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 June 30, 2006
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 six months ended
June 30, 2006 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 February 6, 2006 until
the balance, as of June 30, 2006, of $2,438,775 in face amount of Units are
sold. As of June 30, 2006, of the $15,000,000 of Units registered,
$12,561,225 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 six
months of 2006 was a loss of $374,086 and for the six months of 2005 was a
profit of $1,772,183. 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 June 30, 2006, 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: August 14, 2006
****************************************************************************
ATLAS FUTURES FUND,
LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
INDEX TO FINANCIAL STATEMENTS
Page
Accountants' Review Report F-2
Financial Statements
Balance Sheets as of June 30, 2006 and
December 31, 2005 F-3
Schedules of Investments as of June 30, 2006 and
December 31, 2005 F-4 - F-9
Statements of Operations for the Three and
Six Months Ended June 30, 2006 and 2005 F-10
Statements of Partners' Equity for the
Six Months Ended June 30, 2006 and 2005 F-11
Statements of Cash Flows for the Six Months Ended
June 30, 2006 and 2005 F-12
Notes to Financial Statements F-13 - F-19
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
June 30, 2006 and the related statements of operations for the three and six
months ended June 30, 2006 and 2005, and the statements of partners' equity
and cash flows for the six months ended June 30, 2006 and 2005. 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, 2005 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 24, 2006, 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, 2005 is fairly stated, in all material respects, in relation to
the balance sheet from which it has been derived.
/s/ Frank L. Sassetti & Co.
August 11, 2006
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
JUNE 30, 2006 AND DECEMBER 31, 2005
ASSETS
June 30,
2006 December 31,
(A Review) 2005
Investments
Equity in Commodity Futures Trading Accounts -
Cash and cash equivalents $16,732,061 $16,822,678
Net unrealized gain (loss) on open commodity
futures contracts (42,095) 250,902
16,689,966 17,073,580
Cash 91,604 88,004
Accrued interest receivable 51,662 34,073
$16,833,232 $17,195,657
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Partner redemptions payable $ 286,648 $ 117,164
Accrued trading commissions payable 6,167 15,555
Accrued management fees 12,515 13,110
Incentive fees payable 67,052 170,919
Other accrued liabilities 49,908 37,128
Total Liabilities 422,290 353,876
PARTNERS' EQUITY
Limited partners - (4,987.12 and 5,016.79 units) 16,410,942 16,841,781
General partner - (0 units) - -
Total Partners' Equity 16,410,942 16,841,781
$16,833,232 $17,195,657
See accompanying notes.
F-3
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
SCHEDULE OF INVESTMENTS
JUNE 30, 2006
Contracts Value Percent
United States Commodity Futures Positions, Held Long:
66 Aug '06 CME Cattle $(22,920) (0.13)%
63 Aug '06 IPE Br Crude 38,430 0.23
63 Aug '06 IPE Oil Gas (12,050) (0.07)
1 Dec '06 CBOT Corn 75 0.00
12 Sep '06 CBOT Wheat 10,513 0.06
3 Oct '06 CSC Sugar 3,427 0.02
1 Aug '06 NY LT Crude 3,840 0.02
3 Aug '06 NY Heating Oil (1,121) (0.00)
1 Sep '06 LME Alum (6,513) (0.04)
3 Sep '06 IMM Australian Dollar (915) (0.01)
5 Sep '06 IMM Canadian Dollar (8,300) (0.05)
3 Sep '06 IMM Euro 5,981 0.04
15 March '07 IMM Euro Dollar (200) (0.00)
9 Sep '06 E-Mini S&P 5,738 0.03
Total United States Commodity Futures Positions 15,985 0.10
Japanese Commodity Futures Positions, Held Long:
4 Sep '06 SGX Mini JGB (1,188) (0.01)
Total Japanese Commodity Futures Positions (1,188) (0.01)
British Commodity Futures Positions, Held Long:
2 Sep '06 New FTSE 100 10,953 0.07
Total British Commodity Futures Positions 10,953 0.07
Hong Kong Commodity Futures Positions, Held Long:
1 Jul '06 HK Hang Seng 2,858 0.02
Total Hong Kong Commodity Futures Positions 2,858 0.02
See accompanying notes.
F-4
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
SCHEDULE OF INVESTMENTS- CONTINUED
JUNE 30, 2006
Contracts Value Percent
Australian Commodity Futures Positions, Held Long:
1 Sep '06 SFE 10 Y T-Bond $ (623) (0.00)%
Total Australian Commodity Futures Positions (623) (0.00)
European Commodity Futures Positions, Held Long:
4 Sep '06 Eurx E-Bund (8,708) (0.05)
1 Sep '06 DAX Index 8,967 0.05
3 Jul '06 MONEP CAC 40 EU 10,358 0.06
Total European Commodity Futures Positions 10,617 0.06
Total Commodity Futures Positions Long 38,602 0.24
United States Commodity Futures Positions, Sold Short:
63 Dec '06 CBOT Corn (11,813) (0.07)
67 Nov '06 CBOT Soybeans (33,375) (0.20)
127 Sep '06 CBT Note 10 Y (15,313) (0.09)
63 Sep '06 CBT Note 2 Y 25,594 0.15
63 Dec '06 NYC Cotton 42,210 0.25
66 Sep '06 IMM B-Pounds (85,919) (0.51)
63 Sep '06 IMM Swiss Franc (95,288) (0.57)
1 Sep '06 CMX Silver (3,095) (0.02)
1 Sep '06 LME Copper 20,750 0.12
Total United States Commodity Futures Positions,
Sold Short (156,249) (0.94)
British Commodity Futures Positions, Held Short:
127 Sep '06 Lif Long Gilt 95,735 0.57
35 Mar '07 Lif 3 M Sterling (4,849) (0.03)
Total British Commodity Futures Positions 90,886 0.54
See accompanying notes.
F-5
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
SCHEDULE OF INVESTMENTS- CONTINUED
JUNE 30, 2006
Contracts Value Percent
Australian Commodity Futures Positions, Held Short:
63 Sep '06 SFE 3 Y T-Bond $ (10,194) (0.06)%
Total Australian Commodity Futures Positions (10,194) (0.06)
European Commodity Futures Positions, Held Long:
63 Sep '06 Eurx E-BOBL (12,084) (0.07)
63 Sep '06 Eurx E-Bund 806 0.00
12 Mar '07 Lif 3 M Euribor 6,138 0.04
Total European Commodity Futures Positions (5,140) (0.03)
Total Commodity Futures Positions Short (80,697) (0.49)
Net Commodity Futures Positions (42,095) (0.25)
Cash and Cash Equivalents in Trading Accounts:
Sep '06 United States Treasury Bills
($11,500,000 Face Value) 11,363,765 68.09
Aug '06 United States Treasury Bills
($4,00,000 Face Value) 3,954,661 23.69
Jul '06 United States Treasury Bills
($800,000 Face Value) 791,304 4.74
United States Markets 306,603 1.84
European Markets 518,361 3.10
Hong Kong Markets (2,338) (0.01)
British Pound Markets (158,980) (0.95)
Australian Dollar Markets (89,268) (0.53)
Japanese Yen Markets 47,953 0.28
Total Cash and Cash Equivalents
in Trading Accounts 16,732,061 100.25
Total Investments $16,689,966 100.00%
See accompanying notes.
F-6
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2005
Contracts Value Percent
United States Commodity Futures Positions, Held Long:
68 Mar '06 CBOT Soybeans $(32,162) (0.19)%
62 Mar '06 CBT Bean Meal (29,140) (0.17)
62 Mar '06 CBT T-Bonds (9,688) (0.06)
76 Feb '06 CME Cattle 18,540 0.11
62 Mar '06 CMX HG Copper 19,200 0.11
8 Jan '06 LME Alum US 51,081 0.30
2 Mar '06 LME Alum US 1,087 0.01
1 Jan '06 LME Copper 13,022 0.08
58 Mar '06 CSC Sugar II 187,656 1.10
62 Mar '06 KC Wheat 4,288 0.03
62 Mar '06 IMM Mex Peso 11,963 0.07
2 Mar '06 IMM B-Pounds (6,400) (0.04)
5 Mar '06 IMM Canadian $ (2,200) (0.01)
19 Mar '06 CBOT Corn 8,800 0.05
2 Mar '06 CBOT Wheat 238 0.00
1 Feb '06 CMX Gold 2,260 0.01
1 Mar '06 CMX Silver 200 0.00
8 Mar '06 Emini S&P 500 (4,000) (0.02)
4 Feb '06 NY LT Crude 1,810 0.01
1 Feb '06 NY Heating Oil 3,352 0.02
1 Feb '06 NY Unlead Gas 7,178 0.04
1 Feb '06 NY Natural Gas (1,050) (0.01)
Total United States Commodity Futures Positions 246,035 1.44
Japanese Commodity Futures Positions, Held Long:
5 Mar '06 SGX MINI JGB 2,117 0.01
4 Mar '06 SMX Nikkei 8,298 0.05
Total Japanese Commodity Futures Positions 10,415 0.06
European Commodity Futures Positions, Held Long:
3 Mar '06 DAB Dax Index 9,488 0.06
1 Mar '06 Eurex E-Bund 71 0.00
Total European Commodity Futures Positions 9,559 0.06
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, 2005
Contracts Value Percent
British Commodity Futures Positions, Held Long:
5 Mar '06 NEW FTSE 100 $ 7,646 0.04 %
5 Mar '06 LIF Long Gilt 6,100 0.04
9 Sep '06 CAP 3M STG 21 0.00
Total British Commodity Futures Positions 13,767 0.08
Hong Kong Commodity Futures Positions, Held Long:
5 Jan '06 HG (9,511) (0.05)
Total Hong Kong Commodity Futures Positions (9,511) (0.05)
Australian Commodity Futures Positions, Held Long:
1 Mar '06 SFE SPI 200 2,459 0.02
6 Mar '06 SFE 10Y T-Bond 9,224 0.05
62 Mar '06 SFE 3Y T-Bond 7,581 0.04
Total Australian Commodity Futures Positions 19,264 0.11
Total Commodity Futures Positions 289,529 1.70
United States Commodity Futures Positions, Sold Short:
58 Mar '06 CBT T-Note 2Y (12,813) (0.08)
65 Mar '06 IMM Euro FX (28,656) (0.17)
65 Mar '06 IMM Euro DLR 23,825 0.14
3 Mar '06 CSC Coffee C (7,819) (0.05)
5 Mar '06 IMM J YEN (10,406) (0.06)
Total United States Commodity Futures Positions (35,869) (0.22)
The accompanying notes are an integral part of the financial statements.
F-8
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
SCHEDULE OF INVESTMENTS
December 31, 2005
Contracts Value Percent
European Commodity Futures Positions, Held Short:
9 Sep '06 LIF 3M Euribar $ 399 0.00 %
2 Jan '06 3M Monep CAC40 EU (1,088) (0.01)
62 Mar '06 Euro E-Schatz (2,069) (0.01)
Total Euro Commodity Futures Positions (2,758) (0.02)
Total Commodity Futures Positions, Sold Short (38,627) (0.24)
Net Commodity Futures Positions 250,902 1.46
Cash and Cash Equivalents in Trading Accounts:
Mar '06 United States Treasury Bill
($10,900,000 Face Value) 10,795,349 63.24
Mar '06 United States Treasury Bill
($1,800,000 Face Value) 1,782,533 10.44
Feb '06 United States Treasury Bill
($1,100,000 Face Value) 1,089,456 6.38
Feb '06 United States Treasury Bill
($600,000 Face Value) 594,226 3.48
Jan '06 United States Treasury Bill
($580,000 Face Value) 574,508 3.36
United States Markets 1,516,844 8.88
Euro Markets 592,040 3.47
British Pound Markets (91,011) (0.53)
Australian Dollar Markets (85,440) (0.50)
Hong Kong Dollar Markets 1,724 0.01
Japanese Yen Markets 52,449 0.31
Total Cash and Cash Equivalents
in Trading Accounts 16,822,678 98.54
Total Investments $17,073,580 100.00 %
The accompanying notes are an integral part of the financial statements.
F-9
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(A Review)
Three months ended Six months ended
June 30, June 30,
2006 2005 2006 2005
INVESTMENT AND OTHER INCOME
Interest income $173,980 $80,735 $325,575 $140,391
Total Income 173,980 80,735 325,575 140,391
EXPENSES
Commissions 459,708 397,001 923,651 733,959
Management fees 12,527 9,850 25,073 15,988
Incentive fees 67,052 99,165 67,052 770,117
Professional accounting and legal
fees 31,506 49,621 64,500 70,796
Other operating and administrative
expenses (803) 2,914 721 8,679
Total Expenses 569,990 558,551 1,080,997 1,599,539
Net Investment Loss (396,010) (477,816) (755,422)(1,459,148)
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Realized gain from trading in
futures 2,195,744 502,586 640,783 3,053,456
Realized gain (loss) on exchange
rate fluctuation 13,300 (8,691) 33,547 (17,898)
Changes in unrealized gains
(losses) on open commodity
open futures contracts (377,674) (32,051) (292,994) 195,773
Total Realized and Unrealized
Gains on Investments 1,831,370 461,844 381,336 3,231,331
NET INCOME (LOSS) $1,435,360 $(15,972)$(374,086)$1,772,183
NET INCOME (LOSS)-
Limited partnership unit $287.51 $(3.46) $(74.59) $395.32
General partnership unit $- $- $- $-
Weighted average partnership units outstanding:
Limited units 4,992.36 4,617.38 5,015.09 4,482.88
General units - - - -
The accompanying notes are an integral part of the financial statements.
F-10
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(A Review)
2006 2005
Amount Units Amount Units
Beginning balance-
January 1, $16,841,781 5,016.79 $11,790,949 4,316.80
Partner additions 576,958 170.23 1,454,051 506.55
Partner withdrawals (633,711) (199.90) (316,297) (124.27)
Net income (loss) (374,086) 1,772,183
Balance at June 30, $16,410,942 4,987.12 $14,700,886 4,699.08
2006 2005
Value per unit $3,290.67 $3,128.46
Total partnership units 4,987.12 4,699.08
The accompanying notes are an integral part of the financial statements.
F-11
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(A Review)
2006 2005
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $(374,086) $1,772,183
Adjustments to reconcile net income to net
cash provided by (used in) operating activities -
Changes in unrealized (gains) losses 292,997 (195,772)
Changes in operating assets and liabilities -
Accrued interest receivable (17,589) 5,646
Accrued management and incentive fees (104,462) (253,719)
Other payables and accruals 3,392 (3,045)
Net Cash Provided By (Used In)
Operating Activities (199,748) 1,325,293
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of units, net
of sales commissions 576,958 1,454,051
Partner redemptions (464,227) (342,043)
Net Cash Provided By
Financing Activities 112,731 1,112,008
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (87,017) 2,437,301
CASH AND CASH EQUIVALENTS
Beginning of period 16,910,682 12,298,533
End of period $16,823,665 $14,735,834
End of period cash and cash equivalents consists of:
Cash and cash equivalents in broker
trading accounts $16,732,061 $14,494,653
Cash 91,604 241,181
$16,823,665 $14,735,834
The accompanying notes are an integral part of the financial statements.
F-12
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2006 AND 2005
(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 ("CPO's") of the
Fund. The commodity trading advisors ("CTA's") are Clarke Capital
Management, Inc. ("Clarke") and NuWave Investment Corp. ("NuWave"), effective
February, 2005, who have the authority to trade as much of the Fund's equity
as is allocated to them by the General Partner that is currently estimated to
be 97% of total equity. The Fund began sells direct on a best efforts basis
with no commissions.
Interim Financial Statements - The balance sheet, including the
schedule of investments, as of June 30, 2006 and the statements of operations
for the three and six months ended June 30, 2006 and 2005, and the statements
of partners' equity and cash flows for the six months ended June 30, 2006 and
2005 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 June 30, 2006,
the results of operations for the three and six months ended June 30, 2006
and 2005 and cash flows for the six months ended June 30, 2006 and 2005.
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 and the 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.
F13
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2006 AND 2005
(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.
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 June 30, 2006 and
2005.
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-14
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2006 AND 2005
(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. Effective January 1, 2004, redemption penalties
are no longer charged, although there is a twelve month lock-in.
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.
F-15
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2006 AND 2005
(A Review)
4. FEES - CONTINUED
A quarterly incentive fee of 25% of "new trading profits" is paid to
each CTA. "New net profits" includes all income earned by each CTA and
expense allocated to their activity. In the event that trading produces a
loss, no incentive fees would be paid and all losses would be carried over to
the following months until profits from trading exceeded 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.
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.
Effective February 1, 2006, the monthly commission amount of 11% was
split with 7% going to Futures Investment Company ("Futures"), which is
controlled by Michael Pacult and his wife, and 4% paid to Ashley.
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 six
months ended June 30, 2006 and 2005
2006 2005
Commissions - Ashley $434,020 $656,611
Commissions - Futures $443,908 $ -
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.
F-16
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2006 AND 2005
(A Review)
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 June 30, 2006 and December 31, 2005
was $622,331 and $1,986,606, respectively, which equals approximately 4% and
12% of Net Asset Value, respectively. The Fund also purchases United States
Treasury Bills as a form of margin. At June 30, 2006 and December 31, 2005,
$16,109,730 and $14,836,072, respectively, was invested in U.S. Treasury
Bills, which approximates 98% and 88% of Net Asset Value, respectively.
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 $19,200,000 and $44,907,000 on long positions at June 30,
2006 and December 31, 2005, 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.
F-17
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2006 AND 2005
(A Review)
6. TRADING ACTIVITIES AND RELATED RISKS- CONTINUED
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
June 30, 2006 and December 31, 2005 were ($42,095) and $250,092,
respectively.
Open contracts generally mature within three months. As of June 30,
2006, the latest maturity date for open futures contracts is March, 2007.
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-18
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2006 AND 2005
(A Review)
7. FINANCIAL HIGHLIGHTS
Three months ended Six months ended
June 30, June 30,
2006 2005 2006 2005
Performance per Unit (5)
Net unit value, beginning
of period $3,000.59 $3,128.85 $3,357.08 $2,731.41
Net realized and unrealized
gains/losses on commodity
transactions 366.84 103.09 76.05 719.92
Investment and other income 37.41 17.49 73.09 31.06
Expenses (1) (114.17) (120.97) (215.55) (353.93)
Net increase (decrease) for
the period 290.08 (0.39) (66.41) 397.05
Net unit value, end of period $3,290.67 $3,128.46 $3,290.67 $3,128.46
Net assets, end of period (000) $16,411 $14,701 $16,411 $14,701
Total return (3) 9.67% (.01)% (1.98%) 14.54%
Ratio to average net assets (4)
Investment and other income 1.38% 0.75% 2.64% 1.39%
Expenses (2) (.87)% (1.49)% (1.28)% (8.59)%
(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-19