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.
The trades for the Fund are selected and placed with the futures commission merchant, i.e., broker, for the account of the Fund by one or more commodity trading advisors ("CTAs") selected by the General Partner of the Fund. Currently, and since the inception of trading, the Fund account has been traded by Clarke Capital Management, Inc. 216 S. Vine Street, Hinsdale, IL 60521 (630) 323-5913 as the sole CTA. The books and records of the CTA are kept and are available for inspection by the Partners at its office. The CTA is not paid a management fee of the equity assigned to it to manage, but is paid an incentive fee of twenty percent (20%) of New Net Profit, as that term is defined in the partnership agreement which governs the operation of the Fund. 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. Reports of the NAV are sent to the Partners within twenty days following the end of each month. The General Partner provides its management services for a management fee which is two percent (2%) per year, payable at the rate of one-sixth of one percent (1/6th of 1%) per month.
Futures Investment Company, ("FIC") an introducing broker, which is Affiliated with the General Partner, provides all clearing costs, including pit brokerage fees, which includes floor brokerage, NFA and exchange fees for three quarters of one percent (3/4%) of the total value of the Fund per month [nine percent (9%) per year] which is on deposit at the futures commission merchant, Refco, Inc. selected by the General Partner and FIC to hold the money and place the trades selected by the CTA for the Fund.
The business of the Partnership is regulated by the Commodity Futures Exchange 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 Partnership, 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.
Item 2.
Item 2. Properties
The Fund maintains up to 3% of its assets on deposit in a commercial bank and the balance at Refco, Inc., One World Financial Center, Tower A, Suite 2300, 200 Liberty Street, New York, NY 10281 or other registered futures commission merchants selected, from time to time, by the General Partner. Refco, Inc. is registered with the National Futures Association pursuant to the Commodity Exchange Act as a futures commission merchant. The trading of commodities is highly speculative and the Registrant is at unlimited risk of loss, including the pledge of all of its assets to Refco, Inc. 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.
Item 3. Legal Proceedings
There have been no legal proceedings against the Fund, its General Partner, the commodity trading advisor or any of their Affiliates, directors or officers. Refco, Inc., the futures commission merchant has had legal proceedings against it in the past five years as follows:
On May 24, 1999, Refco settled a CFTC administrative proceeding (In the Matter of Refco, Inc., CFTC Docket No. 99-12) in which Refco was alleged to have violated certain order taking, recordkeeping, and supervisory rules. The CFTC allegations pertained to the period from January 1995 through December 1995 in which Refco took trading instructions from an independent introducing broker/broker-dealer that had discretionary trading authority over approximately 70 accounts. Without any hearing on the merits and without admitting any of the allegations, Refco settled the proceeding and agreed to payment of a $6 million civil penalty, entry of a cease and desist order, funding of a study on order entry and transmission procedures, and a review of its compliance policies and procedures related to its handling of trades by floor and back office personnel.
Refco management does not believe that either of the foregoing matters are material to the clearing and execution services it renders to 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.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
Shira Del 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.
Item 5. Market for Registrant's Limited Partnership Units
The Partnership 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 market for the 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 Partnership 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 Partnership. 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.
Item 6. Selected Financial Data
Registrant 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 Partnership. See the Registration Statement, incorporated herein by reference, for a complete explanation of the allocation of profits and losses to a partners capital account.
Following is a summary of certain financial information for the Registrant for the period from January 1, 2001 to December 31, 2001. Realized Gain (Loss) From Trading In Futures $ 1,220,627 Change in Unrealized Gains (Losses) on Open Contracts (1,253,256) Interest Income 182,304 Management Fees (220,751) Incentive Fees 0 Net Income (Loss) (322,572) General Partner Capital 0 Limited Partner Capital 6,102,458 Total Partnership Capital 6,102,458 Net Income (Loss) Per Limited Partner Unit (68.51) Net Income (Loss) per General Partner Unit 0 Net Asset Value Per Unit At End of Year 1,176.65
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation.
The initial start-up costs attendant to the sale of partnership interests 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 and 2001 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 Partnership. See the Registration Statement, incorporated by reference herein, for an explanation of the operation of the Partnership.
Item 8.
Item 8. Financial Statements and Supplementary Data.
The Partnership financial statements as of December 31, 2001, were prepared by James Hepner, certified public accountant, 1824 N. Normandy, Chicago, IL 60635 and were audited by Frank L. Sassetti & Co., Certified Public Accountants, 6611 West North Avenue, Oak Park, IL 60302, were sent to each Partner, and are incorporated herein by reference and are provided in this Form 10-K.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
No disagreements with (i) the accountants identified in Item 8 above, (ii) any other experts selected by the Partnership as disclosed in the "Experts" section of the Registration Statement, or (iii) the financial statements have occurred since the formation of the Partnership on January 12, 1998, as amended and fully stated on May 1, 1999, to the date of filing of this Form 10-K.
Part III
Item 10.
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 Ms. Shira Del Pacult. The General Partners are both registered with the National Futures Association as commodity pool operators pursuant to the Commodity Exchange Act, and Ms. Shira Del Pacult, age 45, is the sole shareholder, director, registered principal and executive officer of the corporate General Partner. The background and qualifications of Ms. Pacult are disclosed in the Registration Statement, incorporated herein by reference. Ms. Pacult is also a registered representative with Futures Investment Company, the broker dealer which serves as underwriter of the "best efforts" offering of the Units.
Ms. Pacult is also the principal of the general partner of three other commodity pools: Fremont Fund, Limited Partnership, a publicly offered pool which commenced business in November, 1996 and ceased operations in June, 2000; Auburn Fund, Limited Partnership, a privately placed commodity pool, which commenced business in April, 1997; and Bromwell Financial Fund, Limited Partnership a publicly offered commodity pool which commenced business in July, 2000.
Item 11.
Item 11. Executive Compensation.
The Fund pays its corporate General Partner a management fee of two percent (2%) per year, payable monthly, to serve the Partnership in an executive capacity. All operating costs related to management of the Partnership, including compensation to Ms. Pacult, are paid from that management fee.
Ms. Pacult also earns compensation from the sale of the Units through FIC, the Affiliated selling broker and from the fixed commissions paid by the Partnership to FIC as the Affiliated introducing broker. The amounts paid to the affiliated companies which results in compensation to Ms. Pacult are disclosed in the Registration Statement, which is incorporated herein by reference.
Item 12.
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 partnership:
Name Percent Ownership Albert W. Overhauser 7.56% Harry Briscoe 8.02%
(b) As of December 31, 2001, the General Partner owned no Units of Limited Partnership interests.
(c) The Limited Partnership Agreement governs the terms upon which control of the Partnership may change. No change in ownership of the Units will, alone, determine the location of control. A vote of the limited partners is required to change the control from the General Partner to another general partner. Control of the management of the Partnership may never vest in one or more Limited Partners. There were no changes in control of the Partnership from inception of operations to the date of the filing of this Form 10-K.
Item 13.
Item 13. Certain Relationships and Related Transactions.
The General Partner has sole discretion over the selection of trading advisors. FIC, the Affiliated introducing broker is paid a fixed commission for trades and, therefore, the General Partners have a potential conflict in the selection of a trading advisor who makes few trades rather than produces profits for the Partnership. This conflict and others are fully disclosed in the Registration Statement, which is incorporated herein by reference.
Part IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) 1. Financial Statements
See Index to Financial Statements for the period ended December 31, 2001.
The Financial Statements begin on page.
(b) 2. Financial Schedules
Not applicable, not required, or included in the Financial Statements.
(c) 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.
(d) Reports on Form 8-K: none
(e) Exhibits filed herewith: none
(f) Financial Schedules filed herewith: not applicable, not required or included with the financial statements
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, 2001, 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: March 29, 2002 By: /s/ Shira Del Pacult Ms. Shira Del Pacult Sole Director, Sole Shareholder President and Treasurer
Date: March 29, 2002 By: /s/ Shira Del Pacult Ms. Shira Del Pacult, General Partner
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ATLAS FUTURES FUND, LIMITED PARTNERSHIP (A Delaware Limited Partnership)
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
(With Auditors' Report Thereon)
GENERAL PARTNER: Ashley Capital Management, Inc. % Corporate Systems, Inc. 101 North Fairfield Drive Dover, Kent County, Delaware 19901
To The Partners Atlas Futures Fund, Limited Partnership Dover, Kent County, Delaware
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying balance sheet, including the schedule of investments, of ATLAS FUTURES FUND, LIMITED PARTNERSHIP as of December 31, 2001 and the balance sheet, without the schedule of investments as of December 31, 2000, and the related statements of operations, partners' equity and cash flows for the years ended December 31, 2001, 2000 and 1999. 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 auditing standards generally accepted in the 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, 2001 and 2000, and the results of its operations and its cash flows for the years ended December 31, 2001, 2000 and 1999, in conformity with accounting principles generally accepted in the United States.
Accountants: Frank L. Sassetti & Co. Certified Public Accountants
Date: February 16, 2002 By: /s/ Frank L. Sassetti & Co. Frank L. Sassetti & Co. Certified Public Accountants
ATLAS FUTURES FUND, LIMITED PARTNERSHIP (A Delaware Limited Partnership)
BALANCE SHEETS
DECEMBER 31, 2001 AND 2000
ASSETS
2001 2000
Cash (Note 7) $ 32,224 $ 560 United States Treasury Obligations (Note 6) 3,185,359 3,199,558 Accrued interest receivable 10,229 36,401 Due from limited partners 124,985 142,503 Equity in Commodity Futures Trading Accounts - Cash (Note 6) 2,659,778 1,187,154 Net unrealized gain on open commodity futures contracts (Note 8) 122,096 1,375,352
$6,134,671 $5,941,528
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES Accrued trading commissions payable $ 2,803 $ 14,268 Accrued management fees payable 10,074 7,672 Accrued incentive fees payable 318,405 Accrued accounting and auditing fees payable 8,542 4,193 Sales commissions payable 10,794 11,617 Partner redemption payable 27,591
Total Liabilities 32,213 383,746
PARTNERS' EQUITY Limited partners - (5,186.28 and 4,434.4 units) 6,102,458 5,557,782 General partner - (0 units)
Total Partners' Equity 6,102,458 5,557,782
$6,134,671 $5,941,528
ATLAS FUTURES FUND, LIMITED PARTNERSHIP (A Delaware Limited Partnership)
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
2001 2000 1999
REVENUES Realized gain from trading in futures $1,220,627 $ 356,986 $ 37,130 Realized gain/(loss) on exchange rate fluctuation (5,679) 1,600 8 Changes in unrealized gain/(loss) on open commodity futures contracts (1,253,256) 1,371,772 3,580 Interest income 182,304 162,762 8,709 Redemption penalty 4,947 9,567
Total Revenues 148,943 1,902,687 49,427
EXPENSES Commissions 298,949 171,976 18,953 Management fees 110,751 104,921 8,816 Incentive fees 390,501 6,573 Professional accounting and legal fees 58,991 39,496 4,968 Organization costs 1,200 Other operating and administrative expenses 2,824 5,456 257
Total Expenses 471,515 712,350 40,767
NET INCOME (LOSS) $ (322,572)$1,190,337 $ 8,660
NET INCOME (LOSS)- Limited partnership unit $ (68.51)$ 361.85 $ 6.29
General partnership unit $ $ 97.04 $ 9.04
ATLAS FUTURES FUND, LIMITED PARTNERSHIP (A Delaware Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
LIMITED PARTNERS GENERAL PARTNERS TOTAL PARTNERS' EQUITY Amount Units Amount Units Amount Units
Balance - Dec 31, 1998 $ $ 1,647 2.00 $ 1,647 2.00
Addition - of 1789.234 units 1,651,584 1738.59 47,601 50.64 1,699,185 1,789.23
Net income (loss) 7,665 995 8,660
Balance - Dec 31, 1999 1,659,249 1,738.59 50,243 52.64 1,709,492 1,791.23
Addition - of 3092.404 units 3,138,897 3,092.41 3,138,897 3,092.41
Syndication costs paid (16,864) (16,864)
Withdrawal - of 449.237 units (409,154) (396.60) (54,926) (52.64) (464,080) (449.24)
Net income (loss) 1,185,654 4,683 1,190,337
Balance - Dec 31, 2000 5,557,782 4,434.40 5,557,782 4,434.40
Addition - of 1,233.673 units 1,466,150 1,233.67 1,466,150 1,233.67
Syndication costs paid (24,501) (24,501)
Withdrawal - of 481.785 units (574,401) (481.79) (574,401) (481.79)
Net income (loss) (322,572) (322,572)
Balance - Dec 31, 2001 $6,102,458 5,186.28 $ $6,102,458 5,186.28
December 31, December 31, December 31, 2001 2000 1999
Value per unit $1,176.65 $1,253.33 $954.37
Total partnership units 5,186.28 4,434.40 1,791.23
ATLAS FUTURES FUND, LIMITED PARTNERSHIP (A Delaware Limited Partnership)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
2001 2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (322,572) $1,190,337 $ 8,660 Adjustments to reconcile net income (loss) to net cash used in operating activities - Changes in operating assets and liabilities - Equity in Commodity Futures Trading Accounts (219,368) (1,768,461) (794,045) Accrued interest receivable 26,172 (29,904) (6,497) U.S. Treasury Obligations 14,199 (2,508,449) (691,109) Accrued commissions payable (12,288) 3,864 22,021 Management and incentive fees payable (316,003) 312,002 14,075 Partner redemption payable (27,591) 27,591 Accounting and auditing fees payable 4,349 2,716 1,477
Net Cash Used In Operating Activities (853,102) (2,770,304) (1,445,418)
CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from sale of units, net of sales commissions 1,483,668 3,189,059 1,587,749 Syndication and registration costs (24,501) (16,864) (80,941) Partner cash redemptions (574,401) (464,080)
Net Cash Provided By Financing Activities 884,766 2,708,115 1,506,808
NET INCREASE (DECREASE) IN CASH 31,664 (62,189) 61,390
CASH Beginning of period 560 62,749 1,359
End of period $ 32,224 $ 560 $ 62,749
ATLAS FUTURES FUND, LIMITED PARTNERSHIP (A Delaware Limited Partnership)
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2001
Contracts Value
United States Commodity Futures Position Held Long
21 March '02 Mexican Peso $ 4,462
Japanese Commodity Futures Positions Held Long
69 October '02 Gold 25,237 46 October '02 Platinum 45,305 46 November '02 Corn 13,320
Total Japanese Commodity Futures Positions 83,862
Total Commodity Futures Positions Held Long 88,324
U.S. Commodities Futures Positions Sold Short
23 March '02 Corn 5,750 23 March '02 Soybeans 6,325 23 February '02 NY #2 Heating Oil 19,996
Total U.S. Commodity Futures Positions Sold Short 32,071
Australian Commodity Futures Positions Sold Short
23 March '02 90 Day Aussie Bills 1,701
Total Commodity Futures Positions Sold Short 33,772
Net Commodity Futures Positions 122,096
$3,200,000 United States Treasury Bills 3,185,359
Cash in Trading Accounts
United States Markets 2,287,254 Canadian Markets (33,810) Eurodollar Markets 374,838 British Pound Markets 74,787 Japanese Yen Markets (30,400) Australian Dollar Markets (12,891)
Total Cash in Trading Accounts 2,659,778
Total Investments $5,967,233
ATLAS FUTURES FUND, LIMITED PARTNERSHIP (A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001, 2000 AND 1999
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 speculative trading of futures contracts in commodities, which commenced in October, 1999. Ashley Capital Management, Inc. is the General Partner and the commodity pool operator (CPO) of Atlas Futures Fund, Limited Partnership. The commodity trading advisor (CTA) is Clarke Capital Management, who has the authority to trade so much of the Fund's equity as is allocated to it by the General Partner.
Income Taxes - In accordance with the generally accepted method of presenting partnership financial statements, the financial statements do not include assets and liabilities of the partners, including their obligation for income taxes on their distributive shares of the net income of the Fund or their rights to refunds on its net loss.
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. Recurring registration costs, if any, will be charged to expense 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.
Statement of Cash Flows - For purposes of the Statement of Cash Flows, the Fund considers only cash and money market funds to be cash equivalents. Net cash provided by operating activities include no cash payments for interest or income taxes for the years ended December 31, 2001, 2000 and 1999.
ATLAS FUTURES FUND, LIMITED PARTNERSHIP (A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001, 2000 AND 1999
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Reclassification - Certain items in the previously issued 2000 financial statements have been reclassified to conform to current year presentation.
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.
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 Partner.
Allocation of Profit and Loss for Federal Income Tax Purposes - As of the end of each fiscal year, the Partnership's capital gain or loss and ordinary income or loss shall be allocated among the Partners, after having given effect to the fees of the General Partner and the Commodity Trading Advisors and each Partner's share of such items are includable in the Partner's personal income tax return.
ATLAS FUTURES FUND, LIMITED PARTNERSHIP (A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001, 2000 AND 1999
3. THE LIMITED PARTNERSHIP AGREEMENT - CONTINUED
Redemption - No partner may redeem or liquidate any Units until after the lapse of six months from the date of the investment. Thereafter, a Limited Partner may withdraw, subject to certain restrictions, any part or all of his units from the Partnership at the Net Asset Value per Unit on the last day of any month with ten days prior written request to the General Partner. A redemption fee payable to the Partnership of a percentage of the value of the redemption request is charged during the first 24 months of investment pursuant to the following schedule:
4% if such request is received ten days prior to the last trading day of the sixth month after the date of the partner's investment in the Fund
3% if such request is received during the seventh to twelfth month after the investment.
2% if such request is received during the thirteenth to eighteenth month.
1% if such request is received during the nineteenth to twenty-fourth month.
0% thereafter.
4. FEES
The Fund is charged the following fees on a monthly basis since the commencement of trading.
A management fee of 3% (annual rate) of the Fund's net assets allocated to each CTA to trade will be paid to each CTA and 1% of equity to the Fund's General Partner. Effective November 1, 2000, the management fee allocated to each CTA was decreased to 0% (annual rate) and the management fee allocated to the Fund's General Partner was increased to 2% (annual rate) of the Fund's net assets.
An incentive fee of 20% of "new trading profits" will be paid to each CTA. "New trading profits" includes all income earned by each CTA and expense allocated to his activity. In the event that trading produces a loss, no incentive fees will be paid and all losses will be carried over to the following months until profits from trading exceed the loss. It is possible for one CTA to be paid an incentive fee during a quarter of a year when the Fund experienced a loss. Effective November 1, 2000, the incentive fee was increased to 25% of "new trading profits."
ATLAS FUTURES FUND, LIMITED PARTNERSHIP (A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001, 2000 AND 1999
4. FEES - CONTINUED
The Fund will pay fixed commissions of 9% (annual rate) of assets assigned to be traded, payable monthly, to the Introducing Broker affiliated with the General Partner. The Affiliated Introducing Broker will pay the costs to clear the trades to the futures commission merchant and all PIT Brokerage costs which shall include the NFA and exchange fees.
5. REALIZED GAIN ON EXCHANGE RATE FLUCTUATIONS
Certain trades executed by the Fund are denominated in foreign currencies. Gains and losses on these transactions are recorded as futures trading gains or losses at the U. S. dollar equivalent on the date the trade is settled. Exchange rate fluctuation gain or loss is reflected when residual amounts of foreign currencies are reconverted to U. S. dollars.
6. PLEDGED ASSETS
The U. S. Treasury Obligations and Cash in trading accounts are pledged as collateral for commodities trading on margin.
7. CONCENTRATIONS
The Fund maintains its cash balances at a high credit quality financial institution. The balances may, at times, exceed federally insured credit limits.
8. OFF BALANCE SHEET RISK
As discussed in Note 1, the Fund is engaged in speculative trading of futures contracts in commodities. The carrying amounts of the Fund's financial instruments and commodity contracts generally approximate their fair values. Open commodity contracts had gross contract value of $1,770,800 on short positions at December 31, 1999. Open commodity contracts had gross contract value of $81,103,765 on long positions and $7,068,373 on short positions at December 31, 2000. Open commodity contracts had gross contract value of $2,586,066 on long positions and $4,031,682 on short positions at December 31, 2001.
Although the gross contract values of open commodity contracts represent market risk, they do not represent exposure to credit risk, which is limited to the current cost of replacing those contracts in a gain position. The unrealized gain on open commodity futures contracts at December 31, 2001, 2000 and 1999 was $122,096, $1,375,352 and $3,580, respectively.