As Filed with the Securities and Exchange Commission on February 29, 2012
Registration No. 333-170235
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM S-1/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
DELAWARE
[State of organization]
6289 51-0380494
(Primary SIC Number) (IRS EIN)
505 Brookfield Drive
Dover, Delaware 19901
Telephone: (800) 331-1532
(address and telephone number of registrant's principal executive offices)
Mr. Michael Pacult
c/o Ashley Capital Management, Inc.
5914 N. 300 West
Fremont, Indiana 46737
Telephone: (260) 833-1306
(Name, address and telephone number of agent for service of process)
Copies to:
William Sumner Scott, Esquire
The Scott Law Firm, Ltd.
470 Broadway, Suite 160
Bayonne, NJ 07002
(201) 800-4606
If any of the securities being offered on the Form are to be offered on a
continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check One):
Large Accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [X] Smaller reporting company [ ]
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission acting pursuant to said section 8(a),
may determine.
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Prospectus - Part I
Atlas Futures Fund, Limited Partnership
Amended and Restated Prospectus to Offer
$10,000,000 of Units of Limited Partnership Interest
To Be Sold at the Net Asset Value per Unit
Computed At the End of Each Month During the Offering
The Offering
The partnership is a registered commodity pool that trades futures and options
on futures.
Two general partners, Ashley Capital Management, Inc. and Mr. Michael P.
Pacult, manage us. We refer to them collectively as "the general partner."
The general partner is authorized by the partnership agreement to employ,
establish the terms of employment, and terminate investment managers called
commodity trading advisors and clearing brokers called futures commission
merchant.
This is a best efforts offering. The selling agent is not required to sell any
specific number or dollar amount of securities but will use its best efforts
to sell the securities offered. Compensation to the selling agent will be a
6% selling commission of the gross subscription amount in addition to $2,000
in legal fees the partnership has paid associated with the review of this
offering by FINRA. You must purchase at least $25,000 in partnership
interests, though the general partner may reduce this to no less than $5,000.
You have the right to rescind your subscription for five days after it is
submitted. After five days, your subscription is irrevocable and you may only
withdraw from the partnership after twelve months by redeeming your
partnership interests. This offering has no minimum and will terminate on
March __, 2015, three years from the date of this prospectus, or at an
earlier date at the sole discretion of the general partner. There is no
redemption fee, but there is a twelve month lock-in. See Summary,
Subscription Procedure in this prospectus.
All subscriptions received will be placed in a depository account maintained
by the general partner until we accept them. Interest accrued on your
subscription amount will be used to buy additional partnership interests for
you. Partnership interests are offered for sale at their net asset value as
of the close of business on the last day of the month in which the
subscription is received and become effective on the open of business on the
first day of the subsequent month.
The Risks - These securities are highly speculative and involve a high degree
of risk. Consider carefully the risk factors below and the complete
description beginning on page 5 of this prospectus.
* Our business is the speculative trading in futures, commodity options
and unregulated currency contracts selected by registered commodity trading
advisors.
* This partnership pays substantial commission and other costs. There is
no guarantee that you will receive a return on your investment.
* To receive your investment back after one year, the partnership must
currently generate a return of 23.77% and 22.21% should we sell the maximum
number of partnership interests offered. In the second year of investment, the
partnership must similarly generate a return of 15.86%.
* Transfer of your partnership interests will be restricted and there are
limitations on your right of redemption to surrender your partnership
interests in return for their value. No public market for the partnership
interests exists and none is expected to develop.
* This partnership will not make distributions. To receive a return of
your investment, you must use our redemption procedure.
* Although you will not receive distributions, you must pay annual Federal
and state income taxes on your share of any profits earned by this
partnership.
* The general partner and affiliates have conflicts of interest with
regard to the management of this partnership.
You are required to understand fully the terms of this investment. Therefore,
you are encouraged to discuss this investment with your independent financial
and tax advisers.
These securities have not been approved or disapproved by the Securities and
Exchange Commission, or any state securities commission or agency, nor have
any of them confirmed or passed upon the accuracy or adequacy of this
supplement to prospectus. Any representation to the contrary is a criminal
offense.
THE COMMODITY FUTURES TRADING COMMISSION HAS NOT PASSED UPON THE MERITS OF
PARTICIPATING IN THIS POOL NOR HAS THE COMMISSION PASSED ON THE ADEQUACY OR
ACCURACY OF THIS DISCLOSURE DOCUMENT.
The partnership has commenced trading. As of December 31, 2011, the current
net asset value of the partnership is $5,273,657.
FUTURES INVESTMENT COMPANY
5914 N. 300 West, P. O. Box 760
(260) 833-1306
Best Efforts Selling Agent
The date of this prospectus is March __, 2012
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Commodity Futures Trading Commission - Risk Disclosure Statement
YOU SHOULD CAREFULLY CONSIDER WHETHER YOUR FINANCIAL CONDITION PERMITS YOU TO
PARTICIPATE IN A COMMODITY POOL. IN SO DOING, YOU SHOULD BE AWARE THAT
COMMODITY INTEREST TRADING CAN QUICKLY LEAD TO LARGE LOSSES AS WELL AS GAINS.
SUCH TRADING LOSSES CAN SHARPLY REDUCE THE NET ASSET VALUE OF THE POOL AND
CONSEQUENTLY THE VALUE OF YOUR INTEREST IN THE POOL. IN ADDITION,
RESTRICTIONS ON REDEMPTIONS MAY AFFECT YOUR ABILITY TO WITHDRAW YOUR
PARTICIPATION IN THE POOL.
FURTHER, COMMODITY POOLS MAY BE SUBJECT TO SUBSTANTIAL CHARGES FOR MANAGEMENT,
AND ADVISORY AND BROKERAGE FEES. IT MAY BE NECESSARY FOR THOSE POOLS THAT ARE
SUBJECT TO THESE CHARGES TO MAKE SUBSTANTIAL TRADING PROFITS TO AVOID
DEPLETION OR EXHAUSTION OF THEIR ASSETS. THIS DISCLOSURE DOCUMENT CONTAINS A
COMPLETE DESCRIPTION OF EACH EXPENSE TO BE CHARGED THIS POOL AT PAGE 18 AND A
STATEMENT OF THE PERCENTAGE RETURN NECESSARY TO BREAK EVEN, THAT IS, TO
RECOVER THE AMOUNT OF YOUR INITIAL INVESTMENT, AT PAGE 14.
THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER FACTORS NECESSARY
TO EVALUATE YOUR PARTICIPATION IN THIS COMMODITY POOL. THEREFORE, BEFORE YOU
DECIDE TO PARTICIPATE IN THIS COMMODITY POOL, YOU SHOULD CAREFULLY STUDY THIS
DISCLOSURE DOCUMENT, INCLUDING A DESCRIPTION OF THE PRINCIPAL RISK FACTORS OF
THIS INVESTMENT, AT PAGE 5.
YOU SHOULD ALSO BE AWARE THAT THIS COMMODITY POOL MAY TRADE FOREIGN FUTURES OR
OPTIONS CONTRACTS. TRANSACTIONS ON MARKETS LOCATED OUTSIDE THE UNITED STATES,
INCLUDING MARKETS FORMALLY LINKED TO A UNITED STATES MARKET, MAY BE SUBJECT TO
REGULATIONS WHICH OFFER DIFFERENT OR DIMINISHED PROTECTION TO THE POOL AND ITS
PARTICIPANTS. FURTHER, UNITED STATES REGULATORY AUTHORITIES MAY BE UNABLE TO
COMPEL THE ENFORCEMENT OF THE RULES OF REGULATORY AUTHORITIES OR MARKETS IN
NON-UNITED STATES JURISDICTIONS WHERE TRANSACTIONS FOR THE POOL MAY BE
EFFECTED.
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Table of Contents
Commodity Futures Trading Commission - Risk Disclosure Statement i
Table of Contents ii
Suitability Standards v
Summary of the Offering 1
The Partnership 1
Description of Securities Offered for Sale 1
Plan for Sale of Partnership Interests and Use of Depository Account 1
Subscription Procedure 1
Who Will Benefit From an Investment in the Partnership 1
Business Objectives and Expenses 1
Summary Risk Factors 2
Charges to the Partnership 2
Use of Proceeds 3
Selection of Commodity Trading Advisors and Allocation of Equity 3
Federal Income Tax Aspects 3
Redemptions 3
Diagram of Partnership Structure & Commissions Atlas Futures Fund, Limited
Partnership 4
The Risks You Face 5
We must pay substantial charges, which may limit your ability to receive a
return on your investment. 5
You may not transfer your partnership interests and must rely on our
redemption procedures to receive your investment back. 5
Your right of redemption is limited. 5
The partnership depends upon the individual general partner, and his absence
could cause the partnership to cease operations. 5
General partner and commodity trading advisor will serve other businesses and
may not have adequate time to devote to the partnership. 5
There are conflicts of interest in the partnership structure which may limit
our profits. 6
You will be taxed on profits regardless of whether they are distributed. 6
You will have to pay taxes on profits in a current year which may be lost in
future years. 6
If the general partner selects a new trading advisor, it may not be as
profitable as the one replaced, and the new advisor will not be responsible
for recouping any previous losses. 6
The general partner may change the commodity trading advisor and its
allocation of equity without notice to you. 6
Factors beyond a Trading Advisor's control may cause a Trading Advisor to
deviate from its trading program or strategy. 6
You will not participate in management and may not contest the business
decisions of the general partner. 6
Commodity futures trading is speculative. 6
During partnership trading, a small price movement can lead to large
losses. 7
The general partner does not control the trading advisor or its methods and
may not be able to prevent large losses. 7
The partnership may be unable to execute a trade before large losses are
incurred due to market illiquidity. 7
Changes in trading equity may adversely affect performance. 7
Denomination of Partnership Assets at the Futures Commission Merchant in
Foreign Currencies 8
Failure of commodity brokers or banks could result in loss of assets. 8
When trading in foreign exchanges, if the creditworthiness of the other
parties or the value of the currency is not maintained, we may lose the value
of our positions in those markets. 8
Option trading is highly risky and requires less equity to secure a trade,
thus providing greater potential for loss. 8
Position Limits May Limit Profitability and Changes Thereof Can Produce
Dramatic Price Swings. 8
We may not be able to compete with others with greater resources. 8
Resignation of individual general partner and subsequent failure of Ashley to
maintain its net worth may cause suspension of trading or taxation as a
corporation. 9
The general partner will not advise you, and you must rely upon your own
counsel before investing in the partnership. 9
The partnership is not covered by the Investment Company Act of 1940. 9
Possibility of audit - you may be subject to audit and penalties. 9
General partner may settle IRS claim not in your best interest. 9
You may be subject to back taxes and penalties. 9
The general partner may cause higher fees to be paid or riskier trading by
altering the management and incentive fees without prior notice to you. 9
Conflicts Of Interest 10
The general partner, the commodity trading advisor, the futures commission
merchant, the introducing broker, the selling agent and their principals may
preferentially trade for themselves and others. 10
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Possible retention of voting control by the general partner may limit your
ability to control issues. 10
The general partner is not likely to resign, even if it would be in your best
interest. 10
The introducing broker and selling agent is affiliated with the general
partner. 10
Partnership fees may be higher than they would be if they were
negotiated. 10
Our profitability may be limited due to competition among traders and their
unaccountability for previous losses. 10
Your ability to redeem your partnership interests may be lessened due to the
nature of the general partner's compensation. 10
The commodity trading advisor may engage in high risk trading to generate
fees. 11
The individual general partner has sole control over the time he will allocate
to the management of the partnership. 11
No Resolution of Conflicts Procedures 11
Interests of Named Experts and Counsel 11
Cautionary Note Regarding Forward-Looking Statements 11
Management's Discussion and Analysis 12
The Partnership 12
The General Partners 12
Experience 12
Authority 12
Partnership Books and Records 13
The Commodity Trading Advisors 13
The Advisory Contract 13
Business Objective and Expenses 13
Explanatory Notes: 14
Securities Offered 15
Management's Discussion 15
Description of Intended Operations 15
Risk Control 15
Trading Risks 16
Fiduciary Responsibility of the General Partner 16
Indemnification 17
Provisions of Limited Partnership Agreement 17
Provisions of Law 17
Provisions of Federal and State Securities Laws 17
Provisions of the Securities Act of 1933 and NASAA Guidelines 17
Provisions of the Clearing Agreement 17
Other Indemnification Provisions 17
Relationship with the Futures Commission Merchant, the Introducing Broker and
the General Partner 17
Fixed Commissions are Competitive 17
Relationship with the Commodity Trading Advisors 18
The Commodity Trading Advisors Will Trade for Other Accounts 18
Non-Disclosure of the Commodity Trading Advisor's Methods 18
Charges to the Partnership 18
Compensation of the Commodity Trading Advisors 18
Restrictions on Management Fees 19
Compensation of Futures Commission Merchant, Introducing Broker, Selling Agent
and General Partner 19
Fee Paid By Partnership to the Corporate General Partner 19
Selling Commission 19
Brokerage Fees Paid By the Corporate General Partner to the Futures Commission
Merchant 19
Miscellaneous Fees to Futures Commission Merchant 19
Rights of General Partner 19
Other Expenses 19
Charges to the Partnership 20
Investor Suitability 21
Potential Advantages 21
Equity Management 21
Investment Diversification 21
Limited Liability 21
Administrative Convenience 21
Access to the Commodity Trading Advisors 21
Use of Proceeds 21
Determination of the Offering Price 22
The General Partner 22
Identification 22
Michael P. Pacult 22
Ownership in Commodity Trading Advisors and Futures Commission Merchant 23
Ownership in the Partnership 23
Trading By the General Partner; Interest in the Pool 23
Regulatory Notice 23
Trading Management 24
No Affiliation with Commodity Trading Advisor 24
Rights of the General Partner With Respect To Commodity Trading Advisor
Selection and Allocation of Equity 24
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Performance Record of the Partnership 24
The Commodity Trading Advisor 25
Clarke Capital Management, Inc. 25
Business Background 25
Description of Trading Program 26
Performance Record of Other Programs Sponsored By the General Partner 27
The Futures Commission Merchant 27
The Introducing Broker 28
Federal Income Tax Aspects 28
Scope of Tax Presentation 28
No Legal Opinion as To Certain Material Tax Aspects 28
Partnership Tax Status 29
No IRS Ruling 29
Tax Opinion 29
Passive Loss and Unrelated Business Income Taxes Rules 30
Basis Loss Limitation 30
At-Risk Limitation 30
Income and Losses from Passive Activities 30
Allocation of Profits and Losses 31
Taxation of Futures Transactions 31
Section 988 Foreign Currency Transactions 31
Capital Gain and Loss Provisions 32
Business for Profit 32
Self-Employment Income and Tax 32
Alternative Minimum Tax 32
Interest Related To Tax Exempt Obligations 32
Not a Tax Shelter 32
Taxation of Foreign Partners 32
Partnership Entity-Audit Provisions-Penalties 33
Employee Benefit, Retirement Plans and IRA's 33
The Limited Partnership Agreement 33
Formation of the Partnership 33
Units of Partnership Interests 34
Management of Partnership Affairs 34
General Prohibitions 34
Additional Offerings 34
Partnership Accounting, Reports, and Distributions 34
Income, Loss and Expense Allocations 35
Transfer of Partnership Interests Only With Consent of the General
Partner 35
Termination of the Partnership 35
Meetings 35
Redemptions 35
Plan for Sale of Partnership Interests 36
The Selling Agent 36
Underwriting Compensation 36
No Sales to Discretionary Accounts 36
Subscription Procedure 37
Subscription Amounts 37
Revocation and Acceptance of Subscription 37
Net Worth Tests 37
Investor Warranties 37
Compliance with Anti-Money Laundering Laws 38
Legal Matters 38
Litigation and Claims 38
Legal Opinion 38
Experts 38
Additional Information 38
A. Atlas Futures Fund, Limited Partnership
Reviewed Financial Statements as of September 30, 2011
Audited Financial Statements - years ended December 31, 2010, 2009, and 2008
B. Ashley Capital Management, Inc.
Audited Financial Statements - years ended December 31, 2010, 2009, and 2008
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iv
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Suitability Standards
You should only invest a limited amount of the risk portion of your total
portfolio and should not invest more than you can afford to lose.
To invest the minimum $25,000 in this partnership, you must have either:
* a net worth of at least $250,000, exclusive of home, furnishings and
automobiles, or
* an annual gross income of at least $70,000 and a net worth, similarly
calculated of at least $70,000.
Residents of the following States must meet the specific requirements set
forth below. Net worth, is in all cases, to be calculated exclusive of home,
furnishings and automobiles. You may not invest more than 10% of your net
worth, exclusive of home, furnishings and automobiles, in the partnership. No
entity, including ERISA plans, should invest more than 10% of its liquid net
worth (readily marketable securities) in the partnership.
1. California-Net worth of at least $250,000 or a net worth of at least
$70,000 and annual taxable income of at least $70,000.
2. Kansas-It is recommended by the Office of the Kansas Securities
Commissioner that Kansas investors not invest, in the aggregate, more than 10%
of their "liquid net worth" in this and similar direct participation programs.
For these purposes, "liquid net worth" is defined as that portion of net worth
which consists of cash, cash equivalents and readily marketable securities.
3. Nebraska-Net worth of at least $250,000 or a net worth of at least
$70,000 and annual taxable income of at least $70,000.
4. South Carolina-Net worth of at least $250,000 or a net income in the
preceding year some portion of which was subject to maximum federal and State
income tax.
5. Texas-Net worth of at least $250,000 or a net worth of at least $70,000
and annual taxable income of at least $70,000.
In the case of sales to fiduciary accounts, the net worth and income standards
may be met by the beneficiary, the fiduciary account, or, if the donor or
grantor is the fiduciary, by the donor or grantor who supplies the funds to
purchase the partnership interests.
The foregoing suitability standards are regulatory minimums only. Merely
because you meet such requirements does not necessarily mean that a high risk,
speculative and illiquid investment such as one in the partnership is, in
fact, suitable for you.
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v
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Summary of the Offering
This summary is to assist your understanding of the offer. To be certain you
have a full understanding of the risks of this investment, you must carefully
review the entire document, including the exhibits.
The Partnership
The Atlas Futures Fund, LP allows you to participate in alternative or non-
traditional investments, namely the U.S. and international futures markets.
Futures contracts are traded on a wide variety of commodities, including
agricultural products, metals, energies, livestock products, government
securities, currencies and stock market indices. Options on futures contracts
are also traded on U.S. and foreign commodity exchanges. The general partner
uses its discretion to employ advisors that look to manage risk and
volatility.
The principal of the general partner has provided advisory services for
individual managed accounts for 30 years similar to the services he is
providing for the partnership, and he has developed and refined his approach
to evaluating professional advisors over that period.
Atlas Futures Fund, Limited Partnership is a Delaware limited partnership
organized on January 12, 1998 and maintains its main business office at 505
Brookfield Drive, Dover, DE 19901, (800) 331-1532. Its books and records are
kept at the offices of the corporate general partner, 5914 N. 300 West,
Fremont, IN 46737, (260) 833-1306. The partnership is operated pursuant to a
limited partnership agreement which is included as Exhibit A and is managed
and controlled by Ashley Capital Management, Inc., a Delaware corporation, and
Michael P. Pacult, who are collectively referred to as the general partner.
The general partner employs independent registered trading managers called
commodity trading advisors to select trades for the partnership. The pool
currently employs a single trading advisor.
Description of Securities Offered for Sale
Pursuant to previous offerings, we sold a total of $14,221,306 of partnership
interests. As of the effective date of this prospectus, we are offering by
this prospectus an additional $10,000,000, in value of partnership interests,
which will be sold at the partnership's net asset value per partnership
interest on the close of business on the last day of the month in which the
subscription agreement is received. This offering has no minimum and will be
continuously offered until it terminates three years from the date of this
prospectus, or at an earlier date at the sole discretion of the general
partner.
Plan for Sale of Partnership Interests and Use of Depository Account
All sales will be made through the selling agent, which will receive a 6% up
front selling commission on gross subscription proceeds. It will use its best
efforts, which means it will try, but not guarantee, to sell the partnership
interests. To have good funds available on the last day of the month when
your subscription will be accepted, the corporate general partner will
maintain a depository account at either Star Financial Bank, Angola, IN to
hold your subscription from the date of submission to the date you become a
partner. No escrow agent will be used.
Subscription Procedure
To purchase partnership interests, you must complete and execute a
subscription agreement (Exhibit D), deliver your executed subscription
documents and check for your investment, which should be made payable to
"Atlas Futures Fund, LP," and pay for at least $25,000 in partnership
interests, though the general partner may reduce this amount to not less than
$5,000.
You must also have the minimum net worth and income provided in the Notice to
Residents of the State of your residence if it is listed at the front of this
prospectus or, one of the following: (i) a minimum net worth, exclusive of
your home, home furnishings and automobiles, of $250,000, or (ii) a minimum
annual gross income of $70,000 and a minimum net worth of $70,000, both
exclusive of your home, home furnishings and automobiles.
Who Will Benefit From an Investment in the Partnership
You are likely to benefit from an investment in the partnership if you want to
diversify your portfolio and if you have investment money available that you
can afford to lose without adverse consequences to your ability to support
your family and your lifestyle. Recent volatility in the U.S. equity market
has made clear the risks associated with investments concentrated within a
single market. This investment presents the opportunity to participate in
markets which are typically not represented in most investors' portfolios and
which can be profitable in both rising and falling markets.
However, if you cannot afford the risk of losing your entire investment in
this partnership, you should not purchase these partnership interests.
Business Objectives and Expenses
We are organized to be a commodity pool to engage in the speculative trading
of futures, which are instruments designed to permit producers to hedge or
investors to speculate in various interest rates, commodities, currencies,
stock indices and other financial instruments, both domestic and globally. We
also trade options on futures contracts, which give the purchaser the right to
acquire or sell a given contract at a specified time at a specified price, and
other financial instruments.
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We do not anticipate you will receive distributions and cannot guarantee that
we will meet our objectives or avoid substantial losses.
We are subject to substantial charges. To return after one year an initial
investment at $3,219.96 per unit of partnership interest, we must earn a
profit of 23.77%, or $815.46 per partnership interest. In the second year of
investment, the partnership must generate a return of 15.86% to maintain the
value of the partnership interests over that twelve month period.
Summary Risk Factors
Investment in the partnership interests is speculative, illiquid, and highly
risky. You should purchase partnership interests only if you can afford to
lose your entire investment. For a complete description of the risks of an
investment in the partnership, see the Risk Factors section beginning on page
5.
Our business is the speculative trading in futures contracts, and options on
those contracts, selected by a registered commodity trading advisor. This
trading is highly leveraged and takes place in very volatile markets.
Past results of this partnership or the commodity trading advisor do not
guarantee future results.
This partnership pays substantial fixed management fees and commission costs.
There is no guarantee that you will receive a return on your investment.
Transfer of your partnership interests will be restricted and there are
limitations on your right of redemption to surrender your partnership
interests in return for their value. No public market for the partnership
interests exists and none is expected to develop.
This partnership will not make distributions. To receive a return on your
investment, you must use our redemption procedure.
Although you will not receive distributions, you must pay Federal and state
income taxes on your share of any profits earned by this partnership.
The general partner and affiliates have conflicts of interest with regard to
the management of this partnership. Specifically, the individual general
partner is the sole principal of the corporate general partner and is a 50%
owner of the affiliated selling agent and introducing broker. Accordingly,
their fees have not been negotiated at arm's length and there will be no
independent due diligence performed in regard to interests sold. However, the
brokerage commissions are less than the presumptive fair and reasonable limit
provided by the guidelines of the North American Securities Administrators
Association.
Charges to the Partnership
The following table identifies who is paid by the partnership, what they do
for the partnership, and their rate of compensation:
Entity / Nature of Service / Amount of Compensation
-----------------------------------
The general partner
(Ashley Capital Management, Inc. and Mr. Michael P. Pacult)
Manages the partnership; negotiates and pays trading costs; assumes credit
risk of the partnership to the futures commission merchant
The partnership pays the corporate general partner a fixed annual brokerage
commission of 11% of partnership net assets, of which it retains 4% and pays
7% to the introducing broker to clear domestic trades. [$2,750+]
-----------------------------------
The commodity trading advisor
(Clarke Capital Management, Inc.)
Makes trades for the partnership
Clarke: 25% quarterly incentive fee on all new net profits it has generated
(this includes all new profits generated during the quarter, adjusted for
changes in trading equity and losses in previous quarters)
-----------------------------------
The futures commission merchant
(Vision Financial Markets LLC)
Accepts trades from the advisor, clears the trades; holds the partnership's
trading equity
The introducing broker pays the futures commission merchant for the per round
turn commissions for domestic trades entered by the trading advisor. The
partnership pays the per round turn commission for trades made on foreign
exchanges.
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-----------------------------------
The introducing broker
(Futures Investment Company)
Introduces the trades from the advisor to the futures commission merchant
Shares 7% of the 11% brokerage commissions paid to the corporate general
partner, with which it pays the futures commission merchant for domestic
trades generated by the trading advisor. [$1,750+]
-----------------------------------
The selling agent
(Futures Investment Company)
Sells investment in the partnership
FIC, as selling agent, will receive a 6% selling commission of the gross
subscription amount. Other compensation to it includes $2,000 paid by the
partnership for legal fees associated with the review of the offering by
FINRA. [$250+]
-----------------------------------
Lawyers and Accountants
(The Scott Law Firm, Ltd., Patke & Associates, Ltd., CPA, and other
accountants)
Continuing legal and accounting work
Operating expenses are estimated at $120,000 annually, with $40,000 for
accounting, $38,000 for audit, $27,000 for legal, $8,000 for regulatory fees
and $7,000 for other. Expenses related to this offering are estimated to be
$25,000. Claims cannot be estimated but will be paid as incurred. [$109+
offering; $525+ ongoing annual expenses]
-----------------------------------
+ Each $25,000 investment pays this amount per year for these particular
expenses. When the expense is not based on a percentage, but rather a fixed
amount, we have computed the expense upon the partnership's current net asset
value.
Use of Proceeds
The partnership has paid the organizational expenses. Offering and operating
expenses are paid as incurred.
The general partner reserves the right to apply all partnership assets not
allocated to pay expenses toward trading commodities and cash reserves,
including investments in U.S. Treasuries, cash management funds that invest in
only U.S. Treasuries, and foreign treasuries held with the respective issuing
department of treasury, all held in the name of the partnership.
Selection of Commodity Trading Advisors and Allocation of Equity
The general partner has allocated substantially all trading equity to Clarke
Capital Management, Inc. to trade as the sole commodity trading advisor to the
partnership. The trading advisor is responsible for selecting the markets
traded and the number of contracts per trade entered on behalf of the
partnership under the authority granted by a power of attorney from the
partnership to the trading advisor. The advisor is authorized to make short
sales, with unlimited risk of loss, on behalf of the partnership. The general
partner, without prior notice to you, in its sole discretion, may adjust the
allocation of equity to the advisor and terminate or add trading advisors.
Federal Income Tax Aspects
Although you will not be paid distributions, you will have to pay income taxes
on profits and interest, if any, for the taxable year in which it is earned.
The partnership reports on a December 31 year end.
Redemptions
You may request the general partner to accept the surrender of your
partnership interests for cash through our redemption procedures. The general
partner will use its best efforts to comply with all redemption requests, but
may not be able to do so because of insufficient liquid assets. You will not
be allowed to make any redemption during the first twelve months of your
initial investment. There will be no charge for redemptions. See, The
Limited Partnership Agreement, Redemptions.
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Diagram of Partnership Structure & Commissions
Atlas Futures Fund, Limited Partnership
Please see the previous table under Charges to the Partnership for a
description of the below parties.
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The Risks You Face
Investment in the partnership interests is speculative, illiquid, and highly
risky. You should purchase partnership interests only if you can afford to
lose your entire investment. All of the following risks, except payment of
fixed expenses, are present without regard to the amount of partnership
interests sold.
We must pay substantial charges, which may limit your ability to receive a
return on your investment.
We must pay our expenses before you will realize a profit. They are (i) fixed
brokerage commissions of 11% per year upon the partnership's net assets for
domestic trades plus actual commissions charged by the futures commission
merchant for trades made on foreign futures exchanges, if any; (ii) an
incentive fee of 25% to Clarke, the commodity trading advisor to the
partnership, of its new net profits; (iii) a fixed up-front selling commission
of 6% of the subscription amount; (iv) yearly expenses estimated at $120,000,
of which $40,000 is paid for accounting, $38,000 for audit, $27,000 for legal,
$8,000 for regulatory and the balance of $7,000 for variable operating
expenses such as printing, telephone, postage, and office supplies, and (v)
extra-ordinary expenses such as claims and defense of claims from brokers,
partners, and other parties.
The incentive fees are determined and accrued monthly, but paid quarterly to
the commodity trading advisor. We may be subject to substantial incentive
fees in the initial quarters of any given year which will not be refunded,
even if we experience subsequent losses which produce a net loss for that
year. See Charges to the Partnership.
You may not transfer your partnership interests and must rely on our
redemption procedures to receive your investment back.
You can assign or transfer your partnership interests only with the consent of
the general partner, which will be granted only upon limited circumstances.
See The Limited Partnership Agreement, Transfer Of Units Only With Consent Of
The General Partner and the Limited Partnership Agreement (Exhibit A).
Therefore, you must rely on our redemption procedures to receive your initial
investment adjusted to reflect profits, payment of expenses, and losses. See
The Limited Partnership Agreement, Redemptions.
Your right of redemption is limited.
Our redemption procedures provide that the redemption amount will be based
upon the net asset value of the partnership interests as calculated at the end
of the month in which the redemption request is received. The redemption
request must be received no less than 10 days prior to the redemption
effective date and be approved by the general partner, and it may not be
granted if we do not have enough liquid assets.
Subject to the foregoing limitations, the general partner intends to grant all
redemption requests received no less than ten days prior to the last business
day of the month and will use its best efforts to pay those requests within
twenty days after the last business day of the month in which the redemption
request was received. You may be prevented from redeeming your partnership
interests before they are significantly devalued. In such circumstances, the
general partner will use its best efforts to cause partnership assets,
including open trading positions, if any, to be converted into cash to meet
redemption requests and fulfill them as soon as is practicable. However, if
this cannot be done in a timely fashion due to illiquid markets, for instance,
those non-cash assets could be further devalued and reduce the partnership's
net asset value per unit, thus potentially having a negative effect on the
eventual redemption amount. See The Limited Partnership Agreement, Exhibit A,
Redemptions.
Though past performance is no guarantee of future results, all redemption
requests made to pools that the individual general partner has managed since
he began managing commodity pools in August, 2003 were fulfilled on time,
except that redemptions in a private pool managed by an affiliate have been
suspended since November 2011, pending resolution of the liquidation of its
futures commission merchant.
Further, substantial redemption requests could adversely affect us by the
liquidation of positions too rapidly or on unfavorable terms which prevent us
from satisfaction of all redemption requests, or the reduction of our
available trading equity at a time when we have an opportunity to earn
substantial profit.
The partnership depends upon the individual general partner, and his absence
could cause the partnership to cease operations.
You will be relying entirely on the ability of the general partner to select
and monitor the commodity trading advisors selected for the partnership. The
individual general partner is the sole principal and officer of the corporate
general partner. If he becomes unable to perform his duties, we could be
required to cease operations and trading until a replacement for him is found.
General partner and commodity trading advisor will serve other businesses and
may not have adequate time to devote to the partnership.
The individual general partner currently manages other commodity pools and
both general partners expect to manage additional pools in the future. They
may negotiate better terms for advisors, clearing and other services for
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those other pools in competition with this pool. The commodity trading
advisor currently manages other commodity accounts and may manage new
accounts, including personal accounts and other commodity pools. The
commodity trading advisor has developed special trading programs to trade this
partnership's account. Accordingly, there is no guarantee that our trading
results will be similar to or better than any of the trading advisor's other
accounts. Our business could be adversely affected by the failure of either
the individual general partner and sole principal of the corporate general
partner, or the trading advisor to devote sufficient time to the partnership
affairs. See Risk Factors, Trading Management, and The Commodity Trading
Advisors.
There are conflicts of interest in the partnership structure which may limit
our profits.
Before investing in this partnership, you must consider the actual and
potential conflicts of interest that exist in our structure and operation.
Specifically, the individual general partner is also a principal of Futures
Investment Company, the selling agent and introducing broker. Therefore, the
individual general partner will probably not replace Futures Investment
Company in either of such capacities because it receives 7% brokerage
commissions as introducing broker and a 6% selling commission as selling
agent.
In addition, because the selling agent is affiliated with the general partner,
no independent due diligence of this offering will be conducted in regard to
interests it sells. The individual general partner, through its 50% ownership
in the introducing broker, retains a portion of the fixed brokerage
commissions and, therefore, is unlikely to resign. See Risk Factors,
Conflicts of Interest, and the Limited Partnership Agreement (Exhibit A).
You will be taxed on profits regardless of whether they are distributed.
We do not intend to make cash distributions from profits. Regardless of
whether distributions are made, if we realize profits for a fiscal year, you
must report that income on your tax returns.
You will have to pay taxes on profits in a current year which may be lost in
future years.
We might sustain losses that offset our profits after the end of the year. So
you might never receive a distribution equal to your share of our prior year's
taxable income. See Federal Income Tax Aspects and The Limited Partnership
Agreement (Exhibit A).
If the general partner selects a new trading advisor, it may not be as
profitable as the one replaced, and the new advisor will not be responsible
for recouping any previous losses.
We rely upon a commodity trading advisor to generate profits pursuant to an
Advisory Contract and Power of Attorney (Exhibit F). Either the general
partner or a trading advisor may terminate the relationship at any time. If
this happens, or if a trading advisor becomes unable to serve us for any other
reason, the general partner may have to find one or more alternate trading
advisors. We cannot guarantee that any alternate trading advisor will trade
as profitably as the original trading advisor, or that it would be retained on
terms which are as favorable. Also, any new trading advisor will not be
obligated to recoup losses, if any, incurred by the prior trading advisor
before it is paid incentive fees on new net profits it generates.
The general partner may change the commodity trading advisor and its
allocation of equity without notice to you.
Without prior notice to you, the general partner may change the commodity
trading advisor and the amount of equity allocated to it at any time, for any
reason.
Factors beyond a Trading Advisor's control may cause a Trading Advisor to
deviate from its trading program or strategy.
Economic, market and other conditions may cause a trading advisor to deviate
from its stated trading program or strategy. There can be no guarantee that
any trading advisor would alert the general partner to such a change.
You will not participate in management and may not contest the business
decisions of the general partner.
You may not manage or conduct our business in any way or you would be deemed a
general partner, which is not allowed by the Limited Partnership Agreement
(Exhibit A). Accordingly, you are bound by the business decisions of the
general partner.
Commodity futures trading is speculative.
Commodity futures and option contract prices have a high risk of loss and are
volatile. Specifically (i) price movements are influenced by such
unpredictable variables as: changes in supply and demand; weather;
agricultural trade, fiscal, monetary and exchange control programs and
policies of governments; national and international political and economic
events; and, changes in interest rates, governments, exchanges, and other
market authorities that intervene to influence prices; (ii) even if the
analysis of the fundamental conditions by a commodity trading advisor is
correct, prices still may not react as predicted; (iii) analysis by the use
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of a computer program to measure price, historical price averages, momentum
and other technical factors deemed important by a commodity trading advisor
may also fail to predict price direction; (iv) it is possible for most of our
open positions to be unprofitable at the same time; (v) price changes may
reach a limit upon which trading rules require a suspension of trading for a
specified period of time. It is possible for these limits to be reached in
the same direction for successive days. This may prevent us from exiting a
position, and when the market reopens, we could suffer a substantial loss on
the position; (vi) losses are not limited to the margin allocated to hold the
position and may exceed the total equity in our account, though the general
partner assumes the risk in this event; and (vii) short positions, which have
unlimited risk of loss, will be taken on our behalf by the trading advisor.
During partnership trading, a small price movement can lead to large losses.
A small amount of money relative to the value of the contract traded, called
margin, must be deposited to place and hold a trade. The margin amount is
typically between 5% and 15% of the value of the contract traded. This
permits a large percentage gain or loss relative to the margin deposit. For
example, if at the time of purchase, 5% of the futures contract price is
deposited as margin, a 5% decrease in the position's value will cause a loss
of all the equity allocated to the trade, which could equal the entire value
of the account. The losses could be substantially more than the margin
deposited and the total value of the account, though the partners will not be
subject to margin calls.
The General Partner may employ leverage with the trading advisor, which may
increase volatility and negatively impact Fund performance
The general partner, at its sole discretion and without notice to you, may
cause the trading advisor to trade the Fund's assets allocated to it at a
higher or lower trading level normally utilized by the trading advisor
employing the trading program that will be traded on behalf of the Fund. The
range of leverage may be from 0.5 to 2.0. This means general partner may
request the trading advisor to trade each $1,000,000 of Fund equity as though
it were only $500,000 (0.5 times, or half, leverage), or as though it were
$2,000,000 (2 times leverage). At 0.5 leverage, the trading advisor will
trade about half the number of contracts for each trade that it would normally
trade for a given account size, and at 200%, the trading advisor will trade
about twice the number of contracts it would for a given account size. The
Fund could experience either greater or less volatility relative to accounts
that invest with the advisor at the normal (100%) trading level of the trading
program, depending on the amount of leverage utilized. Increased leverage
will magnify both profits and losses to the Fund while decreased leverage will
diminish both profits and losses to the Fund. The fixed brokerage commission
paid by the Fund will not vary if leverage is increased or decreased. Nor,
will the 20% incentive fee paid to the trading advisor change with leverage;
although, the dollar amount paid due to profits, if any, will vary with
leverage.
The general partner does not control the trading advisor or its methods and
may not be able to prevent large losses.
The commodity trading advisor enters trades on our behalf directly with the
futures commission merchant. The general partner does not know the trades
before they are made, nor does it know the trading advisor's methods, the
number of contracts bought or sold, or the margin required. The trading
advisor will not notify the general partner of any modifications, additions or
deletions to its trading methods and money management principles. We may
suddenly suffer large losses before the general partner knows remedial action
must be taken.
The partnership may be unable to execute a trade before large losses are
incurred due to market illiquidity.
It is not always possible to execute a buy or sell order. Such illiquidity
can be caused by a lack of interest in the contract caused by market
conditions which produce no persons willing to buy or sell, or the suspension
of trading which may occur because the price limit for a contract has been
reached.
Most United States commodity exchanges limit price movement in a single
direction by rules referred to as price limits. Once these limits have been
reached, no trades may be executed at prices beyond the limits for a specified
amount of time, usually until the next trading day. However, given sufficient
price movement the following day, price limits may be imposed again.
Accordingly, price limits may be in effect for protracted time periods. No
trading may be made in the direction of the price movement while the limit is
in place. The frequency of the imposition of price limits or the length of
time they will be in effect cannot be predicted. This causes illiquidity and
exposure to substantial losses. These losses could exceed the total equity in
our account, for which the general partners, not the limited partners, are
responsible.
Changes in trading equity may adversely affect performance.
Commodity trading advisors often are unable to adjust to changes in the amount
of money they manage. This is because (i) the larger amount of equity under
management requires larger trades to be made, which may be more difficult to
execute, (ii) there are legal limits called position limits upon the number of
positions that may be taken on a particular commodity, and (iii) it may be
more difficult to scale in positions, which is when a trading advisor takes
positions at different prices at different times and then allocates those
positions on a ratable basis when a change in its allocated equity occurs.
See Appendix I for the full definitions of position limits and scale in
positions.
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The commodity trading advisor may not limit the total equity it accepts and
may suffer losses which cause a withdrawal of the equity it manages. A
commodity trading advisor's rate of return tends to decrease as the amount of
equity under management increases.
Denomination of Partnership Assets at the Futures Commission Merchant in
Foreign Currencies
The general partner may change the currency denomination in which the
partnership assets are held at the futures commission merchant (e.g., U.S.
Dollars, Euros, British Pound, Yen, etc.). Although the assets will be
physically held by the merchant selected by the general partner in a United
States account, they will be subject to currency rate fluctuations, which may
work to the benefit or detriment of fund assets.
Failure of commodity brokers or banks could result in loss of assets.
If the futures commission merchant or other entity with which our money is on
deposit becomes bankrupt, we might only recover some, if any, of the equity in
our account. The deposits in our bank accounts will be insured for only
$250,000 and payment on insured deposits may be delayed. As of April 1, 2008,
the General Partner began to exercise its discretion to put partnership equity
not used for margin in accounts not maintained by or accessible by the futures
commission merchant. This includes U.S. Treasuries held at the U.S. Treasury
and investments in cash management funds that invest in only U.S. Treasuries,
all held in the name of the partnership. The General partner reserves the
right to put partnership equity not used for margin in accounts not maintained
by or accessible by the futures commission merchant. This includes U.S.
Treasuries held at the U.S. Treasury and investments in cash management funds
that invest in only U.S. Treasuries, all held in the name of the partnership.
When trading in foreign exchanges, if the creditworthiness of the other
parties or the value of the currency is not maintained, we may lose the value
of our positions in those markets.
Trading commodities involves entering a contract, or option to contract, for
the delivery of goods or money at a future date. The value of the contract or
option depends directly upon the creditworthiness of the parties and the value
of the item traded. The commodity trading advisor trades commodities on
United States commodity exchanges and foreign commodity exchanges. The
commodity exchange contracts and options traded on United States exchanges are
guaranteed by the members' credit. Contracts and options upon foreign
commodity exchanges are usually not regulated by specific laws and are backed
only by the parties to the contracts. It is possible for a price movement or
a devaluation of a currency in a particular contract or option to be large
enough to destroy the creditworthiness of the contracts and options issued by
a particular party or government, or all of the contracts and options of an
entire market. In either of those situations, we could lose the entire value
of a position with little recourse to regain any of its value. In addition,
the price of any foreign futures or foreign options contract and, therefore,
the potential profit and loss thereon, may be affected by any variance in the
foreign exchange rate between the time a position is established and the time
it is liquidated, offset or exercised.
Option trading is highly risky and requires less equity to secure a trade,
thus providing greater potential for loss.
We reserve the right to trade options, both puts and calls. After a position
is taken, a liquid market may not exist for any particular commodity option or
at any particular time. In an illiquid market, we may not be able to buy or
sell to offset, or liquidate, the positions we have taken.
Option trading allows us to trade with less equity on deposit. Accordingly,
the risk of loss of the entire account is great in the case of selling option
premium.
Position Limits May Limit Profitability and Changes Thereof Can Produce
Dramatic Price Swings.
The Commodity Futures Trading Commission and the United States commodity
exchanges have established limits referred to as Speculative Position Limits
or Position Limits. These are different from the price limits described
before. They are limits on the maximum net long or net short futures or
options positions which any person or group of persons may own, hold, or
control in futures contracts. The positions taken among all commodity
accounts owned, controlled or managed by a trading advisor and its principals
are combined for position limit purposes. Thus, a trading advisor may not be
able to hold sufficient positions for us to maximize the return on a
particular trade because it may be taking similar positions for others. A
material change in the position limits of one or more futures markets could
cause a large liquidation of or large addition to positions in such markets,
which could cause dramatic price swings.
We may not be able to compete with others with greater resources.
Commodity futures trading is highly competitive. We compete with others who
may have greater experience, more extensive information about developments
affecting the futures markets, more sophisticated means of analyzing and
interpreting the futures markets, and greater financial resources.
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Those with greater experience and financial resources have a better chance at
trading profitably. For instance, we will not maintain a warehouse to take
delivery of commodities and will not have a large capital base to allow us to
hold positions through bad times.
Resignation of individual general partner and subsequent failure of Ashley to
maintain its net worth may cause suspension of trading or taxation as a
corporation.
Any general partner wishing to voluntarily withdraw from the partnership must
give 120 days prior written notice to the limited partners. If a general
partner withdraws and the limited partners or remaining general partner elects
to continue the partnership, the withdrawing general partner shall pay all
expenses incurred as a result of its or his withdrawal.
When the sole general partner of a partnership is a corporation, the tax rules
require conditions to be met to allow the partnership to be taxed as a
partnership and not as a corporation. To be taxed as a partnership requires
that two or more of the following tests be met: decentralized management,
unlimited liability, limited transferability of shares, and limited
continuation of existence.
No tax IRS ruling has been or will be requested to confirm the tax opinions
expressed in this prospectus. If we were taxed as a corporation for Federal
income tax purposes, our income or loss would not be passed through to you, we
would be taxed at corporate rates, all or a portion of any distributions made
to you would be taxed to you as dividend income, and the amount of such
distributions would not be deductible in computing our taxable income.
However, the partnership tax counsel has delivered an opinion to the general
partner that this partnership, as presently operated by the general partner,
will be taxed as a partnership and not as a corporation. See Federal Income
Tax Aspects.
The general partner will not advise you, and you must rely upon your own
counsel before investing in the partnership.
Purchasing partnership interests does not create an Individual Retirement
Account, commonly called an IRA, and the creation and administration of an IRA
are solely your responsibility. The assets of a retirement account should be
carefully diversified and you should only allocate high risk capital to this
partnership. If you invest a significant portion of your retirement plan or
IRA assets in this partnership, you could be exposing that portion to
significant loss. The general partner will not advise you in any manner on an
investment in this partnership, including matters of diversification,
prudence, interpretation of the partnership agreement, and liquidity.
Accordingly, you must rely upon the experience of qualified legal, investment
and tax counsel you select.
The partnership is not covered by the Investment Company Act of 1940.
Stock investment companies and investment advisors must be registered under
the Investment Company Act of 1940, as amended. Because the business of the
partnership, the individual and corporate general partners, and the commodity
trading advisor involves only the trade of futures regulated pursuant to the
Commodity Exchange Act, none of them is required, nor does any intend, to be
registered under the Investment Company Act of 1940 or any similar state law.
Therefore, you are not protected by any such legislation.
Possibility of audit - you may be subject to audit and penalties.
If our return is audited, the IRS may make adjustments to our reported items.
If an audit results in an adjustment, you may be required to file amended
returns, subject to a separate audit, and required to pay back taxes, plus
penalty and interest.
General partner may settle IRS claim not in your best interest.
Ashley Capital Management, Inc. is named tax matters partner. This grants it
the power to settle any IRS claim on your behalf if you hold 1% or less
interest in this partnership and do not timely object to the tax matters
partner's authority, after notice. Such settlement may not necessarily be in
your best interest. See Federal Income Tax Aspects.
You may be subject to back taxes and penalties.
The Scott Law Firm, Ltd. has delivered an opinion to the general partner that
this partnership, as presently operated by the general partner, will be taxed
as a partnership and not as a corporation. This opinion does not include the
tax treatment of expenses to prepare the prospectus and selling expenses
because they have to be allocated between expenses attendant to formation and
ordinary business expenses by the general partner. In addition, commodity
trading advisor fees are combined with employee business expenses and other
expenses of producing income and are deductible only if the operation of the
partnership is the conduct of a trade or business. The general partner
believes that our intended operations qualify as a trade or business.
The general partner may cause higher fees to be paid or riskier trading by
altering the management and incentive fees without prior notice to you.
The general partner has reserved the right to raise, without prior notice to
you, the incentive fee to a maximum of 27% while lowering the total management
fees between the commodity trading advisor and general partner to 0%. Also,
the general partner may institute or raise the total management
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fees to 6% provided the total incentive fees are lowered to 15%. In general,
a lower management fee and higher incentive fee may result in higher fees
being paid during times of profit, whereas a higher management fee and lower
incentive fee would result in higher fees being paid in times of losses. The
general partner does not expect to make changes in the management and
incentive fees often, and will only make changes effective as of the first
business day of a subsequent month. The general partner will notify you of
any change in fees within seven business days.
Conflicts Of Interest
There are present and potential future conflicts of interest in our structure
and operation you should consider before you purchase partnership interests.
The general partner will use this explanation of conflicts as a defense
against any claim or other proceeding made against the individual or corporate
general partner, the commodity trading advisor, the introducing broker, the
selling agent, the futures commission merchant or any principal or affiliate,
agent or employee of any of them.
The general partner, the commodity trading advisor, the futures commission
merchant, the introducing broker, the selling agent and their principals may
preferentially trade for themselves and others.
Because the general partner, the commodity trading advisor, the introducing
broker, the selling agent, the futures commission merchant and their
principals and affiliates may trade for themselves and others, conflicts of
interest may exist or be created in the future. For example, if these people
trade their own account, you will not have access to their trading records.
They could possibly take their positions prior to the positions they know will
be placed for the partnership, although, they have stated they will not do so.
Possible retention of voting control by the general partner may limit your
ability to control issues.
The general partner, its principal and its affiliates may purchase an
unlimited amount of partnership interests. These persons include the
individual general partner. It is possible that they could purchase enough
partnership interests to retain voting control. They could then vote,
individually or as a block, to create a conflict with your best interests.
Such voting control may limit the limited partners' ability to achieve a
majority vote on such issues as amendment of the Limited Partnership
Agreement,
change in our basic investment policy, dissolution of this partnership, or the
sale or distribution of our assets. However, neither general partner may,
directly or indirectly vote on the issue of their removal.
The general partner is not likely to resign, even if it would be in your best
interest.
It is unlikely that either general partner would voluntarily resign, even if
it would be in your best interest, because the corporate general partner
retains a portion of the fixed brokerage commissions paid to it, and the
individual general partner also serves as the sole shareholder, director and
principal of the corporate general partner.
The introducing broker and selling agent is affiliated with the general
partner.
The president and 50% owner of the introducing broker and selling agent,
Futures Investment Company, is the sole principal, officer and director of the
general partner. As introducing broker, it will receive a portion of the
brokerage commissions paid to the futures commission merchant for trades
placed by the trading advisor. As selling agent, it will receive a 6% selling
commission.
Partnership fees may be higher than they would be if they were negotiated.
The fixed brokerage commission to Ashley Capital Management, Inc., corporate
general partner and commodity pool operator, has not been negotiated at arm's
length, though they are less than the presumptive fair and reasonable limit
provided by the guidelines of the North American Securities Administrators
Association. The general partner accepts the credit risk of the partnership
to the futures commission merchant, reviews the daily positions and margin
requirements of the partnership, and pays the futures commission merchant's
domestic charges. From the fixed brokerage commissions paid to the corporate
general partner, it must pay round turn brokerage commissions to the futures
commission merchant. Some of the remaining portion of the fixed brokerage
commissions will be kept by the corporate general partner. Conversely, the
corporate general partner will pay the futures commission merchant any
domestic round turn commissions incurred that exceed the fixed brokerage
commissions.
Our profitability may be limited due to competition among traders and their
unaccountability for previous losses.
The general partner has sole and absolute discretion to select and terminate
commodity trading advisors. If it appoints multiple trading advisors, each
will trade independently of the others. Also, they may compete for similar
positions or take positions opposite each other, which may limit our
profitability. If a trading advisor is replaced, the new trading advisor will
receive any earned incentive fees regardless of the previous trading advisor's
performance. As incentive fees are paid based upon each trading advisor's
performance, it would be possible for us to experience a net loss and be
required to pay out incentive fees to one or more of the traders.
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Your ability to redeem your partnership interests may be lessened due to the
nature of the general partner's compensation.
The general partner receives a fee based upon our net asset value available
for trading. This gives it an incentive to withhold distributions and to
discourage redemption. The general partner will try to honor all redemption
requests within twenty days after the last day of the preceding month in which
the request was made. However, if the partnership does not have enough liquid
assets, it may not be able to honor the request on time, or possibly at all.
The commodity trading advisor may engage in high risk trading to generate
fees.
As a general rule, the greater the risk assumed, the greater the potential for
profit. Because the commodity trading advisor receives incentive fees on our
new net profits, it might select trades which are too risky for us.
The individual general partner has sole control over the time he will allocate
to the management of the partnership.
The individual general partner is responsible for managing this partnership
and managing three other commodity pools, Bromwell Financial Fund, LP, TriView
Global Fund, LLC, and Strategic Opportunities Fund, LLC. He also sells
limited partnership interests in some of the above commodity pools, from time
to time and performs other investor relations services as a principal and
registered representative of Futures Investment Company, an introducing broker
and broker dealer of which he is a 50% owner.
He has also reserved the right to trade for his own account and to form and
manage other commodity pools and ventures. He is solely responsible for the
allocation of his time to the management of this partnership as well as the
other projects he currently manages and will manage in the future. He manages
his time, in part, by the delegation of many of the tasks, such as trade
selection and preparation of financial reports and offering documentation, to
independent commodity trading advisors, accountants, and attorneys. He
believes he presently has and will, in the future, have sufficient time to
devote to the affairs of the partnership.
No Resolution of Conflicts Procedures
As is typical in many futures partnerships, the general partner has not and
will not establish formal procedures to resolve potential conflicts of
interest. These future potential conflicts may adversely affect both you and
us. However, the general partner has taken steps to alleviate any real or
potential conflict of interest by the establishment of segregated accounts to
hold partnership equity at the banks, the U.S. Treasury, the futures
commission merchant, and cash management funds. Also, the general partner has
assured the partners that all money on deposit is in the name of and for the
beneficial use of the partnership.
The previous risk factors and conflicts of interest are complete as of the
date of this prospectus, however, additional risks and conflicts may occur
which are not presently foreseen by the general partner. You may not construe
this prospectus as legal or tax advice. Before making an investment in this
partnership, you should read this entire prospectus, including the Limited
Partnership Agreement (Exhibit A) and the subscription agreement. You should
also consult with your personal legal, tax, and other professional advisors.
See Investor Suitability.
Interests of Named Experts and Counsel
The general partner has employed The Scott Law Firm, Ltd., a New Jersey
corporation, to prepare this prospectus, provide tax advice and opine upon the
legality of issuing the partnership interests. Neither the law firm, its
principal, any accountant, nor any other expert hired by the partnership to
give advice on the preparation of this offering document has been hired on a
contingent fee basis. The foregoing persons do not have any present or future
expectation of interest in the general partner, the commodity trading advisor,
the introducing broker, the selling agent or the futures commission merchant.
Cautionary Note Regarding Forward-Looking Statements
This prospectus includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act that
reflect the general partner's current expectations about the future results,
performance, prospects and opportunities of the Trust. All statements other
than statements of historical facts included in this prospectus may constitute
forward-looking statements. The general partner has tried to identify these
forward-looking statements by using words such as "may," "will," "expect,"
"anticipate," "believe," "intend," "should," "estimate," "foresee,"
"continue," "plan" or the negative of those terms or similar expressions.
These forward-looking statements are based on information currently available
to the general partner and are subject to a number of risks, uncertainties and
other factors, both known, such as those described in "Risk Factors" and
elsewhere in this prospectus, and unknown, that could cause the Trust's actual
results, performance, prospects or opportunities to differ materially from
those expressed in, or implied by, these forward-looking statements. Although
the general partner believes that the expectations and underlying assumptions
reflected in these forward-looking statements are reasonable, there can be no
assurance that these expectations or underlying assumptions ultimately will
prove to have been correct. Important factors that could cause actual results
to differ materially from projected or forecasted results or stated
expectations are disclosed in this prospectus, including under the heading
"Risk Factors."
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You should not place undue reliance on any forward-looking statements. In
light of the significant uncertainties inherent in the forward-looking
statements included herein, the inclusion of such information should not be
regarded as a representation by the general partner or any other person that
the objective and expectations of the partnership will be achieved. Except as
expressly required by the Federal securities laws, the general partner
undertakes no obligation to publicly update or revise any forward-looking
statements or the risks, uncertainties or other factors described in this
prospectus, as a result of new information, future events or changed
circumstances or for any other reason after the date of this prospectus.
Management's Discussion and Analysis
The Partnership
Atlas Futures Fund, Limited Partnership is a Delaware limited partnership
organized on January 12, 1998 and maintains its main business office at 505
Brookfield Drive, Dover, DE 19901, (800) 331-1532. It is qualified to be a
commodity pool to engage in the speculative trading of futures and options on
futures in various sectors, including, but not limited to, currencies,
interest rates, energy and agriculture products, metals, and stock indices.
See page 24 for the performance record of the partnership.
Our business objective is to let our invested capital appreciate while
controlling losses; however, there can be no assurance that we will meet this
objective.
The partnership is managed by Ashley Capital Management, Inc., a Delaware
corporation, and Mr. Michael P. Pacult. The partnership does not have
officers, which is why there is no report of executive compensation in this
prospectus.
We operate pursuant to the terms of the limited partnership agreement attached
as Exhibit A, which grants full management control to the general partner
including the right to employ independent trading managers called commodity
trading advisors, and will terminate at 11:59 p.m. on January 12, 2019, or
upon an event causing an earlier termination.
Except for the limited partnership agreement, the partnership may not enter
any contract with the general partner or commodity trading advisor that is
greater than one year in duration. However, all such contracts are expected
to be renewed yearly and are terminable without penalty upon sixty days, or
less, written notice by the partnership.
The General Partners
The corporate general partner is Ashley Capital Management, Inc., a Delaware
corporation incorporated on October 15, 1996. It was registered as a
commodity pool operator and became an NFA member on January 15, 1998 and
maintains its main business office at 5914 N. 300 West, P.O. Box 760, Fremont,
IN 46737, (260) 833-1306. It was registered as a commodity trading advisor on
July 5, 2005, though it does not currently provide services in that capacity.
It is managed by Michael P. Pacult, its sole shareholder, director and
president.
The individual general partner is Michael P. Pacult, who was registered as a
commodity pool operator and became an NFA member on July 28, 2003 and
maintains his main business office at 5914 N. 300 West, P.O. Box 760, Fremont,
IN 46737, (260) 833-1306.
Both the individual and corporate general partners, as well as the
partnership, will comply with all applicable registration requirements under
the Commodity Exchange Act as amended.
Experience
The corporate general partner has managed this commodity pool since its
inception on January 12, 1998. The individual general partner has been
supervising individual managed commodity accounts for over 30 years and serves
in several capacities in four other commodity pools, as follows:
<table>
<s> <c>
Commodity Pool Mr. Pacult Serves As
Bromwell Financial Fund, LP
(publicly offered, commenced business 7/00) Sole principal of the corporate general partner
Providence Select Fund, LP
(publicly offered, closed as of 1/10) Individual general partner and sole principal of
the corporate general partner
TriView Global Fund, LLC
(publicly offered, commenced business 7/2011) Individual managing member and sole principal of
the corporate managing member
Strategic Opportunities Fund, LLC
(commenced business 11/05) Sole principal of the corporate managing member
</table>
Authority
Mr. Pacult is the sole shareholder, director and principal of Ashley Capital
Management, Inc. and also the individual general partner; therefore, he is the
sole decision maker of this partnership. Having said that, the signature of
either the corporate or individual general partner may legally bind this
partnership.
The general partner is authorized to take all actions necessary to manage the
affairs of the partnership. See Article II of the Limited Partnership
Agreement attached as Exhibit A.
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Partnership Books and Records
Our books and records will be maintained for six years at the office of the
corporate general partner, 5914 N. 300 West, Fremont, IN 46737. You may
access our books and records by visiting the corporate general partner's
office at a time convenient for both parties, and you may have copies made at
that time at a reasonable charge per page. The corporate general partner
serves as tax partner for the partnership. The CPA firm ofPatke & Associates,
Ltd., 300 Village Green Drive Ste 210, Lincolnshire, IL 60069 conducts our
annual audit and the annual audit of the corporate general partner, and
prepares our tax returns and sends the IRS Form K-1s to the partners.
The Commodity Trading Advisors
To conduct trading on our behalf, the general partner has selected an
independent commodity trading advisor, Clarke Capital Management, Inc.
Without prior notice to you, the general partner has sole discretion to employ
additional trading advisors, terminate any trading advisor, and change the
amount of equity any advisor may trade. However, the general partner will
give you notice of any change in trading advisor within seven days of such
change. Such notice will include a description of your right to redemption.
The general partner, at its sole discretion and without notice to you, may
cause the trading advisor to trade the Fund's assets allocated to it at a
higher or lower trading level normally utilized by the advisor employing the
trading program that will be traded on behalf of the Fund. Increased leverage
will increase volatility, while decreased leverage may limit performance. The
fixed brokerage commission paid by the Fund will not vary if leverage is
increased or decreased. Nor, will the 20% incentive fee paid to the trading
advisor change with leverage; although, the dollar amount paid due to profits,
if any, will vary with leverage. No change in trading advisor will constitute
a material change to the limited partnership agreement or the structure of our
operation. Any trading advisor employed to trade for the partnership will be
registered with the Commodity Futures Trading Commission and will have at
least three years of experience as a trading advisor.
The Advisory Contract
The general partner has assigned a substantial portion of our assets to the
trading advisor, the terms of which are governed by an advisory contract and
power of attorney between us and the trading advisor. See Exhibit F.
These agreements provide the trading advisor with revocable powers of
attorney, which gives them sole authority to determine the markets to be
traded, the location of those markets, the size of the position to be taken in
each market, and the timing of entry and exit in a market. The agreements may
be terminated, at any time, upon notice from one party to the other and to the
futures commission merchant.
Business Objective and Expenses
Our objective is to achieve the potentially high rates of return that are
possible through the speculative trading of futures and options on futures
contracts. We do not expect to engage in any other business.
The general partner organized this partnership to be a commodity pool, as that
term is defined in the Commodity Exchange Act. It employs independent
commodity trading advisors to trade for us.
The general partner intends to allocate substantially all of our net assets to
the trading advisor to conduct this trading. The trading advisor typically
allocates 20% to 40% of the trading equity assigned to it to secure the
trading positions it selects.
Although we do not expect to make distributions, you will nevertheless be
required to pay yearly Federal, state and local taxes upon income, if any,
earned by this partnership. The general partner recommends partnership
interests be purchased as a long-term investment.
There can be no assurance that we will achieve our business objectives, be
able to pay the substantial fixed and other costs to do business, or avoid
substantial trading losses. See Charges to the Partnership.
Below is a chart explaining the expenses we expect to incur over the twelve
months following the date of this prospectus. All interest income is paid to
the partnership. The chart below assumes the value of each unit of
partnership interest will remain constant during the next twelve months.
13
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Expenses per $1,000 of Investment of Partnership Interest
for the First and Second 12-Month Periods of Investment
<table>
<s> <c> <c> <c>
First 12-Month Second 12-Month
Period of Investment Period of Investment
Based Upon Units Based Upon Maximum Based Upon Maximum
Presently Outstanding Units To Be Sold Units To Be Sold
Actual Units Sold to Date; Value 1,638 Units ($5,273,657)
Actual Units Sold Plus New Units to be
Sold Pursuant to this Prospectus; Value 4,743 Units ($15,273,657) 4,743 Units ($15,273,657)
Base Price (1) $1,000 $1,000 $1,000
Selling Commission (1) $60.00 6.00% $60.00 6.00% $0.00 0.00%
Annual Expenses and Offering Expenses (2) $25.85 2.59% $14.16 1.42% $15.06 1.42%
Brokerage Commissions and Trading Fees (3) $97.20 9.72% $97.20 9.72% $110.00 9.72%
Trading Advisors' Incentive Fees on
New Net Profits (4) $56.10 5.61% $52.20 5.22% $35.89 3.59%
Interest Income (5) $(1.50) (0.15)% $(1.50) (0.15)% $(1.50) (0.15)%
Amount of Trading Income Required to
Redeem Unit At Selling Price After One
Year (6) $237.65 $222.06 $158.55
Percentage of Initial Selling Price Per Unit 23.77% 22.21% 15.86%
</table>
Explanatory Notes:
(1) Investors will purchase partnership interests at the partnership's month
end net asset value per partnership interest. As of December 31, 2011, this
was $3,219.96; however, the table is presented to reflect expenses per $1,000
investment. The initial allocation of partnership interests to an investor
will be after deduction of a one-time 6% up front selling commission on the
gross subscription proceeds. For the first twelve month period in which a
selling commission is charged, the remaining fees are calculated based on the
remaining proceeds after deduction of the selling commission ($940). For the
second twelve month period, the remaining fees are calculated on the full
$1,000 because there is no selling commission.
(2) At the current net asset value, the partnership must pay yearly expenses
of approximately $120,000, of which $40,000 is for accounting, $38,000 for
audit, $27,000 for legal, $8,000 for regulatory fees, and $7,000 for other.
If the maximum is sold, annual expenses are estimated to be $205,000.
Offering expenses are estimated to be $25,000.
(3) Brokerage commissions and domestic trading fees are fixed by the general
partner at 11/12% monthly, 11% annually, of partnership net assets plus actual
commissions for trades made on foreign exchanges, if any, estimated by the
General Partner to be 0.1% annually. For purposes of this calculation, we
assumed that the advisor frequency of trading and the number of partnership
interests outstanding during the next twelve months will remain constant.
(4) This is the amount of incentive fees the trading advisor would earn if it
produced only enough profits to allow you to redeem after one year your
partnership interests at the net asset value used in this table. The trading
advisor is not paid an incentive fee on brokerage commissions paid to the
futures commission merchant which, for purposes of this table, are estimated
to be 1.5% annually.
(5) We earn interest on margin deposits with the futures commission merchant
and on our bank deposits. Based on current interest rates, interest income is
estimated at 0.15% annually of our net assets.
(6) This computation assumes there will be no claims or other extra-ordinary
expenses during the first year.
We do not represent that the above table will reflect our actual offering
expenses, operating expenses or interest income. There can be no assurance
that our expenses will not exceed the amounts projected or that there will not
be claims or other extra-ordinary expenses.
Securities Offered
We, Atlas Futures Fund, Limited Partnership, will offer and sell limited
partnership interests in this partnership at a value determined by the month
end net asset value of the partnership. See Determination Of The Offering
Price.
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You, the Investor will have pro rata rights to profit and losses which will
vary with your investment amount and the right to vote on partnership matters
such as the replacement of the general partner. See The Limited Partnership
agreement attached as Exhibit A. You will not be responsible for our debts in
excess of your investment amount, unless, (i) we become insolvent and you
receive distributions which represent a return on your investment which, under
certain circumstances, you would have to return to us to pay our debts, (ii)
acquire any interest in the corporate general partner, Ashley Capital
Management, Inc., or (iii) manage this partnership. See Plan For Sale of
Partnership Interests and Subscription Requirements.
Your subscription agreement and check (i) must be approved by the general
partner before you will become a partner and will be accepted or rejected
within five business days of receipt, (ii) becomes irrevocable and may not be
withdrawn five days after submission, unless, a longer statutory withdrawal
period applies to you, and (iii) will be deposited and held until you are
admitted into the partnership in a segregated depository account maintained by
either Star Financial Bank .
There cannot be any assurance that additional partnership interests will be
sold. The general partner is authorized, in its sole discretion, to terminate
this or any future offering of partnership interests.
Management's Discussion
This is the continuation of the offering of our partnership interests. We may
conduct future offerings after the close of this offering and intend to raise
money only through offerings, such as this one, and do not intend to borrow
any money. We must pay expenses to qualify and sell our partnership
interests, such as fees for the preparation of this prospectus, sales
literature, and web site promotion as well as other expenses. We allocate
substantially all our net assets to trading and other investments, except
those assets used to pay capital and operating expenses. We have no
directors, officers or employees, which is why there is no report of executive
compensation in this prospectus, and conduct all our business through the
general partner.
Description of Intended Operations
The general partner has selected Vision Financial Markets LLC to serve as the
futures commission merchant and has selected Futures Investment Company to
serve as the introducing broker. The partnership has deposited its funds to
the futures commission merchant to hold as security for the trades selected by
the commodity trading advisor. The general partner reserves the right to put
partnership equity not used for margin in accounts not maintained by or
accessible by the futures commission merchant. This includes U.S. Treasuries
held at the U.S. Treasury, investments in cash management funds that invest in
only U.S. Treasuries. The futures commission merchant have been directed to
send the general partner, before the open of business each day, a computer or
fax report which describes the positions held, the margin allocated, and the
profit or loss on the positions from the date the positions were taken
Risk Control
The general partner reviews the daily transmissions provided by the futures
commission merchant and makes appropriate adjustments to the allocation of
trading equity. Based upon the amount of available trading equity, the
trading advisor has discretion to make specific trades, determine the number
of positions taken, and decide the timing of entry and departure from each
trade made. In managing the partnership's business and affairs, the general
partner may contract with, and rely upon, information, research and advice
provided by third parties.
The general partner will use its best efforts to monitor the daily value of
the partnership, which it calculates from the daily information provided by
the futures commission merchant, and will make such information available to
limited partners upon request. However, the independent accountant calculates
the net asset value at the end of the last business day of each month. If the
daily unit value falls to less than 50% of the highest value earned through
trading, then the general partner will immediately suspend all trading,
provide you with immediate notice of the reduction in net unit value, and give
you the opportunity, for 15 days after the date of such notice, to redeem your
partnership interests according to the provisions of Article IX, Sections 9.5
and 9.6 of the Limited Partnership Agreement. No trading shall commence until
after the lapse of such fifteen day period. See Exhibit A attached.
Trading Risks
Most United States commodity exchanges limit daily fluctuations in commodity
futures contracts prices by regulations referred to as daily price fluctuation
limits or daily limits. Once the price of a futures contract has reached the
daily limit for that day, positions in that contract can neither be taken nor
liquidated. Commodity futures prices have occasionally moved the daily limit
for several consecutive days with little or no trading.
Such an occurrence could prevent us from promptly liquidating unfavorable
positions and subject us to substantial losses. These losses could exceed the
margin initially required to make the trade. In addition, even if commodity
futures prices have not moved the daily limit, we may not be able to execute
futures trades at favorable prices. This may be caused by light trading in
such contracts or by a sudden and substantial price move in a futures
contract. These limitations on liquidity are inherent in our proposed
commodity futures trading operations. Otherwise, our assets are expected to
be highly liquid.
15
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Except for payment of offering and other expenses, the general partner is
unaware of any anticipated known demands, commitments or required capital
expenditures, material trends, favorable or unfavorable, which will affect our
capital resources, or trends or uncertainties that will have a material effect
on operations.
Each United States commodity exchange, with the approval of the Commodity
Futures Trading Commission, and the futures commission merchant establish
minimum margin requirements for each traded contract. The futures commission
merchant will require the margin assigned for each account to be on deposit
before a trade will be accepted. The futures commission merchant may increase
the margin requirements above these minimums for any or all contracts for its
customers. Because we generally use a small percentage of assets for margin,
we do not believe that any increase in margin requirements will materially
affect our proposed operations. However, it is possible for an increase in
margins applicable to the trades the advisor selects for us to force us to
liquidate positions because we cannot meet the additional margin requirements.
Management cannot predict whether the value of our partnership interests will
increase or decrease. Inflation is not projected to be a significant factor
in our operations, except to the extent inflation influences futures prices.
Fiduciary Responsibility of the General Partner
You have legal rights under Delaware partnership and applicable Federal and
state securities laws. In all dealings affecting this partnership, the
general partner has a fiduciary responsibility to you and all other partners
to exercise good faith and fairness. No contract shall permit the general
partner to contract away its fiduciary obligation under common law. The
limited partnership agreement conforms to the Uniform Limited Partnership Act
for the State of Delaware in regard to the definition of the fiduciary duties
of the general partner.
You have a right to initiate legal proceedings related to the partnership in
the following circumstances:
In the event, after demand from you, the general partner fails to take action
to recover damages from third parties, you may initiate proceedings on behalf
of the partnership and, upon an appropriate award from the court pursuant to
Delaware law, obtain reimbursement of your legal fees and costs from the
amount recovered.
You may bring an action against the general partner in either Federal or state
court should you believe the general partner or others have breached its
fiduciary duty to the partnership or committed a breach of any Federal or
state securities laws.
You may seek reparations for the amount of your investment and damages should
the general partner or others breach of the Commodity Exchange Act or order of
the Commodity Exchange Commission in regard to your investment.
If the general partner acts in good faith and exercises its best judgment, it
will not be liable merely because we lost money or otherwise did not meet our
business objectives. Additionally, there are substantial and inherent
conflicts of interest in the partnership's structure which are disclosed in
the prospectus. The general partner intends to raise the disclosures made in
this prospectus and the representations you made in the subscription agreement
as a defense in any proceeding brought which seeks relief based on the
existence of such conflicts of interest. See Conflicts of Interest.
The responsibility of a general partner to you and other partners is a
changing area of the law. If you have questions concerning the
responsibilities of the general partner, you should consult your legal
counsel.
Indemnification
Provisions of Limited Partnership Agreement
The limited partnership agreement protects the general partner from being
responsible or accountable for any act or omission, for which you, other
limited partners or the partnership itself may claim it is liable, provided
that the general partner determined such act or omission was within the scope
of its authority and in the best interest of this partnership, and such action
or failure to act does not constitute misconduct or a breach of the Federal or
state securities laws related to the sale of partnership interests.
Specifically, if the general partner has acted within the scope of its
authority and is being assessed a demand, claim or lawsuit by a partner or
other entity, the partnership will defend, indemnify and hold the general
partner harmless from and against any loss, liability, damage, cost or
expense, including attorneys' and accountants' fees and expenses incurred in
defense of any demands, claims or lawsuits which were actually and reasonably
incurred and arising from any act, omission, activity or conduct undertaken by
or on behalf of the partnership.
Provisions of Law
According to applicable law, indemnification of the general partner is payable
only if (i) the general partner determined, in good faith, that the act,
omission or conduct that gave rise to the claim for indemnification was in the
best interest of the partnership, (ii) the act, omission or activity that was
the basis for such loss, liability, damage, cost or expense was not the result
of negligence or misconduct, (iii) such liability or loss was not the result
of negligence or misconduct by the general partner, and (iv) such
indemnification or agreement to hold harmless is recoverable only out of the
assets of the partnership and not from the partners, individually.
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Provisions of Federal and State Securities Laws
This offering is made pursuant to Federal and state securities laws. If any
indemnification of the general partner arises out of an alleged violation of
such laws, it is subject to the following legal conditions.
Those conditions require that no indemnification may be made in respect of any
losses, liabilities or expenses arising from or out of an alleged violation of
Federal or state securities laws unless (i) there has been a successful
adjudication on the merits of each count involving alleged securities law
violations as to the general partner or other particular indemnitee, (ii) such
claim has been dismissed with prejudice on the merits by a court of competent
jurisdiction as to the general partner or other particular indemnitee, or
(iii) a court of competent jurisdiction approves a settlement of the claims
against the general partner or other agent of the partnership and finds that
indemnification of the settlement and related costs should be made, provided,
however, before seeking such approval, the general partner or other indemnitee
must apprise the court of the position held by regulatory agencies against
such indemnification. These agencies are the Securities and Exchange
Commission and the securities administrator of the state or states in which
the plaintiffs claim they were offered or sold partnership interests.
Provisions of the Securities Act of 1933 and NASAA Guidelines
The Securities and Exchange Commission and the various state securities
administrators believe that indemnification for liabilities arising under the
Securities Act of 1933 are unenforceable because such indemnification is
against public policy as expressed in the Securities Act of 1933 and the North
American Securities Administrators Association, Inc. commodity pool
guidelines.
Provisions of the Clearing Agreement
We clear trades through our futures commission merchant, Vision Financial
Markets LLC. According to the clearing agreements that govern these trades,
we must indemnify the futures commission merchant for any reasonable outside
and in-house attorney's fees incurred by it arising from any failure for the
partnership to perform its duties under the clearing agreement.
Other Indemnification Provisions
The general partner has indemnified the selling agent that there are no
misstatements or omissions of material facts in this prospectus.
Relationship with the Futures Commission Merchant, the Introducing Broker and
the General Partner
Ashley Capital Management, Inc., the corporate general partner, supervises the
relationship with the futures commission merchant and the affiliated
introducing broker, including the negotiation of the round turn commission
rates incurred through trading via the commodity trading advisor, and review
of the daily reports.
Ashley has engaged Vision Financial Services LLC to serve as the futures
commission merchant to open and close the trades selected by the trading
advisor. It has also engaged Futures Investment Company to introduce the
trades to the futures commission merchant.
Fixed Commissions are Competitive
The fixed brokerage commissions that we pay to clear our trades plus actual
costs for foreign markets, if any, are less than the presumptive fair and
reasonable limit provided by the guidelines of the North American Securities
Administrators Association. Also, the general partner has the right to select
any substitute or additional futures commission merchants or introducing
brokers at any time, for any reason.
The futures commission merchant acts for other commodity pools that have
retained either or both of the general partners of this partnership. Either
general partner or any other commodity pool may obtain rates to clear trades
from the general partner which are more favorable to their accounts than the
fixed commissions the general partner charges the partnership.
Relationship with the Commodity Trading Advisors
The Commodity Trading Advisors Will Trade for Other Accounts
The commodity trading advisor will trade for its own accounts and for others
on a discretionary basis. It may use trading methods, policies and strategies
for others which differ from those used for us. Consequently, such accounts
may have different trading results from ours.
Because the trading advisor trades for itself and others, it is possible for
it to take positions ahead of or opposite to the positions taken for us, which
presents a potential conflict of interest. See Appendix I for Taking
Positions Ahead of the Partnership.
Pursuant to Commodity Futures Trading Commission Regulation 421.03, the
trading advisor will use the average price system for those futures and
options contracts where its use is authorized, when trades taken on behalf of
both the partnership and a trading advisor's other accounts are identical, and
the prices of such trades are different. See Appendix I for the definition of
Average Price System.
17
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The commodity trading advisor has also informed the general partner that when
the average price system is not available, trades will be filled in order
based on the numerical account numbers, with the lowest price allocated to the
lowest account number and in numerical matching sequence, thereafter.
Non-Disclosure of the Commodity Trading Advisor's Methods
We have provided a general description of the commodity trading advisor's
methods and strategies under The Commodity Trading Advisors, Description of
Trading Program. However, the specific details of its trading methods are
proprietary and complex in nature and will not be disclosed to us or you. No
notice will be given to you of any changes the trading advisor may make in its
trading methods. See Risk Factors, No Notice of Trades or Trading Method.
Charges to the Partnership
As an investor in this partnership, you will pay your prorated share of the
cost of our operation. These charges are described in narrative form and in
the chart which follows this narrative. In this prospectus, we have disclosed
all compensation, fees, profits and other benefits, including reimbursement of
out-of-pocket expenses, which the general partner will earn in connection with
this offering. Most of these charges were not negotiated at arm's length, but
rather were determined by the two general partners.
Compensation of the Commodity Trading Advisors
Clarke Capital Management, Inc., the commodity trading advisor, has been
allocated equity to trade, which has been deposited in accounts with the
futures commission merchant, investments in U.S. Treasuries held at the U.S.
Treasury, and investments in cash management funds that invest only in U.S.
Treasuries, all held only in the name of the partnership.
The partnership pays Clarke incentive fees of the new net profit produced by
it of 25%. Any incentive fee paid to the trading advisor will not count
against the new net profit calculation in the following period. New net
profit:
* is calculated to determine how much a trading advisor has increased our
net assets through trading alone
* is based upon the net value of the equity assigned to the trading
advisor to trade
* is calculated after the payment of brokerage costs to the futures
commission merchant
* is calculated monthly but paid quarterly
* is only paid when any losses in previous quarters have been offset by
new profits by the trading advisor, regardless of whether:
* the general partner has changed the trading advisor's compensation, or
* the partnership and trading advisor have entered a new contract
* is adjusted to eliminate the effects of:
* any new subscriptions for partnership interests
* redemptions by partners
* interest income paid by the futures commission merchant, and
* any other income earned on our assets which are not related to such
trading activity, regardless of whether such assets are held separately or in
a margin account.
The following hypothetical table illustrates the quarterly incentive fee that
would be earned by a trading advisor based on the net income, as calculated
above, that it has earned for the partnership.
Qtr Net Income Incentive Fee (25%)
1 $1,000 $250
2 (200) 0
3 1,000 200
4 500 125
Restrictions on Management Fees
Some of the states in which we sell partnership interests require that we
comply with the North American Securities Administrators Association
Guidelines for commodity pools. These guidelines provide that the total
management fees, including those of the general partner and the commodity
trading advisor, may not exceed 6% of our net assets, and the total incentive
fees, including those of the general partner and commodity trading advisor,
based upon profits earned may not exceed 15% of new net profits. Provided,
however, without prior notice to you, the general partner has the right to
increase the incentive fee by 2% over 15% for every 1% decrease from 6% in the
management fee. The general partner will notify you of any change in fees
within seven business days after they are made and afford you notice and
opportunity to redeem your partnership interests.
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Compensation of Futures Commission Merchant, Introducing Broker, Selling Agent
and General Partner
Fee Paid By Partnership to the Corporate General Partner
The corporate general partner, Ashley Capital Management, Inc., is responsible
for payment of costs to clear the trades made by the trading advisor through
the futures commission merchant and for payment to the affiliated introducing
broker for introducing the trades to the futures commission merchant. The
partnership pays the corporate general partner a monthly fixed rate of 11/12
of 1%, 11% annually, upon the partnership's net assets, regardless of where it
is held, to trade domestic markets. Commissions charged on foreign exchanges
, if any, are paid directly by the partnership. Costs for trades on foreign
exchanges can vary widely, and are estimated by the general partner to be from
$9 to $27. The corporate general partner retains 4% of this 11% annual charge
and pays the introducing broker the remaining 7%. From this 7%, the
introducing broker pays approximately 1.0% to 1.5% to the futures commission
merchant. Assets on deposit with the futures commission merchant include all
cash, T-Bills at market value, and open trade equity held in all accounts in
the name of the partnership at the futures commission merchant as of the date
and time of calculation of the monthly fee. See The Futures Commission
Merchant. The fixed commission that we pay to clear our trades plus actual
costs for foreign markets, if any, is less than the presumptive fair and
reasonable limit provided by the guidelines of the North American Securities
Administrators Association.
Selling Commission
On the admission date of a new investment, which will be the first business
day of a month, prior to allocation of partnership interests, 6% of the gross
subscription proceeds will be paid to the selling agent as a selling
commission which may be waived at the sole discretion of the general partner.
The remaining amount, including 100% of any interest earned while in the
depository account, will be used to allocate partnership interests in the
capital account of the investor based on the previous month end net asset
value per partnership interest.
Brokerage Fees Paid By to the Futures Commission Merchant
The futures commission merchant charges the introducing broker the round turn
commissions. The round turn charge covers all clearing costs, including the
pit brokerage fees, National Futures Association fees, and exchange fees.
Miscellaneous Fees to Futures Commission Merchant
We will reimburse the futures commission merchant for all delivery, insurance,
storage or other charges incidental to trading and paid to third parties. The
general partner has instructed the trading advisor to avoid these charges and,
therefore, no significant charges of this nature are anticipated.
Rights of General Partner
Without prior notification to you, the general partner has reserved the right
to (i) add, change and delete broker/dealers as selling agents, (ii) add,
change and delete introducing brokers, (iii) change the management and
incentive fees within the limits prescribed herein, (iv) add, change and
delete commodity trading advisors, (v) add, change and delete futures
commission merchants, (vi) add, change and delete selling agents, (vii) change
the fixed brokerage commission rate, and (vii) have the partnership pay a per
round-turn brokerage commission as opposed to a fixed percentage, at any time,
with or without a change in circumstances; provided, however, such brokerage
commissions are presumed reasonable if they do not exceed 80% of the published
retail rate of the affiliated introducing broker plus pit brokerage fees, or
14% annually, including pit brokerage fees, of the average net assets related
to trading activity.
Other Expenses
We must pay legal and accounting fees, as well as other expenses and claims.
For each year of normal operations, based on the current net asset value, we
must pay yearly costs of approximately $120,000, which includes $40,000 for
accounting, $38,000 for audit of all financial statements that appear in this
prospectus, $27,000 for legal, $8,000 for Blue Sky and other regulatory fees,
and the balance of $7,000 for variable operating expenses such as printing,
delivery charges, website promotion, statement preparation and mailing,
telephone, postage, and office supplies. If the maximum is sold, total annual
operating costs are estimated to be $205,000.
Costs for this offering of the partnership's interests prior to effectiveness
of the offering are estimated to be $25,000, which includes legal and
accounting fees, as well as regulator filing fees and printing fees. Costs
to continue the offering after initial effectiveness, such as the cost to
prepare and file periodic amendments and restatements of the registration
statement, are included in the annual operating costs and are estimated to
be $10,000 per year for the offering, which will be ongoing for a maximum of
three years. Accordingly, the maximum offering costs other than underwriting
discounts and commissions are estimated to be $55,000.
Charges to the Partnership
The following table includes all charges to the partnership.
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Entity / Form of Compensation / Amount of Compensation
------------------------------
General Partner
(Ashley Capital Management, Inc.)
Fixed brokerage commission
11% fixed annual charge for domestic trades, of which it retains 4% and pays
7% to the introducing broker, paid monthly, upon the partnership's net assets.
From this amount it will pay brokerage commissions to the futures commission
merchant. [$2,750+]
------------------------------
Futures Commission Merchant
(Vision Financial Markets LLC)
Round-turn commissions paid from the fixed commissions paid by the partnership
From its 7% the introducing broker pays the futures commission merchant per
round turn brokerage commissions for domestic trades. The partnership pays
the per round turn commission for trades made on foreign exchanges.
Reimbursement of delivery, insurance, storage and any other charges incidental
to trading and paid to third parties
Reimbursement by the partnership of actual payments to third parties in
connection with partnership trading
------------------------------
The introducing broker
(Futures Investment Company)
Paid from the fixed commissions paid by the partnership
Shares 7% of the 11% brokerage commissions paid to the corporate general
partner, out of which it pays the futures commission merchant for domestic
trades generated by the trading advisor. [$1,750+]
------------------------------
Commodity Trading Advisors
(Clarke Capital Management, Inc.)
Incentive Fee
Clarke is paid 25% of the new net profits it generates each quarter
------------------------------
The selling agent
(Futures Investment Company)
Selling Commission
FIC, as selling agent, will receive a 6% selling commission of the gross
subscription amount. Other compensation to it includes $2,000 paid by the
partnership for legal fees associated with the review of the offering by
FINRA. [$250+]
------------------------------
Third Parties
(The Scott Law Firm, Ltd., Patke & Associates, Ltd., CPA, and other
accountants)
Legal, accounting fees, and other actual expenses necessary to the operation
of the partnership, and all claims and other extraordinary expenses of the
partnership.
Operating expenses are estimated at $120,000 annually, with $40,000 for
accounting, $38,000 for audit, $27,000 for legal, $8,000 for regulatory fees
and $7,000 for other. Expenses related to this offering are estimated to be
$25,000. Claims cannot be estimated but will be paid as incurred. [$109+
offering; $525+ ongoing annual expenses]
------------------------------
+ Each $25,000 investment pays this amount per year for these particular
expenses. When the expense is not based on a percentage, but rather a fixed
amount, we have computed the expense upon the partnership's current net asset
value. Net asset value means the total assets, including all cash and cash
equivalents (valued at cost plus accrued interest and earned discount), less
total liabilities, of the partnership (each determined on the basis of
generally accepted accounting principles, consistently applied under the
accrual method of accounting or as required by applicable laws, regulations
and rules including those of any authorized self regulatory organization).
Investor Suitability
You should only invest a limited amount of the risk portion of your total
portfolio and should not invest more you can afford to lose.
To invest the minimum $25,000 in this partnership, you must have a net worth
of at least $250,000, exclusive of your home, furnishings and automobiles, or
an annual gross income of at least $70,000 and a net worth, as calculated
above, of at least $70,000, or such higher amounts imposed by your state of
residence.
You may not invest more than 10% of your net worth in this partnership. The
foregoing standard and the additional standards applicable to residents of
certain states and the subscription documents are regulatory minimums only.
20
<page>
Potential Advantages
Commodity trading is speculative and involves a high degree of risk. See Risk
Factors. However, your investment in this partnership will offer the
following potential advantages:
Equity Management
We offer the opportunity for you to:
* place equity with registered commodity trading advisors which have
demonstrated an ability to trade profitably based on its track record,
* have that equity allocated to the trading advisors in a manner which is
intended by the general partner to optimize future profit potential, and
* with limited liability, invest a fraction of what is typically required
by a trading advisor.
The individual general partner has experience managing several other commodity
pools and has over twenty-seven years of experience in selecting commodity
trading advisors to manage individual investor accounts and describing to
investors how managed futures accounts work.
We expect this experience to benefit us in the quality of trading advisors
selected and in the explanation to prospective investors of our operation and
the attendant risks of investment.
Investment Diversification
If you are not prepared to spend substantial time trading various commodity
contracts or options, you may participate in these markets through a $25,000
investment in the partnership, thereby obtaining diversification from other
investments you may have in stocks, bonds and real estate.
Limited Liability
You will not be subject to margin calls and cannot lose more than your
original investment amount plus your share of distributed and undistributed
profits; provided the below legal conditions are met.
In the opinion of our legal counsel, The Scott Law Firm, Ltd., there are no
circumstances, including bankruptcy of this partnership, which will subject
your personal assets that were never invested or paid from this partnership to
our debts; provided the partnership's structure is maintained by the general
partner, and you do not participate in any phase of our management other than
the exercise of your right to vote as a limited partner. See the Limited
Partnership Agreement (Exhibit A).
Administrative Convenience
We are structured to provide you with services that alleviate the
administrative details involved in trading commodities contracts directly,
including providing monthly and annual financial reports showing, among other
things, the value of each unit of partnership interest, trading profits or
losses, and expenses. We also prepare all tax information relating to your
investment in this partnership.
Access to the Commodity Trading Advisors
The commodity trading advisor selected by the general partner requires a
minimum account size substantially greater than the $25,000 minimum investment
required by us. For instance, Clarke currently requires a minimum investment
of $250,000 to open an account, depending on the investment program.
Accordingly, you have access to the trading advisor for a smaller investment
than is available by a direct investment in a managed account with the trading
advisor.
Use of Proceeds
The partnership has paid for the offering and organizational expenses. There
is no redemption charge and you must retain your full initial investment in
the partnership for at least twelve months.
After the subscriptions are deposited in good funds to the partnership bank
account and you are accepted as a limited partner, the general partner will
transfer the money you paid to the partnership accounts at the bank, U.S.
Treasury, cash management fund, any foreign department of treasury, and
futures commission merchant, and may allocate additional trading equity to the
commodity trading advisor. Such assets at the futures commission merchant are
maintained in the form of cash or U.S. Treasury bills in segregated accounts
with the futures brokers pursuant to the Commodity Exchange Act and
regulations thereunder.
At the end of each month, the fixed brokerage commissions are paid by the
partnership. At the end of each quarter, the incentive fees, if any are due,
are paid to the trading advisor. See Charges to the Partnership.
The general partner has sole authority to determine the percentage of our
assets that will be held on deposit with the futures commission merchant, used
for other investments, and held in bank accounts to pay current obligations.
It also reserves the right to invest in a cash management fund that invests in
U.S. Treasury-guaranteed obligations; specifically, the Wells Fargo 100%
Treasury Money Market Fund managed by Wells Fargo Advisors Funds Management,
LLC, One North Jefferson Avenue, St. Louis, MO 63103. Funds maintained with
the Department of Treasury and any cash management funds are in the name of
the partnership and not commingled with those of any other entity.
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<page>
As of December 31, 2011, the partnership maintained approximately 70% of its
assets in a Treasury Direct Account maintained with the United States
Department of the Treasury, and 12% in segregation with the futures commission
merchant for margin for trading by the trading advisor, 18% at Wells Fargo,
and less than 1% of in our bank accounts to pay expenses and redemptions. The
general partner may change the allocation of partnership assets among these
accounts at any time, without prior notice to you.
All entities that will hold or trade our assets will be based in the United
States and will be subject to United States regulations.
The general partner believes that 20% to 40% of our assets will normally be
committed as margin for commodity futures contracts. However, from time to
time, the percentage of assets committed as margin may be substantially more,
or less, than such range. All interest income is used for the partnership's
benefit. To estimate interest income earned upon our deposits, the general
partner has assumed that we will receive 0.15% interest on our deposits.
The futures commission merchant, a government agency or commodity exchange
could increase margins applicable to us to hold trading positions or reduce
the number of contracts in a particular market that we are permitted to hold.
This could force us to liquidate positions in a market at a loss that would
not have occurred had we been permitted to hold the positions as the advisor
intended.
Determination of the Offering Price
Currently, we are offering partnership interests at their net unit value, or
the price per unit equal to our net assets divided by the number of
outstanding units of partnership interests. This amount is calculated after
the close of business on the last business day of the month in which the
general partner accepts a duly executed subscription agreement and
subscription amount from you. You are admitted as a partner on the open of
business on the first day of business of the following month.
The General Partner
Identification
Two general partners, Ashley Capital Management, Inc. and Mr. Michael P.
Pacult, manage us. See Management's Discussion and Analysis of Financial
Condition, The General Partners.
Current audited financials for Ashley are included in this prospectus. Also,
see Experts.
You will not acquire or otherwise have any interest in Ashley, the corporate
general partner, or any entity other than Atlas, by purchasing the partnership
interests offered by the prospectus.
Michael P. Pacult
Mr. Pacult, age 67, is one of the general partners, and the sole shareholder,
director, principal, and officer of the corporate general partner. He grew up
in Detroit, MI and went to high school at Howe Military School in Howe, IN.
In 1969 he received a B.A. Degree from the University of California, Berkeley,
where he majored in English and in Zoology.
Mr. Pacult worked as a commodities broker for Heinold Commodities Inc. from
May, 1980 until December, 1983. Heinold was an FCM and became registered with
the CFTC as such on June 30, 1982. On July 1, 1982, it became registered with
the CFTC as a CPO as well as an NFA member. On December 31, 1988, Heinold
withdrew its registrations and NFA membership. In December, 1983, Mr. Pacult
and his wife, Shira Del Pacult, as 50% owners, established Futures Investment
Company, an Illinois corporation, to sell futures investments managed by
independent commodity trading advisors to retail clients. From inception to
present, Mr. Pacult has been a Director and President of Futures Investment
Company. In addition to his positions at Future Investment Company and as
individual general partner and sole principal of the corporate general partner
of the partnership, Mr. Pacult's business background for the past five years
is as follows:
<table>
<s> <c> <c> <c> <c> <c>
Employed Registered As Registered As Employer Name & Address Position Held and Type of Business
From To Principal Associated Person
1983 Present 02/3/87 2/3/87 Futures Investment Company, 5914 N. President, Director and 50% Owner of Broker-
300 West, Fremont, IN 46737 Dealer/Introducing Broker
9/03 Present 09/10/03 1/07/04 Ashley Capital Management, Inc., President, Director and Owner of Commodity
5914 N. 300 West, Fremont, IN 46737 Pool Operator*
8/03 Present 08/21/03 8/21/03 Belmont Capital Management, Inc., President, Director and Owner of Commodity
5914 N. 300 West, Fremont, IN 46737 Pool Operator
04/03 6/10 05/14/03 to 5/14/03 to White Oak Financial Services, Inc., President, Director and Owner of Commodity Pool
6/27/10 6/27/10 5914 N. 300 West, Fremont, IN 46737 Operator*
10/04 Present 06/10/05 7/5/05 TriView Capital Management, Inc., President, Director and Owner of Commodity
5914 N. 300 West, Fremont, IN 46737 Pool Operator*
05/05 Present 05/16/05 6/1/05 Evergreen Capital Management, Inc., President, Director and Owner of Commodity
5914 N. 300 West, Fremont, IN 46737 Pool Operator
05/99 Present N/A N/A Tree King, Inc., 5914 N. 300 West, President of Landscaping Business
Fremont, IN 46737
</table>
22
<page>
* On August 4, 2011, Ashley and TriView withdrew their registration as
commodity trading advisors, because they never conducted any business in this
capacity. White Oak was also a registered commodity trading advisor; however
it did not conduct any business in this capacity.
His duties as a Director and Officer of the above named corporations, as a
general partner of those partnerships, and as a managing member of those
limited liability companies are to make all of the decisions and supervise all
of the actions they take.
In 1995, Mr. and Mrs. Pacult were featured in a book titled Master Brokers-
Interviews with Top Futures Brokers by John Walsh that was published by the
Center for Futures Education.
Mr. Pacult also manages two other public and one private commodity pools.
Though he provides less than his full time to the business affairs of this
partnership, he devotes what time he believes is necessary to properly handle
his responsibilities as a general partner and as the principal of the
corporate general partner. See Management's Discussion and Analysis of
Financial Condition, The General Partners.
Ownership in Commodity Trading Advisors and Futures Commission Merchant
Neither the individual general partner, nor any of his affiliates, has any
ownership in the commodity trading advisor, or the futures commission
merchant.
Ownership in the Partnership
As of December 31, 2011, the individual and corporate general partners had no
investment in the partnership. Neither the trading advisor nor any of its
principals has any interest in the partnership.
Trading By the General Partner; Interest in the Pool
The corporate and individual general partners, may, from time to time, trade
commodity interests for their own accounts. The records of any such trading
activities will not be made available to you. Neither general partner will
knowingly take positions ahead of identical positions taken by this
partnership. Currently, neither the individual nor corporate general partner
maintains an interest in the partnership.
Regulatory Notice
The regulations of the Commodity Futures Trading Commission and the National
Futures Association prohibit any representation by a person registered with
the Commodity Futures Trading Commission or by any member of the National
Futures Association, respectively, that such registration or membership in any
respect indicates that the Commodity Futures Trading Commission or the
National Futures Association, as the case may be, has approved or endorsed
such person or such person's trading programs or objectives. The
registrations and memberships described in this prospectus must not be
considered as constituting any such approval or endorsement. Likewise, no
commodity or securities exchange, nor the Securities and Exchange Commission,
nor any other regulatory agency has given or will give any such approval or
endorsement.
Trading Management
No Affiliation with Commodity Trading Advisor
The trading advisor is not affiliated with either general partner.
Additionally, the general partner will not serve as a trading advisor or
select any other trading advisors to trade that are affiliated with either
general partner. However, in its capacity as commodity pool operator, the
general partner may consult with the trading advisor with regard to money
management and trading strategy issues.
Rights of the General Partner With Respect To Commodity Trading Advisor
Selection and Allocation of Equity
The general partner believes that a trading advisor should be retained on a
medium to long-term basis and should be allowed to implement fully its trading
strategy. However, the general partner may, in its sole discretion and
without prior notice to you terminate the current or any future trading
advisor, select additional trading advisors, or change the allocation of
equity to any trading advisor.
23
<page>
Should any change in advisors be made, you will be notified within seven
business days. The notice will also remind you of your right to request a
redemption of your partnership interest pursuant to our redemption procedures.
The general partner periodically reviews our performance to determine if a
current trading advisor should be changed or if others should be added. In
doing so, the general partner may use computer generated correlation analysis
or other types of automated review procedures to evaluate trading advisors.
If a trading advisor is replaced, the new trading advisor will receive
incentive fees independent of the previous trading advisor's performance.
If the general partner engages more than one trading advisor, we may pay an
incentive fee to one trading advisor which is trading profitably while the
other trading advisor produces losses which cause us to be unprofitable
overall. Because trading advisors trade independently, they may compete for
similar positions or take positions opposite each other, which may limit our
profitability.
Performance Record of the Partnership
The following capsule shows our past performance for the period from the year
2006 through December 31, 2011.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
Atlas Futures Fund, Limited Partnership
Percentage Rate of Return
(Computed on a compounded monthly basis)*
Month 2011 2010 2009 2008 2007 2006
January (7.49) (3.70) (3.00) (8.64) 5.92 1.76
February 0.32 (3.99) 0.77 25.18 (2.97) (9.11)
March (6.33) (1.11) (5.14) (2.99) (1.58) (3.37)
April 5.54 (1.57) 0.27 16.07 0.70 13.26
May 1.27 (0.61) 2.73 (2.10) (2.15) 1.40
June (5.62) (1.12) (5.73) 7.24 4.92 (4.51)
July (0.34) 1.37 (0.34) (8.17) (3.51) (6.56)
August (7.28) 0.43 (8.44) 4.49 (5.66) 1.46
September 7.94 11.19 (0.23) (5.77) 14.88 9.05
October (14.64) 3.73 (4.13) 7.29 3.63 0.28
November 0.93 (3.49) 0.99 2.57 6.90 (0.81)
December 1.01 3.37 (5.18) (3.76) (1.24) 3.13
Year (23.88) 3.61 (24.46) 29.46 19.65 3.94
Name of Pool: Atlas Futures Fund, LP
How Offered: Publicly offered pursuant to Form S-1 Registration Statement
Name of Commodity Trading Advisor: Clarke Capital Management, Inc.
Principal Protected: No
Date of Inception of trading: October, 1999
Aggregate Subscriptions: $14,213,748
Net Asset Value of the pool: $5,273,657 on total units outstanding: 1,637.80
Net Asset Value Per Unit: $3,219.96
Largest Monthly Draw-Down**: 10-11 / 14.64%
Worst Peak-to-Valley Draw-Down***: 7-08 to 10-11 / 44.05%
* Rate of Return
is computed by dividing net performance by beginning net asset value for the
period. For those months when additions or withdrawals exceed ten percent of
beginning net assets, the Time-Weighting of Additions and Withdrawals method
is used to compute rates of return.
** "Draw-down" is defined by applicable CFTC regulations to mean losses
experienced by a pool or program over a specified period.
*** Worst Peak-to-Valley Draw-Down means the greatest cumulative percentage
decline in month-end net asset value due to losses sustained by a pool,
account or trading program during any period in which the initial month-end
net asset value is not equaled or exceeded by a subsequent month-end net asset
value.
24
<page>
The Commodity Trading Advisor
Clarke Capital Management, Inc.
The general partner has engaged Clarke Capital Management, Inc. ("CCM") to
trade for the partnership, and has assigned to it approximately 99% of the
partnership's equity, after retention of approximately a 1% cash reserve. The
general partner, in its sole discretion, may adjust the allocation of equity
allocated any time in the future.
Clarke Capital Management, Inc., ("CCM") is an Illinois corporation and
registered with the Commodity Futures Trading Commission and the National
Futures Association as a Commodity Trading Advisor on October 25, 1993. CCM's
principals are Chad Butler, John O'Brien, Michael Clarke, James Andersen,
David Wesolowicz and O'Brien International LLC (OIL). Effective December 31,
2009, CCM's sole owner is OIL. OIL's status as a principal of Clarke Capital
was approved by the NFA on January 24, 2011. However, both OIL and John
O'Brien are solely passive owners and exercise no control over the day-to-day
management of CCM or any trading authority on behalf of CCM. Chad Butler is
the President and Michael J. Clarke is the Chief Executive Officer of CCM and
they are responsible for the day-to-day management of CCM and trading on
behalf of CCM. CCM and all of its principals are members of the National
Futures Association.CCM maintains its main business office and main business
telephone at: 750 Pasquinelli Drive, Suite 220, Westmont, IL 60559, (630) 323-
7033. The books and records of CCM will be kept and made available for
inspection at its main business office.
Business Background
The business background of CCM and its principals for at least five (5) years
is as follows:
Chad Butler is President of Clarke Capital. He has extensive experience in
multiple areas of the futures industry that include sales and marketing,
application and trading model development, and trading operation management.
From November 1999 to March 2003, Mr. Butler was registered as an AP with
Peregrine Financial Group, Inc. ("PFGBest"), a registered FCM. During this
time, Mr. Butler had several different responsibilities including retail
broker, equity raiser for managed futures, and Internet marketing. He also was
a member of the firm's IT committee. From April 2003 to September 2003, Mr.
Butler was registered as an AP of Man Financial Inc. (now MF Global Inc.), a
registered FCM, where he managed a group of brokers. From September 2003 to
December 2004, Mr. Butler was employed as General Manager of and was NFA
registered with KwikTrading LLC ("KwikTrading"), a registered IB. His
responsibilities included managing sales, marketing, and daily operations. His
AP registration with KwikTrading was withdrawn in January 2005. From January
2005 to September 2007, Mr. Butler was employed by R.J.O'Brien Associates LLC
("RJ O'Brien"), a registered FCM, as Sales and Marketing Manager of
RJOFutures. From January 2005 through August 2010, he was registered as an AP
of RJ O'Brien. From September 2007 to April 2010, he was employed by County
Cork, LLC, a registered CTA. During this time, he was responsible for trading
operations and model development, and preparing the launch of the O'Brien
Agricultural Fund, a privately offered commodity pool. Mr. Butler was listed
as a Principal of TradeVantage LLC, a registered CTA, from August 2009 through
March 2010, where he occasionally authored market commentary for the firm's
newsletter, as well as represented his equity ownership on the board of
directors. He has been employed at CCM since April, 2010 and was registered as
an AP and was approved as a Principal of Clark Capital on September 17, 2010.
Michael Clarke is chief executive officer of CCM, and has been a registered
principal and associated person of CCM since October 25, 1993. Mr. Clarke's
employment history is the following: The period 2/83 through 2/85 was spent as
an independent contractor trading equities and options for Rice, Naegele &
Associates of Chicago, a firm involved in private speculation. From 2/85
through 3/89, Mr. Clarke as an independent contractor traded equities and
options in a firm account of Shatkin Investment Corp., then a clearing member
of the Chicago Board Options Exchange. From 3/89 to 11/89, Mr. Clarke as an
independent contractor traded equities and options in a firm account of
French-American Securities, a private investment company based in Chicago.
From 11/89 to December 9, 1993, Mr. Clarke was self-employed, developing
methods to trade futures and other commodity interests and trading various
personal accounts. As of April 8, 2011, Mr. Clarke has been employed as a
branch office manager of Clarke Capital Management, Inc.
James Andersen is currently Vice President of CCM with the primary
responsibility for its operations. Mr. Andersen has been an associated person
of CCM since August 25, 2003 and has been a registered principal since January
24, 2007. Mr. Andersen has had an extensive career in commodities and options
beginning in the early 1990's. From November 1991 to January 2001, Mr.
Andersen was employed by Nesbitt-Burns bank, more specifically, a Chicago-
based branch group of options market makers on the CBOT floor. Mr. Andersen
performed various clerical-type duties in addition to being an options market
maker during this period. His experience includes the development of
specialized option market-maker software, back-office procedures, and was
involved in futures organizational operations for the firm. From January 2001
to October 2002, Mr. Andersen traded bond futures and options (for his own
account) on his own behalf. From October 2002 to present, he has been employed
by CCM as Director of Operations before being named VP. He also has extensive
prior experience in sales and fund raising. Mr. Andersen holds a Series III
Commodities Broker's license and has served on the Board of Directors of C-
Line Products, Inc. (a polyurethane manufacture) since 1999.
25
<page>
David G. Wesolowicz has served as Chief Financial Officer and Chief Compliance
Officer for CCM since August, 2004. Mr. Wesolowicz has been an associated
person of CCM since September 3, 2004 and a registered principal since January
24, 2007. He graduated cum laude from Michigan State University in August,
1976 with a bachelor's degree in Accounting and became a Certified Public
Accountant in November, 1976. He was employed as a CPA from September, 1976 to
April, 1981 for Coopers & Lybrand (n/k/a PriceWaterhouseCoopers) and Beatrice
Foods. From April, 1981 to January, 1990, he traded both options and futures
for his own account as a member of the Chicago Board Options Exchange and the
Chicago Board of Trade and was a member of several exchange committees. From
January, 1990 to May, 1990, Mr. Wesolowicz was involved in self-directed
research of financial markets. From May, 1990 to August, 2004, Mr. Wesolowicz
was president of DDJ Brokerage Corporation Inc. D/B/A Essex Trading Group,
Ltd. and its affiliate, Essex Trading Company, Ltd., a leader in the research
and development of trading systems and techniques. Essex Trading Company,
Ltd. was a registered commodity trading advisor from October 8, 2005 to
December 3, 2003 and Mr. Wesolowicz was an associated person and listed
principal of it from June 12, 1990 to December 3, 2003. DDJ Brokerage
Corporation was a registered commodity trading advisor from November 25, 1992
until February 20, 2004 and registered as an introducing broker from November
7, 1989 to December 30, 1992 and from April 19, 1996 to February 7, 1999. Mr.
Wesolowicz was an associated person and listed principal of DDJ Brokerage
Corporation from June 1, 1990 until February 20, 2004.
Clarke Capital Management, Inc. was incorporated in September 1993 for the
purpose of acting as a commodity trading advisor. It became a member of the
National Futures Association and was registered as a commodity trading advisor
with the Commodity Futures Trading Commission on October 25, 1993. It became
registered as a commodity pool operator on October 4, 2004, and subsequently
withdrew its registration as such on October 24, 2007.
There have never been any administrative, civil, or criminal proceedings
against Clarke Capital Management, Inc. or any of its principals.
Any one or any combination of the four principals may direct the trades CCM
enters on behalf of the partnership.
Description of Trading Program
The exact nature of CCM's trading strategy is proprietary and confidential.
The following description is of necessity general and is not intended to be
all-inclusive.
Although the programs offered by CCM differ in certain respects, they share a
number of common elements. Under all programs, CCM's trading strategy is
strictly technical in nature; i.e., the programs are based upon computer
generated analysis of price movements and patterns and are not based on
analysis of fundamentals such as supply and demand, general economic factors,
or world events. CCM has conducted analysis of these price patterns to
determine procedures for initiating and liquidating positions in the markets
in which it trades.
The general trading strategy of all of CCM's programs is trend following.
Most, but not all, trade initiations and liquidations are in the direction of
the trend. CCM employs techniques that utilize a number of trading models
acting independently. Each model generates its own entry and exit signals and
trades both sides of the market (long and short). With minor differences only
for long or short positions, a particular model trades all markets with the
same rules and parameters, regardless of the program.
A specially designed CCM program trades the Atlas account. CCM reserves the
right to change the program used to trade the partnership account and to make
adjustments in the exact entry or exit price a model uses for the Atlas
program in order to attempt to reduce the impact of slippage from large block
orders being executed at the same price. The models used in the Atlas program
are implemented through the use of computer analysis and vary from
intermediate through long-term to very long-term in time-frame focus and
testing has been done in order to select only those models that have good
performance characteristics across a wide range of conditions and
complementary performance with all other models in a program. None of the
models has been custom tailored to any individual market or group of markets.
The principals of CCM and members of the CCM's staff under their direct
supervision, direct the trading of the partnership pursuant to the advisory
agreement attached to this prospectus as an exhibit and the standard power of
attorney to grant trading authority to the advisor provided by the futures
commission merchant.
CCM, its principal and affiliates, have no present or future expectation of a
beneficial interest in the pool or its corporate general partner but look
solely to its incentive fee for compensation for its services.
A PURCHASE IN ATLAS DOES NOT INCLUDE A PURCHASE OF CLARKE OR ITS PROGRAMS.
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Performance Record of Other Programs Sponsored By the General Partner
Within the last ten years, the individual general partner of the partnership,
Michael Pacult, has managed four other commodity pools, one of which,
Strategic Opportunities Fund, LLC, is privately offered and commenced business
in July, 2005. Mr. Pacult is the sole principal of Evergreen Capital
Management, Inc., the corporate general partner of Strategic Opportunities
Fund, LLC. The other three pools are publicly offered: Bromwell Financial
Fund, LP, Providence Select Fund, LP and TriView Global Fund, LLC. Bromwell
previously commenced trading but has temporarily ceased operations.
Providence commenced business on March 5, 2007 and was closed as of January,
2010 because it was not profitable. TriView commenced business as of July 7,
2011. The partnership's corporate general partner has not managed any other
commodity pools. As of August, 2003, Mr. Pacult became an individual general
partner and sole principal of the corporate general partner of Bromwell, but
is no longer an individual general partner of Bromwell. Mr. Pacult has been
the individual managing member and principal of the corporate managing member
of TriView since inception. He was also the individual general partner and
principal of the corporate general partner of Providence from inception to
close. As of November 30, 2011, (1) the total amount of money raised for
Bromwell was $2,525,062 and the total number of investors was one and, (2) the
total amount of money raised for Providence was $4,053,883 and the total
number of investors was none, and (3) the total amount of money raised for
TriView was $2,155,371 and the total number of investors was 43. In November,
2003, the two trading advisors for Bromwell were replaced because they were
unprofitable. As of January 12, 2005, the new trading advisor, Fall River
Capital, LLC had not been profitable and the general partner of Bromwell
suspended the offering and trading, and caused substantially all of the
partners to redeem their accounts in Bromwell. Bromwell is currently
undergoing reorganization with new terms and a new commodity trading advisor.
The Futures Commission Merchant
Since February 10, 2011, the partnership has exclusively employed Vision
Financial Markets LLC, an unaffiliated futures commission merchant to hold,
supervise and control the equity that is used for margin for trading by the
commodity trading advisor. As required by law, the general partner will
provide notice to you within 21 days of any change in futures commission
merchant. At its sole discretion, the general partner may change the
allocation of trade execution and equity held on deposit with either futures
commission merchant at any time.
Vision Financial Markets LLC
Vision, a Delaware limited liability company, is registered with the Commodity
Futures Trading Commission as a futures commission merchant and is a member of
the National Futures Association. Vision is also a clearing member of the
Chicago Mercantile Exchange, New York Mercantile Exchange and Chicago Board
of Trade. Vision is also a self-clearing securities broker/dealer registered
with the Securities and Exchange Commission and holds memberships with the
Chicago Board Options Exchange and the International Securities Exchange.
Vision is a member of the Options Clearing Corporation, the Depository Trust
Clearing Corporation, Financial Industry Regulatory Authority and Securities
Investor Protection Corporation. Vision maintains its principal place of
business at One Whitehall Street, 15th Floor, New York, New York 10004,
telephone (212) 859-0200.
There have been no administrative or criminal actions, whether pending or
concluded, against Vision or any of its individual principals during the past
five years which would be considered "material" as that term is defined in
Section 4.24(l)(2) of the Regulations of the Commodity Futures Trading
Commission, except as follows.
On May 18, 2011, simultaneously with the issuance of a complaint by the NFA,
Vision Financial Markets LLC ("Vision") consented to a finding based on a one-
count complaint for failure to supervise guaranteed IBs in violation of NFA
Compliance Rule 2-9(a). The alleged activities occurred prior to 2009.
Without admitting or denying the findings in the Committee's Decision, Vision
consented to pay a fine of $500,000 and to retain an independent consultant to
review its supervisory procedures relating to guaranteed IBs. Vision
undertook to implement revised procedures for supervising GIBs within 6
months. Finally, Vision consented to a restriction on guaranteeing new
introducing brokers until 2013, unless it petitions the NFA to lift the
restriction earlier.
The futures commission merchants act only as clearing brokers for the
partnership and, as such, are paid commissions for executing and clearing
trades. They have not passed upon the adequacy or accuracy of this
prospectus. The futures commission merchants will not act in any supervisory
capacity with respect to the general partner nor participate in the management
of the general partner or the partnership. Therefore, prospective investors
should not rely on the futures commission merchants' agreements to clear
trades for the partnership or for any other reason related to it in deciding
whether or not to purchase interests in the partnership.
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The partnership is not aware of any threatened or potential claims or legal
proceedings to which the partnership is a party or to which any of its assets
are subject. The partnership has no involvement in the claims against the
futures commission merchant described above. The futures commission merchant
has assured the partnership that none of the above events will interfere with
its ability to perform its duties on behalf of the partnership.
The Introducing Brokers
The partnership trading accounts were introduced to Vision Financial Services
LLC as futures commission merchant by the affiliated introducing broker,
Futures Investment Company, 5914 N. 300 West, Fremont, IN 46737, (260) 833-
1306. Futures Investment Company is a registered introducing broker under the
Commodity Exchange Act, as amended, and is a member of the National Futures
Association in such capacity. It shares 7% of the 11% in the brokerage
commission paid by the partnership to the corporate general partner.
Federal Income Tax Aspects
Scope of Tax Presentation
This presentation is based on:
* the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder which were in effect on the date of this
prospectus, and
* the express intent of the general partner to:
* operate the partnership as authorized and limited by the limited
partnership agreement, and
* cause us to invest only our equity capital and not to borrow money to
operate the partnership , and
* the belief by the general partner that no less than ninety percent of
the income generated by us will be from interest income and the trade of
commodities.
Any change in the Internal Revenue Code or deviation from the above intentions
of operation could alter this presentation and also have adverse tax
consequences on this partnership and you. For instance, if we were taxed as a
corporation, we would pay tax and you would have to pay a second tax. In
addition, if we were taxed as a corporation, none of the deductions for
expenses would pass through to your tax return.
Any adjustment made to our return by our auditors or the IRS will flow through
to your return and could result in a separate audit of your individual return.
If we or you are audited by the IRS, significant factual questions may arise
which, if challenged by the IRS, might only be resolved at considerable legal
and accounting expense. We will report our income for tax and book purposes
under the accrual method of accounting and our tax year will be the calendar
year. During taxable years in which little or no profit is generated from
trading activities, you may still have interest income which will be taxed to
you as ordinary income.
Subject to the above scope of presentation and assumption, following is the
opinion of The Scott Law Firm, Ltd. that summarizes the material Federal
income tax consequences to individual investors in the partnership.
This discussion assumes you are an individual and is not intended as a
substitute for careful planning; particularly, since the income tax
consequences of an investment in the partnership will not be the same for all
taxpayers. Accordingly, you are urged to consult your tax advisors with
specific reference to your tax situation.
No Legal Opinion as To Certain Material Tax Aspects
We will not request a legal opinion in regard to any State income tax issue.
In addition, our tax counsel cannot opine upon any Federal income tax issue
that involves a determination by the IRS of the facts related to our
operation, or any other matter that may be subject to IRS interpretation or
adjustment upon audit.
For an example of an item that could be subject to determination by the IRS,
the Code provides that, for non-corporate taxpayers who itemize deductions
when computing taxable income, expenses of producing income, including
investment advisory fees, are to be aggregated with unreimbursed employee
business expenses and other expenses of producing income (collectively, the
"Aggregate Investment Expenses"), and the aggregate amount of such expenses
will be deductible only to the extent such amount exceeds 2% of a taxpayer's
adjusted gross income. In addition, for taxpayers whose adjusted gross income
exceeds a certain threshold amount (the "AGI Threshold"), Aggregate Investment
Expenses in excess of the 2% threshold, when combined with certain of a
taxpayer's other miscellaneous deductions, are subject to a reduction
(scheduled to be phased out between 2006 and 2010) equal to the lesser of 3%
of the taxpayer's adjusted gross income in excess of the AGI Threshold and 80%
of the amount of certain itemized deductions otherwise allowable for the
taxable year (the "Phase-out"). Moreover, such Aggregate Investment Expenses
are miscellaneous itemized deductions which are not deductible by a non-
corporate taxpayer in calculating its alternative minimum tax liability. The
IRS could contend that some or all of the management fees and incentive fees,
as well as other ordinary expenses of the partnership, constitute "investment
advisory fees." If this contention were sustained, each non-corporate limited
partner's pro rata share of the amounts characterized would be deductible only
to the extent that such limited partner's Aggregate Investment Expenses exceed
2% of such limited partner's adjusted gross income and, when combined with
certain other itemized deductions, exceed the Phase-out.
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PROSPECTIVE INVESTORS MUST CONSULT THEIR OWN TAX ADVISERS CONCERNING THE
FOREGOING "INVESTMENT ADVISORY FEES" ISSUE, WHICH IS A MATTER OF UNCERTAINTY
AND COULD HAVE A MATERIAL IMPACT ON AN INVESTMENT IN THE FUND.
Partnership Tax Status
The Internal Revenue Code, at Section 7701, provides the criteria used to
identify a corporation which cannot be present if a partnership is to be taxed
as a partnership. A partnership must have two or more of the following: (i)
decentralized management, (ii) unlimited liability, (iii) limited
transferability of shares, and (iv) limited continuation of existence. The
limited partnership agreement obligates the general partner to operate the
partnership in a manner which meets this test.
If we were taxed as a corporation, we would pay taxes at the corporate rates
upon our income and gains, items of deduction and losses would be deductible
only by us and not by you, tax credits would be available only to us and not
to you, and all or a part of any distributions we make to you could be taxable
as dividend income and would not be deductible by us in computing our taxable
income. This would substantially increase the total amount of taxes paid on
your investment income and potentially limit your expense deductions.
Historically, the right of redemption, similar to your right to redeem your
partnership interests, renders a pool, such as ours, to be deemed a publicly
traded partnership, taxed as a corporation. However, the Revenue Act of 1987
provides an exception. The exception requires 90% or more of our gross income
to be derived from interest and the trade of commodities. Provided the
principal activity of the partnership is buying and selling commodities,
income may include interest, dividends, and income from the trade or holding
of futures or options on futures. The general partner intends to limit the
principal business activity and sources of income so that this exception will
apply to us. In addition, the general partner has placed restrictions upon
the right of redemption. See The Limited Partnership Agreement, Redemptions
and Exhibit A, Right of Redemption.
No IRS Ruling
We have not applied for a ruling from the Internal Revenue Service regarding
our status as a partnership or with regard to any other tax aspect, nor do we
intend to seek a ruling. In the absence of a ruling, there can be no
assurance that the IRS will not attempt to take a position adverse to the
partnership and the opinions expressed in this prospectus.
Tax Opinion
Subject to the assumption that you are an individual United States resident
taxpayer, in the opinion of The Scott Law Firm, Ltd., this prospectus
accurately summarizes all material Federal tax matters and consequences or
identifies those matters that cannot presently be determined. Particularly,
(i) we will be treated as a partnership for Federal income tax purposes; (ii)
the allocations of profits and losses made when partners redeem their
partnership interests should be upheld for Federal income tax purposes; (iii)
based upon our contemplated trading activities, the IRS should consider us as
conducting a trade or business; and, as a result, the ordinary and necessary
business expenses we incur while conducting our commodity futures trading
business should not be subject to limitation under Section 67 or Section 68 of
the Internal Revenue Code; (iv) the profit share should be respected as a
distributive share of our equity income allocable to Atlas Futures Fund,
Limited Partnership; and (v) the contracts we trade, as described in this
prospectus, should satisfy the commodities trading safe harbor as described in
section 864(b) of the Internal Revenue Code.
Such opinion is based on the Internal Revenue Code as of the date of this
Prospectus and a review of the Limited Partnership Agreement, and is
conditioned upon the following representations of facts by the general
partner:
* at all times, we will be operated in accordance with the Delaware
Uniform Limited Partnership Act and the Limited Partnership Agreement attached
hereto as Exhibit A
* for our first two years of operation, the aggregate deductions claimed
by the partners as their distributive shares of our net losses will not exceed
the equity capital invested in the partnership
* no creditor who makes us a loan, including margin accounts, will have or
acquire, as a result of making the loan, any direct or indirect interest in
our capital, profits or property, other than as a secured creditor
* the general partner will at all times actively direct the affairs of the
Partnership
* interests in the partnership:
* will be transferable or redeemed only upon approval of the general
partner
* will not be traded on an established securities market, and
* will not be readily tradable on a secondary market or the substantial
equivalent thereof
* we will not be registered under the Investment Advisor's Act of 1940;
and
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* over 90% of our earned income will be qualifying income as that term is
defined in the Revenue Act of 1987.
No opinion is expressed in regard to the tax treatment of expenses because
that determination depends upon questions of fact to be resolved by the
general partner on our behalf. In addition, commodity trading advisor fees
are aggregated with employee business expenses and other expenses of producing
income, and the aggregate of such expenses is deductible only to the extent
such amount exceeds 2% of your adjusted gross income. It is the general
partner's position that our intended operations will qualify as a trade or
business. If this position is sustained, the brokerage commissions and
performance fees will be deductible as ordinary and necessary business
expenses. Syndication costs to organize the partnership and offering expenses
are subject to limitations upon deduction imposed by the Internal Revenue
Code.
Any change in the representations of the general partner or the operative
facts will prevent us and you from relying upon the tax opinion from The Scott
Law Firm, Ltd.
Passive Loss and Unrelated Business Income Taxes Rules
In addition to the imposition of a corporate level tax on publicly traded
partnerships, special rules apply to partnerships in regard to the application
of the passive loss and unrelated business income tax rules. In Notice 88-75
issued on June 17, 1988, the IRS provided guidance as to partnership
operation. The general partner intends to cause us to comply with the
applicable provisions of these guidelines. In the event our expenses were
deemed not to qualify as deductions from trading profits, your total taxes
would increase while your distributions would remain the same.
Basis Loss Limitation
Generally, the basis of your interest in the partnership for tax purposes is
equal to the cost decreased, but not below zero, by your share of any
partnership losses and distributions, and increased by your share of any
partnership income. You may not deduct losses in excess of the adjusted basis
for your interest in the partnership at the end of the partnership year in
which such losses occurred. However, you may carry forward any excess to such
time, if ever, as the basis for the interest in the partnership is sufficient
to absorb the loss. Upon the sale or liquidation of your interest in the
partnership, you will recognize a gain or loss for Federal income tax purposes
equal to the difference between the amount you realize in the transaction and
the basis for your interest in the partnership at the time of such sale. For
individuals, capital losses would offset capital gains on a dollar for dollar
basis, with any excess capital losses subject to a $3,000 annual limitation.
Accordingly, it is possible for you to sustain a loss from our operation which
will not be allowed as a deduction for tax purposes or will be limited to a
$3,000 annual limitation.
At-Risk Limitation
If you borrow money to invest in the partnership, there are at risk
limitations that will apply to you. Section 465 of the Internal Revenue Code
provides that the amount of any loss allowable for any year to be included in
your personal tax return is limited to the amount paid for the partnership
interests, or tax basis, of the amount at risk. Losses already claimed may be
subject to recapture if the amount at risk is reduced as a result of cash
distributions from the activity, deduction of losses from the activity,
changes in the status of indebtedness from recourse to non-recourse, the
commencement of a guarantee, or other events that affect your risk of loss.
The at risk provisions must be considered should you elect to arrange debt
financing for purchasing a partnership interest.
Income and Losses from Passive Activities
Internal Revenue Code Section 469 limits the deductibility of what are called
passive losses from business activities in which the taxpayer does not
materially participate. Under temporary Treasury regulations, the trading of
personal property, such as futures contracts, will not be treated as a passive
activity, partnership gains allocable to you will not be available to offset
passive losses from sources outside the partnership, and partnership losses
will not be subject to limitation under the passive loss rules.
Allocation of Profits and Losses
The allocation of profits, losses, deductions and credits contained in the
Limited Partnership Agreement will be recognized for tax purposes only if the
allocations have substantial economic effect. While the general partner
believes that the Limited Partnership Agreement either meets the requirements
or satisfies a substitute capital account equivalency test, the Limited
Partnership Agreement does not meet a third requirement, that a partner must
make a capital contribution to the partnership equal to any deficit in its
capital account. Accordingly, under the regulations and the Limited
Partnership Agreement, losses would not be allocable to you in excess of your
capital contribution plus properly allocated profits less any prior
distributions. The general partner intends to allocate income and losses in
accordance with the Limited Partnership Agreement which it believes complies
with applicable Internal Revenue Code Section 704. However, no assurances can
be given that the IRS will not attempt to change any allocation that is made
among partners admitted on different dates, which could adversely affect the
amount of taxable income to one partner as opposed to another partner.
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Taxation of Futures Transactions
The commodity trading advisor selected to trade for us is expected to trade
primarily, but not exclusively, in Section 1256 Contracts, which is any
regulated futures contract, foreign currency contract, non-equity option, or
dealer equity option. A regulated futures contract is a futures contract:
* if it is traded on or subject to the rules of:
* a national securities exchange which is registered with the Securities
and Exchange Commission,
* a domestic board of trade designated as a contract market by the
Commodity Futures Trading Commission or any other board of trade, exchange or
other market designated by the Secretary of Treasury, and
* which is marked-to-market to determine the amount of margin which must
be deposited or may be withdrawn. Marked-to-market means that the position is
taken in the account on day one at that price. Each day the position is held,
it is valued for account purposes at the price of the contract on the close of
that day.
A foreign currency contract is negotiated between banks and accepted for trade
among banks and private investors. The partnership is expected to purchase
or sell these contracts to speculate on the value of foreign currency as
contrasted with the U. S. dollar. These contracts are exempt from the
Commodity Exchange Act and are excluded from marked-to-market treatment.
A non-equity option means an option which is treated on a qualified board or
exchange and the value of which is not determined directly or indirectly by
reference to any stock, group of stocks, or stock index unless there is in
effect a designation by the Commodity Futures Trading Commission of a contract
market for a contract bond or such group of stocks or stock index.
A dealer equity option means, with respect to an options dealer, only a listed
option which is an equity option, is purchased or granted by such options
dealer in the normal course of his activity of dealing in options, and is
listed on the qualified board or exchange on which such options dealer is
registered.
All Section 1256 contracts will be marked-to-market upon the closing of every
contract, including closing by taking an offsetting position or by making or
taking delivery, by exercise or being exercised, by assignment or being
assigned; or by lapse or otherwise. Also, all open Section 1256 contracts
held by us at our fiscal year-end will be treated as sold for their fair
market value on the last business day of such taxable year. This will result
in all unrealized gains and losses being recognized for Federal income tax
purposes for the taxable year. As a consequence, you may have tax liability
relating to unrealized partnership profits in open positions at year-end.
Sixty percent of any gain or loss from a Section 1256 contract will be treated
as long-term capital gain or loss, and 40% as short-term capital gain or loss,
regardless of the actual holding period of the individual contracts. The
character of a your distributive share of profits or losses of the partnership
from Section 1256 contracts will thus be 60% long-term capital gain or loss
and 40% short-term capital gain or loss. Your distributive share of such gain
or loss for a taxable year will be combined with your other items of capital
gain or loss for such year in computing your Federal income tax liability.
The Internal Revenue Code contains rules designed to eliminate the tax
benefits flowing to high-income taxpayers from the graduated tax rate schedule
and from the personal and dependency exemptions. The effect of these rules is
to tax a portion of a high-income taxpayer's income at a marginal tax rate of
35%. Most long-term capital gains after May 6, 2003 are subject to a maximum
tax rate of 15%. A limited partner, other than a corporation, estate or
trust, may elect to carry-back any net Section 1256 contract losses to each of
the three preceding years. The marked-to-market rules do not apply to
interests in personal property of a nature which are actively traded other
than Section 1256 contracts.
Section 988 Foreign Currency Transactions
A Section 988 transaction is defined as the entering or acquiring of any
forward contract, futures contract, option or similar financial instrument if
the amount to be received or to be paid by reason of a transaction is
denominated in a nonfunctional currency or is determined by reference to one
or more nonfunctional currencies. If the Section 988 transaction results in a
gain or loss, it is considered to be a foreign currency gain or loss to the
extent it does not exceed gain or loss realized by reason of changes in
exchange rates.
Capital Gain and Loss Provisions
If short-term capital gains exceed long-term capital losses, the net capital
gain will be taxed at the same rates as ordinary income. Subject to an annual
limitation of $3,000, you may deduct the excess of capital losses over capital
gains against ordinary income. Excess capital losses which are not used to
reduce ordinary income in a particular taxable year may be carried forward to,
and treated as capital losses incurred in, future years.
Business for Profit
Internal Revenue Code Section 183 sets forth the general rule that no
deduction is allowable to an individual for an activity not engaged in for
profit. These are activities other than those constituting a trade or
business or engaged in for the production or collection of income or for the
management, conservation, or maintenance of property held for the production
of income. The determination of whether an activity is engaged in for profit
is based on all facts and circumstances, and no single factor is
determinative. The general partner believes that by employing independent
commodity trading advisors with strong track records of production of profits,
it is more likely than not, that our activity will be considered an activity
engaged for profit.
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Self-Employment Income and Tax
Section 1402 of the Internal Revenue Code provides that an individual's net
earnings from self-employment shall not include the distributive share of
income or loss from any trade or business carried on by a partnership of which
he is a limited partner. Therefore, you should not consider that the ordinary
income from the partnership constitutes net earnings from self-employment for
purposes of either the Social Security Act or the Internal Revenue Code.
Alternative Minimum Tax
The alternative minimum tax for individuals is imposed on certain high income
persons as a method of collection of tax although income may to sheltered or
otherwise not subject to tax. Alternative minimum taxable income consists of
income deemed taxable without regard to availability of deductions or tax
preferences provided by the tax law. Alternative minimum taxable income may
not be offset by certain deductions, including (in certain circumstances)
interest incurred to purchase or carry interests in partnership such as this
partnership. Taxpayers subject to the alternative minimum tax could be
required to make estimated payments. The extent to which the alternative
minimum tax will be imposed or estimated payments required will depend on the
overall tax situation of each limited partner at the end of each taxable year
and, therefore, this question should be referred to your tax advisor.
Interest Related To Tax Exempt Obligations
Section 265(a)(2) of the Internal Revenue Code will disallow any deduction for
interest on indebtedness of a taxpayer incurred or continued to purchase or
carry obligations the interest on which is wholly exempt from tax. The IRS
announced in Revenue Procedure 72-18 that the proscribed purpose will be
deemed to exist with respect to indebtedness incurred to finance a portfolio
investment. The Revenue Procedure further states that a limited partnership
interest will be regarded as a portfolio investment, unless rebutted by other
evidence. Therefore, if you own tax-exempt obligations, the IRS might take
the position that any interest expense incurred by you to purchase or carry
partnership interests should be viewed as incurred by you to continue carrying
tax exempt obligations, and that you should not be allowed to deduct all or a
portion of the interest on any such loans.
Not a Tax Shelter
In the opinion of tax counsel, we do not constitute a tax shelter, as defined
in Internal Revenue Code Section 6111(c), since the general partner intends to
operate the partnership so that the tax shelter ratio will not exceed two-to-
one at the close of any of the first five years. Accordingly, the general
partner has not registered us as a tax shelter with the IRS.
Taxation of Foreign Partners
An investment in the partnership should not, by itself, cause a foreign
partner to be engaged in a trade or business within the United States. A
foreign person is subject to a 30% withholding tax, unless reduced or exempted
by treaty, on United States source income which is not effectively connected
with the conduct of a United States trade or business. The person having
control over the payment of such income must withhold this tax.
Because we have permitted the trading advisor to trade contracts on foreign
futures exchanges, based on current law it is uncertain whether entering into
foreign transactions may cause us, and therefore any foreign limited partners,
to be treated as engaged in a trade or business within the United States.
However, the Treasury Department has issued proposed regulations which, if
finalized in their current form, would provide that foreign limited partners
should not be deemed to be engaged in a United States trade or business solely
by virtue of an investment as a limited partner in the partnership even if the
partnership enters into foreign exchange trades of currency and derivative
transactions. These regulations are proposed to be effective for taxable years
beginning 30 days after the date final regulations are published in the
Federal Register. We may elect to apply the final regulations retroactively
once they are finalized. The Scott Law Firm, Ltd. has not opined on the
issues related to the withholding by us from distributions to foreign
investors as the determination of how the treat this issue will be resolved at
the end of each taxable year or upon receipt of a redemption request and the
tax opinion is limited to tax consequences to United States residents.
Accordingly, we may be required to withhold tax on items of such income that
are included in the distributive share of a foreign partner, whether or not
the income was actually distributed. If we are required to withhold tax on
such income of a foreign partner, the general partner may pay such tax out of
its own funds and then be reimbursed out of the proceeds of any distribution
to or redemption of partnership interests by the foreign partner.
Partnership Entity-Audit Provisions-Penalties
The Internal Revenue Code provides that the tax treatment of items of
partnership income, gain, loss, deduction and credit will be determined at the
partnership level in a single partnership proceeding. The Limited Partnership
Agreement has appointed Ashley Capital Management, Inc. as the tax matters
partner to settle any issue involving any partner with less than
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a 1% profits interest unless such a partner, upon notice, properly elects not
to give such authority to the tax matters partner. The tax matters partner
may seek judicial review for any adjustment to partnership income, but there
will be only one such action for judicial review to which all partners will be
bound. The Internal Revenue Code provides that a partner must report a
partnership item consistently with its treatment on the partnership return,
unless the partner specifically identifies the inconsistency or can show that
its treatment of the partnership item on its return is consistent with a
schedule furnished to the partner by the partnership. Failure to comply with
this requirement may result in penalties for underpayment of tax and could
result in an extended statute of limitations. The statute of limitations for
adjustment of tax with respect to partnership items will generally be three
years from the date of filing the partnership return.
Internal Revenue Code Section 6662 imposes a penalty for a substantial
understatement of income tax equal to 20% of the amount of any underpayment
attributable to that understatement. Understatement is defined as meaning the
excess of the correct amount of tax required to be shown on the return over
the amount of tax that is actually shown on the return. A substantial
understatement exists for any taxable year if the amount of the understatement
for the taxable year exceeds the greater of 10% of the correct tax or $5,000,
or $10,000, in the case of a corporation other than an S corporation or a
personal holding company.
Employee Benefit, Retirement Plans and IRA's
The Employee Retirement Income Security Act of 1974 governs:
* employee benefit plans, such as:
* a qualified pension, profit-sharing or stock bonus plan, or
* a qualified health and welfare plan; and
* individual retirement accounts, commonly called IRAs.
You may not purchase partnership interests with the assets of a plan if we,
the general partner, the selling agent, the introducing broker, the futures
commission merchant, or any of their affiliates, agents or employees have
investment discretion over such plan, give investment advice with respect to
such plan assets for a fee, or are an employer maintaining or contributing to
such plan.
Before you invest in us through one of these qualified plans, you should
consult your own legal and financial advisors, and the fiduciary of your plan
should take into account the facts and circumstances of your plan, and
consider applicable fiduciary standards under the above act.
Acceptance of subscriptions on behalf of employee benefit plans is not a
representation by the general partner or any other party that this investment
meets all legal requirements or is appropriate with respect to investments by
any particular plan. The person with investment discretion should consult the
attorney for the plan as to the propriety of an investment in this
partnership.
The Limited Partnership Agreement
The partnership agreement was amended and fully restated on December 23, 2003
and is attached to this prospectus as Exhibit A. Following is an explanation
of the material terms of the Limited Partnership Agreement; however, you are
urged to read the entire agreement. See Exhibit A.
Formation of the Partnership
Our Certificate of Limited Partnership is dated and was filed on January 12,
1998 pursuant to the Delaware Uniform Limited Partnership Act.
You are not liable for our losses, debts and obligations beyond your
investment amount and your share of any of our undistributed assets, so long
as you do not take part in the management of the business of the partnership
or transact any business for the partnership other than exercise your right to
vote on partnership matters as a limited partner.
According to the Limited Partnership Agreement, this partnership will not
terminate or dissolve upon any limited partner's death, incompetence,
withdrawal, insolvency, bankruptcy, termination, liquidation, dissolution or
other legal incapacity. Also, legal representatives of such limited partner
may redeem their partnership interests, but will not have the right to
withdraw their interest or become a substituted limited partner solely by
reason of such incapacity.
Units of Partnership Interests
The amount of partnership interests you hold will determine your percentage
interest in our net assets. The value of a single unit will be calculated
from time to time by dividing the net assets of the partnership by the number
of outstanding units of partnership interests. The value of your partnership
interest will be determined by multiplying the number of units of partnership
interests you hold by the value of a single unit. Your percentage interest in
the partnership will also be determined by dividing the number of units you by
the total number of units outstanding.
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Management of Partnership Affairs
Only the general partner may manage this partnership. You will not take part
in our business or affairs nor will you have any voice in our management or
operations other than to vote on partnership matters as a limited partner.
The limited partners who collectively hold a majority of the partnership
interests must give written approval of any material change in either the
Limited Partnership Agreement or the partnership structure; provided, however,
without the limited partners' approval, the general partner is allowed to (i)
change the management and incentive fees within the limits prescribed herein,
(ii) add, change and delete trading advisors, (iii) add, change and delete
introducing brokers, (iv) add, change and delete futures commission merchants,
(v) add, change and delete selling agents, (vi) redeem and return a limited
partner account, (vii) change the commodity contracts traded, or (viii) change
the diversification of our assets among the various types of or in the
positions held in commodity contracts.
To the extent the law permits, such limited partners who hold a majority of
the partnership interests may vote to amend any term in the Limited
Partnership Agreement and, if necessary, the Certificate of Limited
Partnership without the agreement of the general partner. This includes
removing the general partner and electing a new general partner.
In its capacity as commodity pool operator, the general partner may consult
with the trading advisor with regard to money management and trading strategy
issues, but the general partner will not serve as a trading advisor or select
any other trading advisors to trade that are affiliated with either general
partner.
General Prohibitions
We may not borrow from or loan money or any other assets to any person;
provided, however, this shall not apply to the incurrence of an obligation to
a futures commission merchant or debt to a partner or any of their affiliates
with respect to the offering of partnership interests for sale, registration,
or initiation and maintenance of our trading positions.
We may not permit rebates or give-ups to be received by the general partner or
any of its affiliates. Nor may we permit the general partner or any of its
affiliates to engage in reciprocal business arrangements that would circumvent
the foregoing prohibition. However, an affiliate or the general partner may
provide goods or services, including brokerage, at a competitive cost to us.
The general partner or its affiliates are not required to advance or loan
funds to the partnership. If the general partner makes any advance or loan to
the partnership, it will not receive interest in excess of its interest costs,
nor will it receive interest in excess of the amounts which would be charged
the partnership by unrelated banks on comparable loans for the same purpose.
The general partner shall not receive points or other financing charges or
fees regardless of the amount. Currently, no agreement exists for the general
partner to make any loan to the partnership nor does the general partner
expect to enter one; however, you will be notified of such an agreement,
should one be entered.
Additional Offerings
The general partner has sole discretion to end any offering of partnership
interests, register additional partnership interests, and make additional
public or private offerings of partnership interests.
You will not have any preemptive, preferential or other rights with respect to
the issuance or sale of any additional partnership interests. Although we are
offering a maximum of $10,000,000 in partnership interests pursuant to this
offering, we have not limited the amount of capital contributions or the
maximum amount of partnership interests that may be issued, offered or sold
pursuant to other offerings.
Partnership Accounting, Reports, and Distributions
You will have a capital account, and its initial balance will be the amount
you paid for your partnership interests. The net assets of this partnership
will be determined monthly, and any change from the previous month will be
passed on to your account in the ratio that your account bears to all
accounts.
The general partner has sole discretion to make distributions from profits or
net assets. On a monthly basis you will receive a report containing (i) the
net unit value as of the end of both the current and previous month, (ii) the
percentage change in net unit value between the two months, (iii) the amount
of distributions during the month (iv) the aggregate fixed commission in lieu
of round-turn brokerage commissions, other fees, administrative expenses, and
reserves for claims and other extra-ordinary expenses incurred or accrued by
us during the month, and (v) any other information required by the rules of
the Commodity Futures Trading Commission.
The general partner will notify you within seven days of any change in trading
advisor or partnership fee structure, including a notice of your right to
redemption. For all other material changes to the disclosures made in this
document, the general partner will notify you of such change within 21 days.
You or your duly authorized representative may inspect our books and records
and any records related to your account, provided you give adequate notice,
you do so at a reasonable time, and you make copies at your expense.
34
<page>
Income, Loss and Expense Allocations
At the end of each fiscal year, our capital gain or loss and ordinary income
or loss and expenses will be allocated to units held by all partners. You are
responsible for the proper reporting of these items on your personal income
tax return.
Transfer of Partnership Interests Only With Consent of the General Partner
You are admitted to this partnership and are registered on the partnership
records as the owner of the partnership interests you purchase. As a
registered investor in this partnership, you may receive all distributions,
allocations of losses and withdrawals, and reductions of capital
contributions, and vote on any matters submitted to the limited partners for
voting.
You may transfer your partnership interests only with the written consent of
the general partner. The general partner may not approve the transfer if it
(i) is requested before six months from the date of purchase, (ii) is not made
for all of your partnership interests or, if you are not assigning all of your
partnership interests, you will retain more than $5,000 of partnership
interests, (iii) will violate any applicable laws or governmental rules or
regulations, including without limitation, any applicable Federal or state
securities laws, or the Delaware limited partnership laws, (iv) will
jeopardize our ability to be taxed as a partnership and not as a corporation,
or (v) will affect characterizations or treatment of income or loss.
Termination of the Partnership
This partnership will terminate (i) at 11:59 p.m. twenty-one years from the
date of the Certificate of Limited Partnership, (ii) by election of the
general partner, in its sole discretion, to terminate and dissolve this
partnership, (iii) upon the dissolution, death, resignation, withdrawal,
bankruptcy or insolvency of the general partner, unless the partners, by
majority interest, vote to carry on the business and elect a new general
partner, (iv) if it does not pay its annual franchise fee and file its annual
report with the State of Delaware, which will cause it to be dissolved under
Delaware law, (v) upon any event which makes the continued existence of the
partnership unlawful, or (vi) upon the majority vote of the partners.
Meetings
We are not required to hold regular meetings, however, partners may call
meetings to vote on certain issues, including (i) amendment of the limited
partnership agreement; provided, however, any amendment which modifies the
compensation or distributions to the general partner or which affects the
duties of the general partner requires its consent; (ii) removal of the
general partner and election of a new general partner; (iii) cancellation of
any contract for services with the general partner, without penalty, upon 60
days written notice; provided, however, the maximum period of any contract
between the general partner and the partnership is one year; and, provided
further, should any amendment to this partnership agreement attempt to modify
the compensation or distributions to which the general partner is entitled or
which affects the duties of the general partner, such amendment will become
effective only upon the consent of the general partner; (iv) the right to
approve, prior to sale, the sale or distribution, outside the ordinary course
of business, of all or substantially all of the assets of the partnership; (v)
dissolution of the partnership; and (vi) change of any of the partnership's
basic investment policies or in the structure of the partnership. See
Management of Partnership Affairs.
The general partner must receive in person or by certified mail a written
request with a check to cover the cost of sending notice of the meeting to all
partners. One or more partners who collectively own 10% or more of the
outstanding partnership interests must sign the request. The general partner
then has 15 days to call the meeting.
Redemptions
Redemption allows you to receive your share of the net assets of this
partnership. You may not redeem or liquidate any partnership interests until
twelve months after you have been allocated partnerships interests from your
subscription proceeds, though this may be waived at the sole discretion of the
general partner. The general partner must receive a written request for
redemption no less than ten days prior to the desired effective date of
redemption. The effective date of redemption must be the last day of the then
current or a future month.
The general partner will try its best to comply with the redemption request
within twenty days following the effective date. However, you should be aware
that the general partner may be unable to timely comply with the request if
there is not enough cash. This may be because the trading advisor cannot
liquidate the positions it has taken or because there are contingent claims on
partnership assets.
If the general partner notifies you in writing, it may declare additional
redemption dates or cause the partnership to redeem fractions of units of
partnership interests. We will not charge a redemption fee.
Plan for Sale of Partnership Interests
The Selling Agent
We are offering and selling the partnership interests solely through Futures
Investment Company, an Illinois corporation incorporated on December 6, 1983,
the address of which is 5914 N. 300 West, P.O. Box 760, Fremont, Indiana
46737. It was registered as a fully disclosed broker/dealer registered with
the Financial Industry Regulatory Authority on July 24, 1997 and has been
appointed the selling agent. All partnership interests will be sold on a best
efforts basis, which means the selling agent will try, but not guarantee, to
sell the partnership interests.
35
<page>
Currently, Futures Investment Company principally offers securities and
interests in futures. It has and will continue to participate in offerings of
other commodity pools sponsored by the general partner or other persons or
entities in competition with us.
The individual general partner and his spouse own Futures Investment Company.
They are also registered with the National Futures Association as associated
persons and with the Financial Industry Regulatory Authority as registered
representatives of Futures Investment Company.
This offering will be conducted under the terms and conditions of FINRA Rule
2310. Although we are offering a maximum of $10,000,000 in partnership
interests pursuant to this registration statement, the Limited Partnership
Agreement authorizes the general partner to determine the amount of
partnership interests to be sold. If the partnership is to sell any
partnership interests in excess of the $10,000,000, such partnership interests
must also be registered with the Securities and Exchange Commission or sold by
private offering pursuant to applicable exemption from registration.
Accordingly, the partnership may sell an unlimited amount of partnership
interests.
Underwriting Compensation
The only underwriting or other compensation to be paid to the selling agent or
any other FINRA member any underwriting or other compensation from any source
in connection with the offering in terms of offering proceeds, is (i) a 6% up
front selling commission on all gross subscription proceeds pursuant to this
offering, and (2) $2,000 paid by the partnership for legal fees, which are
associated with FINRA's review of this offering submitted to it by the selling
agent. Neither the partnership nor the selling agent will engage in
wholesaling. Due diligence expenses in connection with this offering were
minimal because the selling agent is affiliated with the issuer; however, such
expenses were borne by the issuer upon submission of a detailed invoice by the
selling agent.
FINRA Rule 2310 Offering
The offering of the partnership will be conducted in general compliance with
FINRA Rule 2310. Pursuant to FINRA Rule 2310(b)(2)(C), there will be no
executed transaction in a discretionary account without the prior specific
written approval of the transaction by the customer. Pursuant to the
liquidity track record requirements of FINRA Rule 2310(b)(3)(D), the selling
agent has informed the general partner that it has not offered any prior
investment programs for which the prospectus disclosed a date or time period
when the program might be liquidated.
Depository Account
New partners will be admitted to the partnership on the first business day of
the month following the month in which their subscription documents were
accepted. Until they are admitted to the partnership and assigned partnership
interests, all subscription proceeds and subscription documents will be placed
by the selling agent in a segregated depository account maintained by Star
Financial Bank. No escrow agent will be used.
The interest earned on your subscription during the period it is held in the
depository account will be deposited in our account, and you will receive a
corresponding amount of additional partnership interests at the current month
end net asset value per partnership interest.
If you are investing in the partnership by transferring funds from an account
at a futures commission merchant, your funds may be invested in the
partnership on the admission date without use of the depository account.
Cash from subscriptions held in the depository account will be invested in
short-term investments that meet applicable regulatory requirements until
delivered to the partnership after the close on the last business day of the
month. These investments will be in United States Treasury Bills, bank
savings accounts, or other comparable interest-bearing instruments and
accounts that are expected to be liquid, substantially low risk investments,
with correspondingly low yields.
There cannot be any assurance that any additional partnership interests will
be sold. The general partner is authorized, in its sole discretion, to
terminate this or any future offering of partnership interests.
Subscription Procedure
To purchase partnership interests, you must complete and execute an
acknowledgement of suitability and a subscription agreement (Exhibit D), and
deliver the executed subscription documents and check to the partnership.
You should make out the check to "Atlas Futures Fund, LP". Your check will
then be sent by the selling agent to the bank by noon of the second business
day following its receipt. Under no circumstances should you make payment in
cash, or make any checks payable to the partnership, the general partner or
any of their affiliates or any other party.
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<page>
Subscription Amounts
You must purchase at least $25,000 in partnership interests; however, the
general partner may reduce this to not less than the regulatory minimum of
$5,000. You may make additional investments above $25,000 in $1,000
increments. However, you may not invest more than 10% of your net worth in
the partnership. If you have not provided collectible funds, whether in the
form of a bad check or draft, or otherwise, any partnership interests recorded
on our books in your favor shall be cancelled.
Revocation and Acceptance of Subscription
Once you have delivered your subscription agreement and sent us your check,
you may revoke your subscription within five business days after you send it
to us. After the lapse of five business days from submission, your
subscription will be irrevocable and, thereafter, you must redeem pursuant to
the terms of the Limited Partnership Agreement. The partnership interests
offered to you are subject to prior sale. The general partner has sole
discretion to reject any subscription, in whole or in part, at any time prior
to admission of the subscriber as a partner. If your subscription is
accepted, the general partner will send you written confirmation of your
purchase, and you will be admitted as a limited partner on the first business
day of the following month.
Net Worth Tests
To purchase partnership interests, you must have at least a minimum net worth
of $250,000, exclusive of your home, home furnishings and automobiles, or a
minimum annual gross income of $70,000 and a minimum net worth of $70,000,
exclusive of your home, home furnishings and automobiles. You may have to
satisfy higher amounts if you live in certain states.
In the case of sales to fiduciary accounts, the beneficiary, the fiduciary
account, or the donor or grantor who supplies the funds to purchase the
partnership interests, if the donor or grantor is the fiduciary, may meet the
net worth and income standards.
Investor Warranties
When you execute and deliver your Subscription Agreement and Power of
Attorney, you are making representations and warranties to the general
partner, the introducing broker and the futures commission merchant.
Specifically:
(a) you are of legal age to execute the Subscription Agreement and Power of
Attorney and are legally competent to do so;
(b) you acknowledge that you have received the prospectus, including the
Limited Partnership Agreement, prior to subscribing for partnership interests;
(c) all information you have given to the general partner or that is set
forth in the Subscription Agreement and Power of Attorney submitted by you is
correct and complete as of the date of the agreement and if there are any
changes in such information prior to acceptance of your subscription, you will
immediately furnish the revised or corrected information to the general
partner;
(d) unless (e) or (f) below applies to you, your subscription is made with
your own funds for your own account and not as trustee, custodian or nominee
for another.
(e) the subscription, if made as custodian for a minor, is a gift you have
made to the minor and is not made with the minor's funds; or, if not a gift,
the representations as to net worth and annual income apply only to such
minor.
(f) if you are subscribing in a representative capacity:
* you have full power and authority to purchase the partnership interests
and enter and be bound by the Subscription Agreement and Power of Attorney on
behalf of the entity for which you are purchasing the partnership interests,
and
* such entity has full right and power to purchase the partnership
interests and enter and be bound by the Subscription Agreement and Power of
Attorney and become a limited partner pursuant to the Limited Partnership
Agreement attached as Exhibit A.
The general partner, the introducing broker and the futures commission
merchant may rely upon any of the above representations and warranties as a
defense to any claim made against it.
Compliance with Anti-Money Laundering Laws
To satisfy the partnership's, the general partner's and the selling agent's
obligations under applicable anti-money laundering laws and regulations,
subscribers will be required to make representations and warranties in the
subscription agreement concerning the nature of the subscriber, its source of
investment funds and other related matters. The general partner and the
selling agent reserve the right to request additional information from
subscribers as either of the general partner or the selling agent, in its sole
discretion, requires in order to satisfy applicable anti-money laundering
obligations. By subscribing for units in the partnership, each subscriber
agrees to provide this information upon request.
A PURCHASE OF THE UNITS SHOULD BE MADE ONLY BY THOSE PERSONS WHOSE FINANCIAL
CONDITION WILL PERMIT THEM TO BEAR THE RISK OF A TOTAL LOSS OF THEIR
INVESTMENT IN THE FUND. AN INVESTMENT IN THE UNITS SHOULD BE CONSIDERED ONLY
AS A LONG-TERM INVESTMENT.
37
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Legal Matters
Litigation and Claims
Within the past 5 years as of the date of this prospectus, there have been no
material administrative, civil or criminal actions against either general
partner, the commodity trading advisor, the introducing broker, the selling
agent, or any principal or affiliate of any of them. This includes any
actions pending, on appeal, concluded, threatened, or otherwise known to them.
There is litigation against the futures commission merchant within the past 5
years, which is disclosed beginning on page 28 of this prospectus.
Legal Opinion
The Scott Law Firm, Ltd., 470 Broadway, Suite 160, Bayonne, NJ 07002 serves
as special counsel to us and the general partner with respect to the offering
of partnership interests, the preparation of this prospectus, the legality of
the partnership interests offered, and the classification of the partnership
as a partnership for tax purposes.
From time to time, the firm will also advise the general partner and us in
regard to the maintenance of our tax status, the legality of any subsequent
offers, and the legality of any transfers by partners.
The general partner has granted the firm the right to employ other law firms
to help in matters that relate to the sale of partnership interests or our
operation.
The Scott Law Firm, Ltd. will not give you or any other partner legal advice.
You should seek investment, legal, and tax advice from your own legal counsel
and other professionals of your choice.
Experts
We rely on various experts to perform services for us.
Patke & Associates, Ltd. is our independent registered public accounting firm
expert, and is responsible for auditing the books and records of us and Ashley
Capital Management, Inc., as well as preparing the partnership K-1's and our
tax returns. All audited financial statements appearing in this prospectus
were conducted by Patke & Associates, Ltd.
The corporate general partner serves as our tax partner. The general partner
is required by the rules and regulations of the Commodity Futures Trading
Commission to send you unaudited monthly statements and annual financial
statements audited by an independent certified public accountant.
We will send you the unaudited monthly statements within 30 days of month end,
and will send you the audited annual financial statements within 90 days after
the end of each calendar year.
Additional Information
By our general partner, we have filed a registration statement on Form S-1
with the Securities and Exchange Commission under the Securities Act of 1933
to allow us to issue and sell our limited partnership interests.
This prospectus does not contain all of the information in the Form S-1
filing, for example, the Selling Agreement and the futures commission
merchant's Customer Agreements which established the partnership accounts.
The descriptions in this prospectus of these exhibits are summaries. For
further information regarding the partnership and the partnership interests
offered, you may inspect and copy our complete filings, including this
prospectus, the exhibits and periodic reports, at the public reference
facilities of the Securities and Exchange Commission at 450 Fifth Street, NW,
Washington, D.C. 20549
Also, the Securities and Exchange Commission offices will send you copies of
all or any part of this filing by mail, upon payment of the prescribed rates.
This prospectus and other electronic filings made through the Electronic Data
Gathering, Analysis and Retrieval (EDGAR) system are publicly available
through the Commission's Web site, http://www.sec.gov.
In addition, our books and records will be maintained for six years at the
office of the corporate general partner, 5914 N. 300 West, Fremont, IN 46737.
You are invited to review any materials available to the general partner
relating to this partnership, our operations, this offering, the Advisory
Agreement between us and the commodity trading advisor, the Customer
Agreements between us and our Commodity Brokers, the commodity trading
advisor's disclosure document, the forms filed with the National Futures
Association for any registered entity or person related to this partnership,
and any other matters relating to the laws applicable to this offering or this
partnership.
The officer and staff of the general partner will answer all reasonable
inquiries you may have. All the above materials will be made available at any
mutually convenient location at any reasonable hour after reasonable prior
notice.
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The general partner will allow you to obtain any additional information
necessary to verify any representations or information in this prospectus and
its exhibits, assuming the general partner possess such information or can
acquire it with reasonable effort and expense. However, your review is
limited by the proprietary and confidential nature of the commodity trading
advisor's trading systems and by the confidentiality of personal information
relating to other investors.
[The balance of this page has been intentionally left blank.]
39
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ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
Quarterly Report
September 30, 2011
GENERAL PARTNER:
Ashley Capital Management, Inc.
% Corporate Systems, Inc.
505 Brookfield Drive
Dover, Kent County, Delaware 19901
<page>
Index to the Financial Statements
Page
Report of Independent Registered Public Accounting Firm F-2
Statements of Assets and Liabilities F-3
Condensed Schedule of Investments - September 30, 2011 F-4
Condensed Schedule of Investments - December 31, 2010 F-5
Statements of Operations F-6
Statements of Changes in Net Assets F-7
Statements of Cash Flows F-8
Notes to the Financial Statements F-9 - F-15
Affirmation of the Commodity Pool Operator F-16
F-1
<page>
Patke & Associates, Ltd.
Certified Public Accountants
Report of Independent Registered Public Accounting Firm
To the Partners of
Atlas Futures Fund, Limited Partnership
Dover, Delaware
We have reviewed the accompanying statements of assets and liabilities of
Atlas Futures Fund, Limited Partnership, including the condensed schedule of
investments, as of September 30, 2011, and the related statements of
operations for the three and nine months ended September 30, 2011 and 2010,
and the statements of changes in net assets and cash flows for the nine months
ended September 30, 2011 and 2010. 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 and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with the
standards of the Public Company Accounting Oversight Board (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 such interim financial statements for them to be in
conformity with accounting principles generally accepted in the United States
of America.
We have previously audited, in accordance with the auditing standards of the
Public Accounting Oversight Board (United States), the statement of assets and
liabilities of Atlas Futures Fund, Limited Partnership, including the
condensed schedule of investments, as of December 31, 2010, and the related
statements of operations, changes in net assets and cash flows for the year
then ended (not presented herein) and in our report dated February 24, 2011,
we expressed an unqualified opinion on those financial statements. In our
opinion, the information set forth in the accompanying statement of assets and
liabilities as of December 31, 2010 is fairly stated, in all material
respects, in relation to the statement of assets and liabilities from which it
has been derived.
/s/ Patke & Associates, Ltd.
Patke & Associates, Ltd.
Lincolnshire, Illinois
November 7, 2011
300 Village Green Drive, Suite 210 *
Lincolnshire, Illinois 60069 *(847)913-5400
F-2
<page>
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Statements of Assets and Liabilities
<table>
<s> <c> <c>
September 30, December 31,
2011 2010
Assets (A Review)
Investments
Equity in broker trading accounts
Cash and cash equivalents at broker $2,055,025 $4,513,906
Net unrealized gain on open futures contracts 749,098 647,664
Total equity in broker trading accounts 2,804,123 5,161,570
U.S. Treasury Bills (cost $4,986,097 and $4,998,420) 4,996,138 4,999,789
Cash 639,250 196,788
Money market fund - 1,001,067
Prepaid expenses 8,881 4,124
Total assets 8,448,392 11,363,338
Liabilities
Partner redemptions payable 494,220 64,059
Accrued commissions payable to related parties 6,223 36,291
Other accrued liabilities 34,251 15,052
Total liabilities 534,694 115,402
Net assets $7,913,698 $11,247,936
Analysis of net assets
Limited partners $7,913,698 $11,247,936
General partners - -
Net assets (equivalent to $3,700.36 and
$4,231.14 per unit) $7,913,698 $11,247,936
Partnership units outstanding
Limited partners units outstanding 2,138.63 2,658.37
General partners units outstanding - -
Total partnership units outstanding 2,138.63 2,658.37
</table>
The accompanying notes are an integral part of the financial statements
F-3
<page>
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Condensed Schedule of Investments
September 30, 2011
(A Review)
<table>
<s> <c> <c> <c>
Face Value Fair Value Percent of Net Assets
United States Treasury bills
United States Treasury bills, matures
January 2012 (cost $4,986,097) $5,000,000 $4,996,138 63.13%
Futures contracts
Futures contracts held long
Currency $1,500 0.02%
Total futures contracts held long 1,500 0.02%
Futures contracts held short
Agriculture 305,511 3.86%
Energy 43,940 0.56%
Currency 398,147 5.03%
Total futures contracts held short 747,598 9.45%
Net unrealized gain on open futures contracts $749,098 9.47%
</table>
The accompanying notes are an integral part of the financial statements
F-4
<page>
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Condensed Schedule of Investments
December 31, 2010
<table>
<s> <c> <c> <c>
Face Value Fair Value Percent of Net Assets
United States Treasury bills
United States Treasury bills, matures
January 2011 (cost $4,998,420) $5,000,000 $4,999,789 44.45%
Futures contracts
Futures contracts held long
Agriculture $279,103 2.48%
Metals 900 0.01%
Energy 90,000 0.80%
Currency 233,955 2.08%
Total futures contracts held long 603,958 5.37%
Futures contracts held short
Currency 43,706 0.39%
Total futures contracts held short 43,706 0.39%
Net unrealized gain on open futures contracts $647,664 5.76%
</table>
The accompanying notes are an integral part of the financial statements
F-5
<page>
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Statements of Operations
(A Review)
<table>
<s> <c> <c> <c> <c>
Three Months Ended September 30, Nine Months Ended September 30,
2011 2010 2011 2010
Investment income
Interest income $3,572 $2,788 $10,305 $8,287
Total investment income 3,572 2,788 10,305 8,287
Expenses
Commission expense 231,604 283,461 784,518 993,401
Professional fees 17,000 29,450 88,000 81,300
Other operating expenses 2,474 5,156 12,318 14,290
Total expenses 251,078 318,067 884,836 1,088,991
Net investment (loss) (247,506) (315,279) (874,531) (1,080,704)
Realized and unrealized gain (loss) from investments
and foreign currency
Net realized gain (loss) from:
Investments (224,449) 329,011 (592,430) (594,045)
Foreign currency translation (19,456) 8,336 (12,085) (2,022)
Net realized gain (loss) from investments and
foreign currency transactions (243,905) 337,347 (604,515) (596,067)
Net unrealized appreciation on investments 456,965 1,284,630 101,434 1,345,381
Net realized and unrealized gain (loss) from
investments and foreign currency 213,060 1,621,977 (503,081) 749,314
Net increase (decrease) in net assets resulting
from operations $(34,446) $1,306,698 $(1,377,612) $(331,390)
Net increase (decrease) per unit (for a single unit
outstanding during the entire period)
Limited partnership unit $(9.64) $476.83 $(530.78) $5.19
General partnership unit $- $- $- $-
</table>
The accompanying notes are an integral part of the financial statements
F-6
<page>
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Statements of Changes in Net Assets
(A Review)
<table>
<s> <c> <c> <c> <c>
Nine Months Ended September 30,
2011 2010
Units Net Assets Units Net Assets
Increase (decrease) in net assets from operations
Net investment (loss) $(874,531) $(1,080,704)
Net realized (loss) from investments and foreign currency transactions (604,515) (596,067)
Net unrealized appreciation on investments 101,434 1,345,381
Net (decrease) in net assets resulting from operations (1,377,612) (331,390)
Capital contributions from limited partners - - 10.44 40,361
Redemptions by limited partners (519.74) (1,956,626) (931.64) (3,456,555)
Total (decrease) in net assets (519.74) (3,334,238) (921.20) (3,747,584)
Net assets at the beginning of the period 2,658.37 11,247,936 3,602.89 14,711,478
Net assets at the end of the period 2,138.63 $7,913,698 2,681.69 $10,963,894
</table>
The accompanying notes are an integral part of the financial statements
F-7
<page>
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Statements of Cash Flows
(A Review)
<table>
<s> <c> <c>
Nine Months Ended September 30,
2011 2010
Cash Flows from Operating Activities
Net (decrease) in net assets resulting from operations $(1,377,612) $(331,390)
Adjustments to reconcile net (decrease) in net assets from
operations to net cash (used in) operating activities:
Changes in operating assets and liabilities:
(Increase) decrease in prepaid expenses (4,757) 8,546
Unrealized (appreciation) on investments (101,434) (1,345,381)
(Decrease) in accrued commissions payable to related parties (30,068) (47,361)
Increase (decrease) in other accrued liabilities 19,199 (4,953)
Net (purchases) of investments in United States government securities (4,996,138) -
Net cash (used in) operating activities (6,490,810) (1,720,539)
Cash Flows from Financing Activities
Proceeds from sale of units, net of sales commissions - 40,361
Partner redemptions (1,526,465) (3,497,266)
Net cash (used in) financing activities (1,526,465) (3,456,905)
Net (decrease) in cash and cash equivalents (8,017,275) (5,177,444)
Cash and cash equivalents, beginning of period 10,711,550 14,979,245
Cash and cash equivalents, end of period $2,694,275 $9,801,801
End of period cash and cash equivalents consist of:
Cash and cash equivalents at broker $2,055,025 $3,564,115
Treasury Bills - 4,999,726
Cash 639,250 1,236,919
Money market fund - 1,041
Total cash and cash equivalents $2,694,275 $9,801,801
</table>
The accompanying notes are an integral part of the financial statements
F-8
<page>
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Notes to the Financial Statements
September 30, 2011
(A Review)
1. Nature of the Business
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. (the "Corporate General
Partner") and Michael Pacult (the "Individual General Partner" and
collectively the "General Partner") are the General Partners and the commodity
pool operators ("CPO's") of the Fund. The sole registered commodity trading
advisor ("CTA") of the fund is Clarke Capital Management, Inc. ("Clarke").
Effective July 2004 the Fund began to sell issuer direct on a best efforts
basis with no sales commissions.
The Fund has filed an S-1 registration statement to register an additional
$10,000,000 in Units. Upon effectiveness, the Units will be offered and sold
pursuant to a prospectus under similar terms to the previous offering;
however, there will be compensation to the affiliated selling agent, Futures
Investment Company, of an up front selling commission of 1% calculated on the
gross subscription amount in addition to $2,000 paid by the Fund for legal
fees associated with the review of the offering by the Financial Industry
Regulatory Authority ("FINRA").
Regulation - The Fund is a registrant with the Securities and Exchange
Commission ("SEC") pursuant to the Securities Act of 1933 ("the Act"). The
Fund is subject to the regulations of the SEC and the reporting requirements
of the Securities and Exchange Act of 1934. 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 ("FCM's") 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.
2. Significant Accounting Policies
Registration Costs - The Fund remains open to new partners, and incurs
costs required to retain the ability to issue new units. Such costs, in
addition to the costs of recurring annual and quarterly filings with
regulatory agencies are expensed as incurred.
Revenue Recognition - Futures contracts are recorded on the trade date and
are reflected in the statement of assets and liabilities at the difference
between the original contract amount and the market value on the last business
day of the reporting period.
Fair value of futures contracts is based upon exchange or other applicable
market best available closing quotations.
Interest income is recognized when it is earned.
U.S. Treasury Bills - U.S. Treasury bills are valued at amortized cost,
which management has determined approximates fair value.
Use of Accounting Estimates - The preparation of financial statements in
conformity with accounting principles generally accepted in the United States
of America ("GAAP") requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from these estimates.
F-9
<page>
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Notes to the Financial Statements
September 30, 2011
(A Review)
2. Significant Accounting Policies - Continued
Foreign Currency - The accounting records of the Fund are denominated in
U.S. dollars. Assets and liabilities denominated in currencies other than U.S.
dollars are translated into U.S. dollars at the exchange rates in effect on
the valuation date. Commodity futures contract transactions are translated
into U.S. dollars at the exchange rates on the dates of such transactions. On
the accompanying financial statements, effects of changes in exchange rates
from all transactions denominated in currencies other than U.S. dollars are
disclosed separately.
Fair Value Measurement and Disclosures - Accounting Standards Codification
("ASC") 820 establishes a fair value hierarchy which prioritizes the inputs to
valuation techniques used to measure fair value into three broad levels. The
fair value hierarchy gives the highest priority to unadjusted quoted prices in
active markets for identical assets or liabilities (Level 1 measurements) and
the lowest priority to unobservable inputs (Level 3 measurements).
Level 1 inputs are unadjusted quoted prices in active markets for identical
assets or liabilities that the Fund has the ability to access at the
measurement date.
Level 2 inputs are inputs other than quoted prices included in Level 1 that
are observable for the asset or liability, either directly or indirectly.
Level 3 inputs are unobservable inputs for an asset or liability, including
the Fund's own assumptions used in determining the fair value of investments.
Unobservable inputs shall be used to measure fair value to the extent that
observable inputs are not available, thereby allowing for situations in which
there is little, if any, market activity for the asset or liability at the
measurement date. As of and for the period ended September 30, 2011 and year
ended December 31, 2010, the Fund did not have any Level 3 assets or
liabilities.
The following table sets forth by level within the fair value hierarchy the
Fund's investments accounted for at fair value on a recurring basis as of
September 30, 2011 and December 31, 2010.
<table>
<s> <c> <c> <c> <c>
Fair Value at September 30, 2011
Description Level 1 Level 2 Level 3 Total
U.S. Treasury Bills $- $4,996,138 $- $4,996,138
Exchange Traded - Futures Contracts 749,098 - - 749,098
Total $749,098 $4,996,138 $- $5,745,236
Fair Value at December 31, 2010
Description Level 1 Level 2 Level 3 Total
U.S. Treasury Bills $- $4,999,789 $- $4,999,789
Exchange Traded - Futures Contracts 647,664 - - 647,664
Total $647,664 $4,999,789 $- $5,647,453
</table>
Income Taxes - The Fund prepares calendar year U.S. Federal and applicable
state information tax returns and reports to the partners their allocable
shares of the Fund's income, expenses and trading gains or losses. No
provision for income taxes has been made in the accompanying financial
statements as each partner is individually responsible for reporting income or
loss based on such partner's respective share of the Fund's income and
expenses as reported for income tax purposes.
Management has continued to evaluate the application of ASC 740, "Income
Taxes" to the Fund, and has determined that ASC 740 does not have a material
impact on the Fund's financial statements. The Fund files federal and state
tax returns. The 2007 through 2010 tax years generally remain subject to
examination by the U.S. federal and most state tax authorities.
Statement of Cash Flows - For purposes of the Statement of Cash Flows, the
Fund considers all short-term investments with an original maturity of three
months or less to be cash equivalents. Net cash provided by operating
activities includes no cash payments for interest or income taxes for the nine
months ended September 30, 2011 or September 30, 2010.
Reclassifications - Certain prior year amounts were reclassified to conform
to current year presentation.
F-10
<page>
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Notes to the Financial Statements
September 30, 2011
(A Review)
3. 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 Fund.
If the daily net unit value of the Fund 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.
4. 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 Fund.
Monthly Allocations - Any increase or decrease in the Fund'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 Partner.
Federal Income Tax Allocations - As of the end of each fiscal year, the
Fund'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 subscription funds will accrue to the account
of the investor.
Redemptions - After holding the investment for a minimum of twelve months, 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 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.
5. Fees
The Fund charged the following fees:
The Corporate General Partner is entitled to a fixed annual brokerage
commission of 11% of assets on deposit with the FCM for domestic trades plus
actual commissions charged by the FCM for trades made on foreign exchanges and
forward markets, if any. It receives 4% of the commissions and the Fund pays
the introducing broker the remaining 7%.
A quarterly incentive fee of 25% of "new net profits" is paid to Clarke.
There were no incentive fees for the nine months ended September 30, 2011 and
2010.
The General Partner reserves the right to change the fee structure at its
sole discretion.
F-11
<page>
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Notes to the Financial Statements
September 30, 2011
(A Review)
6. Related Party Transactions
The Fund pays commissions to the Corporate General Partner and Futures
Investment Company, the introducing broker. These related parties are 100%
and 50%, respectively, owned by Michael Pacult. Related party commissions
were as follows:
Commissions included in expenses:
For The Nine Months Ended September 30,
2011 2010
Corporate General Partner $283,888 $362,064
Futures Investment Company 446,300 607,025
Total related party expenses $730,188 $969,089
Commissions included in accrued expenses:
September 30, December 31,
2011 2010
Corporate General Partner $942 $6,173
Futures Investment Company 5,281 30,118
Total accrued commissions payable to
related parties $6,223 $36,291
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 hypothetical claims, but
expects the risk of having to make any payments under these indemnifications
to be remote.
F-12
<page>
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Notes to the Financial Statements
September 30, 2011
(A Review)
7. Trading Activities and Related Risks
The Fund is engaged in speculative trading of U.S. and foreign futures
contracts. 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 in trading accounts are pledged as collateral for
futures 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 establishes
minimum margin requirements for each traded contract. The FCM may increase
the margin requirements above these minimums for any or all contracts. The
Fund maintains cash, cash equivalents and U.S. Treasury Bills to satisfy these
margin requirements. At September 30, 2011 and December 31, 2010 these totaled
$7,690,413 and $10,711,550, respectively. Based upon the types and amounts of
contracts traded and the amount of liquid assets of the Fund, the General
Partner believes there is minimal risk of not being able to meet its margin
requirement.
Trading in futures contracts involves entering into contractual commitments
to purchase or sell a particular futures contracts 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
approximately $1,465,380 and $47,695,198 on long positions at September 30,
2011 and December 31, 2010, 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 net unrealized gains on open futures contracts at September 30, 2011 and
December 31, 2010 were $749,098 and $647,664 respectively.
Open contracts generally mature within three months of September 30, 2011.
The latest maturity for open futures contracts is in December 2011. However,
the Fund intends to close all contracts prior to maturity.
F-13
<page>
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Notes to the Financial Statements
September 30, 2011
(A Review)
7. Trading Activities and Related Risks - Continued
The following tables disclose the fair values of derivative and hedging
activities in the Statements of Assets and Liabilities and the Statements of
Operations.
Derivative Instruments
Statement of Assets and Liabilities
<table>
<s> <c> <c> <c> <c> <c>
Asset Derivatives Liability Derivatives
at Sep 30, 2011 at Sep30, 2011
Statement of Assets and Liabilities Location Fair Value Fair Value Net
Derivatives not designated as hedge Commodity contracts Net unrealized gain (loss) on open futures
instruments under ASC 815 contracts $757,648 $(8,550) $749,098
Asset Derivatives Liability Derivatives
at December 31, at December 31,
Statement of Assets and Liabilities Location 2010 Fair Value 2010 Fair Value Net
Derivatives not designated as hedge Commodity contracts Net unrealized gain (loss) on open $651,883 $(4,219) $647,664
instruments under ASC 815 futures contracts
Derivative Instruments
Statement of Operations
For the three For the nine
months ended months ended
Line Item in the Statement of Operations Sep 30, 2011 Sep 30, 2011
Derivatives not designated as hedge Commodity contracts Net realized (loss) from investments
instruments under ASC 815 and foreign currency transactions $(243,905) $(604,515)
Derivatives not designated as hedge Net unrealized appreciation (depreciation)
instruments under ASC 815 Commodity contracts from investments $456,965 $101,434
For the three For the nine
months ended months ended
Line Item in the Statement of Operations Sep 30, 2010 Sep 30, 2010
Derivatives not designated as hedge Commodity contracts Net realized (loss) from investments
instruments under ASC 815 and foreign currency transactions $337,347 $(596,067)
Derivatives not designated as hedge Net unrealized appreciation (depreciation)
instruments under ASC 815 Commodity contracts from investments $1,284,630 $1,345,381
</table>
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.
8. Financial Instruments with Off-Balance Sheet Credit and Market Risk
All financial instruments are subject to market risk, the risk that future
changes in market conditions may make an instrument less valuable or more
onerous. As the instruments are recognized at fair market value, those
changes directly affect reported income.
Included in the definition of financial instruments are securities,
restricted securities and derivative financial instruments. Theoretically,
the investments owned by the Fund directly are exposed to a market risk (loss)
equal to the notional value of the financial instruments purchased and
substantial liability on certain financial instruments purchased short.
Generally, financial instruments can be closed. However, if the market is not
liquid, it could prevent the timely close-out of any unfavorable positions or
require the Fund to hold those positions to maturity, regardless of the
changes in their value or the trading advisor's investment strategies.
Credit risk represents the accounting loss that would be recognized at the
reporting date if counterparties failed to perform as contracted.
Concentrations of credit risk (whether on or off balance sheet) that arise
from financial instruments exist for groups of counterparties when they have
similar economic characteristics that would cause their ability to meet
contractual obligations to be similarly affected by changes in economic or
other conditions.
9. Derivative Financial Instruments and Fair Value of Financial Instruments
A derivative financial instrument is a financial agreement whose value is
linked to, or derived from, the performance of an underlying asset. The
underlying asset can be currencies, commodities, interest rates, stocks, or
any combination. Changes in the underlying asset indirectly affect the value
of the derivative. As the instruments are recognized at fair value, those
changes directly affect reported income.
All investment holdings are recorded in the statement of assets and
liabilities at their net asset value (fair value) at the reporting date.
Financial instruments (including derivatives) used for trading purposes are
recorded in the statement of assets and liabilities at fair value at the
reporting date. Realized and unrealized changes in fair values are recognized
in net investment gain (loss) in the period in which the changes occur.
Interest income arising from trading instruments is included in the statement
of operations as part of interest income.
Notional amounts are equivalent to the aggregate face value of the
derivative financial instruments. Notional amounts do not represent the
amounts exchanged by the parties to derivatives and do not measure the Fund's
exposure to credit or market risks. The amounts exchanged are based on the
notional amounts and other terms of the derivatives.
F-14
<page>
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Notes to the Financial Statements
September 30, 2011
(A Review)
10. Indemnifications
In the normal course of business, the Fund enters into contracts and
agreements that contain a variety of representations and warranties and which
provide general indemnifications. The Fund's maximum exposure under these
arrangements is unknown, as this would involve future claims that may be made
against the Fund that have not yet occurred. The Fund expects the risk of any
future obligation under these indemnifications to be remote.
11. Financial Highlights
<table>
<s> <c> <c> <c> <c>
Three Months Ended September 30, Nine Months Ended September 30,
2011 2010 2011 2010
Performance per unit (1)
Net unit value, beginning of the period $3,710.00 $3,611.60 $4,231.14 $4,083.24
Net realized and unrealized gain (loss) from
investments and foreign currency 96.92 588.71 (177.86) 343.62
Investment income 1.54 0.98 4.19 2.64
Expenses (108.10) (112.86) (357.11) (341.07)
Net increase (decrease) for the period (9.64) 476.83 (530.78) 5.19
Net unit value at the end of the period $3,700.36 $4,088.43 $3,700.36 $4,088.43
Net assets at the end of the period ($000) $7,914 $10,964 $7,914 $10,964
Total return (2) (0.26%) 13.20% (12.54%) 0.13%
Number of units outstanding at the end of the period 2,138.63 2,681.69 2,138.63 2,681.69
Supplemental Data:
Ratio to average net assets
Net investment (loss) (3) (11.98%) (12.04%) (12.53%) (12.11%)
Expenses (3) (12.15%) (12.16%) (12.67%) (12.20%)
</table>
Total return is calculated based on the change in value of a unit during the
period. An individual partner's total return and ratios may vary from the
above total returns and ratios based on the timing of additions and
redemptions.
(1) Investment income and expenses and net realized and unrealized gains and
losses on futures transactions are calculated based on a single unit
outstanding during the period.
(2) Not annualized.
(3) Annualized.
F-15
<page>
Atlas Futures Fund, Limited Partnership
Affirmation of the Commodity Pool Operator
Nine Months Ended September 30, 2011 and 2010
*****************************************************************************
To the best of the knowledge and belief of the undersigned, the information
contained in this report is accurate and complete.
/s/ Michael Pacult
Michael Pacult
President, Ashley Capital Management, Inc.
General Partner
Atlas Futures Fund, Limited Partnership
F-16
<page>
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
ANNUAL REPORT
December 31, 2010
GENERAL PARTNER:
Ashley Capital Management, Inc.
% Corporate Systems, Inc.
505 Brookfield Drive
Dover, Kent County, Delaware 19901
<page>
Index to the Financial Statements
Page
Report of Independent Registered Public Accounting Firm F-2
Statements of Assets and Liabilities F-3
Condensed Schedule of Investments - December 31, 2010 F-4
Condensed Schedule of Investments - December 31, 2009 F-5
Statements of Operations F-6
Statements of Changes in Net Assets F-7
Statements of Cash Flows F-8
Notes to the Financial Statements F-9 - F-15
Affirmation of the Commodity Pool Operator F-16
F-1
<page>
Patke & Associates, Ltd.
Certified Public Accountants
Report of Independent Registered Public Accounting Firm
To the Partners of
Atlas Futures Fund, Limited Partnership
Dover, Delaware
We have audited the accompanying statements of assets and liabilities of Atlas
Futures Fund, Limited Partnership (a Delaware limited partnership), including
the condensed schedules of investments, as of December 31, 2010 and 2009, and
the related statements of operations, changes in net assets and cash flows for
each of the three years in the period ended December 31, 2010. These
financial statements are the responsibility of the Partnership's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Partnership is not
required to have, nor were we engaged to perform an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures
that are appropriate in the circumstances, but not for the purpose of
expressing an opinion of the effectiveness of the Partnership's internal
control over financial reporting. Accordingly, we do not express such an
opinion. An audit includes, examining on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Atlas Futures Fund, Limited
Partnership as of December 31, 2010 and 2009, and the results of its
operations, its changes in net assets and its cash flows for each of the three
years in the period ended December 31, 2010 are in conformity with accounting
principles generally accepted in the United States of America.
/s/ Patke & Associates, Ltd.
Patke & Associates, Ltd.
Lincolnshire, Illinois
February 24, 2011
300 Village Green Drive, Suite 210 *
Lincolnshire, Illinois 60069 *(847)913-5400
F-2
<page>
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Statements of Assets and Liabilities
December 31, 2010 and 2009
<table>
<s> <c> <c>
2010 2009
Assets
Investments
Cash and cash equivalents at broker $4,513,906 $4,359,494
Net unrealized gain on open futures contracts 647,664 -
Total equity in broker trading accounts 5,161,570 4,359,494
U.S. Treasury Bills (cost $4,998,420 and $9,997,725) 4,999,789 9,998,497
Cash 196,788 120,240
Money market fund 1,001,067 501,014
Prepaid expenses 4,124 11,395
Total assets 11,363,338 14,990,640
Liabilities
Partner redemptions payable 64,059 168,311
Accrued commissions payable to related parties 36,291 86,485
Other accrued liabilities 15,052 24,366
Total liabilities 115,402 279,162
Net assets $11,247,936 $14,711,478
Analysis of net assets
Limited partners $11,247,936 $14,711,478
General partners - -
Net assets (equivalent to $4,231.14 and $4,083.24 per unit) $11,247,936 $14,711,478
Partnership units outstanding
Limited partners units outstanding 2,658.37 3,602.89
General partners units outstanding - -
Total partnership units outstanding 2,658.37 3,602.89
</table>
The accompanying notes are an integral part of the financial statements.
F-3
<page>
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Condensed Schedule of Investments
December 31, 2010
<table>
<s> <c> <c> <c>
Face Value Fair Value Percent of Net Assets
United States Treasury bills
United States Treasury bills, matures
January 2011 (cost $4,998,420) $5,000,000 $4,999,789 44.45%
Futures contracts
Futures contracts held long
Agriculture $279,103 2.48%
Metals 900 0.01%
Energy 90,000 0.80%
Currency 233,955 2.08%
Total futures contracts held long 603,958 5.37%
Futures contracts held short
Currency 43,706 0.39%
Total futures contracts held short 43,706 0.39%
Net unrealized gain on open futures contracts $647,664 5.76%
</table>
The accompanying notes are an integral part of the financial statements.
F-4
<page>
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Condensed Schedule of Investments
December 31, 2009
<table>
<s> <c> <c> <c>
Face Value Fair Value Percent of Net Assets
United States Treasury bills
United States Treasury bills, matures January 2010 $5,000,000 $4,999,872
United States Treasury bills, matures April 2010 5,000,000 4,998,625
Total United States Treasury bills (cost $9,997,725) $9,998,497 67.96%
</table>
The accompanying notes are an integral part of the financial statements.
F-5
<page>
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Statements of Operations
For the Years Ended December 31, 2010, 2009 and 2008
<table>
<s> <c> <c> <c>
2010 2009 2008
Investment income
Interest income $9,957 $25,287 $282,259
Total investment income 9,957 25,287 282,259
Expenses
Commission expense 1,295,025 2,108,568 2,474,512
Management fees - - -
Incentive fees - - 2,562,761
Professional fees 102,900 135,300 150,500
Other operating expenses 21,363 13,838 37,052
Total expenses 1,419,288 2,257,706 5,224,825
Net investment (loss) (1,409,331) (2,232,419) (4,942,566)
Realized and unrealized gain (loss) from investments and foreign currency
Net realized gain (loss) from:
Investments 814,678 (2,928,481) 10,385,993
Foreign currency transactions (2,729) 30,037 17,752
Net realized gain (loss) from investments and foreign currency transactions 811,949 (2,898,444) 10,403,745
Net unrealized appreciation on investments 647,664 - -
Net realized and unrealized gain (loss) from investments and foreign
currency 1,459,613 (2,898,444) 10,403,745
Net increase (decrease) in net assets resulting from operations $50,282 $(5,130,863) $5,461,179
Net income (loss) per unit (for a single unit outstanding during the entire
year)
Limited partnership unit $147.90 $(1,321.52) $1,229.64
General partnership unit $- $- $-
</table>
The accompanying notes are an integral part of the financial statements.
F-6
<page>
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Statements of Changes in Net Assets
For the Years Ended December 31, 2010, 2009 and 2008
<table>
<s> <c> <c> <c> <c> <c> <c>
2010 2009 2008
Units Net Assets Units Net Assets Units Net Assets
Increase (decrease) in net assets from operations
Net investment (loss) $(1,409,331) $(2,232,419) $(4,942,566)
Net realized gain (loss) from investments and foreign
currency transactions 811,949 (2,898,444) 10,403,745
Net unrealized appreciation on investments 647,664 - -
Net increase (decrease) in net assets resulting
from operations 50,282 (5,130,863) 5,461,179
Capital contributions from limited partners 10.44 40,361 65.09 345,345 78.15 411,613
Redemptions by limited partners (954.96) (3,554,185) (660.55) (3,194,039) (343.56) (1,818,467)
Total increase (decrease) in net assets (944.52) (3,463,542) (595.46) (7,979,557) (265.41) 4,054,325
Net assets at the beginning of the year 3,602.89 14,711,478 4,198.35 22,691,035 4,463.76 18,636,710
Net assets at the end of the year 2,658.37 $11,247,936 3,602.89 $14,711,478 4,198.35 $22,691,035
</table>
The accompanying notes are an integral part of the financial statements.
F-7
<page>
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Statements of Cash Flows
For the Years Ended December 31, 2010, 2009 and 2008
<table>
<s> <c> <c> <c>
2010 2009 2008
Cash Flows from Operating Activities
Net increase (decrease) in net assets resulting from operations $50,282 $(5,130,863) $5,461,179
Adjustments to reconcile net increase (decrease) in net assets from
operations to net cash provided by (used in) operating activities:
Changes in operating assets and liabilities:
Unrealized (appreciation) on investments (647,664) - -
(Increase) decrease in prepaid expenses 7,271 (11,395) -
Decrease in interest receivable - 203 43,906
Increase (decrease) in accrued commissions payable to
related parties (50,194) (65,452) 144,593
(Decrease) in incentive fees payable - (57,490) (599,788)
Increase (decrease) in other accrued liabilities (9,314) 466 1,820
Net cash provided by (used in) operating activities (649,619) (5,264,531) 5,051,710
Cash Flows from Financing Activities
Proceeds from sale of units 40,361 345,345 411,613
Partner redemptions (3,658,437) (3,026,755) (1,871,257)
Net cash (used in) financing activities (3,618,076) (2,681,410) (1,459,644)
Net increase (decrease) in cash and cash equivalents (4,267,695) (7,945,941) 3,592,066
Cash and cash equivalents, beginning of year 14,979,245 22,925,186 19,333,120
Cash and cash equivalents, end of year $10,711,550 $14,979,245 $22,925,186
End of period cash and cash equivalents consist of:
Cash at broker $4,513,906 $4,359,494 $7,826,204
Treasury bills 4,999,789 9,998,497 14,997,985
Cash 196,788 120,240 99,988
Money market fund 1,001,067 501,014 1,009
Total cash and cash equivalents $10,711,550 $14,979,245 $22,925,186
</table>
The accompanying notes are an integral part of the financial statements.
F-8
<page>
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Notes to the Financial Statements
December 31, 2010
1. Nature of the Business
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. (the "Corporate General
Partner") and Michael Pacult (the "Individual General Partner" and
collectively the "General Partner") are the General Partners and the commodity
pool operators ("CPO's") of the Fund. The sole registered commodity trading
advisor ("CTA") of the fund is Clarke Capital Management, Inc. ("Clarke").
The Fund has filed an S-1 registration statement to register an additional
$10,000,000 in Units. Upon effectiveness, the Units will be offered and sold
pursuant to a prospectus under similar terms to the previous offering;
however, there will be compensation to the affiliated selling agent, Futures
Investment Company, of an up front selling commission of 1% calculated on the
gross subscription amount in addition to $2,000 paid by the Fund for legal
fees associated with the review of the offering by the Financial Industry
Regulatory Authority ("FINRA").
The Fund is a registrant with the Securities and Exchange Commission ("SEC")
pursuant to the Securities Act of 1933 ("the Act"). The Fund is subject to the
regulations of the SEC and the reporting requirements of the Securities and
Exchange Act of 1934. 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 ("FCM's")
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.
2. Significant Accounting Policies
Registration Costs - Costs incurred for the initial filings with the SEC,
FINRA 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,
in addition to 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 statement of assets and liabilities 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.
Interest income is recognized when it is earned.
Use of Accounting Estimates - The preparation of financial statements in
conformity with accounting principles generally accepted in the United States
of America ("GAAP") requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from these estimates.
F-9
<page>
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Notes to the Financial Statements
December 31, 2010
2. Significant Accounting Policies - Continued
Foreign Currency - The accounting records of the Fund are denominated in
U.S. dollars. Assets and liabilities denominated in currencies other than U.S.
dollars are translated into U.S. dollars at the exchange rates in effect on
the valuation date. Commodity futures contract transactions are translated
into U.S. dollars at the exchange rates on the dates of such transactions. On
the accompanying financial statements, effects of changes in exchange rates
from all transactions denominated in currencies other than U.S. dollars are
disclosed separately.
Fair Value Measurement and Disclosures - Financial Accounting Standards
Board ("FASB") Accounting Standards Codification ("ASC") 820 establishes a
fair value hierarchy which prioritizes the inputs to valuation techniques used
to measure fair value into three broad levels. The fair value hierarchy gives
the highest priority to unadjusted quoted prices in active markets for
identical assets or liabilities (Level 1 measurements) and the lowest priority
to unobservable inputs (Level 3 measurements).
Level 1 inputs are unadjusted quoted prices in active markets for identical
assets or liabilities that the Fund has the ability to access at the
measurement date.
Level 2 inputs are inputs other than quoted prices included in Level 1 that
are observable for the asset or liability, either directly or indirectly.
Level 3 inputs are unobservable inputs for an asset or liability, including
the Fund?s own assumptions used in determining the fair value of investments.
Unobservable inputs shall be used to measure fair value to the extent that
observable inputs are not available, thereby allowing for situations in which
there is little, if any, market activity for the asset or liability at the
measurement date. As of and for the years ended December 31, 2010 and 2009,
the Fund did not have any Level 3 assets or liabilities.
The following table sets forth by level within the fair value hierarchy the
Fund?s investments accounted for at fair value on a recurring basis as of
December 31, 2010 and December 31, 2009.
<table>
<s> <c> <c> <c> <c>
Fair Value at December 31, 2010
Description Level 1 Level 2 Level 3 Total
Money Market Accounts $1,001,067 $- $- $1,001,067
U.S. Treasury Bills - 4,999,789 - 4,999,789
Exchange Traded - Futures Contracts 647,664 - - 647,664
Total $1,648,731 $4,999,789 $- $6,648,520
Fair Value at December 31, 2009
Description Level 1 Level 2 Level 3 Total
Money Market Accounts $501,014 $- $- $501,014
U.S. Treasury Bills - 9,998,497 - 9,998,497
Total $501,014 $9,998,497 $- $10,499,511
</table>
In January 2010, the FASB issued Accounting Standards Update No. 2010-06
("ASU 2010-06") for improving disclosure about fair value measurements. ASU
2010-06 adds new disclosure requirements about transfers into and out of
Levels 1 and 2 and separate disclosures about purchases, sales, issuances and
settlements in the reconciliation for fair value measurements using
significant unobservable inputs (Level 3). It also clarifies existing
disclosure requirements relating to the levels of disaggregation for fair
value measurement and inputs and valuation techniques used to measure fair
value. As of January 1, 2010, the Fund adopted the provisions of ASU 2010-06
except for disclosures about purchases, sales, issuances and settlements in
the rollforward of activity in Level 3 fair value measurements, which are
effective for fiscal years beginning after December 15, 2010 and for interim
periods within those fiscal years. The adoption of this guidance did not have
a material impact on the Fund?s financial statements.
Income Taxes - The Fund prepares calendar year U.S. Federal and applicable
state information tax returns and reports to the partners their allocable
shares of the Fund?s income, expenses and trading gains or losses. No
provision for income taxes has been made in the accompanying financial
statements as each partner is individually responsible for reporting income or
loss based on such partner?s respective share of the Fund?s income and
expenses as reported for income tax purposes.
Management has continued to evaluate the application of ASC 740, ?Income
Taxes" to the Fund, and has determined that ASC 740 does not have a material
impact on the Fund?s financial statements. The Fund files federal and state
tax returns. The 2007 through 2010 tax years generally remain subject to
examination by the U.S. federal and most state tax authorities.
Statement of Cash Flows - For purposes of the Statement of Cash Flows, the
Fund considers money market funds and U.S. Treasury Bills to be cash
equivalents. Net cash provided by operating activities includes no cash
payments for interest or income taxes for the years ended December 31, 2010,
2009 and 2008.
Reclassifications - Certain prior year amounts were reclassified to conform
to current year presentation.
F-10
<page>
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Notes to the Financial Statements
December 31, 2010
3. 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 Fund.
If the daily net unit value of the Fund 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.
4. 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 Fund.
Monthly Allocations - Any increase or decrease in the Fund'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 Partner.
Federal Income Tax Allocations - As of the end of each fiscal year, the
Fund'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 subscription funds will accrue to the account
of the investor.
Redemptions - After holding the investment for a minimum of twelve months, 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 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.
5. Fees
The Fund charged the following fees:
The Corporate General Partner is entitled to a fixed annual brokerage
commission of 11% of assets on deposit with the FCM for domestic trades plus
actual commissions charged by the FCM for trades made on foreign exchanges and
forward markets, if any. It receives 4% of the commissions and the Fund pays
the introducing broker the remaining 7%.
A quarterly incentive fee of 25% of "new net profits" is paid to Clarke.
There were no incentive fees for the years ended December 31, 2010, 2009 and
2008.
The General Partner reserves the right to change the fee structure at its
sole discretion.
F-11
<page>
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Notes to the Financial Statements
December 31, 2010
6. Related Party Transactions
The Fund pays commissions to the Corporate General Partner and Futures
Investment Company, the introducing broker. These related parties are 100%
and 50%, respectively, owned by Michael Pacult. Related party commissions
were as follows:
<table>
<s> <c> <c> <c>
Commissions included in expense:
For the Year Ended December 31,
2010 2009 2008
Corporate General Partner $470,434 $766,090 $898,144
Futures Investment Company 792,054 1,251,360 1,423,668
Total related party expenses $1,262,488 $2,017,450 $2,321,812
Commissions included in accrued expenses:
December 31, December 31,
2010 2009
Corporate General Partner $6,173 $51,924
Futures Investment Company 30,118 34,561
Total accrued commissions payable to
related parties $36,291 $86,485
</table>
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 hypothetical claims, but
expects the risk of having to make any payments under these indemnifications
to be remote.
F-12
<page>
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Notes to the Financial Statements
December 31, 2010
7. 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 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 establishes
minimum margin requirements for each traded contract. The FCM may increase
the margin requirements above these minimums for any or all contracts. The
Fund maintains cash and cash equivalents to satisfy these margin requirements.
Cash and cash equivalents at December 31, 2010 and December 31, 2009 were
$10,711,550 and $14,979,245, respectively. Based upon the types and amounts of
contracts traded and the amount of liquid assets of the Fund, the General
Partner believes there is minimal risk of not being able to meet its margin
requirement.
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 approximately
$47,695,198 and $0 on long positions at December 31, 2010 and December 31,
2009, 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 net unrealized gains on open commodity futures contracts at December 31,
2010 and December 31, 2009 were $647,664 and $0 respectively.
Open contracts generally mature within three months of December 31, 2010.
The latest maturity for open futures contracts is in March 2011. However the
Fund intends to close all contracts prior to maturity.
F-13
<page>
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Notes to the Financial Statements
December 31, 2010
7. Trading Activities and Related Risks - Continued
The following tables disclose the fair values of derivative and hedging
activities in the Statements of Assets and Liabilities and the Statements of
Operations.
<table>
<s> <c> <c> <c> <c> <c>
Derivative Instruments
Statement of Assets and Liabilities
Asset Derivatives Liability Derivatives
at December31, at December 31,
Statement of Assets and Liabilities Location 2010 Fair Value 2010 Fair Value Net
Derivatives not designated as Futures contracts Net unrealized gain (loss) on open $651,883 $(4,219) $647,664
hedge instruments under ASC 815 futures contracts
Asset Derivatives Liability Derivatives
at December31, at December 31,
Statement of Assets and Liabilities Location 2009 Fair Value 2009 Fair Value Net
Derivatives not designated as Futures contracts Net unrealized gain (loss) on open $- $- $-
hedge instruments under ASC 815 futures contracts
Derivative Instruments
Statement of Operations
For the Years Ended December 31,
Line Item in the Statement of Operations 2010 2009 2008
Derivatives not designated as Futures contracts Net realized gain (loss) from investments $811,949 $(2,898,444) $10,403,745
hedge instruments under ASC 815 and foreign currency transactions
Derivatives not designated as Futures contracts Net unrealized appreciation from $647,664 $- $-
hedge instruments under ASC 815 investments
</table>
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.
8. Financial Instruments with Off-Balance Sheet Credit and Market Risk
All financial instruments are subject to market risk, the risk that future
changes in market conditions may make an instrument less valuable or more
onerous. As the instruments are recognized at fair market value, those
changes directly affect reported income.
Included in the definition of financial instruments are securities,
restricted securities and derivative financial instruments. Theoretically,
the investments owned by the Fund directly are exposed to a market risk (loss)
equal to the notional value of the financial instruments purchased and
substantial liability on certain financial instruments purchased short.
Generally, financial instruments can be closed. However, if the market is not
liquid, it could prevent the timely close-out of any unfavorable positions or
require the Fund to hold those positions to maturity, regardless of the
changes in their value or the trading advisor?s investment strategies.
Credit risk represents the accounting loss that would be recognized at the
reporting date if counterparties failed to perform as contracted.
Concentrations of credit risk (whether on or off balance sheet) that arise
from financial instruments exist for groups of counterparties when they have
similar economic characteristics that would cause their ability to meet
contractual obligations to be similarly affected by changes in economic or
other conditions.
9. Derivative Financial Instruments and Fair Value of Financial Instruments
A derivative financial instrument is a financial agreement whose value is
linked to, or derived from, the performance of an underlying asset. The
underlying asset can be currencies, commodities, interest rates, stocks, or
any combination. Changes in the underlying asset indirectly affect the value
of the derivative. As the instruments are recognized at fair value, those
changes directly affect reported income.
All investment holdings are recorded in the statement of assets and
liabilities at their net asset value (fair value) at the reporting date.
Financial instruments (including derivatives) used for trading purposes are
recorded in the statement of assets and liabilities at fair value at the
reporting date. Realized and unrealized changes in fair values are recognized
in net investment gain (loss) in the period in which the changes occur.
Interest income arising from trading instruments is included in the statement
of operations as part of interest income.
Notional amounts are equivalent to the aggregate face value of the
derivative financial instruments. Notional amounts do not represent the
amounts exchanged by the parties to derivatives and do not measure the Fund?s
exposure to credit or market risks. The amounts exchanged are based on the
notional amounts and other terms of the derivatives.
F-14
<page>
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Notes to the Financial Statements
December 31, 2010
10. Indemnifications
In the normal course of business, the Fund enters into contracts and
agreements that contain a variety of representations and warranties and which
provide general indemnifications. The Fund?s maximum exposure under these
arrangements is unknown, as this would involve future claims that may be made
against the Fund that have not yet occurred. The Fund expects the risk of any
future obligation under these indemnifications to be remote.
11. Subsequent Events
Effective February 10, 2011 the trades selected by Clarke began being
cleared by Vision Financial Markets LLC. Trades continue to be introduced by
Futures Investment Company. No further trades will be placed through MF Global
Inc. All trading decisions continue to be made by Clarke and this change will
not have any impact on its trading decisions.
12. Financial Highlights
<table>
<s> <c> <c> <c> <c> <c> <c>
For the Years Ended December 31,
2010 2009 2007 2008 2007 2006
Performance per unit (2)
Net unit value, beginning of the year $4,083.24 $5,404.76 $3,489.87 $4,175.12 $3,489.87 $3,357.08
Net realized and unrealized gain (loss) from
investments and foreign currency 609.02 (753.79) 1,365.97 2,355.63 1,365.97 505.12
Investment income 3.26 6.44 151.43 64.59 151.43 139.17
Expenses (1) (464.38) (574.17) (832.15) (1,190.58) (832.15) (511.50)
Net increase (decrease) for the year 147.90 (1,321.52) 685.25 1,229.64 685.25 132.79
Net unit value at the end of the year $4,231.14 $4,083.24 $4,175.12 $5,404.76 $4,175.12 $3,489.87
Net assets at the end of the year ($000) $11,248 $14,711 $18,637 $22,691 $18,637 $17,015
Total return (1) 3.62% (24.45%) 19.64% 29.45% 19.64% 3.94%
Number of units outstanding at the end of
the year 2,658.37 3,602.89 4,463.75 4,198.35 4,463.75 4,875.48
Supplemental Data:
Ratio to average net assets
Investment and other income (2) 0.08% 0.13% 4.14% 1.30% 4.14 % 4.22 %
Expenses (12.09%) (12.02%) (22.47%) (24.03%) (22.47%) (4.36%)
</table>
Total return is calculated based on the change in value of a unit during the
period. An individual partner's total return and ratios may vary from the
above total returns and ratios based on the timing of additions and
redemptions.
(1) Includes brokerage commissions
(2) For the years ended December 31, 2010, 2009, 2008 and 2007, investments
in other income and expenses and net realized and unrealized gains and losses
on commodity transactions are calculated based on a single unit outstanding
during the period. For the year ended December 31, 2006, investment and other
income and expenses are calculated using the average number of units
outstanding during the year. Net realized and unrealized gains and losses on
commodity transactions is a balancing amount necessary to reconcile the change
in net unit value.
F-15
<page>
Atlas Futures Fund, Limited Partnership
Affirmation of the Commodity Pool Operator
For the Years Ended December 31, 2010, 2009 and 200
*****************************************************************************
To the best of the knowledge and belief of the undersigned, the information
contained in this report is accurate and complete.
/s/ Michael Pacult
Michael Pacult
President, Ashley Capital Management, Inc.
General Partner
Atlas Futures Fund, Limited Partnership
F-16
<page>
Ashley Capital Management, Inc.
FINANCIAL STATEMENTS
December 31, 2010
Index to the Financial Statements
Page
Independent Auditor's Report F-2
Financial Statements
Balance Sheets F-3
Statements of Income and Retained Earnings F-4
Statements of Cash Flows F-5
Notes to the Financial Statements F-6 - F-7
Purchase of units in the Fund will not acquire or otherwise have
any interest in the General Partner.
F-1
<page>
Patke & Associates, Ltd.
Certified Public Accountants
Independent Auditor's Report
To the Board of Directors of
Ashley Capital Management, Inc.
Fremont, Indiana
We have audited the accompanying balance sheets of Ashley Capital Management,
Inc. (a Delaware corporation) as of December 31, 2010 and 2009, and the
related statements of income and retained earnings and cash flows for each of
the three years in the period ended December 31, 2010. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free from material misstatement. An audit involves
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ashley Capital Management,
Inc. as of December 31, 2010 and 2009 and the results of its operations and
its cash flows for each of the three years in the period ended December 31,
2010 are in conformity with accounting principles generally accepted in the
United States of America.
/s/ Patke & Associates, Ltd.
Patke & Associates, Ltd.
Lincolnshire, Illinois
March 14, 2011
300 Village Green Drive, Suite 210 * Lincolnshire, Illinois 60069
Phone: (847) 913-5400 * Fax: (847) 913-5435
F-2
<page>
Ashley Capital Management, Inc.
Balance Sheets
December 31, 2010 and 2009
Assets 2010 2009
Current assets
Cash $4,052 $766
Commissions receivable 6,173 51,923
Due from related parties 33,734 33,734
Total current assets 43,959 86,423
Total assets $43,959 $86,423
Liabilities
Current liabilities
Accounts payable and accrued liabilities $319 $216
Total current liabilities 319 216
Stockholder's equity
Capital stock (common stock 1,500 shares authorized,
no par value; 1,000 issued and outstanding) 1,000 1,000
Retained earnings 42,640 85,207
Total stockholder's equity 43,640 86,207
Total liabilities and stockholder's equity $43,959 $86,423
The accompanying notes are an integral part of the financial statements
F-3
<page>
Ashley Capital Management, Inc.
Statements of Income and Retained Earnings
For the Years Ending December 31, 2010, 2009 and 2008
2010 2009 2008
Revenue
Commissions $471,712 $766,090 $898,144
Operating expenses
Payroll and related expenses 237,328 348,708 365,904
Charitable contributions - - 500
Other operating expenses 98,985 - -
Total operating expenses 336,313 348,708 366,404
Net income 135,399 417,382 531,740
Retained earnings
Beginning of the year 85,207 113,825 109,115
Stockholder distributions (177,966) (446,000) (527,030)
End of the year $42,640 $85,207 $113,825
The accompanying notes are an integral part of the financial statements
F-4
<page>
Ashley Capital Management, Inc.
Statements of Cash Flows
For the Years Ending December 31, 2010, 2009 and 2008
<table>
<s> <c> <c> <c>
2010 2009 2008
Cash flows from operating activities
Net income $135,399 $417,382 $531,740
Adjustments to reconcile net income to net
cash provided by (used in) operating activities -
Changes in operating assets and liabilities -
(Increase) decrease in commissions receivable 45,750 27,600 (78,325)
Increase (decrease) in accounts payable
and accrued liabilities 103 (127) (27,902)
Net cash provided by operating activities 181,252 444,855 425,513
Cash flows from financing activities
Decrease in due from related parties - - 102,789
Stockholder distributions (177,966) (446,000) (527,030)
Net cash (used in) financing activities (177,966) (446,000) (424,241)
Net increase (decrease) in cash 3,286 (1,145) 1,272
Cash at the beginning of the year 766 1,911 639
Cash at the end of the year $4,052 $766 $1,911
</table>
The accompanying notes are an integral part of the financial statements
F-5
<page>
Ashley Capital Management, Inc.
Notes to the Financial Statements
December 31, 2010
1. Nature of the Business
Ashley Capital Management, Inc. (the "Company") was formed on October 15,
1996 under the laws of the state of Delaware. It has authority to act as
general partner and commodity pool operator of the Atlas Futures Fund, Limited
Partnership ("Atlas" or the "Fund") that also was formed pursuant to the laws
of Delaware. The Company became registered as a commodity pool operator by
the National Futures Association pursuant to the Commodity Exchange Act, 7 USC
Sec. 1, et seq, (the "Act") on January 15, 1998.
The responsibilities of the Company, in addition to the selection of trading
advisors and other activity of the Fund, include executing and filing all
necessary legal documents, statements and certificates of the Fund, retaining
independent public accountants to audit the Fund, employing attorneys to
represent the Fund, reviewing the brokerage commission rates to determine
reasonableness, maintaining the tax status of the Fund as a limited
partnership, maintaining a current list of the names, addresses and numbers of
units owned by each limited partner and taking such other actions as deemed
necessary or desirable to manage the business of the Fund and compliance with
the Act. The Company, as general partner, is liable for the debts of the Fund
including, but not limited to, any losses from trading in the pool account not
covered by equity on deposit.
2. Significant Accounting Policies
Use of Accounting Estimates - The accompanying financial statements have
been prepared in accordance with accounting principles generally accepted in
the United States of America ("GAAP"). The preparation of financial
statements in accordance with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.
Statement of Cash Flows - The Company considers all short-term investments
with an original maturity of three months or less to be cash equivalents. The
Company had no cash equivalents at December 31, 2010 or 2009. There were no
cash payments for interest nor for income taxes for the years ended December
31, 2010, 2009 and 2008.
Income Tax Status - For federal income tax purposes, the Company elected S-
Corporation status and therefore pays no federal income taxes, since income or
losses are passed through to the respective stockholders.
Management has continued to evaluate the application of Financial Accounting
Standards Board ("FASB") Accounting Standards Codification ("ASC") 740,
"Income Taxes", and has determined that no reserves for uncertain tax
positions were required to have been recorded as a result of the adoption of
ASC 740. There are no tax positions for which it is reasonably possible that
the total amounts of unrecognized tax benefits will significantly increase or
decrease within twelve months. The 2007 through 2010 tax years generally
remain subject to examination by the U.S. federal and most state tax
authorities.
3. Related Party Transactions
The Company's sole stockholder, Michael Pacult, is the sole stockholder of
the following related parties which are either general partners or managing
members of associated investment funds:
Related Party Investment Fund
Belmont Capital Management, Inc. Bromwell Financial Fund, L.P.
Triview Capital Management, Inc. TriView Global Fund, L.L.C.
Evergreen Capital Management, Inc. Strategic Opportunities Fund, L.L.C.
Michael Pacult is also a 50% owner of Futures Investment Company, an
affiliated introducing broker registered under the Act.
Purchase of units in the Fund will not acquire or otherwise have
any interest in the General Partner.
F-6
<page>
Ashley Capital Management, Inc.
Notes to the Financial Statements
December 31, 2010
3. Related Party Transactions, Continued
Due from related parties result from offering, organizational and operating
costs paid by the Company on behalf of the related party and cash advances.
These amounts bear no interest or due dates and are unsecured. The balance is
usually paid back within a year or when the related fund is financially
capable of repaying the advance. The following amounts were due to the
Company as of December 31, 2010 and 2009:
December 31,
2010 2009
Bromwell Financial Fund, L.P. $3,033 $3,033
Triview Capital Management, Inc. 4,225 4,225
TriView Global Fund, L.L.C. 26,476 26,476
Due from related parties $33,734 $33,734
Atlas pays the Company a 4% commission. For the years ended December 31,
2010, 2009 and 2008 commissions from Atlas were $471,712, $766,090 and
$898,144, respectively. At December 31, 2010 and 2009 the Company was owed
$6,173 and $51,923, respectively, under this agreement.
In 2010 the Company began sharing operating expenses with Futures Investment
Company related to rent, clerical, maintenance and landscaping. These costs
are reported in other operating expenses and totaled $98,981 for the year
ended December 31, 2010.
4. Guarantees
The Company and Michael Pacult, the individual general partner, are liable
for the debts of Atlas. Specifically, the Company has provided a written
guarantee to the FCM to provide that any Atlas overdraft will be paid to the
FCM if it should default in its payments.
5. Concentrations
The Company deposits its cash funds at a local financial institution. The
balance may, at times, exceed federally insured credit limits.
The Company receives all of its net revenues from Atlas.
6. Reclassifications
Certain amounts in prior-year financial statements have been reclassified
for financial statement purposes to conform with presentation in the current-
year financial statements.
7. Subsequent Events
The Company evaluated subsequent events through March 14, 2011, the date the
financial statements were available to be issued. There were no subsequent
events to disclose.
Purchase of units in the Fund will not acquire or otherwise have
any interest in the General Partner.
F-7
<page>
Part II
Statement of Additional Information
Atlas Futures Fund, Limited Partnership
This Statement of Additional Information is the second part of a two-part
document and should be read in conjunction with Part I of Atlas Futures Fund's
disclosure document dated March, __, 2012, both of which are combined in
this single prospectus.
Summary of the Fund 2
Correlation Comparison 4
Fund and Offering Details 5
The Opportunity 6
Why Atlas Futures Fund? 6
Investment Factors 6
Value of Diversification - Managed Futures Industry 7
Managed Futures vs. Stocks During Draw-Downs 9
The Futures Markets 10
Advantages of Managed Futures Fund Investments 11
Important Disclosures 12
Appendixes & Exhibits
Appendix I - Commodity Terms and Definitions; State Regulatory Glossary
Appendix II - Privacy Statement
Exhibit A - Limited Partnership Agreement
Exhibit B - Request for Redemption
Exhibit C - Suitability Information
Exhibit D - Subscription Agreement and Power Of Attorney
Exhibit E - Investment Advisory Contract - Clarke Capital Management,
Inc.
The date of this Statement of Additional Information is March __, 2012
<page>
Atlas Futures Fund, LP
* Trading advisor with 18 years experience
* 11 year trading program track record
* Low historical correlation to stocks and bonds
* Profit potential (and risk of loss) in both rising and falling markets
* Participation in a wide variety of global markets
* Monthly liquidity
THE OFFERING OF UNITS IN ATLAS FUTURES FUND, LP (THE "FUND") CAN ONLY BE MADE
IN CONJUNCTION WITH PART I OF THIS PROSPECTUS, WHICH CONTAINS IMPORTANT
INFORMATION REGARDING CERTAIN RISKS ASSOCIATED WITH THE FUND AND SHOULD BE
READ CAREFULLY AND RETAINED BY ANYONE CONSIDERING INVESTMENT IN THE FUND. THE
UNITS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION NOR HAS THE SECURITIES EXCHANGE COMMISSION, THE COMMODITY FUTURES
TRADING COMMISSION, OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE. AN INVESTMENT IN THE FUND IS SPECULATIVE AND INVOLVES A
HIGH DEGREE OF RISK.
SAI 1
<page>
Atlas Futures Fund, LP
Summary of the Fund
Fund Objectives
Atlas Futures Fund, L.P. allows investors to participate in a wide range of
markets within a single investment. With access to an array of market sectors
and investment opportunities, an investment in the Fund may encompass
everything from financial futures to commodity futures. The Fund also provides
investors with the potential for above average rates of return, as well as an
important diversification from stocks, bonds and mutual funds through a
professionally managed futures investment. Markets also traded by the Fund
include global interest rates, foreign currencies, metals, energy products,
global equity indices and agricultural commodities.
Professional Management
The advisor selected by the General Partner to trade on behalf of the Fund has
over 16 years experience in professional money management and, in the opinion
of the General Partner, is well known for excellence in the managed futures
industry.
Portfolio Diversification
The ability of futures trading advisors to trade in a market by going either
long or short creates profit potential in both rising and falling markets. The
strategy of the Fund acts independently of economic prosperity, interest rates
or currency stability. Futures trading advisors can perform as well in a bear
market as in a bull market. Of course, where there is profit potential, there
is also risk of loss. The correlation between the performance of managed
futures funds and stocks and bonds has historically been very low. Thus,
managed futures funds provide vital diversification for suitable investors.
Disciplined, Multi-Manager Trading Approach
The trading programs used for the Fund represent a unique blend of strategies
with access to global market sectors. This custom blend of strategies creates
an opportunity for investors interested in diversifying their portfolios
across multiple sectors using complimentary trading styles.
Limited Risk
An investor in the Fund has limited liability and is liable for principal and
profits only.
Liquidity
Investors in the Fund can generally withdraw their capital at the net asset
value as of the end of any month, with 10 days advance written notice, and
after an initial 12 month lock-in period.
Administrative Convenience
The Fund's General Partner sends each investor a comprehensive monthly
statement showing the results of the Fund's previous month's trading. The
General Partner provides audited reports for the Fund and a year-end statement
containing information necessary for income tax preparation. Investors may
call the General Partner for intra-month updates if desired.
The General Partner
The Fund's General Partner is Ashley Capital Management, Inc., whose principal
is Mr. Michael Pacult, experienced in the field of managed futures in the
United States since 1980. Please see Part I of this prospectus for a more
detailed description of the advantages and risks associated with an investment
in the Fund that you need to read prior to investment in the Atlas Futures
Fund.
Principal Selling Agent
The Fund is offered by Futures Investment Company, which is registered with
the Financial Industry Regulatory Authority. Futures Investment Company,
through its affiliate relationship with Ashley Capital Management, Inc., is
the selling agent for the Fund. Futures Investment Company is also a member
of SIPC, is registered with the SEC and CFTC, and is an NFA member.. All sales
are on a best efforts basis.
SAI 2
<page>
Checks and Balances
The following is to advise you of the structure of the Fund's business, which
is a combination of independently functioning and regulated organizations that
provide a system of checks and balances on the accuracy and integrity of one
another and your investment.
Broker: Your broker and his or her Broker/Dealer are regulated by the
Securities and Exchange Commission (SEC), the Financial Industry Regulatory
Authority (FINRA), formerly the National Association of Securities Dealers
(NASD), and the various state securities boards in which they operate.
CPO: The Fund managers are registered pursuant to the US Commodity Exchange
Act in accordance with rules established by the US Commodity Futures Trading
Commission (CFTC) as Commodity Pool Operators (CPOs). The Fund CPOs are
regulated by the National Futures Association (NFA), a CFTC authorized self
regulatory organization. The corporate CPO's financial statements are
audited annually by an independent Certified Public Accounting firm, Patke &
Associates, Ltd. In addition to auditing the financial statements of the
CPO, Patke also audits the Fund financial statements.
CTA: The CPO selects one or more independent traders who are registered
pursuant to the US Commodity Exchange Act as Commodity Trading Advisors
(CTAs). The CTA is then granted authority to enter trades utilizing the
amount of money the CPO grants the CTA for that purpose. The CTA is
regulated by the NFA.
FCM: The CTA executes the Fund trades with Vision Financial Services LLC, an
independent Futures Commission Merchant (FCM), which is a registered member of
various world-wide futures exchanges. Both the FCM and the US exchanges are
regulated pursuant to the Commodity Exchange Act and are audited by the NFA.
All Fund trades are executed as standardized futures contracts that have
complete transparency.
Assets: All investor funds are pooled and held in the name of the Fund. The
Fund assets are held in accounts at the FCMs as margin for trading, in a cash
management fund that invests only in US T-Bills, in T-Bills held in a Treasury
Direct account at the US Treasury, and a Fund checking account to pay Fund
expenses as necessary.
Statements: At the end of each trading day, the FCM generates an account
statement that shows the day's trading activity, if any, and the Fund's open
market positions, if any, which shows the original date and price of each
commodity contract marked to the market's daily close. This produces a
resulting unrealized profit or loss on each position, as well as the total
value of the Fund account. The CPO, CTA, and independent Fund bookkeeper,
Investor Services, all review the account statements daily.
Bookkeeper: The independent bookkeeper produces a daily and monthly report of
the Fund's Net Asset Value (NAV) per Unit, both of which are immediately
reviewed by the CPO when completed, and compared to the CPO's own records. In
addition to the Fund bookkeeping, the bookkeeper completes the partnership
accounting and sends out the monthly individual investor statements.
Auditor: All of the bookkeeper's activities with respect to the preparation
of the Fund financial statements are reviewed and audited by Patke &
Associates, Ltd., the Fund's independent CPA, which in turn is subject to the
rules and regulations of the American Institute of Certified Public
Accountants (AICPA) and the Public Company Accounting Oversight Board (PCAOB).
Legal: The Fund employs independent law firms to work with the bookkeeper and
auditor to produce and update the Fund prospectus and to keep in compliance
and interface with the SEC, FINRA, NFA, CFTC, and various state securities
administrators to submit the required regulatory filings as periodically
required.
Although your investment in futures presents the risk of loss from the trades
made, please be assured that all of us-your broker, the CPO, CTA, FCM,
bookkeeper, auditor, and attorneys -while independent from each other, are
working together in a system of checks and balances to monitor your investment
for performance, accuracy, integrity, and safety to be certain the reports of
earnings and losses to you are accurate and complete.
SAI 3
<page>
Correlation Comparison
Performance Through Diversification
The value of diversification can be seen by looking at the correlation
comparison of the performance of the Fund versus benchmark stock market and
managed futures indices. Since October 1999, not only has the Fund
outperformed the major indices, but was also not correlated to such indices.
In general, this attribute will allow investors to potentially reduce the risk
and improve the performance in their portfolios through diversification.
Annual Rates of Return
October 1999 - December 2011
Atlas Fund S&P 500 NASDAQ 100 Barclay CTA
1999 -4.88% 14.54% 53.97% -1.97%
2000 31.76% -10.12% -36.83% 10.46%
2001 -5.70% -13.05% -32.65% 4.92%
2002 10.97% -23.36% -37.58% 13.40%
2003 33.47% 26.39% 49.11% 11.07%
2004 56.04% 9.00% 10.45% 3.83%
2005 22.91% 3.01% 1.48% 2.44%
2006 3.94% 13.62% 6.78% 5.67%
2007 19.65% 3.55% 18.67% 11.57%
2008 29.46% -38.50% -41.90% 19.64%
2009 -24.66% 23.45% 53.54% 0.32%
2010 3.61% 12.79% 19.23% 7.05%
2011 -23.88% -0.02% 2.71% -2.99%
Value of Initial $10,000 Investment vs. Benchmarks
October 1999 - December 2011
$10,000 invested Oct 1999 in Atlas would be worth $32,202
$10,000 invested Oct 1999 in S&P 500 would be worth $9,806
$10,000 invested Oct 1999 in the NASDAQ 100 would be worth $9,460
$10,000 invested Oct 1999 in Barclay CTA would be worth $18,820
Correlation Comparison
<table>
<s> <c> <c> <c> <c> <c>
Oct 1999 - December 2011 Total Months: 147 Atlas Fund S&P 500 NASDAQ 100 Barclay CTA
Performance Total Rate of Return 222.02% -1.94% -5.40% 88.20%
Avg. Annual Rate of Return 12.48% 1.74% 5.47% 5.41%
Risk Worst Peak-to-Valley Drawdown* 44.05% -52.56% -81.07% -7.73%
Standard Deviation** 23.49% 18.65% 34.54% 5.01%
Statistics Sharpe Ratio*** 0.43 -0.03 0.09 0.58
Correlation to Atlas 1.00 -0.17 -0.24 0.56
</table>
* Worst Peak-to-Valley Drawdown is the greatest cumulative percentage decline
in month end net asset value of the program due to losses sustained by an
account during any period in which the initial month-end net asset value of an
account is not equaled or exceeded by a subsequent month-end net asset value
of the account and includes the time period in which it occurred.
** Standard Deviation shows the annualized performance volatility by
quantifying the amount of dispersion you can expect performances to fall
around the average or mean return.
*** Sharpe Ratio is a risk-adjusted measure used to determine reward per unit
of risk. The higher the ratio, the better the fund's historical risk-adjusted
performance. The measure uses a compounded annual return minus the available
annual risk free rate in 13 Week T-Bill returns divided by annualized standard
deviation.
The S&P 500 and NASDAQ 100 indices are unmanaged and are generally
representative of certain portions of the U.S. equity markets. The Barclay CTA
Index is representative of the average performance of Commodity Trading
Advisors reporting to the Barclay Database. These indices are shown for
illustrative purposes only and are not indicative of any fund's performance.
An investor cannot invest directly in an index. Moreover, indices do not
reflect commissions or fees which might be charged to a similar fund and which
might materially affect the performance data presented.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. TRADING IN THE FUTURES,
AND OPTIONS ON FUTURES MARKETS IS SPECULATIVE, INVOLVES SUBSTANTIAL RISK, AND
IS NOT SUITABLE FOR ALL INVESTORS. THE ABOVE THREE TABLES WERE PREPARED BY
THE FUND.
SAI 4
<page>
Atlas Futures Fund, LP
Fund and Offering Details
The Fund
Investment Goal Intermediate to Long-Term Capital Appreciation
General Partner Ashley Capital Management, Inc.
Trading Advisor Clarke Capital Management, Inc.
Clearing Broker Vision Financial Markets, LLC
The Offering
Minimum Investment $25,000
Increment Amount $1,000
Subscription Fee None
Subscription Price Net Asset Value
Subscription Notice Subscriptions Available Monthly with 5 Business Days
Notice
Subscription Procedure Subscribers Must Complete, Execute and Deliver to the
Fund the Subscription Agreement and Power of Attorney Signature Page Which
Accompanies the Prospectus
Redemption Notice Liquidity Available Monthly with 10 Days Notice after an
initial 12 month lock-in period
Investor Liability Limited to the Amount of Capital Invested
Investor Suitability Net Worth of $250,000 -or-
Income of $70,000 and Net Worth of $70,000
Plus Specific State Requirements
Please Refer to the Prospectus for Additional Information
Fees and Expenses
General Partner Compensation Fixed Brokerage Commission of 4% Annually
Introducing Broker Compensation Fixed Brokerage Commission of 7% Annually
Trading Advisor Compensation Incentive Fee: 25% New Profit Quarterly
Management Fee: None
Selling Agent Compensation 6% up front selling commission on gross
subscription amount
Annual Expenses Estimated $130,000
SAI 5
<page>
The Opportunity
* Professionally managed futures funds offer access to global markets,
along with the potential to profit from rising or falling markets.
* Professionally managed futures funds add an important component to a
diversified growth portfolio.
* In the opinion of the General Partner, Atlas Futures Fund, L.P. offers a
more simple and effective way to use the services of a successful futures
trading advisor with a long-term track record than with a managed account or
through discretionary trading yourself.
* An individual investor seeking to utilize the services of the Fund's
traders through a direct account would need to meet a substantially higher
minimum investment requirement.
How to Subscribe
* After reviewing the Offering Memorandum, please complete and sign the
items in the Subscription Booklet.
* Forward to the Fund the Subscription Booklet and a check made payable to
"Atlas Futures Fund, LP".
The Fund is open to qualified investors and the current minimum investment is
$25,000. New investments are entered into the Fund at the end of the month in
which they are received and must be received on the 5th business day prior to
the end of the month.
Why Atlas Futures Fund?
Why a Managed Futures Fund?
Managed futures investments are intended to generate long-term capital growth
by providing global portfolio diversification. This diversification can be
utilized by investing in the Fund. A primary reason to invest in a managed
futures (alternative investment) product, such as Atlas Futures Fund, is to
provide a fully diversified portfolio of investments that has the potential to
improve returns while protecting against risk. This is possible because
managed futures (alternative investment) products historically have not been
correlated to traditional markets, such as stocks and bonds.
The Atlas Futures Fund employs a professional commodity trading advisor,
Clarke Capital Management, Inc., that trades as many as 40 futures markets
worldwide using proprietary trading systems. The trading advisor has
consistently produced positive returns, even during down markets, due to
diversified trades and the ability to spot trends, while insuring strict risk
controls are always in place. Of course, past performance is not necessarily
indicative of future results.
Why Now?
The recent fluctuation in world markets has proven that long-only equity
portfolios cannot make money during downward cycles. For continued portfolio
performance, a fund that hedges its trades is the only way to potentially
limit losses and possibly achieve gains in any economic environment.
Historical Non Correlated Performance
Historically, managed futures investments have had very little correlation to
the stock and bond markets. While there is no guarantee of positive
performance in a managed futures component of a portfolio, the non-correlation
characteristic of managed futures can improve risk adjusted returns in a
diversified investment portfolio. Having the ability to go long and short
gives managed futures the ability to profit from up or down markets. In other
words, profit or loss in managed future funds is not dependent on economic
cycles.
Investment Factors
The Advantages of Non-Correlation and Diversification of Your Portfolio
The Nobel Prize for Economics in 1990 was awarded to Dr. Harry Markowitz for
demonstrating that the total return can increase, and/or risk can be reduced,
when portfolios have positively performing asset categories that are
essentially non-correlated. Even many seemingly diverse portfolios may
actually be quite correlated. For instance, over time, alternative investment
classes such as real estate and international stocks and bonds may correlate
closely with domestic equities as the global economy expands and contracts.
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Historically, alternative investments such as managed futures funds have had
very little correlation to the stock and bond markets. Ashley Capital
Management, Inc. believes that the performance of the Fund should also exhibit
a substantial degree of non-correlation (not, however, necessarily negative
correlation) with the performance of traditional equity and debt portfolio
components, in part because of the ease of selling futures short. This feature
of futures -- being able to be long or short a futures position with similar
ease - means that profit and loss from futures trading is not dependent upon
economic or geopolitical prosperity or stability.
However, non-correlation will not provide any diversification advantages
unless the non-correlated assets are outperforming other portfolio assets, and
there is no guarantee that the Fund will outperform other sectors of an
investor's portfolio (or not produce losses). Additionally, although adding
managed futures funds to a portfolio may provide diversification, managed
futures funds are not a hedging mechanism and there is no guarantee that
managed futures funds will appreciate during periods of inflation or stock and
bond market declines.
Non-correlated performance should not be confused with negatively correlated
performance. Non-correlation means only that the Fund's performance will
likely have no relation to the performance of equity and debt instruments,
reflecting Ashley Capital's belief that factors that affect equity and debt
prices may affect the Fund differently and that certain factors which affect
the former may not affect the latter. The net asset value per unit may decline
or increase more or less than equity and debt instruments during both rising
and falling markets. Ashley Capital has no expectation that the Fund's
performance will be negatively correlated to the general debt and equity
markets, i.e., likely to be profitable when the latter are unprofitable or
vice versa.
Value of Diversification - Managed Futures Industry
Money Under Management in Managed Futures
Money Under Management in Managed Futures is updated on a quarterly basis and
is usually ready by month end of the month following the quarter. Money Under
Management during the 2nd quarter 2011 was $299 billion.
This chart was prepared by the Fund and shows industry growth since 1980 using
data obtained from Barclay Trading Group, Ltd. See the glossary in Appendix I
of this Statement of Additional Information for information integral to this
chart. This chart reflects the managed futures industry as a whole and is not
indicative of the Fund in particular.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
Market Diversification
The Fund's CTAs use proprietary systems designed to ensure minimal correlation
to traditional investments. The spectrum of traded instruments globally
consists of up to 40 futures markets in both commodity and financial futures.
Fundamental to the Fund's selection of CTAs is low correlation between the
different instruments they trade and high liquidity for order execution.
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This chart was prepared by the Fund. See the glossary in Appendix I of this
Statement of Additional Information for information integral to this chart.
This chart reflects the managed futures industry as a whole and is not
indicative of the Fund in particular.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
Historical Correlation
The chart below shows the historical correlation of the monthly returns of the
NASDAQ Composite Index, Europe, Australasia, Far East (EAFE) Index with the
S&P 500 Index than managed futures investments, as represented by the Barclay
CTA Index. This low correlation shows that managed futures have a tendency to
behave somewhat independently from stocks.
Historical Correlation Of Monthly Returns
With The S&P 500 Index
January 1980* - December 2011
* Barclay data was not available prior to 1980.
This chart was prepared by the Fund. See the glossary in Appendix I of this
Statement of Additional Information for information integral to this chart.
This chart reflects the managed futures industry as a whole and is not
indicative of the Fund in particular. The S&P 500, NASDAQ composite, and
Europe, Australia, Far East indices are unmanaged and are generally
representative of certain portions of the U.S. and global equity markets. The
Barclay Aggregate Bond Index is unmanaged and generally representative of the
global central government bond market. The Barclay CTA Index reflects the
dollar-weighted performance of CTAs reporting to the Barclay Database. These
indices are shown for illustrative purposes only and are not indicative of any
fund's performance. An investor cannot invest directly in an index. Moreover,
indices do not reflect commissions or fees which might be charged to a similar
fund and which might materially affect the performance data presented.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
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Risk Perspective
The proper evaluation of any investment must include an assessment of the risk
which must be taken to achieve the prospective return. Another measure of
risk, in addition to standard deviation, is historical worst-case decline, or
largest draw-down. In other words, if you had purchased an investment at a
month-end peak in performance and then subsequently sold at the lowest month-
end price thereafter, the worst-case decline would be the largest percentage
loss experienced. The chart below shows the worst-case cumulative monthly
decline in the Barclay Government Bond Index, Barclay CTA Index, S&P 500
Index, EAFE Index and NASDAQ Composite Index since 1980. The Barclay CTA Index
experienced a smaller peak to valley decline than three of the other indices.
This does not imply that managed futures are necessarily safer than the
benchmarks compared; it is merely intended to put risk in a historical
perspective.
Worst-Case Declines
1980* - December 2011
[Amounts In Percents]
* Barclay data was not available prior to 1980.
This chart was prepared by the Fund. See the glossary in Appendix I of this
Statement of Additional Information for information integral to this chart.
This chart reflects the managed futures industry as a whole and is not
indicative of the Fund in particular. The S&P 500, NASDAQ composite, and
Europe, Australia, Far East indices are unmanaged and are generally
representative of certain portions of the U.S. and global equity markets. The
Barclay Govt. Bond Index is unmanaged and generally representative of the
global central government bond market. The Barclay CTA Index reflects the
dollar-weighted performance of CTAs reporting to the Barclay Database. These
indices are shown for illustrative purposes only and are not indicative of any
fund's performance. An investor cannot invest directly in an index. Moreover,
indices do not reflect commissions or fees which might be charged to a similar
fund and which might materially affect the performance data presented.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
Managed Futures vs. Stocks During Draw-Downs
The following charts show the comparison between the performance of managed
futures and stocks during the five worst declines for each since 1980. These
charts demonstrate the historical non-correlation between these two asset
classes over the stated time periods. The managed futures portion is
represented by the Barclay CTA Index and the stocks portion is represented by
the S&P 500 Index.
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Managed Futures vs. Stocks During Stock Market Drawdowns.
(January, 1980* - December 2011)
Source: Stocks: S&P 500 Index,
Managed Futures: Barclay Trading Advisor Qualified Universe Index (MAR)
* Barclay data was not available prior to 1980.
This chart was prepared by the Fund. See the glossary in Appendix I of this
Statement of Additional Information for information integral to this chart.
This chart reflects the managed futures industry as a whole and is not
indicative of the Fund in particular. The S&P 500 index is unmanaged and is
generally representative of a certain portion of the U.S. equity markets. The
Barclay CTA Index reflects the unweighted performance of CTAs with at least
four years of experience. These indices are shown for illustrative purposes
only and are not indicative of any fund's performance. An investor cannot
invest directly in an index. Moreover, indices do not reflect commissions or
fees which might be charged to a similar fund and which might materially
affect the performance data presented.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
The Futures Markets
Futures Contracts
Futures contracts are standardized agreements traded on commodity exchanges
that call for the future delivery of the commodity or financial instrument at
a specified time and place. A futures trader that enters into a contract to
take delivery of the underlying commodity is "long" the contract, or has
"bought" the contract. A trader that is obligated to make delivery is "short"
the contract or has "sold" the contract. Actual delivery on the contract
rarely occurs. Futures traders usually offset (liquidate) their contract
obligations by entering into equal but offsetting futures positions. For
example, a trader who is long one September Treasury bond contract on the
Chicago Board of Trade can offset the obligation by entering into a short
position in a September Treasury bond contract on that exchange. Futures
positions that have not yet been liquidated are known as "open" contracts or
positions.
Futures contracts are traded on a wide variety of commodities, including
agricultural products, metals, energies, livestock products, government
securities, currencies and stock market indices. Options on futures contracts
are also traded on U.S. and foreign commodity exchanges. The Fund concentrates
its futures trading in financial instruments, such as interest rate, foreign
exchange and stock index contracts, and metal and energy contracts.
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Option Contracts
An option on a futures contract or on a physical commodity or currency gives
the buyer of the option the right to take a position of a specified amount at
a specified price in a specific underlying instrument (the "striking,"
"strike" or "exercise price"). The buyer of a "call" option acquires the right
to take a long position (i.e., the obligation to take delivery of a specified
amount at a specified price in a specific underlying instrument). The buyer of
a "put" option acquires the right to take a short position (i.e., the
obligation to make delivery of a specified amount at a specified price in a
specific underlying instrument).
The purchase price of an option is referred to as its "premium." The seller
(or "writer") of an option is obligated to take a position at a specified
price opposite to the option buyer if the option is exercised. Thus, the
seller of a call option must stand ready to sell (take a short position in)
the underlying instrument at the striking price if the buyer should exercise
the option. The seller of a put option, on the other hand, must stand ready to
buy (take a long position in) the underlying instrument at the striking price
if the buyer should exercise the option.
A call option is said to be "in the money" if the striking price is below
current market levels, and "out of the money" if the striking price is above
current market levels. Conversely, a put option is said to be "in the money"
if the striking price is above current market levels, and "out of the money"
if the striking price is below current market levels.
Options have limited lifespans. An option that is out of the money and not
offset by the time it expires becomes worthless. Options usually trade at a
premium above their intrinsic value (i.e., the difference between the market
price for the underlying instrument and the striking price), because the
option trader is speculating on (or hedging against) future movements in the
price of the underlying instrument. As an option nears its expiration date,
the market value and intrinsic value typically move into parity. The
difference between an option's intrinsic value and market value is referred to
as the "time value" of the option.
Regulation
The U.S. futures markets are regulated under the Commodity Exchange Act, which
is administered by the CFTC, a Federal agency created in 1974. The CFTC
licenses and regulates commodity exchanges, commodity pool operators,
commodity trading advisors and clearing firms which are referred to in the
futures industry as "futures commission merchants." The Fund is licensed by
the CFTC as a commodity pool operator. Futures professionals are also
regulated by the NFA, a self-regulatory organization for the futures industry
that supervises the dealings between futures professionals and their
customers. If its pertinent CFTC licenses or NFA memberships were to lapse, be
suspended or be revoked, the Fund would be unable to act as the Fund's
commodity pool operator.
The CFTC has adopted disclosure, reporting and recordkeeping requirements for
commodity pool operators and disclosure and recordkeeping requirements for
commodity trading advisors. The reporting rules require pool operators to
furnish to the participants in their pools a monthly statement of account,
showing the pool's income or loss and change in net asset value, and an annual
financial report, audited by an independent certified public accountant.
The CFTC and the exchanges have pervasive powers over the futures markets,
including the emergency power to suspend trading and order trading for
liquidation of existing positions only. The exercise of such powers could
adversely affect the Fund's trading.
Margin
The Fund will use margin in its trading. In order to establish and maintain a
futures position, a trader must make a type of good-faith deposit with its
broker, known as "margin," of approximately 2%-10% of contract value. Minimum
margins are established for each futures contract by the exchange on which the
contract is traded. The exchanges alter their margin requirements from time to
time, sometimes significantly. For their protection, futures brokers may
require higher margins from their customers than the exchange minimums.
There are two types of margin. "Initial" margin is the amount a trader is
required to deposit with its broker to open a futures position. The other type
of margin is "maintenance" margin. When the contract value of a trader's
futures position falls below a certain percentage, typically about 75%, of its
value when the trader established the position, the trader is required to
deposit additional margin in an amount equal to the loss in value.
Advantages of Managed Futures Fund Investments
Trading in futures and options on futures, and participating in funds that
invest in those markets offer many structural advantages that make managed
futures an efficient way to participate in global markets. The Fund believes
that this investment should be considered as a medium to long-term investment
and should not be purchased with the intent to redeem the investment within
the first three years.
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Profit Potential
Futures and related contracts can easily be leveraged, which magnifies the
potential profit or loss.
Interest Credit
Unlike some other alternative investment funds, the Fund does not borrow money
in order to obtain leverage, so the Fund does not incur any interest expense.
Rather, the Fund's margin deposits are maintained in cash and cash
equivalents, such as U.S. Treasury bills.
Global Diversification Within a Single Investment
Futures and related contracts can be traded in many countries, which makes it
possible to diversify risk around the world. This diversification is available
both geographically and across market sectors. For example, an investor can
trade interest rates, stock indices and currencies in several countries around
the world, as well as energy and metals. While the Fund itself trades across a
diverse selection of global markets, an investment in the Fund is not a
substitute for overall portfolio diversification.
Ability to Profit or Lose in a Rising or Falling Market Environment
The Fund can establish short positions and thereby profit from declining
markets as easily as it can establish long positions. This potential to make
or lose money, whether markets are rising or falling around the world, makes
managed futures particularly attractive to sophisticated investors. Of course,
if markets go higher while the Fund has a short position, the Fund will lose
money until the short position is exited and vice versa.
Professional Trading
Ashley Capital's approach includes the following elements:
- Disciplined Money Management. The CTAs selected by Ashley Capital generally
allocate a portion of portfolio equity to any single market position. However,
no guarantee is provided that losses will be limited to these percentages.
- Balanced Risk. The Fund's capital is allocated to as many as 40 markets 24
hours a day. Among the factors considered for determining the portfolio mix
are market volatility, liquidity and trending characteristics.
- Capital Management. When proprietary risk/reward indicators reach
predetermined levels, the Fund may increase or decrease commitments in certain
markets in an attempt to reduce performance volatility.
- Multiple Systems. While the Fund's approach is to find emerging trends and
follow them to conclusion, no one system is right all of the time. The CTAs
utilize a multi-system trading strategy on behalf of the Fund that divides
capital among different trading systems in an attempt to reduce performance
volatility and manage risk.
Convenience
Through the Fund, investors can participate in global markets and
opportunities without needing to master complex trading strategies and monitor
multiple international markets.
Liquidity
In most cases, the underlying markets have sufficient liquidity. Some markets
trade 24 hours a day when global markets are open. While there can be cases
where there may be no buyer or seller for a particular contract, the Fund
tries to select markets for investment based upon, among other things, their
perceived liquidity. However, unexpected market illiquidity has caused major
losses in recent years in such sectors as emerging markets and mortgage-backed
securities. There can be no assurance that the same will not happen to the
Fund at any time or from time to time.
Important Disclosures
Atlas Futures Fund, LP is a registered commodity pool and is not subject to
the same regulatory requirements
as a mutual fund, including mutual fund requirements to provide certain daily
standardized pricing and evaluation
information to investors. The following should be noted:
* The Fund is a speculative investment and involves a high degree of risk.
An investor could lose all of his/her investment.
* An investment in the Fund is not suitable for all investors.
* The Fund may be leveraged and the Fund's performance can be volatile.
* A substantial portion of the Fund's trades may be executed on foreign
exchanges, which could mean higher risk.
* An investment in the Fund may be illiquid (monthly redemptions are
available subject to market disruption) and there are significant restrictions
on transferring interests in the Fund. There is no secondary market for an
investor's investment in the Fund and none is expected to develop.
* The Fund's fees and expenses - which may be substantial regardless of
any positive return - are deducted from profits, and returns to clients will
be net of fees.
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* Diversification does not assure a profit or provide a guarantee against
loss in a declining market.
This summary is not a complete list of the risks and other important
disclosures involved in investing in the Fund and is subject to the more
complete disclosures contained in the Fund's Prospectus and other offering
documents, which should be reviewed carefully.
SAI 13
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General Partner:
Ashley Capital Management, Inc.
P.O. Box 760
5914 North 300 West
Fremont, IN 46737
(260) 833-1306
THE OFFERING OF UNITS IN ATLAS FUTURES FUND, LP (THE "FUND") CAN ONLY BE MADE
IN CONJUNCTION WITH PART I OF THIS PROSPECTUS, WHICH CONTAINS IMPORTANT
INFORMATION REGARDING CERTAIN RISKS ASSOCIATED WITH THE FUND AND SHOULD BE
READ CAREFULLY AND RETAINED BY ANYONE CONSIDERING INVESTMENT IN THE FUND. THE
UNITS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION NOR HAS THE SECURITIES EXCHANGE COMMISSION, THE COMMODITY FUTURES
TRADING COMMISSION, OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THE OFFERING MEMORANDUM OR THIS BROCHURE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. AN INVESTMENT IN THE
FUND IS SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK.
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APPENDIX I
Commodity Terms and Definitions
Identification of the parties and knowledge of various terms and concepts
relating to trading in futures and options on futures contracts and this
offering are necessary for a potential investor to identify the risks of
investment in the Fund.
1256 Contract. See Taxation - Section 1256 Contract.
Additional Sellers. See definition of Selling Agent.
Associated Persons. The persons registered pursuant to the Commodity Exchange
Act with the futures commission merchant, who are eligible to service the
partnership or the partnership accounts.
Average Price System. The method approved by the Commodity Futures Trading
Commission to permit the commodity trading advisor to place positions sold or
purchased in a block to the numerous accounts managed by the advisor. See The
Commodity Trading Advisor in the main body of the prospectus.
Best Efforts. The term to describe that the party will try to accomplish a
result without any contractual obligation to achieve that result.
Broker. See definitions of Futures Commission Merchant and Introducing
Broker.
Capital means cash invested in the partnership by any partner and placed at
risk for the business of the partnership.
Commodity Futures trading Commission. Commodity Futures Trading Commission,
1155 21st St NW, Washington, D.C., 20036. An independent regulatory
commission of the United States government empowered to regulate commodity
futures transactions and the registration of the general partner, futures
commission merchant, trading advisor and commodity exchanges pursuant to the
U.S. Commodity Exchange Act.
Commodity. Goods, wares, merchandise, produce, currencies, and stock indices
and in general everything that is bought and sold in commerce. Traded
commodities on U. S. Exchanges are sold according to uniform established grade
standards, in convenient predetermined lots and quantities such as bushels,
pounds or bales, are fungible and, with a few exceptions, are storable over
periods of time.
Commodity Broker. See definitions of Futures Commission Merchant and
Introducing Broker.
Commodity Exchange Act. The statute providing the regulatory scheme for
trading in commodity futures and options contracts and the commodity pool
operators, futures commission merchant, and trading advisors in the United
States under the administration of the Commodity Futures Trading Commission.
Commodity Pool Operator. Ashley Capital Management, Inc., 5914 N. 300 West,
P. O. Box 760, Fremont, IN 46737, (260) 833-1306; and, Mr. Michael P. Pacult,
5914 N. 300 West, P.O. Box 760, Fremont, IN 46737. A person who raises
capital through the sale of interests in an investment trust, partnership,
corporation, syndicate or similar form of enterprise, that uses that capital
to invest either entirely or partially in futures contracts.
Commodity Trading Advisor. A person or entity which renders advice about
commodities or about the trading of commodities, as part of a regular
business, for profit. Particularly, those who will be responsible for the
analysis and placement of trades for the partnership.
Daily Price Limit. The maximum permitted movement in a single direction
(imposed by an exchange and approved by the CFTC) in the price of a commodity
futures contract for a given commodity that can occur on a commodity exchange
on a given day in relation to the previous day's settlement price, which is
subject to change, from time to time, by the exchange (with CFTC approval).
Depository Account. An account maintained by the corporate general partner
that will hold all the subscription documents and proceeds until such time as
either the subscription is accepted or rejected or the offering is terminated.
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Exchange for Physicals. A practice whereby positions in futures contracts may
be initiated or liquidated by first executing the transaction in the
appropriate cash market and then arbitraging the position into the futures
market (simultaneously buying the cash position and selling the futures
position, or vice versa).
Form K-1. The section of the Federal Income Tax Return filed by the
partnership which identifies the amount of investment in the partnership, the
gains and losses for the tax year, and the amount of such gains and losses
reportable by a partner on the partner's tax return.
Fully-Committed Position. Each commodity trading advisor has an objective
percentage of equity to be placed at risk. In addition, the CFTC places
limits upon the number of positions a single commodity trading advisor may
have in commodities. When either the objective percentage of equity is placed
at risk or the commodity trading advisor reaches the limit in number of
positions, the account or accounts have a fully-committed position.
Futures Commission Merchant. The person that solicits or accepts orders for
the purchase or sale of any commodity for future delivery subject to the rules
of any contract market and in connection with such solicitation or acceptance
of orders, accepts money or other assets to margin, guarantee, or secure any
trades or contracts that result from such orders for a commission. The
introducing broker is responsible for the negotiation and payment of the
commission to the futures commission merchant.
Futures Contract. A contract providing for (1) the delivery or receipt at a
future date of a specified amount and grade of a traded Commodity at a
specified price and delivery point, or (2) cash settlement of the change in
the value of the contract. The terms of these contracts are standardized for
each commodity traded on each exchange and vary only with respect to price and
delivery months. A futures contract should be distinguished from the actual
physical commodity, which is termed a cash commodity. Trading in futures
contracts involves trading in contracts for future delivery of commodities and
not the buying and selling of particular physical lots of commodities. A
contract to buy or sell may be satisfied either by making or taking delivery
of the commodity and payment or acceptance of the entire purchase price
therefore, or by offsetting the contractual obligation with a countervailing
contract on the same exchange prior to delivery.
General Partner. Ashley Capital Management, Inc., 5914 N. 300 West, P. O. Box
760, Fremont, IN 46737, (260) 833-1306; and, Mr. Michael P. Pacult, 5914 N.
300 West, P.O. Box 760, Fremont, IN 46737. The managers of the fund.
Gross Profits. The income or loss from all sources, including interest income
and profit and loss from non-trading activities, if any.
Introducing Broker (IB). An entity that may share the brokerage commissions
and is responsible for introducing trades to the futures commission merchant.
Futures Investment Company, 5914 N. 300 West, P. O. Box 760, Fremont, IN
46737, (260) 833-1306, is the affiliated introducing broker of the
partnership.
Limited Partner. Persons admitted without management authority pursuant to
the partnership agreement.
Margin. A good faith deposit with a broker to assure fulfillment of the terms
of a futures contract.
Margin Call. A demand for additional monies to hold positions taken to
maintain a customer's account in compliance with the requirements of a
particular commodity exchange or of a futures commission merchant.
Minimum Offering/Maximum Offering. The Minimum is the amount required to be
invested before trading will commence, and the Maximum is the amount the
general partner establishes as the amount which will terminate this offering.
National Futures Association (NFA). The self regulatory organization that is
responsible for the legal and fair operation of commodity pool operators, such
as the general partner of the partnership, commodity trading advisors, such as
the trading advisor for the partnership, introducing brokers, such as the
introducing broker for the partnership, for futures commission merchant, such
as the clearing broker of the partnership, and such other matters within the
authority granted to it by the CFTC pursuant to the Commodity Exchange Act.
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Net Assets or Net Asset Value means the total assets, including all cash and
cash equivalents (valued at cost plus accrued interest and earned discount),
including investments in U.S. Treasuries, cash management funds that invest in
only U.S. Treasuries, and investments in U.S. Treasuries and in cash
management funds that invest in only U.S. Treasuries, less total liabilities,
of the partnership (each determined on the basis of generally accepted
accounting principles, consistently applied under the accrual method of
accounting or as required by applicable laws, regulations and rules including
those of any authorized self regulatory organization). See Exhibit A, The
Limited Partnership Agreement, 1.2(e).
Net Unit Value. The net assets of the partnership divided by the total number
of units of partnership interests outstanding.
Net Gains. The net profit from all sources.
New Net Profit. The amount of income earned from trading, less the trading
losses and brokerage commissions and fees paid to clear the trades which are
incurred or accrued during the then current accounting period. See Charges to
the Partnership.
Net Worth. The excess of total assets over total liabilities as determined by
generally accepted accounting principles. Net worth for a prospective
investor shall be exclusive of home, home furnishings and automobiles.
Offering and Organizational Expenses. The partnership has paid the offering
and organizational expenses from the gross proceeds of the offering at the
time of the sale of the minimum and the subsequent initial closing. North
American Securities Administrator Association Guidelines for Commodity Pools
define offering and organizational expenses to include selling commissions and
redemption fees as well; and, for purposes of limitation, these expenses
cannot exceed 15% of capital raised pursuant to the offering.
Option Contract. An option contract gives the purchaser the right (as opposed
to the obligation) to acquire (call) or sell (put) a given quantity of a
commodity or a futures contract for a specified period of time at a specified
price to the seller of the option contract. The seller has unlimited risk of
loss while the loss to a buyer of an option is limited to the amount paid
(premium) for the option.
Partners. The general partners and all limited partners in the partnership.
Partnership or Limited Partnership or Commodity Pool or Pool or Fund. The
Atlas Futures Fund, Limited Partnership, evidenced by Exhibit A to this
Prospectus, 505 Brookfield Drive, Dover, DE 19901, (800) 331-1532.
Position Limits. The Commodity Futures Trading Commission has established
maximum positions which can be taken in some, but not in all commodity
markets, to prevent the corner or control of the price or supply of those
commodities. These maximum number of positions are called position limits.
Principal. Mr. Michael P. Pacult, one of the general partners and the
principal of the corporate general partner.
Round-turn Trade. The initial purchase or sale of a futures contract or
option on a futures contract and the subsequent offsetting sale or purchase of
such contract.
Redemption. The right of a partner to tender its or his or her partnership
interests to the partnership for surrender at the net unit value. See the
Limited Partnership Agreement attached as Exhibit A.
Selling Agent. Futures Investment Company, 5914 N. 300 West, Fremont, IN
46737, which is to offer the partnership interests for sale on a best efforts
basis. See Plan of Distribution.
Selling Commissions. A commission paid from the subscription amount for
selling the partnership interests. There is a 6% up front selling commission
on gross subscription amounts in this offering.
Scale in Positions. The commodity trading advisor selected by the general
partner presently has a large amount of equity under management. In some
situations, the positions desired to be taken on behalf of the partnership and
other accounts under management will be too large to be executed at one time.
The trading advisor intends to take positions at different prices, at
different times and allocate those positions on a ratable basis in accordance
with rules established by the Commodity Futures Trading Commission. This
procedure is defined as to scale in positions. The same definition and rules
apply when the trading advisor elects to exit a position.
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Taxation - Section 1256 Contract is defined to mean: (1) any regulated
futures contract (RFC); (2) any foreign currency contract; (3) any non-equity
option; and (4) any dealer equity option. The term RFC means a futures
contract whether it is traded on or subject to the rules of a national
securities exchange which is registered with the Securities and Exchange
Commission, a domestic board of trade designated as a contract market by the
Commodity Futures Trading Commission or any other board of trade, exchange or
other market designated by the Secretary of Treasury (a qualified board of
exchange) and which is marked-to-market to determine the amount of margin
which must be deposited or may be withdrawn. A "foreign currency contract" is
a contract which requires delivery of, or the settlement of, which depends
upon the value of foreign currency which is currency in which positions are
also entered at arm's length at a price determined by reference to the price
in the interbank market. (The Secretary of Treasury is authorized to issue
regulations excluding certain currency forward contracts from marked-to-market
treatment.) A non-equity option means an option which is treated on a
qualified board or exchange and the value of which is not determined directly
or indirectly by reference to any stock (or group of stocks) or stock index
unless there is in effect a designation by the Commodity Futures Trading
Commission of a contract market for a contract bond or such group of stocks or
stock index. A dealer equity option means, with respect to an options dealer,
only a listed option which is an equity option, is purchased or granted by
such options dealer in the normal course of his activity of dealing in
options, and is listed on the qualified board or exchange on which such
options dealer is registered. See Federal Income Tax Aspects.
Trading Advisor. See Commodity Trading Advisor.
Taking Positions Ahead of the Partnership. The allocation of trades by other
than legally accepted methods by the commodity trading advisor or other trader
which favors parties who took the position unfairly.
Trading Matrix. The dollar value used by a commodity trading advisor to
define the number of positions to be taken by the accounts under management.
Some commodity trading advisors have different trading matrices for different
sized accounts. For example, they may trade all accounts over one million in
size differently than accounts under one million.
Unit. The term used to describe the Net Asset Value of general and limited
partner interests of the partnership.
Unrealized Profit or Loss. The profit or loss which would be realized on an
open position if it were closed at the current settlement price or the most
recent appropriate quotation as supplied by the broker or bank through which
the transaction is effected.
Underwriter. This term is not applicable to this offering. All sales of
partnership interests will be on a best efforts basis. The price of the units
will not be guaranteed, supported or underwritten in any way. See Selling
Agent.
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State Regulatory Glossary
The following definitions are supplied by the state securities administrators
responsible for the review of public futures fund (commodity pool) offerings
made to residents of their respective states. They belong to the North
American Securities Administrators Association, Inc. which publishes
"Guidelines for the Registration of Commodity Pool Programs", such as the
Fund, which contain these definitions. The following definitions are
published from the Guidelines, however, the general partner has made additions
to, but no deletions from, some of these definitions to make them more
relevant to an investment in the Fund.
Administrator-The official or agency administering the security laws of a
state. This will usually be the State of residence of the Fund or the
domicile of the broker or brokerage firm which makes the offer or the
residence of the potential investor.
Advisor-Any person who, for any consideration, engages in the business of
advising others, either directly or indirectly, as to the value, purchase, or
sale of commodity contracts or commodity options. This definition applies to
the commodity trading advisor and, when it provides such advice, to the
general partner.
Affiliate-An Affiliate of a Person means: (a) any Person directly or
indirectly owning, controlling or holding with power to vote 10% or more of
the outstanding voting securities of such Person; (b) any Person 10% or more
of whose outstanding voting securities are directly or indirectly owned,
controlled or held with power to vote, by such Person; (c) any Person,
directly or indirectly, controlling, controlled by, or under common control of
such Person; (d) any officer, director or partner of such Person; or (e) if
such Person is an officer, director or partner, any Person for which such
Person acts in any such capacity. See "Conflicts".
Capital Contributions-The total investment in a Program by a Participant or by
all Participants, as the case may be. The purchase price, less sales
commissions, for the partnership interests.
Commodity Broker-Any Person who engages in the business of effecting
transactions in commodity contracts for the account of others or for his own
account. See Futures Commission Merchant and Introducing Broker.
Commodity Contract-A contract or option thereon providing for the delivery or
receipt at a future date of a specified amount and grade of a traded commodity
at a specified price and delivery point.
Cross Reference Sheet-A compilation of the Guideline sections, referenced to
the page of the prospectus, Program agreement, or other exhibits, and
justification of any deviation from the Guidelines. This sheet is used by the
State Administrator to review this prospectus.
Net Assets-The total assets, less total liabilities, of the Program determined
on the basis of generally accepted accounting principles. Net Assets shall
include any unrealized profits or losses on open positions, and any fee or
expense including Net Asset fees accruing to the Program.
Net Asset Value Per Program Interest-The Net Assets divided by the number of
Program Interests outstanding.
Net Worth-The excess of total assets over total liabilities are determined by
generally accepted accounting principles. Net Worth shall be determined
exclusive of home, home furnishings and automobiles.
New Trading Profits-The excess, if any, of Net Assets at the end of the period
over Net Assets at the end of the highest previous period or Net Assets at the
date trading commences, whichever is higher, and as further adjusted to
eliminate the effect on Net Assets resulting from new Capital Contributions,
redemptions, or capital distributions, if any, made during the period
decreased by interest or other income, not directly related to trading
activity, earned on Program assets during the period, whether the assets are
held separately or in a margin account. See New Net Profit.
Organizational and Offering Expenses-All expenses incurred by the Program in
connection with and in preparing a Program for registration and subsequently
offering and distributing it to the public, including, but not limited to,
total underwriting and brokerage discounts and commissions (including fees of
the underwriter's attorneys), expenses for printing, engraving, mailing,
salaries of employees while engaged in sales activity, charges of transfer
agents, registrars, trustees, escrow holders, depositories, experts, expenses
of qualification of the sale of its Program Interest under Federal and state
law, including taxes and fees, accountants' and attorneys' fees.
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Participant-The holder of a Program Interest. A Partner in the Fund.
Person-Any natural Person, partnership, corporation, association or other
legal entity.
Pit Brokerage Fee-Pit Brokerage Fee shall include floor brokerage, clearing
fees, National Futures Association fees, and exchange fees. These fees will
be paid by the corporate general partner from the fixed commissions.
Program-A limited partnership, joint venture, corporation, trust or other
entity formed and operated for the purpose of investing in Commodity
Contracts. The Fund.
Program Broker-A Commodity Broker that effects trades in Commodity Contracts
for the account of a Program. See the Futures Commission Merchant and
Introducing Broker.
Program Interest-A limited partnership interest or other security representing
ownership in a program. The units in the Fund. See Exhibit A, the Limited
Partnership Agreement.
Pyramiding-A method of using all or a part of an unrealized profit in a
Commodity Contract position to provide margin for any additional Commodity
Contracts of the same or related commodities.
Sponsor-Any Person directly or indirectly instrumental in organizing a Program
or any Person who will manage or participate in the management of a Program,
including a Commodity Broker who pays any portion of the Organizational
Expenses of the Program, and the general partner(s) and any other Person who
regularly performs or selects the Persons who perform services for the
Program. Sponsor does not include wholly independent third parties such as
attorneys, accountants, and underwriters whose only compensation is for
professional services rendered in connection with the offering of the
partnership interests. The term Sponsor shall be deemed to include its
Affiliates. The general partner is a sponsor of this partnership.
Valuation Date-The date as of which the Net Assets of the Program are
determined. For the Fund, this will be after the close of business on the
last business day of each month.
Valuation Period-A regular period of time between Valuation Dates. For the
Fund, this will be the close of business for each calendar month and each
calendar year.
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APPENDIX II
PRIVACY STATEMENT
ATLAS FUTURES FUND, LP
505 Brookfield Drive
Dover, DE 19901
Telephone: (800) 331-1532
Atlas Futures Fund, LP is committed to safeguarding the confidential
information of its partners. We hold all personal information provided to us
in the strictest confidence. These records include all personal information
that we collect from you. We have never disclosed information to
nonaffiliated third parties, except as directed by you or required by law, and
we do not anticipate any change in these procedures in the future. If we were
to change this disclosure policy, we would not take such action without your
permission.
A full statement of our privacy policy with respect to personal information
about you is as follows:
* We limit employee and independent contractor representatives of ours
access to information in your file to only to those persons who have a
business or professional reason for knowing.
* We limit the delivery of your information to only those nonaffiliated
parties who directly service your account such as trustees and clearing
brokers, or as directed by you or as required by law. As examples, Federal
regulations permit us to share a limited amount of information about you with
a clearing brokerage firm in order to execute securities transactions on your
behalf and we have implied permission from you to discuss your financial
situation with your accountant or other professional.
* We use our best efforts to maintain a secure office and computer
environment to ensure that your information is not placed at unreasonable
risk.
* The categories of nonpublic personal information that we collect from a
prospect, partner, client and independent third parties depend upon the scope
of the client engagement. It will include information about your personal
finances, information about your health to the extent that it is needed for
the planning process, information about transactions between you and third
parties, and information from consumer reporting agencies.
* For unaffiliated third parties that require access to your personal
information, including financial service companies, consultants, and auditors,
we also require strict confidentiality in our agreements with them and expect
them to keep this information private. Federal and state regulators also may
review firm records as permitted under law.
* Personally identifiable information about you will be maintained during
the time you are a partner or client, and for the required time thereafter
that such records are required to be maintained by Federal and state
securities laws. After this required period of record retention, all such
information is expected to be destroyed.
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EXHIBIT A TO ATLAS FUTURES FUND DISCLOSURE DOCUMENT
AGREEMENT OF LIMITED PARTNERSHIP OF
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
THIS LIMITED PARTNERSHIP AGREEMENT, (the "Agreement") dated the 23rd of
December, 2003, is to amend and restate in full that certain partnership
agreement entered on the 1st day of February, 1998, that formed Atlas Futures
Fund, Limited Partnership (hereinafter called either the "Partnership" or the
"Fund") and was previously amended and restated in full on the 15th day of
May, 1999 as follows:
WITNESSETH:
IN CONSIDERATION of good and valuable consideration, the receipt of which is
hereby acknowledged, Ashley Capital Management, Incorporated, ("Ashley") the
Corporate General Partner, Michael P. Pacult, the Other General Partner, and
Ashley as agent for the Limited Partners, pursuant to the authority granted to
the General Partner by this Agreement at formation and the powers of attorney
granted by the Limited Partners to Ashley at the time of their admission to
the Partnership, hereby adopt this Amended and Fully Restated Limited
Partnership Agreement to govern and control the operation of the Partnership
pursuant and subject to the Delaware Uniform Limited Partnership Act (the
"Act").
The resignation of Shira Del Pacult ("Ms. Pacult") pursuant to her prior 120
day notice to the Partners given on August 20, 2003, became effective on the
date of this Agreement. Ms. Pacult is no longer a General Partner of the
Fund. Ashley and Michael P. Pacult continue to serve as the General Partners
of the Fund and from this date forward the term General Partner shall refer to
both Ashley and Mr. Pacult.
ARTICLE I
Definitions and Risk Disclosure Statement
Certain terms used in this Agreement shall have the special meaning designated
below:
1.1 The term AFFILIATE means (1) any person controlled by or under common
control with another person, (2) a person owning or controlling 10% or more of
the outstanding voting securities of such other person, (3) any officer or
director of such other person, and (4) if such other person is an officer or
director, any other company for which such person acts as an officer or
director.
1.2 When referring to the capital of the Partnership:
(a) the term CAPITAL shall mean cash invested in the Partnership by any
Partner and placed at risk for the business of the Partnership;
(b) the term CAPITAL CONTRIBUTION shall mean, with respect to any Partner,
the sum of all Capital contributed to the Partnership pursuant to Article I;
(c) the term CAPITAL SUBSCRIPTION shall mean the amount set forth opposite
the name of such Partner in the schedule of Partners, which amount shall be
the purchase price, less sales commissions, if any, to be paid or paid by such
Partner for the Unit or Units in the Partnership purchased by such Partner;
(d) the term INITIAL CAPITAL shall mean the sum of all Capital Subscriptions
received by the General Partner prior to commencement of trading;
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(e) the term NET ASSETS OR NET ASSET VALUE means the total assets, including
all cash and cash equivalents (valued at cost plus accrued interest and earned
discount), less total liabilities, of the Partnership (each determined on the
basis of generally accepted accounting principles, consistently applied under
the accrual method of accounting or as required by applicable laws,
regulations and rules including those of any authorized self regulatory
organization), specifically:
(i) Net Asset Value includes any unrealized profit or loss on open security
and commodity positions subject to reserves for loss established, from time to
time, by the General Partner;
(ii) All open stock, option, and commodity positions are calculated on the
then current market value, which shall be based upon the settlement price for
that particular position on the date with respect to which Net Asset Value is
being determined; provided, however, that if a position could not be
liquidated on such day due to the operation of the daily limits or other rules
of the exchange upon which that position is traded or otherwise, the
settlement price on the first subsequent day on which the position could be
liquidated shall be the basis for determining the market value of such
position for such day. As used herein, "settlement price" includes, but is
not limited to: (1) in the case of a futures contract, the settlement price
on the commodity exchange on which such futures contract is traded; and (2) in
the case of a foreign currency forward contract which is not traded on a
commodity exchange, the average between the lowest offered price and the
highest bid price, at the close of business on the day Net Asset Value is
being determined, established by the bank or broker through which such forward
contract was acquired or is then currently traded;
(iii) Brokerage commissions to close security and commodity positions, if
charged on a round-turn basis, are accrued in full at the time the position is
initiated (i.e., on a round-turn basis) as a liability of the Partnership;
(iv) Interest earned on all Partnership accounts is accrued at least monthly;
(v) The amount of any distribution made by the Partnership is a liability of
the Partnership from the day when the distribution is declared by the General
Partner or as provided in this Agreement and the amount of any redemption is a
liability of the Partnership as of the Valuation Date; and
(vi) Syndication Costs incurred in organizing and all present and future
costs to increase or maintain the qualification of the Units available for
sale and the cost to present the initial and future offering of Units for sale
shall be capitalized when incurred and amortized and paid from Capital or
Monthly Profit as required by applicable law.
(f) The term VALUATION DATE means the date as of which the Net Assets of the
Partnership are determined, which will be after the close of business on the
last business day of each month.
(g) the term PROFIT (LOSS) ATTRIBUTABLE TO UNITS means the product of A) the
number of Units divided into B) an amount equal to the Net Profit (Loss)
determined as follows: (1) the net of profits and losses realized on all
trades closed out, plus (2) the net of any unrealized profits and losses an
open positions as of the end of the period, less (3) the net of any unrealized
profits and losses on open positions as of the end of the preceding period,
minus, (4) the Expenses attributable to Units. Profit (Loss) shall include
interest earned on Partnership assets, realized and unrealized capital gains
or losses on U.S. Treasury bills, and other securities;
(h) the term MANAGEMENT FEE shall mean up to six percent (6%) annually of
the Net Assets of the Partnership computed on the close of business on the
last day of each month and payable to the General Partner or independent
Commodity Trading Advisor, or both, without regard to the income or loss of
the Partnership for that period; presently, the General Partners and the CTA
receive no Management Fee;
(i) the term INCENTIVE FEE means a percentage of the profits accrued and
paid to the General Partner, or its Affiliates, of up to fifteen percent (15%)
annually of New Net Profit earned from inception of trading, through the date
of the computation, based upon total Capital of the Partnership. The General
Partner has reserved the right to both reduce the Incentive Fee below fifteen
percent (15%) and increase the Incentive Fee to a maximum of twenty-seven
percent (27%), provided that in such case the Management Fee is
correspondingly lowered to 0%; presently, the Incentive Fee paid to the CTA is
twenty five percent (25%);
(j) the term GROSS PROFIT OR LOSS means the income or loss from all sources,
including interest income and profit and loss from non-trading activities, if
any.
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(k) the term NEW NET PROFIT OR LOSS means the amount of income earned from
trading, less the trading losses and brokerage commissions and fees paid to
clear the trades which are incurred or accrued during the then current
accounting period; and,
(l) the term NET GAINS means net profit from all sources.
(m) the term UNIT shall mean a partnership interest in the Partnership
requiring a Capital Contribution of the Net Asset Value of the initial Unit,
as adjusted to reflect increases and decreases caused by receipt, accrual, and
payment of profit, Expenses, losses, bonuses, and fees, less a sales
commission, from time to time.
1.3 When referring to costs and expenses of the Partnership to be allocated
and charged pursuant to this Agreement:
(a) the term EXPENSES shall mean costs allocated, incurred, paid, accrued,
or reserved, including the fixed commissions payable to the Corporate General
Partner and affiliated Introducing Broker of four percent (4%) and seven
percent (7%), respectively, of the Partnership's Net Assets, which are, in the
opinion of the General Partner, required, necessary or desirable to establish,
manage, continue and promote the business of the Partnership including, but
not limited to, all deferred organization costs, brokerage commissions, and
all management and incentive fees payable to the General Partner or to
independent investment and Commodity Trading Advisor by the Partnership as
negotiated and determined by the General Partner on behalf of the Partnership
on a basis consistently applied in accordance with generally accepted
accounting principals under the accrual method of accounting or as required by
applicable laws, regulations and rules including those of any authorized self
regulatory organization with proper jurisdiction over the business of the
Partnership; provided, however, Expenses shall not include salaries, rent,
travel, expenses and other items of General Partner overhead and, provided,
further, management fees, advisory fees and all other fees, except for
incentive fees and commodity brokerage commissions;
(b) the term NET UNIT VALUE shall mean the Net Asset Value divided, from
time to time, by the total number of Units outstanding;
(c) the term OFFERING PERIOD means the period of time established by the
General Partner after the Partnership begins to offer to sell Units at the Net
Unit Value ; and,
(d) the term SYNDICATION COSTS shall mean the promotion and syndication
costs of the Partnership and the costs of the offering of Units, and to
establish the initial business relationships on behalf of the Partnership,
including all legal and printing costs to prepare the Disclosure Documents,
registrations and filing fees, contract negotiation, and travel incurred which
are deemed necessary or desirable by the General Partner to form the
Partnership, be ready to engage in business, and to sell the Units.
1.4 The terms DISCLOSURE DOCUMENT, MEMORANDUM, OFFERING CIRCULAR, PROSPECTUS
and REGISTRATION STATEMENT shall mean the document or documents, together with
the exhibits and any subsequent continuations thereof, which describes this
Partnership to persons selected by the General Partner including, but not
limited to, potential purchasers of Units, or the Partners or to any
government or self regulatory agency or to persons selected by the General
Partner to participate in the affairs or provide services to the Partnership.
1.5 When referring to this Agreement and the Partners of the Partnership:
(a) the term ACT shall refer to the partnership act of Delaware.
(b) the term AGREEMENT refers to this Partnership agreement;
(c) the term GENERAL PARTNER shall refer to both Ashley Capital Management,
Incorporated, 5914 N. 300 West, P.O. Box 760, Fremont, IN 46737 (260) 833-1306
("Ashley") and Michael P. Pacult, 5914 N. 300 West, P.O. Box 760, Fremont, IN
46737 (260) 833-1306 ("Mr. Pacult") collectively or singularly, as the context
requires;
(d) the term LIMITED PARTNER shall refer to any party listed on the Schedule
of Limited Partners attached to this Agreement as Attachment I, as amended,
from time to time, pursuant to Article VI hereof;
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(e) the term MAJORITY IN INTEREST shall refer to that number of Partners who
collectively hold over 50% of all of the outstanding Units held by all
Partners in the Partnership; provided, however, the Units held by the General
Partner cannot be considered to determine a MAJORITY IN INTEREST or otherwise
vote or consent regarding the question of removal of the General Partner or
other matters specifically expressed in Article V, Section 5.3. In addition,
see the rights and duties of the General Partner in Article IV and of the
Limited Partners in Articles V;
(f) the term OTHER GENERAL PARTNER refers to any General Partner other than
Ashley Capital Management, Incorporated; and
(g) the term PARTNERS refers to the General Partner, any Other General
Partner, and the Limited Partners, collectively.
1.6 RISK DISCLOSURE STATEMENT.
YOU SHOULD CAREFULLY CONSIDER WHETHER YOUR FINANCIAL CONDITION PERMITS YOU TO
PARTICIPATE IN A COMMODITY POOL. IN SO DOING, YOU SHOULD BE AWARE THAT
FUTURES AND OPTIONS TRADING CAN QUICKLY LEAD TO LARGE LOSSES AS WELL AS GAINS.
SUCH TRADING LOSSES CAN SHARPLY REDUCE THE NET ASSET VALUE OF THE POOL AND
CONSEQUENTLY THE VALUE OF YOUR INTEREST IN THE POOL. IN ADDITION,
RESTRICTIONS ON REDEMPTIONS MAY AFFECT YOUR ABILITY TO WITHDRAW YOUR
PARTICIPATION IN THE POOL.
FURTHER, COMMODITY POOLS MAY BE SUBJECT TO SUBSTANTIAL CHARGES FOR MANAGEMENT,
AND ADVISORY AND BROKERAGE FEES. IT MAY BE NECESSARY FOR THOSE POOLS THAT ARE
SUBJECT TO THESE CHARGES TO MAKE SUBSTANTIAL TRADING PROFITS TO AVOID
DEPLETION OR EXHAUSTION OF THEIR ASSETS. THIS DISCLOSURE DOCUMENT CONTAINS A
COMPLETE DESCRIPTION OF EACH EXPENSE TO BE CHARGED THIS POOL AT PAGE 18 AND A
STATEMENT OF THE PERCENTAGE RETURN NECESSARY TO BREAK EVEN, THAT IS, TO
RECOVER THE AMOUNT OF YOUR INITIAL INVESTMENT, AT PAGE 14.
THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER FACTORS NECESSARY
TO EVALUATE YOUR PARTICIPATION IN THIS COMMODITY POOL. THEREFORE, BEFORE YOU
DECIDE TO PARTICIPATE IN THIS COMMODITY POOL, YOU SHOULD CAREFULLY STUDY THIS
DISCLOSURE DOCUMENT, INCLUDING A DESCRIPTION OF THE PRINCIPAL RISK FACTORS OF
THIS INVESTMENT, AT PAGE 5.
YOU SHOULD ALSO BE AWARE THAT THIS COMMODITY POOL MAY TRADE FOREIGN FUTURES OR
OPTIONS CONTRACTS. TRANSACTIONS ON MARKETS LOCATED OUTSIDE THE UNITED STATES,
INCLUDING MARKETS FORMALLY LINKED TO A UNITED STATES MARKET, MAY BE SUBJECT TO
REGULATIONS WHICH OFFER DIFFERENT OR DIMINISHED PROTECTION TO THE POOL AND ITS
PARTICIPANTS. FURTHER, UNITED STATES REGULATORY AUTHORITIES MAY BE UNABLE TO
COMPEL THE ENFORCEMENT OF THE RULES OF REGULATORY AUTHORITIES OR MARKETS IN
NON-UNITED STATES JURISDICTIONS WHERE TRANSACTIONS FOR THE POOL MAY BE
EFFECTED.
ARTICLE II
Partnership Organization and Purpose
2.1 PARTNERSHIP NAME AND LOCATION OF BOOKS AND RECORDS. The name of the
Partnership, as filed with the state of Delaware, shall be Atlas Futures Fund,
Limited Partnership. The address where the books and records of the
Partnership will be maintained for inspection by the Partners is at the
offices of the Corporate General Partner, 5914 N. 300 West, Fremont, IN 46737
or such other address as the General Partner shall, from time to time,
determine.
2.2 PARTNERSHIP AFFILIATES.
(a) POOL OPERATOR NAME AND PRINCIPALS. The General Partner shall serve as
the commodity pool operator for the Partnership. In addition to being one of
the general partners, Michael P. Pacult is the sole principal, shareholder,
director and officer of Ashley Capital Management, Inc., the other general
partner, and is solely responsible for the business decisions of the
Partnership, including, but not limited to, selection of the Commodity Trading
Advisors (the "CTAs"). The signature of either Mr. Pacult or Ashley may bind
the Partnership. Ashley and Mr. Pacult are registered commodity pool
operators with the Federal Commodity Futures Trading Association pursuant to
the Commodity Exchange Act and members of the futures self regulatory
organization, the National Futures Association.
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THE REGULATIONS OF THE FEDERAL COMMODITY FUTURES TRADING COMMISSION AND THE
NATIONAL FUTURES ASSOCIATION PROHIBIT ANY REPRESENTATION BY A PERSON
REGISTERED WITH THE CFTC OR BY ANY MEMBER OF THE NFA, RESPECTIVELY, THAT SUCH
REGISTRATION OR MEMBERSHIP IN ANY RESPECT INDICATES THAT THE CFTC OR THE NFA,
AS THE CASE MAY BE, HAS APPROVED OR ENDORSED SUCH PERSON OR SUCH PERSON'S
TRADING PROGRAMS OR OBJECTIVES. THE REGISTRATIONS AND MEMBERSHIPS DESCRIBED
IN THIS PARTNERSHIP AGREEMENT MUST NOT BE CONSIDERED AS CONSTITUTING ANY SUCH
APPROVAL OR ENDORSEMENT. LIKEWISE, NO COMMODITY EXCHANGE HAS GIVEN OR WILL
GIVE ANY SUCH APPROVAL OR ENDORSEMENT.
(b) COMMODITY TRADING ADVISOR NAMES AND PRINCIPALS. The General Partner
selects and assigns partnership equity to one or more independent CTAs to
trade on behalf of the partnership. The CTA will have no ownership in the
Partnership and its compensation is described in 4.6(f). The CTA will enter
trades on behalf of the Partnership directly with the FCM without the prior
knowledge or approval of the General Partner of the methods used by the CTA to
select the trades, the number of contracts, or the margin required. From 20%
to 40% of the Net Asset Value on deposit with the FCM is expected to be
committed to margin to hold positions taken by the CTA for the account of the
Partnership.
(c) COMMODITY POOL OPERATOR, INTRODUCING BROKER AND FUTURES COMMISSION
MERCHANT NAMES AND PRINCIPALS. Ashley Capital Management, Inc. 5914 N. 300
West, P.O. Box 760, Fremont, IN 46737 (260) 833-1306 will serve as the
Commodity Pool Operator ("CPO") of the Partnership and will be paid a fixed
amount for brokerage commissions of four percent (4%) per year of Partnership
Net Assets, payable monthly by the Partnership, for introducing domestic
trades through the futures commission merchant (the "FCM"). The Partnership
will pay actual commissions charged by the FCM for trades made on foreign
exchanges, if any. The CPO will pay the round-turn brokerage commissions, pit
brokerage and other clearing expenses to the FCM, which will act in the normal
capacity as a futures commission merchant and will hold the equity assigned by
the General Partner for trading and will clear the trades entered by the CTA
pursuant to the power of attorney granted by the General Partner to the CTA to
trade on behalf of the Partnership. The General Partner has the right
pursuant to this Agreement to change the FCM at their sole discretion subject
only to notices of such change to the Partners as are required by law.
2.3 MATERIAL ADMINISTRATIVE AND/OR CIVIL ACTIONS. There have been no
material administrative, civil or criminal actions against Ashley or Mr.
Pacult (who are the general partners and Commodity Pool Operators), the
Commodity Trading Advisor or any principal or any Affiliate of any of them,
pending, on appeal, or concluded, threatened or otherwise known to them,
within the five (5) years preceding the date of this Partnership Agreement.
There have been such actions against the Futures Commission Merchant that are
fully disclosed in the Prospectus but, in the opinion of the General Partner
and the FCM, are not material to the fulfillment of the clearing duties the
FCM will perform for the Partnership.
2.4 CHARACTER OF THE BUSINESS. The Partnership's business purpose is to
increase Capital through the speculative and hedge trading of futures and
options on futures. The General Partner is authorized to do any and all
things on behalf of the Partnership incident thereto or connected therewith
including, but not limited to:
(a) trade, buy, sell or otherwise acquire, hold or dispose of all forms of
investments including futures and options on futures, and any rights
pertaining thereto. The Partnership shall carry on the foregoing activities
through the exercise of judgment by its General Partner and/or the Investment
and/or Commodity Trading Advisors and consultants and brokers selected by the
General Partner. The General Partner may direct the Partnership to hold
assets, for purposes of safety and liquidity, as investments in U.S.
Treasuries, cash management funds that invest in only U.S. Treasuries, all
held in the name of the Partnership.
(b) invest and trade, on margin or otherwise, in capital stocks, bonds,
debentures, trust receipts and other obligations, instruments or evidences of
indebtedness, gold, silver, cattle, corn, wheat, soybeans, or any other asset
for which a trading market is maintained or otherwise paid for by cash or
otherwise including, but not limited to, the right to sell short and to cover
such short sales.
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(c) possess, sell, exchange, discount, transfer, mortgage, pledge, deal in,
maintain multiple accounts for, and to exercise all rights, powers, privileges
and other rights, incidental to ownership of the assets held by the
Partnership.
(d) borrow or raise monies and, from time to time without limit as to
amount, to issue, accept, endorse and execute promissory notes, draft bills of
exchange, warrants, bonds, debentures and other negotiable or non-negotiable
instruments and evidences of indebtedness, and to secure the payment of any
thereof and the interest thereon by mortgage or pledge, conveyance or
assignment in trust of the whole or any part of the property of the
Partnership, whether at the time owned or thereafter acquired, and to sell,
pledge of otherwise dispose of such instruments issued by the Partnership for
its purposes; form and own one or more corporations to engage in such
businesses as the General Partner shall deem advisable.
(e) lend any of its properties or funds, either with or without security in
furtherance of the objects and purposes of the Partnership as the General
Partner shall deem advisable and consent.
(f) rent or own and maintain one or more offices staffed as the General
Partner shall determine and to do such other acts attendant thereto as may be
necessary or desirable.
(g) waive the sales commission to acquire investment Capital as the General
Partner, in its sole discretion, may determine.
(h) enter, make and perform all contracts, surety and guarantees as may be
necessary or advisable or incidental to the carrying out of the foregoing
objects and purposes.
2.5 ADDRESS OF PARTNERS. The General Partner's address is listed in
paragraph 2.1 hereof and the Limited Partners' addresses are on record at the
office of the General Partner to the Partnership.
2.6 TERM OF PARTNERSHIP. The term of the Partnership shall commence on the
date of this Agreement and shall continue until dissolved or terminated
pursuant to Article IX.
2.7 REGISTRATION. The General Partner, on behalf of the Partnership, shall
have the authority, but not the obligation, to cause a Registration statement
to be filed, and such amendments thereto as the General Partner deems
advisable, with the appropriate Federal and state regulatory agencies,
including the United States Securities and Exchange Commission and the
commission of securities for registration under the securities laws of the
various states and any other jurisdiction desirable or proper to the sale of
Units to qualify for public offerings. Each of the Limited Partners hereby
confirm and ratify all action taken and things done by the General Partner
with respect to such filings and public offerings. The General Partner may
make such other arrangements for the sale of Units, including the private
placement of Units, as it deems appropriate.
ARTICLE III
Capital Contributions and Allocation of Profits and Losses
3.1 CAPITAL CONTRIBUTIONS OF LIMITED PARTNERS.
(a) Each Limited Partner has delivered to the Partnership an executed
Subscription which has been accepted by the General Partner on behalf of the
Partnership, an Amended Certificate of Limited Partnership, and a check in the
amount of his Capital Subscription. The Partnership shall use the funds thus
contributed solely to pay, sales commissions, Expenses, Organization Costs and
to otherwise make the payments required to be made by the Partnership to
engage in active trading and to pay the management fees, if any, and, from
profits, the incentive fees and distributions to Partners Capital Accounts.
(b) The General Partner has filed a Form S-1 to qualify the Partnership
Units for public sale. Except for payment of Partnership expenses from Capital
as provided by this Agreement, there will be no required contribution or
assessments of the Limited Partners.
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3.2 CAPITAL CONTRIBUTIONS OF GENERAL PARTNER.
(a) The General Partner has not made and shall not be required to make any
capital contribution to the Partnership except for purchases that are required
by law. The General Partner shall use its best efforts to maintain its status
as a partnership for tax purposes.
(b) Partnership interests shall be evidenced by Units. The General Partner,
on behalf of the Partnership, may, in accordance with applicable law and the
Offering Memorandum of the Partnership, issue Units to persons desiring to
become Limited Partners. A Partner shall contribute an amount equal to the
Net Asset Value of a Unit calculated as of the end of the last business day of
the previous month, plus the sales commission, if any, on the Valuation Date.
The General Partner will have five (5) days to review the Partner's
subscription, and the Partner will have five (5) days to rescind his
subscription, after which time period all subscriptions will be irrevocable,
subject to any applicable law which may extend the Partner's rescission
period. The General Partner and Affiliates of the General Partner may
purchase Limited Partnership Units with the same rights as other Limited
Partners.
(c) All subscriptions for Units made pursuant to the offering of the Units
must be on the form provided with the Prospectus. The partnership has offered
$15,000,000 Units (the "Maximum") for sale and has reserved the right to
increase this Maximum. Ashley maintains an escrow account to continuously
accept Partners' subscriptions until such time as they are admitted into the
Partnership.
3.3 ALLOCATION OF PROFITS AND LOSSES
(a) A distribution account shall be established for each Partner that shall
include, as the initial balance thereof, each Partner's initial contribution
to the Partnership expressed in total dollars and Units purchased. As of the
close of business each month, allocations shall be made as follows:
(i) The Incentive Fee. The incentive fee upon New Net Profit at the rate of
twenty-five percent (25%), or such other rate as may be established pursuant
to 1.2(h), shall be paid quarterly to the CTA but allocated to the Partners
monthly.
(ii) The Profit (Loss) Attributable to Units shall be added to (subtracted
from) the distribution accounts of the Partners. Items of income, gain or
loss, accrued and paid Expenses shall be added to (subtracted from) the
distribution account of each Partner in accordance with the ratio that such
distribution account bears to the sum of all of the Partners' distribution
accounts.
(iii) The amount of any cash distributions to a Partner during such month and
any amount paid upon Redemption of Units as of the end of such month shall be
subtracted from the distribution account of such Partner.
(iv) The distribution account of any Unit that was redeemed shall be reduced
by the Redemption Charge per Unit multiplied by the number of Units that were
redeemed by the Partner represented by such distribution account. The
Redemption Charge, if any, shall be first used to defray expenses and any
excess treated as interest earned by the Fund; provided, however, Partners
admitted after the date of this Agreement will not be charged a Redemption
Charge.
ARTICLE IV
Rights and Obligations of the General Partner
4.1 GENERAL. The General Partner shall have full, exclusive and complete
discretion in the management and control of the affairs of the Partnership to
the best of its ability and shall use its best efforts to carry out the
purposes of the Partnership set forth in Article II. In connection therewith,
it shall have all powers of a general partner under the Act, including,
without limitation, the power to:
(a) enter, execute and maintain contracts, agreements and any or all other
instruments, and to do and perform all such things, as may be required or
desirable in furtherance of Partnership purposes or necessary or appropriate
to the conduct of Partnership activities including, but not limited to,
contracts with third parties for:
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(i) brokerage services on behalf of the Partnership (which brokerage
services may be performed by the General Partner or an Affiliate of the
General Partner), or any successor to its business, and an Affiliated
introducing broker or futures commission merchant of the General Partner may
clear the trades, in consideration of the payment of eleven percent (11%) of
the total equity placed with the Commodity Trading Advisor or advisors it
selects, and will cause and pay for the domestic trades to be cleared through
one or more futures commission merchants selected by the General Partner;
(ii) trading advisory services relating to the purchase and sale of all
stocks, options, commodity futures contracts, commodity options and contracts
for forward delivery of foreign currencies on behalf of the Partnership (which
advisory services may be performed by the General Partner or an Affiliate of
the General Partner); and
(iii) rent, salaries, computer, accounting, legal and other services attendant
to the maintenance of the Fund.
(b) open and maintain bank accounts on behalf of the Partnership with banks
and money market funds.
(c) deposit, withdraw, pay, retain and distribute the Partnership's funds in
any manner consistent with the provisions of this Agreement.
(d) supervise the preparation and filing of all documentation required by
law including, but not limited to, Registration Statements to be filed with
Federal and state agencies.
(e) pay or authorize the payment of distributions to the Partners and pay
Expenses of the Partnership.
(f) invest or direct the investment of funds of the Partnership not
involving the purchases or sale of stocks, futures contracts and options on
futures.
(g) purchase, at the expense of the Partnership, liability and other
insurance to protect the Partnership's proprieties and business.
(h) borrow money from banks and other lenders for Partnership purposes, and
may pledge any or all of the Partnership's assets for such loans. No bank or
other lender to which application is made for a loan by the lender to which
application is made for a loan by the General Partner shall be required to
inquire as to the purposes for which such loan is sought and, as between the
Partnership and such bank or other lender, it shall be conclusively presumed
that the proceeds of such loan are to be and will be used for the purposes
authorized under this Agreement.
(i) confess judgment for and against the Partnership and control any matters
affecting the rights and obligations of the Partnership, including the
employment of attorneys, in the conduct of litigation and otherwise incur
legal expenses and costs of consultation, settlement of claims, and litigation
against or on behalf of the Partnership.
4.2 LOANS BY GENERAL PARTNER. The General Partner or its Affiliates will be
not be required to advance or loan funds to the Partnership. In the event the
General Partner makes any advance or loan to the Partnership, the General
Partner will not receive interest in excess of its interest costs, nor will
the General Partner receive interest in excess of the amounts which would be
charged the Partnership (without reference to the General Partner's financial
abilities or guarantees) by unrelated banks on comparable loans for the same
purpose and the General Partner shall not receive points or other financing
charges or fees regardless of the amount.
4.3 TRANSACTION WITH PARTNERSHIP. Notwithstanding anything to the contrary
which may be contained herein, the General Partner shall not:
(a) sell, or otherwise dispose of, any of the Partnership's assets to the
General Partner or its Affiliates.
(b) subject to the provisions regarding and without diminishment of the
right of the General Partner or any Affiliate to compensation for services
provided to the Partnership as set forth in this Agreement, cause or permit
the Partnership to enter any agreement with the General Partner or an
Affiliate which is not in the best interest of and for the benefit of the
Partnership or which would be in contravention of the General Partner's
fiduciary obligations to the Partnership or pursuant to which the General
Partner or any Affiliate;
(i) would provide or sell any services, equipment, or supplies at other than
rates charged to others; or
(ii) would receive from the Partnership, Units of Partnership interest in
consideration for services rendered.
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4.4 OBLIGATIONS OF GENERAL PARTNER. In addition to the obligations provided
by law or this Agreement, the General Partner shall:
(a) Devote such of its time to the business and affairs of the Partnership
as it shall, in its discretion exercised in good faith, determine to be
necessary to conduct the business and affairs of the Partnership for the
benefit of the Partnership and the Limited Partners.
(b) Execute, file, record and/or publish all certificates, statements and
other documents and do any and all other things as may be appropriate for the
formation , qualification and operation of the Partnership and for the conduct
of its business in all appropriate jurisdictions including, but not limited
to, the compliance, at its expense, with all laws related to its qualification
to serve as the commodity pool operator of the Fund.
(c) Retain independent public accountants to audit the accounts of the
Partnership.
(d) Employ attorneys to represent the Partnership.
(e) Use its best efforts to maintain the status of the Partnership as a
partnership for United States Federal income tax purposes.
(f) Employ only CTAs which are registered pursuant to the Commodity Exchange
Act to conduct trading and to otherwise establish and monitor the trading
policies of the Partnership; and the activities of the partnership's trading
advisor(s) in carrying out those policies.
(g) Have fiduciary responsibility for the safekeeping and use of all funds
and assets of the Partnership, whether or not in the General Partner's
immediate possession or control, and the General Partner will not employ or
permit others to employ such funds or assets in any manner except for the
benefit of the Partnership.
(h) Agree that if it becomes the sole General Partner of the Partnership, it
will use its best efforts to maintain the Partnership as a limited partnership
as required by all applicable laws. Mr. Pacult intends to resign as a general
partner. Before Mr. Pacult resigns, Ashley will secure an opinion of counsel
to the effect that sufficient IRS elements exist to permit the Partnership to
continue to be taxed as a partnership and not as a corporation. A letter of
credit may be included. The requirements of this subparagraph (i) may be
modified if the General Partner obtains an opinion of counsel for the
Partnership to effect that a proposed modification will not (1) adversely
affect the classification of the Partnership as a partnership for Federal
income tax purposes; (2) will not adversely affect the status of the Limited
Partners as limited partners under the Act.
(i) Maintain a current list of the name, address, and number of Units owned
by each Limited Partner at the General Partner's principal office. Such list
shall be disclosed to any Partner or their representative at reasonable times,
upon request, either in person or by mail, upon payment, in advance, of the
reasonable cost of reproduction and mailing. The Partners and their
representatives shall be permitted access to all other records of the
Partnership, after adequate notice, at any reasonable time, at the offices of
the Partnership. The General Partner shall maintain and preserve such records
for a period of not less than six (6) years.
4.5 GENERAL PROHIBITIONS. The Partnership shall not:
(a) borrow from or loan to any person, except that the foregoing is not
intended to prohibit the incurring of any indebtedness to a Partner or an
Affiliate with respect to the offering of Units for sale, Registration, or
initiation and maintenance of the Partnership's trading positions.
(b) commingle its assets with those of any other person, except to the
extent permitted under the Securities and Exchange Act or the Commodity
Exchange Act and the regulations promulgated under each.
(c) permit rebates or give-ups to be received by the General Partner or any
Affiliate of the General Partner, or permit the General Partner or any
Affiliate of the General Partner to engage in reciprocal business arrangements
which would circumvent the foregoing prohibition; provided, however, that an
Affiliate or the General Partner may provide goods or services, including
brokerage, at a competitive cost to the Partnership.
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(d) engage in the pyramiding of its positions (i.e., the use of unrealized
profits on existing positions to provide margins for additional positions in
the same or a related stock or commodity); provided, however, that there may
be taken into account the Partnership's open trade equity on existing
positions in determining whether to acquire additional unrelated stock or
commodity positions.
(e) margins of all open positions in all stocks and commodities combined
would exceed 250% of the partnership's Net Asset Value at the time such
position would otherwise be initiated.
(f) permit churning of the Partnership's trading account for the purpose of
generating brokerage commissions to any person.
(g) directly or indirectly pay or award any finder's fees, commissions or
other compensation to any persons engaged by a potential limited partner for
independent investment advice as an inducement to such advisor to advise the
potential limited partner to purchase Units in the Partnership without the
knowledge of such potential limited partner.
(h) No Partnership funds will be held outside the United States. The
Partnership funds committed to trading will be on deposit with and under the
control of a futures commission merchant regulated pursuant to the Commodity
Exchange Act, as may be amended, from time to time. The funds not committed
to trading will be in investments that are properly registered under the
United States securities or other financial institution regulations.
(i) The CTA may not receive a management fee pursuant to the terms of this
Partnership Agreement if it shares or participates, directly or indirectly, in
any commodity brokerage commissions generated by the Partnership.
4.6 FEES AND EXPENSES.
(a) The Partnership shall pay all Organization Costs and offering Expenses
incurred in the creation of the Partnership and sale of Units. The foregoing
expenses may be paid directly by the Partnership or may be reimbursed by the
Partnership to the General Partner or an Affiliate of the General Partner.
Notwithstanding the foregoing, in no event will reimbursement by the
Partnership to the General Partner for Organization Costs and offering
Expenses charged to the Partnership exceed an amount equal to 15% of the gross
proceeds from the sale of Units. Organization Costs and Offering Expenses
shall mean those Expenses incurred in connection with the formation,
qualification and Registration of the Partnership and in distributing and
processing the Units under applicable Federal and state law, sales
commissions, and any other expenses such as: (i) registration fees, filing
fees and taxes; (ii) the costs of qualifying, printing, amending,
supplementing, mailing and distributing, including publication by website, the
Registration Statement and Prospectus; (iii) the costs of qualifying,
printing, amending, supplementing, publication by website, mailing and
distributing sales materials used in connection with the issuance of the
Units; (iv) salaries of officers and employees of the General Partner and any
Affiliate of the General Partner while directly engaged in distributing and
processing the Units and establishing its records; (v) rent, travel,
remuneration of personnel, telegraph, telephone and other expenses in
connection with the offering of the Units; (vi) accounting, auditing, and
legal fees incurred in connection therewith; and (vii) any extraordinary
expenses related thereto. Organization Costs and Offering Expenses do not
include salaries, rent, travel, expenses and other items of General Partner
overhead.
(b) All operating expenses of the Partnership shall be billed directly to
and paid by the Partnership.
(c) The General Partner or any Affiliate of the General Partner may be
reimbursed for the actual costs of any Expense including, but not limited to,
legal, accounting and auditing services used for or by the Partnership, as
well as printing and filing fees and extraordinary expenses incurred for or by
the Partnership; provided, however, the limitations of contained in Article X
- Exoneration and Indemnification contained in this Agreement will apply to
restrict the purchase of certain insurance coverage and the assumption of the
defense of certain claims.
(d) The General Partner may establish its compensation, from time to time,
for its services; provided, however, such charges shall be no more than:
(i) A sales commission of up to six percent (6%) to be established, from
time to time, by the General Partner and subject to waiver at its sole
discretion, for sales of Units;
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(ii) A management fee of one half of one percent (1/2 of 1%) per month (6%
per year) of the Net Asset Value of the Partnership, computed and paid to the
General Partner and/or non-affiliated independent investment or trading
advisor on the close of business on the last day of each month;
(iii) An incentive fee, paid quarterly, of up to fifteen percent (15%) of the
first one hundred percent (100%) of New Net Profit, or less earned upon
Capital, and prorated to consider the date of deposit of such Capital to the
Partnership each year. The incentive fee may be increased up to 27%, provided
that the management fee is correspondingly reduced to 0%. Each trading sub-
account established by the General Partner shall be considered separately for
purposes of incentive fee. The incentive fee will be non-refundable; i.e., in
the event that the Partnership earns substantial New Net Profit during the
first month of any year and, thereafter, suffers losses, the General Partner
will not refund any of the profit incentive fee paid for the prior month or
months. However, the Partnership will not pay or accrue to the General
Partner any further incentive fee during that year until such time as the New
Net Profit, when added to Net Asset Value, after additions, deductions of
Redemptions and distributions, exceeds the highest Net Asset Value, computed
for that year; i.e., incentive fees will only be earned and paid or accrued
upon New Net Profit for that year; and
(iv) A share of the brokerage commissions paid for trades made by the
Partnership.
(e) The General Partner is hereby authorized to employ brokers, attorneys,
accountants, consultants, and administrative personnel who may be Affiliated
with the General partner to perform Partnership business at the expense of the
Partnership. Ashley has advanced the initial offering and organizational
expenses. The offering expenses were reimbursed by the Partnership
immediately upon the Initial Closing and the organizational expenses are were
repaid over a period of time to the corporate General Partner on a monthly
basis.
(f) The General Partner is hereby authorized, individually or through an
Affiliate, to employ non-affiliated independent investment and trading
advisors to trade the assets of all or a portion of the Fund to be paid (i) an
annual management fee not to exceed six percent (6%) of the assigned trading
equity when combined with the General Partner's management fee, if any; and,
(ii) an incentive fee of up to fifteen percent (15%) on New Net Profit earned
by such advisor, which may be increased by 2% for each 1% reduction of
management fee from 6% or decreased pursuant to the terms of this Agreement.
All incentive fees may be prorated monthly but must be paid quarterly.
4.7 ACTIVITIES OF PARTNERS.
(a) The General Partner and its Affiliates shall devote to the Partnership
only such time as shall be reasonably required to fulfill their
responsibilities hereunder.
(b) Any Partner may, notwithstanding the existence of this Agreement, engage
in whatever other activities they may choose, whether the same be competitive
with the Partnership or otherwise, without having or incurring any obligation
or conflict of interest in such activities with the Partnership or to any
party hereto. The Partners are specifically authorized to deal with other
partnerships and to acquire interests in positions and trading without having
to offer participation therein to the Partnership or the other Partners.
Neither this Agreement nor any activities undertaken pursuant hereto shall
prevent any Partner, including the General Partner and its Affiliates and
their officers, directors and employees, from engaging in the trading
contemplated by this Partnership individually, jointly with others, or as a
part of any other association to which any of them are or may become parties,
in the same trades as the Partnership, or require any of them to permit the
Partnership, the General Partner or any other Partner to participate in any of
the foregoing. As a material part of the consideration for each party's
execution hereof, each Partner hereby waives, relinquishes and renounces any
such right or claim of conflict of interest and participation from any other
Partner.
(c) Ashley is a corporation which was formed on October 15, 1996, and prior
to that date, it didn't have any experience in the management of a partnership
which trades commodity futures or options, or any other securities; however,
on the date of this Agreement, Ashley has over four years of successful
operation of this Fund. In addition, Mr. Pacult, has been engaged in
supervision of individual managed commodity accounts for over 24 years and has
managed one other commodity pool. The past and future results of trading by
the principals of the General Partner, both within and without the
partnership, will be confidential and not disclosed to the other Partners.
Such positions taken by the principals may be the same as or different from
any positions taken by the General Partner or any advisor to the Fund.
Nothing in this Section, or elsewhere in this Partnership Agreement, shall
permit the General Partner to violate their fiduciary or legal obligations to
the Partnership.
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4.8 CONFLICTS OF INTEREST. Significant actual and potential conflicts of
interest exist in the structure and operation of the Partnership. The General
Partner has used its best efforts to identify and describe all potential
conflicts of interest that may be present under this heading and elsewhere in
the Partnership's Prospectus and the Exhibits attached thereto. Prospective
investors should consider that the General Partner intends to assert that
Partners have, by subscribing to the Partnership, consented to the existence
of such potential conflicts of interest as are described in this Agreement and
the Prospectus and its Exhibits, in the event of any claim or other proceeding
against the General Partner, any principal of the General Partner, the CTA,
any Principal of the CTA, the Partnership's FCM, or any principal of the FCM
or any principal or any Affiliate of any of them alleging that such conflicts
violated any duty owed by any of them to said subscriber. Specifically, the
Partnership is selling its Units through an affiliated broker/dealer and,
therefore, no independent due diligence of the Partnership or the General
Partner will be made by a Financial Industry Regulatory Authority, Inc.
member.
(a) MANAGEMENT OF OTHER EQUITY AND FOR THEIR OWN ACCOUNTS BY THE GENERAL
PARTNER, THE CTAs, AND THEIR PRINCIPALS. The right of both Mr. Pacult, in any
capacity, and Ashley to manage and the actual management by the CTA of
accounts they or their Affiliates own or control and other commodity accounts
and pools presents the potential for conflicts of interest. There is no
limitation upon the right of Mr. Pacult, Ashley, the CTA, or any of their
Affiliates to engage in trading commodities for their own account. It is
possible for these persons to take their positions in their personal accounts
prior to the orders they know they are going to place for the money they
manage for others. The General Partner will obtain representations from all
of these persons and their Affiliates that no such prior orders will be
entered for their personal accounts. The Partnership's CTA will be effecting
trades for its own accounts and for others (including other commodity pools in
competition with this Pool) on a discretionary basis. It is possible that
positions taken by the CTA for other accounts may be taken ahead of or
opposite positions taken on behalf of the Partnership. Conflicts may arise as
a result of the involvement of Mr. Pacult in the management of Bromwell
Financial Fund, L. P. and Providence Select Fund, L. P. and other conflicts
could arise should either Ashley or he exercise their right to form other
commodity pools in the future. Conflicts could also arise because the CTA may
have financial incentives to favor other accounts over the Partnership. In
the event Mr. Pacult, Ashley or the CTA, or any of their principals trade for
their own account, such trading records shall not be made available for
inspection by the Partners. Ashley does not presently intend to engage in
trading for its own account; however, Mr. Pacult reserves the right to trade
for his own account. The CTA also reserves the right to trade for its own
account and other public and private commodity pools in competition with the
Fund. Any trading for their personal accounts or other commodity pools by the
General Partner, any Commodity Trading Advisor selected to trade for the
Partnership or any of their principals could present a conflict of interest in
regard to position limits, timing of the taking of positions or other similar
conflicts. The result to the Partnership could be a reduction in the
potential for profit should the entry or exit of positions be at unfavorable
prices by virtue of position limits or entry of other trades in front of the
Partnership trades by the General Partner or CTA responsible for the
management of the Partnership.
(b) POSSIBLE RETENTION OF VOTING CONTROL BY THE GENERAL PARTNER. There is
no limit upon the number of Units in the Partnership the General Partner and
its principal and Affiliates may purchase. It will be possible for them to
vote, individually or as a block, to create a conflict with the best interests
of the Partnership, in regard to the selection of Commodity Trading Advisors
which do not trade frequently to protect the eleven percent (11%) fixed
commission paid by the Partnership to the Corporate General Partner.
(c) GENERAL PARTNER TO REMAIN AGAINST POSSIBLE BEST INTEREST OF PARTNERSHIP.
As Ashley has financial interest in the operation of the Partnership in the
form of the eleven percent (11%) fixed brokerage commission and because Mr.
Pacult serves as the other general partner and is also the sole principal of
Ashley, the other general partner, it is unlikely that either general partner
would voluntarily resign, even if such resignation would be in the best
interest of the Partnership.
(d) FEES AND CHARGES TO THE PARTNERSHIP PAID TO GENERAL PARTNER NOT
NEGOTIATED. The fixed commission of eleven percent (11%) per year for
domestic trades entered by the CTA in lieu of round-turn brokerage
commissions, payable to Ashley that is Affiliated with Mr. Pacult, has not
been negotiated at arm's length, nor has selling commission to the affiliated
selling agent. The General Partner has a conflict of interest between its
responsibility to manage the Partnership for the benefit of the Limited
Partners and its interest in receiving the difference between the fixed
commission charged the Partnership and the actual transaction costs incurred
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by the FCM as a result of the frequency of trades entered by the CTA. See
"Charges to the Partnership" in the Partnership's Prospectus. The General
Partner will select the CTAs to manage the Partnership assets and the CTAs
determine the frequency of trading. Because the General Partner will receive
the difference between the brokerage commissions and other costs which will be
paid on behalf of the Partnership and the fixed commission, the General
Partner's best interests are served if it selects trading advisors which will
trade the Partnership's Net Assets assigned to them in a way to minimize the
frequency of trades to maximize the difference between the fixed commission
and the round-turn commissions for domestic trades and other costs to trade
charged by the FCM; i.e., it is in the best interest of the General Partner to
reduce the frequency of trading rather than concentrate on the expected
profitability of the CTAs without regard to frequency of trades. This
conflict is offset by the fact the General Partner does not select any of the
trades and the CTA is paid an incentive of 25% of New Net Profits. The
arrangements between the General Partner and the Partnership with respect to
the payment of the commissions are consistent in cost with arrangements other
comparable commodity pools have made to clear their trades. These
arrangements are fair to the Partnership and its investors because the General
Partner has assumed the risk of frequency of trading, up to a maximum of three
times the normal rate by the CTA. Also, the 11% annual fixed commission that
the partnership pays to clear its trades plus actual costs for foreign
markets, if any, is less than the presumptive fair and reasonable limit
provided by the guidelines of the North American Securities Administrators
Association
(e) CONFLICTS OF INTEREST IN THE PARTNERSHIP STRUCTURE. Certain actual and
potential conflicts of interest do exist in the structure and operation of the
Partnership which must be considered by investors before they purchase Units
in the Partnership. See "Risk Factors", and "Conflicts of Interest" in the
Partnership's Prospectus. In addition, the Partnership is selling its Units
through an affiliated selling agent and, therefore, no independent due
diligence of the offering will be conducted for the protection of the
investors. The General Partner has taken steps to insure that the Partnership
equity is held in segregated accounts at the banks, the futures commission
merchant and other accounts, and has otherwise assured the Partnership that
all money on deposit is in the name of and for the beneficial use of the
Partnership.
(f) GENERAL PARTNER TO DISCOURAGE REDEMPTIONS. The General Partner has an
incentive to withhold distributions and to discourage Redemption because
Ashley receives compensation based on the Net Asset Value of the Partnership
assigned to the CTAs to trade.
(g) HIGH RISK TRADING BY THE CTAs TO GENERATE INCENTIVE FEES. As a general
rule, the greater the risk assumed, the greater the potential for profit.
Because the CTA is compensated by the General Partner based on a percentage of
the New Net Profit of the Partnership, it is possible that the CTA will select
trades which are otherwise too risky for the Partnership to assume to earn the
percentage incentive fee on the profit should that ill-advised speculative
trade prove to be profitable.
(h) NO RESOLUTION OF CONFLICTS PROCEDURES. As is typical in many futures
partnerships, the General Partner has not established formal procedures, and
none are expected to be established in the future, to resolve the potential
conflicts of interest which may arise. It will be extremely difficult, if not
impossible, for the General Partner to assure that these and future potential
conflicts will not, in fact, result in adverse consequences to the Partnership
or the Limited Partners. The foregoing list of risk factors and conflicts of
interest is complete as of the date of this Prospectus, however, additional
risks and conflicts may occur which are not presently foreseen by the General
Partner. Investors are not to construe this Prospectus as legal or tax
advice. Before determining to invest in the Units, potential investors should
read this entire Agreement as well as the Partnership's Prospectus and the
subscription agreement, and consult with their own personal legal, tax, and
other professional advisors as to the legal, tax, and economic aspects of a
purchase of Units and the suitability of such purchase for them. See
"Investor Suitability" in the Partnership's Prospectus.
(i) INTERESTS OF NAMED EXPERTS AND COUNSEL. The General Partner has
employed The Scott Law Firm, Ltd. to prepare this Prospectus, provide certain
tax advice and opine upon the legality of the issuance of the Units. Neither
the Law Firm nor its principal, nor any accountant or other expert employed by
the General Partner to render advice in connection with the preparation of the
Prospectus or any documents attendant thereto, have been retained on a
contingent fee basis nor do they have any present interest or future
expectation of ownership in the Partnership or its General Partner or the
Underwriter or the CTAs or the IB or the FCM.
4.9 LIMITATION OF POWERS. Without concurrence of a Majority in Interest,
the General Partner may not:
(a) Amend this Agreement except for those amendments that are specifically
authorized by this Agreement or do not adversely affect the rights of the
Limited Partners.
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(b) Voluntarily withdraw as a General Partner other than upon 120 days
notice.
(c) Appoint a new General Partner or additional general partners; provided,
however, additional general partners may be appointed without obtaining the
consent of a Majority in Interest if the addition of such person is necessary
to preserve the tax status of the Partnership as a partnership and not as a
corporation; and the admission of such additional general partner does not
materially adversely affect the Limited Partners.
(d) Sell all or substantially all of the Partnership assets other than in
the ordinary course of business.
(e) Cause the merger or other reorganization of the Partnership.
(f) Dissolve the Partnership other than because of an event, which by law,
requires such dissolution.
ARTICLE V
Rights and Obligations of Limited Partners
5.1 LIMITATION OF LIABILITY. No Limited Partner shall be personally liable
for any of the debts of the Partnership or any of the losses thereof.
However, the amount committed by him to the Capital of the Partnership and his
interest in Partnership assets shall be subject to liability for Partnership
debts and obligations. Limited Partners may be liable to repay any wrongful
distribution of profits to them and may be liable for distributions (with
interest thereon) considered to be a return of Capital if necessary to satisfy
creditors of the Partnership.
5.2 NO MANAGEMENT RIGHTS. No Limited Partner shall take part in the
management of the business of the Partnership or transact any business for the
Partnership. No Limited Partner, as such, shall have the power to sign for or
to bind the Partnership.
5.3 CERTAIN RIGHTS. Provided the following, does not either (i) subject the
Limited Partners to unlimited liability or (ii) subject the Partnership to be
taxable as a Corporation for purposes of Federal Income tax laws, the
Partners, by a vote of a Majority in Interest, without the necessity for
concurrence by the General Partner, shall have the following rights in
addition to those granted elsewhere in this Agreement:
(a) Amend the Partnership Agreement; provided, however, any amendment which
modifies the compensation or distributions to the General Partner or which
affects the duties of the General Partner requires the consent of a majority
of the Limited Partners.
(b) The General Partner may be removed and a new General Partner elected in
accordance with the terms of this Agreement.
(c) Cancel any contract for services with the General Partner, without
penalty, upon 60 days written notice; provided, however, the maximum period of
any contract between the General Partner and the Partnership is one year; and,
provided further, should any amendment to this Partnership Agreement attempt
to modify the compensation or distributions to which the General Partner is
entitled or which affects the duties of the General Partner, such amendment
will become effective only upon the consent of the General Partner.
(d) The right to approve, prior to sale, the sale or distribution, outside
the ordinary course of business, of all or substantially all of the assets of
the Partnership.
(e) Dissolve the Partnership.
(f) Any material changes in the Partnership's basic investment policies
identified in Article III including, but not limited to, the speculation and
trade in commodity futures, forward futures contracts, and options upon those
contracts both within and without the United States or the structure of the
Partnership as a limited partnership requires prior written notification of a
meetings which identifies the purpose of the meeting and the approval by a
vote of the Majority in Interest of the Partners.
5.4 GENERAL PARTNER ACTION WITHOUT LIMITED PARTNER APPROVAL.
Notwithstanding anything in this Agreement, particularly section 5.3, to the
contrary, the General Partner may amend this Agreement without any vote,
consent, approval, authorization or other action of any other Partner and
without notice to any other Partner to:
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(a) add to the representations, duties or obligations of the General Partner
or its Affiliates or surrender any right or power granted to the General
Partner or its Affiliates in this Agreement for the benefit of the Limited
Partners;
(b) cure any ambiguity, correct or supplement any provision in this
Agreement which may be inconsistent with any other provision in this
Agreement, or make any other provisions with respect to matters or questions
arising under this Agreement which will not be inconsistent with the intent of
this Agreement;
(c) delete or add any provision of this Agreement required to be so deleted
or added by the staff of the Securities and Exchange Commission, or by a state
securities law administrator or similar such official, which addition or
deletion is deemed by such official to be for the benefit or protection of the
Limited Partner or does not have a material adverse effect on the Limited
Partners generally or the Partnership;
(d) reflect the withdrawal, expulsion, addition or substitution of Partners;
(e) reflect the proposal, promulgation or amendment of Regulations under
Code section 704, or otherwise, to preserve the uniformity of interest in the
Partnership issued or sold from time to time, if, in the opinion of the
General Partner, the amendment does not have a material adverse effect on the
Limited Partners generally;
(f) elect for the Partnership to be bound by any successor statute to the
Act, if, in the opinion of the General Partner, the amendment does not have a
material adverse effect on the Limited Partners generally;
(g) conform this Agreement to changes in the Act or interpretations thereof
which, in the exclusive desecration of the General Partner, it believe
appropriate, necessary or desirable, if, in the General Partner's reasonable
opinion, such amendment does not have a materially adverse effect on the
Limited Partners generally or the Partnership;
(h) change the name of the Partnership;
(i) conform the provisions of this Agreement to any applicable requirements
of Federal of state law which, in the exclusive discretion of the General
Partner, it believes appropriate, necessary or desirable, if, in the General
Partner's reasonable opinion, such amendment does not have a material adverse
effect on the Limited Partners generally or the Partnership; and
(j) make any change which, in the exclusive discretion of the General
Partner, is advisable to qualify or to continue the qualification of the
Partnership as a limited partnership or a partnership in which the Limited
Partners have limited liability under the laws of any state or that is
necessary or advisable, in the exclusive discretion of the General Partner, so
that the Partnership will not be treated as an association taxable as a
corporation for Federal income tax purposes.
5.5 EXPULSION OF LIMITED PARTNERS. Anything herein to the contrary
notwithstanding,
(a) no Partner, including any corporation, partnership, trust or other
entity may, at any time, have an ownership percentage of ten percent or more
of the aggregate ownership percentages of the Limited Partners. If, at any
time, the General Partner determines that any Limited Partner has an ownership
percentage of ten percent or more, the Partnership, in the General Partner's
exclusive discretion, may cause a Redemption by that Limited Partner of the
number of Units necessary or advisable to reduce that Limited Partner's
ownership percentage to less than ten percent. The Redemption shall be
effective as of the next Valuation Date or such other Valuation Date, at the
discretion of the General Partner.
(b) the General Partner has the right, in its sole discretion, to raise or
lower the minimum investment in the Partnership required for the admission or
retention of Units in the Partnership by a Partner; however such minimum
investment may not be lowered below $5,000. In the event the General Partner
does raise the minimum investment in the Partnership to an amount in excess of
any Partners Capital account, the Partnership shall provide notice to the
Partner of such event and allow the Partner 30 days to raise the Capital
account for that Partner to such raised amount, or more. In the event the
Partner does not so raise his Capital account to such minimum amount, the
Partner shall be deemed to have elected to withdraw from the Partnership and
all of his Units shall be redeemed at the next redemption date as provided in
this Agreement.
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(c) notwithstanding the foregoing, the General Partner, at its sole
discretion, may expel any Partner at anytime, by causing the redemption of
that Partner's Units as of the next Valuation Date, or such other Valuation
Date as the General Partner may determine.
5.6 NOTIFICATION. Notice shall be sent to each Partner within seven
business days from the date of:
(a) any decline in the Net Unit Value to less than 50% of the Net Asset
Value on the last Valuation Date;
(b) any material change in contracts with the FCM or CTA including, but not
limited to, any change in CTAs or any modification in connection with the
method of calculating the incentive fee;
(c) any other material change affecting the compensation of the General
Partner, FCM, CTA or any Affiliated party;
5.7 NOTIFICATION CONTENTS.
(a) a material change related to brokerage commissions shall not be made
until notice is given and the Partners, after such notice, have the
opportunity to Redeem pursuant to Article IX;
(b) in addition, in regard to all other changes, the required notification
shall describe the change in detail, include a description of the Partners'
Redemption rights pursuant to Article IX and voting rights pursuant to this
Article V and a description of any material effect such changes may have on
the interests of the Partners.
5.8 EXERCISE OF RIGHTS. Upon receipt of a written request, executed by the
holders of Units aggregating ten percent (10%) or more of the Units, for a
vote upon and to take action with respect to any rights of the Partners under
this Agreement, the General Partner shall call a meeting of all Partners of
the Partnership in the time and manner as provided in Section 8.7 hereof. The
General Partner will assume the cost for distribution of the request for the
meeting.
5.9 EXAMINATION OF BOOKS AND RECORDS. A Limited Partner shall have the
right to examine the books and records of the Partnership at all reasonable
times, including the right to have such examination conducted at his sole
expense by any reasonable number of representatives. Notwithstanding the
foregoing, the General Partner may keep and withhold the names of the other
Partners, specific trading and other designed information confidential from
the Partners.
ARTICLE VI
Assignment of Limited Partnership Units;
Admission of Limited Partners
6.1 RESTRICTION ON ASSIGNMENT. A Partner may not assign or transfer some or
all of his Units in the Partnership without the written consent of the General
Partner; provided, however, that in no event may an assignment be made or
permitted until after six months from the date of purchase of such assigned or
transferred Units(s) by said Partner; and, provided, further, that full Units
must be assigned and the assignor, if he is not assigning all of his Units,
will retain more than five Units. Any such assignment shall be subject to all
applicable securities, commodity, and tax laws and the regulations promulgated
under each such law. The General Partner shall review any proposed assignment
and shall withhold its consent in the event it determines, in its sole
discretion, that such assignment could have an adverse effect on the business
activities or the legal or tax status of the Partnership.
6.2 QUALIFIED PLAN RESTRICTIONS. In no event shall a Partner be entitled to
transfer all or part of a Partnership interest if, under applicable United
States Department of Labor law or regulations, such transfer would result in a
violation of such law or regulations.
6.3 DOCUMENTATION OF ASSIGNMENT. The General Partner shall furnish to the
assigning Limited partner a proper form to duly effect such assignment. The
General Partner shall not be required to recognize any assignment and shall
not be liable to the assignee for any distributions made to the assigning
Limited Partner until the General Partner has received such form of
assignment, properly executed with signature guaranteed, together with the
Certificate of Ownership originally issued to the Limited Partner (or an
indemnity bond in lieu therefor) and such evidence of authority as the General
Partner may reasonably request and the General Partner shall have accepted
such assignment.
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ARTICLE VII
Accounting Records, Reports and Distributions
7.1 DISTRIBUTIONS. Each Partner will have a Capital account, and its
initial balance will be the amount the Partner paid for the Partner's Units.
The Net Assets of the Partnership will be determined monthly, and any increase
or decrease from the end of the preceding month will be added to or subtracted
from the accounts of the Partners in the ratio that each account bears to all
accounts. Distributions from profits or Capital will be made solely at the
discretion of the General Partner.
7.2 BOOKS OF ACCOUNT. Proper books of account shall be kept and there shall
be entered therein all transactions, matters and things relating to the
Partnership's business as required by applicable law and the regulations
promulgated thereunder and as are usually entered into books of account kept
by persons engaged in business of like character. The books of account shall
be kept at the principal office of the General Partner and each Limited
Partner (or any duly constituted agent of a Limited Partner) shall have, at
all times during reasonable business hours, free access, subject to rules of
confidentiality established by the General Partner, the right to inspect and
copy the same. Such books of account shall be kept on an accrual basis. A
Capital account shall be established and maintained from each Partner, as set
forth above.
(a) Each Partner shall be furnished as of the end of each Fiscal Year with
(1) annual financial statements, audited by a certified public accountant,
within 90 days from the end of such year; together with such other reports (in
such detail) as are required to be given to Partners by applicable law,
specifically, annual and periodic reports will be supplied by the General
Partner to the other Partners in conformance with the provisions of CFTC
regulations for reporting to Pool Participants, 17 C.F.R. Section 4.22, as
amended, from time to time, and, (2) any other reports or information which
the General Partner, in its sole discretion, determines to be necessary or
appropriate.
(b) Appropriate tax information (adequate to enable each Partner to complete
and file his Federal tax return) shall be delivered to such Partner no later
than March 1 following the end of each Calendar Year.
7.3 CALCULATION OF NET ASSET VALUE. Net Asset Value shall be calculated
daily and reports delivered to Partners as of the last day of each month by
the 20th of the following month. Upon request, the General Partner shall make
available to any Partner the Net Unit Value.
7.4 MAINTENANCE OF RECORDS. The General Partner shall maintain all records
as required by law including, but not limited to, (1) all books of account
required by paragraph 7.1 of this Article VII; and, (2) a record of the
information obtained to indicate that a Partner meets the applicable investor
suitability standards.
7.5 TAX RETURNS The General Partner shall cause tax returns for the
Partnership to be prepared and timely filed with the appropriate authorities.
The General Partner shall cause the Partnership to pay any taxes payable by
the Partnership; provided, however, that the General Partner shall not be
required to cause the Partnership to pay any tax so long as the General
Partner or the Partnership shall be in good faith and by appropriate means
contesting the applicability, validity or amount thereof and such contest
shall not materially endanger any right or interest of the Partnership.
7.6 TAX ELECTIONS The General Partner shall from time to time, make such
tax elections or allocations deemed necessary or desirable to carry out the
business of the Partnership or the purposes of this Agreement. Ashley shall
be authorized to perform all duties imposed by Sections 6221 through 6232 of
the Internal Revenue Code on the General Partner as "tax matters partner" of
the Partnership, including, but not limited to, the following: (i) the power
to conduct all audits and other administrative proceedings with respect to
Partnership tax items; (ii) the power to extend the statute of limitations for
all Limited Partners with respect to Partnership tax items; (iii) the power to
file a petition with an appropriate federal court for a review of a final
Partnership administrative adjustment; and, (iv) a power of attorney on behalf
of each Limited Partner having less than a 1% interest in the Partnership to
enter a settlement with the Internal Revenue Service on behalf of, and binding
upon, those Limited Partners unless any said Limited Partner shall have
notified the Internal Revenue Service and the General Partner, within 30 days
of service of the notice of claim up said Limited Partner, that the General
Partner may not act on such Limited Partner's behalf.
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ARTICLE VIII
Amendments of Partnership Agreement
8.1 RESTRICTION ON AMENDMENTS. No amendment to this Agreement shall be
effective or binding upon the partners unless the same shall have been
approved by a Majority in Interest of the Partners; provided, however, the
General Partner may adopt amendments without such approval which are, in the
sole judgment of the General Partner, deemed necessary or desirable to
maintain the business or limited partnership or other favorable tax status of
the Partnership, or permit a Public Offering of the Units, or to maintain the
Partnership and the General Partner and its principals in compliance with the
laws which govern the business, including the requirements of any self
regulatory organization, or to substitute or add persons as Limited Partners.
8.2 ADMISSION OF ADDITIONAL PARTNERS. At any time, the General Partner may,
in its sole discretion and subject to applicable law, admit additional
Partners. Each newly admitted Partner shall contribute cash equal to the Net
Unit Value of the Partnership for each Unit to be acquired. The terms of any
additional offering may be different from the terms of the initial offering.
All expenses of any such additional offering shall be borne by the either the
Partnership or the subscribers thereto, as determined in the sole discretion
of the General Partner. Pursuant to Article VI, the General Partner may
consent to and admit any assignee of Units as a substituted Partner. There is
no maximum aggregate amount of Units which may be offered and sold by the
Partnership or on the amount of contributions which may be received by the
Partnership.
8.3 TERMINATION OF OFFERINGS; ADDITIONAL OFFERINGS. Notwithstanding
anything stated herein to the contrary, the General Partner may from time to
time, in its sole discretion, limit the number of Units to be offered,
terminate any offering of Units, or register additional Units and/or make
additional public or private offerings of Units. No Limited Partner shall
have any preemptive, preferential or other rights with respect to the issuance
or sale of any additional Units. No Limited Partner shall have the right to
consent to the admission of any additional Limited Partners.
8.4 NOTICE OF RESTRICTED TRANSFER. Should the General Partner elect to
issue certificates of Limited Partnership, each certificate shall be subject
to and contain the following notice:
THESE LIMITED PARTNERSHIP INTERESTS SHALL NOT BE TRANSFERABLE BY THE
REGISTERED HOLDER EXCEPT BY CONSENT OF THE GENERAL PARTNER AND AS OTHERWISE
PROVIDED IN THE PARTNERSHIP AGREEMENT.
8.5 MEETINGS OF PARTNERS. Upon receipt of a written request, together with
the costs to distribute such request to all Partners, executed by Partners
holding ten percent (10%) or more of the Units, for the calling of a meeting
of the Partners or should the General Partner desire a meeting for any
purpose, the General Partner shall, within fifteen (15) days thereafter,
provide written notice, either in person or by certified mail, after the date
of receipt of said notice. Such written notice shall state the purpose of the
meeting, specify a reasonable time, place, and date, which shall be not less
than thirty (30) or more than sixty (60) days thereafter. An Amendment shall
be adopted and binding upon all parties hereto if a Majority in Interest of
the Partners vote for the adoption of such amendment. Partners may vote in
person or by written proxy delivered to any such meeting. Meetings of
Partners may also be held by conference telephone where all Partners can hear
one another.
8.6 RIGHT OF GENERAL PARTNER TO RESIGN. The individual General Partner, Mr.
Pacult, may resign upon one hundred twenty (120) days notice to all other
Partners. The corporate General Partner, Ashley, may resign or assign any
portion of its interest in the Partnership at anytime to a third party and
become a Limited Partner with respect to the balance of its interest in the
Partnership, if any, if it provides one hundred twenty (120) days prior
written notice to all other Partners of its intention to resign and states in
such notice the name of the intended assignee who is to become substitute
corporate General Partner and the information reasonably appropriate to enable
the Partners to decide whether or not to approve the substitution or, in the
alternative, provide that the partners must elect a successor general partner.
In the event of the voluntary withdrawal by the corporate General Partner, the
corporate General Partner shall pay the legal fees, recording fees and all
other expenses incurred as a result of its withdrawal. Upon resignation, the
corporate General Partner shall be paid the items identified in Section 8.7
below.
8.7 AMENDMENT INVOLVING SUCCESSOR CORPORATE GENERAL PARTNER. Should a
resignation or an amendment to the Agreement provide for a change in the
general partner upon the conditions provided in this Agreement, the election
and admission of a person or persons as a successor or successors to the
corporate General Partner, shall require the following conditions: the General
Partner shall retire and withdraw as General Partner and the Partnership
business shall be continued by the successor general partner or general
partners, and such amendment shall expressly provide that on or before the
effective date of removal.
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(a) The corporate General Partner shall be permitted to Redeem 100% of its
Units as of the Valuation Date following its removal or resignation in cash
equal to the Net Asset Value of such corporate General Partner's interest in
the Partnership.
(b) The Partnership shall pay to the removed corporate General Partner an
amount equal to the Appraised Value of such General Partner's assets to be
transferred to the successor General Partner to enable the successor to
continue the business of the Partnership. The Appraised Value of the
withdrawing corporate General Partner's interest in the Partnership shall
equal such General Partner's interest in the sum of (1) the Expenses advanced
by the corporate General Partner to the Partnership, (2) all cash items, (3)
all prepaid expenses and accounts receivable less a reasonable discount for
doubtful accounts, and (4) the net book value of all other assets, unless the
withdrawing General Partner of the successor corporate General Partner
believes that the net book value of an asset does not fairly represent its
fair market value in which event such corporate General Partner shall cause,
at the expense of the Partnership, an independent appraisal to be made by a
person selected by the General Partner with approval of a Majority in Interest
of the Partners to determine its value.
(c) The successor General Partner or Partners shall indemnify the former
General Partner for all future activities of the Fund.
ARTICLE IX
Dissolution, Liquidation and Redemption
9.1 DISSOLUTION. The Partnership shall be dissolved, and shall terminate
and wind-up its affairs, upon the first to occur of the following:
(a) the affirmative vote of a Majority in Interest of the Partners adopting
an amendment to this Agreement providing for the dissolution of the
Partnership;
(b) the sale, exchange, forfeiture or other disposition of all or
substantially all the properties of the Partnership out of the ordinary course
of business;
(c) the resignation of the General Partner after one hundred twenty days
notice to the Partners, of the bankruptcy, insolvency or dissolution, of the
General Partner without a successor, promptly after any such event, but in no
event beyond one hundred twenty (120) days after the effective date of such
event;
(d) at 11:59 p.m. on the day which is twenty-one (21) years from the 1st day
of February, 1998; or
(e) any event which legally dissolves the Partnership.
9.2 EFFECT OF LIMITED PARTNER STATUS. The death, legal disability,
bankruptcy, insolvency, dissolution, or withdrawal of any Limited Partner
shall not result in the dissolution or termination of the Partnership, and
such Limited Partner, his estate, custodian or personal representative shall
have no right to withdraw or value such Limited Partner's interest in the
Partnership except as provided in Paragraph 9.3. Each Limited Partner (any
assignee thereof) expressly agrees that the provisions of the Act, as amended,
titled "Powers of Legal Representative or Successor of Deceased, Incompetent,
Dissolved or Terminated Partner", shall not apply to his interest in the
Partnership and expressly waives any rights and benefits thereunder. Each
Limited Partner (and any assignee of such Partner's interest) expressly agrees
that in the event of his death, that he waives on behalf of himself and his
estate, and he directs the legal representative of his estate and any person
interested therein to waive the furnishing of any inventory, accounting or
appraisal of the assets and any right to an audit or examination of the books
of the Partnership. The General Partner may assign, sell, or otherwise
dispose of all or any portion of its shares of common stock without any legal
effect upon the operation of the Partnership and no Limited Partner may object
to any such transfer.
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9.3 LIQUIDATION. Upon the termination and dissolution of the Partnership,
the General Partner (or in the event the dissolution is caused by the
dissolution or the cessation to exist as a legal entity of the General
Partner, voluntary withdrawal, bankruptcy or insolvency, such person as the
Majority in Interest of the Partners may select) shall act as liquidating
trustee and shall take full charge of the Partnership assets and liabilities.
Thereafter, the business and affairs of the Partnership shall be wound up and
all assets shall be liquidated as promptly as is consistent with obtaining the
fair value thereof, and the proceeds therefrom shall be applied and
distributed in the following order: (i) to the expenses of liquidation and
termination and to creditors, including the General Partner, in order or
priority as provided by law, and (ii) to the Partners pro rata in accordance
with his or its Capital account, less any amount owed by such Partner to the
Partnership.
9.4 RETURN OF CAPITAL CONTRIBUTION SOLELY OUT OF ASSETS. A Partner shall
look solely to the properties and assets of the Partnership for the return of
his Capital Contribution, and if the properties and assets of the Partnership
remaining after the payment or discharge of the debts and liabilities of the
Partnership are insufficient to return his Capital Contribution, he shall have
no recourse against the General Partner or any other Limited Partner for that
purpose.
9.5 REDEMPTION. A Partner (including any approved assignee who becomes a
Limited Partner) may withdraw any part or all of his Capital Contribution and
undistributed profits, if any, by requiring the Partnership to redeem any or
all of his Units at the Net Asset Value thereof (such withdrawal being herein
referred to as "Redemption"). The General Partner has the right to establish
the notice cut-off date and the Redemption effective date. Such Redemptions
shall be no less often than quarterly; provided, however, Redemption may be
deferred until after the lapse of twelve months from the date of purchase of
the Units.
9.6 REDEMPTION PROCEDURES. Redemption shall be after all liabilities,
contingent, accrued, reserved in amounts determined by the General Partner
have been deducted and there remains property of the Partnership sufficient to
pay the Net Unit Value as defined in Paragraph 1.3(b). As used herein,
"request for Redemption" shall mean a letter mailed or delivered by a Partner
and received by the General Partner no less than 10 business days prior to the
effective date for which Redemption is requested. Upon Redemption, a Partner
shall receive, on or before the last day of the following month, an amount
equal to the Net Unit Value redeemed as of the date for which the request for
Redemption was received, less accrued expenses and any amount owed by such
Partner to the Partnership. Redemption is subject to a Redemption fee to be
paid by the Partners as provided below; provided, however, no Partner other
than the initial Limited Partner, may redeem any Units until the last day of
the twelfth month after the commencement of trading. All Redemption requests
shall be subject to the following:
(a) Under special circumstances including, but not limited to, the inability
to liquidate positions as of such Redemption date or default or delay in
payments due the Partnership from banks, brokers, or other persons, the
Partnership may in turn delay payment to Partners requesting Redemption of
Units of the proportionate part of the Net Unit Value represented by the sums
which are the subject of such delay or default.
(b) The General Partner in its sole discretion may, upon notice to the
Partners, declare additional Redemption dates and may cause the Partnership to
redeem fractions of Units and, prior to registration of Units for public sale,
redeem Units held by Partners who do not hold the required minimum amount of
Units established, from time to time, by the General Partner.
(c) For Partners admitted after the date of this Agreement, there will be no
redemption charge or fee. The General Partner may withdraw from the
Partnership at any time and have return of the proceeds attributable to his
Units without any delay or payment of fees.
9.7 SPECIAL REDEMPTION. In the event the Net Unit Value falls to less than
fifty percent (50%) of the Net Asset Value established by the greater of the
initial offering price of one thousand dollars ($1,000), less commissions and
other charges, or such higher value earned after payment of the incentive fee
for the addition of profits, the General Partner shall immediately suspend all
trading, provide immediate notice, in accordance with the terms of this
Agreement, to all Partners of the reduction in Net Asset Value, and afford all
Partners the opportunity for fifteen (15) days after the date of such notice
to Redeem their Units in accordance with the provisions of Section 9.5 and
9.6, above. No trading shall commence until after such fifteen day period.
ARTICLE X
Nature of Partner's Liabilities for Claims
10.1 PROSECUTION OF CLAIMS. The General Partner shall arrange to prosecute,
defend, settle or compromise actions at law or in equity or with any self
regulatory organizations at the expense of the Partnership as such may be
necessary or desirable to enforce, protect, or maintain Partnership interests.
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10.2 SATISFACTION OF CLAIMS. The General Partner shall satisfy any claims
against, errors asserted, or other liability of the Partnership and any
judgment, decree, decision or settlement, first out of any insurance proceeds
available therefor, next, out of Partnership assets and income, and finally
out of the assets and income of the General Partner.
10.3 GENERAL PARTNER DECISION. The decisions made by the General Partner in
regard to the prosecution or settlement of claims, errors, and other
liabilities, will be final unless contested and put to a vote pursuant to
Section 5.8, in which case the outcome of the vote will determine the course
of action.
10.4 EXONERATION, INDEMNIFICATION, AND NO ANTICIPATION OF PAYMENTS. The
General Partner shall not be liable to the Partnership or the Partners for any
failure to comply with its obligations hereunder except for breach of
fiduciary obligation owed to the partnership or negligence on its part in the
management of Partnership affairs or violation of Federal and state
securities laws in connection with the offering of Units for sale. In
addition:
(a) The General Partner will be indemnified for liabilities and expenses
arising from any threatened, pending or completed action or suit in which it
or any affiliate is a party or is threatened to be made a party by reason of
the fact that it is or was the General Partner of the Partnership (other than
an action by the Partnership or a Partner against the General Partner which is
finally resolved in favor of the Partnership or Partner). The Partnership
will indemnify the General Partner and its affiliates against expenses,
including attorney's fees, judgments and amounts paid in settlement of an
action, suit or proceeding if it has acted in good faith and in a manner it
reasonably believed to be in or not opposed to the best interest of the
Partnership, and provided that its conduct did not constitute negligence or a
breach of fiduciary obligations in the performance of its duty to the
Partnership or a violation of the securities laws. The termination of any
action, suit or proceeding by judgment, order or settlement against the
Partnership shall not of itself create a presumption that the General Partner
or any affiliate did not act in good faith and not in the best interest of the
Partnership.
Notwithstanding any provision of this Agreement to the contrary, the
Partnership shall advance or pay the General Partner or any of its Affiliates
for legal expenses and other costs incurred as a result of any legal action
which alleges a breach of the Federal or state securities laws only if the
following conditions are satisfied: (i) the legal action relates to acts or
omissions with respect to the performance of duties or services on behalf of
the Partnership; (ii) the legal action is initiated by a third party who is
not a Limited Partner, or the legal action is initiated by a Limited Partner
and an independent arbitration panel, administrative law judge, or court of
competent jurisdiction specifically approves such advancement; and, (iii) the
General Partner or its Affiliates undertake to repay the advanced funds to the
Partnership, together with the applicable legal rate of interest thereon, in
cases which such party is not entitled to indemnification under NASAA
Guideline II.F.
To the extent that a General Partner or an Affiliate has been successful on
the merits or otherwise in defense of any action, suit or proceeding referred
to above or in defense of any claim, issue or other matter related to the
Partnership or any other Partner or person who applied to be a Partner, the
Partnership shall indemnify such General Partner against the expenses,
including attorneys' fees and costs, actually and reasonably incurred by it in
connection therewith.
(b) The indemnification of a General Partner shall be limited to and
recoverable only out of the assets of the Partnership. Notwithstanding the
foregoing, the Partnership's indemnification of the General Partner shall be
limited to the amount of such loss, liability or damage which is not otherwise
compensated for by insurance carried for the benefit of the Partnership.
Additionally, the Partnership may not incur the cost of that portion of
liability insurance which insures the General Partner for any liability as to
which the General Partner is prohibited from being indemnified under this
Agreement.
(c) Notwithstanding any provision in this Agreement to the contrary, the
Partnership shall not advance the expenses or pay for any insurance to pay for
the costs of the defense or any liability which is prohibited from being
indemnified pursuant to NASAA Guideline II.F. Specifically, no
indemnification which is the result of negligence or misconduct by the General
Partner or for any allegation of a violation of the Federal or state
securities laws by or against the General Partner, any broker/dealer or any
other party unless there has been a successful adjudication on the merits of
each count involving alleged securities law violation as to the General
Partner or broker/dealer or such other party; or a court of competent
jurisdiction approves a settlement of the claims against the General Partner
or any broker/dealer or any other party and finds, specifically, that the
indemnification of the settlement and related costs should be made after the
court of law has been made aware that the Securities and Exchange Commission
opposes such indemnification and the position of any applicable state
securities regulatory authority where the Partnership Interests were offered
or sold without the compliance with specific conditions upon such
indemnification and the action covered satisfies the provisions of Section
10.4 (a) of this Agreement. Any change in the requirements imposed by the
Securities and Exchange Commission and the state securities administrators in
regard to indemnification shall cause a corresponding change in the right of
the General Partner to indemnification.
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(d) The indemnification of the General Partner provided in this Article
shall extend to any employee, agent, attorney, certified public accountant, or
Affiliate of the Partnership and the General Partner.
(e) The Partnership shall indemnify, to the extent of the Partnership
assets, each Partner against any claims of liability asserted against a
Partner solely because he is a Partner in the Partnership.
(f) In the event the Partnership or any Partner is made a party to any
claim, dispute or litigation or otherwise incurs any loss or expense, as a
result of or in connection with any Partner's activities unrelated to the
Partnership business or as a result of an unfounded claim against the
Partnership or any other Partner brought as a result of alleged actions by
said Partner, the Partner which was responsible for the allegations which
caused such loss or expense shall indemnify and reimburse the Partnership and
all other Partners for all loss and expense incurred, including attorneys'
fees and costs.
(g) No creditor of a Partner shall have a right to vote Units. Nor may any
Partner or creditor of a Partner anticipate any principal or income from the
Fund prior to the approval of a Redemption Request or the payment of a
distribution from the Fund.
ARTICLE XI
Power of Attorney
11.1 POWER OF ATTORNEY EXECUTED CONCURRENTLY. Concurrent with the written
acceptance and adoption of the provisions of this Agreement, each Partner
shall execute and deliver to the General Partner, a Power of Attorney
(paragraph 5 of the Subscription Agreement). Said Power of Attorney
irrevocably constitutes and appoints the General Partner as a true and lawful
attorney-in-fact and agent for such Partner with full power and authority to
act in his name and on his behalf in the execution, acknowledgment and filing
of documents, which will include, but shall not be limited to, the following:
(a) Any certificates and other instruments, including but not limited to, a
Certificate of Limited partnership and amendments thereto and a certificate of
doing business under an assumed name, which the General Partner deems
appropriate to qualify or continue the Partnership as a limited partnership in
the jurisdictions in which the Partnership may conduct business, so long as
such qualifications and continuations are in accordance with the terms of this
Agreement or any amendment hereto, or which may be required to be filed by the
Partnership or the Partners under the laws of any jurisdiction;
(b) Any other instrument which may be required to be filed by the
Partnership under Federal or any state laws or by any governmental agency or
which the General Partner deems advisable to file; and
(c) Any documents required to effect the continuation of the Partnership,
the admission of the signer of the Power as a Limited Partner or of others as
additional or substituted Partners or Limited Partners, or the dissolution and
termination of the Partnership, provided such continuation, admission,
dissolution or termination is pursuant to the terms of this Agreement.
11.2 EFFECT OF POWER OF ATTORNEY. The Power of Attorney concurrently granted
by each Partner to the General Partner is a special Power of Attorney coupled
with an interest, is irrevocable, and shall survive the death or legal
incapacity of the Partner; and may be exercised by the General Partner for
each Partner by a facsimile signature of one of its officers or by listing all
of the Partners executing any instrument with a single signature of one of its
officers acting as attorney-in-fact for all of them; and shall survive the
delivery of an assignment by a Partner of the whole or any portion of his
interest in the Partnership; except that where the assignee thereof has been
approved by the General Partner for admission to the Partnership as a
substituted partner, the Power of Attorney shall survive the delivery of such
assignment for the sole purpose of enabling the General Partner to execute,
acknowledge and file an instrument necessary to effect such substitution.
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11.3 FURTHER ASSURANCES. Upon request, each Limited Partner agrees to
execute and deliver to the Partnership, within thirty (30) days after receipt
of a written request from the General Partner, a separate form of power of
attorney granting the same powers described above; and such other further
statements of interest, holdings, designations, powers of attorney and other
instruments as the General Partner deems necessary or desirable.
ARTICLE XII
Miscellaneous Provisions
12.1 NOTICES. Notices, requests, reports, payments or other communications
required to be given or made hereunder shall be in writing and shall be deemed
to be delivered when properly addressed and posted by United States registered
or certified mail or delivered by independent courier which provides an record
of receipt, postage or delivery fees prepaid, properly addressed to the party
being given such notice at its last known address. Addresses shown on the
Schedule of Limited Partners records of the Partnership shall be considered
the last known address of each said party unless the General Partner is
otherwise notified in writing.
12.2 NATURE OF INTEREST OF PARTNERS. The interest of each Partner in the
Partnership is personal property. No Partner may anticipate the distribution
or redemption of principal or income from the Partnership and no assignment to
secure the position of a lender to a Partner shall be valid without the
express written consent of the General Partner.
12.3 GOVERNING LAW. This Agreement shall be construed in accordance with and
governed in all respects by the laws of the State of Delaware. All Partners
agree to consent to the jurisdiction and to bring all actions for claims
related to the Partnership and the sale of the Units in the State and County
of the principal office of the Partnership as it is established, from time to
time, by the General Partner. Currently, the principal office of the
Partnership is located in Kent County, Delaware.
12.4 SUCCESSORS IN INTEREST. This Agreement shall be binding on and inure to
the benefit of he parties hereto and, to the extent permitted by this
Agreement, their respective heirs, executors, administrators, personal
representatives, successors and assigns.
12.5 INTEGRATION. This Agreement constitutes the entire agreement among the
parties pertaining to the subject matter hereof and supersedes all prior and
contemporaneous agreements and understandings of such parties in connection
herewith. Any amendment or supplement made hereto must be in writing.
12.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts. In such event, each counterpart shall constitute an original
and all such counterparts shall constitute one agreement. The addition of
Limited Partners pursuant to the power of attorney granted to the General
Partner shall not be deemed amendments to alter the rights of the other
Partners under this Agreement.
12.7 SEVERABILITY. Any provision of this Agreement which is invalid,
illegal, or unenforceable in any respect in any jurisdiction shall be, as to
such jurisdiction, ineffective to the extent of such invalidity, illegality or
unenforceability. The remaining provisions hereof in such jurisdiction shall
be and remain effective. Any such invalidity, illegality or unenforceability
in any jurisdiction shall not invalidate or in any way effect the validity,
legality or enforceability of such provision or the remainder of this
Agreement in any other jurisdiction.
12.8 WAIVERS. The failure of any Partner to seek redress for violation of or
to insist upon the strict performance of any covenant or condition of this
agreement shall not prevent a subsequent act, which would have originally
constituted a violation, from having the effect of an original violation.
12.9 HEADINGS. The headings in this Agreement are inserted for convenience
and identification only and are in no way intended to describe, interpret,
define or limit the scope, extent or intent of this Agreement or any provision
hereof.
12.10 RIGHTS AND REMEDIES CUMULATIVE. This rights and remedies provided by
this Agreement are cumulative and the use of any one right or remedy by any
Partner shall not preclude or waive his right to use addition to any other
rights such Partner may have by law, statute, ordinance or otherwise.
12.11 WAIVER OF RIGHT TO PARTITION. Each of the Partners irrevocably waives,
during the term of the Partnership, any right that it may have to maintain any
action for partition with respect to the property and assets of the
Partnership.
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12.12 INTEREST OF CERTAIN SECURED CREDITORS. No creditor who makes
nonrecourse loan to the Partnership shall have or acquire at any time as a
result of making the loan, any direct or indirect interest in the profits,
Capital, or property of the Partnership other than as a secured creditor.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement the day and year first above written.
General Partner:
ASHLEY CAPITAL MANAGEMENT, INCORPORATED
By: __________________________
Michael P. Pacult
President
Other General Partner:
By: __________________________
Michael P. Pacult
Agent for Limited Partners:
Ashley Capital Management, Inc.
By: __________________________
Michael P. Pacult
President
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EXHIBIT B TO ATLAS FUTURES FUND DISCLOSURE DOCUMENT
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
REQUEST FOR REDEMPTION
To: Ashley Capital Management, Inc.
General Partner _____________________________
5914 N. 300 West Our Social Security Number or
P. O. Box 760 Taxpayer ID Number
Fremont, IN 46737
_____________________________
Joint Social Security Number or
Taxpayer ID Number
Dear General Partner:
The undersigned hereby requests redemption ("Redemption"), as defined in and
subject to all the terms and conditions disclosed in the Offering Circular
(the "Prospectus") delivered to the undersigned at the time of our purchase of
limited partnership interests (the "Units") in Atlas Futures Fund, Limited
Partnership, (the "Fund"), of $___________________ of Units (or insert the
number of Units to be Redeemed). This Redemption request, once approved and
accepted by you as General Partner, will be at the Net Asset Value per Unit,
as described in the Prospectus, as of the close of business at the end of the
current month following such approval.
The undersigned hereby represents and warrants that the undersigned is the
true, lawful and beneficial owner of the Units to which this Request relates
with full power and authority to request Redemption of such Units. Such
Units are not subject to any pledge or otherwise encumbered.
United States Taxable Limited Partners Only - Under penalty of perjury, the
undersigned hereby certifies that the Social Security Number or Taxpayer ID
Number indicated on this Request for Redemption is the undersigned's true,
cared and complete Social Security Number or Taxpayer ID Number and that the
undersigned is not subject to backup withholding under the provisions of
section 3406(a)(1)(C) of the Internal Revenue Code.
Non United States Limited Partners Only - Under penalty of perjury, the
undersigned hereby certifies that (a) the undersigned is not a citizen or
resident of the United States or (b) (in the case of an investor which is not
an individual) the investor is not a United States corporation, partnership,
estate or trust.
SIGNATURE(S) MUST BE IDENTICAL TO NAME(S) IN WHICH UNITS ARE REGISTERED
Please forward redemption funds by mail to the undersigned at:
_____________________________________________________________________________
Name Street City, State and Zip Code
Entity Limited Partner Individual Limited Partners(s)
________________________________ _______________________________
(Name of Entity) (Signature of Limited Partner)
By:
________________________________ ________________________________
(Authorized corporate officer, partner, (Signature of Limited Partner)
custodian or trustee)
________________________________
(Title)
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EXHIBIT C TO ATLAS FUTURES FUND DISCLOSURE DOCUMENT
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
SUBSCRIPTION REQUIREMENTS
By executing the Subscription Agreement and Power of Attorney for Atlas
Futures Fund Limited Partnership (the "Fund"), each purchaser ("Purchaser") of
Limited Partnership Interests (the "Units") in the Partnership irrevocably
subscribes for Units at a price equal to the Net Asset Value per Unit as of
the end of the month in which the subscription is accepted as described in the
Partnership's prospectus dated March __, 2012, (the "Prospectus"). The
minimum subscription is $25,000, however, it may be lowered to not less than
$5,000 by the General Partner; additional Units may be purchased in multiples
of $1,000. Subscriptions must be accompanied by a check in the full amount of
the subscription and made payable to "Atlas Futures Fund, LP". Purchaser is
also delivering to the Partnership an executed Subscription Agreement and
Power of Attorney (Exhibit D to the Prospectus). Upon acceptance of
Purchaser's Subscription Agreement and Power of Attorney, Purchaser agrees to
contribute Purchaser's subscription to the Partnership and to be bound by the
terms of the Partnership's Limited Partnership Agreement, attached as Exhibit
A to the Prospectus. Purchaser agrees to reimburse the Partnership and Ashley
Capital Management, Incorporated (the "General Partner") for any expense or
loss incurred as a result of the cancellation of Purchaser's Units due to a
failure of Purchaser to deliver good funds in the amount of the subscription
price. By execution of the Subscription Agreement and Power of Attorney,
Purchaser shall be deemed to have executed the Limited Partnership Agreement.
As an inducement to the General Partner to accept this subscription, Purchaser
(for the Purchaser and, if Purchaser is an entity, on behalf of and with
respect to each of Purchaser's shareholders, partners or beneficiaries), by
executing and delivering Purchaser's Subscription Agreement and Power of
Attorney, represents and warrants to the General Partner, the Commodity Broker
and the Fund, as follows:
(a) Purchaser is of legal age to execute the Subscription Agreement and
Power of Attorney and is legally competent to do so. Purchaser acknowledges
that Purchaser has received a copy of the Prospectus, including the Limited
Partnership Agreement, prior to subscribing for Units.
(b) All information that Purchaser has heretofore furnished to the General
Partner or that is set forth in the Subscription Agreement and Power of
Attorney submitted by Purchaser is correct and complete as of the date of such
Subscription Agreement and Power of Attorney, and if there should be any
change in such information prior to acceptance of Purchaser's subscription,
Purchaser will immediately furnish such revised or corrected information to
the General Partner.
(c) Unless (d) or (e) below is applicable, Purchaser's subscription is made
with Purchaser's funds for Purchaser's own account and not as trustee,
custodian or nominee for another.
(d) The subscription, if made as custodian for a minor, is a gift Purchaser
has made to such minor and is not made with such minor's funds or, if not a
gift, the representations as to net worth and annual income set forth below
apply only to such minor.
(e) If Purchaser is subscribing in a representative capacity, Purchaser has
full power and authority to purchase the Units and enter and be bound by the
Subscription Agreement and Power of Attorney on behalf of the entity for which
he is purchasing the Units, and such entity has full right and power to
purchase such Units and enter and be bound by the Subscription Agreement and
Power of Attorney and become a Limited Partner pursuant to the Limited
Partnership Agreement which is attached to the Prospectus as Exhibit A.
(f) Purchaser either is not required to be registered with the Commodity
Futures Trading Commission ("CFTC") or to be a member of the National Futures
Association ("NFA") or if required to be so registered is duly registered with
the CFTC and is a member in good standing of the NFA.
(g) If the undersigned is acting on behalf of an "employee benefit plan," as
defined in and subject to the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), or a "plan" as defined in and subject to Section 4975 of
the Internal Revenue Code of 1986, as amended (the "Code") (a "Plan"), the
individual signing this Subscription Agreement and Power of Attorney on behalf
of the undersigned hereby further represents and warrants as, or on behalf of,
the Plan responsible for purchasing units (the "Plan Fiduciary") that: (a) the
Plan Fiduciary has considered an investment in the Fund for such plan in light
of the risks relating thereto; (b) the Plan
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Fiduciary has determined that, in view of such considerations, the investment
in the Fund is consistent with the Plan Fiduciary's responsibilities under
ERISA; (c) the Plan's investment in the Fund does not violate and is not
otherwise inconsistent with the terms of any legal document constituting the
Plan or any trust agreement thereunder; (d) the Plan's investment in the Fund
has been duly authorized and approved by all necessary parties; (e) none of
the General Partner, the Fund's advisors, the Fund's cash manager, the Fund's
futures brokers, any selling agent, any of their respective affiliates or any
of their respective agents or employees: (i) has investment discretion with
respect to the investment of assets of the Plan used to purchase units; (ii)
has authority or responsibility to or regularly gives investment advice with
respect to the assets of the Plan used to purchase units for a fee and
pursuant to an agreement or understanding that such advice will serve as a
primary basis for investment decisions with respect to the Plan and that such
advice will be based on the particular investment needs of the Plan; or (iii)
is an employer maintaining or contributing to the Plan; and (f) the Plan
Fiduciary (i) is authorized to make, and is responsible for, the decision to
invest in the Fund, including the determination that such investment is
consistent with the requirement imposed by Section 404 of ERISA that Plan
investments be diversified so as to minimize the risks of large losses, (ii)
is independent of the General Partner, the Fund's advisors, the Fund's cash
manager, the Fund's futures brokers, any selling agent, each of their
respective affiliates, and (iii) is qualified to make such investment
decision. The undersigned will, at the request of the General Partner, furnish
the General Partner with such information as the General Partner may
reasonably require to establish that the purchase of the units by the Plan
does not violate any provision of ERISA or the Code, including without
limitation, those provisions relating to "prohibited transactions" by "parties
in interest" or "disqualified persons" as defined therein.
(h) If the undersigned is acting on behalf of a trust (the "Subscriber
Trust"), the individual signing the Subscription Agreement and Power of
Attorney on behalf of the Subscriber Trust hereby further represents and
warrants that an investment in the Trust is permitted under the trust
agreement of the Subscriber Trust, and that the undersigned is authorized to
act on behalf of the Subscriber Trust under the trust agreement thereof.
(i) Purchaser represents and warrants that purchaser has (i) a net worth of at
least $250,000 (exclusive of home, furnishings and automobiles) or (ii) an
annual gross income of at least $70,000 and a net worth (similarly calculated)
of at least $70,000. Residents of the following states must meet the
requirements set forth below (net worth in all cases is exclusive of home,
furnishings and automobiles). In addition, purchaser may not invest more than
10% of his net worth (exclusive of home, furnishings and automobiles) in the
Fund.
State Suitability Requirements
1. California-Net worth of at least $250,000 or a net worth of at least
$70,000 and annual taxable income of at least $70,000.
2. Kansas-It is recommended by the Office of the Kansas Securities
Commissioner that Kansas investors not invest, in the aggregate, more than 10%
of their "liquid net worth" in this and similar direct participation programs.
For these purposes, "liquid net worth" is defined as that portion of net worth
which consists of cash, cash equivalents and readily marketable securities.
3. Nebraska-Net worth of at least $250,000 or a net worth of at least
$70,000 and annual taxable income of at least $70,000.
4. South Carolina-Net worth of at least $250,000 or a net income in the
preceding year some portion of which was subject to maximum federal and State
income tax.
5. Texas-Net worth of at least $250,000 or a net worth of at least $70,000
and annual taxable income of at least $70,000.
In the case of sales to fiduciary accounts, the net worth and income standards
may be met by the beneficiary, the fiduciary account, or, if the donor or
grantor is the fiduciary, by the donor or grantor who supplies the funds to
purchase the partnership interests.
The foregoing suitability standards are regulatory minimums only. Merely
because you meet such requirements does not necessarily mean that a high risk,
speculative and illiquid investment such as one in the Fund is, in fact,
suitable for you.
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EXHIBIT D TO ATLAS FUTURES FUND DISCLOSURE DOCUMENT
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
UNITS OF LIMITED PARTNERSHIP INTEREST
SUBSCRIPTION INSTRUCTIONS
Any person considering subscribing for
Units should carefully read and review the Prospectus.
The Units are speculative and involve a high degree of risk. No person may
invest more than 10% of his or her liquid net worth (exclusive of home,
furnishings and automobiles) in the Partnership. No entity-and, in particular,
no ERISA plan-may invest more than 10% of its liquid net worth (readily
marketable securities) in the Partnership. The purchaser must have a minimum
annual gross income of $70,000 and a minimum net worth of $70,000 or, in the
alternative, a minimum net worth of $250,000.
A Subscription Agreement and Power of Attorney Signature Page (the "Signature
Page") is attached to these Subscription Instructions and the following
Subscription Agreement and Power of Attorney. The Signature Page is the
document which you must execute if you wish to subscribe for Units. One copy
of such Signature Page should be retained by you for your records and the
others delivered to the Partnership.
FILL IN ALL OF THE INFORMATION ON THE ATTACHED SIGNATURE PAGE, USING BLACK INK
ONLY, AS FOLLOWS
Item 1 - Enter the dollar amount of the purchase.
Items 2 - 7 - Enter the Social Security Number or Taxpayer ID Number and
check the appropriate box to indicate the type of individual ownership desired
or of the entity that is subscribing. In the case of joint ownership, either
Social Security Number may be used.
The Signature Page is self-explanatory for most ownership types; however, the
following specific instructions are provided for certain of the ownership
types identified on the Signature Page:
Trusts-Enter the trust's name on Line 3 and the trustee's name on Line 4,
followed by "Ttee." If applicable, use Line 7 also for the custodian's name.
Be sure to furnish the Taxpayer ID Number of the trust.
Custodian Under Uniform Gifts to Minors Act-Complete Line 3 with the name of
minor followed by "UGMA." On Line 7, enter the custodian's name followed by
"Custodian." Be sure to furnish the minor's Social Security Number.
Partnership or Corporation-The partnership's or corporation's name is required
on Line 4. Enter a partner's or officer's name on Line 4. Be sure to furnish
the Taxpayer ID Number of the partnership or corporation. A subscriber who is
not an individual must provide a copy of documents evidencing the authority of
such entity to invest in the Partnership.
Item 8 - The investor(s) must execute the Subscription Agreement and
Power of Attorney Signature Page and review the representations relating to
backup withholding tax or non-resident alien status underneath the signature
and telephone number lines in Item 8.
Item 9 - General Partner must complete.
The Selling Agent's copy of the Subscription Agreement and Power of Attorney
Signature Page may be required to be retained in the Selling Agent's office.
<page>
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
UNITS OF LIMITED PARTNERSHIP INTEREST
BY EXECUTING THIS SUBSCRIPTION AGREEMENT AND POWER OF ATTORNEY
SUBSCRIBERS ARE NOT WAIVING ANY RIGHTS UNDER THE
SECURITIES ACT OF 1933 OR THE SECURITIES
EXCHANGE ACT OF 1934
SUBSCRIPTION AGREEMENT AND
POWER OF ATTORNEY
To: Ashley Capital Management, Inc.
General Partner _____________________________
5914 N. 300 West Our Social Security Number or
P. O. Box 760 Taxpayer ID Number
Fremont, IN 46737
_____________________________
Joint Social Security Number or
Taxpayer ID Number
Dear General Partner:
1. Subscription For Units. I hereby subscribe for the number of Limited
Partnership Units ("Units") in Atlas Futures Fund, Limited Partnership (the
"Fund") set forth below (minimum $25,000) in the Subscription Agreement and
Power of Attorney Signature Page, at a price per Unit as set forth in the
Fund's prospectus dated March __, 2012 (the "Prospectus"). I have completed
and executed a Subscription Agreement and Power of Attorney Signature Page in
the form attached hereto as Exhibit "D", and delivered the executed
Subscription Documents to the Sales Agent and executed a check made payable to
"Star Financial Bank for the exclusive benefit of the customers of Atlas Futures
Fund, LP" to be delivered by the Sales Agent to the Depository Agent within 24
hours after receipt for deposit to the Depository Account. The General
Partner may, in its sole and absolute discretion, accept or reject this
subscription, in whole or in part. If this subscription is accepted, I
understand subscribers will earn additional Units in lieu of interest earned
on the undersigned's subscription during any period of time, if any, such
subscription is held in the depository account. If this subscription is
rejected, all funds remitted by the undersigned will be returned, together
with any interest earned from the depository account, if any.
2. Representations and Warranties of Subscriber. I have received a copy of
the Prospectus. I understand that by submitting this Subscription Agreement
and Power of Attorney I am making the representations and warranties set forth
in "Exhibit C - Subscription Requirements" contained in the Prospectus,
including, without limitation, representations and warranties relating to my
net worth and annual income. Additionally, I understand that the General
Partner will review my suitability for this investment.
3. Power of Attorney. In connection with my acceptance of an Interest in the
Partnership, I do hereby irrevocably constitute and appoint the General
Partner, and its successors and assigns, as my true and lawful Attorney-in-
Fact, with full power of substitution, in my name, place and stead, to (i)
file, prosecute, defend, settle or compromise litigation, claims or
arbitration on behalf of the Partnership; and, (ii) make, execute, sign,
acknowledge, swear to, deliver, record and file any documents or instruments
which may be considered necessary or desirable by the General Partner to carry
out fully the provisions of the Limited Partnership Agreement of the
Partnership, which is attached as Exhibit A to the Prospectus, including,
without limitation, the execution of the said Agreement itself and by
effecting all amendments permitted by the terms thereof. The Power of
Attorney granted hereby shall be deemed to be coupled with an interest and
shall be irrevocable and shall survive, and shall not be affected by, my
subsequent death, incapacity, disability, insolvency or dissolution or any
delivery by me of an assignment of the whole or any portion of my interest in
the Partnership.
4. Irrevocability; Governing Law. You may revoke your subscription for five
business days after you send it to us (the "Revocation Period"). After the
lapse of five business days from submission, your subscription will be
irrevocable. The Units offered to you are subject to prior sale. I hereby
acknowledge and agree that after the Revocation Period I am not entitled to
cancel, terminate or revoke this subscription or any of my agreements
hereunder and that this subscription and such agreements shall survive my
death or disability. This Subscription Agreement and Power of Attorney shall
be governed by and interpreted in accordance with the laws of the State of
Delaware.
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ATLAS FUTURES FUND, LIMITED PARTNERSHIP
Units of Limited Partnership Interests
Subscription Agreement and Power of Attorney
Signature Page
The investor named below, by execution and delivery of this Subscription
Agreement and Power of Attorney, by payment of the purchase price for Limited
Partnership Interests (the "Units") in Atlas Futures Fund, Limited Partnership
(the "Partnership"), and by enclosing a check payable to "Star Financial Bank
for the exclusive benefit of the customers of Atlas Futures Fund, LP", hereby
subscribes for the purchase of Units, at a price per Unit as set forth in the
Partnership's prospectus dated March __, 2012 (the "Prospectus").
The named investor further, by signature below, acknowledges (i) receipt of
the Prospectus; (ii) that such Prospectus includes the Partnership's Limited
Partnership Agreement, the Subscription Requirements, and the Subscription
Agreement and Power of Attorney set forth therein, the terms of which govern
the investment in the Units being subscribed for hereby; (iii) that this
subscription may be revoked within five business days after submission; and,
(iv) after the lapse of five business days from submission, this subscription
will be irrevocable.
By my signature below, I represent that I satisfy the requirements relating to
net worth and annual income as set forth in Exhibit C to the Prospectus.
1) Total $ Amount (minimum of $25,000, unless lowered to less than
$25,000 but not less than $5,000 by the General Partner; $1,000 minimum for
investors making an additional investment)
2) Social Security Number (SSN) ____________-____________-____________
Joint SSN or Taxpayer ID # ____________-____________-____________
Taxable Investors (check one):
O Individual Ownership
O Trust other than a Grantor or Revocable Trust
O Joint Tenants with Right of Survivorship
O Estate
O UGMA/UTMA (Minor)
O Tenants in Common
O Community Property
O Partnership
O Corporation
O Grantor or Other Revocable Trust
Non-Taxable Investors (check one):
O IRA
O Profit Sharing
O IRA Rollover
O Defined Benefit
O Pension
O Other (specify)
O SEP
3) Investor's Name _________________________________________________________
4) _________________________________________________________________________
Additional Information (for Estates, Trusts, Partnerships and Corporations)
5) Resident Address of Investor
_________________________________________________________________________
Street (P.O. Box not acceptable) City State Zip Code
6) Mailing Address(if different)
_________________________________________________________________________
Street City State Zip Code
7) Custodian Name and Mailing Address
_________________________________________________________________________
Name Street (P.O. Box not acceptable) City State Zip Code
Signature(s) - do not sign without familiarizing yourself with the information
in the Prospectus, including: (i) the fundamental risks and financial hazards
of this investment, including the risk of losing your entire investment; (ii)
the Partnership's substantial charges; (iii) the Partnership's highly
leveraged trading activities; (iv) the lack of liquidity of the Units
including a lock-in period of twelve months; (v) the existence of actual and
potential conflicts of interest in the structure and operation of the
Partnership; (vi) that Limited Partners may not take part in the management of
the Partnership; and (vii) the tax consequences of the Partnership.
8) INVESTOR(S) MUST SIGN
X_________________________________________________________
Signature of Investor Date Telephone No.
X_________________________________________________________
Signature of Joint Investor (if any) Date
Investor must sign individually, or pursuant to a power of attorney; provided,
however, that such power of attorney has not been granted to a registered
representative of the Selling Agent.
Executing and delivering this Subscription Agreement and Power of Attorney
shall in no respect be deemed to constitute a waiver of any rights under the
Securities Act of 1933 or under the Securities Exchange Act of 1934.
UNITED STATES INVESTORS ONLY
I have checked the following box if I am subject to backup withholding under
the provisions of Section 3406(a)(1)(C) of the Internal Revenue Code: 0.
Under the penalties of perjury, by signature above I hereby certify that the
Social Security Number or Taxpayer ID Number set forth in Item 2 above is my
true, correct and complete Social Security Number of Taxpayer ID Number and
that the information given in the immediately preceding sentence is true,
correct and complete.
NON-UNITED STATES INVESTORS ONLY
Under the penalties of perjury, by signature above, I hereby certify that (a)
I am not a citizen or resident of the United States or (b) (in the case of an
investor which is not an individual) the investor is not a United States
corporation, partnership, estate or trust: 0.
9) REGISTERED REPRESENTATIVE MUST SIGN
I hereby certify that I have informed the investor of all pertinent facts
relating to the: risks; liquidity and marketability; management; and
control of the Managing Owner with respect to an investment in the Units, as
set forth in the Prospectus. I have also informed the investor of the
unlikelihood of a public trading market developing for the Units. I do not
have discretionary authority over the account of the investor.
I have reasonable grounds to believe, based on information obtained from the
investor concerning his/her investment objectives, other investments,
financial situation and needs and any other information known by me, that an
investment in the Fund is suitable for such investor in light of his/her
financial position, net worth and other suitability characteristics. The
Registered Representative MUST sign below in order to substantiate compliance
with Article III, Section 34 of the FINRA's Rules of Fair Practice.
X____________________________________________________________________
Registered Representative Signature Date
X____________________________________________________________________
Office Manager Signature Date
10) REGISTERED REPRESENTATIVE
Name:
Selling Agent:
Reg. Rep. No.:
Branch Office:
Address:
City, State, Zip:
Tel. Number:
Facsimile:
Email:
11) SELLING AGENT - Futures Investment Company, 5914 N. 300 West, P.O. Box
760, Fremont, IN 46737, (260) 833-1306
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EXHIBIT E TO ATLAS FUTURES FUND DISCLOSURE DOCUMENT
INVESTMENT ADVISORY CONTRACT
CLARKE CAPITAL MANAGEMENT, INC.
THIS AGREEMENT is made and entered as of this ____ day of _____________, 2011,
between Atlas Futures Fund, Limited Partnership, (the "Fund") and Clarke
Capital Management, Inc., an Illinois corporation (the "CTA").
WITNESSETH:
In consideration of the deposit by the Fund of equity to Vision Financial
Markets LLC (the "FCM") in the name of the Fund (this account and any other
accounts, which may be assigned to the CTA in the future are collectively
hereinafter called the "Account") and the grant of the power of attorney on
the standard form of the FCM to the CTA to permit the CTA to enter trades for
the Fund in the Account and the opportunity to earn incentive fees by the CTA,
the parties hereto agree as follows:
1. The CPO shall determine the amount the Fund shall initially deposit in
the Account with the FCM, which the CTA agrees to manage pursuant to the terms
of this Agreement. Subsequent deposits and accumulation of profits in the
Account, less withdrawals and losses, shall also be subject to this Agreement.
At its sole discretion, the Fund may add or withdraw funds at any time from
the Account by written request to the FCM with a copy to the CTA.
2. The CTA will cause futures contracts, and when deemed advisable, options
on futures and forward contracts, to be bought and sold on behalf of the Fund
in the Account. The CTA will have the authority to issue all necessary
instructions to the FCM to effect trading for the Fund's Account. All such
transactions shall be for the account and risk of the Fund. The CTA agrees to
use its best efforts to exit all futures trades prior to delivery of any
commodity that requires storage or other costs.
3. The CTA's services are not rendered exclusively for the Fund and the
Fund agrees that the CTA is free to continue to provide and offer similar
services to others. The General Partner may change or add another FCM for the
Account assigned to the CTA at any time upon written direction to the FCM and
the CTA, and the FCM and the CTA agree to effect the transfer and sign the
forms necessary to complete such change or addition, provided such transfer
does not conflict with any prior agreements the CTA has with the FCM.
4. The CTA will use its best efforts to obtain an equity run from the FCM
before the opening of business the next trading day. Unless authorized in
writing by the CPO, the CTA will use only the equity in the Account assigned
to the CTA by the CPO for margins to hold the positions taken by the CTA. No
equity in the Account assigned to the CTA will be commingled or margined, for
any purpose, with any other account at the FCM. The CPO, upon written
instruction to the FCM, may terminate, for any reason, the power of attorney
and suspend the trading authority of the CTA to enter trades with the FCM. In
the event of a termination of the power of attorney, the CTA agrees that the
FCM shall accept no further instructions from the CTA but shall place the
Account upon liquidation only to be handled in written instructions from the
CPO to the FCM.
5. The Fund agrees to execute, from time to time, the Acknowledgment of
Receipt of Disclosure Document from the CTA. By signing, the Fund agrees that
it has received and understands and the CTA represents that it has supplied
the most recent copy of the CTA's Risk Disclosure Document. The CTA will
promptly review the Fund offering documents submitted by the Fund to it, from
time to time, and will furnish its consent, in the form requested by the Fund,
to the filing of forms and offering documents with the Federal and State
security and commodity regulators.
1
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6. The Fund agrees to execute the CTA's Managed Account Compensation
Agreement. The CTA will not be paid a management fee. The CTA will be paid
an incentive fee of twenty-five percent (25%), of the New Net Profit earned
each calendar quarter. The Fund accountant will calculate the fee subject to
approval by the CTA, and the fee shall not be deducted from the Account, but
will be paid upon submission of an invoice by the CTA to the CPO of the Fund.
Once approved by the CPO, the incentive fee will be paid promptly from the
Fund account selected by the CPO.
7. The Fund and the CTA agree that they have or will properly execute all
necessary forms for opening the Account with the FCM; provided, however, any
disputes between the Fund and the CTA will be submitted to arbitration before
a single arbitrator selected by the American Arbitration Association, not the
National Futures Association, and only upon written agreement of the parties
at the time such dispute arises. The terms of this Agreement will supersede,
and in the event of conflicts with any other agreement, the terms of this
Agreement shall control. This Agreement will be governed by the laws of the
State of Illinois and any dispute concerning arbitration will be resolved by a
Federal or State court of competent jurisdiction located in Chicago, Illinois.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement the day and year first above written.
Atlas Futures Fund, Limited Partnership
By: Ashley Capital Management, Inc.
Michael P. Pacult
President
By: Clarke Capital Management, Inc.
Michael J. Clarke
President
2
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Dealer Prospectus Delivery Obligation
Until one year from the date of this prospectus, all dealers that effect
transactions in these securities, whether or not participating in this
offering, may be required to deliver a prospectus. This is in addition to the
dealers' obligation, if any, to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.
[The balance of this page has been intentionally left blank.]
<page>
FORM S-1
Registration No. 333-170235
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
(b) The Selling Agreement between Futures Investment Company and the
Registrant contains an indemnification from the General Partner to the effect
that the disclosures in the Prospectus and this Amendment are in compliance
with Rule 10b5 and otherwise true and complete. This indemnification speaks
from the date of the first offering of the Units through the end of the
applicable statute of limitations. The Partnership has assumed no
responsibility for any indemnification to Futures Investment Company and the
General Partner is prohibited by the Partnership Agreement from receiving
indemnification for breach of any securities laws or for reimbursement for
insurance for coverage for any such claims. See Article X, Section 10.4 (b)
and (e).
(d) There are no indemnification agreements which are not contained in the
Limited Partnership Agreement attached as Exhibit A, the Selling Agreement or
the Clearing Agreement.
(c) The following reflects all expenses in connection with the issuance and
distribution of the securities to be registered, other than underwriting
discounts and commissions:
Expense Cost
Registration fees $2,213
Federal taxes 0
States taxes and fees 10,000
Trustees' and transfer agents' fees 0
Costs of printing and engraving 2,500
Legal 30,000
Accounting 10,000
Engineering 0
Other 287
$55,000
Item 15. Recent Sales of Unregistered Securities.
None within three years.
Item 16. Exhibits and Financial Statement Schedules.
The following documents (unless indicated) are filed herewith and made a part
of this Registration Statement:
(a) Exhibits.
Exhibit
Number Description of Document
(1) - 01 Selling Agreement dated October 28, 2010, among the Partnership,
the Corporate General Partner, and Futures Investment Company, the Selling
Agent
(2) None
1
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(3) - 01 Articles of Incorporation of the General Partner*
(3) - 02 By-Laws of the General Partner *
(3) - 03 Board Resolution of General Partner to authorize formation of
Delaware Limited Partnership *
(3) - 04 Amended and Restated Agreement of Limited Partnership of the
Registrant dated
February 1, 1998 (included as Exhibit A to the Prospectus)
(3) - 05 Certificate of Limited Partnership, Designation of Registered
Agent, Certificate of
Initial Capital filed with the Delaware Secretary of State, and Delaware
Secretary of State
acknowledgment of filing of Certificate of Limited Partnership *
(4) - 01 Amended and Restated Agreement of Limited Partnership of the
Registrant dated
February 1, 1998 (included as Exhibit A to the Prospectus)
(5) - 01 Opinion of The Scott Law Firm, Ltd. relating to the legality of
the Partnership Units.
(6) Not Applicable
(7) Not Applicable
(8) - 01 Opinion of The Scott Law Firm, Ltd. with respect to Federal income
tax consequences.
(9) None
(10) - 01 Form of Advisory Agreements between the Partnership and the
Commodity Trading Advisor.
(included as Exhibit F to the Prospectus)
(10) - 02 Form of New Account Agreement between the Partnership and the
Futures Commission Merchant*
(10) - 03 Form of Subscription Agreement and Power of Attorney.
(included as Exhibit D to the Prospectus).
(10) - 04 Depository Agreement among Depository Agent, Selling Agent, and
the Partnership. (included as Exhibit E to the Prospectus).
(11) Not Applicable
(12) Not Applicable
(13) Not Required
(14) None
(15) None
(16) Not Applicable
(17) Not Required
(18) Not Required
(19) Not Required
(20) Not Required
(21) None
(22) Not Required
(23) - 01 Consent of The Scott Law Firm, Ltd.
(23) - 02 Consent of Patke & Associates, Ltd.
(24) None
(25) None
(26) None
(27) Not Applicable
(28) Not Applicable
(99) - 01 Subordinated Loan Agreement for Equity Capital*
(99) - 02 Representative's Agreement between Futures Investment Company and
Shira Del Pacult*
* Filed as an exhibit to the Registrant's Registration Statement on Form S-1
(File No. 333-59976) and incorporated herein by reference.
(b) Financial Statement Schedules.
No Financial Schedules are required to be filed herewith.
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
2
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(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the Securities
Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represents a fundamental: change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
(4) That the registrant is not a foreign private issuer.
(5) That, for the purpose of determining liability under the Securities Act
of 1933:
(i) Each prospectus filed by the registrant pursuant to Rule 424(b)(3)shall
be deemed to be part of the registration statement as of the date the filed
prospectus was deemed part of and included in the registration statement; and
each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or
(b)(7) as part of a registration statement in reliance on Rule 430B relating
to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the
purpose of providing the information required by section 10(a) of the
Securities Act of 1933 shall be deemed to be part of and included in the
registration statement as of the earlier of the date such form of prospectus
is first used after effectiveness or the date of the first contract of sale of
securities in the offering described in the prospectus. As provided in Rule
430B, for liability purposes of the issuer and any person that is at that date
an underwriter, such date shall be deemed to be a new effective date of the
registration statement relating to the securities in the registration
statement to which that prospectus relates, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof. Provided, however, that no statement made in a registration statement
or prospectus that is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the registration
statement or prospectus that is part of the registration statement will, as to
a purchaser with a time of contract of sale prior to such effective date,
supersede or modify any statement that was made in the registration statement
or prospectus that was part of the registration statement or made in any such
document immediately prior to such effective date; or
(ii) Each prospectus filed pursuant to Rule 424(b) as part of a registration
statement relating to an offering, other than registration statements relying
on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall
be deemed to be part of and included in the registration statement as of the
date it is first used after effectiveness. Provided, however, that no
statement made in a registration statement or prospectus that is part of the
registration statement or made in a document incorporated or deemed
incorporated by reference into the registration statement or prospectus that
is part of the registration statement will, as to a purchaser with a time of
contract of sale prior to such first use, supersede or modify any statement
that was made in the registration statement or prospectus that was part of the
registration statement or made in any such document immediately prior to such
date of first use.
3
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(6) That, for the purpose of determining liability of the registrant under
the Securities Act of 1933 to any purchaser in the initial distribution of the
securities: The undersigned registrant undertakes that in a primary offering
of securities of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell the securities
to the purchaser, if the securities are offered or sold to such purchaser by
means of any of the following communications, the undersigned registrant will
be a seller to the purchaser and will be considered to offer or sell such
securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant
relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on
behalf of the undersigned registrant or used or referred to by the undersigned
registrant;
(iii) The portion of any other free writing prospectus relating to the
offering containing material information about the undersigned registrant or
its securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the
undersigned registrant to the purchaser.
(b) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A, if any pre-effective
amendment was used, and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4), or 497(h) under the Securities
Act shall be deemed to be part of this registration statement as of the time
it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) The General Partner has provided an indemnification to Futures
Investment Company, the best efforts selling agent. The Registrant (issuer)
has not made any indemnification to Futures Investment Company.
Insofar as indemnification for liabilities under the Securities Act of 1933
may be permitted to directors, officers and controlling persons of the
Registrant including, but not limited to, the General Partner pursuant to the
provisions described in Item 14 above, or otherwise, the Registrant had been
advised that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any such action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
4
<page>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, in the City of
Fremont in the State of Indiana on this 29th day of February, 2012, Mr. Michael
Pacult, the individual general partner of the Registrant, signed this
Registration Statement; and Ashley Capital Management, Inc., the corporate
general partner of the Registrant, has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized.
ASHLEY CAPITAL MANAGEMENT, INC. ATLAS FUTURES FUND, L.P.
BY ASHLEY CAPITAL MANAGEMENT, INC.
GENERAL PARTNER
BY: /s/ Michael Pacult BY: /s/ Michael Pacult
MR. MICHAEL PACULT MR. MICHAEL PACULT
PRESIDENT PRESIDENT
ATLAS FUTURES FUND, L.P.
BY MR. MICHAEL PACULT
GENERAL PARTNER
BY: /s/ Michael Pacult BY: /s/ Michael Pacult
MR. MICHAEL PACULT MR. MICHAEL PACULT
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following person on behalf of Ashley
Capital Management, Inc., General Partner of the Registrant in the capacities
and on the date indicated.
/s/ Michael Pacult
MR. MICHAEL PACULT
PRESIDENT
Date: February 29, 2012
(Being the principal executive officer, the principal financial and accounting
officer and the sole director of Ashley Capital Management, Inc., General
Partner of the Partnership)
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