FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2012
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 333-53111
Atlas Futures Fund, Limited Partnership
(Exact name of registrant as specified in its charter)
Delaware 51-0380494
(State or other jurisdiction
of incorporation (I.R.S. Employer
or organization) Identification No.)
505 Brookfield Drive, Dover, DE 19901
(Address of principal executive offices, including zip code)
(800) 331-1532
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec.
232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files).
Yes [ ] No [ ] Not Applicable.
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
definition 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[ ]
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Act).
Yes [ ] No [X]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) f the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [ ] No [ ] Not Applicable.
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. Not Applicable.
<page>
Part 1 - FINANCIAL INFORMATION
Item 1. Financial Statements.
The reviewed financial statements for the Registrant for the three months
ended March 31, 2012 are attached hereto at page F-1 and made a part hereof.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
General Information
During the past quarter and in the future, Registrant, did and will, pursuant
to the terms of the Limited Partnership Agreement, engage in the business of
speculative and high risk trading of commodity futures and options markets
through the services of one or more commodity trading advisors it selects.
Description of Fund Business
The Fund grants the commodity trading advisors a power of attorney that is
terminable at the will of either party to trade the equity assigned by the
Fund. Clarke Capital Management, Inc. was granted a power of attorney by the
Fund and served as a trading advisor for the Fund since the Fund's inception.
During the periods covered by this report, Clarke Capital Management, Inc. was
the sole trading advisor to the Fund (see Subsequent Events at the end of this
Item). The commodity trading advisors selected to trade for the Fund have
discretion to select the trades and do not disclose the methods they use to
make those determinations in their disclosure documents or to the Fund or
general partner. There is no promise or expectation of a fixed return to the
partners. The partners must look solely to trading profits for a return their
investment as the interest income is expected to be less than the fixed
expenses to operate the Fund.
Assets
The 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.
As of the date of this Report, the partnership maintains approximately 68% of
its total assets in a Treasury Direct Account maintained with the United
States Department of the Treasury. From time to time, it may also maintain an
interest in a cash management fund that invests in U.S. Treasuries and has
high liquidity; however, as of the date of this Report, there was no such
investment. Funds maintained with the Department of Treasury and any cash
management fund are held in the name of the partnership and not commingled
with those of any other entity. As of the date of this Report, the general
partner maintained approximately 18% of our total assets with the futures
commission merchant ("FCM") for margin for trading by the trading advisor. As
of February 10, 2011, the FCM was changed to Vision Financial Markets LLC.
Approximately 13% of our total assets was maintained as cash and cash
equivalents, including bank accounts and Wells Fargo 100% Treasury money
market fund. The Fund assets at the FCM consist of cash used as margin to
secure futures (formerly called commodity) trades entered on its behalf by the
commodity trading advisors it selects. The Fund deposits its cash with one or
more FCM's (brokers) that hold and allocate the cash to use as margin to
secure the trades made. The futures held in the Fund accounts are valued at
the market price on the close of business each day by the FCM that holds the
Fund equity made available for trading.
The Capital accounts of the Partners are immediately responsible for all
profit and losses incurred by trading and payment and accrual of the expenses
of offering partnership interests for sale and the operation of the
partnership. During the periods of this Report, the fixed costs of operation
of the Fund include continuing offering costs, fixed brokerage commissions of
11%, and accounting, legal and other operating fees that must be paid before
the limited partners may earn a profit on their investment.
The Fund has not in the past and does not intend in the future to borrow from
third parties. Its trades are entered pursuant to a margin agreement with the
futures commission merchant which obligates the fund to the actual loss, if
any, without reference or limit by the amount of cash posted to secure the
trade. The limited partners are not personally liable for the debts of the
Fund, including any trading losses. On October 29, 2010, the Fund requested
withdrawal of a previously filed post effective amendment and filed an S-1
registration statement to register 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 a
6% up front selling commission 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 FINRA. As of the date of this Report, $14,213,748 has been
sold pursuant to a previous registration statement and, upon redemption by the
holder, will not be resold.
2
<page>
An Investment in the Fund Depends upon Redemption of Fund Units
The Fund Units are not traded and they have no market value. Liquidity of an
investment in the Fund depends upon the credit worthiness of the exchanges,
brokers, and third parties of off exchange traded futures that hold Fund
equity or have a lien against Fund assets for payment of debts incurred.
Those parties must honor their obligations to the Fund for the Fund to be able
to obtain the return of its cash from the futures commission merchant that
holds the Fund account.
The commodity trading advisors select the markets and the off exchange
instruments to be traded. The General Partner selects the futures commission
merchants to hold the Fund assets. Both the commodity trading advisors and
the general partner believe all parties who hold Fund assets or are otherwise
obligated to pay value to the Fund are credit worthy. Margin is an amount to
secure the entry of a trade and is not a limit of the profit or loss to be
gained from the trade. The general partner currently allocates nearly 100% of
the Fund equity to be used as margin to enter trades. Although it is
customary for the commodity trading advisors to use 40% or less of the equity
available as margin, there is no limit imposed by the Fund upon the amount of
equity the advisors may commit to margin. It is possible for the Fund to
suffer losses in excess of the margin it posts to secure the trades made.
To have the purchase price or appreciation, if any, of the Units paid to them,
partners must use the redemption feature of the Partnership. Distributions,
although possible in the sole discretion of the general partner, are not
expected to be made. There is no current market for the Units sold, none is
expected to develop and the limited partnership agreement limits the ability
of a partner to transfer the Units.
Results of Operations
The Fund is subject to ongoing offering and operating expenses; however,
profits or losses are primarily generated by the commodity trading advisor by
methods that are proprietary to it. These results are not to be construed as
an expectation of similar profits in the future. See the Registration
Statements, incorporated by reference herein, for an explanation of the
operation of the Fund.
The Limited Partnership Agreement grants solely to the General Partner the
right to select the trading advisor or advisors and to otherwise manage the
operation of the Fund. Clarke Capital Management, Inc. was responsible for
the selection of all trades during the period covered by this report. Most of
the operational profits and losses have been due to the trading activity of
Clarke, though interest income also contributes, and there was an additional
trading advisor allocated approximately 20% of trading equity from February 1,
2005 to October 1, 2007. Net unit value has increased since inception, from
$1,000 in October, 1999 to $2,992.00 as of March 31, 2012. Past performance
is not necessarily indicative of future results, however.
The gain (loss) in registrant's net asset value per unit during the three
months ended March 31, 2012 and 2011, respectively, was (7.08%) and (13.07%).
The difference over the periods was primarily due to the difference in
operational profits (losses) due to trading, which were (3.55)% and (10.14)%
for the same respective periods (expressed as a percentage of the periods'
beginning net asset value per unit). Operational losses due to expenses in,
similarly calculated, were (3.54)% and (2.96)% for the same respective
periods.
Net asset value per unit is calculated to eliminate the effects of capital
contributions and redemptions; however, fixed costs will become a greater
percentage of overall net assets when net assets decline. Net assets over the
three months ended March 31, 2012 and 2011 were down from beginning to end of
the period, and were (-19.01)% and (16.50)%, respectively. The decrease in
net assets is due mainly to trading results, described above, and redemptions.
Redemptions were $(671,752) and $(396,840) over the same respective periods
((12.74)% and (3.53)% of beginning net assets, respectively). There were no
capital contributions over the same periods.
3
<page>
The Fund is charged fixed brokerage commissions of 11%, which are calculated
on the Fund's total trading equity as of the beginning of each month and,
therefore, vary according to monthly trading performance, subscriptions and
redemptions. The same factors that contribute to increases or decreases in
average net assets, therefore, contribute to changes in brokerage commissions
paid.
The above described performance was primarily due to the trading of Clarke,
which traded for the Fund via its proprietary methods. The general trading
strategy of all of Clarke's programs is trend following. Most, but not all,
trade initiations and liquidations are in the direction of the trend. All
Clarke programs employ 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. Clarke reserves the
right to make adjustments in the exact entry or exit price a model uses for
any program or pool, or to delay entry or exit on any order, in order to
attempt to reduce the impact of slippage from large block orders being
executed at the same or similar prices. The models vary from intermediate
through long-term to very long-term in timeframe 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.
Clarke traded its Alpha program for the Fund, which traded approximately 37
domestic and international commodity interests utilizing twelve models with a
medium-to-long time frame, risk control and profit-taking characteristics.
Twelve of these commodity interests are either long or short interest rate
contracts, reflecting interest rates in Europe, the US, Canada, Japan and
Australia. The balance of commodity interests traded include currencies,
grains, softs, metals, meats and fuels, both foreign and domestic. These
models have been selected for their ability as a group to provide a high
return for the amount of exposure or time that a position is held. It should
be noted that there will be times when there is significant correlation
between markets within a market sector or between market sectors, possibly in
an adverse direction to positions held in the client's account. This factor
alone, although there are others, will lead to periods of extreme volatility
and possibly very large drawdowns in Fund equity. The Alpha program will, at
times, have a significantly higher margin to equity ratio than other Clarke
programs, and at other times will trade very lightly due to the selectivity of
its models.
If a large price movement occurs in a sector that a trading advisor trades,
such as agriculture, financials, metals or softs, it does not necessarily mean
that the trading advisor will engage in trades that capture such moves.
Accordingly, market movements and conditions are not necessarily correlated
with Fund performance. As always, past performance is not necessarily
indicative of future results.
Pursuant to the Trading Advisory Agreement, the Fund paid a quarterly
incentive fee to Clarke on new net profits, or those profits achieved on a per
unit basis above the advisor's previous high water mark. See Note 5 to the
financial statements herein for the current incentive fees. Because Clarke
has not recouped prior trading losses, it was not been paid an incentive fee
in any of the periods covered by this report.
The balance of the Fund's income that does not derive from the trading
activity of Clarke comes from interest income. However, short term interest
rates were so low as to produce negligible interest income for the Fund over
the three years covered by this report.
Subsequent Events:
Effective April 11, 2012, the Fund's Advisory Agreement with Clarke Capital
Management, Inc. was terminated and all open positions were closed. Hamer
Trading Inc., an independent registered Commodity Trading Advisor, now serves
as the Fund's sole trading advisor and trades its Diversified Systematic
Program on behalf of the Fund, commencing April 12, 2012. Hamer is paid a 1%
management fee calculated on the prior month-end net assets allocated to it by
the Fund to trade, along with a 20% quarterly incentive fee on New Net
Profits, as that term is defined in the Fund's Prospectus.
4
<page>
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The business of the Fund is speculative and involves a high degree of risk of
loss. See the Fund's Registration Statement and prospectus contained therein,
incorporated herein, for a full description of the risks attendant to Fund
business.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
The Registrant has adopted procedures in connection with the operation of its
business including, but not limited to, the review of account statements sent
to the General Partner before the open of business each day that disclose the
positions held overnight in the Fund accounts, the margin to hold those
positions, and the amount of profit or loss on each position, and the net
balance of equity available in each account. The Fund brokerage account
statements and financial books and records accounts are prepared by an
independent CPA Firm and then are reviewed each quarter and audited each year
by a different independent CPA firm.
The General Partner of the Fund, under the actions of its sole principal,
Michael Pacult, has evaluated the effectiveness of the design and operation of
its disclosure controls and procedures (as defined in the Securities Exchange
Act of 1934 Rules 13a-15(e) or 15d-15(e)) with respect to the Fund as of the
end of the period covered by this Report. Based on their evaluation, Mr.
Pacult has concluded that these disclosure controls and procedures are
effective.
Changes in Internal Control over Financial Reporting
There were no changes in the General Partner's internal control over financial
reporting during the quarter ended March 31, 2012 that have materially
affected, or are reasonably likely to materially affect, internal control over
financial reporting applicable to the Fund.
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
There have been no legal proceedings against the Fund, its General Partner,
the CTA, the FCM, the IB or any of their Affiliates, directors or officers,
except against the FCM, as follows:
Vision Financial Services LLC
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 FCM has acted only as clearing brokers for the Fund's futures accounts and
as such it has been paid commissions for executing and clearing trades. The
FCM has not passed upon the adequacy or accuracy of the Fund's prospectus or
this report and will not act in any supervisory capacity with respect to the
CPO or the CTA, as the case may be, nor participate in the management of the
CPO or of the Fund or of the CTA. Therefore, investors should not rely on the
FCM in deciding whether or not to participate in the Fund.
The Fund is not aware of any threatened or potential claims or legal
proceedings to which the Fund is a party or to which any of its assets are
subject. The FCM has represented to the General Partner that that none of the
events reported above would interfere with its performance as a clearing
broker for the Fund's account.
5
<page>
Item 1A. Risk Factors
There have been no material changes from risk factors as previously disclosed
in the Fund's 2011 Form 10-K. The risks of the Fund are (1) described fully
in its prospectus filed with its registration statement on Form S-1, which is
incorporated herein by reference (2) described in summary in Part I of this
Form 10-Q, which is incorporated herein by reference.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None
Item 3. Defaults Upon Senior Securities
None
Item 4. (Removed and Reserved)
Not Applicable
Item 5. Other Information
(a) None
(b) None
Item 6. Exhibits
31.1 Certification of Principal Executive Officer and Principal Financial
Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Form 10-Q for the period
ended March 31, 2012, to be signed on its behalf by the undersigned, thereunto
duly authorized.
Registrant: Atlas Futures Fund, Limited Partnership
By Ashley Capital Management, Incorporated
Its General Partner
By: /s/ Michael Pacult
Mr. Michael Pacult
Sole Director, Sole Shareholder,
President, and Treasurer of the General Partner
Date: May 15, 2012
6
<page>
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
QUARTERLY REPORT
March 31, 2012
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 - March 31, 2012 F-4
Condensed Schedule of Investments - December 31, 2011 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 March 31, 2012, and the related statements of operations,
changes in net assets and cash flows for the three months ended March 31, 2012
and 2011. 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, 2011, 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 March 7, 2012, 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, 2011 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
May 9, 2012
300 Village Green Drive, Suite 210 * Lincolnshire, Illinois 60069
*(847)913-5400
F-2
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Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Statements of Assets and Liabilities
<table>
<s> <c> <c>
March 31, December 31,
2012 2011
(A Review)
Assets
Equity in broker trading accounts
Cash and cash equivalents at broker $802,987 $662,202
Net unrealized gain (loss) on open futures contracts (90) 113,800
Total equity in broker trading accounts 802,897 776,002
U.S. Treasury Bills (cost $2,999,924 and $3,986,110) 2,999,990 3,999,691
Cash and cash equivalents 581,367 1,012,647
Prepaid expenses 5,887 7,850
Total assets 4,390,141 5,796,190
Liabilities
Partner redemptions payable 72,166 497,919
Accrued commissions payable to related parties 40,422 10,569
Other accrued liabilities 6,265 14,045
Total liabilities 118,853 522,533
Net assets $4,271,288 $5,273,657
Analysis of net assets
Limited partners $4,271,288 $5,273,657
General partners - -
Net assets (equivalent to $2,992.00 and $3,219.98 per unit) $4,271,288 $5,273,657
Partnership units outstanding
Limited partners units outstanding 1,427.57 1,637.79
General partners units outstanding - -
Total partnership units outstanding 1,427.57 1,637.79
</table>
F-3
The accompanying notes are an integral part of the financial statements.
<page>
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Condensed Schedule of Investments
March 31, 2012
(A Review)
<table>
<s> <c> <c> <c>
Face Value Fair Value Percent of Net Assets
United States Treasury bills
United States Treasury bills, matures
April 2012 (cost $2,999,924) $3,000,000 $2,999,990 70.24%
Futures contracts
Futures contracts held long
Agriculture $(250) (0.00%)
Total futures contracts held long (250) (0.00%)
Futures contracts held short
Agriculture 160 0.00%
Total futures contracts held short 160 0.00%
Net unrealized (loss) on open futures contracts $(90) (0.00%)
</table>
F-4
The accompanying notes are an integral part of the financial statements.
<page>
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Condensed Schedule of Investments
December 31, 2011
<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 $3,986,110) $4,000,000 $3,999,691 75.84%
Futures contracts
Futures contracts held long
Agriculture $504 0.01%
Energy 6,260 0.12%
Currency 62,269 1.18%
Total futures contracts held long 69,033 1.31%
Futures contracts held short
Agriculture (6,388) (0.12%)
Energy 53,130 1.01%
Currency (1,975) (0.04%)
Total futures contracts held short 44,767 0.85%
Net unrealized gain on open futures contracts $113,800 2.16%
</table>
F-5
The accompanying notes are an integral part of the financial statements.
<page>
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Statements of Operations
(A Review)
<table>
<s> <c> <c>
Three Months Ended March 31,
2012 2011
Investment income
Interest income $380 $3,207
Total investment income 380 3,207
Expenses
Commission expense 152,275 291,665
Professional fees 17,500 33,500
Other operating expenses 2,878 4,885
Total expenses 172,653 330,050
Net investment (loss) (172,273) (326,843)
Realized and unrealized (loss) from investments and foreign currency
Net realized (loss) from:
Investments (40,823) (794,940)
Foreign currency translation (3,632) (2,402)
Net realized (loss) from investments and foreign
currency transactions (44,455) (797,342)
Net unrealized (depreciation) on investments (113,890) (335,107)
Net realized and unrealized (loss) from investments and
foreign currency (158,345) (1,132,449)
Net (decrease) in net assets resulting from operations $(330,618) $(1,459,292)
Net (decrease) per unit (for a single unit outstanding
during the entire period)
Limited partnership unit $(227.98) $(552.93)
General partnership unit $- $-
</table>
F-6
The accompanying notes are an integral part of the financial statements.
<page>
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Statements of Changes in Net Assets
(A Review)
<table>
<s> <c> <c> <c> <c>
Three Months Ended March 31,
2012 2011
Units Net Assets Units Net Assets
(Decrease) in net assets from operations
Net investment (loss) $(172,273) $(326,843)
Net realized (loss) from investments and foreign currency transactions (44,455) (797,342)
Net unrealized (depreciation) on investments (113,890) (335,107)
Net (decrease) in net assets resulting from operations (330,618) (1,459,292)
Capital contributions from limited partners - - - -
Redemptions by limited partners (210.22) (671,752) (105.01) (396,840)
Total (decrease) in net assets (210.22) (1,002,369) (105.01) (1,856,132)
Net assets at the beginning of the period 1,637.79 5,273,657 2,658.37 11,247,936
Net assets at the end of the period 1,427.57 $4,271,288 2,553.36 $9,391,804
</table>
F-7
The accompanying notes are an integral part of the financial statements.
<page>
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Statements of Cash Flows
(A Review)
<table>
<s> <c> <c>
Three Months Ended March 31,
2012 2011
Cash Flows from Operating Activities
Net (decrease) in net assets resulting from operations $(330,618) $(1,459,292)
Adjustments to reconcile net increase (decrease) in net assets from
operations to net cash (used in) operating activities:
Changes in operating assets and liabilities:
Decrease in prepaid expenses 1,963 1,031
Unrealized depreciation on investments 113,890 335,107
Increase (decrease) in accrued commissions payable to related parties 29,853 (13,875)
Increase (decrease) in other accrued liabilities (7,780) 4,839
Net cash (used in) operating activities (192,692) (1,132,190)
Cash Flows from Financing Activities
Partner redemptions (1,097,505) (236,124)
Net cash (used in) financing activities (1,097,505) (236,124)
Net (decrease) in cash and cash equivalents (1,290,196) (1,368,314)
Cash and cash equivalents, beginning of period 5,674,540 10,711,550
Cash and cash equivalents, end of period $4,384,344 $9,343,236
End of period cash and cash equivalents consist of:
Cash and cash equivalents at broker $802,987 $3,473,676
Treasury bills 2,999,990 4,989,071
Cash and cash equivalents 581,367 880,489
Total cash and cash equivalents $4,384,344 $9,343,236
</table>
F-8
The accompanying notes are an integral part of the financial statements.
<page>
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Notes to the Financial Statements
March 31, 2012
(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 6% 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 and other investments are recorded on the
trade date and will be reflected in the statements of operations at the
difference between the original contract amount and the fair value on the last
business day of the reporting period.
Fair value of futures and other investments is based upon exchange or other
applicable closing quotations related to the specific positions.
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
March 31, 2012
(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 three months ended March 31, 2012 and the
year ended December 31, 2011, 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
March 31, 2012 and December 31, 2011.
<table>
<s> <c> <c> <c> <c>
Fair Value at March 31, 2012
Description Level 1 Level 2 Level 3 Total
U.S. Treasury Bills $- $2,999,990 $- $2,999,990
Exchange Traded - Futures Contracts (90) - - (90)
Total $(90) $2,999,990 $- $2,999,900
Fair Value at December 31, 2011
Description Level 1 Level 2 Level 3 Total
U.S. Treasury Bills $- $3,999,691 $- $3,999,691
Exchange Traded - Futures Contracts 113,800 - - 113,800
Total $113,800 $3,999,691 $- $4,113,491
</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 2008 through 2011 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
three months ended March 31, 2012 or March 31, 2011.
Reclassifications - The March 31, 2011 money market fund balance was
reclassified to cash and cash equivalents to on the statement of cash flows to
conform with current year presentation.
F-10
<page>
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Notes to the Financial Statements
March 31, 2012
(A Review)
3. General Partner Duties
The responsibilities of the General Partner, in addition to directing the
trading and investment activity of the Fund, including suspending all trading,
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 March
31, 2012 net asset value, or such higher 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 three months ended March 31, 2012 and
2011.
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
March 31, 2012
(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:
<table>
<s> <c> <c>
Commissions included in expenses:
For The Three Months Ended March 31,
2012 2011
Corporate General Partner $53,586 $105,474
Futures Investment Company 83,931 168,320
Total related party commissions $137,517 $273,794
Commissions included in accrued expenses:
March 31, December 31,
2012 2011
Corporate General Partner $16,241 $4,144
Futures Investment Company 24,181 6,425
Total accrued commissions payable to
related parties $40,422 $10,569
</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
March 31, 2012
(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 March 31, 2012 and December 31, 2011 these totaled
$4,384,344 and $5,674,540, 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
$281,000 and $15,096,000 on long positions at March 31, 2012 and December 31,
2011, 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 gain (loss) on open futures contracts at March 31, 2012 and
December 31, 2011 were ($90) and $113,800, respectively.
Open contracts generally mature within three months of March 31, 2012. The
latest maturity for open futures contracts is in May 2012. 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
March 31, 2012
(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.
<table>
<s> <c> <c> <c> <c> <c>
Derivative Instruments
Statement of Assets and Liabilities
Asset Derivatives Liability Derivatives
at March 31, 2012 at March 31, 2012
Statement of Assets and Liabilities Location Fair Value Fair Value Net
Derivatives not designated as hedge Futures contracts Net unrealized gain (loss) on open
instruments under ASC 815 futures contracts $160 $(250) $(90)
Asset Derivatives Liability Derivatives
at December 31, 2011 at December 31, 2011
Statement of Assets and Liabilities Location Fair Value Fair Value Net
Derivatives not designated as hedge Futures contracts Net unrealized gain (loss) on open
instruments under ASC 815 futures contracts $122,163 $(8,363) $113,800
</table>
<table>
<s> <c> <c> <c> <c>
Derivative Instruments
Statement of Operations
For the three months ended March 31,
Line Item in the Statement of Operations 2012 2011
Derivatives not designated as hedge Futures contracts Net realized (loss) from investments and
instruments under ASC 815 foreign currency transactions $(44,455) $(797,342)
Derivatives not designated as hedge Futures contracts Net unrealized (depreciation) on investments $(113,890) $(335,107)
instruments under ASC 815
</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.
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.
F-14
<page>
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Notes to the Financial Statements
March 31, 2012
(A Review)
11. Subsequent Events
Effective April 11, 2012, the Fund's Advisory Agreement with Clarke Capital
Management, Inc. was terminated and all open positions were closed. Hamer
Trading Inc., an independent registered Commodity Trading Advisor, now serves
as the Fund's sole trading advisor and trades its Diversified Systematic
Program on behalf of the Fund, commencing April 12, 2012. Hamer is paid a 1%
management fee calculated on the prior month-end net assets allocated to it by
the Fund to trade, along with a 20% quarterly incentive fee on New Net
Profits, as that term is defined in the Fund's Prospectus.
12. Financial Highlights
<table>
<s> <c> <c>
Three Months Ended March 31,
2012 2011
Performance per unit (1)
Net unit value, beginning of the period $3,219.98 $4,231.14
Net realized and unrealized (loss) from
investments and foreign currency (114.36) (428.91)
Investment income 0.24 1.22
Expenses (113.86) (125.24)
Net (decrease) for the period (227.98) (552.93)
Net unit value at the end of the period $2,992.00 $3,678.21
Net assets at the end of the period ($000) $4,271 $9,392
Total return (2) (7.08%) (13.07%)
Number of units outstanding at the end of the period 1,427.57 2,553.36
Supplemental Data:
Ratio to average net assets
Net investment (loss) (3) (14.39%) (12.69%)
Expenses (3) (14.42%) (12.81%)
</table>
Total returns are calculated based on the change in value of a unit during
the period. An individual partner's total returns 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
Three Months Ended March 31, 2012 and 2011
*****************************************************************************
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>