-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, J9nNzuLlJImfhHCKZ8CX6Qf6hy84A2Qyb6p8VnJPLBSFFYdvSf7bZeYKt1zw0nVH R/pnnlxgTXiC7C8MMMOF0w== 0000865549-04-000009.txt : 20040825 0000865549-04-000009.hdr.sgml : 20040825 20040825165716 ACCESSION NUMBER: 0000865549-04-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20040630 FILED AS OF DATE: 20040825 DATE AS OF CHANGE: 20040825 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATLAS FUTURES FUND LIMITED PARTNERSHIP CENTRAL INDEX KEY: 0000865549 STANDARD INDUSTRIAL CLASSIFICATION: [6221] IRS NUMBER: 510380494 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-53111 FILM NUMBER: 04996913 BUSINESS ADDRESS: STREET 1: 5916 N 300 WEST CITY: FREMONT STATE: IN ZIP: 46737 BUSINESS PHONE: 2198331306 MAIL ADDRESS: STREET 1: 5916 N 300 WEST CITY: FREMONT STATE: IN ZIP: 46737 10-Q 1 atl10q063004.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 -------------- FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2004 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 ____333-61217______ Atlas Futures Fund, Limited Partnership --------------------------------------- (Exact Name of Registrant as Specified in Its Charter) Delaware 51-0380494 - ------- ---------- (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 5916 N. 300 West, Fremont, IN 46737 - ---------------------------------------- ----- (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code (260) 833-1505 - ------------------------------------------------------------------------ Former Name, Address and Fiscal Year, if Changed, Since Last Report No such changes occurred 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 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) of the Securities and Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes No 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. Part 1 - FINANCIAL INFORMATION Item 1. Financial Statements. The reviewed financial statements for the Registrant for the second quarter ended June 30, 2004, and audited results for the calendar year 2003 are attached hereto and made a part hereof. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 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 trading of commodity futures and options markets through the services of its commodity trading advisor, Clarke Capital Management, Inc. The Units are sold through the broker dealer selected by the General Partner, Futures Investment Company, at the Net Asset Value per Unit as of the close of business on the last day of the month in which subscriptions are received by the General Partner. On June 3, 2004, the Registrant filed Post Effective Amendment No. 3 to its Registration Statement to disclose (i) the removal of Futures Investment Company as the principal selling agent; (ii) the removal of the 6% selling commission and 4% annual continuing service fee; (iii) the increase of brokerage commissions from 7% to 11%; and, (iv) the change in accountant to Michael J. Liccar & Co., CPA. The Registrant will continue to offer Units for sale to the public via its fully amended and restated prospectus dated July 2, 2004 until the total amount of registered securities, $15,000,000, is sold or the offering terminates. To obtain a return of invested capital or appreciation, if any, purchasers of Units must look solely to the redemption feature of the Partnership or to the General Partner, in its sole judgment, to elect to make distributions. There is no current market for the Units sold and none is expected to develop nor is the General Partner expected to make distributions. Part II - OTHER INFORMATION Item 1. Legal Proceedings None Item 2. Changes in Securities None Item 3. Defaults Upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a) None (b) None SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Form 10-Q for the period ended June 30, 2004, 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 P. Pacult Mr. Michael Pacult Sole Director, Sole Shareholder, President, and Treasurer of the General Partner Date: August 25, 2004 ATLAS FUTURES FUND, LIMITED PARTNERSHIP (A Delaware Limited Partnership) INDEX TO FINANCIAL STATEMENTS Page Accountants' Review Report F-2 Financial Statements Balance Sheets as of June 30, 2004 and December 31, 2003 F-3 Schedules of Investments as of June 30, 2004 and December 31, 2003 F-4 - F-7 Statements of Operations for the Three and Six Months Ended June 30, 2004 and 2003 F-8 Statements of Partners' Equity for the Six Months Ended June 30, 2004 and 2003 F-9 Statements of Cash Flows for the Six Months Ended June 30, 2004 and 2003 F-10 Notes to Financial Statements F-11 - F-17 F-1 Frank L. Sassetti & Co. Certified Public Accountants To The Partners Atlas Futures Fund, Limited Partnership Dover, Kent County, Delaware We have reviewed the balance sheet, including the schedule of investments, of ATLAS FUTURES FUND, LIMITED PARTNERSHIP as of June 30, 2004 and the related statements of operations for the three and six months ended June 30, 2004 and 2003, and the statements of partners' equity and cash flows for the six months ended June 30, 2004 and 2003. These financial statements are the responsibility of the Partnership's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquires of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review we are not aware of any material modifications that should be made to the financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States. We have previously audited, in accordance with auditing standards generally accepted in the United States, the balance sheet, including the schedule of investments, of ATLAS FUTURES FUND, LIMITED PARTNERSHIP as of December 31, 2003 and the related statements of operations, partner's equity and cash flows for the year then ended (not presented herein); and in our report dated February 20, 2004, we expressed an unqualified opinion on these financial statements. In our opinion, the information set forth in the accompanying balance sheet as of December 31, 2003 is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived. /s/ Frank L. Sassetti & Co. August 9, 2004 Oak Park, Illinois 6611 W. North Avenue * Oak Park, Illinois 60302 * Phone (708) 386-1433 * Fax (708) 386-0139 F-2 ATLAS FUTURES FUND, LIMITED PARTNERSHIP (A Delaware Limited Partnership) BALANCE SHEETS JUNE 30, 2004 AND DECEMBER 31, 2003 ASSETS June 30, 2004 December 31, (A Review) 2003 Investments Equity in Commodity Futures Trading Accounts - Cash and cash equivalents $9,539,902 $6,930,523 Net unrealized gain (loss) on open commodity futures contracts (46,226) 694,260 9,493,676 7,624,783 Cash 32,276 37,775 Accrued interest receivable 7,068 6,936 Prepaid incentive fees - 94,433 $9,533,020 $7,763,927 LIABILITIES AND PARTNERS' EQUITY LIABILITIES Partner redemptions payable $ 28,260 $ 46,267 Accrued trading commissions payable 36,819 487 Incentive fees payable 339,135 - Front end load payable 60 376 Other accrued liabilities 7,000 27,000 Total Liabilities 411,274 74,130 PARTNERS' EQUITY Limited partners - (4,301.24 and 4,393.05 units) 9,121,746 7,689,797 General partner - (0 units) Total Partners' Equity 9,121,746 7,689,797 $9,533,020 $7,763,927 The accompanying notes are an integral part of the financial statements. F-3 ATLAS FUTURES FUND, LIMITED PARTNERSHIP (A Delaware Limited Partnership) SCHEDULE OF INVESTMENTS JUNE 30, 2004 (A Review) Contracts Value Percent United States Commodity Futures Positions, Held Long: 32 Dec '04 CBT Soybean Oil $(21,888) (0.23)% 32 Sept '04 CBT 10 Yr. Tnote (4,500) (0.05) Total Commodity Futures Positions, Held Long (26,388) (0.28) United States Commodity Futures Positions, Sold Short: 32 Aug '04 CME Lean Hogs (21,760) (0.23) 32 Sept '04 IMN New Mexican Peso (2,800) (0.03) 33 Sept '04 KCBT Wheat 26,288 0.28 1,728 0.02 Japanese Commodity Futures Positions, Sold Short: 32 July '05 TGE Raw Sugar (8,212) (0.09) 33 April '05 TCE Gold (4,106) (0.04) (12,318) (0.13) European Commodity Futures Positions, Sold Short: 32 Dec '04 LIFFE 3M Euribor (9,248) (0.10) (9,248) (0.10) Net Commodity Futures Positions, Sold Short (19,838) (0.21) Net Commodity Futures Positions (46,226) (0.49) The accompanying notes are an integral part of the financial statements. F-4 ATLAS FUTURES FUND, LIMITED PARTNERSHIP (A Delaware Limited Partnership) SCHEDULE OF INVESTMENTS JUNE 30, 2004 (A Review) Value Percent Cash and Cash Equivalents in Trading Accounts: Aug '04 United States Treasury Bills ($5,000,000 Face Value) $4,986,600 52.53% United States Markets 4,559,743 48.03 Euro Dollar Markets 25,339 0.27 British Pound Markets (189,631) (2.00) Australian Dollar Markets (19,882) (0.21) Japanese Yen Markets 177,733 1.87 Total Cash and Cash Equivalents in Trading Accounts 9,539,902 100.49 Total Investments $9,493,676 100.00% The accompanying notes are an integral part of the financial statements. F-5 ATLAS FUTURES FUND, LIMITED PARTNERSHIP (A Delaware Limited Partnership) SCHEDULE OF INVESTMENTS DECEMBER 31, 2003 Contracts Value Percent United States Commodity Futures Positions, Held Long: 27 Feb '04 Crude Oil $(18,900) (0.25)% 54 Feb '04 Unleaded Gas 54,205 0.71 27 Mar '04 Soybeans 10,800 0.14 27 Mar '04 Soybean Meal 32,670 0.43 104 Mar '04 Euro FX 401,700 5.27 52 Mar '04 British Pound 142,675 1.87 53 Mar '04 Swiss Franc 22,025 0.29 27 Jan '04 Gas Oil 25,650 0.34 27 Feb '04 Brent Crude 5,940 0.08 Total United States Commodity Futures Positions 676,765 8.88 European Commodity Futures Positions, Held Long: 27 Mar '04 5 Year Euro Bobl (340) (0.00) Japanese Commodity Futures Positions, Held Long: 27 Oct '04 Gold 1,010 0.01 53 Oct '04 Platinum 16,195 0.21 Total Japanese Commodity Positions 17,205 0.22 Total Commodity Futures Positions 693,630 9.10 The accompanying notes are an integral part of the financial statements. F-6 ATLAS FUTURES FUND, LIMITED PARTNERSHIP (A Delaware Limited Partnership) SCHEDULE OF INVESTMENTS DECEMBER 31, 2003 Contracts Value Percent Japanese Commodity Futures Positions, Sold Short: 27 Nov '04 Arabica Coffee $ 630 0.01% Net Commodity Futures Positions 694,260 9.11 Cash and Cash Equivalents in Trading Accounts: Mar '04 United States Treasury Bills ($5,000,000 Face Value) $4,973,700 65.23% United States Markets 1,940,209 25.44 Euro Dollar Markets (54,581) (0.72) British Pound Markets (32,377) (0.42) Japanese Yen Markets 103,572 1.36 Total Cash and Cash Equivalents in Trading Accounts 6,930,523 90.89 Total Investments $7,624,783 100.00% The accompanying notes are an integral part of the financial statements. F-7 ATLAS FUTURES FUND, LIMITED PARTNERSHIP (A Delaware Limited Partnership) STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2004 AND 2003 (A Review) Three months ended Six months ended June 30, June 30, 2004 2003 2004 2003 INVESTMENT AND OTHER INCOME Interest income $ 18,520 $ 18,731 $ 35,905 $ 36,736 Redemption penalty 13,654 14,389 Total Income 18,520 32,385 35,905 51,125 EXPENSES Commissions 186,872 168,215 320,098 320,968 Management fees 35,068 68,510 Continuing service fee 55,539 131,711 Incentive fees 339,135 230,581 600,259 597,100 Professional accounting and legal fees 14,779 17,680 57,785 49,607 Other operating and administrative expenses 7,078 737 20,263 1,367 Total Expenses 603,403 452,281 1,130,116 1,037,552 Net Investment Loss (584,883) (419,896)(1,094,211) (986,427) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Realized gain from trading in futures 2,030,587 1,059,454 3,463,131 4,074,674 Realized gain (loss) on exchange rate fluctuation (12,447) 44,587 (1,510) 66,921 Changes in unrealized gains (losses) on open commodity open futures contracts (474,726) (32,232) (740,486)(1,213,330) Total Realized and Unrealized Gain (Loss) on Investments 1,543,414 1,071,809 2,721,135 2,928,265 NET INCOME $ 958,531 $ 651,913 $1,626,924 $1,941,838 NET INCOME - Limited partnership unit $220.40 $157.49 $374.90 $442.36 General partnership unit $ $ $ $ The accompanying notes are an integral part of the financial statements. F-8 ATLAS FUTURES FUND, LIMITED PARTNERSHIP (A Delaware Limited Partnership) STATEMENTS OF PARTNERS' EQUITY FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003 (A Review) 2004 2003 Amount Units Amount Units Beginning balance- December 31 $7,689,797 4,393.05 $6,200,090 4,727.47 Partner additions 491,103 250.16 953,716 552.96 Syndication costs (12,429) - - Partner withdrawals (673,649) (341.97) (1,236,244) (794.18) Net Income 1,626,924 1,941,838 - Balance at June 30, $9,121,746 4,301.24 $7,859,400 4,486.25 2004 2003 Value per unit $2,120.72 $1,751.89 Total partnership units 4,301.24 4,486.25 The accompanying notes are an integral part of the financial statements. F-9 ATLAS FUTURES FUND, LIMITED PARTNERSHIP (A Delaware Limited Partnership) STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003 (A Review) 2004 2003 CASH FLOWS FROM OPERATING ACTIVITIES Net income $1,626,924 $1,941,838 Adjustments to reconcile net income to net cash provided by operating activities - Changes in unrealized losses 740,486 1,213,330 Changes in operating assets and liabilities - Accrued interest receivable (132) (1,452) Accrued/ prepaid commissions (5,749) Accrued management and incentive fees 339,135 225,906 Prepaid incentive fees 94,433 Other payables and accruals 16,016 (4,300) Net Cash Provided By Operating Activities 2,816,862 3,369,573 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from sale of units, net of sales commissions 491,103 415,270 Syndication costs (12,429) Partner redemptions (691,656) (1,308,822) Net Cash Used In Financing Activities (212,982) (893,552) NET INCREASE IN CASH AND CASH EQUIVALENTS 2,603,880 2,476,021 CASH AND CASH EQUIVALENTS Beginning of period 6,968,298 5,088,099 End of period $9,572,178 $7,564,120 End of period cash and cash equivalents consists of: Cash and cash equivalents in broker trading accounts $9,539,902 $7,519,558 Cash 32,276 44,562 $9,572,178 $7,564,120 The accompanying notes are an integral part of the financial statements. F-10 ATLAS FUTURES FUND, LIMITED PARTNERSHIP (A Delaware Limited Partnership) NOTES TO FINANCIAL STATEMENTS JUNE 30, 2004 AND 2003 (A Review) 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES Atlas Futures Fund, Limited Partnership (the Fund) was formed January 12, 1998 under the laws of the State of Delaware. The Fund is engaged in the speculative trading of futures contracts in commodities, which commenced in October, 1999. Ashley Capital Management, Inc.(Ashley) and Michael Pacult are the General Partners and the commodity pool operators (CPOs) of the Fund. The commodity trading advisor (CTA) is Clarke Capital Management, Inc. who has the authority to trade as much of the Fund's equity as is allocated to it by the General Partner that is currently estimated to be 97% of total equity. The principal selling agent is Futures Investment Company (Futures), which is controlled by Michael Pacult and his wife. Interim Financial Statements - The balance sheet as of June 30, 2004, including the June 30, 2004 schedule of investments, and the statements of operations for the three and six months ended June 30, 2004 and 2003, and the statements of partners' equity and cash flows for the six months ended June 30, 2004 and 2003 are unaudited. In the opinion of management, such financial statements reflect all adjustments, which were of a normal and recurring nature, necessary for a fair presentation of financial position as of June 30, 2004 and the results of operations and cash flows for the six months ended June 30, 2004 and 2003. Regulation - The Fund is a registrant with the Securities and Exchange Commission (SEC) pursuant to the Securities and Exchange Act of 1933 (the Act). The Fund is subject to the regulations of the SEC and the reporting requirements of the Act. The Fund is also subject to the regulations of the Commodities Futures Trading Commission (CFTC), an agency of the U.S. government which regulates most aspects of the commodity futures industry, the rules of the National Futures Association and the requirements of various commodity exchanges where the Fund executes transactions. Additionally, the Fund is subject to the requirements of futures commission merchants and interbank market makers through which the Fund trades and regulated by commodity exchanges and by exchange markets that may be traded by the advisor. Registration Costs - Costs incurred for the initial filings with the Securities and Exchange Commission, Commodity Futures Trading Commission, National Futures Association (the "NFA") and the states where the offering was made were accumulated, deferred and charged against the gross proceeds of offering at the initial closing as part of the offering expense. The Fund remains open to new partners, and incurs costs required to retain the ability to issue new units. Such costs are treated in a similar manner. Costs of recurring annual and quarterly filings with regulatory agencies are expensed as incurred. Revenue Recognition - Commodity futures contracts are recorded on the trade date and are reflected in the balance sheet at the difference between the original contract amount and the market value on the last business day of the reporting period. Market value of commodity futures contracts is based upon exchange or other applicable market best available closing quotations. F-11 ATLAS FUTURES FUND, LIMITED PARTNERSHIP (A Delaware Limited Partnership) NOTES TO FINANCIAL STATEMENTS JUNE 30, 2004 AND 2003 (A Review) 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Use of Accounting Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Income Taxes - The Fund is not required to provide a provision for income taxes. Income tax attributes that arise from its operations are passed directly to the individual partners. The Fund may be subject to state and local taxes in jurisdictions in which it operates. Reclassifications - Certain reclassifications have been made to the 2003 financial statements to conform to the 2004 presentation. Statement of Cash Flows - For purposes of the Statement of Cash Flows, the Fund considers only cash and money market funds to be cash equivalents. Net cash provided by operating activities include no cash payments for interest or income taxes for the periods ended June 30, 2004 and 2003. Foreign Currency Transactions - The Fund's functional currency is the U.S. dollar; however, it transacts business in currencies other than the U.S. dollar. Assets and liabilities denominated in currencies other than U.S. dollar are translated into U.S. dollars at the rates in effect at the date of the statement of financial condition. Income and expense items denominated in currencies other than the U.S. dollar are translated into U.S. dollars at the rates in effect at each month end. Gains and losses resulting from the translation to U.S. dollars are reported in income currently. 2. GENERAL PARTNER DUTIES The responsibilities of the General Partner, in addition to directing the trading and investment activity of the Fund, include executing and filing all necessary legal documents, statements and certificates of the Fund, retaining independent public accountants to audit the Fund, employing attorneys to represent the Fund, reviewing the brokerage commission rates to determine reasonableness, maintaining the tax status of the Fund as a limited partnership, maintaining a current list of names, addresses and numbers of units owned by each Limited Partner and taking such other actions as deemed necessary or desirable to manage the business of the Partnership. If the daily net unit value of the partnership falls to less than 50% of the highest value earned through trading at the close of any month, then the General Partner will immediately suspend all trading, provide all limited partners with notice of the reduction and give all limited partners the opportunity, for fifteen days after such notice, to redeem partnership interests. No trading will commence until after the lapse of the fifteen day period. F-12 ATLAS FUTURES FUND, LIMITED PARTNERSHIP (A Delaware Limited Partnership) NOTES TO FINANCIAL STATEMENTS JUNE 30, 2004 AND 2003 (A Review) 3. THE LIMITED PARTNERSHIP AGREEMENT The Limited Partnership Agreement provides, among other things, that: Capital Account - A capital account shall be established for each partner. The initial balance of each partner's capital account shall be the amount of the initial contributions to the partnership. Monthly Allocations - Any increase or decrease in the Partnership's net asset value as of the end of a month shall be credited or charged to the capital account of each Partner in the ratio that the balance of each account bears to the total balance of all accounts. Any distribution from profits or partners' capital will be made solely at the discretion of the General Partners. Federal Income Tax Allocations - As of the end of each fiscal year, the Partnership's realized capital gain or loss and ordinary income or loss shall be allocated among the Partners, after having given effect to the fees and expenses of the Fund. Subscriptions - Investors must submit subscription agreements and funds at least five business days prior to month end. Subscriptions must be accepted or rejected by the general partner within five business days. The investor also has five business days to withdraw his subscription. Funds are deposited into an interest bearing escrow account and will be transferred to the Fund's account on the first business day of the month after the subscription is accepted. Interest earned on the escrow funds will accrue to the account of the investor. Redemptions - A limited partner may request any or all of his investment be redeemed at the net asset value as of the end of a month. The written request must be received by the general partner no less than ten business days prior to a month end. Redemptions will generally be paid within twenty days of the effective month end. However, in various circumstances due to liquidity, etc. the general partner may be unable to comply with the request on a timely basis. Redemption fees are charged during the first 24 months of investment based on a sliding scale (4% - 0%). Effective January 1, 2004, redemption penalties are no longer charged. 4. FEES Prior to January 1, 2004, the Fund was charged the following fees: A monthly management fee of 2% (annual rate) of the Fund's net assets allocated to the Fund's Corporate General Partner. F-13 ATLAS FUTURES FUND, LIMITED PARTNERSHIP (A Delaware Limited Partnership) NOTES TO FINANCIAL STATEMENTS JUNE 30, 2004 AND 2003 (A Review) 4. FEES - CONTINUED An incentive fee of 25% of "new trading profits" is paid to each CTA. "New trading profits" includes all income earned by each CTA and expense allocated to his activity. In the event that trading produces a loss, no incentive fees will be paid and all losses will be carried over to the following months until profits from trading exceed the loss. It is possible for one CTA to be paid an incentive fee during a quarter of a year when the Fund experiences a loss. The Fund pays a combination of fixed commissions and continuing service fees of 9% (annual rate) of assets assigned to be traded, payable monthly, to the Introducing Broker affiliated with the General Partner. The Affiliated Introducing Broker will pay the costs to clear the trades to the futures commisssion merchant and all PIT Brokerage costs which shall include the NFA and exchange fees. Effective January 1, 2004, the Fund is charged the following fees: A monthly commission of 7% (annual rate) of the Fund's assets on deposit with the futures commission merchant. The Corporate General Partner is responsible for payments of brokerage commission and fees to the futures commission merchant. The quarterly incentive fee of 25% of "new trading profits" paid to each CTA is unchanged. A monthly continuing service fee of 4% (annual rate) of the investment in the Fund (as defined) will be paid to the selling agent. The Corporate General Partner reserves the right to change the fee structure at its sole-discretion. 5. RELATED PARTY TRANSACTIONS The Fund paid the following expenses to related parties during the six months ended June 30, 2004 and 2003. 2004 2003 Commission/Management Fee - Ashley $256,167 $ 68,542 Commission - Futures $ - $249,420 Continuing Service Fee - Futures $131,711 $ - F-14 ATLAS FUTURES FUND, LIMITED PARTNERSHIP (A Delaware Limited Partnership) NOTES TO FINANCIAL STATEMENTS JUNE 30, 2004 AND 2003 (A Review) 5. RELATED PARTY TRANSACTIONS- CONTINUED Financial Accounting Standards Board Interpretation No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, identifies certain disclosures to be made by a guarantor in its financial statements about its obligations under certain guarantees that it has issued. In the normal course of business, the Fund has provided general indemnifications to the General Partner, its CTA and others when they act, in good faith, in the best interests of the Fund. The Fund is unable to develop an estimate for future payments resulting from unasserted and unknown claims, but expects the risk of having to make any payments under these indemnifications to be remote. 6. TRADING ACTIVITIES AND RELATED RISKS The Fund is engaged in speculative trading of U.S. and foreign futures contracts in commodities. The Fund is exposed to both market risk, the risk arising from changes in market value of the contracts, and credit risk, the risk of failure by another party to perform according to the terms of a contract. A certain portion of cash and Treasury Bills in trading accounts are pledged as collateral for commodities trading on margin. Additional deposits may be necessary for any loss on contract value. The Commodity Exchange Act requires a broker to segregate all customer transactions and assets from such broker's proprietary activities. Each U.S. commodity exchange, with the approval of the CFTC, and the futures commission merchant establish minimum margin requirements for each traded contract. The futures commission merchant may increase the margin requirements above these minimums for any or all contracts. In general, the amount of required margin should never fall below 10% of the Net Asset Value. The cash deposited in trading accounts at June 30, 2004 and December 31, 2003 was $4,553,302 and $1,956,823, respectively, which equals approximately 50% and 25% of Net Asset Value, respectively. The Fund also purchases United States Treasury bills as a form of margin. At June 30, 2004 and December 31, 2003, $4,986,600 and $4,973,700, respectively, was invested in U.S. Treasury Bills, which approximates 55% and 65% of Net Asset Value, respectively. F-15 ATLAS FUTURES FUND, LIMITED PARTNERSHIP (A Delaware Limited Partnership) NOTES TO FINANCIAL STATEMENTS JUNE 30, 2004 AND 2003 (A Review) 6. TRADING ACTIVITIES AND RELATED RISKS- CONTINUED Trading in futures contracts involves entering into contractual commitments to purchase or sell a particular commodity at a specified date and price. The gross or face amount of the contract, which is typically many times that of the Fund's net assets being traded, significantly exceeds the Fund's future cash requirements since the Fund intends to close out its open positions prior to settlement. As a result, the Fund is generally subject only to the risk of loss arising from the change in the value of the contracts. The market risk is limited to the gross or face amount of the contracts held of $3,968,132 and $38,468,967 on long positions at June 30, 2004 and December 31, 2003, respectively. However, when the Fund enters into a contractual commitment to sell commodities, it must make delivery of the underlying commodity at the contract price and then repurchase the contract at prevailing market prices or settle in cash. Since the repurchase price to which a commodity can rise is unlimited, entering into commitments to sell commodities exposes the Fund to unlimited potential risk. Market risk is influenced by a wide variety of factors including government programs and policies, political and economic events, the level and volatility of interest rates, foreign currency exchange rates, the diversification effects among the derivative instruments the Fund holds and the liquidity and inherent volatility of the markets in which the Fund trades. The unrealized gains/(losses) on open commodity futures contracts at June 30, 2004 and December 31, 2003 were $(46,226) and $694,260, respectively. Open contracts generally mature within three months. As of June 30, 2004, the latest maturity date for open futures contracts is April, 2005. However, the Fund intends to close all contracts prior to maturity. Credit risk is the possibility that a loss may occur due to the failure of a counter party to perform according to the terms of a contract. The Fund has a substantial portion of its assets on deposit with financial institutions. In the event of a financial institution's insolvency, recovery of Fund deposits may be limited to account insurance or other protection afforded deposits. The Fund has established procedures to actively monitor market risk and minimize credit risk although there can be no assurance that it will succeed. The basic market risk control procedures consist of continuously monitoring open positions, diversification of the portfolio and maintenance of a desirable margin-to-equity ratio. The Fund seeks to minimize credit risk primarily by depositing and maintaining its assets at financial institutions and brokers which it believes to be creditworthy. F-16 ATLAS FUTURES FUND, LIMITED PARTNERSHIP (A Delaware Limited Partnership) NOTES TO FINANCIAL STATEMENTS JUNE 30, 2004 AND 2003 (A Review) 7. FINANCIAL HIGHLIGHTS Three months ended Six months ended June 30, June 30, 2004 2003 2004 2003 Performance per Unit (5) Net unit value, beginning of period $ 1,905.74 $ 1,589.63 $ 1,750.45 $1,311.50 Net realized and unrealized gains/losses on commodity transactions 349.46 263.70 622.42 670.56 Investment and other income 4.26 7.82 8.27 11.93 Expenses (1) (138.74) (109.26) (260.42) (242.10) Net increase (decrease) for the period 214.98 162.26 370.27 440.39 Net unit value, end of period $ 2,120.72 $ 1,751.89 $ 2,120.72 $1,751.89 Net assets, end of period (000)$ 9,122 $ 7,859 $ 9,122 $ 7,859 Total return (3) 11.28% 10.21% 21.15% 33.58% Ratio to average net assets (4) Investment and other income 1.25% 1.80% 0.52% 1.49% Expenses (2) (28.17)% (15.80)% (11.80)% (20.89)% (1) Includes brokerage commissions (2) Excludes brokerage commissions (3) Not annualized (4) Annualized for all periods (5) Investment and other income and expenses is calculated using average number of units outstanding during the year. Net realized and unrealized gains/losses on commodity transactions is a balancing amount necessary to reconcile the change in net unit value. F-17 -----END PRIVACY-ENHANCED MESSAGE-----