-----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, QuHe/y80v837riOuN5D/LwLnia4lULoPIgpSaN8BBPPr8Uq+su7j3+/Xn6rB5elq U07+fX70Qn0K0rw+8LYmmg== 0000865549-05-000004.txt : 20050408 0000865549-05-000004.hdr.sgml : 20050408 20050408161542 ACCESSION NUMBER: 0000865549-05-000004 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20041231 FILED AS OF DATE: 20050408 DATE AS OF CHANGE: 20050408 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-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-53111 FILM NUMBER: 05741695 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-K 1 at10k1204.txt FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the year ended 12-31-2004 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.) 101 N. Fairfield Drive, Dover, DE 19901 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (800) 331-1532 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered None None Securities registered pursuant to Section 12(g) of the Act: Limited Partnership Units (Title of class) (Title of class) 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (S 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] Indicate by check mark whether the Registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2 of the Act). Yes ___ No _X_ State the aggregate market value of the voting stock held by non-affiliates of the registrant: None. There is no market for the Units of Partnership interests and none is expected to develop. This is a commodity pool. The Units are registered to permit the initial sale of Units at month end net asset value. Documents Incorporated by Reference Audited Financial Statements for Registrant filed with the United States Securities and Exchange Commission for the years ended December 31, 1998, 1999, 2000, 2001, 2002, and 2003 at Registration No. 333-61217. Registration Statement and all amendments thereto filed with the United States Securities and Exchange Commission at Registration No. 333-61217 are incorporated by reference to Parts I, II, III, and IV. PART I Item 1. Business On September 3, 1999, the registration statement filed by Atlas Futures Fund, L. P., (the "Fund") with the Securities and Exchange Commission (the "SEC") and the disclosure document filed with the Commodity Futures Trading Commission (the "CFTC") was declared effective. Offers and sales of the Fund's limited partnership interests (the "Units") at the price of $1,000 per Unit commenced on that date to residents of the states selected by the General Partner. On October 15, 1999, the Fund had sold in excess of the $700,000 in face amount of Units, the amount required to break escrow and deliver the sales proceeds to the Fund accounts to permit it to commence the speculative trading of commodity futures. Trading commenced on November 18, 1999. On May 1, 2001, the Registrant registered $8,000,000 in additional Units. Units are currently offered and sold at the net asset value per Unit ("NAV") determined after addition of profits and deduction of losses, expenses, and reserves, at the close on the last business day of each month. See the financial statements for the total value of the Fund and the NAV as of the date of the statements. By Notice to Limited Partners dated May 24, 2004 and by subsequent post effective amendment to its Registration Statement dated June 3, 2004 that became effective July 2, 2004, the General Partner provided disclosure of certain changes to the Fund operation, including (i) the change in selling agent from Futures Investment Company to the partnership itself to be sold issuer-direct; (ii) removal of the 6% selling commission and 4% continuing service fee; (iii) the increase of the fixed brokerage commissions from 7% to 11%; and, (iv) the change of the Fund accountant to Michael J. Liccar & Co., CPA, 53 West Jackson Blvd, Suite 1250, Chicago IL 60604. By Notice to Limited Partners dated October 20, 2004, the General Partner disclosed that the futures commission merchant would be changed from Citigroup Global Markets, Inc. to Man Financial, Inc., 717 Fifth Avenue, 9th Floor, New York, New York 10022-8101 and that Mt. Kemble Futures LLC, 1099 Mt Kemble Ave, Morristown NJ 07960 would be added as the sole introducing broker, to receive a portion of the round turn commissions paid by the General Partner to the futures commission merchant. The trades for the Fund are selected and placed with the FCM, i.e., broker, for the account of the Fund by one or more CTAs selected by the General Partner of the Fund. Since the inception of trading, the Fund account has been traded by a single CTA, Clarke Capital Management, Inc. 116 W. 2nd Street, Hinsdale, Illinois 60521 (630) 323-5913. The books and records of the trades placed by the CTA in the Fund's trading account are kept and are available for inspection by the Partners at the office of Michael J. Liccar & Co., CPA, 53 West Jackson Blvd, Suite 1250, Chicago IL 60604. The CTA is not paid a management fee of the equity assigned to it to manage, but is paid an incentive fee of twenty-five percent (25%) of New Net Profit, as that term is defined in the partnership agreement which governs the operation of the Fund, payable quarterly. The Fund Partnership Agreement is included as Exhibit A to the prospectus delivered to the prospective investors and filed as part of the Registration Statement. The Partnership Agreement is incorporated herein by reference. None of the purchasers of Limited Partnership Units ("Limited Partners") has a voice in the management of the Partnership or ownership in the General Partner or the trading advisor. Reports of the NAV are sent to the Partners within twenty days following the end of each month. Ashley Capital Management, Inc. the corporate General Partner and Commodity Pool Operator, provides all clearing costs, including pit brokerage fees, which includes floor brokerage, NFA and exchange fees for eleven twelfths of one percent (11/12%) of the total value of the Fund available for trading in the Fund's account at the FCM per month [eleven percent (11%) per year]. The FCM is selected by the General Partner and holds the Fund's trading equity and places the trades as directed by the CTA pursuant to a power of attorney granted by the Fund. The sale of partnership interests ("Units") is regulated by the US Securities and Exchange Commission pursuant to the Securities Act of 1933 and the Securities Commissions and securities acts of the several states where its Units are offered and sold. The Commodity Pool Operators (General Partners) and principals are regulated by the US Commodity Futures Trading Commission pursuant to the Commodity Exchange Act. These legal safeguards are not intended to protect investors from the risks inherent in the trading of commodities. The trading of commodities is highly speculative and risky. For a complete description of the risks and regulation of the business of the Fund, see the Registrant's Registration Statement and its pre-effective amendments on file with the Securities and Exchange Commission at No. 333- 61217, which are incorporated herein by reference. Events Subsequent to December 31, 2004: By Notice to Limited Partners dated January 11, 2005 and by subsequent post effective amendment to its Registration Statement dated January 24, 2005 that became effective February 1, 2005 and post effective amendment to its Registration Statement dated February 22, 2005 that became effective March 8, 2005, the General Partner provided disclosure that, NuWave Investment Corp., 1099 Mount Kemble Avenue, Morristown, New Jersey 07960, would (i) be added as a CTA; (ii) assigned $2,000,000 in equity to trade; (iii) receive a two percent (2%) annual management fee on the first $2,000,000 under management and 1% on all equity assigned to it in excess of $2,000,000; and, (iv) receive a twenty percent (20%) incentive fee. Because Mt. Kemble Futures, LLC, the introducing broker, is affiliated with NuWave, Mt. Kemble will not receive any portion of the brokerage commissions paid to Man Financial, Inc. for trades placed for the Fund by NuWave. The Registrant will continue to offer Units for sale to the public via its fully amended and restated prospectus dated March 8, 2005 until the balance of un-issued registered securities, $5,463,570, as of December 31, 2004, is sold or the offering terminates. Item 2. Properties The Fund maintains up to 3% of its assets on deposit in a commercial bank and the balance is on deposit and available as margin to secure trading through Man Financial, Inc., the FCM. Man Financial, Inc. is registered with the National Futures Association pursuant to the Commodity Exchange Act as a FCM. The trading of commodities is highly speculative and the Fund is at unlimited risk of loss, including the pledge of all of its assets to the FCM to secure the losses on the trades made on its behalf by the commodity trading advisor or advisors selected, from time to time, by the General Partner. Item 3. Legal Proceedings There have been no legal proceedings against the Fund, its General Partner, the Selling Agent, the CTA, the FCM, the IB or any of their Affiliates, directors or officers. 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. Item 4. Submission of Matters to a Vote of Security Holders Michael P. Pacult, individually and as the principal of the corporate General Partner, makes all day to day decisions regarding the operation of the Fund. The Limited Partners have not exercised any right to vote their Units and their have been no matters which would cause the Fund to conduct a vote of the Partners. The rights of the Limited Partners, including their voting rights, are defined in the Partnership Agreement. Briefly stated, their voting rights are limited to the selection of the General Partner, amendments to the Partnership Agreement, and other similar decisions. PART II Item 5. Market for Registrant's Limited Partnership Units, Related Stockholder Matters and Issuer Purchases of Equity Securities The Fund desires to be taxed as a partnership and not as a corporation. In furtherance of this objective, the Partnership Agreement, subject to certain exceptions upon the death of a Partner, requires all Partners to obtain the approval of the General Partner prior to the transfer of any Units of Partnership interest. Accordingly, there is no trading market for the Fund Units and none is likely to develop. The Partners must rely upon the right of Redemption provided in the Partnership Agreement to liquidate their interest. The Fund has less than 300 holders of its securities. Partners are required to represent to the issuer that they are able to understand and accept the risks of investment in a commodity pool for which no market of interests will develop and that the right of redemption will be the sole expected method of withdrawal of equity from the Fund. The General Partner has sole discretion in determining what distributions, if any, the Fund will make to its Partners. The Fund has not made any distributions as of the date hereof. The Fund has no securities authorized for issuance under equity compensation plans. See the Partnership Agreement attached as Exhibit A to the Registration Statement, incorporated herein by reference, for a complete explanation of the limitations upon transfer and right of redemption provided to Partners. Item 6. Selected Financial Data The Fund is not required to pay dividends or otherwise make distributions and none are expected. The Partners must rely upon their right of redemption to obtain their return of equity after consideration of profits, if any, and losses from the Fund. See the Registration Statement, incorporated herein by reference, for a complete explanation of the allocation of profits and losses to a partner's capital account. Following is a summary of certain financial information for the Registrant for the period from January 1, 2000 to December 31, 2004. Year to Date 2004 2003 2002 2001 2000 Performance per Unit (3) Net unit value, beginning of year $1,750.45 $1,311.50 $1,181.89 $1,253.33 $ 954.37 Net realized and unrealized gains/losses on commodity transactions 1,573.93 735.70 298.13 (12.68) 447.29 Investment and other income 27.57 18.43 18.32 38.70 47.33 Expenses (1) (620.54) (315.18) (186.84) (97.46) (195.66) Net increase (decrease) for the year 980.96 438.95 129.61 (71.44) 298.96 Net unit value, end of year $2,731.41 $1,750.45 $1,311.50 $1,181.89 $1,253.33 Net assets, end of period (000) $ 11,791 $ 7,690 $ 6,200 $ 6,102 $ 5,558 Total return 56.04% 33.47% 10.97% (5.97)% 31.33% Ratio to average net assets Investment and other income 1.23% 1.10% 1.48% 3.36% 4.37% Expenses (2) (17.91)% (10.33)% (7.62)% (3.09)% (13.71)% (1) Includes brokerage commissions (2) Excludes brokerage commissions (3) 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. The following summarized quarterly financial information presents the results of operations for the quarterly periods during the years ended December 31, 2004 and 2003: Quarters ended: March 31, June 30, Sep 30, Dec 31, 2004 2004 2004 2004 Total Investment Gain $1,177,721 $1,543,414 $2,131,236 $1,784,946 Net Income 668,393 958,531 1,391,383 1,112,478 Net Income per partnership unit 155.80 220.40 352.29 248.73 Net asset value per partnership unit at the end of the period 1,905.74 2,120.72 2,464.67 2,731.41 March 31, June 30, Sep 30, Dec 31, 2003 2003 2003 2003 Total Investment Gain (Loss) $1,856,456 $1,071,809 $ (2,510) $ 372,910 Net Income (Loss) 1,289,925 651,913 (218,818) 261,562 Net Income (Loss) per partnership unit 278.00 157.49 (48.46) 60.17 Net asset value per partnership unit at the end of the period 1,589.63 1,751.89 1,701.96 1,750.45 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation. Critical Accounting Policies The Fund records all investments at market value in its financial statements, with changes in market value reported as a component of realized and change in unrealized trading gain (loss) in the Statements of Operations. In certain circumstances, estimates are involved in determining market value in the absence of an active market closing price (e.g. swap and forward contracts which are traded in the inter-bank market). Capital Resources The Fund will raise additional capital only through the sale of Units offered pursuant to the continuing offering, and does not intend to raise any capital through resale of Units once issued or borrowing. Due to the nature of the Fund's business, it will make no capital expenditures and will have no capital assets which are not operating capital or assets. Liquidity Most United States commodity exchanges limit fluctuations in commodity futures contracts prices during a single day by regulations referred to as "daily price fluctuation limits" or "daily limits". During a single trading day, no trades may be executed at prices beyond the daily limit. 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 to the daily limit for several consecutive days with little or no trading. Similar occurrences could prevent the Fund from promptly liquidating unfavorable positions and subject the Fund to substantial losses which could exceed the margin initially committed to such trades. In addition, even if commodity futures prices have not moved the daily limit, the Fund may not be able to execute futures trades at favorable prices, if little trading in such contracts is taking place. Other than these limitations on liquidity, which are inherent in the Fund's commodity futures trading operations, the Fund's assets are expected to be highly liquid. The entire offering proceeds will be credited to the Fund's bank and brokerage accounts to engage in trading activities and as reserves for that trading. The Fund meets its margin requirements by depositing U.S. government securities or cash or both with the futures broker and the over-the-counter counterparties. In this way, substantially all (i.e., 97% or more) of the Fund's assets, whether used as margin for trading purposes or as reserves for such trading, can be invested in U.S. government securities and time deposits with U.S. banks. Investors should note that maintenance of the Fund's assets in U.S. government securities and banks does not reduce the risk of loss from trading futures, forward and swap contracts. The Fund receives all interest earned on its assets. No other person shall receive any interest or other economic benefits from the deposit of Fund assets. Approximately 10% to 40% of the Fund's assets normally are committed as required margin for futures contracts and held by the futures broker, although the amount committed may vary significantly. Such assets are maintained in the form of cash or U.S. Treasury bills in segregated accounts with the futures broker pursuant to the Commodity Exchange Act and regulations thereunder. Approximately 10% to 40% of the Fund's assets are deposited with over-the-counter counterparties in order to initiate and maintain forward and swap contracts. Such assets are not held in segregation or otherwise regulated under the Commodity Exchange Act, unless such over- the-counter counterparty is registered as a futures commission merchant. These assets are held either in U.S. government securities or short-term time deposits with U.S.-regulated bank affiliates of the over-the-counter counterparties. The remaining 60% to 90% of the Fund's assets will normally be invested in cash equivalents, such as U.S. Treasury bills, and held by the futures broker or the over-the-counter counterparties. The Fund's assets are not and will not be, directly or indirectly, commingled with the property of any other person in violation of law or invested with or loaned to the Fund, the General Partner or any affiliated entities. Results of Operations The initial start-up costs attendant to the sale of Units by use of a Prospectus which has been filed with the Securities and Exchange Commission are substantial. The results of the partial year 1999 and the years 2000, 2001, 2002, 2003 and 2004 reflect the absorption of these costs by the Fund. The 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. The CTA selected is totally responsible for the selection of trades. As evidenced by the increase in per unit value disclosed above, the trading advisor has been successful. The General Partner has selected a second CTA to trade for the fund during the year 2005. See the Registration Statement, incorporated by reference herein, for an explanation of the operation of the Fund. Off-Balance Sheet Risk The term "off-balance sheet risk" refers to an unrecorded potential liability that, even though it does not appear on the balance sheet, may result in future obligation or loss. The Fund trades in futures, forward and swap contracts and is therefore a party to financial instruments with elements of off-balance sheet market and credit risk. In entering into these contracts there exists a risk to the Fund, market risk, that such contracts may be significantly influenced by market conditions, such as interest rate volatility, resulting in such contracts being less valuable. If the markets should move against all of the futures interests positions of the Fund at the same time, and if the Fund's trading advisor was unable to offset futures interests positions of the Fund, the Fund could lose all of its assets and the Limited Partners would realize a 100% loss. The Fund, the General Partner and the CTAs minimize market risk through real-time monitoring of open positions, diversification of the portfolio and maintenance of a margin-to- equity ratio that rarely exceeds 40%. In addition to market risk, in entering into futures, forward and swap contracts there is a credit risk that a counterparty will not be able to meet its obligations to the Fund. The counterparty for futures contracts traded in the United States and on most foreign exchanges is the clearinghouse associated with such exchange. In general, clearinghouses are backed by the corporate members of the clearinghouse who are required to share any financial burden resulting from the non-performance by one of their members and, as such, should significantly reduce this credit risk. In cases where the clearinghouse is not backed by the clearing members, like some foreign exchanges, it is normally backed by a consortium of banks or other financial institutions. In the case of forward and swap contracts, which are traded on the interbank market rather than on exchanges, the counterparty is generally a single bank or other financial institution, rather than a group of financial institutions; thus there may be a greater counterparty credit risk. The CTAs trade for the Fund only with those counterparties which they believe to be creditworthy. All positions of the Fund are valued each day on a mark-to- market basis. There can be no assurance that any clearing member, clearinghouse or other counterparty will be able to meet its obligations to the Fund. Item 7A. Quantitative and Qualitative Disclosures About Market Risk The securities of the Fund are not traded and no market for the Fund securities is expected to develop. The Fund is engaged in the speculative trading of futures and options on futures. The risks are fully explained in the Fund prospectus delivered to each prospective partner prior to their investment. Item 8. Financial Statements and Supplementary Data. The Fund financial statements as of December 31, 2004 were audited by Frank L. Sassetti & Co., Certified Public Accountants, 6611 West North Avenue, Oak Park, IL 60302 and are provided in this Form 10-K beginning on page F-1. The supplementary financial information specified by Item 302 of Regulation S-K is included in Item 6. Selected Financial Data. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. Item 9A. Controls and Procedures. 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 annual report. Based on their evaluation, Mr. Pacult has concluded that these disclosure controls and procedures are effective. There were no changes in the General Partner's internal control over financial reporting applicable to the Fund identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the last fiscal quarter that have materially affected, or is reasonably likely to materially affect, internal control over financial reporting applicable to the Fund. The Fund securities are not publicly traded so that there can be no insider trading or leaks of confidential information to the public. All Fund money is on deposit either with a bank or a futures commission merchant. There is an audit trail produced by both. A certified public accountant prepares the monthly financial statements. The Fund units are sold during the month at a net asset value to be determined as of the close of business on the last day of trading each month. No information related to the value of the units during the month is available to the Fund sales force or the prospects. All quarterly financial statements are reviewed by an independent certified public accountant who audits the Fund financial statements at the end of each calendar year. The Fund maintains its subscription agreements and other records for six years. Item 9B. Other Information. None Part III Item 10. Directors and Executive Officers of the Registrant The Fund is a Delaware Limited Partnership which acts through its corporate and individual general partner. Accordingly, the Registrant has no Directors or Executive Officers. The General Partners of the Registrant are Ashley Capital Management, Incorporated, a Delaware corporation, and Mr. Michael P. Pacult. The General Partners are both registered with the National Futures Association as commodity pool operators pursuant to the Commodity Exchange Act, and Mr. Pacult, age 60, is the sole shareholder, director, registered principal and executive officer of the corporate General Partner. The background and qualifications of Mr. Pacult are disclosed in the Registration Statement, incorporated herein by reference. Commencing in August 2003 to present, Mr. Pacult has also been the sole Owner, Director and President of Ashley Capital Management, Inc., the commodity pool operator of this partnership; and from August 2003, to present, he has been the sole Owner, Director and President of Belmont Capital Management, Inc., a commodity pool operator of partnership that competes with this partnership; and, from April 2003 to present, he has been the sole Owner, Director and President of White Oak Financial Services, Inc., a commodity pool operator that will also compete with this partnership; and, from October 2004 to present, he has been the sole Owner, Director and President of TriView Capital Management, Inc., a commodity pool operator that will also compete with this partnership. Since August 2003, he has also served as the individual general partner of this partnership. Since April 2003, he has also served as the individual general partner of another commodity pool, Providence Select Fund, LP, which is presently registering its securities with the SEC. Since October 2004, he has also served as the individual managing member of another public commodity pool, TriView Global Fund, LLC, which is presently registering its securities with the SEC. There has never been a material administrative, civil or criminal action brought against the Fund, the General Partner or any of its directors, executive officers, promoters or control persons. No Forms 3, 4, or 5 have been furnished to the Registrant since inception. To the best of the Fund's knowledge, no such forms have been or are required to be filed. Audit Committee Financial Expert Mr. Pacult, in his capacity as the sole principal for the Fund, has determined that he qualifies as an "audit committee financial expert" in accordance with the applicable rules and regulations of the Securities and Exchange Commission. He is not independent of management. Code of Ethics The Fund General Partner is registered with the National Futures Association as a Commodity Pool Operator and its President, Michael P. Pacult is registered as its principal. Both the Fund and the General Partner are subject to Federal Commodity Exchange Act and audit for compliance and the rules of good practice of the Commodity Futures Trading Commission and the industry self regulatory organization, the National Futures Association. Having said that, neither the Commodity Futures Trading Commission nor the National Futures Association are responsible for the quality of the Fund disclosures or its operation, those functions are exclusively the responsibility of the Fund and its General Partner. Item 11. Executive Compensation. Although there are no executives in the partnership, the corporate General Partner is paid compensation that the Fund has elected to disclose on this Form 10-K. The Fund pays its corporate General Partner fixed brokerage commissions of eleven percent (11%) per year, payable monthly, to cover the cost of the trades entered by the CTA. The corporate General Partner retains the difference between the cost to enter the trades and the eleven percent. All compensation is disclosed in the Registration Statement, which is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management. (a) The following Partners own more than five percent (5%) of the total equity of the Fund: Name Percent Ownership None N/A (b) As of December 31, 2004, the General Partner owned no Units of Limited Partnership Interests. (c) The Limited Partnership Agreement governs the terms upon which control of the Fund may change. No change in ownership of the Units will, alone, determine the location of control. The Limited Partners must have 120 days advance notice and the opportunity to redeem prior to any change in the control from the General Partner to another general partner. Control of the management of the Fund may never vest in one or more Limited Partners. Item 13. Certain Relationships and Related Transactions. See Item 11, Executive Compensation and Item 12, Security Ownership of Certain Beneficial Owners and Management. The General Partner has sole discretion over the selection of trading advisors. Ashley Capital Management, Inc., the corporate General Partner, is paid a fixed commission for trades and, therefore, both General Partners have a potential conflict in the selection of a trading advisor who makes few trades rather than produces profits for the Fund. This conflict and others are fully disclosed in the Registration Statement, which is incorporated herein by reference. Item 14. Principal Accountant Fees and Services. (a) Audit Fees The fees and costs paid to Frank L. Sassetti & Co. for the audit of the Fund's annual financial statements, for review of financial statements included in the Fund's Forms 10-Q and other services normally provided in connection with regulatory filing or engagements (i.e., consents related to SEC registration statements) for the years ended December 31, 2004 and 2003 were $23,815 and $30,125, respectively. (b) Audit Related Fees None (c) Tax Fees The aggregate fees paid to Frank L. Sassetti & Co. for tax compliance services for the years ended December 31, 2004 and 2003 were $5,055 and $5,075, respectively. (d) All Other Fees None (e) The Board of Directors of Ashley Capital Management, Inc., General Partner of the Fund, approved all of the services described above. The Board of Directors has determined that the payments made to its independent certified public accountant for these services are compatible with maintaining such auditors' independence. The Board of Directors explicitly pre-approves all audit and non-audit services and all engagement fees and terms. Part IV Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K (a) The following documents are filed as part of this report: 1. Financial Statements See Index to Financial Statements for the years ended December 31, 2004, 2003, and 2002. The Financial Statements begin on page F-1 of this report. 2. Financial Schedules Not applicable, not required, or included in the Financial Statements. 3. Exhibits. Incorporated by reference from Form S-1, and all amendments at file No. 333- 61217 previously filed with the Washington, D. C. office of the Securities and Exchange Commission. (b) Reports on Form 8-K: 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-K for the period ended December 31, 2004, to be signed on its behalf by the undersigned, thereunto duly authorized. Registrant: Atlas Futures Fund, Limited Partnership By Ashley Capital Management, Inc. Its General Partner Date: April 8, 2005 By: /s/ Michael P. Pacult Mr. Michael P. Pacult Sole Director, Sole Shareholder President and Treasurer Date: April 8, 2005 By: /s/ Michael P. Pacult Mr. Michael P. Pacult General Partner ******************************************************************************* ATLAS FUTURES FUND, LIMITED PARTNERSHIP (A Delaware Limited Partnership) INDEX TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002 Page Report of Independent Registered Public Accounting Firm F-2 Financial Statements Balance Sheets F-3 Schedules of Investments F-4 - F-7 Statements of Income F-8 Statements of Partners' Equity F-9 Statements of Cash Flows 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 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We have audited the accompanying balance sheets, including the schedules of investments, of ATLAS FUTURES FUND, LIMITED PARTNERSHIP as of December 31, 2004 and 2003, and the related statements of income, partners' equity and cash flows for each of the three years in the period ended December 31, 2004. 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. An audit includes 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 ATLAS FUTURES FUND, LIMITED PARTNERSHIP as of December 31, 2004 and 2003, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2004, in conformity with accounting principles generally accepted in the United States. /s/ Frank L. Sassetti & Co. February 14, 2005 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 DECEMBER 31, 2004 AND 2003 ASSETS 2004 2003 Investments Equity in Commodity Futures Trading Accounts - Cash and cash equivalents $12,280,244 $6,930,523 Net unrealized gain (loss) on open commodity futures contracts (97,995) 694,260 12,182,249 7,624,783 Cash 18,289 37,775 Accrued interest receivable 22,314 6,936 Prepaid incentive fees - 94,433 $12,222,852 $7,763,927 LIABILITIES AND PARTNERS' EQUITY LIABILITIES Partner redemptions payable $ 28,746 $ 46,267 Accrued trading commissions payable 15,414 487 Front end load payable 60 376 Incentive fees payable 362,733 - Other accrued liabilities 24,950 27,000 Total Liabilities 431,902 74,130 PARTNERS' EQUITY Limited partners - (4,316.80 and 4,393.05 units) 11,790,949 7,689,797 General partner - (0 units) Total Partners' Equity 11,790,949 7,689,797 $12,222,852 $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 DECEMBER 31, 2004 Contracts Value Percent United States Commodity Futures Positions, Held Long: 80 Mar '05 CBT Soybeans $ (32,000) (0.26)% 40 Mar '05 CBT 10-Year Treasury Notes (10,000) (0.08) 40 Feb '05 CME Lean Hogs (4,200) (0.03) 40 Mar '05 CSC Coffee 93,000 0.76 40 Mar '05 IMM British Pounds (59,000) (0.48) 40 Mar '05 IMM Swiss Francs (21,000) (0.17) 40 Mar '05 IMM Mexican Peso 500 0.00 Total United States Commodity Futures Positions (32,700) (0.26) British Commodity Futures Positions, Held Long: 40 Sep '05 LIFFE 3 MO Sterling 7,702 0.06 Total British Commodity Futures Positions 7,702 0.06 Australian Commodity Futures Positions, Held Long: 40 Mar '05 SYD 90 Day Australian Bill (2,245) (0.02) Total Australian Commodity Futures Positions (2,245) (0.02) Total Commodity Futures Positions (27,243) (0.22) 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 DECEMBER 31, 2004 Contracts Value Percent United States Commodity Futures Positions, Sold Short: 40 Mar '05 CBT 2-Year Treasury Notes $ (5,000) (0.04)% 40 Mar '05 CSC Cocoa (4,600) (0.04) 40 Feb '05 New York Unleaded Gas (61,152) (0.50) Total United States Commodity Futures Positions, Sold Short (70,752) (0.58) Net Commodity Futures Positions (97,995) (0.80) Cash and Cash Equivalents in Trading Accounts: Mar '05 United States Treasury Bills ($10,570,000 Face Value) 10,512,712 86.29 May '05 United States Treasury Bills ($1,250,000 Face Value) 1,236,477 10.15 United States Markets 287,356 2.36 Eurodollar Markets 218,154 1.79 British Pound Markets (1,027) (0.01) Australian Dollar Markets (6,326) (0.05) Japanese Yen Markets 32,900 0.27 Total Cash and Cash Equivalents in Trading Accounts 12,280,244 100.80 Total Investments $12,182,249 100.00% 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 INCOME YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002 2004 2003 2002 INVESTMENT AND OTHER INCOME Interest income $ 116,543 $ 66,435 $ 82,435 Redemption penalty - 15,200 4,761 Total Income 116,543 81,635 87,196 EXPENSES Commissions 921,708 630,488 439,971 Management fees - 142,919 111,992 Continuing service fee 131,711 22,466 Incentive fees 1,428,902 502,667 269,367 Professional accounting and legal fees 117,343 82,023 66,669 Other operating and administrative expenses 23,411 15,155 1,245 Total Expenses 2,623,075 1,395,718 889,244 Net Investment Loss (2,506,532)(1,314,083)(802,048) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Realized gain from trading in futures 7,430,148 3,715,385 202,558 Realized gain (loss) on exchange rate fluctuation (576) 72,978 82,092 Changes in unrealized gains (losses) on open futures contracts (792,255) (489,698)1,061,861 Total Realized and Unrealized Gain on Investments 6,637,317 3,298,665 1,346,511 NET INCOME $4,130,785 $1,984,582 $ 544,463 NET INCOME - Limited partnership unit $977.22 $447.20 $112.92 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 YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002 TOTAL LIMITED PARTNERS GENERAL PARTNERS PARTNERS' EQUITY Amount Units Amount Units Amount Units Balance - January 1, 2002 $6,102,458 5,163.32 $ $6,102,458 5,163.32 Subscriptions of 533.74 units 631,659 533.74 631,659 533.74 Syndication costs paid (5,250) (5,250) Redemptions of 969.59 units (1,073,240) (969.59) (1,073,240) (969.59) Net income 544,463 544,463 Balance - December 31, 2002 6,200,090 4,727.47 6,200,090 4,727.47 Subscriptions of 649.88 units 1,114,348 649.88 1,114,348 649.88 Syndication costs paid (57,453) (57,453) Redemptions of 984.30 units (1,551,770) (984.30) (1,551,770) (984.30) Net income 1,984,582 1,984,582 Balance - December 31, 2003 7,689,797 4,393.05 7,689,797 4,393.05 Subscriptions of 723.76 units 1,704,641 723.76 1,704,641 723.76 Syndication costs paid (12,429) (12,429) Redemptions of 800.01 units (1,721,845) (800.01) (1,721,845) (800.01) Net income 4,130,785 4,130,785 Balance - December 31, 2004 $11,790,949 4,316.80 $ $11,790,949 4,316.80 December 31, December 31, December 31, 2004 2003 2002 Value per unit $2,731.41 $1,750.45 $1,311.50 Total partnership units 4,316.80 4,393.05 4,727.47 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 YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002 2004 2003 2002 CASH FLOWS FROM OPERATING ACTIVITIES Net income $4,130,785 $1,984,582 $ 544,463 Adjustments to reconcile net income to net cash provided by (used in) operating activities - Changes in operating assets and liabilities - Investments 792,255 489,697 (1,061,861) Accrued interest receivable (15,378) (76) 3,369 Accrued commissions payable 14,927 487 (13,849) Accrued management and incentive fees 362,733 (10,074) Prepaid incentive fees 94,433 (94,433) Other payables and accruals (19,887) 21,128 (2,042) Net Cash Provided By (Used In) Operating Activities 5,359,868 2,401,385 (539,994) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from sale of units, net of sales commissions 1,704,641 1,114,348 756,644 Syndication costs (12,429) (57,453) (5,250) Partner redemptions (1,721,845)(1,578,081)(1,000,662) Net Cash Used In Financing Activities (29,633) (521,186) (249,268) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 5,330,235 1,880,199 (789,262) CASH AND CASH EQUIVALENTS Beginning of period 6,968,298 5,088,099 5,877,361 End of period $12,298,533 $6,968,298 $5,088,099 End of period cash and cash equivalents consists of: Cash and cash equivalents in broker trading accounts $12,280,244 $6,930,523 $4,976,223 Cash 18,289 37,775 111,876 $12,298,533 $6,968,298 $5,088,099 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 DECEMBER 31, 2004, 2003 AND 2002 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES Atlas Futures Fund, Limited Partnership (the "Fund") was formed January 12, 1998 under the laws of the State of Delaware. The Fund is engaged in the speculative trading of futures contracts in commodities, which commenced in October, 1999. Ashley Capital Management, Inc.("Ashley") and Michael Pacult are the General Partners and the commodity pool operators ("CPO's") of the Fund. The commodity trading advisors ("CTA's") are Clarke Capital Management, Inc. ("Clarke") and NuWave Investment Corp. ("NuWave"), effective February, 2005, who have the authority to trade as much of the Fund's equity as is allocated to them by the General Partner that is currently estimated to be 97% of total equity. Prior to July, 2004, the principal selling agent was Futures Investment Company ("Futures"), which is controlled by Michael Pacult and his wife. Effective July, 2004 the Fund began to sell direct on a best efforts basis with no commissions. 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. 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. The accompanying notes are an integral part of the financial statements F-11 ATLAS FUTURES FUND, LIMITED PARTNERSHIP (A Delaware Limited Partnership) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2004, 2003 AND 2002 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Income Taxes - The Fund is not required to provide a provision for income taxes. Income tax attributes that arise from its operations are passed directly to the individual partners. The Fund may be subject to state and local taxes in jurisdictions in which it operates. Statement of Cash Flows - For purposes of the Statement of Cash Flows, the Fund considers cash, money market funds and U.S. Treasury Bills to be cash equivalents. Net cash provided by operating activities include no cash payments for interest or income taxes for the years ended December 31, 2004, 2003 and 2002. 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. The accompanying notes are an integral part of the financial statements F-12 ATLAS FUTURES FUND, LIMITED PARTNERSHIP (A Delaware Limited Partnership) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2004, 2003 AND 2002 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 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 - A limited partner may request any or all of his investment be redeemed at the net asset value as of the end of a month. The written request must be received by the general partner no less than ten business days prior to a month end. Redemptions will generally be paid within twenty days of the effective month end. However, in various circumstances due to liquidity, etc. the general partner may be unable to comply with the request on a timely basis. Effective January 1, 2004, redemption penalties are no longer charged. 4. FEES Prior to January 1, 2004, the Fund was charged the following fees: A monthly management fee of 2% (annual rate) of the Fund's net assets allocated to the Fund's Corporate General Partner. A quarterly incentive fee of 25% of "new net profits" was paid to each CTA. "New net profits" includes all income earned by each CTA and expense allocated to his activity. In the event that trading produced a loss, no incentive fees would be paid and all losses would be carried over to the following months until profits from trading exceeded the loss. It was possible for one CTA to be paid an incentive fee during a quarter of a year when the Fund experienced a loss. The accompanying notes are an integral part of the financial statements F-13 ATLAS FUTURES FUND, LIMITED PARTNERSHIP (A Delaware Limited Partnership) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2004, 2003 AND 2002 4. FEES - CONTINUED The Fund paid 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 paid the costs to clear the trades to the futures commission merchant and all PIT Brokerage costs which included 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 to the Fund's Corporate General Partner. 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 net 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. Effective June 1, 2004, the monthly commission was changed from 7% to 11% and the continuing service fee was eliminated. Effective February 1, 2005, the Fund added a new CTA, NuWave. Nu Wave's quarterly incentive fee is 20% of "new net profits" and also receives a monthly management fee of 2% (annualized) on the first $2,000,000 in allocated equity and 1% on the allocated equity above $2,000,000. NuWave was allocated $2,000,000 in equity on February 1, 2005. The Corporate General Partner reserves the right to change the fee structure at his sole-discretion. 5. RELATED PARTY TRANSACTIONS The Fund paid the following expenses to related parties during the years ended December 31, 2004, 2003 and 2002: 2004 2003 2002 Commission/Management Fee - Ashley $777,455 $210,478 $111,992 Commission - Futures $ - $396,020 $439,971 Continuing Service Fee - Futures $131,711 $ 22,466 $ - The accompanying notes are an integral part of the financial statements F-14 ATLAS FUTURES FUND, LIMITED PARTNERSHIP (A Delaware Limited Partnership) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2004, 2003 AND 2002 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 December 31, 2004 and 2003 was $531,057 and $1,956,823, respectively, which equals approximately 5% and 25% of Net Asset Value, respectively. The Fund also purchases United States Treasury bills as a form of margin. At December 31, 2004 and 2003, $11,749,189 and $4,973,700, respectively, was invested in U.S. Treasury Bills, which approximates 99% and 65% of Net Asset Value, respectively. The accompanying notes are an integral part of the financial statements F-15 ATLAS FUTURES FUND, LIMITED PARTNERSHIP (A Delaware Limited Partnership) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2004, 2003 AND 2002 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 approximately $36,661,000 and $38,469,000 on long positions at December 31, 2004 and 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 net unrealized (losses) gains on open commodity futures contracts at December 31, 2004, and 2003 were ($97,995) and $694,260, respectively. Open contracts generally mature within three months and as of December 31, 2004, the latest maturity date for open futures contracts is September, 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. The accompanying notes are an integral part of the financial statements F-16 ATLAS FUTURES FUND, LIMITED PARTNERSHIP (A Delaware Limited Partnership) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2004, 2003 AND 2002 7. FINANCIAL HIGHLIGHTS Year to Date 2004 2003 2002 2001 2000 Performance per Unit (3) Net unit value, beginning of year $1,750.45 $1,311.50 $1,181.89 $1,253.33 $ 954.37 Net realized and unrealized gains/losses on commodity transactions 1,573.93 735.70 298.13 (12.68) 447.29 Investment and other income 27.57 18.43 18.32 38.70 47.33 Expenses (1) (620.54) (315.18) (186.84) (97.46) (195.66) Net increase (decrease) for the year 980.96 438.95 129.61 (71.44) 298.96 Net unit value, end of year $2,731.41 $1,750.45 $1,311.50 $1,181.89 $1,253.33 Net assets, end of period (000) $ 11,791 $ 7,690 $ 6,200 $ 6,102 $ 5,558 Total return 56.04% 33.47% 10.97% (5.97)% 31.33% Ratio to average net assets Investment and other income 1.23% 1.10% 1.48% 3.36% 4.37% Expenses (2) (17.91)% (10.33)% (7.62)% (3.09)% (13.71)% (1) Includes brokerage commissions (2) Excludes brokerage commissions (3) 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. The accompanying notes are an integral part of the financial statements F-17 -----END PRIVACY-ENHANCED MESSAGE-----