States.
/s/ Frank L. Sassetti & Co.
February 20, 2004
Oak Park, Illinois
6611 W. North Avenue * Oak Park, Illinois 60302
* Phone (708) 386-1433 * Fax (708) 386-0139
F-2
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
BALANCE SHEETS
DECEMBER 31, 2003 AND 2002
ASSETS
2003 2002
Investments
Equity in Commodity Futures Trading Accounts -
Cash and cash equivalents $6,930,523 $4,976,223
Net unrealized gain on open commodity futures
contracts 694,260 1,183,957
7,624,783 6,160,180
Cash 37,775 111,876
Accrued interest receivable 6,936 6,860
Prepaid trading commissions 252
Prepaid incentive fees 94,433
$7,763,927 $6,279,168
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Partner redemptions payable $ 46,267 $ 72,578
Accrued trading commissions payable 487
Front end load payable 376
Other accrued liabilities 27,000 6,500
Total Liabilities 74,130 79,078
PARTNERS' EQUITY
Limited partners - (4,393.05 and 4,727.47 units) 7,689,797 6,200,090
General partner - (0 units)
Total Partners' Equity 7,689,797 6,200,090
$7,763,927 $6,279,168
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
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 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-4
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2003
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 Dollar 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-5
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2002
Contracts Value Percent
United States Commodity Futures Positions, Held Long:
42 March '03 US Treasury Bond $ 17,719 0.29 %
42 March '03 10-Year Treasury Notes 32,813 0.53
41 March '03 5-Year Treasury Notes 54,484 0.88
83 March '03 2-Year Treasury Notes 79,281 1.29
21 March '03 New York Sugar 1,176 0.02
21 February '03 New York Unleaded Gas (36,427) (0.59)
21 February '03 New York #2 Heating Oil (45,335) (0.74)
21 March '03 New York Cotton (4,350) (0.07)
21 March '03 New York Silver 5,360 0.09
41 February '03 New York Gold 75,420 1.22
41 March '03 British Pound 48,800 0.79
102 March '03 Swiss Franc 366,275 5.95
81 March '03 Euro Foreign Exchange 359,588 5.84
106 March '03 Eurodollar 16,788 0.27
21 January '03 Gas Oil (17,325) (0.28)
21 February '03 Brent Crude 22,680 0.37
Total United States Commodity Futures Positions 976,947 15.86
Australian Commodity Futures Positions, Held Long:
21 March '03 90 Day Australian Bill 857 0.01
42 March '03 3-Year Australian Treasury Bond 7,027 0.12
Total Australian Commodity Futures Positions 7,884 0.13
European Commodity Futures Positions, Held Long:
40 March '03 Euribor 12,838 0.21
21 March '03 2-Year German Euro Schatz 4,622 0.08
20 March '03 10-Year German Euro Bund 34,794 0.56
Total European Commodity Futures Positions 52,254 0.85
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, 2002
Contracts Value Percent
British Commodity Futures Positions, Held Long:
61 June '03 Short Sterling $ 12,933 0.21 %
41 March '03 Long Gilt 42,788 0.69
Total British Commodity Futures Positions 55,721 0.90
Japanese Commodity Futures Positions, Held Long:
21 April '03 Rubber 2,658 0.04
22 October '03 Gold 20,053 0.33
Total Japanese Commodity Futures Positions 22,711 0.37
Total Commodity Futures Positions Held Long 1,115,517 18.11
United States Commodities Futures Positions, Sold Short:
20 March '03 New York Coffee 64,125 1.04
21 March '03 Mexican Peso 4,938 0.08
Total United States Commodity Futures Positions 69,063 1.12
Japanese Commodity Futures Positions, Sold Short:
21 March '03 Euro Yen (623) (0.01)
Total Commodity Futures Positions Sold Short 68,440 1.11
Net Commodity Futures Positions 1,183,957 19.22
The accompanying notes are an integral part
of the financial statements.
F-7
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2002
Value Percent
Cash and Cash Equivalents in Trading Accounts:
Feb '03 United States Treasury Bills
($3,200,000 Face Value) $3,190,667 51.80 %
United States Markets 1,163,497 18.89
Canadian Markets (34,209) (0.55)
Eurodollar Markets 676,612 10.98
British Pound Markets 84,526 1.37
Japanese Yen Markets (35,561) (0.58)
Australian Dollar Markets (69,309) (1.13)
Total Cash and Cash Equivalents in Trading Accounts 4,976,223 28.98
Total Investments $6,160,180 100.00 %
The accompanying notes are an integral part
of the financial statements.
F-8
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
2003 2002 2001
INVESTMENT AND OTHER INCOME
Interest income $ 66,435 $ 82,435 $ 182,304
Redemption penalty 15,200 4,761 4,947
Total Income 81,635 87,196 187,251
EXPENSES
Commissions 630,488 439,971 298,949
Management fees 142,919 111,992 110,751
Continuing service fee 22,466
Incentive fees 502,667 269,367
Professional accounting and legal fees 82,023 66,669 58,991
Other operating and administrative expenses 15,155 1,245 2,824
Total Expenses 1,395,718 889,244 471,515
Net Investment Loss (1,314,083) (802,048) (284,264)
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Realized gain from trading in futures 3,715,385 202,558 1,220,627
Realized gain (loss) on exchange rate
fluctuation 72,978 82,092 (5,679)
Changes in unrealized gains (losses) on
open commodity open futures contracts (489,698) 1,061,861 (1,253,256)
Total Realized and Unrealized Gain
(Loss) on Investments 3,298,665 1,346,511 (38,308)
NET INCOME (LOSS) $1,984,582 $ 544,463 $ (322,572)
NET INCOME (LOSS)-
Limited partnership unit $ 447.20 $ 112.92 $ (68.51)
General partnership unit $ $
$
The accompanying notes are an integral part
of the financial statements.
F-9
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
LIMITED PARTNERS GENERAL PARTNERS TOTAL PARTNERS'
EQUITY
Amount Units Amount Units Amount Units
Balance -
January 1, 2001 $5,557,782 4,434.40 $ 5,557,782 4,434.40
Subscriptions of
1233.67 units 1,466,150 1,233.67 1,466,150 1,233.67
Syndication costs
paid (24,501) (24,501)
Redemptions of
504.75 units (574,401) (504.75) (574,401) (504.75)
Net loss (322,572) (322,572)
Balance -
December 31, 2001 6,102,458 5,163.32 6,102,458 5,163.32
Subscriptions of
533.74 units 631,659 533.74 631,659 533.74
Syndication costs paid (5,250) (5,250)
Redemptions of
969.59 units (1,073,240) (969.59) (1,073,240) (969.59)
Net income 544,463 544,463
Balance -
December 31, 2002 6,200,090 4,727.47 6,200,090 4,727.47
Subscriptions of
649.88 units 1,114,348 649.88 1,114,348 649.88
Syndication costs paid (57,453) (57,453)
Redemptions of
984.30 units (1,551,770) (984.30) (1,551,770) (984.30)
Net income 1,984,582 1,984,582
Balance -
December 31, 2003 $7,689,797 4,393.05 $ $7,689,797 4,393.05
December 31, December 31, December 31,
2003 2002 2001
Value per unit $1,750.45 $1,311.50 $1,181.89
Total partnership units 4,393.05 4,727.47 5,163.32
The accompanying notes are an integral part
of the financial statements.
F-10
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
2003 2002 2001
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $1,984,582 $544,463 $(322,572)
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities -
Changes in operating assets
and liabilities -
Investments 489,697 (1,061,861) 1,253,256
Accrued interest receivable (76) 3,369 26,172
Accrued commissions payable 487 (13,849) (12,288)
Accrued management and incentive fees (10,074) (316,003)
Prepaid incentive fees (94,433)
Other payables and accruals 21,128 (2,042) 4,349
Net Cash Provided By (Used In)
Operating Activities 2,401,385 (539,994) 632,914
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of units, net
of sales commissions 1,114,348 756,644 1,483,668
Syndication costs (57,453) (5,250) (24,501)
Partner redemptions (1,578,081) (1,000,662) (601,992)
Net Cash Provided By (Used In)
Financing Activities (521,186) (249,268) 857,175
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 1,880,199 (789,262) 1,490,089
CASH AND CASH EQUIVALENTS
Beginning of period 5,088,099 5,877,361 4,387,272
End of period $6,968,298 $5,088,099 $5,877,361
End of period cash and cash
equivalents consists of:
Cash and cash equivalents in broker
trading accounts $6,930,523 $4,976,223 $5,845,137
Cash 37,775 111,876 32,224
$6,968,298 $5,088,099 $5,877,361
The accompanying notes are an integral part
of the financial statements.
F-11
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003, 2002 AND 2001
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.
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.
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.
F-12
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003, 2002 AND 2001
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
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
2002 and 2001 financial statements to conform to the 2003 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 years ended December 31, 2003, 2002 and
2001.
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-13
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003, 2002 AND 2001
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
The Fund is 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-14
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003, 2002 AND 2001
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
commisssion 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.
The Corporate General Partner reserves the right to change the fee
structure at his sole-discretion.
5. RELATED PARTY TRANSACTIONS
The Fund paid the following expenses to related parties during the
years ended December 31, 2003, 2002 and 2001:
2003 2002 2001
Commission/Management Fee - Ashley $210,478 $111,992 $110,751
Commission - Futures $396,020 $439,971 $298,949
Continuing Service Fee - Futures $ 22,466 $ - $ -
F-15
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003, 2002 AND 2001
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 December 31, 2003 and 2002 was
$1,956,823 and $1,785,556, respectively, which equals approximately 25% and
29% of Net Asset Value, respectively. The Fund also purchases United States
Treasury bills as a form of margin. At December 31, 2003 and 2002,
$4,973,700 and $3,190,667, respectively, was invested in U.S. Treasury Bills,
which approximates 65% and 51% of Net Asset Value, respectively.
F-16
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003, 2002 AND 2001
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 $38,468,967 and $131,740,781 on long positions at December
31, 2003 and 2002, 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 December
31, 2003, and 2002 were $694,260 and $1,183,957, respectively.
Open contracts generally mature within three months and as of December
31, 2003, the latest maturity date for open futures contracts is November,
2004. 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-17
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003, 2002 AND 2001
7. FINANCIAL HIGHLIGHTS
Year to Date
2003 2002 2001 2000 1999 (6)
Performance per Unit (5)
Net unit value, beginning
of period $1,311.50 $1,181.89 $1,253.33 $ 954.37 $ 950.00
Net realized and unrealized
gains/losses on commodity
transactions 735.70 298.13 (12.68) 447.29 22.28
Investment and other income 18.43 18.32 38.70 47.33 4.87
Expenses (1) (315.18) (186.84) (97.46) (195.66) (22.78)
Net increase (decrease)
for the period 438.95 129.61 (71.44) 298.96 4.37
Net unit value, end
of period $1,750.45 $1,311.50 $1,181.89 $1,253.33 $954.37
Net assets, end of
period (000) $ 7,690 $ 6,200 $ 6,102 $ 5,558 $ 1,709
Total return (3) 33.47% 10.97% (5.97)% 31.33% (4.57)%
Ratio to average net
assets (4)
Investment and other
income 1.10% 1.48% 3.36% 4.37% 2.05%
Expenses (2) (10.33)% (7.62)% (3.09)% (13.71)% (5.14)%
(1) Includes brokerage commissions
(2) Excludes brokerage commissions
(3) Not annualized for periods less than one year
(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.
(6) Period from October 15,1999 (inception of trading) to December 31, 1999.
Beginning net unit value based on new subscriptions during period, net of
syndication costs.
F-18
******************************************************************************
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
F-19
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-20
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-21
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-22
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-23
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-24
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-25
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-26
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-27
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-28
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-29
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-30
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-31
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-32
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-33
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-34
******************************************************************************
Frank L. Sassetti & Co.
Certified Public Accountants
To The Shareholders
Ashley Capital Management, Inc.
Dover, Kent County, Delaware
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying balance sheets of
ASHLEY CAPITAL MANAGEMENT, INC. (an S Corporation) as of December 31, 2003
and 2002, and the related statements of income and retained earnings and cash
flows for the three years ended December 31, 2003, 2002 and 2001. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with auditing
standards generally accepted in the United States. Those standards require
that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the financial position of
ASHLEY CAPITAL MANAGEMENT, INC. as of December 31, 2003 and 2002, and the
results of its operations and its cash flows for the three years ended
December 31, 2003, 2002 and 2001, in conformity with accounting principles
generally accepted in the United States.
/s/ Frank L. Sassetti & Co.
March 6, 2004
Oak Park, Illinois
Purchases of units in the partnership will not acquire
or otherwise have any interest in this Company.
F-35
ASHLEY CAPITAL MANAGEMENT, INC.
BALANCE SHEETS
DECEMBER 31, 2003 AND 2002
ASSETS
2003 2002
CURRENT ASSETS
Cash $1,722 $10,208
Due from Atlas Futures Fund (Note 2)
Total Current Assets 1,722 10,208
$1,722 $10,208
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES (NOTE 3) $ - $ -
STOCKHOLDER'S EQUITY
Capital stock (common 1,500 shares
authorized, no par value; 1,000 issued
and outstanding) 1,000 1,000
Retained earnings 722 9,208
Total Stockholder's
Equity 1,722 10,208
$1,722 $10,208
The accompanying notes are an integral part
of the financial statements.
F-36
ASHLEY CAPITAL MANAGEMENT, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
2003 2002 2001
REVENUES $210,478 $111,992 $110,530
OPERATING EXPENSES 24,964 679 491
INCOME FROM OPERATIONS 185,514 111,313 110,039
OTHER INCOME
Interest income 24 163
NET INCOME 185,514 111,337 110,202
RETAINED EARNINGS
Beginning of period 9,208 18,391 10,689
Less: Dividends paid (194,000) (120,520) (102,500)
End of period $ 722 $ 9,208 $ 18,391
The accompanying notes are an integral part
of the financial statements.
F-37
ASHLEY CAPITAL MANAGEMENT, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
2003 2002 2001
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $185,514 $111,337 $110,202
Adjustments to reconcile net income to net
cash provided by operating activities -
Changes in operating assets and
liabilities -
Increase (decrease) in accrued
interest payable (720) 480
Due from Atlas Futures Fund 10,074 (2,402)
Net Cash Provided by
Operating Activities 185,514 120,691 108,280
CASH FLOWS FROM INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Retirement of long-term debt (4,000)
Payment of dividend distributions (194,000) (120,520) (102,500)
Net Cash Used in
Financing Activities (194,000) (124,520) (102,500)
NET INCREASE (DECREASE) IN CASH (8,486) (3,829) 5,780
CASH -
Beginning of period 10,208 14,037 8,257
End of period $ 1,722 $ 10,208 $ 14,037
The accompanying notes are an integral part
of the financial statements.
F-38
ASHLEY CAPITAL MANAGEMENT, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003, 2002 AND 2001
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Ashley Capital Management, Inc. (the Company) was formed on October
15, 1996 under the laws of the State of Delaware to act as general partner
and commodity pool operator of the Atlas Futures Fund, Limited Partnership
(the Fund). It became registered as a commodity pool operator of the
National Futures Association on January 15, 1998.
The responsibilities of the General Partner, in addition to the
selection of trading advisors and other 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 the 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.
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 amounts
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.
Statement of Cash Flows - The Company considers all short-term
investments with an original maturity of three months or less to be cash
equivalents. The Company has no cash equivalents. Net cash provided by
operating activities includes cash payments for interest of $0, $1,200 and $0
for the years ended December 31, 2003, 2002 and 2001, respectively . There
were no cash payments for income taxes for the years ended December 31, 2003,
2002 and 2001.
Income Tax Status - For federal income tax purposes, the Company
elected S-Corporation status and therefore pays no federal income taxes,
since income or losses are passed through to the respective shareholders.
2. CORPORATE AFFILIATION
The Company's sole shareholder is also a joint owner of Futures
Investment Company. In addition, the Company is a general partner of Atlas
Futures Fund, a limited partnership.
Purchases of units in the partnership will not acquire
or otherwise have any interest in this Company.
F-39
ASHLEY CAPITAL MANAGEMENT, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003, 2002 AND 2001
2. CORPORATE AFFILIATION - CONTINUED
As general partner, the Company receives management fees from the
limited partnership.
3. INVESTMENTS
During 1998 and 1999, the Company purchased its interest in the Atlas
Futures Fund, Limited Partnership with an initial investment of $1,000 and an
additional $25,000 investment as one of the Fund's general partners. The
investment was being accounted for under the equity method and reported
profits of $2,341 during the year ended December 31, 2000. The Company
redeemed its investment in 2000. The Company is liable for the debts of the
partnership including, but not limited to, any losses from trading in the
pool account not covered by equity on deposit.
4. LONG-TERM DEBT
The Company and its sole shareholder signed a subordinated loan
agreement on October 24, 1996, whereby the Company can borrow up to $500,000
from the shareholder. The loan agreement bears interest at the rate of 12%
per annum and is payable on February 1, 2019; however, under certain
circumstances the borrower may repay the loan earlier. On April 16, 1998,
the Company borrowed $4,000 against this commitment, which will mature
February 1, 2019, in part to fund the expenses of the Company and to advance
proceeds to and invest into the limited partnership. An additional $25,000
was borrowed during 1999. All borrowings have been repaid.
5. GUARANTEES
The Fund pays both the Company and the Futures Commission Merchant
(FCM) a commission. The Company has guaranteed the commission to the FCM and
will pay it if the Fund defaults payment.
Purchases of units in the partnership will not acquire
or otherwise have any interest in this Company.
F-40
*******************************************************************************
APPENDIX I
Commodity Terms And Definitions
Identification of the parties and knowledge of various terms and concepts
relating to trading in futures and forward contracts and this offering are
necessary for a potential investor to identify the risks of investment in the
Fund.
1256 Contract. See Taxation - Section 1256 Contract.
Additional Sellers. See definition of Selling Agent.
Associated Persons. The persons registered pursuant to the Commodity
Exchange Act with the futures commission merchant, who are eligible to
service the partnership or the partnership accounts.
Average Price System. The method approved by the Commodity Futures Trading
Commission to permit the commodity trading advisor to place positions sold or
purchased in a block to the numerous accounts managed by the advisor. See
The Commodity Trading Advisor in the main body of the prospectus.
Best Efforts. The term to describe that the party will try to accomplish a
result without any contractual obligation to achieve that result.
Broker. See definitions of Futures Commission Merchant and Introducing
Broker.
Capital means cash invested in the partnership by any partner and placed at
risk for the business of the partnership.
Commodity Futures trading Commission. Commodity Futures Trading Commission,
2033 K Street, Washington, D.C., 20581. An independent regulatory commission
of the United States government empowered to regulate commodity futures
transactions and the registration of the general partner, futures commission
merchant, trading advisor and commodity exchanges pursuant to the U.S.
Commodity Exchange Act.
Commodity. Goods, wares, merchandise, produce, currencies, and stock indices
and in general everything that is bought and sold in commerce. Traded
commodities on U. S. Exchanges are sold according to uniform established
grade standards, in convenient predetermined lots and quantities such as
bushels, pounds or bales, are fungible and, with a few exceptions, are
storable over periods of time.
Commodity Broker. See definitions of Futures Commission Merchant and
Introducing Broker.
Commodity Exchange Act. The statute providing the regulatory scheme for
trading in commodity futures and options contracts and the commodity pool
operators, futures commission merchants, and trading advisors in the United
States under the administration of the Commodity Futures Trading Commission.
Commodity Pool Operator. Ashley Capital Management, Inc., 5914 N. 300 West,
P. O. Box C, Fremont, IN 46737, (260) 833-1306; and, Mr. Michael P. Pacult,
5914 N. 300 West, P.O. Box C, Fremont, IN 46737. A person who raises capital
through the sale of interests in an investment trust, partnership,
corporation, syndicate or similar form of enterprise, that uses that capital
to invest either entirely or partially in futures contracts.
Commodity Trading Advisor. A person or entity which renders advice about
commodities or about the trading of commodities, as part of a regular
business, for profit. Particularly, those who will be responsible for the
analysis and placement of trades for the partnership.
Daily Price Limit. The maximum permitted movement in a single direction
(imposed by an exchange and approved by the CFTC) in the price of a commodity
futures contract for a given commodity that can occur on a commodity exchange
on a given day in relation to the previous day's settlement price, which is
subject to change, from time to time, by the exchange (with CFTC approval).
Depository Agent and Depository Account. An account maintained by the
corporate general partner that will hold all the subscription documents and
proceeds until such time as either the subscription is accepted or rejected
or the offering is terminated.
Exchange for Physicals. A practice whereby positions in futures contracts
may be initiated or liquidated by first executing the transaction in the
appropriate cash market and then arbitraging the position into the futures
market (simultaneously buying the cash position and selling the futures
position, or vice versa).
Form K-1. The section of the Federal Income Tax Return filed by the
partnership which identifies the amount of investment in the partnership, the
gains and losses for the tax year, and the amount of such gains and losses
reportable by a partner on the partner's tax return.
Fully-Committed Position. Each commodity trading advisor has an objective
percentage of equity to be placed at risk. In addition, the CFTC places
limits upon the number of positions a single commodity trading advisor may
have in commodities. When either the objective percentage of equity is
placed at risk or the commodity trading advisor reaches the limit in number
of positions, the account or accounts have a fully-committed position.
Futures Commission Merchant. The person that solicits or accepts orders for
the purchase or sale of any commodity for future delivery subject to the
rules of any contract market and in connection with such solicitation or
acceptance of orders, accepts money or other assets to margin, guarantee, or
secure any trades or contracts that result from such orders for a commission.
The corporate general partner is responsible for the negotiation and payment
of the commission to the futures commission merchant.
Futures Contract. A contract providing for (1) the delivery or receipt at a
future date of a specified amount and grade of a traded Commodity at a
specified price and delivery point, or (2) cash settlement of the change in
the value of the contract. The terms of these contracts are standardized for
each commodity traded on each exchange and vary only with respect to price
and delivery months. A futures contract should be distinguished from the
actual physical commodity, which is termed a cash commodity. Trading in
futures contracts involves trading in contracts for future delivery of
commodities and not the buying and selling of particular physical lots of
commodities. A contract to buy or sell may be satisfied either by making or
taking delivery of the commodity and payment or acceptance of the entire
purchase price therefore, or by offsetting the contractual obligation with a
countervailing contract on the same exchange prior to delivery.
General Partner. Ashley Capital Management, Inc., 5914 N. 300 West, P. O.
Box C, Fremont, IN 46737, (260) 833-1306; and, Mr. Michael P. Pacult, 5914 N.
300 West, P.O. Box C, Fremont, IN 46737. The managers of the fund.
Gross Profits. The income or loss from all sources, including interest
income and profit and loss from non-trading activities, if any.
Introducing Broker (IB). An entity that may share the brokerage commissions
and is responsible for introducing trades to the futures commission merchant.
Limited Partner. Persons admitted without management authority pursuant to
the partnership agreement.
Margin. A good faith deposit with a broker to assure fulfillment of the
terms of a futures contract.
Margin Call. A demand for additional monies to hold positions taken to
maintain a customer's account in compliance with the requirements of a
particular commodity exchange or of a futures commission merchant.
Minimum Offering/Maximum Offering. The Minimum is the amount required to be
invested before trading will commence, and the Maximum is the amount the
general partner establishes as the amount which will terminate this offering.
National Association of Securities Dealers or NASD. National Association of
Security Dealers, Inc., the self regulatory organization responsible for the
legal and fair operation of broker dealers.
National Futures Association (NFA). The self regulatory organization that is
responsible for the legal and fair operation of commodity pool operators,
such as the general partner of the partnership, commodity trading advisors,
such as the trading advisors for the partnership, introducing brokers, such
as the introducing broker for the partnership, for futures commission
merchants, such as the clearing broker of the partnership, and such other
matters within the authority granted to it by the CFTC pursuant to the
Commodity Exchange Act.
Net Assets or Net Asset Value means the total assets, including all cash and
cash equivalents (valued at cost plus accrued interest and earned discount),
less total liabilities, of the partnership (each determined on the basis of
generally accepted accounting principles, consistently applied under the
accrual method of accounting or as required by applicable laws, regulations
and rules including those of any authorized self regulatory organization).
See Exhibit A, The Limited Partnership Agreement, 1.2(e).
Net Unit Value. The net assets of the partnership divided by the total
number of units of partnership interests outstanding.
Net Gains. The net profit from all sources.
New Net Profit. The amount of income earned from trading, less the trading
losses and brokerage commissions and fees paid to clear the trades which are
incurred or accrued during the then current accounting period. See Charges
to the Partnership.
Net Worth. The excess of total assets over total liabilities as determined
by generally accepted accounting principles. Net worth for a prospective
investor shall be exclusive of home, home furnishings and automobiles.
Offering and Organizational Expenses. The partnership has paid offering
expenses of approximately $160,000, including organizational expenses, from
the gross proceeds of the offering at the time of the sale of the minimum and
the subsequent initial closing. North American Securities Administrator
Association Guidelines for Commodity Pools define offering and organizational
expenses to include selling commissions and redemption fees as well; and, for
purposes of limitation, these expenses cannot exceed 15% of capital raised
pursuant to the offering.
Option Contract. An option contract gives the purchaser the right (as
opposed to the obligation) to acquire (call) or sell (put) a given quantity
of a commodity or a futures contract for a specified period of time at a
specified price to the seller of the option contract. The seller has
unlimited risk of loss while the loss to a buyer of an option is limited to
the amount paid (premium) for the option.
Partners. The general partners and all limited partners in the partnership.
Partnership or Limited Partnership or Commodity Pool or Pool or Fund. The
Atlas Futures Fund, Limited Partnership, evidenced by Exhibit A to this
Prospectus, 5914 N. 300 West, P. O. Box C, Fremont, IN 46737, (260) 833-1306.
Position Limits. The Commodity Futures Trading Commission has established
maximum positions which can be taken in some, but not in all commodity
markets, to prevent the corner or control of the price or supply of those
commodities. These maximum number of positions are called position limits.
Principal. Mr. Michael P. Pacult, one of the general partners and the
principal of the corporate general partner.
Round-turn Trade. The initial purchase or sale of a futures or forward
contract and the subsequent offsetting sale or purchase of such contract.
Redemption. The right of a partner to tender its or his or her partnership
interests to the partnership for surrender at the net unit value. See the
Limited Partnership Agreement attached as Exhibit A.
Selling Agent. The partnership, Atlas Futures Fund, LP, 5914 N. 300 West,
P.O. Box C, Fremont, IN 46737, that is to offer the partnership interests for
sale issuer direct. See Plan of Distribution.
Selling Commissions. A commission paid from the subscription amount for
selling the partnership interests. There is no selling commission in this
offering.
Scale in Positions. The commodity trading advisor selected by the general
partner presently has a large amount of equity under management. In some
situations, the positions desired to be taken on behalf of the partnership
and other accounts under management will be too large too be executed at one
time. The trading advisor intends to take positions at different prices, at
different times and allocate those positions on a ratable basis in accordance
with rules established by the Commodity Futures Trading Commission. This
procedure is defined as to scale in positions. The same definition and rules
apply when the trading advisor elects to exit a position.
Taxation - Section 1256 Contract is defined to mean: (1) any regulated
futures contract (RFC); (2) any foreign currency contract; (3) any non-equity
option; and (4) any dealer equity option.
The term RFC means a futures contract whether it is traded on or subject to
the rules of a national securities exchange which is registered with the
Securities and Exchange Commission, a domestic board of trade designated as a
contract market by the Commodity Futures Trading Commission or any other
board of trade, exchange or other market designated by the Secretary of
Treasury (a qualified board of exchange) and which is marked-to-market to
determine the amount of margin which must be deposited or may be withdrawn.
A "foreign currency contract" is a contract which requires delivery of, or
the settlement of, which depends upon the value of foreign currency which is
currency in which positions are also entered at arm's length at a price
determined by reference to the price in the interbank market. (The Secretary
of Treasury is authorized to issue regulations excluding certain currency
forward contracts from marked-to-market treatment.) A non-equity option means
an option which is treated on a qualified board or exchange and the value of
which is not determined directly or indirectly by reference to any stock (or
group of stocks) or stock index unless there is in effect a designation by
the Commodity Futures Trading Commission of a contract market for a contract
bond or such group of stocks or stock index. A dealer equity option means,
with respect to an options dealer, only a listed option which is an equity
option, is purchased or granted by such options dealer in the normal course
of his activity of dealing in options, and is listed on the qualified board
or exchange on which such options dealer is registered. See Federal Income
Tax Aspects.
Trading Advisor. See Commodity Trading Advisor.
Taking Positions Ahead of the Partnership. The allocation of trades by other
than legally accepted methods by the commodity trading advisor or other
trader which favors parties who took the position unfairly.
Trading Matrix. The dollar value used by a commodity trading advisor to
define the number of positions to be taken by the accounts under management.
Some commodity trading advisors have different trading matrices for different
sized accounts. For example, they may trade all accounts over one million in
size differently than accounts under one million.
Unit. The term used to describe the Net Asset Value of general and limited
partner interests of the partnership.
Unrealized Profit Or Loss. The profit or loss which would be realized on an
open position if it were closed at the current settlement price or the most
recent appropriate quotation as supplied by the broker or bank through which
the transaction is effected.
Underwriter. This term is not applicable to this offering. All sales of
partnership interests will be on a best efforts basis. The price of the
units will not be guaranteed, supported or underwritten in any way. See
Selling Agent.
State Regulatory Glossary
The following definitions are supplied by the state securities
administrators responsible for the review of public futures fund (commodity
pool) offerings made to residents of their respective states. They belong to
the North American Securities Administrators Association, Inc. which publish
"Guidelines for the Registration of Commodity Pool Programs", such as the
Fund, which contain these definitions. The following definitions are
published from the Guidelines, however, the general partner has made
additions to, but no deletions from, some of these definitions to make them
more relevant to an investment in the Fund.
Administrator-The official or agency administering the security laws of
a state. This will usually be the State of residence of the Fund or the
domicile of the broker or brokerage firm which makes the offer or the
residence of the potential investor.
Advisor-Any person who, for any consideration, engages in the business
of advising others, either directly or indirectly, as to the value, purchase,
or sale of commodity contracts or commodity options. This definition applies
to the commodity trading advisor and, when it provides such advice, to the
general partner.
Affiliate-An Affiliate of a Person means: (a) any Person directly or
indirectly owning, controlling or holding with power to vote 10% or more of
the outstanding voting securities of such Person; (b) any Person 10% or more
of whose outstanding voting securities are directly or indirectly owned,
controlled or held with power to vote, by such Person; (c) any Person,
directly or indirectly, controlling, controlled by, or under common control
of such Person; (d) any officer, director or partner of such Person; or (e)
if such Person is an officer, director or partner, any Person for which such
Person acts in any such capacity. See "Conflicts".
Capital Contributions-The total investment in a Program by a
Participant or by all Participants, as the case may be. The purchase price,
less sales commissions, for the partnership interests.
Commodity Broker-Any Person who engages in the business of effecting
transactions in commodity contracts for the account of others or for his own
account. See Futures Commission Merchant and Introducing Broker.
Commodity Contract-A contract or option thereon providing for the
delivery or receipt at a future date of a specified amount and grade of a
traded commodity at a specified price and delivery point.
Cross Reference Sheet-A compilation of the Guideline sections,
referenced to the page of the prospectus, Program agreement, or other
exhibits, and justification of any deviation from the Guidelines. This sheet
is used by the State Administrator to review this prospectus.
Net Assets-The total assets, less total liabilities, of the Program
determined on the basis of generally accepted accounting principles. Net
Assets shall include any unrealized profits or losses on open positions, and
any fee or expense including Net Asset fees accruing to the Program.
Net Asset Value Per Program Interest-The Net Assets divided by the
number of Program Interests outstanding.
Net Worth-The excess of total assets over total liabilities are
determined by generally accepted accounting principles. Net Worth shall be
determined exclusive of home, home furnishings and automobiles.
New Trading Profits-The excess, if any, of Net Assets at the end of the
period over Net Assets at the end of the highest previous period or Net
Assets at the date trading commences, whichever is higher, and as further
adjusted to eliminate the effect on Net Assets resulting from new Capital
Contributions, redemptions, or capital distributions, if any, made during the
period decreased by interest or other income, not directly related to trading
activity, earned on Program assets during the period, whether the assets are
held separately or in a margin account. See New Net Profit.
Organizational and Offering Expenses-All expenses incurred by the
Program in connection with and in preparing a Program for registration and
subsequently offering and distributing it to the public, including, but not
limited to, total underwriting and brokerage discounts and commissions
(including fees of the underwriter's attorneys), expenses for printing,
engraving, mailing, salaries of employees while engaged in sales activity,
charges of transfer agents, registrars, trustees, escrow holders,
depositories, experts, expenses of qualification of the sale of its Program
Interest under Federal and state law, including taxes and fees, accountants'
and attorneys' fees.
Participant-The holder of a Program Interest. A Partner in the Fund.
Person-Any natural Person, partnership, corporation, association or
other legal entity.
Pit Brokerage Fee-Pit Brokerage Fee shall include floor brokerage,
clearing fees, National Futures Association fees, and exchange fees. These
fees will be paid by the corporate general partner from the fixed
commissions.
Program-A limited partnership, joint venture, corporation, trust or
other entity formed and operated for the purpose of investing in Commodity
Contracts. The Fund.
Program Broker-A Commodity Broker that effects trades in Commodity
Contracts for the account of a Program. See the Futures Commission Merchant
and Introducing Broker.
Program Interest-A limited partnership interest or other security
representing ownership in a program. The units in the Fund. See Exhibit A,
the Limited Partnership Agreement.
Pyramiding-A method of using all or a part of an unrealized profit in a
Commodity Contract position to provide margin for any additional Commodity
Contracts of the same or related commodities.
Sponsor-Any Person directly or indirectly instrumental in organizing a
Program or any Person who will manage or participate in the management of a
Program, including a Commodity Broker who pays any portion of the
Organizational Expenses of the Program, and the general partner(s) and any
other Person who regularly performs or selects the Persons who perform
services for the Program. Sponsor does not include wholly independent third
parties such as attorneys, accountants, and underwriters whose only
compensation is for professional services rendered in connection with the
offering of the partnership interests. The term Sponsor shall be deemed to
include its Affiliates. The general partner is a sponsor of this
partnership.
Valuation Date-The date as of which the Net Assets of the Program are
determined. For the Fund, this will be after the close of business on the
last business day of each month.
Valuation Period-A regular period of time between Valuation Dates. For
the Fund, this will be the close of business for each calendar month and each
calendar year.
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APPENDIX II
PRIVACY STATEMENT
ATLAS FUTURES FUND, LP
5914 N. 300 WEST
Fremont, Indiana 46737
Telephone: (260) 833-1306
Atlas Futures Fund, LP is committed to safeguarding the confidential
information of its partners. We hold all personal information provided to us
in the strictest confidence. These records include all personal information
that we collect from you. We have never disclosed information to
nonaffiliated third parties, except as directed by you or required by law,
and we do not anticipate any change in these procedures in the future. If we
were to change this disclosure policy, we would not take such action without
your written permission.
A full statement of our privacy policy with respect to personal information
about you is as follows:
We limit employee and independent contractor representatives of ours access
to information in your file to only to those persons who have a business or
professional reason for knowing.
We limit the delivery of your information to only those nonaffiliated parties
who directly service your account such as trustees and clearing brokers, or
as directed by you or as required by law. As examples, Federal regulations
permit us to share a limited amount of information about you with a clearing
brokerage firm in order to execute securities transactions on your behalf and
we have implied permission from you to discuss your financial situation with
your accountant or other professional.
We use our best efforts to maintain a secure office and computer environment
to ensure that your information is not placed at unreasonable risk.
The categories of nonpublic personal information that we collect from a
prospect, partner, client and independent third parties depend upon the scope
of the client engagement. It will include information about your personal
finances, information about your health to the extent that it is needed for
the planning process, information about transactions between you and third
parties, and information from consumer reporting agencies.
For unaffiliated third parties that require access to your personal
information, including financial service companies, consultants, and
auditors, we also require strict confidentiality in our agreements with them
and expect them to keep this information private. Federal and state
regulators also may review firm records as permitted under law.
Personally identifiable information about you will be maintained during the
time you are a partner or client, and for the required time thereafter that
such records are required to be maintained by Federal and state securities
laws. After this required period of record retention, all such information is
expected to be destroyed.
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EXHIBIT A TO ATLAS FUTURES FUND DISCLOSURE DOCUMENT
AGREEMENT OF LIMITED PARTNERSHIP OF
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
THIS LIMITED PARTNERSHIP AGREEMENT, (the "Agreement") dated the 23rd of
December, 2003, is to amend and restate in full that certain partnership
agreement entered on the 1st day of February, 1998, that formed Atlas Futures
Fund, Limited Partnership (hereinafter called either the "Partnership" or the
"Fund") and was previously amended and restated in full on the 15th day of
May, 1999 as follows:
WITNESSETH:
IN CONSIDERATION of good and valuable consideration, the receipt of which is
hereby acknowledged, Ashley Capital Management, Incorporated, ("Ashley") the
Corporate General Partner, Michael P. Pacult, the Other General Partner, and
Ashley as agent for the Limited Partners, pursuant to the authority granted
to the General Partner by this Agreement at formation and the powers of
attorney granted by the Limited Partners to Ashley at the time of their
admission to the Partnership, hereby adopt this Amended and Fully Restated
Limited Partnership Agreement to govern and control the operation of the
Partnership pursuant and subject to the Delaware Uniform Limited Partnership
Act (the "Act").
The resignation of Shira Del Pacult ("Ms. Pacult") pursuant to her prior 120
day notice to the Partners given on August 20, 2003, became effective on the
date of this Agreement. Ms. Pacult is no longer a General Partner of the
Fund. Ashley and Michael P. Pacult continue to serve as the General Partners
of the Fund and from this date forward the term General Partner shall refer
to both Ashley and Mr. Pacult.
ARTICLE I
Definitions and Risk Disclosure Statement
Certain terms used in this Agreement shall have the special meaning
designated below:
1.1 The term AFFILIATE means (1) any person controlled by or under common
control with another person, (2) a person owning or controlling 10% or more
of the outstanding voting securities of such other person, (3) any officer or
director of such other person, and (4) if such other person is an officer or
director, any other company for which such person acts as an officer or
director.
1.2 When referring to the capital of the Partnership:
(a) the term CAPITAL shall mean cash invested in the Partnership by any
Partner and placed at risk for the business of the Partnership;
(b) the term CAPITAL CONTRIBUTION shall mean, with respect to any Partner,
the sum of all Capital contributed to the Partnership pursuant to Article I;
(c) the term CAPITAL SUBSCRIPTION shall mean the amount set forth opposite
the name of such Partner in the schedule of Partners, which amount shall be
the purchase price, less sales commissions, if any, to be paid or paid by
such Partner for the Unit or Units in the Partnership purchased by such
Partner;
(d) the term INITIAL CAPITAL shall mean the sum of all Capital
Subscriptions received by the General Partner prior to commencement of
trading;
(e) the term NET ASSETS OR NET ASSET VALUE means the total assets,
including all cash and cash equivalents (valued at cost plus accrued interest
and earned discount), less total liabilities, of the Partnership (each
determined on the basis of generally accepted accounting principles,
consistently applied under the accrual method of accounting or as required by
applicable laws, regulations and rules including those of any authorized self
regulatory organization), specifically:
(i) Net Asset Value includes any unrealized profit or loss on open security
and commodity positions subject to reserves for loss established, from time
to time, by the General Partner;
(ii) All open stock, option, and commodity positions are calculated on the
then current market value, which shall be based upon the settlement price for
that particular position on the date with respect to which Net Asset Value is
being determined; provided, however, that if a position could not be
liquidated on such day due to the operation of the daily limits or other
rules of the exchange upon which that position is traded or otherwise, the
settlement price on the first subsequent day on which the position could be
liquidated shall be the basis for determining the market value of such
position for such day. As used herein, "settlement price" includes, but is
not limited to: (1) in the case of a futures contract, the settlement price
on the commodity exchange on which such futures contract is traded; and (2)
in the case of a foreign currency forward contract which is not traded on a
commodity exchange, the average between the lowest offered price and the
highest bid price, at the close of business on the day Net Asset Value is
being determined, established by the bank or broker through which such
forward contract was acquired or is then currently traded;
(iii) Brokerage commissions to close security and commodity positions, if
charged on a round-turn basis, are accrued in full at the time the position
is initiated (i.e., on a round-turn basis) as a liability of the Partnership;
(iv) Interest earned on all Partnership accounts is accrued at least
monthly;
(v) The amount of any distribution made by the Partnership is a liability
of the Partnership from the day when the distribution is declared by the
General Partner or as provided in this Agreement and the amount of any
redemption is a liability of the Partnership as of the Valuation Date; and
(vi) Syndication Costs incurred in organizing and all present and future
costs to increase or maintain the qualification of the Units available for
sale and the cost to present the initial and future offering of Units for
sale shall be capitalized when incurred and amortized and paid from Capital
or Monthly Profit as required by applicable law.
(f) The term VALUATION DATE means the date as of which the Net Assets of
the Partnership are determined, which will be after the close of business on
the last business day of each month.
(g) the term PROFIT (LOSS) ATTRIBUTABLE TO UNITS means the product of A)
the number of Units divided into B) an amount equal to the Net Profit (Loss)
determined as follows: (1) the net of profits and losses realized on all
trades closed out, plus (2) the net of any unrealized profits and losses an
open positions as of the end of the period, less (3) the net of any
unrealized profits and losses on open positions as of the end of the
preceding period, minus, (4) the Expenses attributable to Units. Profit
(Loss) shall include interest earned on Partnership assets, realized and
unrealized capital gains or losses on U.S. Treasury bills, and other
securities;
(h) the term MANAGEMENT FEE shall mean up to six percent (6%) annually of
the Net Assets of the Partnership computed on the close of business on the
last day of each month and payable to the General Partner or independent
Commodity Trading Advisor, or both, without regard to the income or loss of
the Partnership for that period; presently, the General Partners and the CTA
receive no Management Fee;
(i) the term INCENTIVE FEE means a percentage of the profits accrued and
paid to the General Partner, or its Affiliates, of up to fifteen percent
(15%) annually of New Net Profit earned from inception of trading, through
the date of the computation, based upon total Capital of the Partnership. The
General Partner has reserved the right to both reduce the Incentive Fee below
fifteen percent (15%) and increase the Incentive Fee to a maximum of twenty-
seven percent (27%), provided that in such case the Management Fee is
correspondingly lowered to 0%; presently, the Incentive Fee paid to the CTA
is twenty five percent (25%);
(j) the term GROSS PROFIT OR LOSS means the income or loss from all
sources, including interest income and profit and loss from non-trading
activities, if any.
(k) the term NEW NET PROFIT OR LOSS means the amount of income earned from
trading, less the trading losses and brokerage commissions and fees paid to
clear the trades which are incurred or accrued during the then current
accounting period; and,
(l) the term NET GAINS means net profit from all sources.
(m) the term UNIT shall mean a partnership interest in the Partnership
requiring a Capital Contribution of the Net Asset Value of the initial Unit,
as adjusted to reflect increases and decreases caused by receipt, accrual,
and payment of profit, Expenses, losses, bonuses, and fees, less a sales
commission, from time to time.
1.3 When referring to costs and expenses of the Partnership to be allocated
and charged pursuant to this Agreement:
(a) the term EXPENSES shall mean costs allocated, incurred, paid, accrued,
or reserved, including the fixed commissions payable to the Corporate General
Partner of eleven percent (11%) of the total equity placed under management
with the Commodity Trading Advisor, which are, in the opinion of the General
Partner, required, necessary or desirable to establish, manage, continue and
promote the business of the Partnership including, but not limited to, all
deferred organization costs, brokerage commissions, and all management and
incentive fees payable to the General Partner or to independent investment
and Commodity Trading Advisor by the Partnership as negotiated and determined
by the General Partner on behalf of the Partnership on a basis consistently
applied in accordance with generally accepted accounting principals under the
accrual method of accounting or as required by applicable laws, regulations
and rules including those of any authorized self regulatory organization with
proper jurisdiction over the business of the Partnership; provided, however,
Expenses shall not include salaries, rent, travel, expenses and other items
of General Partner overhead and, provided, further, management fees, advisory
fees and all other fees, except for incentive fees and commodity brokerage
commissions, the actual cost of legal and audit services and extraordinary
expenses, shall not exceed one half of one percent of Net Assets per month
(not to exceed six percent annually). If necessary, the General Partner
shall reimburse the Partnership no less frequently than quarterly, for the
amount by which such aggregate fees and expenses exceed the limitations
provided by NASAA Guideline IVC.1. During the period for which reimbursement
is made up to an amount not exceeding the aggregate compensation received by
the General Partner, including direct or indirect par icipations in commodity
brokerage commissions charged to the Partnership. In addition, if
reimbursement is required or ordinary expenses are incurred, the General
Partner shall include in the Partnership's next regular report to the
auditors a discussion of the circumstances or events which resulted in the
reimbursement or extraordinary expenses;
(b) the term NET UNIT VALUE shall mean the Net Asset Value divided, from
time to time, by the total number of Units outstanding;
(c) the term OFFERING PERIOD means the period of time established by the
General Partner after the Partnership begins to offer to sell Units at the
Net Unit Value ; and,
(d) the term SYNDICATION COSTS shall mean the promotion and syndication
costs of the Partnership and the costs of the offering of Units, and to
establish the initial business relationships on behalf of the Partnership,
including all legal and printing costs to prepare the Disclosure Documents,
registrations and filing fees, contract negotiation, and travel incurred
which are deemed necessary or desirable by the General Partner to form the
Partnership, be ready to engage in business, and to sell the Units.
1.4 The terms DISCLOSURE DOCUMENT, MEMORANDUM, OFFERING CIRCULAR,
PROSPECTUS and REGISTRATION STATEMENT shall mean the document or documents,
together with the exhibits and any subsequent continuations thereof, which
describes this Partnership to persons selected by the General Partner
including, but not limited to, potential purchasers of Units, or the Partners
or to any government or self regulatory agency or to persons selected by the
General Partner to participate in the affairs or provide services to the
Partnership.
1.5 When referring to this Agreement and the Partners of the Partnership:
(a) the term ACT shall refer to the partnership act of Delaware.
(b) the term AGREEMENT refers to this Partnership agreement;
(c) the term GENERAL PARTNER shall refer to both Ashley Capital Management,
Incorporated, 5916 N. 300 West, P.O. Box C, Fremont, IN 46737 (260) 833-1306
("Ashley") and Michael P. Pacult, 5916 N. 300 West, P.O. Box C, Fremont, IN
46737 (260) 833-1306 ("Mr. Pacult") collectively or singularly, as the
context requires;
(d) the term LIMITED PARTNER shall refer to any party listed on the
Schedule of Limited Partners attached to this Agreement as Attachment I, as
amended, from time to time, pursuant to Article VI hereof;
(e) the term MAJORITY IN INTEREST shall refer to that number of Partners
who collectively hold over 50% of all of the outstanding Units held by all
Partners in the Partnership; provided, however, the Units held by the General
Partner cannot be considered to determine a MAJORITY IN INTEREST or otherwise
vote or consent regarding the question of removal of the General Partner or
other matters specifically expressed in Article V, Section 5.3. In addition,
see the rights and duties of the General Partner in Article IV and of the
Limited Partners in Articles V;
(f) the term OTHER GENERAL PARTNER refers to any General Partner other than
Ashley Capital Management, Incorporated; and
(g) the term PARTNERS refers to the General Partner, any Other General
Partner, and the Limited Partners, collectively.
1.6 RISK DISCLOSURE STATEMENT.
YOU SHOULD CAREFULLY CONSIDER WHETHER YOUR FINANCIAL CONDITION PERMITS YOU TO
PARTICIPATE IN A COMMODITY POOL. IN SO DOING, YOU SHOULD BE AWARE THAT
FUTURES AND OPTIONS TRADING CAN QUICKLY LEAD TO LARGE LOSSES AS WELL AS
GAINS. SUCH TRADING LOSSES CAN SHARPLY REDUCE THE NET ASSET VALUE OF THE
POOL AND CONSEQUENTLY THE VALUE OF YOUR INTEREST IN THE POOL. IN ADDITION,
RESTRICTIONS ON REDEMPTIONS MAY AFFECT YOUR ABILITY TO WITHDRAW YOUR
PARTICIPATION IN THE POOL.
FURTHER, COMMODITY POOLS MAY BE SUBJECT TO SUBSTANTIAL CHARGES FOR
MANAGEMENT, AND ADVISORY AND BROKERAGE FEES. IT MAY BE NECESSARY FOR THOSE
POOLS THAT ARE SUBJECT TO THESE CHARGES TO MAKE SUBSTANTIAL TRADING PROFITS
TO AVOID DEPLETION OR EXHAUSTION OF THEIR ASSETS. THIS DISCLOSURE DOCUMENT
CONTAINS A COMPLETE DESCRIPTION OF EACH EXPENSE TO BE CHARGED THIS POOL AT
PAGE 6 AND A STATEMENT OF THE PERCENTAGE RETURN NECESSARY TO BREAK EVEN, THAT
IS, TO RECOVER THE AMOUNT OF YOUR INITIAL INVESTMENT, AT PAGE 14.
THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER FACTORS
NECESSARY TO EVALUATE YOUR PARTICIPATION IN THIS COMMODITY POOL. THEREFORE,
BEFORE YOU DECIDE TO PARTICIPATE IN THIS COMMODITY POOL, YOU SHOULD CAREFULLY
STUDY THIS DISCLOSURE DOCUMENT, INCLUDING A DESCRIPTION OF THE PRINCIPAL RISK
FACTORS OF THIS INVESTMENT, AT PAGE 6.
YOU SHOULD ALSO BE AWARE THAT THIS COMMODITY POOL MAY TRADE FOREIGN FUTURES
OR OPTIONS CONTRACTS. TRANSACTIONS ON MARKETS LOCATED OUTSIDE THE UNITED
STATES, INCLUDING MARKETS FORMALLY LINKED TO A UNITED STATES MARKET, MAY BE
SUBJECT TO REGULATIONS WHICH OFFER DIFFERENT OR DIMINISHED PROTECTION TO THE
POOL AND ITS PARTICIPANTS. FURTHER, UNITED STATES REGULATORY AUTHORITIES MAY
BE UNABLE TO COMPEL THE ENFORCEMENT OF THE RULES OF REGULATORY AUTHORITIES OR
MARKETS IN NON-UNITED STATES JURISDICTIONS WHERE TRANSACTIONS FOR THE POOL
MAY BE EFFECTED.
ARTICLE II
Partnership Organization and Purpose
2.1 PARTNERSHIP NAME AND LOCATION OF BOOKS AND RECORDS. The name of the
Partnership, as filed with the state of Delaware, shall be Atlas Futures
Fund, Limited Partnership. The address where the books and records of the
Partnership will be maintained for inspection by the Partners is c/o Ashley
Capital Management, Incorporated, 5916 N. 300 West, Fremont, IN 46737 (260)
833-1306 or such other address as the General Partner shall, from time to
time, determine.
2.2 PARTNERSHIP AFFILIATES.
(a) POOL OPERATOR NAME AND PRINCIPALS. The General Partner shall serve as
the commodity pool operator for the Partnership. In addition to being one of
the general partners, Michael P. Pacult is the sole principal, shareholder,
director and officer of Ashley Capital Management, Inc., the other general
partner, and is solely responsible for the business decisions of the
Partnership, including, but not limited to, selection of the Commodity
Trading Advisors (the "CTAs"). The signature of either Mr. Pacult or Ashley
may bind the Partnership. Ashley and Mr. Pacult are registered commodity
pool operators with the Federal Commodity Futures Trading Association
pursuant to the Commodity Exchange Act and members of the futures self
regulatory organization, the National Futures Association.
THE REGULATIONS OF THE FEDERAL COMMODITY FUTURES TRADING COMMISSION AND THE
NATIONAL FUTURES ASSOCIATION PROHIBIT ANY REPRESENTATION BY A PERSON
REGISTERED WITH THE CFTC OR BY ANY MEMBER OF THE NFA, RESPECTIVELY, THAT SUCH
REGISTRATION OR MEMBERSHIP IN ANY RESPECT INDICATES THAT THE CFTC OR THE NFA,
AS THE CASE MAY BE, HAS APPROVED OR ENDORSED SUCH PERSON OR SUCH PERSON'S
TRADING PROGRAMS OR OBJECTIVES. THE REGISTRATIONS AND MEMBERSHIPS DESCRIBED
IN THIS PARTNERSHIP AGREEMENT MUST NOT BE CONSIDERED AS CONSTITUTING ANY SUCH
APPROVAL OR ENDORSEMENT. LIKEWISE, NO COMMODITY EXCHANGE HAS GIVEN OR WILL
GIVE ANY SUCH APPROVAL OR ENDORSEMENT.
Mr. Pacult (i) has been engaged in supervision of individual managed
commodity accounts for over 22 years, and (ii) is currently a general partner
and principal of the corporate general partner of another publicly offered
commodity pool, Bromwell Financial Fund, Limited Partnership and intends to
serve as a general partner of a new futures fund called Providence Select
Fund, L. P. as soon as all regulatory requirements have been satisfied. See
"Performance of Other Programs Sponsored by the General Partner-Bromwell
Financial Fund, L.P. and Providence Select Fund, L. P." in the Partnership's
Prospectus.
(b) COMMODITY TRADING ADVISOR NAMES AND PRINCIPALS. The General Partner
has initially selected one independent CTA to trade the assets of the
Partnership, Clarke Capital Management, Inc. The CTA's performance record
and business background are disclosed in the Partnership's Prospectus under
"Trading Management". The CTA will have no ownership in the Partnership and
its compensation is described in 4.6(f). The CTA will enter trades on behalf
of the Partnership directly with the FCM without the prior knowledge or
approval of the General Partner of the methods used by the CTA to select the
trades, the number of contracts, or the margin required. From 20% to 40% of
the Net Asset Value on deposit with the FCM is expected to be committed to
margin to hold positions taken by the CTA for the account of the Partnership.
(c) COMMODITY POOL OPERATOR AND FUTURES COMMISSION MERCHANT NAMES AND
PRINCIPALS. Ashley Capital Management, Inc. 5916 N. 300 West, P.O. Box C,
Fremont, IN 46737 (260) 833-1306 will serve as the Commodity Pool Operator
("CPO") of the Partnership and will be paid a fixed amount for brokerage
commissions of eleven percent (11%) per year, payable monthly by the
Partnership, for introducing domestic trades through Citigroup Global
Markets, Inc., 1 S. Wacker Drive, Ste. 1000, Chicago, Illinois 60606,
Telephone 312-516-6030, Fax 312-516-6234, the futures commission merchant
(the "FCM"). The Partnership will pay actual commissions charged by the FCM
for trades made on foreign exchanges or forward markets, if any. The CPO
will pay the round-turn brokerage commissions, pit brokerage and other
clearing expenses to the FCM, which will act in the normal capacity as a
futures commission merchant and will hold the equity assigned by the General
Partner for trading and will clear the trades entered by the CTA pursuant to
the power of attorney granted by the General Partner to the CTA to trade on
behalf of the Partnership. The General Partner has the right pursuant to
this Agreement to change the FCM at their sole discretion subject only to
notices of such change to the Partners as are required by law.
2.3 MATERIAL ADMINISTRATIVE AND/OR CIVIL ACTIONS. There have been no
material administrative, civil or criminal actions against Ashley or Mr.
Pacult (who are the general partners and Commodity Pool Operators), the
Commodity Trading Advisor or any principal or any Affiliate of any of them,
pending, on appeal, or concluded, threatened or otherwise known to them,
within the five (5) years preceding the date of this Partnership Agreement.
There have been such actions against the Futures Commission Merchant that are
fully disclosed in the Prospectus but, in the opinion of the General Partner
and the FCM, are not material to the fulfillment of the clearing duties the
FCM will perform for the Partnership.
2.4 CHARACTER OF THE BUSINESS. The Partnership's business purpose is to
increase Capital through the speculative and hedge trading of futures and
options on futures. The General Partner is authorized to do any and all
things on behalf of the Partnership incident thereto or connected therewith
including, but not limited to:
(a) trade, buy, sell or otherwise acquire, hold or dispose of all forms of
investments (including tangibles and intangibles, foreign currencies,
mortgage-backed securities, money market instruments, stock and futures
options, and any other securities or items which are now, or may hereafter
be, the subject of barter or stock or futures trading), commodity futures,
and forward contracts and any rights pertaining thereto. The Partnership
shall carry on the foregoing activities through the exercise of judgment by
its General Partner and/or the Investment and/or Commodity Trading Advisors
and consultants and brokers selected by the General Partner. The General
Partner may serve as an investment or trading advisor to the Partnership for
management fees, incentive fee, reimbursement of costs and other remuneration
at the same rates charged either by independent third parties for similar
services to other partnerships or by the General Partner to others for the
same service.
(b) invest and trade, on margin or otherwise, in capital stocks, bonds,
debentures, trust receipts and other obligations, instruments or evidences of
indebtedness, gold, silver, cattle, corn, wheat, soybeans, or any other asset
for which a trading market is maintained or otherwise paid for by cash or
otherwise including, but not limited to, the right to sell short and to cover
such short sales.
(c) possess, sell, exchange, discount, transfer, mortgage, pledge, deal in,
maintain multiple accounts for, and to exercise all rights, powers,
privileges and other rights, incidental to ownership of the assets held by
the Partnership.
(d) borrow or raise monies and, from time to time without limit as to
amount, to issue, accept, endorse and execute promissory notes, draft bills
of exchange, warrants, bonds, debentures and other negotiable or non-
negotiable instruments and evidences of indebtedness, and to secure the
payment of any thereof and the interest thereon by mortgage or pledge,
conveyance or assignment in trust of the whole or any part of the property of
the Partnership, whether at the time owned or thereafter acquired, and to
sell, pledge of otherwise dispose of such instruments issued by the
Partnership for its purposes; form and own one or more corporations to engage
in such businesses as the General Partner shall deem advisable.
(e) lend any of its properties or funds, either with or without security in
furtherance of the objects and purposes of the Partnership as the General
Partner shall deem advisable and consent.
(f) rent or own and maintain one or more offices staffed as the General
Partner shall determine and to do such other acts attendant thereto as may be
necessary or desirable.
(g) waive the sales commission to acquire investment Capital as the General
Partner, in its sole discretion, may determine.
(h) enter, make and perform all contracts, surety and guarantees as may be
necessary or advisable or incidental to the carrying out of the foregoing
objects and purposes.
2.5 ADDRESS OF PARTNERS. The General Partner's address is listed in
paragraph 2.1 hereof and the Limited Partners' addresses are on record at the
office of the General Partner to the Partnership.
2.6 TERM OF PARTNERSHIP. The term of the Partnership shall commence on the
date of this Agreement and shall continue until dissolved or terminated
pursuant to Article IX.
2.7 REGISTRATION. The General Partner, on behalf of the Partnership, shall
have the authority, but not the obligation, to cause a Registration statement
to be filed, and such amendments thereto as the General Partner deems
advisable, with the appropriate Federal and state regulatory agencies,
including the United States Securities and Exchange Commission and the
commission of securities for registration under the securities laws of the
various states and any other jurisdiction desirable or proper to the sale of
Units to qualify for public offerings. Each of the Limited Partners hereby
confirm and ratify all action taken and things done by the General Partner
with respect to such filings and public offerings. The General Partner may
make such other arrangements for the sale of Units, including the private
placement of Units, as it deems appropriate.
ARTICLE III
Capital Contributions and Allocation of Profits and Losses
3.1 CAPITAL CONTRIBUTIONS OF LIMITED PARTNERS.
(a) Each Limited Partner has delivered to the Partnership an executed
Subscription which has been accepted by the General Partner on behalf of the
Partnership, an Amended Certificate of Limited Partnership, and a check in
the amount of his Capital Subscription. The Partnership shall use the funds
thus contributed solely to pay, sales commissions, Expenses, Organization
Costs and to otherwise make the payments required to be made by the
Partnership to engage in active trading and to pay the management fees, if
any, and, from profits, the incentive fees and distributions to Partners
Capital Accounts.
(b) The General Partner has filed a Form S-1 to qualify the Partnership
Units for public sale. Except for payment of Partnership expenses from
Capital as provided by this Agreement, there will be no required contribution
or assessments of the Limited Partners.
3.2 CAPITAL CONTRIBUTIONS OF GENERAL PARTNER.
(a) The General Partner has not made and shall not be required to make any
capital contribution to the Partnership except for purchases that are
required by law. The General Partner shall use its best efforts to maintain
its status as a partnership for tax purposes.
(b) Partnership interests shall be evidenced by Units. The General
Partner, on behalf of the Partnership, may, in accordance with applicable law
and the Offering Memorandum of the Partnership, issue Units to persons
desiring to become Limited Partners. A Partner shall contribute an amount
equal to the Net Asset Value of a Unit calculated as of the end of the last
business day of the previous month, plus the sales commission, if any, on the
Valuation Date. The General Partner will have five (5) days to review the
Partner's subscription, and the Partner will have five (5) days to rescind
his subscription, after which time period all subscriptions will be
irrevocable, subject to any applicable law which may extend the Partner's
rescission period. The General Partner and Affiliates of the General Partner
may purchase Limited Partnership Units with the same rights as other Limited
Partners.
(c) All subscriptions for Units made pursuant to the offering of the Units
must be on the form provided with the Prospectus. The partnership has offered
$15,000,000 Units (the "Maximum") for sale and has reserved the right to
increase this Maximum. Ashley maintains an escrow account to continuously
accept Partners' subscriptions until such time as they are admitted into the
Partnership.
3.3 ALLOCATION OF PROFITS AND LOSSES
(a) A distribution account shall be established for each Partner that shall
include, as the initial balance thereof, each Partner's initial contribution
to the Partnership expressed in total dollars and Units purchased. As of the
close of business each month, allocations shall be made as follows:
(i) The Incentive Fee. The incentive fee upon New Net Profit at the rate
of twenty-five percent (25%), or such other rate as may be established
pursuant to 1.2(h), shall be paid quarterly to the CTA but allocated to the
Partners monthly.
(ii) The Profit (Loss) Attributable to Units shall be added to (subtracted
from) the distribution accounts of the Partners. Items of income, gain or
loss, accrued and paid Expenses shall be added to (subtracted from) the
distribution account of each Partner in accordance with the ratio that such
distribution account bears to the sum of all of the Partners' distribution
accounts.
(iii) The amount of any cash distributions to a Partner during such month and
any amount paid upon Redemption of Units as of the end of such month shall be
subtracted from the distribution account of such Partner.
(iv) The distribution account of any Unit that was redeemed shall be reduced
by the Redemption Charge per Unit multiplied by the number of Units that were
redeemed by the Partner represented by such distribution account. The
Redemption Charge, if any, shall be first used to defray expenses and any
excess treated as interest earned by the Fund; provided, however, Partners
admitted after the date of this Agreement will not be charged a Redemption
Charge.
ARTICLE IV
Rights and Obligations of the General Partner
4.1 GENERAL. The General Partner shall have full, exclusive and complete
discretion in the management and control of the affairs of the Partnership to
the best of its ability and shall use its best efforts to carry out the
purposes of the Partnership set forth in Article II. In connection
therewith, it shall have all powers of a general partner under the Act,
including, without limitation, the power to:
(a) enter, execute and maintain contracts, agreements and any or all other
instruments, and to do and perform all such things, as may be required or
desirable in furtherance of Partnership purposes or necessary or appropriate
to the conduct of Partnership activities including, but not limited to,
contracts with third parties for:
(i) brokerage services on behalf of the Partnership (which brokerage
services may be performed by the General Partner or an Affiliate of the
General Partner), or any successor to its business, and an Affiliated
introducing broker or futures commission merchant of the General Partner may
clear the trades, in consideration of the payment of eleven percent (11%) of
the total equity placed with the Commodity Trading Advisor or advisors it
selects, and will cause and pay for the domestic trades to be cleared through
one or more futures commission merchants selected by the General Partner;
(ii) trading advisory services relating to the purchase and sale of all
stocks, options, commodity futures contracts, commodity options and contracts
for forward delivery of foreign currencies on behalf of the Partnership
(which advisory services may be performed by the General Partner or an
Affiliate of the General Partner); and
(iii) rent, salaries, computer, accounting, legal and other services
attendant to the maintenance of the Fund.
(b) open and maintain bank accounts on behalf of the Partnership with banks
and money market funds.
(c) deposit, withdraw, pay, retain and distribute the Partnership's funds
in any manner consistent with the provisions of this Agreement.
(d) supervise the preparation and filing of all documentation required by
law including, but not limited to, Registration Statements to be filed with
Federal and state agencies.
(e) pay or authorize the payment of distributions to the Partners and pay
Expenses of the Partnership.
(f) invest or direct the investment of funds of the Partnership not
involving the purchases or sale of stocks, futures contracts, options, and
contracts for forward delivery of foreign currencies.
(g) purchase, at the expense of the Partnership, liability and other
insurance to protect the Partnership's proprieties and business.
(h) borrow money from banks and other lenders for Partnership purposes, and
may pledge any or all of the Partnership's assets for such loans. No bank or
other lender to which application is made for a loan by the lender to which
application is made for a loan by the General Partner shall be required to
inquire as to the purposes for which such loan is sought and, as between the
Partnership and such bank or other lender, it shall be conclusively presumed
that the proceeds of such loan are to be and will be used for the purposes
authorized under this Agreement.
(i) confess judgment for and against the Partnership and control any
matters affecting the rights and obligations of the Partnership, including
the employment of attorneys, in the conduct of litigation and otherwise incur
legal expenses and costs of consultation, settlement of claims, and
litigation against or on behalf of the Partnership.
4.2 LOANS BY GENERAL PARTNER. The General Partner or its Affiliates will
be not be required to advance or loan funds to the Partnership. In the event
the General Partner makes any advance or loan to the Partnership, the General
Partner will not receive interest in excess of its interest costs, nor will
the General Partner receive interest in excess of the amounts which would be
charged the Partnership (without reference to the General Partner's financial
abilities or guarantees) by unrelated banks on comparable loans for the same
purpose and the General Partner shall not receive points or other financing
charges or fees regardless of the amount.
4.3 TRANSACTION WITH PARTNERSHIP. Notwithstanding anything to the contrary
which may be contained herein, the General Partner shall not:
(a) sell, or otherwise dispose of, any of the Partnership's assets to the
General Partner or its Affiliates.
(b) subject to the provisions regarding and without diminishment of the
right of the General Partner or any Affiliate to compensation for services
provided to the Partnership as set forth in this Agreement, cause or permit
the Partnership to enter any agreement with the General Partner or an
Affiliate which is not in the best interest of and for the benefit of the
Partnership or which would be in contravention of the General Partner's
fiduciary obligations to the Partnership or pursuant to which the General
Partner or any Affiliate;
(i) would provide or sell any services, equipment, or supplies at other
than rates charged to others; or
(ii) would receive from the Partnership, Units of Partnership interest in
consideration for services rendered.
4.4 OBLIGATIONS OF GENERAL PARTNER. In addition to the obligations
provided by law or this Agreement, the General Partner shall:
(a) Devote such of its time to the business and affairs of the Partnership
as it shall, in its discretion exercised in good faith, determine to be
necessary to conduct the business and affairs of the Partnership for the
benefit of the Partnership and the Limited Partners.
(b) Execute, file, record and/or publish all certificates, statements and
other documents and do any and all other things as may be appropriate for the
formation , qualification and operation of the Partnership and for the
conduct of its business in all appropriate jurisdictions including, but not
limited to, the compliance, at its expense, with all laws related to its
qualification to serve as the commodity pool operator of the Fund.
(c) Retain independent public accountants to audit the accounts of the
Partnership.
(d) Employ attorneys to represent the Partnership.
(e) Use its best efforts to maintain the status of the Partnership as a
partnership for United States Federal income tax purposes.
(f) Employ only CTAs which are registered pursuant to the Commodity
Exchange Act to conduct trading and to otherwise establish and monitor the
trading policies of the Partnership; and the activities of the partnership's
trading advisor(s) in carrying out those policies.
(g) Review, not less often than annually, the brokerage commission rates
charged to comparable funds to determine that the commission rates paid by
the Partnership are comparable with such other rates.
(h) Have fiduciary responsibility for the safekeeping and use of all funds
and assets of the Partnership, whether or not in the General Partner's
immediate possession or control, and the General Partner will not employ or
permit others to employ such funds or assets in any manner except for the
benefit of the Partnership.
(i) Agree that if it becomes the sole General Partner of the Partnership,
it will use its best efforts to maintain the Partnership as a limited
partnership as required by all applicable laws including, but not limited to
the requirement of the United States Department of the Treasury, Internal
Revenue Service, for a sole corporate general partner of a limited
partnership to maintain its "Net Worth" (as defined below) to establish the
sufficient assets test for a sole corporate general partner to be liable for
the debts of the Partnership. Mr. Pacult intends to resign as a general
partner once Ashley has sufficient net assets to meet the NASAA Guidelines to
continue to offer Units in the Partnership. Although there can be no
assurance that Ashley, as the sole corporate General Partner, will satisfy
the IRS "safe harbor" test to permit the Partnership to continue to be taxed
as a partnership, before Mr. Pacult resigns, Ashley will secure an opinion of
counsel to the effect that sufficient other IRS elements exist to permit the
Partnership to continue to be taxed as a partnership and not as a
corporation. The Units owned by either general partner in the Partnership
and in other partnerships in which they act as a general partner shall not be
included in calculating their Net Worth. A letter of credit may be included.
The requirements of this subparagraph (i) may be modified if the General
Partner obtains an opinion of counsel for the Partnership to effect that a
proposed modification will not (1) adversely affect the classification of the
Partnership as a partnership for Federal income tax purposes; (2) will not
adversely affect the status of the Limited Partners as limited partners under
the Act; (3) will not violate any applicable state securities or Blue Sky law
or any rules, regulations, guidelines or statements of policy promulgated or
applied thereunder including, but not limited to, the net worth required by
Section II.B of the Guidelines for Registration of Commodity Pool Programs,
as adopted in revised form by the North American Securities Administrators
Association, Inc. as are in effect on the date of such proposed modification.
(j) Maintain a current list of the name, address, and number of Units owned
by each Limited Partner at the General Partner's principal office. Such list
shall be disclosed to any Partner or their representative at reasonable
times, upon request, either in person or by mail, upon payment, in advance,
of the reasonable cost of reproduction and mailing. The Partners and their
representatives shall be permitted access to all other records of the
Partnership, after adequate notice, at any reasonable time, at the offices of
the Partnership. The General Partner shall maintain and preserve such
records for a period of not less than six (6) years.
4.5 GENERAL PROHIBITIONS. The Partnership shall not:
(a) borrow from or loan to any person, except that the foregoing is not
intended to prohibit the incurring of any indebtedness to a Partner or an
Affiliate with respect to the offering of Units for sale, Registration, or
initiation and maintenance of the Partnership's trading positions.
(b) commingle its assets with those of any other person, except to the
extent permitted under the Securities and Exchange Act or the Commodity
Exchange Act and the regulations promulgated under each.
(c) permit rebates or give-ups to be received by the General Partner or any
Affiliate of the General Partner, or permit the General Partner or any
Affiliate of the General Partner to engage in reciprocal business
arrangements which would circumvent the foregoing prohibition; provided,
however, that an Affiliate or the General Partner may provide goods or
services, including brokerage, at a competitive cost to the Partnership.
(d) engage in the pyramiding of its positions (i.e., the use of unrealized
profits on existing positions to provide margins for additional positions in
the same or a related stock or commodity); provided, however, that there may
be taken into account the Partnership's open trade equity on existing
positions in determining whether to acquire additional unrelated stock or
commodity positions.
(e) margins of all open positions in all stocks and commodities combined
would exceed 250% of the partnership's Net Asset Value at the time such
position would otherwise be initiated.
(f) permit churning of the Partnership's trading account for the purpose of
generating brokerage commissions to any person.
(g) directly or indirectly pay or award any finder's fees, commissions or
other compensation to any persons engaged by a potential limited partner for
independent investment advice as an inducement to such advisor to advise the
potential limited partner to purchase Units in the Partnership without the
knowledge of such potential limited partner.
(h) No Partnership funds will be held outside the United States. The
Partnership funds committed to trading will be on deposit with and under the
control of a futures commission merchant regulated pursuant to the Commodity
Exchange Act, as may be amended, from time to time. The funds not committed
to trading will be in investments that are properly registered under the
United States securities or other financial institution regulations.
(i) The CTA may not receive a management fee pursuant to the terms of this
Partnership Agreement if it shares or participates, directly or indirectly,
in any commodity brokerage commissions generated by the Partnership.
4.6 FEES AND EXPENSES.
(a) The Partnership shall pay all Organization Costs and offering Expenses
incurred in the creation of the Partnership and sale of Units. The foregoing
expenses may be paid directly by the Partnership or may be reimbursed by the
Partnership to the General Partner or an Affiliate of the General Partner.
Notwithstanding the foregoing, in no event will reimbursement by the
Partnership to the General Partner for Organization Costs and offering
Expenses charged to the Partnership exceed an amount equal to 15% of the
gross proceeds from the sale of Units. Organization Costs and Offering
Expenses shall mean those Expenses incurred in connection with the formation,
qualification and Registration of the Partnership and in distributing and
processing the Units under applicable Federal and state law, sales
commissions, and any other expenses such as: (i) registration fees, filing
fees and taxes; (ii) the costs of qualifying, printing, amending,
supplementing, mailing and distributing, including publication by website,
the Registration Statement and Prospectus; (iii) the costs of qualifying,
printing, amending, supplementing, publication by website, mailing and
distributing sales materials used in connection with the issuance of the
Units; (iv) salaries of officers and employees of the General Partner and any
Affiliate of the General Partner while directly engaged in distributing and
processing the Units and establishing its records; (v) rent, travel,
remuneration of personnel, telegraph, telephone and other expenses in
connection with the offering of the Units; (vi) accounting, auditing, and
legal fees incurred in connection therewith; and (vii) any extraordinary
expenses related thereto. Organization Costs and Offering Expenses do not
include salaries, rent, travel, expenses and other items of General Partner
overhead.
(b) All operating expenses of the Partnership shall be billed directly to
and paid by the Partnership.
(c) The General Partner or any Affiliate of the General Partner may be
reimbursed for the actual costs of any Expense including, but not limited to,
legal, accounting and auditing services used for or by the Partnership, as
well as printing and filing fees and extraordinary expenses incurred for or
by the Partnership; provided, however, the limitations of contained in
Article X - Exoneration and Indemnification contained in this Agreement will
apply to restrict the purchase of certain insurance coverage and the
assumption of the defense of certain claims.
(d) The General Partner may establish its compensation, from time to time,
for its services; provided, however, such charges shall be no more than:
(i) A sales commission of up to six percent (6%) to be established, from
time to time, by the General Partner, for sales of Units;
(ii) A management fee of one half of one percent (1/2 of 1%) per month (6%
per year) of the Net Asset Value of the Partnership, computed and paid to
the General Partner and/or non-affiliated independent investment or trading
advisor on the close of business on the last day of each month;
(iii) An incentive fee, paid quarterly, of up to fifteen percent (15%) of the
first one hundred percent (100%) of New Net Profit, or less earned upon
Capital, and prorated to consider the date of deposit of such Capital to the
Partnership each year. The incentive fee may be increased up to 27%,
provided that the management fee is correspondingly reduced to 0%. Each
trading sub-account established by the General Partner shall be considered
separately for purposes of incentive fee. The incentive fee will be non-
refundable; i.e., in the event that the Partnership earns substantial New Net
Profit during the first month of any year and, thereafter, suffers losses,
the General Partner will not refund any of the profit incentive fee paid for
the prior month or months. However, the Partnership will not pay or accrue
to the General Partner any further incentive fee during that year until such
time as the New Net Profit, when added to Net Asset Value, after additions,
deductions of Redemptions and distributions, exceeds the highest Net Asset
Value, computed for that year; i.e., incentive fees will only be earned and
paid or accrued upon New Net Profit for that year; and
(iv) A share of the brokerage commissions paid for trades made by the
Partnership. Such commissions shall not be more than the average published
fixed rate per month or per round-turn charged, from time to time, to public
commodity pools by national brokerage firms for similar trading size,
frequency, and style.
(e) The General Partner is hereby authorized to employ brokers, attorneys,
accountants, consultants, and administrative personnel who may be Affiliated
with the General partner to perform Partnership business at the expense of
the Partnership. Ashley has advanced the initial offering and organizational
expenses. The offering expenses were reimbursed by the Partnership
immediately upon the Initial Closing and the organizational expenses are
being repaid to the corporate General Partner monthly. The Partnership is
subject to yearly accounting, audit and legal fees of approximately $29,000,
$24,000 and $7,000, respectively.
(f) The General Partner is hereby authorized, individually or through an
Affiliate, to employ non-affiliated independent investment and trading
advisors to trade the assets of all or a portion of the Fund to be paid (i)
an annual management fee not to exceed six percent (6%) of the assigned
trading equity when combined with the General Partner's management fee, if
any; and, (ii) an incentive fee of up to fifteen percent (15%) on New Net
Profit earned by such advisor, which may be increased by 2% for each 1%
reduction of management fee from 6% or decreased pursuant to the terms of
this Agreement. All incentive fees may be prorated monthly but must be paid
quarterly.
4.7 ACTIVITIES OF PARTNERS.
(a) The General Partner and its Affiliates shall devote to the Partnership
only such time as shall be reasonably required to fulfill their
responsibilities hereunder.
(b) Any Partner may, notwithstanding the existence of this Agreement,
engage in whatever other activities they may choose, whether the same be
competitive with the Partnership or otherwise, without having or incurring
any obligation or conflict of interest in such activities with the
Partnership or to any party hereto. The Partners are specifically authorized
to deal with other partnerships and to acquire interests in positions and
trading without having to offer participation therein to the Partnership or
the other Partners. Neither this Agreement nor any activities undertaken
pursuant hereto shall prevent any Partner, including the General Partner and
its Affiliates and their officers, directors and employees, from engaging in
the trading contemplated by this Partnership individually, jointly with
others, or as a part of any other association to which any of them are or may
become parties, in the same trades as the Partnership, or require any of them
to permit the Partnership, the General Partner or any other Partner to
participate in any of the foregoing. As a material part of the consideration
for each party's execution hereof, each Partner hereby waives, relinquishes
and renounces any such right or claim of conflict of interest and
participation from any other Partner.
(c) Ashley is a corporation which was formed on October 15, 1996, and prior
to that date, it didn't have any experience in the management of a
partnership which trades commodity futures or options, or any other
securities; however, on the date of this Agreement, Ashley has over four
years of successful operation of this Fund. In addition, Mr. Pacult, has
been engaged in supervision of individual managed commodity accounts for over
23 years and has managed one other commodity pool. The past and future
results of trading by the principals of the General Partner, both within and
without the partnership, will be confidential and not disclosed to the other
Partners. Such positions taken by the principals may be the same as or
different from any positions taken by the General Partner or any advisor to
the Fund. Nothing in this Section, or elsewhere in this Partnership
Agreement, shall permit the General Partner to violate their fiduciary or
legal obligations to the Partnership.
4.8 CONFLICTS OF INTEREST. Significant actual and potential conflicts of
interest exist in the structure and operation of the Partnership. The
General Partner has used its best efforts to identify and describe all
potential conflicts of interest that may be present under this heading and
elsewhere in the Partnership's Prospectus and the Exhibits attached thereto.
Prospective investors should consider that the General Partner intends to
assert that Partners have, by subscribing to the Partnership, consented to
the existence of such potential conflicts of interest as are described in
this Agreement and the Prospectus and its Exhibits, in the event of any claim
or other proceeding against the General Partner, any principal of the General
Partner, the CTA, any Principal of the CTA, the Partnership's FCM, or any
principal of the FCM or any principal or any Affiliate of any of them
alleging that such conflicts violated any duty owed by any of them to said
subscriber. Specifically, the Partnership is selling its Units issuer direct
and, therefore, absent the selection of non-Affiliated Selling Agents, no
independent due diligence of the Partnership or the General Partner will be
made by a National Association of Securities Dealers, Inc. member.
(a) MANAGEMENT OF OTHER EQUITY AND FOR THEIR OWN ACCOUNTS BY THE GENERAL
PARTNER, THE CTAs, AND THEIR PRINCIPALS. The right of both Mr. Pacult, in
any capacity, and Ashley to manage and the actual management by the CTA of
accounts they or their Affiliates own or control and other commodity accounts
and pools presents the potential for conflicts of interest. There is no
limitation upon the right of Mr. Pacult, Ashley, the CTA, or any of their
Affiliates to engage in trading commodities for their own account. It is
possible for these persons to take their positions in their personal accounts
prior to the orders they know they are going to place for the money they
manage for others. The General Partner will obtain representations from all
of these persons and their Affiliates that no such prior orders will be
entered for their personal accounts. The Partnership's CTA will be effecting
trades for its own accounts and for others (including other commodity pools
in competition with this Pool) on a discretionary basis. It is possible that
positions taken by the CTA for other accounts may be taken ahead of or
opposite positions taken on behalf of the Partnership. Conflicts may arise
as a result of the involvement of Mr. Pacult in the management of Bromwell
Financial Fund, L. P. and Providence Select Fund, L. P. and other conflicts
could arise should either Ashley or he exercise their right to form other
commodity pools in the future. Conflicts could also arise because the CTA
may have financial incentives to favor other accounts over the Partnership.
In the event Mr. Pacult, Ashley or the CTA, or any of their principals trade
for their own account, such trading records shall not be made available for
inspection by the Partners. Ashley does not presently intend to engage in
trading for its own account; however, Mr. Pacult reserves the right to trade
for his own account. The CTA also reserves the right to trade for its own
account and other public and private commodity pools in competition with the
Fund. Any trading for their personal accounts or other commodity pools by
the General Partner, any Commodity Trading Advisor selected to trade for the
Partnership or any of their principals could present a conflict of interest
in regard to position limits, timing of the taking of positions or other
similar conflicts. The result to the Partnership could be a reduction in the
potential for profit should the entry or exit of positions be at unfavorable
prices by virtue of position limits or entry of other trades in front of the
Partnership trades by the General Partner or CTA responsible for the
management of the Partnership.
(b) POSSIBLE RETENTION OF VOTING CONTROL BY THE GENERAL PARTNER. There is
no limit upon the number of Units in the Partnership the General Partner and
its principal and Affiliates may purchase. It will be possible for them to
vote, individually or as a block, to create a conflict with the best
interests of the Partnership, in regard to the selection of Commodity Trading
Advisors which do not trade frequently to protect the eleven percent (11%)
fixed commission paid by the Partnership to the Corporate General Partner.
(c) GENERAL PARTNER TO REMAIN AGAINST POSSIBLE BEST INTEREST OF
PARTNERSHIP. As Ashley has financial interest in the operation of the
Partnership in the form of the eleven percent (11%) fixed brokerage
commission and because Mr. Pacult serves as the other general partner and is
also the sole principal of Ashley, the other general partner, it is unlikely
that either general partner would voluntarily resign, even if such
resignation would be in the best interest of the Partnership.
(d) FEES AND CHARGES TO THE PARTNERSHIP PAID TO GENERAL PARTNER NOT
NEGOTIATED. The fixed commission of eleven percent (11%) per year for
domestic trades entered by the CTA in lieu of round-turn brokerage
commissions, payable to Ashley that is Affiliated with Mr. Pacult, has not
been negotiated at arm's length. The General Partner has a conflict of
interest between its responsibility to manage the Partnership for the benefit
of the Limited Partners and its interest in receiving the difference between
the fixed commission charged the Partnership and the actual transaction costs
incurred by the FCM as a result of the frequency of trades entered by the
CTA. See "Charges to the Partnership" in the Partnership's Prospectus. The
General Partner will select the CTAs to manage the Partnership assets and the
CTAs determine the frequency of trading. Because the General Partner will
receive the difference between the brokerage commissions and other costs
which will be paid on behalf of the Partnership and the fixed commission, the
General Partner's best interests are served if it selects trading advisors
which will trade the Partnership's Net Assets assigned to them in a way to
minimize the frequency of trades to maximize the difference between the fixed
commission and the round-turn commissions for domestic trades and other costs
to trade charged by the FCM; i.e., it is in the best interest of the General
Partner to reduce the frequency of trading rather than concentrate on the
expected profitability of the CTAs without regard to frequency of trades.
This conflict is offset by the fact the General Partner does not select any
of the trades and the CTA is paid an incentive of 25% of New Net Profits.
The arrangements between the General Partner and the Partnership with respect
to the payment of the commissions are consistent in cost with arrangements
other comparable commodity pools have made to clear their trades. These
arrangements are fair to the Partnership and its investors because the
General Partner has assumed the risk of frequency of trading, up to a maximum
of three times the normal rate by the CTA.
(e) CONFLICTS OF INTEREST IN THE PARTNERSHIP STRUCTURE. Certain actual and
potential conflicts of interest do exist in the structure and operation of
the Partnership which must be considered by investors before they purchase
Units in the Partnership. See "Risk Factors", and "Conflicts of Interest" in
the Partnership's Prospectus. In addition, the Partnership is selling its
Units issuer direct and, therefore, no independent due diligence of the
offering will be conducted for the protection of the investors. The General
Partner has taken steps to insure that the Partnership equity is held in
segregated accounts at the banks and the futures commission merchant selected
and has otherwise assured the Partnership that all money on deposit is in the
name of and for the beneficial use of the Partnership.
(f) GENERAL PARTNER TO DISCOURAGE REDEMPTIONS. The General Partner has an
incentive to withhold distributions and to discourage Redemption because
Ashley receives compensation based on the Net Asset Value of the Partnership
assigned to the CTAs to trade.
(g) HIGH RISK TRADING BY THE CTAs TO GENERATE INCENTIVE FEES. As a general
rule, the greater the risk assumed, the greater the potential for profit.
Because the CTA is compensated by the General Partner based on a percentage
of the New Net Profit of the Partnership, it is possible that the CTA will
select trades which are otherwise too risky for the Partnership to assume to
earn the percentage incentive fee on the profit should that ill-advised
speculative trade prove to be profitable.
(h) NO RESOLUTION OF CONFLICTS PROCEDURES. As is typical in many futures
partnerships, the General Partner has not established formal procedures, and
none are expected to be established in the future, to resolve the potential
conflicts of interest which may arise. It will be extremely difficult, if
not impossible, for the General Partner to assure that these and future
potential conflicts will not, in fact, result in adverse consequences to the
Partnership or the Limited Partners. The foregoing list of risk factors and
conflicts of interest is complete as of the date of this Prospectus, however,
additional risks and conflicts may occur which are not presently foreseen by
the General Partner. Investors are not to construe this Prospectus as legal
or tax advice. Before determining to invest in the Units, potential
investors should read this entire Agreement as well as the Partnership's
Prospectus and the subscription agreement, and consult with their own
personal legal, tax, and other professional advisors as to the legal, tax,
and economic aspects of a purchase of Units and the suitability of such
purchase for them. See "Investor Suitability" in the Partnership's
Prospectus.
(i) INTERESTS OF NAMED EXPERTS AND COUNSEL. The General Partner has
employed The Scott Law Firm, P.A. to prepare this Prospectus, provide certain
tax advice and opine upon the legality of the issuance of the Units. Neither
the Law Firm nor its principal, nor any accountant or other expert employed
by the General Partner to render advice in connection with the preparation of
the Prospectus or any documents attendant thereto, have been retained on a
contingent fee basis nor do they have any present interest or future
expectation of ownership in the Partnership or its General Partner or the
Underwriter or the CTAs or the IB or the FCM.
4.9 LIMITATION OF POWERS. Without concurrence of a Majority in Interest,
the General Partner may not:
(a) Amend this Agreement except for those amendments that are specifically
authorized by this Agreement or do not adversely affect the rights of the
Limited Partners.
(b) Voluntarily withdraw as a General Partner other than upon 120 days
notice.
(c) Appoint a new General Partner or additional general partners; provided,
however, additional general partners may be appointed without obtaining the
consent of a Majority in Interest if the addition of such person is necessary
to preserve the tax status of the Partnership as a partnership and not as a
corporation; and the admission of such additional general partner does not
materially adversely affect the Limited Partners.
(d) Sell all or substantially all of the Partnership assets other than in
the ordinary course of business.
(e) Cause the merger or other reorganization of the Partnership.
(f) Dissolve the Partnership other than because of an event, which by law,
requires such dissolution.
ARTICLE V
Rights and Obligations of Limited Partners
5.1 LIMITATION OF LIABILITY. No Limited Partner shall be personally liable
for any of the debts of the Partnership or any of the losses thereof.
However, the amount committed by him to the Capital of the Partnership and
his interest in Partnership assets shall be subject to liability for
Partnership debts and obligations. Limited Partners may be liable to repay
any wrongful distribution of profits to them and may be liable for
distributions (with interest thereon) considered to be a return of Capital if
necessary to satisfy creditors of the Partnership.
5.2 NO MANAGEMENT RIGHTS. No Limited Partner shall take part in the
management of the business of the Partnership or transact any business for
the Partnership. No Limited Partner, as such, shall have the power to sign
for or to bind the Partnership.
5.3 CERTAIN RIGHTS. Provided the following, does not either (i) subject
the Limited Partners to unlimited liability or (ii) subject the Partnership
to be taxable as a Corporation for purposes of Federal Income tax laws, the
Partners, by a vote of a Majority in Interest, without the necessity for
concurrence by the General Partner, shall have the following rights in
addition to those granted elsewhere in this Agreement:
(a) Amend the Partnership Agreement; provided, however, any amendment which
modifies the compensation or distributions to the General Partner or which
affects the duties of the General Partner requires the consent of a majority
of the Limited Partners.
(b) The General Partner may be removed and a new General Partner elected in
accordance with the terms of this Agreement.
(c) Cancel any contract for services with the General Partner, without
penalty, upon 60 days written notice; provided, however, the maximum period
of any contract between the General Partner and the Partnership is one year;
and, provided further, should any amendment to this Partnership Agreement
attempt to modify the compensation or distributions to which the General
Partner is entitled or which affects the duties of the General Partner, such
amendment will become effective only upon the consent of the General Partner.
(d) The right to approve, prior to sale, the sale or distribution, outside
the ordinary course of business, of all or substantially all of the assets of
the Partnership.
(e) Dissolve the Partnership.
(f) Any material changes in the Partnership's basic investment policies
identified in Article III including, but not limited to, the speculation and
trade in commodity futures, forward futures contracts, and options upon those
contracts both within and without the United States or the structure of the
Partnership as a limited partnership requires prior written notification of a
meetings which identifies the purpose of the meeting and the approval by a
vote of the Majority in Interest of the Partners.
5.4 GENERAL PARTNER ACTION WITHOUT LIMITED PARTNER APPROVAL.
Notwithstanding anything in this Agreement, particularly section 5.3, to the
contrary, the General Partner may amend this Agreement without any vote,
consent, approval, authorization or other action of any other Partner and
without notice to any other Partner to:
(a) add to the representations, duties or obligations of the General
Partner or its Affiliates or surrender any right or power granted to the
General Partner or its Affiliates in this Agreement for the benefit of the
Limited Partners;
(b) cure any ambiguity, correct or supplement any provision in this
Agreement which may be inconsistent with any other provision in this
Agreement, or make any other provisions with respect to matters or questions
arising under this Agreement which will not be inconsistent with the intent
of this Agreement;
(c) delete or add any provision of this Agreement required to be so deleted
or added by the staff of the Securities and Exchange Commission, or by a
state securities law administrator or similar such official, which addition
or deletion is deemed by such official to be for the benefit or protection of
the Limited Partner or does not have a material adverse effect on the Limited
Partners generally or the Partnership;
(d) reflect the withdrawal, expulsion, addition or substitution of
Partners;
(e) reflect the proposal, promulgation or amendment of Regulations under
Code section 704, or otherwise, to preserve the uniformity of interest in the
Partnership issued or sold from time to time, if, in the opinion of the
General Partner, the amendment does not have a material adverse effect on the
Limited Partners generally;
(f) elect for the Partnership to be bound by any successor statute to the
Act, if, in the opinion of the General Partner, the amendment does not have a
material adverse effect on the Limited Partners generally;
(g) conform this Agreement to changes in the Act or interpretations thereof
which, in the exclusive desecration of the General Partner, it believe
appropriate, necessary or desirable, if, in the General Partner's reasonable
opinion, such amendment does not have a materially adverse effect on the
Limited Partners generally or the Partnership;
(h) change the name of the Partnership;
(i) conform the provisions of this Agreement to any applicable requirements
of Federal of state law which, in the exclusive discretion of the General
Partner, it believes appropriate, necessary or desirable, if, in the General
Partner's reasonable opinion, such amendment does not have a material adverse
effect on the Limited Partners generally or the Partnership; and
(j) make any change which, in the exclusive discretion of the General
Partner, is advisable to qualify or to continue the qualification of the
Partnership as a limited partnership or a partnership in which the Limited
Partners have limited liability under the laws of any state or that is
necessary or advisable, in the exclusive discretion of the General Partner,
so that the Partnership will not be treated as an association taxable as a
corporation for Federal income tax purposes.
5.5 EXPULSION OF LIMITED PARTNERS. Anything herein to the contrary
notwithstanding,
(a) no Partner, including any corporation, partnership, trust or other
entity may, at any time, have an ownership percentage of ten percent or more
of the aggregate ownership percentages of the Limited Partners. If, at any
time, the General Partner determines that any Limited Partner has an
ownership percentage of ten percent or more, the Partnership, in the General
Partner's exclusive discretion, may cause a Redemption by that Limited
Partner of the number of Units necessary or advisable to reduce that Limited
Partner's ownership percentage to less than ten percent. The Redemption
shall be effective as of the next Valuation Date or such other Valuation
Date, at the discretion of the General Partner.
(b) the General Partner has the right, in its sole discretion, to raise or
lower the minimum investment in the Partnership required for the admission or
retention of Units in the Partnership by a Partner; however such minimum
investment may not be lowered below $5,000. In the event the General Partner
does raise the minimum investment in the Partnership to an amount in excess
of any Partners Capital account, the Partnership shall provide notice to the
Partner of such event and allow the Partner 30 days to raise the Capital
account for that Partner to such raised amount, or more. In the event the
Partner does not so raise his Capital account to such minimum amount, the
Partner shall be deemed to have elected to withdraw from the Partnership and
all of his Units shall be redeemed at the next redemption date as provided in
this Agreement.
(c) notwithstanding the foregoing, the General Partner, at its sole
discretion, may expel any Partner at anytime, by causing the redemption of
that Partner's Units as of the next Valuation Date, or such other Valuation
Date as the General Partner may determine.
5.6 NOTIFICATION. Notice shall be sent to each Partner within seven
business days from the date of:
(a) any decline in the Net Unit Value to less than 50% of the Net Asset
Value on the last Valuation Date;
(b) any material change in contracts with the FCM or CTA including, but
not limited to, any change in CTAs or any modification in connection with the
method of calculating the incentive fee;
(c) any other material change affecting the compensation of the General
Partner, FCM, CTA or any Affiliated party;
5.7 NOTIFICATION CONTENTS.
(a) a material change related to brokerage commissions shall not be made
until notice is given and the Partners, after such notice, have the
opportunity to Redeem pursuant to Article IX;
(b) in addition, in regard to all other changes, the required notification
shall describe the change in detail, include a description of the Partners'
Redemption rights pursuant to Article IX and voting rights pursuant to this
Article V and a description of any material effect such changes may have on
the interests of the Partners.
5.8 EXERCISE OF RIGHTS. Upon receipt of a written request, executed by the
holders of Units aggregating ten percent (10%) or more of the Units, for a
vote upon and to take action with respect to any rights of the Partners under
this Agreement, the General Partner shall call a meeting of all Partners of
the Partnership in the time and manner as provided in Section 8.7 hereof.
The General Partner will assume the cost for distribution of the request for
the meeting.
5.9 EXAMINATION OF BOOKS AND RECORDS. A Limited Partner shall have the
right to examine the books and records of the Partnership at all reasonable
times, including the right to have such examination conducted at his sole
expense by any reasonable number of representatives. Notwithstanding the
foregoing, the General Partner may keep and withhold the names of the other
Partners, specific trading and other designed information confidential from
the Partners.
ARTICLE VI
Assignment of Limited Partnership Units;
Admission of Limited Partners
6.1 RESTRICTION ON ASSIGNMENT. A Partner may not assign or transfer some
or all of his Units in the Partnership without the written consent of the
General Partner; provided, however, that in no event may an assignment be
made or permitted until after six months from the date of purchase of such
assigned or transferred Units(s) by said Partner; and, provided, further,
that full Units must be assigned and the assignor, if he is not assigning all
of his Units, will retain more than five Units. Any such assignment shall be
subject to all applicable securities, commodity, and tax laws and the
regulations promulgated under each such law. The General Partner shall
review any proposed assignment and shall withhold its consent in the event it
determines, in its sole discretion, that such assignment could have an
adverse effect on the business activities or the legal or tax status of the
Partnership.
6.2 QUALIFIED PLAN RESTRICTIONS. In no event shall a Partner be entitled
to transfer all or part of a Partnership interest if, under applicable United
States Department of Labor law or regulations, such transfer would result in
a violation of such law or regulations.
6.3 DOCUMENTATION OF ASSIGNMENT. The General Partner shall furnish to the
assigning Limited partner a proper form to duly effect such assignment. The
General Partner shall not be required to recognize any assignment and shall
not be liable to the assignee for any distributions made to the assigning
Limited Partner until the General Partner has received such form of
assignment, properly executed with signature guaranteed, together with the
Certificate of Ownership originally issued to the Limited Partner (or an
indemnity bond in lieu therefor) and such evidence of authority as the
General Partner may reasonably request and the General Partner shall have
accepted such assignment.
ARTICLE VII
Accounting Records, Reports and Distributions
7.1 DISTRIBUTIONS. Each Partner will have a Capital account, and its
initial balance will be the amount the Partner paid for the Partner's Units.
The Net Assets of the Partnership will be determined monthly, and any
increase or decrease from the end of the preceding month will be added to or
subtracted from the accounts of the Partners in the ratio that each account
bears to all accounts. Distributions from profits or Capital will be made
solely at the discretion of the General Partner.
7.2 BOOKS OF ACCOUNT. Proper books of account shall be kept and there
shall be entered therein all transactions, matters and things relating to the
Partnership's business as required by applicable law and the regulations
promulgated thereunder and as are usually entered into books of account kept
by persons engaged in business of like character. The books of account shall
be kept at the principal office of the General Partner and each Limited
Partner (or any duly constituted agent of a Limited Partner) shall have, at
all times during reasonable business hours, free access, subject to rules of
confidentiality established by the General Partner, the right to inspect and
copy the same. Such books of account shall be kept on an accrual basis. A
Capital account shall be established and maintained from each Partner, as set
forth above.
(a) Each Partner shall be furnished as of the end of each Fiscal Year with
(1) annual financial statements, audited by a certified public accountant,
within 90 days from the end of such year; together with such other reports
(in such detail) as are required to be given to Partners by applicable law,
specifically, annual and periodic reports will be supplied by the General
Partner to the other Partners in conformance with the provisions of CFTC
regulations for reporting to Pool Participants, 17 C.F.R. Section 4.22, as
amended, from time to time, and, (2) any other reports or information which
the General Partner, in its sole discretion, determines to be necessary or
appropriate.
(b) Appropriate tax information (adequate to enable each Partner to
complete and file his Federal tax return) shall be delivered to such Partner
no later than January 31 following the end of each Calendar Year.
7.3 CALCULATION OF NET ASSET VALUE. Net Asset Value shall be calculated
daily and reports delivered to Partners as of the last day of each month by
the 20th of the following month. Upon request, the General Partner shall
make available to any Partner the Net Unit Value.
7.4 MAINTENANCE OF RECORDS. The General Partner shall maintain all records
as required by law including, but not limited to, (1) all books of account
required by paragraph 7.1 of this Article VII; and, (2) a record of the
information obtained to indicate that a Partner meets the applicable investor
suitability standards.
7.5 TAX RETURNS The General Partner shall cause tax returns for the
Partnership to be prepared and timely filed with the appropriate authorities.
The General Partner shall cause the Partnership to pay any taxes payable by
the Partnership; provided, however, that the General Partner shall not be
required to cause the Partnership to pay any tax so long as the General
Partner or the Partnership shall be in good faith and by appropriate means
contesting the applicability, validity or amount thereof and such contest
shall not materially endanger any right or interest of the Partnership.
7.6 TAX ELECTIONS The General Partner shall from time to time, make such
tax elections or allocations deemed necessary or desirable to carry out the
business of the Partnership or the purposes of this Agreement. Ashley shall
be authorized to perform all duties imposed by Sections 6221 through 6232 of
the Internal Revenue Code on the General Partner as "tax matters partner" of
the Partnership, including, but not limited to, the following: (i) the power
to conduct all audits and other administrative proceedings with respect to
Partnership tax items; (ii) the power to extend the statute of limitations
for all Limited Partners with respect to Partnership tax items; (iii) the
power to file a petition with an appropriate federal court for a review of a
final Partnership administrative adjustment; and, (iv) a power of attorney on
behalf of each Limited Partner having less than a 1% interest in the
Partnership to enter a settlement with the Internal Revenue Service on behalf
of, and binding upon, those Limited Partners unless any said Limited Partner
shall have notified the Internal Revenue Service and the General Partner,
within 30 days of service of the notice of claim up said Limited Partner,
that the General Partner may not act on such Limited Partner's behalf.
ARTICLE VIII
Amendments of Partnership Agreement
8.1 RESTRICTION ON AMENDMENTS. No amendment to this Agreement shall be
effective or binding upon the partners unless the same shall have been
approved by a Majority in Interest of the Partners; provided, however, the
General Partner may adopt amendments without such approval which are, in the
sole judgment of the General Partner, deemed necessary or desirable to
maintain the business or limited partnership or other favorable tax status of
the Partnership, or permit a Public Offering of the Units, or to maintain the
Partnership and the General Partner and its principals in compliance with the
laws which govern the business, including the requirements of any self
regulatory organization, or to substitute or add persons as Limited Partners.
8.2 ADMISSION OF ADDITIONAL PARTNERS. At any time, the General Partner
may, in its sole discretion and subject to applicable law, admit additional
Partners. Each newly admitted Partner shall contribute cash equal to the Net
Unit Value of the Partnership for each Unit to be acquired. The terms of any
additional offering may be different from the terms of the initial offering.
All expenses of any such additional offering shall be borne by the either the
Partnership or the subscribers thereto, as determined in the sole discretion
of the General Partner. Pursuant to Article VI, the General Partner may
consent to and admit any assignee of Units as a substituted Partner. There
is no maximum aggregate amount of Units which may be offered and sold by the
Partnership or on the amount of contributions which may be received by the
Partnership.
8.3 TERMINATION OF OFFERINGS; ADDITIONAL OFFERINGS. Notwithstanding
anything stated herein to the contrary, the General Partner may from time to
time, in its sole discretion, limit the number of Units to be offered,
terminate any offering of Units, or register additional Units and/or make
additional public or private offerings of Units. No Limited Partner shall
have any preemptive, preferential or other rights with respect to the
issuance or sale of any additional Units. No Limited Partner shall have the
right to consent to the admission of any additional Limited Partners.
8.4 NOTICE OF RESTRICTED TRANSFER. Should the General Partner elect to
issue certificates of Limited Partnership, each certificate shall be subject
to and contain the following notice:
THESE LIMITED PARTNERSHIP INTERESTS SHALL NOT BE TRANSFERABLE BY THE
REGISTERED HOLDER EXCEPT BY CONSENT OF THE GENERAL PARTNER AND AS OTHERWISE
PROVIDED IN THE PARTNERSHIP AGREEMENT.
8.5 MEETINGS OF PARTNERS. Upon receipt of a written request, together with
the costs to distribute such request to all Partners, executed by Partners
holding ten percent (10%) or more of the Units, for the calling of a meeting
of the Partners or should the General Partner desire a meeting for any
purpose, the General Partner shall, within fifteen (15) days thereafter,
provide written notice, either in person or by certified mail, after the date
of receipt of said notice. Such written notice shall state the purpose of
the meeting, specify a reasonable time, place, and date, which shall be not
less than thirty (30) or more than sixty (60) days thereafter. An Amendment
shall be adopted and binding upon all parties hereto if a Majority in
Interest of the Partners vote for the adoption of such amendment. Partners
may vote in person or by written proxy delivered to any such meeting.
Meetings of Partners may also be held by conference telephone where all
Partners can hear one another.
8.6 RIGHT OF GENERAL PARTNER TO RESIGN. The individual General Partner,
Mr. Pacult, may resign upon one hundred twenty (120) days notice to all other
Partners. The corporate General Partner, Ashley, may resign or assign any
portion of its interest in the Partnership at anytime to a third party and
become a Limited Partner with respect to the balance of its interest in the
Partnership, if any, if it provides one hundred twenty (120) days prior
written notice to all other Partners of its intention to resign and states in
such notice the name of the intended assignee who is to become substitute
corporate General Partner and the information reasonably appropriate to
enable the Partners to decide whether or not to approve the substitution or,
in the alternative, provide that the partners must elect a successor general
partner. In the event of the voluntary withdrawal by the corporate General
Partner, the corporate General Partner shall pay the legal fees, recording
fees and all other expenses incurred as a result of its withdrawal. Upon
resignation, the corporate General Partner shall be paid the items identified
in Section 8.7 below.
8.7 AMENDMENT INVOLVING SUCCESSOR CORPORATE GENERAL PARTNER. Should a
resignation or an amendment to the Agreement provide for a change in the
general partner upon the conditions provided in this Agreement, the election
and admission of a person or persons as a successor or successors to the
corporate General Partner, shall require the following conditions: the
General Partner shall retire and withdraw as General Partner and the
Partnership business shall be continued by the successor general partner or
general partners, and such amendment shall expressly provide that on or
before the effective date of removal.
(a) The corporate General Partner shall be permitted to Redeem 100% of its
Units as of the Valuation Date following its removal or resignation in cash
equal to the Net Asset Value of such corporate General Partner's interest in
the Partnership.
(b) The Partnership shall pay to the removed corporate General Partner an
amount equal to the Appraised Value of such General Partner's assets to be
transferred to the successor General Partner to enable the successor to
continue the business of the Partnership. The Appraised Value of the
withdrawing corporate General Partner's interest in the Partnership shall
equal such General Partner's interest in the sum of (1) the Expenses advanced
by the corporate General Partner to the Partnership, (2) all cash items, (3)
all prepaid expenses and accounts receivable less a reasonable discount for
doubtful accounts, and (4) the net book value of all other assets, unless the
withdrawing General Partner of the successor corporate General Partner
believes that the net book value of an asset does not fairly represent its
fair market value in which event such corporate General Partner shall cause,
at the expense of the Partnership, an independent appraisal to be made by a
person selected by the General Partner with approval of a Majority in
Interest of the Partners to determine its value.
(c) The successor General Partner or Partners shall indemnify the former
General Partner for all future activities of the Fund.
ARTICLE IX
Dissolution, Liquidation and Redemption
9.1 DISSOLUTION. The Partnership shall be dissolved, and shall terminate
and wind-up its affairs, upon the first to occur of the following:
(a) the affirmative vote of a Majority in Interest of the Partners adopting
an amendment to this Agreement providing for the dissolution of the
Partnership;
(b) the sale, exchange, forfeiture or other disposition of all or
substantially all the properties of the Partnership out of the ordinary
course of business;
(c) the resignation of the General Partner after one hundred twenty days
notice to the Partners, of the bankruptcy, insolvency or dissolution, or
failure of the General Partner to maintain sufficient Net Worth to qualify
the Partnership as a partnership for Federal Income Tax purposes or as
required by the NASAA Guidelines in effect at the time the Units were sold,
without a successor, promptly after any such event, but in no event beyond
one hundred twenty (120) days after the effective date of such event;
(d) at 11:59 p.m. on the day which is twenty-one (21) years from the 1st
day of February, 1998; or
(e) any event which legally dissolves the Partnership.
9.2 EFFECT OF LIMITED PARTNER STATUS. The death, legal disability,
bankruptcy, insolvency, dissolution, or withdrawal of any Limited Partner
shall not result in the dissolution or termination of the Partnership, and
such Limited Partner, his estate, custodian or personal representative shall
have no right to withdraw or value such Limited Partner's interest in the
Partnership except as provided in Paragraph 9.3. Each Limited Partner (any
assignee thereof) expressly agrees that the provisions of the Act, as
amended, titled "Powers of Legal Representative or Successor of Deceased,
Incompetent, Dissolved or Terminated Partner", shall not apply to his
interest in the Partnership and expressly waives any rights and benefits
thereunder. Each Limited Partner (and any assignee of such Partner's
interest) expressly agrees that in the event of his death, that he waives on
behalf of himself and his estate, and he directs the legal representative of
his estate and any person interested therein to waive the furnishing of any
inventory, accounting or appraisal of the assets and any right to an audit or
examination of the books of the Partnership. The General Partner may assign,
sell, or otherwise dispose of all or any portion of its shares of common
stock without any legal effect upon the operation of the Partnership and no
Limited Partner may object to any such transfer.
9.3 LIQUIDATION. Upon the termination and dissolution of the Partnership,
the General Partner (or in the event the dissolution is caused by the
dissolution or the cessation to exist as a legal entity of the General
Partner, voluntary withdrawal, bankruptcy or insolvency, such person as the
Majority in Interest of the Partners may select) shall act as liquidating
trustee and shall take full charge of the Partnership assets and liabilities.
Thereafter, the business and affairs of the Partnership shall be wound up and
all assets shall be liquidated as promptly as is consistent with obtaining
the fair value thereof, and the proceeds therefrom shall be applied and
distributed in the following order: (i) to the expenses of liquidation and
termination and to creditors, including the General Partner, in order or
priority as provided by law, and (ii) to the Partners pro rata in accordance
with his or its Capital account, less any amount owed by such Partner to the
Partnership.
9.4 RETURN OF CAPITAL CONTRIBUTION SOLELY OUT OF ASSETS. A Partner shall
look solely to the properties and assets of the Partnership for the return of
his Capital Contribution, and if the properties and assets of the Partnership
remaining after the payment or discharge of the debts and liabilities of the
Partnership are insufficient to return his Capital Contribution, he shall
have no recourse against the General Partner or any other Limited Partner for
that purpose.
9.5 REDEMPTION. A Partner (including any approved assignee who becomes a
Limited Partner) may withdraw any part or all of his Capital Contribution and
undistributed profits, if any, by requiring the Partnership to redeem any or
all of his Units at the Net Asset Value thereof (such withdrawal being herein
referred to as "Redemption"). The General Partner has the right to establish
the notice cut-off date and the Redemption effective date. Such Redemptions
shall be no less often than quarterly; provided, however, Redemption may be
deferred until after the lapse of twelve months from the date of purchase of
the Units.
9.6 REDEMPTION PROCEDURES. Redemption shall be after all liabilities,
contingent, accrued, reserved in amounts determined by the General Partner
have been deducted and there remains property of the Partnership sufficient
to pay the Net Unit Value as defined in Paragraph 1.3(b). As used herein,
"request for Redemption" shall mean a letter mailed or delivered by a Partner
and received by the General Partner no less than 10 business days prior to
the effective date for which Redemption is requested. Upon Redemption, a
Partner shall receive, on or before the last day of the following month, an
amount equal to the Net Unit Value redeemed as of the date for which the
request for Redemption was received, less accrued expenses and any amount
owed by such Partner to the Partnership. Redemption is subject to a
Redemption fee to be paid by the Partners as provided below; provided,
however, no Partner other than the initial Limited Partner, may redeem any
Units until the last day of the twelfth month after the commencement of
trading. All Redemption requests shall be subject to the following:
(a) Under special circumstances including, but not limited to, the
inability to liquidate positions as of such Redemption date or default or
delay in payments due the Partnership from banks, brokers, or other persons,
the Partnership may in turn delay payment to Partners requesting Redemption
of Units of the proportionate part of the Net Unit Value represented by the
sums which are the subject of such delay or default.
(b) The General Partner in its sole discretion may, upon notice to the
Partners, declare additional Redemption dates and may cause the Partnership
to redeem fractions of Units and, prior to registration of Units for public
sale, redeem Units held by Partners who do not hold the required minimum
amount of Units established, from time to time, by the General Partner.
(c) For Partners admitted after the date of this Agreement, there will be
no redemption charge or fee. The General Partner may withdraw from the
Partnership at any time and have return of the proceeds attributable to his
Units without any delay or payment of fees..
9.7 SPECIAL REDEMPTION. In the event the Net Unit Value falls to less than
fifty percent (50%) of the Net Asset Value established by the greater of the
initial offering price of one thousand dollars ($1,000), less commissions and
other charges, or such higher value earned after payment of the incentive fee
for the addition of profits, the General Partner shall immediately suspend
all trading, provide immediate notice, in accordance with the terms of this
Agreement, to all Partners of the reduction in Net Asset Value, and afford
all Partners the opportunity for fifteen (15) days after the date of such
notice to Redeem their Units in accordance with the provisions of Section 9.5
and 9.6, above. No trading shall commence until after such fifteen day
period.
ARTICLE X
Nature of Partner's Liabilities for Claims
10.1 PROSECUTION OF CLAIMS. The General Partner shall arrange to prosecute,
defend, settle or compromise actions at law or in equity or with any self
regulatory organizations at the expense of the Partnership as such may be
necessary or desirable to enforce, protect, or maintain Partnership
interests.
10.2 SATISFACTION OF CLAIMS. The General Partner shall satisfy any claims
against, errors asserted, or other liability of the Partnership and any
judgment, decree, decision or settlement, first out of any insurance proceeds
available therefor, next, out of Partnership assets and income, and finally
out of the assets and income of the General Partner.
10.3 GENERAL PARTNER DECISION. The decisions made by the General Partner in
regard to the prosecution or settlement of claims, errors, and other
liabilities, will be final unless contested and put to a vote pursuant to
Section 5.8, in which case the outcome of the vote will determine the course
of action.
10.4 EXONERATION, INDEMNIFICATION, AND NO ANTICIPATION OF PAYMENTS. The
General Partner shall not be liable to the Partnership or the Partners for
any failure to comply with its obligations hereunder except for breach of
fiduciary obligation owed to the partnership or negligence on its part in the
management of Partnership affairs or violation of Federal and state
securities laws in connection with the offering of Units for sale. In
addition:
(a) The General Partner will be indemnified for liabilities and expenses
arising from any threatened, pending or completed action or suit in which it
or any affiliate is a party or is threatened to be made a party by reason of
the fact that it is or was the General Partner of the Partnership (other than
an action by the Partnership or a Partner against the General Partner which
is finally resolved in favor of the Partnership or Partner). The Partnership
will indemnify the General Partner and its affiliates against expenses,
including attorney's fees, judgments and amounts paid in settlement of an
action, suit or proceeding if it has acted in good faith and in a manner it
reasonably believed to be in or not opposed to the best interest of the
Partnership, and provided that its conduct did not constitute negligence or a
breach of fiduciary obligations in the performance of its duty to the
Partnership or a violation of the securities laws. The termination of any
action, suit or proceeding by judgment, order or settlement against the
Partnership shall not of itself create a presumption that the General Partner
or any affiliate did not act in good faith and not in the best interest of
the Partnership.
Notwithstanding any provision of this Agreement to the contrary, the
Partnership shall advance or pay the General Partner or any of its Affiliates
for legal expenses and other costs incurred as a result of any legal action
which alleges a breach of the Federal or state securities laws only if the
following conditions are satisfied: (i) the legal action relates to acts or
omissions with respect to the performance of duties or services on behalf of
the Partnership; (ii) the legal action is initiated by a third party who is
not a Limited Partner, or the legal action is initiated by a Limited Partner
and an independent arbitration panel, administrative law judge, or court of
competent jurisdiction specifically approves such advancement; and, (iii) the
General Partner or its Affiliates undertake to repay the advanced funds to
the Partnership, together with the applicable legal rate of interest thereon,
in cases which such party is not entitled to indemnification under NASAA
Guideline II.F.
To the extent that a General Partner or an Affiliate has been successful on
the merits or otherwise in defense of any action, suit or proceeding referred
to above or in defense of any claim, issue or other matter related to the
Partnership or any other Partner or person who applied to be a Partner, the
Partnership shall indemnify such General Partner against the expenses,
including attorneys' fees and costs, actually and reasonably incurred by it
in connection therewith.
(b) The indemnification of a General Partner shall be limited to and
recoverable only out of the assets of the Partnership. Notwithstanding the
foregoing, the Partnership's indemnification of the General Partner shall be
limited to the amount of such loss, liability or damage which is not
otherwise compensated for by insurance carried for the benefit of the
Partnership. Additionally, the Partnership may not incur the cost of that
portion of liability insurance which insures the General Partner for any
liability as to which the General Partner is prohibited from being
indemnified under this Agreement.
(c) Notwithstanding any provision in this Agreement to the contrary, the
Partnership shall not advance the expenses or pay for any insurance to pay
for the costs of the defense or any liability which is prohibited from being
indemnified pursuant to NASAA Guideline II.F. Specifically, no
indemnification which is the result of negligence or misconduct by the
General Partner or for any allegation of a violation of the Federal or state
securities laws by or against the General Partner, any broker/dealer or any
other party unless there has been a successful adjudication on the merits of
each count involving alleged securities law violation as to the General
Partner or broker/dealer or such other party; or a court of competent
jurisdiction approves a settlement of the claims against the General Partner
or any broker/dealer or any other party and finds, specifically, that the
indemnification of the settlement and related costs should be made after the
court of law has been made aware that the Securities and Exchange Commission
opposes such indemnification and the position of any applicable state
securities regulatory authority where the Partnership Interests were offered
or sold without the compliance with specific conditions upon such
indemnification and the action covered satisfies the provisions of Section
10.4 (a) of this Agreement. Any change in the requirements imposed by the
Securities and Exchange Commission and the state securities administrators in
regard to indemnification shall cause a corresponding change in the right of
the General Partner to indemnification.
(d) The indemnification of the General Partner provided in this Article
shall extend to any employee, agent, attorney, certified public accountant,
or Affiliate of the Partnership and the General Partner.
(e) The Partnership shall indemnify, to the extent of the Partnership
assets, each Partner against any claims of liability asserted against a
Partner solely because he is a Partner in the Partnership.
(f) In the event the Partnership or any Partner is made a party to any
claim, dispute or litigation or otherwise incurs any loss or expense, as a
result of or in connection with any Partner's activities unrelated to the
Partnership business or as a result of an unfounded claim against the
Partnership or any other Partner brought as a result of alleged actions by
said Partner, the Partner which was responsible for the allegations which
caused such loss or expense shall indemnify and reimburse the Partnership and
all other Partners for all loss and expense incurred, including attorneys'
fees and costs.
(g) No creditor of a Partner shall have a right to vote Units. Nor may any
Partner or creditor of a Partner anticipate any principal or income from the
Fund prior to the approval of a Redemption Request or the payment of a
distribution from the Fund.
ARTICLE XI
Power of Attorney
11.1 POWER OF ATTORNEY EXECUTED CONCURRENTLY. Concurrent with the written
acceptance and adoption of the provisions of this Agreement, each Partner
shall execute and deliver to the General Partner, a Power of Attorney
(paragraph 5 of the Subscription Agreement). Said Power of Attorney
irrevocably constitutes and appoints the General Partner as a true and lawful
attorney-in-fact and agent for such Partner with full power and authority to
act in his name and on his behalf in the execution, acknowledgment and filing
of documents, which will include, but shall not be limited to, the following:
(a) Any certificates and other instruments, including but not limited to, a
Certificate of Limited partnership and amendments thereto and a certificate
of doing business under an assumed name, which the General Partner deems
appropriate to qualify or continue the Partnership as a limited partnership
in the jurisdictions in which the Partnership may conduct business, so long
as such qualifications and continuations are in accordance with the terms of
this Agreement or any amendment hereto, or which may be required to be filed
by the Partnership or the Partners under the laws of any jurisdiction;
(b) Any other instrument which may be required to be filed by the
Partnership under Federal or any state laws or by any governmental agency or
which the General Partner deems advisable to file; and
(c) Any documents required to effect the continuation of the Partnership,
the admission of the signer of the Power as a Limited Partner or of others as
additional or substituted Partners or Limited Partners, or the dissolution
and termination of the Partnership, provided such continuation, admission,
dissolution or termination is pursuant to the terms of this Agreement.
11.2 EFFECT OF POWER OF ATTORNEY. The Power of Attorney concurrently
granted by each Partner to the General Partner is a special Power of Attorney
coupled with an interest, is irrevocable, and shall survive the death or
legal incapacity of the Partner; and may be exercised by the General Partner
for each Partner by a facsimile signature of one of its officers or by
listing all of the Partners executing any instrument with a single signature
of one of its officers acting as attorney-in-fact for all of them; and shall
survive the delivery of an assignment by a Partner of the whole or any
portion of his interest in the Partnership; except that where the assignee
thereof has been approved by the General Partner for admission to the
Partnership as a substituted partner, the Power of Attorney shall survive the
delivery of such assignment for the sole purpose of enabling the General
Partner to execute, acknowledge and file an instrument necessary to effect
such substitution.
11.3 FURTHER ASSURANCES. Upon request, each Limited Partner agrees to
execute and deliver to the Partnership, within thirty (30) days after receipt
of a written request from the General Partner, a separate form of power of
attorney granting the same powers described above; and such other further
statements of interest, holdings, designations, powers of attorney and other
instruments as the General Partner deems necessary or desirable.
ARTICLE XII
Miscellaneous Provisions
12.1 NOTICES. Notices, requests, reports, payments or other communications
required to be given or made hereunder shall be in writing and shall be
deemed to be delivered when properly addressed and posted by United States
registered or certified mail or delivered by independent courier which
provides an record of receipt, postage or delivery fees prepaid, properly
addressed to the party being given such notice at its last known address.
Addresses shown on the Schedule of Limited Partners records of the
Partnership shall be considered the last known address of each said party
unless the General Partner is otherwise notified in writing.
12.2 NATURE OF INTEREST OF PARTNERS. The interest of each Partner in the
Partnership is personal property. No Partner may anticipate the distribution
or redemption of principal or income from the Partnership and no assignment
to secure the position of a lender to a Partner shall be valid without the
express written consent of the General Partner.
12.3 GOVERNING LAW. This Agreement shall be construed in accordance with
and governed in all respects by the laws of the State of Delaware. All
Partners agree to consent to the jurisdiction and to bring all actions for
claims related to the Partnership and the sale of the Units in the State and
County of the principal office of the Partnership as it is established, from
time to time, by the General Partner. Currently, the principal office of the
Partnership is located in Kent County, Delaware.
12.4 SUCCESSORS IN INTEREST. This Agreement shall be binding on and inure
to the benefit of he parties hereto and, to the extent permitted by this
Agreement, their respective heirs, executors, administrators, personal
representatives, successors and assigns.
12.5 INTEGRATION. This Agreement constitutes the entire agreement among the
parties pertaining to the subject matter hereof and supersedes all prior and
contemporaneous agreements and understandings of such parties in connection
herewith. Any amendment or supplement made hereto must be in writing.
12.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts. In such event, each counterpart shall constitute an original
and all such counterparts shall constitute one agreement. The addition of
Limited Partners pursuant to the power of attorney granted to the General
Partner shall not be deemed amendments to alter the rights of the other
Partners under this Agreement.
12.7 SEVERABILITY. Any provision of this Agreement which is invalid,
illegal, or unenforceable in any respect in any jurisdiction shall be, as to
such jurisdiction, ineffective to the extent of such invalidity, illegality
or unenforceability. The remaining provisions hereof in such jurisdiction
shall be and remain effective. Any such invalidity, illegality or
unenforceability in any jurisdiction shall not invalidate or in any way
effect the validity, legality or enforceability of such provision or the
remainder of this Agreement in any other jurisdiction.
12.8 WAIVERS. The failure of any Partner to seek redress for violation of
or to insist upon the strict performance of any covenant or condition of this
agreement shall not prevent a subsequent act, which would have originally
constituted a violation, from having the effect of an original violation.
12.9 HEADINGS. The headings in this Agreement are inserted for convenience
and identification only and are in no way intended to describe, interpret,
define or limit the scope, extent or intent of this Agreement or any
provision hereof.
12.10 RIGHTS AND REMEDIES CUMULATIVE. This rights and remedies provided by
this Agreement are cumulative and the use of any one right or remedy by any
Partner shall not preclude or waive his right to use addition to any other
rights such Partner may have by law, statute, ordinance or otherwise.
12.11 WAIVER OF RIGHT TO PARTITION. Each of the Partners irrevocably waives,
during the term of the Partnership, any right that it may have to maintain
any action for partition with respect to the property and assets of the
Partnership.
12.12 INTEREST OF CERTAIN SECURED CREDITORS. No creditor who makes
nonrecourse loan to the Partnership shall have or acquire at any time as a
result of making the loan, any direct or indirect interest in the profits,
Capital, or property of the Partnership other than as a secured creditor.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement the day and year first above written.
General Partner:
ASHLEY CAPITAL MANAGEMENT, INCORPORATED
By: _____________________________
Michael P. Pacult
President
Other General Partner:
By: _____________________________
Michael P. Pacult
Agent for Limited Partners:
Ashley Capital Management, Inc.
By: _____________________________
Michael P. Pacult
President
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EXHIBIT B TO ATLAS FUTURES FUND DISCLOSURE DOCUMENT
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
REQUEST FOR REDEMPTION
To: Ashley Capital Management, Inc.
General Partner _____________________________
5914 N. 300 West Our Social Security Number or
P. O. Drawer C Taxpayer ID Number
Fremont, IN 46737
Dear General Partner:
The undersigned hereby requests redemption ("Redemption"), as defined
in and subject to all the terms and conditions disclosed in the Offering
Circular (the "Prospectus") delivered to the undersigned at the time of our
purchase of limited partnership interests (the "Units") in Atlas Futures
Fund, Limited Partnership, (the "Fund"), of _______________ Units (insert the
number of Units to be Redeemed). This Redemption request, once approved and
accepted by you as General Partner, will be at the Net Asset Value per Unit,
as described in the Prospectus, as of the close of business at the end of the
current month following such approval.
The undersigned hereby represents and warrants that the undersigned is
the true, lawful and beneficial owner of the Units to which this Request
relates with full power and authority to request Redemption of such Units.
Such Units are not subject to any pledge or otherwise encumbered.
United States Taxable Limited Partners Only - Under penalty of perjury,
the undersigned hereby certifies that the Social Security Number or Taxpayer
ID Number indicated on this Request for Redemption is the undersigned's true,
cared and complete Social Security Number or Taxpayer ID Number and that the
undersigned is not subject to backup withholding under the provisions of
section 3406(a)(1)(C) of the Internal Revenue Code.
Non United States Limited Partners Only - Under penalty of perjury, the
undersigned hereby certifies that (a) the undersigned is not a citizen or
resident of the United States or (b) (in the case of an investor which is not
an individual) the investor is not a United States corporation, partnership,
estate or trust.
SIGNATURE(S) MUST BE IDENTICAL TO NAME(S) IN WHICH UNITS ARE REGISTERED
Please forward redemption funds by mail to the undersigned at:
_____________________________________________________________________________
Name Street City, State and Zip Code
Entity Limited Partner Individual Limited Partners(s)
________________________________ _______________________________
(Name of Entity) (Signature of Limited Partner)
By:
________________________________ ________________________________
(Authorized corporate officer, partner, (Signature of Limited Partner)
custodian or trustee)
________________________________
(Title)
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EXHIBIT C TO ATLAS FUTURES FUND DISCLOSURE DOCUMENT
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
SUBSCRIPTION REQUIREMENTS
By executing the Subscription Agreement and Power of Attorney for Atlas
Futures Fund Limited Partnership (the "Fund"), each purchaser ("Purchaser")
of Limited Partnership Interests (the "Units") in the Partnership irrevocably
subscribes for Units at a price equal to the Net Asset Value per Unit as of
the end of the month in which the subscription is accepted as described in
the Partnership's prospectus dated January __, 2005, (the "Prospectus"). The
minimum subscription is $25,000, however, it may be lowered to not less than
$5,000 by the General Partner; additional Units may be purchased in multiples
of $1,000. Subscriptions must be accompanied by a check in the full amount
of the subscription and made payable to "Star Bank for the acct. of Atlas".
Purchaser is also delivering to the Partnership an executed Subscription
Agreement and Power of Attorney (Exhibit D to the Prospectus). Upon
acceptance of Purchaser's Subscription Agreement and Power of Attorney,
Purchaser agrees to contribute Purchaser's subscription to the Partnership
and to be bound by the terms of the Partnership's Limited Partnership
Agreement, attached as Exhibit A to the Prospectus. Purchaser agrees to
reimburse the Partnership and Ashley Capital Management, Incorporated (the
"General Partner") for any expense or loss incurred as a result of the
cancellation of Purchaser's Units due to a failure of Purchaser to deliver
good funds in the amount of the subscription price. By execution of the
Subscription Agreement and Power of Attorney, Purchaser shall be deemed to
have executed the Limited Partnership Agreement.
As an inducement to the General Partner to accept this subscription,
Purchaser (for the Purchaser and, if Purchaser is an entity, on behalf of and
with respect to each of Purchaser's shareholders, partners or beneficiaries),
by executing and delivering Purchaser's Subscription Agreement and Power of
Attorney, represents and warrants to the General Partner, the Commodity
Broker and the Fund, as follows:
(a) Purchaser is of legal age to execute the Subscription Agreement and
Power of Attorney and is legally competent to do so. Purchaser acknowledges
that Purchaser has received a copy of the Prospectus, including the Limited
Partnership Agreement, prior to subscribing for Units.
(b) All information that Purchaser has heretofore furnished to the General
Partner or that is set forth in the Subscription Agreement and Power of
Attorney submitted by Purchaser is correct and complete as of the date of
such Subscription Agreement and Power of Attorney, and if there should be any
change in such information prior to acceptance of Purchaser's subscription,
Purchaser will immediately furnish such revised or corrected information to
the General Partner.
(c) Unless (d) or (e) below is applicable, Purchaser's subscription is
made with Purchaser's funds for Purchaser's own account and not as trustee,
custodian or nominee for another.
(d) The subscription, if made as custodian for a minor, is a gift
Purchaser has made to such minor and is not made with such minor's funds or,
if not a gift, the representations as to net worth and annual income set
forth below apply only to such minor.
(e) If Purchaser is subscribing in a representative capacity, Purchaser
has full power and authority to purchase the Units and enter and be bound by
the Subscription Agreement and Power of Attorney on behalf of the entity for
which he is purchasing the Units, and such entity has full right and power to
purchase such Units and enter and be bound by the Subscription Agreement and
Power of Attorney and become a Limited Partner pursuant to the Limited
Partnership Agreement which is attached to the Prospectus as Exhibit A.
(f) Purchaser satisfies the net worth requirements of the Prospectus.
*******************************************************************************
EXHIBIT D TO ATLAS FUTURES FUND DISCLOSURE DOCUMENT
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
UNITS OF LIMITED PARTNERSHIP INTEREST
SUBSCRIPTION INSTRUCTIONS
Any person considering subscribing for
Units should carefully read and review the Prospectus.
The Units are speculative and involve a high degree of risk. No person
may invest more than 10% of his or her liquid net worth (exclusive of home,
furnishings and automobiles) in the Partnership. No entity-and, in
particular, no ERISA plan-may invest more than 10% of its liquid net worth
(readily marketable securities) in the Partnership. If a purchaser is allowed
to purchase less than $25,000 in Units, then the purchaser must have a
minimum annual gross income of $45,000 and a minimum net worth of $45,000 or,
in the alternative, a minimum net worth of $150,000.
A Subscription Agreement and Power of Attorney Signature Page (the
"Signature Page") is attached to these Subscription Instructions and the
following Subscription Agreement and Power of Attorney. The Signature Page is
the document which you must execute if you wish to subscribe for Units. One
copy of such Signature Page should be retained by you for your records and
the others delivered to the Partnership.
FILL IN ALL OF THE INFORMATION ON THE ATTACHED SIGNATURE PAGE, USING
BLACK INK ONLY, AS FOLLOWS
Item 1 - Enter the dollar amount (no cents) of the purchase.
Items 2 - 7 - Enter the Social Security Number or Taxpayer ID
Number and check the appropriate box to indicate the type of individual
ownership desired or of the entity that is subscribing. In the case of joint
ownership, either Social Security Number may be used.
The Signature Page is self-explanatory for most ownership types;
however, the following specific instructions are provided for certain of the
ownership types identified on the Signature Page:
Trusts-Enter the trust's name on Line 3 and the trustee's name on Line 4,
followed by "Ttee." If applicable, use Line 7 also for the custodian's name.
Be sure to furnish the Taxpayer ID Number of the trust.
Custodian Under Uniform Gifts to Minors Act-Complete Line 3 with the name of
minor followed by "UGMA." On Line 7, enter the custodian's name followed by
"Custodian." Be sure to furnish the minor's Social Security Number.
Partnership or Corporation-The partnership's or corporation's name is
required on Line 4. Enter a partner's or officer's name on Line 4. Be sure to
furnish the Taxpayer ID Number of the partnership or corporation. A
subscriber who is not an individual must provide a copy of documents
evidencing the authority of such entity to invest in the Partnership.
Item 8 - The investor(s) must execute the Subscription
Agreement and Power of Attorney Signature Page and review the representations
relating to backup withholding tax or non-resident alien status underneath
the signature and telephone number lines in Item 8.
Item 9 - General Partner must complete.
The Selling Agent's copy of the Subscription Agreement and Power of Attorney
Signature Page may be required to be retained in the Selling Agent's office.
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
UNITS OF LIMITED PARTNERSHIP INTEREST
BY EXECUTING THIS SUBSCRIPTION AGREEMENT AND POWER OF ATTORNEY
SUBSCRIBERS ARE NOT WAIVING ANY RIGHTS UNDER THE
SECURITIES ACT OF 1933 OR THE SECURITIES
EXCHANGE ACT OF 1934
SUBSCRIPTION AGREEMENT AND
POWER OF ATTORNEY
Ashley Capital Management, Inc.
General Partner ________________________________
5914 N. 300 West Your Social Security Number or
P. O. Drawer C Taxpayer ID Number
Fremont, IN 46737
Dear General Partner:
1. Subscription For Units. I hereby subscribe for the number of Limited
Partnership Units ("Units") in Atlas Futures Fund, Limited Partnership (the
"Fund") set forth below (minimum $25,000) in the Subscription Agreement and
Power of Attorney Signature Page, at a price per Unit as set forth in the
Fund's prospectus dated January __, 2005 (the "Prospectus"). I have
completed and executed a Subscription Agreement and Power of Attorney
Signature Page in the form attached hereto as Exhibit "D", and delivered the
executed Subscription Documents to the Sales Agent and executed a check made
payable to "Star Bank for the acct. of Atlas" to be delivered by the Sales
Agent to the Depository Agent within 24 hours after receipt for deposit to
the Depository Account. The General Partner may, in its sole and absolute
discretion, accept or reject this subscription, in whole or in part. If this
subscription is accepted, I understand subscribers will earn additional Units
in lieu of interest earned on the undersigned's subscription during any
period of time, if any, such subscription is held in the depository account.
If this subscription is rejected, all funds remitted by the undersigned will
be returned, together with any interest earned from the depository account,
if any.
2. Representations and Warranties of Subscriber. I have received a copy of
the Prospectus. I understand that by submitting this Subscription Agreement
and Power of Attorney I am making the representations and warranties set
forth in "Exhibit C - Subscription Requirements" contained in the Prospectus,
including, without limitation, representations and warranties relating to my
net worth and annual income. Additionally, I understand that my
broker/dealer account application will be forwarded to the General Partner to
review my suitability for this investment.
3. Power of Attorney. In connection with my acceptance of an Interest in the
Partnership, I do hereby irrevocably constitute and appoint the General
Partner, and its successors and assigns, as my true and lawful Attorney-in-
Fact, with full power of substitution, in my name, place and stead, to (i)
file, prosecute, defend, settle or compromise litigation, claims or
arbitration on behalf of the Partnership; and, (ii) make, execute, sign,
acknowledge, swear to, deliver, record and file any documents or instruments
which may be considered necessary or desirable by the General Partner to
carry out fully the provisions of the Limited Partnership Agreement of the
Partnership, which is attached as Exhibit A to the Prospectus, including,
without limitation, the execution of the said Agreement itself and by
effecting all amendments permitted by the terms thereof. The Power of
Attorney granted hereby shall be deemed to be coupled with an interest and
shall be irrevocable and shall survive, and shall not be affected by, my
subsequent death, incapacity, disability, insolvency or dissolution or any
delivery by me of an assignment of the whole or any portion of my interest in
the Partnership.
4. Irrevocability; Governing Law. You may revoke your subscription for five
business days after you send it to us (the "Revocation Period"). After the
lapse of five business days from submission, your subscription will be
irrevocable. The Units offered to you are subject to prior sale. I hereby
acknowledge and agree that after the Revocation Period I am not entitled to
cancel, terminate or revoke this subscription or any of my agreements
hereunder and that this subscription and such agreements shall survive my
death or disability. This Subscription Agreement and Power of Attorney shall
be governed by and interpreted in accordance with the laws of the State of
Delaware.
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
Units of Limited Partnership Interests
Subscription Agreement and Power of Attorney
Signature Page
The investor named below, by execution and delivery of this Subscription
Agreement and Power of Attorney, by payment of the purchase price for Limited
Partnership Interests (the "Units") in Atlas Futures Fund, Limited
Partnership (the "Partnership"), and by enclosing a check payable to "Star
Bank for the acct. of Atlas", hereby subscribes for the purchase of Units, at
a price per Unit as set forth in the Partnership's prospectus dated January
__, 2005 (the "Prospectus").
The named investor further, by signature below, acknowledges (i) receipt of
the Prospectus; (ii) that such Prospectus includes the Partnership's Limited
Partnership Agreement, the Subscription Requirements, and the Subscription
Agreement and Power of Attorney set forth therein, the terms of which govern
the investment in the Units being subscribed for hereby; (iii) that this
subscription may be revoked within five business days after submission; and,
(iv) after the lapse of five business days from submission, this subscription
will be irrevocable.
By my signature below, I represent that I satisfy the requirements relating
to net worth and annual income as set forth in Exhibit C to the Prospectus.
1) Total $ Amount __________________ (minimum of $25,000, unless lowered to
less than $25,000 but not less than $5,000 by the General Partner; $1,000
minimum for investors making an additional investment)
2) Social Security Number _____-___-_____
Taxpayer ID # _____-___-_____
Taxable Investors (check one):
O Individual Ownership
O Trust other than a Grantor or Revocable Trust
O Joint Tenants with Right of Survivorship
O Estate
O UGMA/UTMA (Minor)
O Tenants in Common
O Community Property
O Partnership
O Corporation
O Grantor or Other Revocable Trust
Non-Taxable Investors (check one):
O IRA
O Profit Sharing
O IRA Rollover
O Defined Benefit
O Pension
O Other (specify)
O SEP
3) Investor's Name _________________________________________________________
4) _________________________________________________________________________
Additional Information (for Estates, Trusts, Partnerships and Corporations)
5) Resident Address of Investor
_________________________________________________________________________
Street (P.O. Box not acceptable) City State Zip Code
6) Mailing Address(if different)
_________________________________________________________________________
Street City State Zip Code
7) Custodian Name and Mailing Address
_________________________________________________________________________
Name Street (P.O. Box not acceptable) City State Zip Code
Signature(s) - do not sign without familiarizing yourself with the
information in the Prospectus, including: (i) the fundamental risks and
financial hazards of this investment, including the risk of losing your
entire investment; (ii) that the Partnership is the first client account to
trade in the Atlas Futures Fund portfolio; (iii) the Partnership's
substantial charges; (iv) the Partnership's highly leveraged trading
activities; (v) the lack of liquidity of the Units including a lock-in period
of twelve months; (vi) the existence of actual and potential conflicts of
interest in the structure and operation of the Partnership; (vii) that
Limited Partners may not take part in the management of the Partnership; and
(viii) the tax consequences of the Partnership.
8) INVESTOR(S) MUST SIGN
X_________________________________________________________
Signature of Investor Date Telephone No.
X_________________________________________________________
Signature of Joint Investor (if any) Date
Investor must sign individually, or pursuant to a power of attorney;
provided, however, that such power of attorney has not been granted to the
Partnership.
Executing and delivering this Subscription Agreement and Power of Attorney
shall in no respect be deemed to constitute a waiver of any rights under the
Securities Act of 1933 or under the Securities Exchange Act of 1934.
UNITED STATES INVESTORS ONLY
I have checked the following box if I am subject to backup withholding under
the provisions of Section 3406(a)(1)(C) of the Internal Revenue Code: 0.
Under the penalties of perjury, by signature above I hereby certify that the
Social Security Number or Taxpayer ID Number set forth in Item 2 above is my
true, correct and complete Social Security Number of Taxpayer ID Number and
that the information given in the immediately preceding sentence is true,
correct and complete.
NON-UNITED STATES INVESTORS ONLY
Under the penalties of perjury, by signature above, I hereby certify that (a)
I am not a citizen or resident of the United States or (b) (in the case of an
investor which is not an individual) the investor is not a United States
corporation, partnership, estate or trust: 0.
9) GENERAL PARTNER MUST SIGN
Ashley Capital Management, Inc., the general partner of the Partnership,
hereby accepts the above investor to become a limited partner on first
business day of the month following the date below.
BY: Ashley Capital Management, Inc.
X______________________________ _____________________________
Michael P. Pacult, President Date
ATLAS FUTURES FUND, LP
SUBSCRIBER NEW ACCOUNT APPLICATION AND AGREEMENT
In this agreement, the following terms are used: I, me, my, mine refer to the
subscriber identified in the Atlas Futures Fund, LP Subscription Agreement.
You, your and yours refer to Atlas Futures Fund, LP ("Atlas")
TO: ATLAS FUTURES FUND, LP
In consideration of Atlas' acceptance of this subscription agreement for
review, the undersigned agrees as follows:
1. Authority and Ownership. I have the required legal capacity, am
authorized to enter into this agreement and have obtained and will provide
you with all necessary authorizations from third parties to open accounts and
effect transactions in direct participation securities under this agreement.
I will be the owner of all securities purchased by and sold to me.
2. No Advice. I understand that you provide no tax, legal or investment
advice, nor do you give advice or offer any opinion with respect to the
suitability of any security or order. All purchases of Atlas partnership
interests ("Units") will be done only on my order or the order of my
authorized delegate except as described in paragraph 5.
3. Appointment of Ashley Capital Management, Inc. ("Ashley") as Agent.
I appoint Ashley as my agent for the purpose of carrying out my directions
with respect to the purchase or sale of Units. To carry out Ashley's duties,
Ashley is authorized to provide information to Atlas and to third parties and
take such other steps as are reasonable to carry out my directions.
4. Purchase and Sale Orders. I agree that together with all executed
documents required to purchase Units, I will forward the funds required to
pay for such Units. Checks will by made payable to "Star Bank for the acct.
of Atlas."
5. Indebtedness. Upon the purchase or sale of Units, if you are unable
to settle the transaction by reason of my failure to make payment in good
form, I authorize you to take steps necessary to complete or cancel the
transaction to minimize your loss, and I agree to reimburse you for any and
all costs, losses or liabilities incurred by you, including attorney's fees.
In the event I become indebted to you in the operation of this account, I
agree that I will repay such indebtedness upon demand.
6. Force Majeure. You shall not be liable for loss of delay caused
directly or indirectly by war, natural disasters, government restrictions,
exchange or market rulings or other conditions beyond your control.
7. Recording Conversations. I understand and agree that for our mutual
protection you may tape record any of our telephone conversations.
8. Relationship with Atlas. I understand that my subscription
documentation will be reviewed by you. I understand and agree that you may
refuse to accept my subscription or to process any other transaction which I
may wish to effect.
9. Fees and Charges. I agree to the fees and charges indicated in the
prospectus I received dated January __, 2005.
10. Joint Accounts. If this is a joint account, unless we notify you
otherwise and provide such documentation as you require, the account(s) shall
be considered by us jointly with right of survivorship (payable to either or
the survivor of us). Each joint tenant irrevocably appoints the other as
attorney-in-fact to take all action on his behalf and to represent him in all
respects in connection with this Agreement. You shall be fully protected in
acting upon the instructions of either of us, in sending confirmation
advices, notices or other communications instructions of either of us, or in
otherwise dealing with either of us. Each of us shall be liable, jointly to
either of us, or in otherwise dealing with either of us. Each of us shall be
liable, jointly and individually, for any amounts due to you pursuant to this
Agreement, whether incurred by either or both of us.
11. Amendments and Termination. You may amend this agreement at any time
in any respect, effective upon notice to me. You may, at your discretion,
terminate this service at any time, effective upon notice to me. I will
continue to be responsible for any obligation incurred by me prior to
termination.
12. GOVERNING LAW. THIS AGREEMENT IS GOVERNED BY THE LAWS OF THE STATE
OF DELAWARE.
13. ARBITRATION DISCLOSURES.
* ARBITRATION IS FINAL AND BINDING ON THE PARTIES.
* THE PARTIES ARE WAIVING THEIR RIGHT TO SEEK REMEDIES IN COURT,
INCLUDING THE RIGHT TO JURY TRIAL.
* PRE-ARBITRATION DISCOVERY IS GENERALLY MORE LIMITED THAN AND DIFFERENT
FROM COURT PROCEEDINGS.
* THE ARBITRATORS' AWARD IS NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR
LEGAL REASONING AND ANY PARTY'S RIGHT TO APPEAL OR TO SEEK MODIFICATION OF
RULING BY THE ARBITRATORS IS STRICTLY LIMITED.
14. AGREEMENT TO ARBITRATE CONTROVERSIES.
IT IS AGREED THAT ANY CONTROVERSY BETWEEN US ARISING OUT OF THIS AGREEMENT
SHALL BE SUBMITTED TO ARBITRATION CONDUCTED BEFORE A SINGLE ARBITRATOR
SELECTED AND CONDUCTED PURSUANT TO THE RULES OF THE AMERICAN ARBITRATION
ASSOCIATION. ARBITRATION MUST BE COMMENCED BY SERVICE UPON THE OTHER PARTY
OF A WRITTEN DEMAND FOR ARBITRATION OR WRITTEN NOTICE OF INTENTION TO
ARBITRATE.
15. If any information on this SUBSCRIBER NEW ACCOUNT APPLICATION AND
AGREEMENT is misstated, the person or persons signing on behalf of the
account will be held liable for the misstatement, as you will rely on the
information given by us. You assume no responsibility for misstatements.
16. Obligation to Review Statements. The person or a person acting on
their behalf will review transaction statements and notice to partners within
10 days from their receipt and will advise you of any discrepancies as soon
as possible.
17. Statute of Limitations. The undersigned agrees that any claims from
transactions with you must be brought, if at all, within 2 years from the
date of the transaction.
ATLAS FUTURES FUND, LP
SUBSCRIBER NEW ACCOUNT APPLICATION AND AGREEMENT
5914 N. 300 West - P.O. Box C
Fremont, IN 46737
Tel: (260) 833-1306 - Fax: (260) 833-4411
Section I
_______-_____-________ ___________________
Social Security Number D.O.B.
_____________________________________________
Name Work Phone
_____________________________________________
Address Home Phone
_____________________________________________
City, State, Zip Fax
_____________________________________________
Dollar Amount Investing
_____________________________________________
Occupation Employer
_____________________________________________
Type of Business Years Employed
Educational Background
_____________ _____________ _________________
10-11 12-15 16+
Number of Dependents ________
_____________________________________________
Prior Years of Investment Experience
_____futures _____futures options _____mutual funds
_____stocks _____stock options _____bonds
Investment References
A. __________________________________________
B. __________________________________________
Bank Reference ______________________________
____ ____ Have you filed for bankruptcy in the last 10 years?
Yes No
____ ____ Have you filed a claim against a commodity or securities broker?
Yes No
Section II
I agree to accept high and speculative risk. ___ I do not agree. ___
________________________________________________
Type of Account Title of Account
__________________________ _________________ _______-_____-_______
Joint Investor Name D.O.B. Soc. Security Number
________________________________________________
Joint Occupation Employer
U.S. Citizen? ______ ______
Yes No
State of Residency _____________________
Name of State
Is customer or any member of customer's immediate family employed by a member
of a stock exchange or the NASD?
________ _________
Yes No
Is customer an officer of a public company?
________ _________
Yes No
Estimated Individual Net Worth $______________________
(exclusive of primary residence, furnishings and automobiles)
Estimated Liquid Assets $____________________
Estimated Risk Capital $____________________
Tax Bracket %____________________
Avg. Income Past Two Years $____________________
Anticipated Income for the Current Year $____________________
TO ATLAS FUTURES FUND, LP:
IN CONSIDERATION OF ATLAS OPENING ONE OR MORE ACCOUNTS FOR THE UNDERSIGNED, I
HEREBY ACKNOWLEDGE THAT I HAVE READ AND UNDERSTAND THE TERMS SET FORTH IN THE
SUBSCRIBER NEW ACCOUNT APPLICATION AND AGREEMENT ON THE PRECEDING PAGE AND
AGREE TO SUCH TERMS. THIS AGREEMENT CONTAINS A PREDISPUTE ARBITRATION CLAUSE
IN PARAGRAPHS 13 AND 14. I HEREBY CERTIFY THAT THE ABOVE INFORMATION IS
COMPLETE AND CORRECT.
Tax Certification: Under penalties of perjury, I certify that the number
shown on this form is my correct taxpayer identification number or if not,
then the number I have entered above per instructions is my correct taxpayer
identification number, and that I am not subject to backup withholding.
________________________ _______ ________________________ ______
Client Name (Signature) Date Client Name (Signature) Date
________________________________ _______________________________
Client Name (Print) Client Name (Print)
Social Security Number or Tax I.D. Number _______-_____-_______
Social Security Number or Tax I.D. Number _______-_____-_______
*******************************************************************************
EXHIBIT E TO ATLAS FUTURES FUND DISCLOSURE DOCUMENT
DEPOSITORY AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into as of the ___ day
of January, 2005, by and among Atlas Futures Fund, Limited Partnership,
("Atlas" or the "Fund"), Ashley Capital Management, Inc., 5914 N. 300 West,
P. O. Box, C, Fremont, IN 46737, (the "General Partner"), and Star Financial
Bank (the "Depository"), 2004 N. Wayne St., Angola, IN 46703, a bank
unaffiliated with the Fund or General Partner and otherwise qualified to be a
depository within the definition of Section 3(a)(2) of the Securities Act of
1933.
1. Account Opened. (a) The General Partner establishes and the Depository
accepts and opens an account that will be invested in short term bank
certificates of deposit titled "Star Bank for the acct. of Atlas" to clear
proceeds of sale of limited partnership interests (the "Units") and hold such
proceeds until the General Partner either accepts the proceeds into the Atlas
account or rejects the subscription and directs the Depository to return the
proceeds to the prospective investor. (b) Limited partnership interests (the
"Units") will be sold by the Fund on a best efforts basis and either
delivered by the investor directly to the Depository by wire transfer or by
check by the General Partner by noon of the following day. (c) Units will be
sold at the Net Asset Value per Unit computed after the close of business on
the last business day of each month and transferred to the Fund as of the
open on the first business day of each month. The General Partner shall
direct all subscribers to make their checks to "Star Bank for the acct. of
Atlas." Any instrument not so made out shall be promptly returned to the
subscriber, with notice to the General Partner. The General Partner will
supply the Depository with a list of the subscribers to identify their name,
address and amount of subscription. The General Partner will be solely
responsible for the allocation of interest earned among the subscribers.
2. Transfer of Subscribers' Funds. The General Partner shall promptly
transmit all checks and wire transfers for the purchase of Units directly to
the Depository. At the time of delivery of the proceeds to the Depository,
the General Partner shall provide the Depository with the name and address of
the subscriber for the Units. On the first business day of each month (the
"Delivery Date"), the Depository shall deliver all proceeds plus interest by
check or account transfer to the Fund. Should the Fund reject a subscription
for any reason or cease business prior to the Delivery Date, the Depository
shall promptly return the proceeds directly to each subscriber plus interest
as allocated by the General Partner without deduction for costs or expenses
from the amounts paid to the subscribers, and the Depository shall notify the
General Partner of its distribution of the funds. The proceeds returned to
each subscriber shall be free and clear of any and all claims of the Fund or
any of its creditors. The General Partner is solely responsible for the
allocation of the interest earned to the subscribers.
3. No Creditor's Rights. The General Partner agrees that neither it nor
the Fund is entitled to any funds in the Depository account prior to the
Delivery Date, and no amounts deposited in the Depository Account shall
become the property of or be subject to the debts of the General Partner,
Fund or any other entity or person.
4. Collection Procedure. The Depository is hereby authorized to forward
each check for collection and, upon collection of the proceeds of each check,
deposit the collected proceeds in the account. As an alternative, the
Depository may telephone the bank on which the check is drawn to confirm that
the check has been paid. Any check returned unpaid shall be returned by Star
Bank to the subscriber with notice to the General Partner. If the Fund
rejects any subscription for which the Depository has already collected
funds, the Depository shall promptly issue a refund check to the rejected
subscriber. If the General Partner rejects any subscription for which the
Depository has not yet collected funds but has submitted the subscriber's
check for collection, the Depository shall promptly issue a check in the
amount of the subscriber's check to the rejected subscriber after the
Depository has cleared such funds. If the Depository has not yet submitted a
rejected subscriber's check for collection, the Depository shall promptly
remit the subscriber's check directly to the subscriber.
5. Depository Liability Limited. Depository shall have no liability
under, or duty to inquire into, the terms and provisions of any other
document or instrument utilized in connection with the Offering, and it is
agreed that the duties of Depository are purely ministerial in nature, and
that Depository shall incur no liability whatsoever under this Agreement,
except for acts or omissions of the Depository involving or constituting
willful misconduct, fraud, gross negligence or bad faith.
6. Depository May Resign. Depository may, at any time, resign hereunder
by giving written notice of its intent to resign to the other parties hereto,
at their respective addresses set forth above, at least ten (10) days prior
to the date specified for such resignation to take effect, and upon the
effective date of such resignation the proceeds, including all accrued
interest, shall be delivered by Depository to the person designated in
writing by the General Partner or a court of competent jurisdiction,
whereupon all of Depository's obligations hereunder shall cease and
terminate. Notwithstanding the foregoing, nothing in this paragraph releases
Depository or relieves it of any of its obligations that existed prior to the
effective date of Depository's resignation including, without limitation,
liability for willful misconduct, fraud, gross negligence or bad faith.
Notwithstanding the foregoing, nothing in this paragraph releases the General
Partner of its obligations under the Securities and Exchange Act including,
but not limited to, Rules 15c2-4 and 10b-9.
7. Depository Indemnification. The General Partner agrees to indemnify,
defend and hold Depository harmless from and against any and all loss,
damage, tax, liability and expense that may be incurred by Depository and
arising out of or in connection with its acceptance of appointment as
depository hereunder, including reasonable attorneys' fees and other legal
costs and expenses of defending itself against any claim or liability in
connection with its performance hereunder, except in the case of willful
misconduct, fraud, gross negligence or bad faith on the part of Depository.
Depository may consult with and rely on its attorneys with respect to any
dispute not assumed or defended by the General Partner and this
indemnification shall include all reasonable and necessary attorneys' fees of
Depository in connection with such consultation.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
ASHLEY CAPITAL MANAGEMENT, INC. STAR FINANCIAL BANK
By: ____________________________ By: __________________________
Mr. Michael Pacult Thad Wright
President Vice President
ATALS FUTURES FUND, LP
By: Ashley Capital Management, Inc.
By: ____________________________
Mr. Michael Pacult
President
*******************************************************************************
EXHIBIT F TO ATLAS FUTURES FUND DISCLOSURE DOCUMENT
INVESTMENT ADVISORY CONTRACT
CLARKE CAPITAL MANAGEMENT, INC.
THIS AGREEMENT is made and entered as of this 29th day of October, 2004
between Atlas Futures Fund, Limited Partnership, (the "Fund") and Clarke
Capital Management, Inc., an Illinois corporation, (the "CTA").
WITNESSETH:
In consideration of the deposit by the Fund of equity to Man Financial,
Inc. (the "FCM") in the name of the Fund (this account and any other
accounts, which may be assigned to the CTA in the future are collectively
hereinafter called the "Account") and the grant of the power of attorney on
the standard form of the FCM to the CTA to permit the CTA to enter trades for
the Fund in the Account, the parties hereto agree as follows:
1. The CPO shall determine the amount the Fund shall initially deposit in
the Account with the FCM. Subsequent deposits and accumulation of profits
in the Account, less withdrawals and losses, shall also be subject to this
Agreement. At its sole discretion, the Fund may add or withdraw funds at
any time from the Account by written request to the FCM with a copy to the
CTA.
2. The CTA will cause futures contracts, and when deemed advisable,
options on futures and forward contracts, to be bought and sold on behalf of
the Fund in the Account. The CTA will have the sole authority to issue all
necessary instructions to effect trading with the FCM for the Account. All
such transactions shall be for the account and risk of the Fund. During the
term of this agreement, the Fund agrees that it will not place orders in the
Account without the prior written consent of the CTA.
3. The CTA's services are not rendered exclusively for the Fund, and the
CTA shall be free to render similar services to others. The General Partner
may change the FCM for the account assigned to the CTA at any time upon
written direction to the FCM and the CTA, and CTA agrees to effect the
transfer and sign the forms necessary to complete such change, provided such
transfer does not conflict with any prior agreements the CTA has with the
FCM.
4. On the close of the last business day of each month, the corporate
general partner and commodity pool operator, Ashley Capital Management, Inc.
(the "CPO") shall charge the Fund a fixed commission of 11% of the Net Equity
in the account assigned to the CTA payable at the rate of 11/12 of 1% per
month. This payment to the CPO will be for all round turns, pit brokerage,
exchange, NFA fees and other clearing expenses arising from the trades placed
by the CTA in the account for domestic trades. This does not include
delivery or other exchange for physicals or trades made on foreign exchanges
or forward markets. Those costs will be at rates to be negotiated by the CPO
with the Fund and the FCM or other party, as the facts determine, and charged
separately, to the Fund. No trades for physicals are to be made without the
written consent of the CPO.
5. The CTA will use its best efforts to obtain an equity run from the FCM
before the opening of business the next trading day. Unless authorized in
writing by the CPO, the CTA will use only the equity in the Account assigned
to the CTA by the CPO for margins to hold the positions taken by the CTA. No
equity in the Account assigned to the CTA will be commingled or margined, for
any purpose, with any other account at the FCM. The CPO, upon written
instruction to the FCM, may terminate, for any reason, the power of attorney
and suspend the trading authority of the CTA to enter trades with the FCM.
In the event of a termination of the power of attorney, the CTA agrees that
the FCM shall accept no further instructions from the CTA but shall place the
Account upon liquidation only to be handled in written instructions from the
CPO to the FCM.
6. The Fund agrees to execute, from time to time, the Acknowledgment of
Receipt of Disclosure Document from the CTA. By signing, the Fund agrees
that it has received and understands the most recent copy of the CTA's Risk
Disclosure Document.
7. The Fund and the CTA agree that the CTA will not be paid from the
account pursuant to the CTA's Managed Account Compensation Agreement. The
CTA will not be paid a management fee. The CTA will be paid an incentive fee
of twenty-five percent (25%), of the New Net Profit earned each quarter.
Michael J. Liccar, certified public accountant will calculate the fee subject
to approval by the CTA, and the fee shall not be deducted from the Account,
but will be paid upon submission of an invoice by the CTA to the CPO of the
Fund. Once approved by the CPO, the incentive fee will be paid promptly
from the Fund account selected by the CPO.
8. The Fund and the CTA agree that they have properly executed all the
necessary account forms for opening the Account with the FCM; provided,
however, any disputes between the Fund and the CTA will be submitted to
arbitration before a single arbitrator selected by the American Arbitration
Association and only upon written agreement of the parties at the time such
dispute arises and each party shall bear their own legal fees and costs to
present and defend any such claim. In the event of conflicts with any other
agreement, the terms of this Agreement shall control. This Agreement will be
governed by the laws of the State of Illinois and any dispute concerning
arbitration will be resolved by a Federal or State court of competent
jurisdiction located in Chicago, Illinois.
9. The Fund acknowledges receipt of a copy of the CTA disclosure document
dated October 18, 2004 and the CTA acknowledges a copy of the Atlas
prospectus dated July 2, 2004 prior to the execution of this agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement the day and year first above written.
Atlas Futures Fund, Limited Partnership Clarke Capital Management, Inc.
By: Ashley Capital Management, Inc.
_________________________________ ____________________________
Michael P. Pacult Michael J. Clarke
President President
Ashley Capital Management, Inc.
General Partner and Commodity Pool Operator
By: _____________________________
Michael Pacult
President
*******************************************************************************
EXHIBIT G TO ATLAS FUTURES FUND DISCLOSURE DOCUMENT
INVESTMENT ADVISORY CONTRACT
NuWave Investment Corp.
THIS AGREEMENT is made and entered as of this ____ day of January,
2005, between Atlas Futures Fund, Limited Partnership, (the "Fund") and
NuWave Investment Corp, a New Jersey corporation (the "CTA").
WITNESSETH:
In consideration of the deposit by the Fund of equity to Man Financial,
Inc. (the "FCM") in the name of the Fund (this account and any other
accounts, which may be assigned to the CTA in the future are collectively
hereinafter called the "Account") and the grant of the power of attorney on
the standard form of the FCM to the CTA to permit the CTA to enter trades for
the Fund in the Account and payment of management fees to and the opportunity
to earn incentive fees by the CTA, the parties hereto agree as follows:
1. The CPO shall determine the amount the Fund shall initially deposit
in the Account with the FCM, which the CTA agrees to manage pursuant to the
terms of this Agreement. Subsequent deposits and accumulation of profits in
the Account, less withdrawals and losses, shall also be subject to this
Agreement. At its sole discretion, the Fund may add or withdraw funds at any
time from the Account by written request to the FCM with a copy to the CTA.
2. The CTA will cause futures contracts, and when deemed advisable,
options on futures and forward contracts, to be bought and sold on behalf of
the Fund in the Account. The CTA will have the sole authority to issue all
necessary instructions to the FCM to effect trading for the Fund's Account.
All such transactions shall be for the account and risk of the Fund. The CTA
agrees to use its best efforts to exit all futures trades prior to delivery
of any commodity that requires storage or other costs. During the term of
this agreement, the Fund agrees that it will not place orders in the Account
without the prior written consent of the CTA.
3. The CTA's services are not rendered exclusively for the Fund and the
Fund agrees that the CTA is free to continue to provide and offer similar
services to others. The General Partner may change or add another FCM for
the Account assigned to the CTA at any time upon written direction to the FCM
and the CTA, and the FCM and the CTA agree to effect the transfer and sign
the forms necessary to complete such change or addition, provided such
transfer does not conflict with any prior agreements the CTA has with the
FCM.
4. On the close of the last business day of each month, the corporate
general partner and commodity pool operator, Ashley Capital Management, Inc.
(the "CPO") shall charge the Fund a fixed commission of 11/12% (11% annually)
of the Net Equity in the account assigned to the CTA, for trades made on
domestic markets. The fixed commission for domestic trades is for entry and
exit from all trades, pit brokerage, exchange, NFA fees and other clearing
expenses arising from the trades placed by the CTA in the Account. This does
not include trades made on foreign exchanges or forward markets or costs to
accept delivery incurred on trades made on any exchange. Those commissions
and costs will be at rates to be negotiated by the CPO with the FCM or other
party, as the facts determine, and charged separately at cost, if at all, to
the Fund.
5. The CTA will use its best efforts to obtain an equity run from the
FCM before the opening of business the next trading day. Unless authorized
in writing by the CPO, the CTA will use only the equity in the Account
assigned to the CTA by the CPO for margins to hold the positions taken by the
CTA. No equity in the Account assigned to the CTA will be commingled or
margined, for any purpose, with any other account at the FCM. The CPO, upon
written instruction to the FCM, may terminate, for any reason, the power of
attorney and suspend the trading authority of the CTA to enter trades with
the FCM. In the event of a termination of the power of attorney, the CTA
agrees that the FCM shall accept no further instructions from the CTA but
shall place the Account upon liquidation only to be handled in written
instructions from the CPO to the FCM.
6. The Fund agrees to execute, from time to time, the Acknowledgment of
Receipt of Disclosure Document from the CTA. By signing, the Fund agrees
that it has received and understands and the CTA represents that it has
supplied the most recent copy of the CTA's Risk Disclosure Document. The
CTA will promptly review the Fund offering documents submitted by the Fund to
it, from time to time, and will furnish its consent, in the form requested by
the Fund, to the filing of forms and offering documents with the Federal and
State security and commodity regulators.
7. The Fund agrees to execute the CTA's Managed Account Compensation
Agreement authorizing the CTA to be paid a two percent (2%) annual management
fee, payable monthly, from the Fund Account on the first $2,000,000 in equity
assigned by the Fund to the CTA to trade, and to be paid a one percent (1%)
annual management fee on assigned equity above $2,000,000. The CTA will be
paid an incentive fee of twenty percent (20%), of the New Net Profit earned
each calendar quarter. New Net Profit is determined after deduction of the
fixed commission; i.e., the CTA must earn back the brokerage commissions
before incentive fees are paid. And, New Net Profit excludes interest earned
on cash and cash equivalents, such as treasury bills. The Fund accountant
will make the incentive fee determination on the close of the last business
day of each quarter and submit his calculations to the CTA and CPO for
approval. Once approved by the CPO, the CTA invoice for the quarterly
incentive fee will be submitted by the CPO to the futures commission merchant
for payment from the Account.
8. The Fund and the CTA agree that they have or will properly execute
all necessary forms for opening the Account with the FCM; provided, however,
any disputes between the Fund and the CTA will be submitted to arbitration
before a single arbitrator selected by the American Arbitration Association,
not the National Futures Association, and only upon written agreement of the
parties at the time such dispute arises. The terms of this Agreement will
supersede, and in the event of conflicts with any other agreement, the terms
of this Agreement shall control. This Agreement will be governed by the laws
of the State of Illinois and any dispute concerning arbitration will be
resolved by a Federal or State court of competent jurisdiction located in
Chicago, Illinois.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement the day and year first above written.
Atlas Futures Fund, Limited Partnership NuWave Investment Corp.
By: Ashley Capital Management, Inc.
___________________________ _________________________
Michael P. Pacult Troy Buckner
President Principal
*******************************************************************************
Dealer Prospectus Delivery Obligation
Until one year from the date of this prospectus, all dealers that effect
transactions in these securities, whether or not participating in this
offering, may be required to deliver a prospectus. This is in addition to
the dealers' obligation, if any, to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.
[The balance of this page has been intentionally left blank.]
*******************************************************************************
FORM S-1
Registration No. 333-59976
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
(b) The Selling Agreement between Futures Investment Company and the
Registrant contains an indemnification from the General Partner to the
effect that the disclosures in the Prospectus are in compliance with Rule
10b5 and otherwise true and complete. This indemnification speaks from
the date of the first offering of the Units through the end of the
applicable statute of limitations. The Partnership has assumed no
responsibility for any indemnification to Futures Investment Company
and the General Partner is prohibited by the Partnership Agreement from
receiving indemnification for breach of any securities laws or for
reimbursement for insurance for coverage for any such claims. See
Article X, Section 10.4 (b) and (e).
(d) There are no indemnification agreements which are not contained in the
Limited Partnership Agreement attached as Exhibit A, the Selling
Agreement or the Clearing Agreement.
Item 16. Exhibits and Financial Statement Schedules.
The following documents (unless indicated) are filed herewith and made a part
of this Registration Statement:
(a) Exhibits.
Exhibit
Number Description of Document
(1) - 01 Selling Agreement dated February 1, 1998, among the Partnership,
the General Partner, and Futures Investment Company, the Selling
Agent
(2) None
(3) - 01 Articles of Incorporation of the General Partner
(3) - 02 By-Laws of the General Partner
(3) - 03 Board Resolution of General Partner to authorize formation of
Delaware Limited Partnership
(3) - 04 Amended and Restated Agreement of Limited Partnership of the
Registrant dated February 1, 1998 (included as Exhibit A to the
Prospectus)
(3) - 05 Certificate of Limited Partnership, Designation of Registered
Agent, Certificate of Initial Capital filed with the Delaware
Secretary of State, and Delaware Secretary of State acknowledgment
of filing of Certificate of Limited Partnership
(4) - 01 Amended and Restated Agreement of Limited Partnership of the
Registrant dated February 1, 1998 (included as Exhibit A to the
Prospectus)
(5) - 01 Opinion of The Scott Law Firm, P.A. relating to the legality of the
Partnership Units.
(6) Not Applicable
(7) Not Applicable
(8) - 01 Opinion of The Scott Law Firm, P.A. with respect to Federal income
tax consequences.
(9) None
(10) - 01 Form of Advisory Agreements between the Partnership and the CTAs
(included as Exhibit F to the Prospectus)
(10) - 02 Form of New Account Agreement between the Partnership and the FCM
(10) - 03 Form of Subscription Agreement and Power of Attorney
(included as Exhibit D to the Prospectus).
(10) - 04 Escrow Agreement among Escrow Agent, Underwriter, and the Partnership.
(included as Exhibit E to the Prospectus).
(10) - 05 Introducing Broker Clearing Agreement by and between Refco, Inc. as
futures commission merchant (the "FCM") and Futures Investment
Company as introducing broker (the "IB")
(11) Not Applicable - start-up business
(12) Not Applicable
(13) Not Required
(14) None
(15) None
(16) Not Applicable
(17) Not Required
(18) Not Required
(19) Not Required
(20) Not Required
(21) None
(22) Not Required
(23) - 01 Consent of Frank L. Sassetti & Co., Certified Public Accountants
(23) - 02 Consent of James Hepner, Certified Public Accountant
(23) - 03 Consent of The Scott Law Firm, P.A.
(23) - 04 Consent of Clarke Capital Management, Inc., Commodity Trading Advisor
(23) - 05 Consent of Futures Investment Company, as Selling Agent
(23) - 06 Consent of Futures Investment Company, as Introducing Broker
(23) - 07 Consent of Refco, Inc., Futures Commission Merchant
(24) None
(25) None
(26) None
(27) Not Applicable
(28) Not Applicable
(99) - 01 Subordinated Loan Agreement for Equity Capital
(99) - 02 Representative's Agreement between Futures Investment Company and
Shira Del Pacult
(b) Financial Statement Schedules.
No Financial Schedules are required to be filed herewith.
Item 17. Undertakings.
(a) (1) The undersigned registrant hereby undertakes to file, during any
period in which offers or sales are being made, a post-effective
amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represents a fundamental:
change in the information set forth in the registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for the purpose of
determining any liability under the Securities Act of 1933, each post-
effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) The General Partner has provided an indemnification to Futures Investment
Company, the best efforts selling agent. The Partnership (issuer) has
not made any indemnification to Futures Investment Company.
Insofar as indemnification for liabilities under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of
the Registrant including, but not limited to, the General Partner
pursuant to the provisions described in Item 14 above, or otherwise, the
Registrant had been advised that, in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any such action, suit or
proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of
such issue.
*******************************************************************************
Pursuant to the requirements of the Securities Act of 1933, in the City of
Fremont in the State of Indiana on this 24th day of January, 2005, Mr. Michael
Pacult, the individual general partner of the Registrant, signed this
Registration Statement; and Ashley Capital Management, Inc., the corporate
general partner of the Registrant, has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized.
ASHLEY CAPITAL MANAGEMENT, INC. ATLAS FUTURES FUND, L.P.
BY ASHLEY CAPITAL MANAGEMENT, INC.
GENERAL PARTNER
BY: /s/ Michael Pacult BY: /s/ Michael Pacult
MR. MICHAEL PACULT MR. MICHAEL PACULT
PRESIDENT PRESIDENT
ATLAS FUTURES FUND, L.P.
BY MR. MICHAEL PACULT
GENERAL PARTNER
BY: /s/ Michael Pacult BY: /s/ Michael Pacult
MR. MICHAEL PACULT MR. MICHAEL PACULT
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following person on behalf of Ashley
Capital Management, Inc., General Partner of the Registrant in the capacities
and on the date indicated.
/s/ Michael Pacult
MR. MICHAEL PACULT
PRESIDENT
Date: January 24, 2005
(Being the principal executive officer, the principal financial and accounting
officer and the sole director of Ashley Capital Management, Inc., General
Partner of the Fund)