0000865549-11-000002.txt : 20110516
0000865549-11-000002.hdr.sgml : 20110516
20110516172810
ACCESSION NUMBER: 0000865549-11-000002
CONFORMED SUBMISSION TYPE: 10-Q
PUBLIC DOCUMENT COUNT: 3
CONFORMED PERIOD OF REPORT: 20110331
FILED AS OF DATE: 20110516
DATE AS OF CHANGE: 20110516
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: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-Q
SEC ACT: 1934 Act
SEC FILE NUMBER: 333-53111
FILM NUMBER: 11848849
BUSINESS ADDRESS:
STREET 1: 505 BROOKFIELD DRIVE
CITY: DOVER
STATE: DE
ZIP: 19901
BUSINESS PHONE: 800-331-1532
MAIL ADDRESS:
STREET 1: 505 BROOKFIELD DRIVE
CITY: DOVER
STATE: DE
ZIP: 19901
10-Q
1
atlas10q033111.txt
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2011
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 333-53111
Atlas Futures Fund, Limited Partnership
(Exact name of registrant as specified in its charter)
Delaware 51-0380494
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
505 Brookfield Drive, Dover, DE 19901
(Address of principal executive offices, including zip code)
(800) 331-1532
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (S.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files).
Yes [ ] No [ ] Not Applicable.
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
definition of large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [X] Smaller Reporting Company[ ]
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Act).
Yes [ ] No [X]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) f the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [ ] No [ ] Not Applicable.
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. Not Applicable.
Part 1 - FINANCIAL INFORMATION
Item 1. Financial Statements.
The reviewed financial statements for the Registrant for the nine months ended
March 31, 2011 are attached hereto at page F-1 and made a part hereof.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
General Information
During the past quarter and in the future, Registrant, did and will, pursuant
to the terms of the Limited Partnership Agreement, engage in the business of
speculative and high risk trading of commodity futures and options markets
through the services of one or more commodity trading advisors it selects.
Description of Fund Business
The Fund grants the commodity trading advisors a power of attorney that is
terminable at the will of either party to trade the equity assigned by the
Fund. Clarke Capital Management, Inc. was granted a power of attorney by the
Fund and served as a trading advisor for the Fund since the Fund's inception.
From February 1, 2005 through the end of September, 2007, the Fund also
engaged NuWave Investment Corp as a trading advisor. Clarke traded
approximately 80% of the Fund's equity made available for trading and NuWave
traded the other 20%. During the last week of September, 2007, the General
Partner advised NuWave that, effective October 1, 2007, it would terminate the
Advisory Agreement and Power of Attorney and requested that NuWave liquidate
all positions it had open on behalf of the Fund as of the last business day of
September, 2007, or as soon as practical thereafter. The management and
incentive fees paid to NuWave are, accordingly, no longer paid. Clarke
Capital Management, Inc. remains the sole trading advisor to the Fund. The
commodity trading advisors selected to trade for the Fund have discretion to
select the trades and do not disclose the methods they use to make those
determinations in their disclosure documents or to the Fund or general
partner. There is no promise or expectation of a fixed return to the
partners. The partners must look solely to trading profits for a return their
investment as the interest income is expected to be less than the fixed
expenses to operate the Fund.
Assets
The general partner has sole authority to determine the percentage of our
assets that will be held on deposit with the futures commission merchant, used
for other investments, and held in bank accounts to pay current obligations.
As of the date of this Report, the partnership maintains approximately 52% of
its assets in a Treasury Direct Account maintained with the United States
Department of the Treasury, and 8% in a cash management fund that invests in
U.S. Treasuries and has high liquidity. Funds maintained with the Department
of Treasury and any cash management fund are held in the name of the
partnership and not commingled with those of any other entity. The general
partner maintains approximately 39% of our net assets with the futures
commission merchant ("FCM") for margin for trading by the trading advisor. As
of February 10, 2011, the FCM was changed from MF Global, Inc. to Vision
Financial Markets LLC. About 1% of the previous month's net assets are
retained in our bank accounts to pay expenses and redemptions. The Fund
assets at the FCM consist of cash used as margin to secure futures (formerly
called commodity) trades entered on its behalf by the commodity trading
advisors it selects. The Fund deposits its cash with one or more FCM's
(brokers) that hold and allocate the cash to use as margin to secure the
trades made. The futures held in the Fund accounts are valued at the market
price on the close of business each day by the FCM that holds the Fund equity
made available for trading.
The Capital accounts of the Partners are immediately responsible for all
profit and losses incurred by trading and payment and accrual of the expenses
of offering partnership interests for sale and the operation of the
partnership. During the periods of this Report, the fixed costs of operation
of the Fund include continuing offering costs, fixed brokerage commissions of
11%, and accounting, legal and other operating fees that must be paid before
the limited partners may earn a profit on their investment.
2
The Fund has not in the past and does not intend in the future to borrow from
third parties. Its trades are entered pursuant to a margin agreement with the
futures commission merchant which obligates the fund to the actual loss, if
any, without reference or limit by the amount of cash posted to secure the
trade. The limited partners are not personally liable for the debts of the
Fund, including any trading losses. On October 29, 2010, the Fund requested
withdrawal of a previously filed post effective amendment and filed an S-1
registration statement to register additional $10,000,000 in Units. Upon
effectiveness, the Units will be offered and sold pursuant to a prospectus
under similar terms to the previous offering; however, there will be
compensation to the affiliated selling agent, Futures Investment Company, of a
1% up front selling commission calculated on the gross subscription amount, in
addition to $2,000 paid by the Fund for legal fees associated with the review
of the offering by FINRA. As of the date of this Report, $14,205,185 has been
sold pursuant to a previous registration statement and, upon redemption by the
holder, will not be resold.
An Investment in the Fund Depends upon Redemption of Fund Units
The Fund Units are not traded and they have no market value. Liquidity of an
investment in the Fund depends upon the credit worthiness of the exchanges,
brokers, and third parties of off exchange traded futures that hold Fund
equity or have a lien against Fund assets for payment of debts incurred.
Those parties must honor their obligations to the Fund for the Fund to be able
to obtain the return of its cash from the futures commission merchant that
holds the Fund account.
The commodity trading advisors select the markets and the off exchange
instruments to be traded. The General Partner selects the futures commission
merchants to hold the Fund assets. Both the commodity trading advisors and
the general partner believe all parties who hold Fund assets or are otherwise
obligated to pay value to the Fund are credit worthy. Margin is an amount to
secure the entry of a trade and is not a limit of the profit or loss to be
gained from the trade. The general partner currently allocates nearly 100% of
the Fund equity to be used as margin to enter trades. Although it is
customary for the commodity trading advisors to use 40% or less of the equity
available as margin, there is no limit imposed by the Fund upon the amount of
equity the advisors may commit to margin. It is possible for the Fund to
suffer losses in excess of the margin it posts to secure the trades made.
To have the purchase price or appreciation, if any, of the Units paid to them,
partners must use the redemption feature of the Partnership. Distributions,
although possible in the sole discretion of the general partner, are not
expected to be made. There is no current market for the Units sold, none is
expected to develop and the limited partnership agreement limits the ability
of a partner to transfer the Units.
Results of Operations
The Fund is subject to ongoing offering and operating expenses; however,
profits or losses are primarily generated by the commodity trading advisor by
methods that are proprietary to it. These results are not to be construed as
an expectation of similar profits in the future.
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
through 2010 reflect the absorption of these costs by the Fund. See the
Registration Statements, incorporated by reference herein, for an explanation
of the operation of the Fund.
The Limited Partnership Agreement grants solely to the General Partner the
right to select the trading advisor or advisors and to otherwise manage the
operation of the Fund. Clarke Capital Management, Inc. was responsible for
the selection of all trades during the three year period covered by this
report. Most of the operational profits and losses have been due to the
trading activity of Clarke, though interest income also contributes, and there
was an additional trading advisor allocated approximately 20% of trading
equity from February 1, 2005 to October 1, 2007. As evidenced by the increase
in net unit value since inception, from $1,000 in October, 1999 to $3,678.21
as of March 31, 2011, trading has been successful overall. Past performance
is not necessarily indicative of future results, however.
The gain (loss) in registrant's net asset value per unit during the three
months ended March 31, 2011 and March 31, 2010 was (13.07)% and (8.57)%,
respectively. The difference over the periods was primarily due to
3
operational losses which, for the 2011 period, were (12.97)% versus (8.45)% in
the 2010 period (expressed as a percentage of the periods' beginning net asset
value). Operational losses due to trading, similarly calculated, were
(10.07)% for the 2011 period and (5.67)% for the 2010 period.
Net asset value per unit is calculated to eliminate the effects of capital
contributions and redemptions; however, fixed costs will become a greater
percentage of overall net assets when net assets decline. Net assets over the
two periods were down from beginning to end of the period, and were (16.50)%
in the 2011 period versus (15.86)% in the 2010 period. The similarity in net
assets change despite the difference in net asset value per unit change is
largely due to the difference in redemptions, which were about three times
greater in the 2010 period than the 2011 period. Capital contributions were
negligible in 2010 and non-existent in 2011.
The Fund is charged fixed brokerage commissions of 11%, which are calculated
on the Fund's total trading equity as of the beginning of each month and,
therefore, vary according to monthly trading performance, subscriptions and
redemptions. The same factors that contribute to increases or decreases in
average net assets, therefore, contribute to changes in brokerage commissions
paid.
The above described performance was primarily due to the trading of Clarke,
which trades for the Fund via its proprietary methods. The general trading
strategy of all of Clarke's programs is trend following. Most, but not all,
trade initiations and liquidations are in the direction of the trend. All
Clarke programs employ techniques that utilize a number of trading models
acting independently. Each model generates its own entry and exit signals and
trades both sides of the market (long and short). With minor differences only
for long or short positions, a particular model trades all markets with the
same rules and parameters, regardless of the program. Clarke reserves the
right to make adjustments in the exact entry or exit price a model uses for
any program or pool, or to delay entry or exit on any order, in order to
attempt to reduce the impact of slippage from large block orders being
executed at the same or similar prices. The models vary from intermediate
through long-term to very long-term in timeframe focus and testing has been
done in order to select only those models that have good performance
characteristics across a wide range of conditions and complementary
performance with all other models in a program.
Clarke trades its Alpha program for the Fund, which trades approximately 37
domestic and international commodity interests utilizing twelve models with a
medium-to-long time frame, risk control and profit-taking characteristics.
Twelve of these commodity interests are either long or short interest rate
contracts, reflecting interest rates in Europe, the US, Canada, Japan and
Australia. The balance of commodity interests traded include currencies,
grains, softs, metals, meats and fuels, both foreign and domestic. These
models have been selected for their ability as a group to provide a high
return for the amount of exposure or time that a position is held. It should
be noted that there will be times when there is significant correlation
between markets within a market sector or between market sectors, possibly in
an adverse direction to positions held in the client's account. This factor
alone, although there are others, will lead to periods of extreme volatility
and possibly very large drawdowns in Fund equity. The Alpha program will, at
times, have a significantly higher margin to equity ratio than other Clarke
programs, and at other times will trade very lightly due to the selectivity of
its models.
If a large price movement occurs in a sector that a trading advisor trades,
such as agriculture, financials, metals or softs, it does not necessarily mean
that the trading advisor will engage in trades that capture such moves.
Accordingly, market movements and conditions are not necessarily correlated
with Fund performance. As always, past performance is not necessarily
indicative of future results. Notwithstanding these caveats, commencing with
the second quarter of 2011, Clarke will provide to the Fund an analysis of
sector by sector trades, which the Fund will summarize in subsequent quarterly
and annual reports filed with the SEC.
Pursuant to the Trading Advisory Agreement, the Fund pays a quarterly
incentive fee to Clarke on new net profits, or those profits achieved on a per
unit basis above the advisor's previous high water mark. See Note 5 to the
financial statements herein for the current incentive fees. Because Clarke
has not recouped prior trading losses, it was not been paid an incentive fee
in the two three month periods covered by this report.
Operating expenses include accounting, audit, tax, and legal fees, as well as
regulatory costs and printing and postage costs related to reports sent to
limited partners. Operating expenses during the two three month periods ended
March 31, 2011 and March 31, 2010 were 0.34% and 0.19% of beginning net asset
value, respectively. The increase over the comparative periods is primarily
due to higher compliance costs.
4
The balance of the Fund's income that does not derive from the trading
activity of Clarke comes from interest income. However, short term interest
rates were so low as to produce negligible interest income for the Fund over
the two three months periods ended March 31, 2011 and March 31, 2010.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The business of the Fund is speculative and involves a high degree of risk of
loss. See the Fund's Registration Statement and prospectus contained therein,
incorporated herein, for a full description of the risks attendant to Fund
business.
Item 4T. Controls and Procedures
Disclosure Controls and Procedures
The Registrant has adopted procedures in connection with the operation of its
business including, but not limited to, the review of account statements sent
to the General Partner before the open of business each day that disclose the
positions held overnight in the Fund accounts, the margin to hold those
positions, and the amount of profit or loss on each position, and the net
balance of equity available in each account. The Fund brokerage account
statements and financial books and records accounts are prepared by an
independent CPA Firm and then are reviewed each quarter and audited each year
by a different independent CPA firm.
The General Partner of the Fund, under the actions of its sole principal,
Michael Pacult, has evaluated the effectiveness of the design and operation of
its disclosure controls and procedures (as defined in the Securities Exchange
Act of 1934 Rules 13a-15(e) or 15d-15(e)) with respect to the Fund as of the
end of the period covered by this Report. Based on their evaluation, Mr.
Pacult has concluded that these disclosure controls and procedures are
effective.
Changes in Internal Control over Financial Reporting
There were no changes in the General Partner's internal control over financial
reporting during the quarter ended March 31, 2011 that have materially
affected, or are reasonably likely to materially affect, internal control over
financial reporting applicable to the Fund.
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
There have been no legal proceedings against the Fund, its General Partner,
the CTA, the IB, the current FCM, Vision Financial Markets LLC, or any of
their Affiliates, directors or officers.
Prior to February 10, 2011, the trades selected by the Fund's trading advisor
were cleared through MF Global Inc. ("MFG") as FCM. MFG, (MFG was formerly
known as Man Financial Inc. ("MFI") until the change of name to MFG was
effected on July 19, 2007), has had the following described reportable events,
none of which, in the opinion of the FCM, were material to the performance of
the FCM on behalf of the Fund's account:
In May 2006, MFI was sued by the Receiver for Philadelphia Alternate Asset
Fund ("PAAF") and associated entities for common law negligence, common law
fraud, violations of the Commodity Exchange Act and RICO violations (the
"Litigation"). In December 2007, without admitting any liability of any party
to the Litigation to any other party to the Litigation, the Litigation was
settled with MFI agreeing to pay $69 million, plus $6 million of legal
expenses, to the Receiver, in exchange for releases from all applicable
parties and the dismissal of the Litigation with prejudice. In a related
action, MFI settled a CFTC administrative proceeding (In the Matter of MF
Global, f/k/a Man Financial Inc., and Thomas Gilmartin) brought by the CFTC
against MFI and one of its employees for failure to supervise and
recordkeeping violations. Without admitting or denying the allegations, MFI
agreed to pay a civil monetary penalty of $2 million and accept a cease and
desist order.
5
On February 20, 2007, MFI settled a CFTC administrative proceeding (In the
Matter of Steven M. Camp and Man Financial Inc., CFTC Docket No. 07-04) in
which MFI was alleged to have failed to supervise one of its former associated
persons ("AP") who was charged with fraudulently soliciting customers to open
accounts at MFI. The CFTC alleged that the former AP misrepresented the
profitability of a web-based trading system and of a purported trading system
to be traded by a commodity trading advisor. Without admitting or denying the
allegation, MFI agreed to pay restitution to customers amounting to
$196,900.44 and a civil monetary penalty of $120,000. MFI also agreed to a
cease and desist order and to strengthen its supervisory system for overseeing
sales solicitations by employees in connection with accounts to be traded
under letters of direction in favor of third party system providers.
On March 6, 2008, and thereafter, 5 virtually identical proposed class action
securities suits were filed against MFG's parent, MF Global Ltd. (now, MF
Global Holdings Ltd.) ("MF Global"), certain of its officers and directors,
and Man Group plc. These suits have now been consolidated into a single
action. The complaints seek to hold defendants liable under SS 11, 12 and 15
of the Securities Act of 1933 by alleging that the registration statement and
prospectus issued in connection with MF Global's initial public offering in
July 2007 were materially false and misleading to the extent that
representations were made regarding MF Global's risk management policies,
procedures and systems. The allegations are based upon MF Global's disclosure
of $141.5 million in trading losses incurred in a single day by an AP in his
personal trading account ("Trading Incident"), which losses MFG was
responsible to pay as an exchange clearing member. The consolidated cases
have been dismissed on a motion to dismiss by defendants. Plaintiffs have
appealed. In January 2011, the parties reached a preliminary agreement to
settle whereby MF Global will contribute $2.5 million to an overall settlement
amount of $90 million. The preliminary settlement will be subject to Court
review and final approval.
On December 17, 2009, MFG settled a CFTC administrative proceeding in
connection with the Trading Incident and three other matters without admitting
or denying any allegations and accepting a charge of failing to supervise (In
the Matter of MF Global Inc. CFTC Docket No. 10-03). The three additional
matters that were settled involved allegations that MF Global failed to
implement procedures to ensure proper transmissions of price information for
certain options that were sent to a customer, specifically that the price
indications reflected a consensus taken on [a particular] time and date and
were derived from different sources in the market place; failed to diligently
supervise the proper and accurate preparation of trading cards and failed to
maintain appropriate written authorization to conduct trades for a certain
customer. Under the Commission's order, MFG agreed to pay an aggregate civil
monetary penalty of $10 million (which it had previously accrued) and agreed
to a cease and desist order. In addition, MFG agreed to specific undertakings
related to its supervisory practices and procedures and MFG agreed that it
would engage an independent outside firm to review and assess the
implementation of the undertakings and certain recommendations that MFG
previously accepted. At the same time, MFG, without admitting or denying the
allegations made by the CME, settled a CME disciplinary action relating to the
Trading Incident by paying a fine of $495,000.
On August 28, 2009, Bank of Montreal ("BMO") instituted suit against MFG and
its former broker, Joseph Saab ("Saab") (as well as a firm named Optionable,
Inc. and five of its principals or employees), in the United States District
Court for the Southern District of New York. In its complaint, BMO asserts
various claims against all defendants for their alleged misrepresentation of
price quotes to BMO's Market Risk Department ("MRD") as independent quotes
when defendants knew, or should have known, that David Lee ("Lee"), BMO's
trader, created the quotes which, in circular fashion, were passed on to BMO
through MFG's broker, thereby enabling Lee substantially to overvalue his book
at BMO. BMO further alleges that MFG and Saab knew that Lee was fraudulently
misrepresenting prices in his options natural gas book and aided and abetted
his ability to do so by MFG's actions in sending price indications to the BMO
MRD, and substantially assisted Lee's breach of his fiduciary duties to BMO as
its employee. The Complaint seeks to hold all defendants jointly and
severally liable and, although it does not specify an exact damage claim, it
claims CAD 680.0 million (approximately $635.9 million) as a pre-tax loss for
BMO in its natural gas trading, claims that it would not have paid brokerage
commissions to MFG (and Optionable), would not have continued Lee and his
supervisor as employees at substantial salaries and bonuses, and would not
have incurred substantial legal costs and expenses to deal with the Lee
mispricing. MFG has made a motion to dismiss, which was denied.
In or about October 2003, MFI uncovered an apparent fraudulent scheme
conducted by third parties unrelated to MFI that may have victimized a number
of its clients. CCPM, a German Introducing Broker, introduced to MFI all the
clients that may have been victimized. An agent of CCPM, Michael Woertche
(and his asssociates), apparently engaged in a Ponzi scheme in which allegedly
unauthorized transfers from and trading in accounts maintained at MFI were
utilized to siphon money out of these accounts, on some occasions shortly
after they were established. MFI was involved in two arbitration proceedings
relating to these CCPM introduced accounts. The first
6
arbitration involved claims made by two claimants before a NFA panel. The
second arbitration involves claims made by four claimants before a FINRA
panel. The claims in both arbitrations are based on allegations that MFI and
an employee assisted CCPM in engaging in, or recklessly or negligently failed
to prevent, unauthorized transfers from, and trading in, accounts maintained
by MFI. Damages sought in the NFA arbitration proceeding were approximately
$1,700,000 in compensatory damages, unspecified punitive damages and
attorney's fees in addition to the rescission of certain deposit agreements.
The NFA arbitration was settled for $200,000 as to one claimant and a net of
$240,000 as to the second claimant during fiscal 2008. Damages sought in the
FINRA proceeding were approximately $6,000,000 in compensatory damages and
$12,000,000 in punitive damages. During the year ended March 31, 2009, the
FINRA arbitration was settled for an aggregate of $800,000.
The Liquidation Trustee ("Trustee") for Sentinel Management Group, Inc.
("Sentinel") sued MFG in June 2009 on the theory that MFG's withdrawal of
$50.2 million within 90 days of the filing of Sentinel's bankruptcy petition
on August 17, 2007 is a voidable preference under Section 547 of the
Bankruptcy Code and, therefore, recoverable by the Trustee, along with
interest and costs.
In May 2009, investors in a venture set up by Nicholas Cosmo ("Cosmo") sued
Bank of America and MFG, among others, in the United States District Court for
the Eastern District of New York, alleging that MFG, among others, aided and
abetted Cosmo and related entities in a Ponzi scheme in which investors lost
$400 million. MFG has made a motion to dismiss which was granted and cannot be
appealed by plaintiffs until the conclusion of the case against the Bank of
America.
In December 2010, the Court-appointed receiver for Joseph Forte, L.P., ("Forte
Partnership") filed a complaint in the United States District Court for the
Eastern District of Pennsylvania, alleging that MFG was negligent in the
handling of a futures account the Forte Partnership maintained at MFG. The
Complaint alleges that as a result of MFG's negligence, Joseph Forte ("Forte")
was able to operate a Ponzi scheme in which he misappropriated at least
$25,000,000 from limited partners in the Forte Partnership. The Complaint
seeks damages "in excess of $150,000." MFG has not been served with the
complaint.
In the late spring of 2009, MFG was sued in Oklahoma State Court by customers
who were substantial investors with Mark Trimble ("Trimble") and/or
Phidippides Capital Management ("Phidippides"). Trimble and Phidippides may
have been engaged in a Ponzi scheme. Plaintiffs allege that MFG "materially
aided and abetted" Trimble's and Phidippides' violations of the anti-fraud
provisions of the Oklahoma securities laws and they are seeking damages "in
excess of" $10,000 each. MFG made a motion to dismiss which was granted by the
court. Plaintiffs have appealed.
In the late spring of 2009, MFG was sued in Oklahoma State Court by customers
who were substantial investors with Mark Trimble ("Trimble") and/or
Phidippides Capital Management ("Phidippides"). Trimble and Phidippides may
have been engaged in a Ponzi scheme. Plaintiffs allege that MFG "materially
aided and abetted" Trimble's and Phidippides' violations of the anti-fraud
provisions of the Oklahoma securities laws and they are seeking damages "in
excess of" $10,000 each. MFG made a motion to dismiss which was granted by the
court. Plaintiffs have appealed.
On August 4, 2010, MFG was added as a defendant to a consolidated class action
complaint filed against Moore Capital Management and related entities in the
United States District Court for the Southern District of New York alleging
claims of manipulation and aiding and abetting manipulation, in violation of
the Commodity Exchange Act. Specifically, the complaint alleges that, between
October 25, 2007 and June 6, 2008, Moore Capital directed MFG, as its
executing broker, to enter "large" market on close orders (at or near the time
of the close) for platinum and palladium futures contracts, which allegedly
caused artificially inflated prices. On August 10, 2010, MFG was added as a
defendant to a related class action complaint filed against the Moore-related
entities on behalf of a class of plaintiffs who traded the physical platinum
and palladium in the relevant time frame, which alleges price fixing under the
Sherman Act and violations of the civil Racketeer Influenced and Corrupt
Organizations Act. On September 30, 2010 plaintiffs
7
filed an amended consolidated class action complaint that includes all of the
allegations and claims identified above on behalf of subclasses of traders of
futures contracts of platinum and palladium and physical platinum and
palladium. Plaintiffs' claimed damages have not been quantified. This matter
is in its earliest stages.
MFG and an affiliate, MF Global Market Services LLC ("Market Services"), are
currently involved in litigation with a former customer of Market Services,
Morgan Fuel & Heating Co., Inc. ("Morgan Fuel") and its principals, Anthony
Bottini, Jr., Brian Bottini and Mark Bottini (the "Bottinis"). The litigations
arise out of trading losses incurred by Morgan Fuel in over-the-counter
derivative swap transactions, which were unconditionally guaranteed by the
Bottinis.
On October 6, 2008, Market Services commenced an arbitration against the
Bottinis to recover $8.3 million, which is the amount of the debt owed to
Market Services by Morgan Fuel after the liquidation of the swap transactions.
MF Global Market Services LLC v. Anthony Bottini, Jr., Brian Bottini and Mark
Bottini, FINRA No. 08-03673. Each of the Bottinis executed a guaranty in favor
of Market Services personally and unconditionally guaranteeing payment of the
obligations of Morgan Fuel upon written demand by Market Services. Market
Services asserted a claim of breach of contract based upon the Bottinis'
failure to honor the guarantees.
On October 21, 2008, Morgan Fuel commenced a separate arbitration proceeding
before FINRA against MFG and Market Services. Morgan Fuel claims that MFG and
Market Services caused Morgan Fuel to incur approximately $14.2 million in
trading losses. Morgan Fuel v. MFG and Market Services, FINRA No. 08-03879.
Morgan Fuel seeks recovery of $5.9 million in margin payments that it
allegedly made to Market Services and a declaration that it has no
responsibility to pay Market Services for the remaining $8.3 million in
trading losses because Market Services should not have allowed Morgan Fuel to
enter into, or maintain, the swap transactions. On MFG's motion, the Supreme
Court of the State of New York determined that there was no agreement to
arbitrate such claims. Morgan Fuel appealed and all appeals were denied.
The Bottinis also asserted a third-party claim against Morgan Fuel, which in
turn asserted a fourth-party claim against MFG, Market Services and Steven
Bellino (an MFG employee) in the arbitration proceeding commenced by Market
Services. The Supreme Court of the State of New York denied a motion to stay
the fourth party claim but the denial to stay was reversed. Morgan Fuel filed
a motion to appeal with the New York Court of Appeals which was denied.
On December 12, 2008, MFG settled three CME Group disciplinary actions
involving allegations that on a number of occasions in 2006 and 2007, MFG
employees engaged in impermissible pre-execution communications in connection
with trades executed on the e-cbot electronic trading platform, withheld
customer orders that were executable in the market for the purpose of
soliciting, and brokering contra-orders and crossed orders on the e-cbot
trading platform without allowing for the minimum required exposure period
between the entry of the orders. MFG was also charged with failing to properly
supervise its employees in connection with these trades. Without admitting or
denying any wrongdoing, MFG consented to an order of a CME Business Conduct
Committee Panel which found that MFG violated legacy CBOT Rule 504.00 and
Regulations 480.10 and 9B.13 and 9B.13(c) and ordered MFG to pay a $400,000
fine, cease and desist from similar conduct and, in consultation with CME
Market regulation Staff, enhance its training practices and supervisory
procedures regarding electronic trading practices.
MFG acts only as clearing broker for the Fund's futures accounts and as such
is paid commissions for executing and clearing trades. MFG has not passed
upon the adequacy or accuracy of the Fund's prospectus or this report and will
not act in any supervisory capacity with respect to the CPO or the CTA, as the
case may be, nor participate in the management of the CPO or of the Fund or of
the CTA. Therefore, investors should not rely on MFG in deciding whether or
not to participate in the Fund.
The Fund is not aware of any threatened or potential claims or legal
proceedings to which the Fund is a party or to which any of its assets are
subject. During the time when MFG acted as the Fund's clearing broker
(through February 10, 2011), it represented to the General Partner that that
none of the events it had reported would interfere with its performance as the
clearing broker for the Fund's account.
8
Item 1A. Risk Factors
There have been no material changes from risk factors as previously disclosed
in the Fund's 2010 Form 10-K. The risks of the Fund are (1) described fully
in its prospectus filed with its registration statement on Form S-1, which is
incorporated herein by reference (2) described in summary in Part I of this
Form 10-Q, which is incorporated herein by reference.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None
Item 3. Defaults Upon Senior Securities
None
Item 4. (Removed and Reserved)
Not Applicable
Item 5. Other Information
(a) None
(b) None
Item 6. Exhibits
31.1 Certification of Principal Executive Officer and Principal Financial
Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Form 10-Q for the period
ended March 31, 2011, to be signed on its behalf by the undersigned, thereunto
duly authorized.
Registrant: Atlas Futures Fund, Limited Partnership
By Ashley Capital Management, Incorporated
Its General Partner
By: /s/ Michael Pacult
Mr. Michael Pacult
Sole Director, Sole Shareholder,
President, and Treasurer of the General Partner
Date: May 13, 2011
9
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
Quarterly Report
March 31, 2011
GENERAL PARTNER:
Ashley Capital Management, Inc.
% Corporate Systems, Inc.
505 Brookfield Drive
Dover, Kent County, Delaware 19901
Index to the Financial Statements
Page
Report of Independent Registered Public Accounting Firm F-2
Statements of Assets and Liabilities F-3
Condensed Schedule of Investments - March 31, 2011 F-4
Condensed Schedule of Investments - December 31, 2010 F-5
Statements of Operations F-6
Statements of Changes in Net Assets F-7
Statements of Cash Flows F-8
Notes to the Financial Statements F-9 - F-15
Affirmation of the Commodity Pool Operator F-16
F-1
Patke & Associates, Ltd.
Certified Public Accountants
Report of Independent Registered Public Accounting Firm
To the Partners of
Atlas Futures Fund, Limited Partnership
Dover, Delaware
We have reviewed the accompanying statements of assets and liabilities of
Atlas Futures Fund, Limited Partnership, including the condensed schedule of
investments, as of March 31, 2011, and the related statements of operations,
changes in net assets and cash flows for the three months ended March 31, 2011
and 2010. These financial statements are the responsibility of the
Partnership's management.
We conducted our review in accordance with the standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with the
standards of the Public Company Accounting Oversight Board (United States),
the objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to such interim financial statements for them to be in
conformity with accounting principles generally accepted in the United States
of America.
We have previously audited, in accordance with the auditing standards of the
Public Accounting Oversight Board (United States), the statement of assets and
liabilities of Atlas Futures Fund, Limited Partnership, including the
condensed schedule of investments, as of December 31, 2010, and the related
statements of operations, changes in net assets and cash flows for the year
then ended (not presented herein) and in our report dated February 24, 2011,
we expressed an unqualified opinion on those financial statements. In our
opinion, the information set forth in the accompanying statement of assets and
liabilities as of December 31, 2010 is fairly stated, in all material
respects, in relation to the statement of assets and liabilities from which it
has been derived.
/s/ Patke & Associates, Ltd.
Patke & Associates, Ltd.
Lincolnshire, Illinois
May 10, 2011
300 Village Green Drive, Suite 210 * Lincolnshire, Illinois 60069
*(847)913-5400
F-2
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Statements of Assets and Liabilities
March 31, December 31,
2011 2010
Assets (A Review)
Investments
Equity in broker trading accounts
Cash and cash equivalents at broker $3,473,676 $4,513,906
Net unrealized gain on open futures contracts 312,557 647,664
Total equity in broker trading accounts 3,786,233 5,161,570
U.S. Treasury Bills (cost $4,986,097 and $4,998,420) 4,989,071 4,999,789
Cash 79,399 196,788
Money market fund 801,090 1,001,067
Prepaid expenses 3,093 4,124
Total assets 9,658,886 11,363,338
Liabilities
Partner redemptions payable 224,775 64,059
Accrued commissions payable to related parties 22,416 36,291
Other accrued liabilities 19,891 15,052
Total liabilities 267,082 115,402
Net assets $9,391,804 $11,247,936
Analysis of net assets
Limited partners $9,391,804 $11,247,936
General partners - -
Net assets (equivalent to $3,678.21 and
$4,231.14 per unit) $9,391,804 $11,247,936
Partnership units outstanding
Limited partners units outstanding 2,553.36 2,658.37
General partners units outstanding - -
Total partnership units outstanding 2,553.36 2,658.37
The accompanying notes are an integral part of the financial statements
F-3
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Condensed Schedule of Investments
March 31, 2011
(A Review)
Face Value Fair Value Percent of Net Assets
United States Treasury bills
United States Treasury bills, matures
January 2012 (cost $4,986,097) $5,000,000 $4,989,071 53.12%
Futures contracts
Futures contracts held long
Agriculture $16,080 0.17%
Metals 156,240 1.66%
Energy 117,390 1.25%
Currency 89,813 0.96%
Total futures contracts held long 379,523 4.04%
Futures contracts held short
Agriculture (66,966) (0.71%)
Total futures contracts held short (66,966) (0.71%)
Net unrealized gain on open futures contracts $312,557 3.33%
The accompanying notes are an integral part of the financial statements
F-4
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Condensed Schedule of Investments
December 31, 2010
Face Value Fair Value Percent of Net Assets
United States Treasury bills
United States Treasury bills, matures
January 2011 (cost $4,998,420) $5,000,000 $4,999,789 44.45%
Futures contracts
Futures contracts held long
Agriculture $279,103 2.48%
Metals 900 0.01%
Energy 90,000 0.80%
Currency 233,955 2.08%
Total futures contracts held long 603,958 5.37%
Futures contracts held short
Currency 43,706 0.39%
Total futures contracts held short 43,706 0.39%
Net unrealized gain on open futures
contracts $647,664 5.76%
The accompanying notes are an integral part of the financial statements
F-5
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Statements of Operations
(A Review)
Three Months Ended March 31,
2011 2010
Investment income
Interest income $3,207 $1,936
Total investment income 3,207 1,936
Expenses
Commission expense 291,665 382,455
Professional fees 33,500 23,500
Other operating expenses 4,885 4,799
Total expenses 330,050 410,754
Net investment (loss) (326,843) (408,818)
Realized and unrealized gain (loss) from investments
and foreign currency
Net realized (loss) from:
Investments (794,940) (838,179)
Foreign currency translation (2,402) (9,066)
Net realized (loss) from investments and foreign
currency transactions (797,342) (847,245)
Net unrealized appreciation (depreciation) on investments (335,107) 12,987
Net realized and unrealized (loss) from investments
and foreign currency (1,132,449) (834,258)
Net (decrease) in net assets resulting from operations $(1,459,292) $(1,243,076)
Net (loss) per unit (for a single unit outstanding during
the entire period)
Limited partnership unit $(552.93) $(349.81)
General partnership unit $- $-
The accompanying notes are an integral part of the financial statements
F-6
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Statements of Changes in Net Assets
(A Review)
Three Months Ended March 31,
2011 2010
Units Net Assets Units Net Assets
Increase (decrease) in net assets from operations
Net investment (loss) $(326,843) $(408,818)
Net realized (loss) from investments and foreign currency
transactions (797,342) (847,245)
Net unrealized appreciation (depreciation) on investments (335,107) 12,987
Net (decrease) in net assets resulting from operations (1,459,292) (1,243,076)
Capital contributions from limited partners - - 10.44 40,361
Redemptions by limited partners (105.01) (396,840) (297.87) (1,130,647)
Total (decrease) in net assets (105.01) (1,856,132) (287.43) (2,333,362)
Net assets at the beginning of the period 2,658.37 11,247,936 3,602.89 14,711,478
Net assets at the end of the period 2,553.36 $9,391,804 3,315.46 $12,378,116
The accompanying notes are an integral part of the financial statements
F-7
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Statements of Cash Flows
(A Review)
Three Months Ended March 31,
2011 2010
Cash Flows from Operating Activities
Net (decrease) in net assets resulting from operations $(1,459,292) $(1,243,076)
Adjustments to reconcile net increase (decrease) in net assets from
operations to net cash provided by (used in) operating activities:
Changes in operating assets and liabilities:
Decrease in prepaid expenses 1,031 2,849
Unrealized (appreciation) depreciation on investments 335,107 (12,987)
(Decrease) in accrued commissions payable to related parties (13,875) (28,154)
Increase (decrease) in other accrued liabilities 4,839 (10,094)
Net cash (used in) operating activities (1,132,190) (1,291,462)
Cash Flows from Financing Activities
Proceeds from sale of units, net of sales commissions - 40,361
Partner redemptions (236,124) (879,338)
Net cash (used in) financing activities (236,124) (838,977)
Net (decrease) in cash and cash equivalents (1,368,314) (2,130,439)
Cash and cash equivalents, beginning of period 10,711,550 14,979,245
Cash and cash equivalents, end of period $9,343,236 $12,848,806
End of period cash and cash equivalents consist of:
Cash and cash equivalents at broker $3,473,676 $2,123,865
Treasury Bills 4,989,071 9,999,916
Cash 79,399 223,999
Money market fund 801,090 501,026
Total cash and cash equivalents $9,343,236 $12,848,806
The accompanying notes are an integral part of the financial statements
F-8
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Notes to the Financial Statements
March 31, 2011
(A Review)
1. Nature of the Business
Atlas Futures Fund, Limited Partnership (the "Fund") was formed January 12,
1998 under the laws of the state of Delaware. The Fund is engaged in the
speculative trading of futures contracts in commodities, which commenced in
October, 1999. Ashley Capital Management, Inc. (the "Corporate General
Partner") and Michael Pacult (the "Individual General Partner" and
collectively the "General Partner") are the General Partners and the commodity
pool operators ("CPO's") of the Fund. The sole registered commodity trading
advisor ("CTA") of the fund is Clarke Capital Management, Inc. ("Clarke").
Effective July 2004 the Fund began to sell issuer direct on a best efforts
basis with no sales commissions.
The Fund has filed an S-1 registration statement to register an additional
$10,000,000 in Units. Upon effectiveness, the Units will be offered and sold
pursuant to a prospectus under similar terms to the previous offering;
however, there will be compensation to the affiliated selling agent, Futures
Investment Company, of an up front selling commission of 1% calculated on the
gross subscription amount in addition to $2,000 paid by the Fund for legal
fees associated with the review of the offering by the Financial Industry
Regulatory Authority ("FINRA").
The Fund is a registrant with the Securities and Exchange Commission ("SEC")
pursuant to the Securities Act of 1933 ("the Act"). The Fund is subject to the
regulations of the SEC and the reporting requirements of the Securities and
Exchange Act of 1934. The Fund is also subject to the regulations of the
Commodities Futures Trading Commission ("CFTC"), an agency of the U.S.
government which regulates most aspects of the commodity futures industry, the
rules of the National Futures Association and the requirements of various
commodity exchanges where the Fund executes transactions. Additionally, the
Fund is subject to the requirements of futures commission merchants ("FCM's")
and interbank market makers through which the Fund trades and regulated by
commodity exchanges and by exchange markets that may be traded by the advisor.
2. Significant Accounting Policies
Registration Costs - The Fund remains open to new partners, and incurs
costs required to retain the ability to issue new units. Such costs, in
addition to the costs of recurring annual and quarterly filings with
regulatory agencies are expensed as incurred.
Regulation - The Fund is a registrant with the Securities and Exchange
Commission (SEC) pursuant to the Securities and Exchange Act of 1934 (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.
Revenue Recognition - Futures contracts are recorded on the trade date and
are reflected in the statement of assets and liabilities at the difference
between the original contract amount and the market value on the last business
day of the reporting period.
Market value of futures contracts is based upon exchange or other applicable
market best available closing quotations.
Interest income is recognized when it is earned.
Use of Accounting Estimates - The preparation of financial statements in
conformity with accounting principles generally accepted in the United States
of America ("GAAP") requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from these estimates.
F-9
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Notes to the Financial Statements
March 31, 2011
(A Review)
2. Significant Accounting Policies - Continued
Foreign Currency - The accounting records of the Fund are denominated in
U.S. dollars. Assets and liabilities denominated in currencies other than U.S.
dollars are translated into U.S. dollars at the exchange rates in effect on
the valuation date. Commodity futures contract transactions are translated
into U.S. dollars at the exchange rates on the dates of such transactions. On
the accompanying financial statements, effects of changes in exchange rates
from all transactions denominated in currencies other than U.S. dollars are
disclosed separately.
Fair Value Measurement and Disclosures - Accounting Standards Codification
("ASC") 820 establishes a fair value hierarchy which prioritizes the inputs to
valuation techniques used to measure fair value into three broad levels. The
fair value hierarchy gives the highest priority to unadjusted quoted prices in
active markets for identical assets or liabilities (Level 1 measurements) and
the lowest priority to unobservable inputs (Level 3 measurements).
Level 1 inputs are unadjusted quoted prices in active markets for identical
assets or liabilities that the Fund has the ability to access at the
measurement date.
Level 2 inputs are inputs other than quoted prices included in Level 1 that
are observable for the asset or liability, either directly or indirectly.
Level 3 inputs are unobservable inputs for an asset or liability, including
the Fund's own assumptions used in determining the fair value of investments.
Unobservable inputs shall be used to measure fair value to the extent that
observable inputs are not available, thereby allowing for situations in which
there is little, if any, market activity for the asset or liability at the
measurement date. As of and for the period ended March 31, 2011 and year
ended December 31, 2010, the Fund did not have any Level 3 assets or
liabilities.
The following table sets forth by level within the fair value hierarchy the
Fund's investments accounted for at fair value on a recurring basis as of
March 31, 2011 and December 31, 2010.
Fair Value at March 31, 2011
U.S. Treasury Bills $- $4,989,071 $- $4,989,071
Exchange Traded - Futures Contracts 312,557 - - 312,557
Total $312,557 $4,989,071 $- $5,301,628
Fair Value at December 31, 2010
Description Level 1 Level 2 Level 3 Total
U.S. Treasury Bills $- $4,999,789 $- $4,999,789
Exchange Traded - Futures Contracts 647,664 - - 647,664
Total $647,664 $4,999,789 $- $5,647,453
Income Taxes - The Fund prepares calendar year U.S. Federal and applicable
state information tax returns and reports to the partners their allocable
shares of the Fund's income, expenses and trading gains or losses. No
provision for income taxes has been made in the accompanying financial
statements as each partner is individually responsible for reporting income or
loss based on such partner's respective share of the Fund's income and
expenses as reported for income tax purposes.
Management has continued to evaluate the application of ASC 740, "Income
Taxes" to the Fund, and has determined that ASC 740 does not have a material
impact on the Fund's financial statements. The Fund files federal and state
tax returns. The 2007 through 2010 tax years generally remain subject to
examination by the U.S. federal and most state tax authorities.
Statement of Cash Flows - For purposes of the Statement of Cash Flows, the
Fund considers money market funds and U.S. Treasury Bills to be cash
equivalents. Net cash provided by operating activities includes no cash
payments for interest or income taxes for the three months ended March 31,
2011 or March 31, 2010.
Reclassifications - Certain prior year amounts were reclassified to conform
to current year presentation.
F-10
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Notes to the Financial Statements
March 31, 2011
(A Review)
3. General Partner Duties
The responsibilities of the General Partner, in addition to directing the
trading and investment activity of the Fund, include executing and filing all
necessary legal documents, statements and certificates of the Fund, retaining
independent public accountants to audit the Fund, employing attorneys to
represent the Fund, reviewing the brokerage commission rates to determine
reasonableness, maintaining the tax status of the Fund as a limited
partnership, maintaining a current list of names, addresses and numbers of
units owned by each limited partner and taking such other actions as deemed
necessary or desirable to manage the business of the Fund.
If the daily net unit value of the Fund falls to less than 50% of the
highest value earned through trading at the close of any month, then the
General Partner will immediately suspend all trading, provide all limited
partners with notice of the reduction and give all limited partners the
opportunity, for fifteen days after such notice, to redeem partnership
interests. No trading will commence until after the lapse of the fifteen day
period.
4. Limited Partnership Agreement
The Limited Partnership Agreement provides, among other things, that:
Capital Account - A capital account shall be established for each partner.
The initial balance of each partner's capital account shall be the amount of
the initial contributions to the Fund.
Monthly Allocations - Any increase or decrease in the Fund's net asset value
as of the end of a month shall be credited or charged to the capital account
of each partner in the ratio that the balance of each account bears to the
total balance of all accounts.
Any distribution from profits or partners' capital will be made solely at
the discretion of the General Partner.
Federal Income Tax Allocations - As of the end of each fiscal year, the
Fund's realized capital gain or loss and ordinary income or loss shall be
allocated among the partners, after having given effect to the fees and
expenses of the Fund.
Subscriptions - Investors must submit subscription agreements and funds at
least five business days prior to month end. Subscriptions must be accepted or
rejected by the General Partner within five business days. The investor also
has five business days to withdraw his subscription. Funds are deposited into
an interest bearing subscription account and will be transferred to the Fund's
account on the first business day of the month after the subscription is
accepted. Interest earned on the subscription funds will accrue to the account
of the investor.
Redemptions - After holding the investment for a minimum of twelve months, a
limited partner may request any or all of his investment be redeemed at the
net asset value as of the end of a month. The written request must be received
by the General Partner no less than ten days prior to a month end. Redemptions
will generally be paid within twenty days of the effective month end. However,
in various circumstances due to liquidity, etc. the General Partner may be
unable to comply with the request on a timely basis.
5. Fees
The Fund charged the following fees:
The Corporate General Partner is entitled to a fixed annual brokerage
commission of 11% of assets on deposit with the FCM for domestic trades plus
actual commissions charged by the FCM for trades made on foreign exchanges and
forward markets, if any. It receives 4% of the commissions and the Fund pays
the introducing broker the remaining 7%.
A quarterly incentive fee of 25% of "new net profits" is paid to Clarke.
There were no incentive fees for the three months ended March 31, 2011 and
2010.
The General Partner reserves the right to change the fee structure at its
sole discretion.
F-11
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Notes to the Financial Statements
March 31, 2011
(A Review)
6. Related Party Transactions
The Fund pays commissions to the Corporate General Partner and Futures
Investment Company, the introducing broker. These related parties are 100%
and 50%, respectively, owned by Michael Pacult. Related party commissions
were as follows:
Commissions included in expenses:
For The Three Months Ended March 31,
2011 2010
Corporate General Partner $105,474 $138,782
Futures Investment Company 168,320 230,288
Total related party expenses $273,794 $369,070
Commissions included in accrued expenses:
March 31, December 31,
2011 2010
Corporate General Partner $14,420 $6,173
Futures Investment Company 7,996 30,118
Total accrued commissions payable to
related parties $22,416 $36,291
In the normal course of business, the Fund has provided general
indemnifications to the General Partner, its CTA and others when they act, in
good faith, in the best interests of the Fund. The Fund is unable to develop
an estimate for future payments resulting from hypothetical claims, but
expects the risk of having to make any payments under these indemnifications
to be remote.
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Notes to the Financial Statements
March 31, 2011
(A Review)
7. Trading Activities and Related Risks
The Fund is engaged in speculative trading of U.S. and foreign futures
contracts. The Fund is exposed to both market risk, the risk arising from
changes in market value of the contracts, and credit risk, the risk of failure
by another party to perform according to the terms of a contract.
A certain portion of cash in trading accounts are pledged as collateral for
futures trading on margin. Additional deposits may be necessary for any loss
on contract value. The Commodity Exchange Act requires a broker to segregate
all customer transactions and assets from such broker's proprietary
activities.
Each U.S. commodity exchange with the approval of the CFTC establishes
minimum margin requirements for each traded contract. The FCM may increase
the margin requirements above these minimums for any or all contracts. The
Fund maintains cash and cash equivalents to satisfy these margin requirements.
Cash and cash equivalents at March 31, 2011 and December 31, 2010 were
$9,343,236 and $10,711,550, respectively. Based upon the types and amounts of
contracts traded and the amount of liquid assets of the Fund, the General
Partner believes there is minimal risk of not being able to meet its margin
requirement.
Trading in futures contracts involves entering into contractual commitments
to purchase or sell a particular futures contracts at a specified date and
price. The gross or face amount of the contract, which is typically many times
that of the Fund's net assets being traded, significantly exceeds the Fund's
future cash requirements since the Fund intends to close out its open
positions prior to settlement. As a result, the Fund is generally subject only
to the risk of loss arising from the change in the value of the contracts. The
market risk is limited to the gross or face amount of the contracts held of
approximately $19,289,972 and $47,695,198 on long positions at March 31, 2011
and December 31, 2010, respectively. However, when the Fund enters into a
contractual commitment to sell commodities, it must make delivery of the
underlying commodity at the contract price and then repurchase the contract at
prevailing market prices or settle in cash. Since the repurchase price to
which a commodity can rise is unlimited, entering into commitments to sell
commodities exposes the Fund to unlimited potential risk.
Market risk is influenced by a wide variety of factors including government
programs and policies, political and economic events, the level and volatility
of interest rates, foreign currency exchange rates, the diversification
effects among the derivative instruments the Fund holds and the liquidity and
inherent volatility of the markets in which the Fund trades.
The net unrealized gains on open futures contracts at March 31, 2011 and
December 31, 2010 were $312,557 and $647,664 respectively.
Open contracts generally mature within three months of March 31, 2011. The
latest maturity for open futures contracts is in June 2011. However the Fund
intends to close all contracts prior to maturity.
F-12
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Notes to the Financial Statements
March 31, 2011
(A Review)
7. Trading Activities and Related Risks - Continued
The following tables disclose the fair values of derivative and hedging
activities in the Statements of Assets and Liabilities and the Statements of
Operations.
Derivative Instruments
Statement of Assets and Liabilities
Asset Derivatives Liability Derivatives
at March 31, 2011 at March 31, 2011
Statement of Assets and Liabilities Location Fair Value Fair Value Net
Derivatives not designated as hedge Commodity contracts Net unrealized gain (loss) on open futures
instruments under ASC 815 contracts $399,153 $(86,596) $312,557
Asset Derivatives Liability Derivatives
at December 31, at December 31,
Statement of Assets and Liabilities Location 2010 Fair Value 2010 Fair Value Net
Derivatives not designated as hedge Commodity contracts Net unrealized gain (loss) on open $651,883 $(4,219) $647,664
instruments under ASC 815 futures contracts
Derivative Instruments
Statement of Operations
Three Three
months ended months ended
Line Item in the Statement of Operations March 31, 2011 March 31, 2010
Derivatives not designated as hedge Commodity contracts Net realized (loss) from investments
instruments under ASC 815 and foreign currency transactions $(797,342) $(847,245)
Derivatives not designated as hedge
instruments under ASC 815 Commodity contracts Net unrealized appreciation from investments $(335,107) $12,987
Credit risk is the possibility that a loss may occur due to the failure of a
counter party to perform according to the terms of a contract.
The Fund has a substantial portion of its assets on deposit with financial
institutions. In the event of a financial institution's insolvency, recovery
of Fund deposits may be limited to account insurance or other protection
afforded deposits.
The Fund has established procedures to actively monitor market risk and
minimize credit risk although there can be no assurance that it will succeed.
The basic market risk control procedures consist of continuously monitoring
open positions, diversification of the portfolio and maintenance of a
desirable margin-to-equity ratio. The Fund seeks to minimize credit risk
primarily by depositing and maintaining its assets at financial institutions
and brokers which it believes to be creditworthy.
8. Financial Instruments with Off-Balance Sheet Credit and Market Risk
All financial instruments are subject to market risk, the risk that future
changes in market conditions may make an instrument less valuable or more
onerous. As the instruments are recognized at fair market value, those
changes directly affect reported income.
Included in the definition of financial instruments are securities,
restricted securities and derivative financial instruments. Theoretically,
the investments owned by the Fund directly are exposed to a market risk (loss)
equal to the notional value of the financial instruments purchased and
substantial liability on certain financial instruments purchased short.
Generally, financial instruments can be closed. However, if the market is not
liquid, it could prevent the timely close-out of any unfavorable positions or
require the Fund to hold those positions to maturity, regardless of the
changes in their value or the trading advisor's investment strategies.
Credit risk represents the accounting loss that would be recognized at the
reporting date if counterparties failed to perform as contracted.
Concentrations of credit risk (whether on or off balance sheet) that arise
from financial instruments exist for groups of counterparties when they have
similar economic characteristics that would cause their ability to meet
contractual obligations to be similarly affected by changes in economic or
other conditions.
9. Derivative Financial Instruments and Fair Value of Financial Instruments
A derivative financial instrument is a financial agreement whose value is
linked to, or derived from, the performance of an underlying asset. The
underlying asset can be currencies, commodities, interest rates, stocks, or
any combination. Changes in the underlying asset indirectly affect the value
of the derivative. As the instruments are recognized at fair value, those
changes directly affect reported income.
All investment holdings are recorded in the statement of assets and
liabilities at their net asset value (fair value) at the reporting date.
Financial instruments (including derivatives) used for trading purposes are
recorded in the statement of assets and liabilities at fair value at the
reporting date. Realized and unrealized changes in fair values are recognized
in net investment gain (loss) in the period in which the changes occur.
Interest income arising from trading instruments is included in the statement
of operations as part of interest income.
Notional amounts are equivalent to the aggregate face value of the
derivative financial instruments. Notional amounts do not represent the
amounts exchanged by the parties to derivatives and do not measure the Fund's
exposure to credit or market risks. The amounts exchanged are based on the
notional amounts and other terms of the derivatives.
F-13
Atlas Futures Fund, Limited Partnership
(A Delaware Limited Partnership)
Notes to the Financial Statements
March 31, 2011
(A Review)
10. Indemnifications
In the normal course of business, the Fund enters into contracts and
agreements that contain a variety of representations and warranties and which
provide general indemnifications. The Fund's maximum exposure under these
arrangements is unknown, as this would involve future claims that may be made
against the Fund that have not yet occurred. The Fund expects the risk of any
future obligation under these indemnifications to be remote.
11. Financial Highlights
Three Months Ended March 31,
2011 2010
Performance per unit (1)
Net unit value, beginning of the period $4,231.14 $4,083.24
Net realized and unrealized (loss) from
investments and foreign currency (428.91) (233.77)
Investment income 1.22 0.55
Expenses (125.24) (116.59)
Net (decrease) for the period (552.93) (349.81)
Net unit value at the end of the period $3,678.21 $3,733.43
Net assets at the end of the period ($000) $9,392 $12,378
Total return (2) (13.07%) (8.57%)
Number of units outstanding at the end of the period 2,553.36 3,315.46
Supplemental Data:
Ratio to average net assets
Net investment (loss) (3) (12.69%) (12.13%)
Expenses (3) (12.81%) (12.19%)
Total return is calculated based on the change in value of a unit during the
period. An individual partner's total return and ratios may vary from the
above total returns and ratios based on the timing of additions and
redemptions.
(1) Investment income and expenses and net realized and unrealized gains and
losses on futures transactions are calculated based on a single unit
outstanding during the period.
(2) Not annualized.
(3) Annualized.
F-14
Atlas Futures Fund, Limited Partnership
Affirmation of the Commodity Pool Operator
Three Months Ended March 31, 2011 and 2010
*****************************************************************************
To the best of the knowledge and belief of the undersigned, the information
contained in this report is accurate and complete.
/s/ Michael Pacult
Michael Pacult
President, Ashley Capital Management, Inc.
General Partner
Atlas Futures Fund, Limited Partnership
F-15
EX-31
2
atlas10q033111ex31.txt
Exhibit 31.01
CERTIFICATION
I, Michael Pacult do hereby certify that:
1. I have reviewed this quarterly report on Form 10-Q of Atlas Futures Fund,
Limited Partnership;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
(b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the Registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonable likely to
materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.
By: /s/ Michael Pacult
Michael Pacult
President of Ashley Capital Management, Inc.
General Partner of the Registrant
Date: May 13, 2011
EX-32
3
atlas10q033111ex32.txt
EXHIBIT 32.01
CERTIFICATION BY CHIEF EXECUTIVE OFFICER &
CHIEF FINANCIAL OFFICER
I, Michael Pacult, the Chief Executive Officer and Chief Financial Officer of
Ashley Capital Management, Inc. as general partner of Atlas Futures Fund,
L.P., certify that (i) the Form 10-Q for the period ended March 31, 2011 of
Atlas Futures Fund, L.P. fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 and (ii) the information
contained in the Form 10-Q for the period ended March 31, 2011 fairly
presents, in all material respects, the financial condition and results of
operations of Atlas Futures Fund, L.P.
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
By: Ashley Capital Management, Inc., General Partner
By: /s/ Michael Pacult
Michael Pacult
Chief Executive Officer &
Chief Financial Officer
Date: May 13, 2011