FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2005
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 333-59976
Atlas Futures Fund, Limited Partnership
(Exact name of registrant as specified in its charter)
Delaware 51-0380494
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
505 Brookfield Drive, Dover, DE 19901
(Address of principal executive offices, including zip code)
(800) 331-1532
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2)
Yes No X
Part 1 - FINANCIAL INFORMATION
Item 1. Financial Statements.
The reviewed financial statements for the Registrant for the nine months
ended September 30, 2005 are attached hereto and made a part hereof.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
General Information
During the past quarter and in the future, Registrant, did and will, pursuant
to the terms of the Limited Partnership Agreement, engage in the business of
speculative and high risk trading of commodity futures and options markets
through the services of one or more commodity trading advisors it selects.
Description of Fund Business
The Fund grants the commodity trading advisors a power of attorney that is
terminable at the will of either party to trade the equity assigned by the
Fund. Currently, the Fund has granted powers to two commodity trading
advisors, Clarke Capital Management, Inc. and NuWave Investment Corp. Clarke
trades approximately 80% of the Fund's equity made available for trading and
NuWave trades the other 20%. The commodity trading advisors have sole
discretion to select the trades and do not disclose the methods they use to
make those determinations in their disclosure documents or to the Fund or
general partner. There is no promise or expectation of a fixed return to the
partners. The partners must look solely to trading profits for a return
their investment as the interest income is expected to be less than the fixed
expenses to operate the Fund.
Assets
The Fund assets consist of cash used as margin to secure futures (formerly
called commodity) trades entered on its behalf by the commodity trading
advisors it selects. The Fund deposits its cash with one or more futures
commission merchants (brokers) who hold and allocate the cash to use as
margin to secure the trades made. The futures held in the Fund accounts are
valued at the market price on the close of business each day by the Futures
Commission Merchant or Merchants that hold the Fund equity made available for
trading. The Capital accounts of the Partners are immediately responsible
for all profit and losses incurred by trading and payment and accrual of the
expenses of offering partnership interests for sale and the operation of the
partnership. The fixed costs of operation of the Fund include continuing
offering costs, a management fee to NuWave of 2% of equity assigned to it to
trade, fixed brokerage commissions of 11%, and accounting and legal fees that
must be paid before the limited partners may earn a profit on their
investment.
The Fund does not intend to borrow from third parties. Its trades are
entered pursuant to a margin agreement with the futures commission merchant
which obligates the fund to the actual loss, if any, without reference or
limit by the amount of cash posted to secure the trade. The limited partners
are not personally liable for the debts of the Fund, including any trading
losses. The Registrant will continue to offer Units for sale to the public
via its fully amended and restated prospectus dated March 8, 2005 until the
balance, as of September 30, 2005, of $2,824,970 in face amount of Units are
sold. As of September 30, 2005, of the $15,000,000 of Units registered,
$12,175,030 has been sold and upon redemption by the holder, will not be
resold. Absent the registration of additional Units, the Fund will be
capitalized at $15,000,000 subject to redemption of Units by the holders as
they request which are expected to be honored by the General Partner.
An Investment in the Fund Depends upon Redemption of Fund Units
The Fund Units are not traded and they have no market value. Liquidity of an
investment in the Fund depends upon the credit worthiness of the exchanges,
brokers, and third parties of off exchange traded futures that hold Fund
equity or have a lien against Fund assets for payment of debts incurred.
Those parties must honor their obligations to the Fund for the Fund to be
able to obtain the return of its cash from the futures commission merchant
that holds the Fund account.
The commodity trading advisors select the markets and the off exchange
instruments to be traded. The General Partner selects the futures commission
merchants to hold the Fund assets. Both the commodity trading advisors and
the general partner believe all parties who hold Fund assets or are otherwise
obligated to pay value to the Fund are credit worthy. Margin is an amount to
secure the entry of a trade and is not a limit of the profit or loss to be
gained from the trade. The general partner intends to allocate approximately
97% of the Fund equity to be used as margin to enter trades. Although it is
customary for the commodity trading advisors to use 40% or less of the equity
available as margin, there is no limit imposed by the Fund upon the amount of
equity the advisors may commit to margin. It is possible for the Fund to
suffer losses in excess of the margin it posts to secure the trades made.
To have the purchase price or appreciation, if any, of the Units, paid to
them, partners must use the redemption feature of the Partnership.
Distributions, although possible in the sole discretion of the general
partner, are not expected to be made. The General Partner is not expected to
make distributions. There is no current market for the Units sold, none is
expected to develop and the partnership agreement limits the ability of a
partner to transfer the Units.
Results of Operations
The Fund results after payment and accrual of expenses for the first nine
months of 2005 was 21.56% and for the nine months of 2004 was 40.80%. The
profits were generated by the commodity trading advisors by methods that are
proprietary to them. These results are not to be construed as an expectation
of similar profits in the future.
Quantitative and Qualitative Disclosures about Market Risk
The business of the Fund is speculative and involves a high degree of risk of
loss.
Controls and Procedures
The Registrant has adopted procedures in connection with the operation of its
business including, but not limited to, the review of account statements sent
to the general partner before the open of business each day that disclose the
positions held overnight in the Fund accounts, the margin to hold those
positions, and the amount of profit or loss on each position, and the net
balance of equity available in each account. The Fund brokerage account
statements and financial books and records accounts are prepared by an
independent Certified Public Accounting Firm and then are reviewed each
quarter and audited each year by a different independent CPA firm.
Internal Control over Financial Reporting
Each month, the general partner reviews the profit and loss statements for
the month and once approved each partner is sent a statement to disclose
total Fund performance and the amount in the partner's capital account.
Checks are paid for expenses only upon approval of invoices submitted to the
general partner or pursuant to standing authorizations for periodic fixed
expenses. Payment of a redemption is only upon receipt of a request form
signed by the person with authority over the partner's account. The general
partner balances the daily account information with the monthly compilation
and financial statements prepared by the independent CPA.
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) None
(b) None
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Form 10-Q for the
period ended September 30, 2005, to be signed on its behalf by the
undersigned, thereunto duly authorized.
Registrant: Atlas Futures Fund, Limited Partnership
By Ashley Capital Management, Incorporated
Its General Partner
By: /s/ Michael Pacult
Mr. Michael Pacult
Sole Director, Sole Shareholder,
President, and Treasurer of the
General Partner
Date: November 14, 2005
****************************************************************************
ATLAS FUTURES FUND,
LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
INDEX TO FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm F-2
Financial Statements
Balance Sheets as of September 30, 2005 and
December 31, 2004 F-3
Schedules of Investments as of September 30, 2005 and
December 31, 2004 F-4 - F-8
Statements of Operations for the Three and Nine Months
Ended September 30, 2005 and 2004 F-9
Statements of Partners' Equity for the Nine Months Ended
September 30, 2005 and 2004 F-10
Statements of Cash Flows for the Nine Months Ended
September 30, 2005 and 2004 F-11
Notes to Financial Statements F-12 - F-18
F-1
Frank L. Sassetti & Co.
Certified Public Accountants
To The Partners
Atlas Futures Fund, Limited Partnership
Dover, Kent County, Delaware
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have reviewed the balance sheet, including
the schedule of investments, of ATLAS FUTURES FUND, LIMITED PARTNERSHIP as of
September 30, 2005 and the related statements of operations for the three and
nine months ended September 30, 2005 and 2004, and the statements of
partners' equity and cash flows for the nine months ended September 30, 2005
and 2004. These financial statements are the responsibility of the
Partnership's management.
We conducted our review in accordance with the
standards of the Public Company Accounting Oversight Board (United States).
A review of interim financial information consists principally of applying
analytical procedures to financial data and making inquires 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 of the Public Company Accounting Oversight Board (United
States), the balance sheet, including the schedule of investments, of ATLAS
FUTURES FUND, LIMITED PARTNERSHIP as of December 31, 2004 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 14, 2005, 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, 2004 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 10, 2005
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
SEPTEMBER 30, 2005 AND DECEMBER 31, 2004
ASSETS
September 30,
2005 December 31,
(A Review) 2004
Investments
Equity in Commodity Futures Trading Accounts -
Cash and cash equivalents $16,349,124 $12,280,244
Net unrealized gain (loss) on open commodity
futures contracts 750,937 (97,995)
17,100,061 12,182,249
Cash 71,078 18,289
Accrued interest receivable 32,871 22,314
$17,204,010 $12,222,852
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Partner redemptions payable $ 8,000 $ 28,746
Accrued trading commissions payable 20,744 15,414
Accrued management fees payable 12,679
Incentive fees payable 387,187 362,733
Front end load payable - 60
Other accrued liabilities 6,606 24,950
Total Liabilities 435,216 431,903
PARTNERS' EQUITY
Limited partners - (5,050.40 and 4,316.80 units) 16,768,794 11,790,949
General partner - (0 units) - -
Total Partners' Equity 16,768,794 11,790,949
$17,204,010 $12,222,852
See accompanying notes.
F-3
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2005
(A Review)
Contracts Value Percent
United States Commodity Futures Positions, Held Long:
113 Dec '05 CME Lean Hogs $ 76,840 0.45%
57 Dec '05 CME Cattle 43,320 0.25
171 Dec '05 CMX HG Copper 170,438 1.00
10 Dec '05 IMM AUST Dollar (10,400) (0.06)
4 Dec '05 IMM British Pounds (18,875) (0.11)
4 Dec '05 IMM Canadian Dollar 4,280 0.03
13 Dec '05 E MINI S&P 500 (2,600) (0.02)
2 Nov '05 LME Copper 15,025 0.09
2 Dec '05 LME Copper 5,450 0.03
17 Dec '05 CMX Gold 11,560 0.06
3 Dec '05 CMX Silver 2,655 0.02
23 Mar '06 CSC Sugar 13,653 0.08
6 Nov '05 NY LT Crude 8,940 0.05
4 Nov '05 LME Alum US (1,558) (0.01)
7 Oct '05 LME Alum US (88) (0.00)
Total United States Commodity Futures Positions 318,640 1.86
Japanese Commodity Futures Positions, Held Long:
9 Dec '05 SGX MINI JGB (15,441) (0.09)
7 Dec '05 SMX Nikkei 15,683 0.09
Total Japanese Commodity Futures Positions 242 0.00
European Commodity Futures Positions, Held Long:
9 Dec '05 DTB Dax Index 35,794 0.21
16 Jun '06 Lif 3M Euribar (7,691) (0.04)
Total European Commodity Futures Positions 28,103 0.17
See accompanying notes.
F-4
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2005
(A Review)
Contracts/
Amount Value Percent
Great British Commodity Futures Positions, Held Long:
7 Dec '05 NEW FTSE 100 $ 15,053 0.09%
11 Dec '05 LIFFE Long Gilt (14,594) (0.09)
43 Jun '06 LIF 3M Sterling (3,790) (0.02)
Total British Commodity Futures Positions (3,331) (0.02)
Hong Kong Commodity Futures Positions, Held Long:
2 Oct '05 Hong Kong Hang Seng 6,832 0.04
Total Hong Kong Commodity Futures Positions 6,832 0.04
Australian Commodity Futures Positions, Held Long:
2 Dec '05 SFE SPI 200 5,719 0.03
Total Australian Commodity Futures Positions 5,719 0.03
Total Commodity Futures Positions, Held Long 356,205 2.08
United States Commodity Futures Positions, Sold Short:
114 Dec '05 IMM B Pounds 72,031 0.42
57 March '06 IMM Euro Dollar 14,963 0.09
57 Dec '05 IMM Swiss Francs 82,650 0.48
67 Dec '05 IMM Japanese Yen 210,456 1.23
4 Dec '05 IMM Euro Fx 11,100 0.06
4 Nov '05 CBOT Soybeans 4,400 0.03
3 Dec '05 CME Cattle (1,500) (0.01)
4 Dec '05 CSC Coffee 20,213 0.12
1 Dec '05 LME Alum US 856 0.01
3 Dec '05 NYC Cotton (4,760) (0.03)
18 June '06 IMM Euro Dollar 11,650 0.07
Total United States Commodity Futures Positions 422,059 2.47
See accompanying notes.
F-5
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2005
(A Review)
Contracts/
Amount Value Percent
European Commodity Futures Positions, Held Short:
13 Oct '05 MONEP CAC 40 EU $ (17,280) (0.10)%
British Commodity Futures Positions, Sold Short:
57 Mar '06 Lif 3M Sterling (10,047) (0.06)
Total Commodity Futures Positions, Sold Short 394,732 2.31
Net Commodity Futures Positions 750,937 4.39
Cash and Cash Equivalents in Trading Accounts:
Dec '05 United States Treasury Bill
($10,900,000 Face Value) 10,809,126 63.21
Dec '05 United States Treasury Bill
($1,800,000 Face Value) 1,784,830 10.44
Nov '05 United States Treasury Bill
($1,100,000 Face Value) 1,090,707 6.38
Nov '05 United States Treasury Bill
($700,000 Face Value) 694,348 4.06
Oct '05 United States Treasury Bill
($580,000 Face Value) 575,530 3.37
United States Markets 774,411 4.53
Euro Markets 415,486 2.43
British Pound Markets 163,898 0.96
Australian Dollar Markets (67,085) (0.39)
Hong Kong Dollar Markets 21,373 0.12
Japanese Yen Markets 86,500 0.50
Total Cash and Cash Equivalents
in Trading Accounts 16,349,124 95.61
Total Investments $17,100,060 100.00%
See accompanying notes.
F-6
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2004
Contracts Value Percent
United States Commodity Futures Positions, Held Long:
80 Mar '05 CBT Soybeans $ (32,000) (0.26)%
40 Mar '05 CBT 10-Year Treasury Notes (10,000) (0.08)
40 Feb '05 CME Lean Hogs (4,200) (0.03)
40 Mar '05 CSC Coffee 93,000 0.76
40 Mar '05 IMM British Pounds (59,000) (0.48)
40 Mar '05 IMM Swiss Francs (21,000) (0.17)
40 Mar '05 IMM Mexican Peso 500 0.00
Total United States Commodity Futures Positions (32,700) (0.26)
British Commodity Futures Positions, Held Long:
40 Sep '05 LIFFE 3 MO Sterling 7,702 0.06
Total British Commodity Futures Positions 7,702 0.06
Australian Commodity Futures Positions, Held Long:
40 Mar '05 SYD 90 Day Australian Bill (2,245) (0.02)
Total Australian Commodity Futures Positions (2,245) (0.02)
Total Commodity Futures Positions (27,243) (0.22)
See accompanying notes.
F-7
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2004
Contracts Value Percent
United States Commodity Futures Positions, Sold Short:
40 Mar '05 CBT 2-Year Treasury Notes $ (5,000) (0.04)%
40 Mar '05 CSC Cocoa (4,600) (0.04)
40 Feb '05 New York Unleaded Gas (61,152) (0.50)
Total United States Commodity Futures Positions,
Sold Short (70,752) (0.58)
Net Commodity Futures Positions (97,995) (0.80)
Cash and Cash Equivalents in Trading Accounts:
Mar '05 United States Treasury Bills
($10,570,000 Face Value) 10,512,712 86.29
May '05 United States Treasury Bills
($1,250,000 Face Value) 1,236,477 10.15
United States Markets 287,356 2.36
Eurodollar Markets 218,154 1.79
British Pound Markets (1,027) (0.01)
Australian Dollar Markets (6,326) (0.05)
Japanese Yen Markets 32,900 0.27
Total Cash and Cash Equivalents
in Trading Accounts 12,280,244 100.80
Total Investments $12,182,249 100.00%
See accompanying notes.
F-8
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
(A Review)
Three months ended Nine months ended
September 30, September 30,
2005 2004 2005 2004
INVESTMENT AND OTHER INCOME
Interest income $116,851 $ 28,910 $257,242 $ 64,815
Other income - - - -
Total Income 116,851 28,910 257,242 64,815
EXPENSES
Commissions 433,036 267,594 1,166,995 587,692
Management fees 13,044 - 29,032 -
Continuing service fee - - - 131,711
Incentive fees 387,101 465,910 1,157,218 1,066,170
Professional accounting and
legal fees 32,000 33,017 102,796 90,802
Other operating and administrative
expenses 1,727 2,242 10,406 22,504
Total Expenses 866,908 768,763 2,466,447 1,898,879
Net Investment Loss (750,057) (739,854)(2,209,205)(1,834,064)
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Realized gain (loss) from trading
in futures 1,057,546 1,162,778 4,111,002 4,625,908
Realized gain (loss) on exchange
rate fluctuation (6,269) (1,603) (24,167) (3,113)
Changes in unrealized gains
(losses) on open commodity
open futures contracts 653,159 970,061 848,932 229,576
Total Realized and Unrealized Gain
(Loss) on Investments 1,704,436 2,131,236 4,935,767 4,852,371
NET INCOME $ 954,379 $1,391,382 $2,726,562 $3,018,308
NET INCOME -
Limited partnership unit $ 191.63 $ 352.29 $ 583.46 $ 717.01
General partnership unit $ - $ - $ - $ -
Weighted average partnership units outstanding:
Limited units 4,980.41 3,649.52 4,673.07 4,207.58
General units - - - -
See accompanying notes.
F-9
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
(A Review)
2005 2004
Amount Units Amount Units
Beginning balance-
December 31, $11,790,949 4,316.80 $ 7,689,797 4,393.05
Partner additions 2,590,950 870.95 714,331 349.30
Syndication costs (12,429)
Partner withdrawals (339,667) (137.35) (1,604,376) (763.87)
Net Income 2,726,562 3,018,307
Balance at
September 30, $16,768,794 5,050.40 $ 9,805,630 3,978.48
2005 2004
Value per unit $3,320.29 $2,464.67
Total partnership units 5,050.40 3,978.48
See accompanying notes.
F-10
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
(A Review)
2005 2004
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 2,726,562 $ 3,018,307
Adjustments to reconcile net income to net
cash provided by operating activities -
Changes in unrealized gains (848,932) (229,575)
Changes in operating assets and liabilities -
Accrued interest receivable (10,557) (2,886)
Accrued/ prepaid commissions - 7,569
Accrued management and incentive fees 37,133 805,046
Prepaid incentive fees - 94,433
Other payables and accruals (13,074) (20,316)
Net Cash Provided By
Operating Activities 1,891,132 3,672,578
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of units, net
of sales commissions 2,590,950 714,331
Syndication costs - (12,429)
Partner redemptions (360,413) (1,637,189)
Net Cash Used In
Financing Activities 2,230,537 (935,287)
NET INCREASE IN CASH
AND CASH EQUIVALENTS 4,121,669 2,737,291
CASH AND CASH EQUIVALENTS
Beginning of period 12,298,533 6,968,298
End of period $16,420,202 $9,705,589
End of period cash and cash equivalents consists of:
Cash and cash equivalents in broker
trading accounts $16,349,124 $9,676,933
Cash 71,078 28,656
$16,420,202 $9,705,589
See accompanying notes.
F-11
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2005 AND 2004
(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.
Interim Financial Statements - The balance sheet, including the schedule of
investments, as of September 30, 2005 and the statements of operations for
the three and nine months ended September 30, 2005 and 2004, and the
statements of partners' equity and cash flows for the nine months ended
September 30, 2005 and 2004 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, 2005 and the results of operations and cash flows for the
three and nine months ended September 30, 2005 and 2004.
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. 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-12
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2005 AND 2004
(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 2004
financial statements to conform to the 2005 presentation.
Statement of Cash Flows - For purposes of the Statement of Cash Flows, the
Fund considers cash, money market funds and U.S. Treasury Bills 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,
2005 and 2004.
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
SEPTEMBER 30, 2005 AND 2004
(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 subscription 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.
F-14
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2005 AND 2004
(A Review)
4. 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" is paid to
Clarke for assets traded in their account.
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.
Effective February 1, 2005, the Fund added a new CTA, NuWave. NuWave's
quarterly incentive fee is 20% of "new net profits" and also receives a
monthly management fee of 2% (annualized) on the first $2,000,000 in
allocated equity and 1% on the allocated equity above $2,000,000. NuWave was
initially allocated $2,000,000 in equity on February 1, 2005.
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, 2005 and 2004
2005 2004
Commission/Management Fee - Ashley $1,046,158 $587,692
Continuing Service Fee - Futures $ - $131,711
F-15
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2005 AND 2004
(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, 2005 and December 31,
2004 was $1,394,583 and $531,055, respectively, which equals approximately 8%
and 5% of Net Asset Value, respectively. The Fund also purchases United
States Treasury bills as a form of margin. At September 30, 2005 and
December 31, 2004, $14,954,541 and $11,749,189, respectively, was invested in
U.S. Treasury Bills, which approximates 89% and 99% of Net Asset Value,
respectively.
F-16
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2005 AND 2004
(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 $36,261,000 and $36,661,000 on long positions at September 30, 2005
and December 31, 2004, 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/(losses) on open commodity futures contracts at
September 30, 2005 and December 31, 2004 were $750,937 and ($97,995),
respectively.
Open contracts generally mature within three months. As of September 30,
2005, the latest maturity date for open futures contracts is June, 2006.
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
SEPTEMBER 30, 2005 AND 2004
(A Review)
7. FINANCIAL HIGHLIGHTS
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
Performance per Unit (5)
Net unit value, beginning of period $3,128.46 $2,120.72 $2,731.41 $1,750.45
Net realized and unrealized gains/
losses on commodity transactions 342.43 531.28 1,061.63 1,149.90
Investment and other income 23.46 7.32 55.05 15.40
Expenses (1) (174.06) (194.65) (527.80) (451.08)
Net increase (decrease) for the period 191.83 343.95 588.88 714.22
Net unit value, end of period $3,320.29 $2,464.67 $3,320.29 $2,464.67
Net assets, end of period (000) $ 16,769 $ 9,805 $ 16,769 $ 9,805
Total return (3) 6.13% 16.22% 21.56% 40.80%
Ratio to average net assets (4)
Investment and other income 2.89% 1.25% 2.39% 1.00%
Expenses (2) (10.74)% (21.62)% (12.08)% (20.14)%
(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-18