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, 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 333-53111
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, 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. See Subsequent Events under this Item 2 for a change to the Fund
fee structure.
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 November 13, 2006 until
the balance, as of September 30, 2006, of $1,954,886 in face amount of Units
are sold. As of September 30, 2006, of the $15,000,000 in Units registered,
$13,045,114 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. There is no current market for the
Units sold, none is expected to develop and the limited 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 2006 was a profit of $177,189 and for the nine months of 2005 was a
profit of $2,726,052. 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.
Subsequent Events
Effective October 25, 2006, the auditor of the Fund was changed from Frank L.
Sassetti & Co., 6611 W. North Avenue, Oak Park, Illinois 60302-1043, to the
CPA firm of Jordan, Patke & Associates, Ltd., 300 Village Green Drive Ste
210, Lincolnshire, IL 60069 for normal business considerations without any
disagreement between the former auditor and the Fund or its management.
On October 27, 2006, the Fund filed post effective amendment no. 9, which
became effective November 13, 2006.
Effective December 1, 2006, the management fee to NuWave Investment Corp.
will be increased from 2% annually on the first $2,000,000 of equity assigned
and 1% annually on equity over $2,000,000 to a percentage based on the rate
of trading assigned by NuWave and approved by the General Partner of up to 3%
annually on the first $2,000,000 of equity and up to 2% annually on all
equity over $2,000,000.
The bookkeeping will be transferred from Michael Liccar & Co, certified
public accountants, 200 West Adams Street, Suite 2211, Chicago, IL 60606-5208
to Shoup Accounting Services, certified public accountants, 306 S. West
Street, Angola, IN 46703. Shoup is an accounting expert that will maintain a
duplicate set of the Fund books and records and handle the Fund accounting.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The business of the Fund is speculative and involves a high degree of risk of
loss.
Item 4. 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.
As of the end of the period covered by this report, the general partner
carried out an evaluation, under the supervision and with the participation
of the general partner's management, including its principal executive
officer and principal financial officer, of the effectiveness of the design
and operation of the Fund's disclosure controls and procedures as
contemplated by Rule 13a-15 of the Securities Exchange Act of 1934, as
amended. Based on and as of the date of that evaluation, the general
partner's principal executive officer and principal financial officer
concluded that the Fund's disclosure controls and procedures are effective,
in all material respects, in timely alerting them to material information
relating to the Fund required to be included in the reports required to be
filed or submitted by the Fund with the SEC under the Exchange Act.
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 limited partner's account. The
general partner balances the daily account information with the monthly
compilation and financial statements prepared by the independent CPA. There
was no change in the Fund's internal control over financial reporting in the
quarter ended September 30, 2006 that has materially affected, or is
reasonably likely to materially affect, the Fund's internal control over
financial reporting.
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
(a) Report filed on 8-K subsequent to reporting period of this 10-Q
The Fund filed a Form 8-K on October 26, 2006 and Form 8-K/A on November 2,
2006 to disclose the change of the Fund's auditor effective October 25, 2006
from Frank L. Sassetti & Co., 6611 W. North Avenue, Oak Park, Illinois 60302-
1043, to the CPA firm of Jordan, Patke & Associates, Ltd., 300 Village Green
Drive Ste 210, Lincolnshire, IL 60069 for normal business considerations
without any disagreement between the former auditor and the Fund or its
management.
(b) None
Item 6. Exhibits
31.1 Certification of Principal Executive Officer and Principal Financial
Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
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, 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: November 15, 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 September 30, 2006 and
December 31, 2005 F-3
Schedules of Investments as of September 30, 2006 and
December 31, 2005 F-4 - F-9
Statements of Operations for the Three and Nine Months
Ended September 30, 2006 and 2005 F-10
Statements of Partners' Equity for the Nine Months
Ended September 30, 2006 and 2005 F-11
Statements of Cash Flows for the Nine Months Ended
September 30, 2006 and 2005 F-12
Notes to Financial Statements F-13 - F-20
F-1
Jordan, Patke & Associates, Ltd.
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,
2006 and December 31, 2005 and the related statements of operations for the
three and nine months ended September 30, 2006 and 2005, and the statements
of partners' equity and cash flows for the nine months ended September 30,
2006 and 2005. 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.
Frank L. Sassetti & Co. 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, 2005 and the related statements of operations,
partner's equity and cash flows for the year then ended (not presented
herein); and in their report dated February 24, 2006, they 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/ Jordan, Patke & Associates
November 15, 2006
Lincolnshire, Illinois
F-2
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
BALANCE SHEETS
SEPTEMBER 30, 2006 AND DECEMBER 31, 2005
ASSETS
September 30,
2006 December 31,
(A Review) 2005
Investments
Equity in Commodity Futures Trading Accounts -
Cash and cash equivalents $16,992,456 $16,822,678
Net unrealized gain on open commodity
futures contracts 164,788 250,902
17,157,244 17,073,580
Cash 40,033 88,004
Accrued interest receivable 51,787 34,073
$17,249,064 $17,195,657
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Partner redemptions payable $ 60,144 $ 117,164
Accrued trading commissions payable 31,076 15,555
Accrued management fees payable 12,594 13,110
Incentive fees payable 257,223 170,919
Other accrued liabilities 28,620 37,128
Total Liabilities 389,657 353,876
PARTNERS' EQUITY
Limited partners - (4,955.64 and 5,016.79 units) 16,859,407 16,841,781
General partner - (0 units) - -
Total Partners' Equity 16,859,407 16,841,781
$17,249,064 $17,195,657
The accompanying notes are an integral part of the financial statements.
F-3
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2006
(A Review)
Contracts Value Percent
United States Commodity Futures Positions, Held Long:
9 Dec '06 CBOT Wheat $21,938 0.13%
12 Dec '06 CBT 10 Y Note 15,953 0.09
6 Dec '06 CME Cattle (5,340) (0.03)
3 Mar '07 CSC Sugar 2,587 0.02
2 Nov '06 RBOB Gas 1,982 0.01
2 Dec '06 IMM GBP 638 0.00
5 Dec '06 IMM CAD 700 0.00
1 Oct '06 LME Copper 10,288 0.06
70 Jun '07 IMM Euro $ 13,663 0.08
11 Dec '06 E-Mini 20,900 0.12
1 Dec '06 LME Alum US 3,810 0.02
Total United States Commodity Futures Positions 87,118 0.51
Japanese Commodity Futures Positions, Held Long:
4 Dec '06 SGX MINI JGB (3,471) (0.02)
Total Japanese Commodity Futures Positions (3,471) (0.02)
European Commodity Futures Positions, Held Long:
7 Dec '06 Eurx E-Bund 8,609 0.05
7 Dec '06 CAC 40 11,006 0.06
1 Dec '06 DTB Dax Index 3,328 0.02
Total European Commodity Futures Positions 22,943 0.13
The accompanying notes are an integral part of the financial statements.
F-4
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2006
(A Review)
Contracts/
Amount Value Percent
Great British Commodity Futures Positions, Held Long:
5 Dec '06 FTSE 100 8,231 0.05
8 Dec '06 LIFFE Long Gilt 3,423 0.02
Total British Commodity Futures Positions 11,654 0.07
Hong Kong Commodity Futures Positions, Held Long:
1 Oct '06 Hong Kong Hang Seng (674) (0.00)
Total HK Commodity Futures Positions (674) (0.00)
Total Commodity Futures Positions 126,816 0.74
Australian Commodity Futures Positions, Held Long:
1 Dec '06 SFE SPI 200 2,350 0.01
4 Dec '06 SFE 10 Y T-Note 3,003 0.02
Total Australian Commodity Futures Positions 5,352 0.03
Total Commodity Futures Positions 122,922 0.72
United States Commodity Futures Positions, Sold Short:
55 Dec '06 IMM Aust Dollar $20,350 0.12%
1 Dec '06 CMX Silver 6,185 0.04
5 Nov '06 CBOT Soybeans 17,525 0.10
0 Nov '06 NY Heating Oil 84 0.00
1 Dec '06 CSC Coffee 1,350 0.01
1 Dec '06 LME Copper 3,555 0.02
Total United States Commodity Futures Positions 49,049 1.13
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
SEPTEMBER 30, 2006
(A Review)
European Commodity Futures Positions, Held Short:
10 Jun '07 LIF 3M Euribor (2,694) (0.02)
British Commodity Futures Positions, Sold Short:
12 Jun '07 Lif 3M Sterling (4,490) (0.03)
Total Commodity Futures Positions, Sold Short 41,865 0.24
Net Commodity Futures Positions 164,788 0.96
Cash and Cash Equivalents in Trading Accounts:
Dec '06 United States Treasury Bill
($10,500,000 Face Value) 10,374,575 60.47
Nov '06 United States Treasury Bill
($1,800,000 Face Value) 1,777,205 10.36
Dec '06 United States Treasury Bill
($1,000,000 Face Value) 988,018 5.76
Nov '06 United States Treasury Bill
($1,00,000 Face Value) 987,675 5.76
Oct '06 United States Treasury Bill
($800,000 Face Value) 790,060 4.60
United States Markets 2,090,654 12.19
Euro Markets 377,106 2.20
British Pound Markets (369,305) (2.15)
Australian Dollar Markets (85,187) (0.50)
Hong Kong Dollar Markets 9,145 0.05
Japanese Yen Markets 52,510 0.31
Total Cash and Cash Equivalents
in Trading Accounts 16,992,455 99.04
Total Investments $17,157,244 100.00%
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, 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 NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
(A Review)
Three months ended Nine months ended
Sep 30, Sep 30,
2006 2005 2006 2005
INVESTMENT AND OTHER INCOME
Interest income $185,790 $116,851 $511,365 $257,242
Redemption penalty
Total Income 185,790 116,851 511,365 257,242
EXPENSES
Commissions 324,841 433,036 1,248,492 1,166,995
Management fees 12,603 13,044 37,676 29,032
Continuing service fee - - - -
Incentive fees 257,223 387,101 324,275 1,157,218
Professional accounting and legal
fees 24,500 32,000 89,000 102,796
Other operating and administrative
expenses 188 1,727 909 10,406
Total Expenses 619,355 866,908 1,700,352 2,466,447
Net Investment Loss (433,565) (750,057)(1,188,987)(2,209,205)
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Realized gain (loss) from trading
in futures 779,658 1,057,546 1,420,441 4,111,002
Realized gain (loss) on exchange
rate fluctuation (1,700) (6,269) 31,847 (24,167)
Changes in unrealized gains (losses)
on open commodity open futures
contracts 206,882 653,159 (86,112) 848,932
Total Realized and Unrealized Gain
(Loss) on Investments 984,840 1,704,436 1,366,176 4,935,767
NET INCOME (LOSS) $551,275 $954,379 $177,189 $2,726,562
NET INCOME (LOSS) -
Limited partnership unit $111.40 $191.63 $44.98 $583.46
General partnership unit $ $ $ $
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 NINE MONTHS ENDED SEPTEMBER 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 758,150 228.37 2,590,950 870.95
Syndication redistribution
costs 11,310 47,651
Partner withdrawals (929,023) (289.53) (387,318) (137.35)
Net Income 177,189 2,726,562
Balance at September 30, $16,859,407 4,955.63 $16,768,794 5,050.40
2006 2005
Value per unit $3,402.07 $3,320.29
Total partnership units 4,955.63 5,050.40
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 NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
(A Review)
2006 2005
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 177,189 $2,726,562
Adjustments to reconcile net income to net
cash provided by operating activities -
Changes in unrealized gains 86,114 (848,932)
Changes in operating assets and liabilities -
Accrued interest receivable (17,714) (10,557)
Accrued/ prepaid commissions - -
Accrued management and incentive fees 85,788 37,133
Prepaid incentive fees - -
Other payables and accruals (50,007) (33,820)
Net Cash Provided By
Operating Activities 281,370 1,870,386
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of units, net
of sales commissions 758,150 2,590,950
Syndication costs 11,310 47,651
Partner redemptions (929,023) (387,318)
Net Cash Used In
Financing Activities (159,563) 2,251,283
NET INCREASE IN CASH
AND CASH EQUIVALENTS 121,807 4,121,669
CASH AND CASH EQUIVALENTS
Beginning of period 16,910,682 12,298,533
End of period $17,032,489 $16,420,202
End of period cash and cash equivalents consists of:
Cash and cash equivalents in broker
trading accounts $16,992,456 $16,349,124
Cash 40,033 71,078
$17,032,489 $16,420,202
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
SEPTEMBER 30, 2006 AND 2005 AND DECEMBER 31, 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, and 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. Prior to July, 2004, the principal
selling agent was Futures Investment Company ("Futures"), which is controlled
by Michael Pacult and his wife. Effective July, 2004 the Fund began to sell
direct on a best efforts basis with no commissions or continuing service
fees.
Interim Financial Statements - The balance sheet as of September 30, 2006,
including the September 30, 2006 schedule of investments, and the statements
of operations for the three and nine months ended September 30, 2006 and
2005, and the statements of partners' equity and cash flows for the nine
months ended September 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 September 30, 2006 and the results of operations and cash
flows for the nine months ended September 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 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-13
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2006 AND 2005 AND DECEMBER 31, 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.
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 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, 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
SEPTEMBER 30, 2006 AND 2005 AND DECEMBER 31, 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. 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.
A quarterly incentive fee of 25% of "new net profits" was paid to each CTA.
"New net profits" includes all income earned by each CTA and expense
allocated to his activity. In the event that trading produced 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 was
possible for one CTA to be paid an incentive fee during a quarter of a year
when the Fund experienced a loss.
F-15
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2006 AND 2005 AND DECEMBER 31, 2005
(A Review)
4. FEES - CONTINUED
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" is paid to
Clarke Trading 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. Nu Wave'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
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. See the Subsequent Events note for an
additional change to the Fund fee structure.
5. RELATED PARTY TRANSACTIONS
The Fund paid the following expenses to related parties during the nine
months ended September 30, 2006 and 2005
2006 2005
Commission/Management Fee - Ashley $432,958 $1,046,158
Commission/Management Fee - FIC 815,535 -
Total $1,248,492 $1,046,158
F-16
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2006 AND 2005 AND DECEMBER 31, 2005
(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, 2006 and December 31,
2005 was $2,074,924 and $1,986,606, respectively, which equals approximately
12% and 12% of Net Asset Value, respectively. The Fund also purchases United
States Treasury bills as a form of margin. At September 30, 2006 and
December 31, 2005, $14,969,320 and $14,917,532 respectively, was invested in
U.S. Treasury Bills, which approximates 88% and 88% of Net Asset Value,
respectively.
F-17
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2006 AND 2005 AND DECEMBER 31, 2005
(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 $26,177,110 and $44,907,000 on long positions at September 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.
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,
2006 and December 31, 2005 were $164,788 and $250,092, respectively.
Open contracts generally mature within three months. As of September 30,
2006, the latest maturity date for open futures contracts is June, 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
SEPTEMBER 30, 2006 AND 2005 AND DECEMBER 31, 2005
(A Review)
7. FINANCIAL HIGHLIGHTS
Three months ended Nine months ended
September 30, September 30,
2006 2005 2006 2005
Performance per Unit (5)
Net unit value, beginning
of period $3,290.67 $3,128.46 $3,357.08 $2,731.41
Net realized and
unrealized gains/losses on
commodity transactions 198.69 342.43 282.91 1,061.63
Investment and other income 37.40 23.46 102.32 55.05
Expenses (1) (124.69) (174.06) (340.24) (527.80)
Net increase (decrease) for the
period 111.40 191.83 44.99 588.88
Net unit value, end of period $3,402.07 $3,320.29 $3,402.07 $3,320.29
Net assets, end of period (000) $16,859 $16,769 $16,859 $16,769
Total return (3) 3.39% 6.13% 1.34% 21.56%
Ratio to average net assets (4)
Investment and other income 4.68% 2.89% 4.20% 2.39%
Expenses (2) (7.41)% (10.74)% (3.71)% (12.08)%
(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
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2006 AND 2005 AND DECEMBER 31, 2005
(A Review)
8. SUBSEQUENT EVENTS
Effective October 2006, we changed the auditor of the Fund from Frank L.
Sassetti & Co., 6611 West North Avenue, Oak Park, Illinois 60302-1043 to the
CPA firm of Jordan, Patke & Associates, Ltd., 300 Village Green Drive, Suite
210, Lincolnshire, Illinois 60069.
Effective December 1, 2006, the management fee to NuWave Investment
Corporation will be increased from 2% annually on the first $2,000,000 of
equity assigned and 1% annually on the equity over $2,000,000 to a percentage
based on the rate of trading assigned by NuWave and approved by the General
Partner of up to 3% annually on the first $2,000,000 of equity and up to 2%
annually on all equity over $2,000,000.
The bookkeeping will be transferred from Michael Liccar & Company,
Certified Public Accountants, 200 West Adams Street, Suite 2211, Chicago,
Illinois 60606-5208 to Shoup Accounting Services, Certified Public
Accountants, 306 South West Street, Angola, Indiana 46703. Shoup is an
accounting expert that will maintain a duplicate set of the Fund's books and
records and handle the Fund's accounting.
F-20