SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly report pursuant to Section 12(b) or (g) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 2000
Commission File Number 0-17555
EVEREST FUTURES FUND, L.P.
(Exact name of registrant as specified in its charter)
Iowa 42-1318186
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2280 West Tyler Street, Suite 105, Fairfield, Iowa 52556
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (641) 472-5500
Not Applicable
(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
EVEREST FUTURES FUND, L.P.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(1) GENERAL INFORMATION AND SUMMARY
Everest Futures Fund, L.P. (the "Partnership") is a limited partnership
organized on June 20, 1988 under the Iowa Uniform Limited Partnership Act.
The business of the Partnership is the speculative trading of commodity
futures contracts and other commodity interests, including forward contracts
on foreign currencies ("Commodity Interests") either directly or through
investing in other, including subsidiary, partnerships, funds or other
limited liability entities. The Partnership commenced its trading operations
on February 1, 1989 and its general partner is Everest Asset Management, Inc.
(the "General Partner") a Delaware corporation organized in December 1987.
The Partnership was initially organized on June 20, 1988 under the name
Everest Energy Futures Fund, L.P. and its initial business was the
speculative trading of Commodity Interests, with a particular emphasis on the
trading of energy-related commodity interests. However, effective September
12, 1991, the Partnership changed its name to "Everest Futures Fund, L.P."
and at the same time eliminated its energy concentration trading policy. The
Partnership thereafter has traded futures contracts and options on futures
contracts on a diversified portfolio of financial instruments and precious
metals and trades forward contracts on currencies.
The public offering of the Partnership's units of limited partnership
interest ("Units") commenced on or about December 6, 1988. On February 1,
1989, the initial offering period for the Partnership was terminated, by
which time the Net Asset Value of the Partnership was $2,140,315.74.
Beginning February 2, 1989, an extended offering period commenced which
terminated on July 31, 1989, by which time a total of 5,065.681 Units of
Limited Partnership Interest were sold. Effective May 1995 the Partnership
ceased to report as a public offering. On July 1, 1995 the Partnership
recommenced the offering of its Units as a Regulation D, Rule 506 private
placement, which continues to the present with a total of $ 72,863,862 for
41,425.06 Units sold July 1, 1995 through September 30, 2000.
During its operation, the Partnership has had various advisors. In December
1990, John W. Henry & Company, Inc. (JWH) began trading for the Partnership
as one of the Partnership's trading advisors. In May 1994, JWH became the
sole advisor to the Partnership. In March 1996, the Partnership transferred
all of its assets to, and became the sole limited partner of, Everest Futures
Fund II, L.P. (Everest II) and JWH began trading for Everest II. In July
2000, the Partnership redeemed approximately 50% of its assets from Everest
II and allocated them to Trilogy's Barclay Futures Index Program. The
Partnership instructed Trilogy to trade its account using twice the leverage
of Trilogy's unleveraged portfolio to attempt to achieve a return greater
than the return of the Index before fees and expenses. Finally, effective as
of the close of business August 31, 2000, the Partnership liquidated the
balance of its investment in Everest II and opened a trading account directly
with JWH. JWH has used, and continues to use, only its Financial and Metals
Portfolio while trading for Everest II and the Partnership.
The Partnership clears all of its futures and options on futures trades
through Cargill Investor Services, Inc. (CIS), its clearing broker, and all
of its cash trading through CIS Financial Services, Inc. (CISFS), an
affiliate of CIS.
On September 13, 1996 the Securities and Exchange Commission accepted for
filing a Form 10 -- Registration of Securities for the Partnership. Public
reporting of Units of the Partnership sold as a private placement commenced
at that time and has continued to the present.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements are prepared on a combined basis and
include the accounts of Everest Futures Fund, L.P. and Everest Futures Fund
II, L.P. All significant intercompany transactions and balances have been
eliminated in the accompanying combined financial statements.
Cash Equivalents
Cash equivalents represent short-term highly liquid investments with
remaining maturities of 60 days or less and include money market accounts,
securities purchased under agreements to resell, commercial paper, and U.S.
Government and agency obligations with variable rate and demand features that
qualify them as cash equivalents. These cash equivalents, with the exception
of securities purchased under agreement to resell, are stated at amortized
cost, which approximates fair value. Securities purchased under agreements to
resell, with overnight maturity, are collateralized by U.S. Government and
agency obligations, and are carried at the amounts at which the securities
will subsequently be resold plus accrued interest. For purposes of the
statements of cash flows, cash and cash equivalents includes cash and cash
equivalents and cash on deposit with Brokers in the equity in commodity
futures trading accounts.
Fair Value of Financial Instruments
The financial instruments held by the Company are reported in the statement
of financial condition at market or fair value, or at carrying amounts which
approximate fair value, because of their highly liquid nature and short-term
maturity.
Revenue Recognition
Commodity futures contracts, forward contracts, physical commodities, and
related options are recorded on the trade date. All such transactions are
recorded on the identified cost basis and marked to market daily. Unrealized
gains and losses on open contracts reflected in the statements of financial
condition represent the difference between original contract amount and
market value (as determined by exchange settlement prices for futures
contracts and related options and cash dealer prices at a predetermined time
for forward contracts, physical commodities, and their related options) as of
the last business day of the year or as of the last date of the financial
statements.
Foreign Currency Translation
Assets and liabilities denominated in foreign currencies are translated at
the prevailing exchange rates as of the valuation date. Gains and losses on
investment activity are translated at the prevailing exchange rate on the
date of each respective transaction while year-end balances are translated at
the year-end currency rates.
Income Taxes
Income taxes are not provided for by the Partnership because taxable income
of the Partnership is includable in the income tax returns of the partners.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the period. Actual results could differ from those estimates.
Reclassifications
Certain reclassifications of prior year amounts have been made to conform
with the current year presentation.
Minority Interest
Minority interest represents CISI's interest in the Trading Partnership.
(3) THE LIMITED PARTNERSHIP AGREEMENT
The Limited Partners and General Partner share in the profits and losses of
the Partnership in proportion to the number of Units or Unit equivalents held
by each. However, no Limited Partner is liable for obligations of the
Partnership in excess of his or her capital contribution and profits, if any,
and such other amounts as he may be liable for pursuant to the Iowa Uniform
Limited Partnership Act. Distributions of profits are made solely at the
discretion of the General Partner.
Responsibility for managing the Partnership is vested solely in the General
Partner; however, the General Partner has delegated complete trading
authority to an unrelated party (note 4).
The Partnership bears all expenses incurred in connection with its trading
activities, including commodity brokerage commissions and fees payable to the
trading advisor, as well as legal, accounting, auditing, printing, mailing
and extraordinary expenses.
Limited Partners may cause any or all of their Units to be redeemed as of the
end of any month at net asset value on fifteen days' prior written notice.
The Partnership will be dissolved at December 31, 2020, or upon the
occurrence of certain events, as specified in the Limited Partnership
Agreement.
(4) OTHER AGREEMENTS
John W. Henry & Company, Inc. was the Partnership's sole trading advisor from
May 1, 1994 through July 31, 2000. Effective August 1, 2000, approximately
50% of the Partnership's assets were allocated to Trilogy Capital Management,
LLC's Barclay Futures Index Program. As of September 1, 2000, JWH managed
approximately 45% of the Partnership's assets, and Trilogy managed
approximately 55%.
JWH receives a monthly management fee equal to 0.33% (4% annually) of the
Partnership's month-end allocated assets, as defined, and a quarterly
incentive fee of 15% (20% prior to April 1, 1995) of the Partnership's
trading profits allocable to its trading exclusive of interest income on
allocated assets, as defined. The incentive fee is retained by JWH even
though trading losses may occur in subsequent quarters; however, no further
incentive fees are payable until any such trading losses (other than losses
attributable to redeemed units and losses attributable to assets reallocated
to another advisor) are recouped by the Partnership. Effective October 1,
2000, JWH revised its fee structure. JWH will receive a monthly management
fee of 0.167% (2%) annually and an incentive fee of 20%.
Trilogy receives a monthly management fee of 0.0375% (approximately 0.45%
annually) of the Partnership's allocated assets (0.45% annually.) Since the
Partnership has directed Trilogy to trade its account at 2:1 leverage, the
management fee represents 0.90% of the actual cash in the Trilogy account.
The Clearing Broker charges the Trading Partnership monthly brokerage
commissions equal to 0.50% (1.0833% prior to April 1, 1995) of the Trading
Partnership's beginning-of-month net asset value, as defined. Effective
November 1, 1995, the General Partner receives a management fee from the
Clearing Broker of approximately 83% of the brokerage commission charged by
the Clearing Broker. Prior to November 1, 1995, no management fee was
received by the General Partner.
A portion of assets are deposited with a commercial bank and invested under
the direction of Horizon Cash Management, Inc. ("Horizon"). Horizon will
receive a monthly cash management fee equal to 1/12 of .25% (.25% annually)
of the average daily assets under management if the accrued monthly interest
income earned on the Partnership's assets managed by Horizon exceeds the 91-
day U.S. Treasury bill rate.
(5) FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
The Partnership was formed to speculatively trade commodity interests. The
Partnership's commodity interest transactions and related cash balances are
on deposit with the Clearing Broker or CIS Financial Services, Inc. ("CISFS"
or "Forward Currency Broker" and collectively, the "Brokers") at all times.
In the event that volatility of trading of other customers of the Brokers
impaired the ability of the Brokers to satisfy the obligations to the
Partnership, the Partnership would be exposed to off-balance sheet risk.
Such risk is defined in Statement of Financial Accounting Standards No. 105
(SFAS 105) as a credit risk. To mitigate this risk, the Clearing Broker,
pursuant to the mandates of the Commodity Exchange Act, is required to
maintain funds deposited by customers, relating to futures contracts in
regulated commodities, in separate bank accounts which are designated as
segregated customers' accounts. In addition, the Clearing Broker has set
aside funds deposited by customers relating to foreign futures and options in
separate bank accounts which are designated as customer secured accounts.
Lastly, the Clearing Broker is subject to the Securities and Exchange
Commission's Uniform Net Capital Rule which requires the maintenance of
minimum net capital at least equal to 4% of the funds required to be
segregated pursuant to the Commodity Exchange Act. The Clearing Broker and
Forward Currency Broker both have controls in place to make certain that all
customers maintain adequate margin deposits for the positions which they
maintain at each Broker. Such procedures should protect the Partnership from
the off-balance sheet risk as mentioned earlier. Neither the Clearing Broker
or the Forward Currency Broker engage in proprietary trading and thus have no
direct market exposure.
The counterparty of the Partnership for futures contracts traded in the
United States and most non-U.S. exchanges on which the fund trades is the
Clearing House associated with the exchange. In general, Clearing Houses are
backed by the membership and will act in the event of nonperformance by one
of its members or one of the members' customers and as such should
significantly reduce this credit risk. In the cases where the Partnership
trades on exchanges on which the Clearing House is not backed by the
membership, the sole recourse of the Partnership for nonperformance will be
the Clearing House. The Forward Currency Broker is the counterparty for the
Partnership's forward transactions. CISFS policies require that they execute
transactions only with top rated financial institutions with assets in excess
of $100,000,000.
The Partnership holds futures and futures options positions on the various
exchanges throughout the world and forward positions with CISFS which
transacts with various top rated banks throughout the world. As defined by
SFAS 105, futures and foreign currency contracts are classified as financial
instruments. SFAS 105 requires that the Partnership disclose the market risk
of loss from all of its financial instruments. Market risk is defined as the
possibility that future changes in market prices may make a financial
instrument less valuable or more onerous. If the markets should move against
all of the futures positions held by the Partnership at the same time, and if
the markets moved such that the trading advisor was unable to offset the
futures positions of the Partnership, the Partnership could lose all of its
assets and the partners would realize a 100% loss. The Partnership has a
contract with one trading advisor who makes the trading decisions on behalf
of the Partnership. That trading advisor trades a program which is
diversified among the various futures contracts in the financials and metals
group on exchanges both in the U.S. and outside the U.S. Such
diversification should greatly reduce this market risk.
The following chart discloses the dollar amount of the unrealized gain or
loss on open contracts related to Commodity Interests for the Partnership as
of
September 30, 2000:
COMMODITY GROUP UNREALIZED GAIN/(LOSS)
FOREIGN CURRENCIES (1,131,768)
STOCK INDICES 4,231
METALS (25,967)
INTEREST RATE INSTRUMENTS (109,325)
ENERGIES (523,490)
AGRICULTURAL (306,474)
____________
TOTAL (2,092,793)
The range of maturity dates of these exchange traded open contracts is
October of 2000 to September of 2001. The average open trade equity for the
period of January, 2000 to September 30, 2000 was $1,725,237.
The margin requirement at September 30, 2000 was $ 4,314,039. To meet this
requirement, the Partnership had on deposit with the Clearing Broker
$1,907,449 in segregated funds, $ 1,860,200 in secured funds and
$ 1,927,825 in non-regulated funds.
Cash was on deposit with the Clearing Broker in each time period of the
financial statements that exceeded the cash requirements of the Commodity
Interests of the Partnership.
(6) FINANCIAL STATEMENT PREPARATION
The interim financial statements are unaudited but reflect all adjustments
that are, in the opinion of management, necessary for a fair statement of the
results for the interim periods presented. These adjustments consist
primarily of normal recurring accruals. These interim financial statements
should be read in conjunction with the audited financial statements of the
Partnership for the year ended December 31, 1999, as filed with the
Securities and Exchange Commission on March 28, 2000, as part of its Annual
Report on Form 10-K.
The results of operations for interim periods are not necessarily indicative
of the operating results to be expected for the fiscal year.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation
Fiscal Quarter ended September 30, 2000
The Partnership recorded a loss of $1,597,603 or $58.14 per Unit for the
third quarter of 2000. This compares to a loss of $6,815,439 or $284.10 per
Unit for the third quarter of 1999.
At September 30, 2000, John W. Henry & Company, Inc. (JWH) was managing
approximately 45% of the Partnership's assets using its Financial and Metals
Portfolio. Trilogy Capital Management, LLC (Trilogy) was managing
approximately 55% of the Partnership's assets.
In July, the Partnership had a loss of l.94%. JWH had a small gain in
currency trading which was not enough to offset losses of less than 1% each
in global interest rates, metals and foreign stock indices. The Partnership
had a loss of $726,174 or $26.26 per Unit in July.
In August, the Partnership had a gain of 2.07%. This was the first month
that the assets were allocated to both JWH and Trilogy's Barclay Futures
Index Program (BFIP). JWH had a loss of 0.56% from metals positions and a
stock index position in the Nikkei 225. JWH had gains in currencies as the
Euro reached three month lows versus the U.S. dollar and dragged the Swiss
franc and British pound with it. The BFIP had a gain of 4.45% for the month.
The long positions in the energy sector were responsible for the largest
gains but the Index had gains in seven of its nine sectors. The Index is
composed of the following subindexes: Financials Index, Meats Index,
Energies Index, Currencies Index, Softs Index, Grains Index and Metals Index.
The Partnership had a gain of $809,507 or $28.50 per Unit in August.
In September, the Partnership had a loss of 4.31% as both JWH and the BFIP
had losing months. JWH was -6.42% from losses in interest rates and
currencies. Both sectors had profits in the first few weeks of the month.
However, European Central Bank intervention to boost the Euro drove both
sectors to unprofitability for the month. Reverberations from the currency
markets were felt in the interest rate markets. Positions in non-U.S. stock
indices were essentially flat and metals positions were slightly profitable.
The BFIP had a smaller loss of 2.57% as long positions in energy and softs
(particularly sugar) had price corrections toward the end of the month.
Profits had been posted in both energy and softs in prior months. The
Partnership recorded a loss of $1,680,935 or $60.38 per Unit in September.
During the quarter, additional Units sold consisted of 1,407.72 limited
partnership units; and 0 general partnership units. Additional Units sold
during the quarter represented a total of $1,924,229. Investors redeemed a
total of 1,943.48 Units during the quarter. At the end of the quarter there
were 27,122.19
Units outstanding (including 198.49 Units owned by the General Partner).
During the fiscal quarter ended September 30, 2000, the Partnership had no
material credit exposure to a counter-party which is a foreign commodities
exchange or to any counter-party dealing in over the counter contracts which
was material.
During the quarter ended September 30, 2000, the General Partner of the
Partnership added Janet A. Mullen as Vice President.
Fiscal Quarter ended September 30, 1999
The Partnership recorded a loss of $6,815,439 or $284.10 per Unit for the
third quarter of 1999. This compares to a gain of $14,024,089 or $557.71 per
Unit for the third quarter of 1998.
In the first month of the quarter the Partnership posted a loss resulting
primarily from excessive volatility in the currency markets. The Partnership
posted a small loss during the second month of the quarter due in part to
long positions held in global interest rates and in the Japanese Nikkei stock
index. During the third month of the quarter, the Partnership surrendered
profits due to rapidly escalating gold prices and the Partnership's short
gold positions. Overall, the third quarter of fiscal 1999 ended negatively
for the Partnership accounts managed by JWH. At September 30, 1999, John W.
Henry & Company, Inc. was managing 100% of the Partnership's assets using its
Financial and Metals Portfolio.
The Partnership posted a loss for July, largely due to excessive volatility
in the currency markets. After gaining value versus the world's currencies
for several weeks, the U.S. dollar ran out of steam by the mid-month. As a
result, the Partnership posted losses from long Dollar positions against the
Euro, Swiss franc and Japanese yen. The decline of the Dollar continued
through month end, which prompted short Dollar positions to be established.
Losses in the currency markets wiped out smaller gains that came from global
interest rates and metals. Short positions in the 10-year and 30-year U.S.
bonds provided profits as the long bond yield rose above 6.1%. The
Partnership's strongest gains in this sector came from Europe where interest
rates continued to rise. Profits were earned from short positions in the
Euro Bund, Euro Bobl and U.K. Gilt. Likewise, the Partnership continued to
profit from its short positions in the gold market as the price of gold fell
to its lowest level in 20 years; $253.70 per troy ounce. All in all, the
Partnership posted a loss of $1,303,556 or $54.31 per Unit in July.
In August, the Trust posted another small loss. Gains for the Partnership
were the result of a weaker U.S. dollar, versus the Yen and Euro
specifically. Lower gold prices also provided gains. Unfortunately, these
gains were offset by losses in global interest rates and the Japanese Nikkei
stock index. Long positions in the Japanese stock index (the Nikkei) that
have been profitable for the entire year were closed out and small losses
were recorded during August.
Currencies provided some resurrection in the form of a stronger Yen and Euro
versus the U.S. dollar. Since mid-July, the Partnership held profitable long
positions in the Yen and Euro looking for these currencies to strengthen
against the Dollar. Gold prices again plummeted through a 20-year low to
$253.00 per troy ounce. Notwithstanding these gains, the Partnership posted
a loss of $1,839,009 or $77.17 per Unit in August.
The Partnership had a difficult time in the markets during September. Losses
were primarily attributable to our short gold position, as the price rose
over $50 per ounce. The price of gold escalated rapidly after 15 European
central banks announced that they wouldn't sell or lease additional gold for
the next five years.
Unfortunately, gains in the Japanese Yen were offset by losses in gold, as
well as short positions in the U.S. and Japanese bond markets. Currencies
provided small gains as the Japanese yen strengthened against the U.S. dollar
for the second consecutive month. In addition, long yen positions were
profitable relative to the European currencies. Notwithstanding these gains,
the Partnership posted a loss of $3,672,875 or $152.62 per Unit in September.
During the quarter, additional Units sold consisted of 508.75 limited
partnership units; there were no general partnership units sold during the
quarter. Additional Units sold during the quarter represented a total of
$1,078,097.46. Investors redeemed a total of 746.38 Units during the
quarter. At the end of the quarter there were 23,566.17.80 Units outstanding
(including 198.49 Units owned by the General Partner).
As of September 30, 1999, the Partnership had a balance of $5,255,084 on
deposit with CISFS. CISFS is an affiliate of the Clearing Broker and is the
broker for the Partnership on forwards contracts in foreign currencies.
Forward currency contracts are defined as over-the-counter and require
separate disclosure should the total exposure to any entity dealing in over-
the-counter products exceed 10%. The balance on deposit at CISFS represents
10.63% of the total assets of the Partnership and requires this separate
disclosure as an off balance sheet credit risk to the Partnership.
Fiscal Quarter ended June 30, 1999
The Partnership recorded a gain of $6,901,733 or $281.62 per Unit for the
second quarter of 1999. This compares to a loss of $4,450,695 or $193.22 per
Unit for the second quarter of 1998.
In the first month of the quarter the Partnership posted a gain resulting
primarily from a rising Japanese stock market and continued appreciation of
the U.S. dollar versus the Euro and Swiss franc. The Partnership posted a
gain during the second month of the quarter resulting primarily from the
declining price of gold and the continued decline of the Euro currency.
During the third month of the quarter, the Partnership posted a gain as it
continued to benefit from the freefall in gold prices and the declining Euro
currency. Overall, the second quarter of fiscal 1999 ended positively for
the Partnership accounts managed by JWH. At June 30, 1999, John W. Henry &
Company, Inc. was managing 100% of the Partnership's assets using its
Financial and Metals Portfolio.
In April, currencies were the most favorable sector for the Partnership. The
continued flight to quality to the U.S. dollar provided opportunities for the
Partnership to profit from long U.S.dollar positions versus the Euro and
Swiss franc. As the conflict in Kosovo persisted, the flow of money into the
U.S. dollar continued. Trading in the Japanese yen and Australian dollar was
also profitable. Confidence in the Japanese stock market restored
performance in the Nikkei 225 as the index was up approximately 20% year to
date. A long position in the Nikkei helped the Partnership generate profits
as did long positions in the S&P 500 Index and Hang Seng Index.
During April, the unprofitable trading sectors were primarily interest rates
and
precious metals. As Europe cut interest rates mid-month, the Partnership's
position went from short to long. Short U.S. bond positions generated a
small profit by month end. Short gold positions were also unprofitable. In
the interim, this position turned profitable as the United Kingdom decided to
sell off over 50% of its gold reserves putting severe pressure on the price
of gold. All in all, the Partnership posted a gain of $789,066 or $32.13 per
Unit in April.
In May, gold fell below $270 per ounce, a 20 year low. The Partnership
benefited from this price decline since it held short gold positions during
the
month. The interest rate rumors in the U.S., coupled with the inflation
fears
caused the continuation of the decline in the U.S. 10-year and 30-year bonds.
The Partnership held short positions in this sector during May, resulting in
profits for the period. In addition, the Partnership held long positions in
the
Japanese government bond that were profitable.
For the third consecutive month, currencies continued to provide gains for
the
Partnership. Profit opportunities came from long U.S. dollar positions
versus the Euro and Swiss franc. During May, the Euro fell to its lowest
level
versus the U.S. dollar since its inception at the beginning of the year.
Pressure on the Euro surrounded the conflict in Kosovo, as investors saw the
dollar as a safe haven. Small gains also came from the Japanese yen.
Overall, the Partnership posted a gain of $2,713,185 or $110.34 per Unit in
May.
In June, the rumor of the Fed raising interest rates in the U.S. became a
reality. The Partnership's short positions in the 10-year and 30-year bonds
provided profits and strong gains were posted as European bond prices
continued to erode. A big reason was the weakening Euro, which declined 13%,
depreciating in a straight line against the U.S. dollar since its inception
January 1, 1999.
Short positions in the German Bund, the German Bobl and U.K. Gilt provided
the
lion's share of performance. Currencies also provided gains for the
Partnership
for the fourth consecutive month. Once again, the profit opportunities came
from long U.S. dollar positions versus the Euro and Swiss franc. Pressure on
the Euro which initially resulted from the conflict in Kosovo, also seemed
attributable to investors losing confidence in the Euro.
During June, the Partnership continued to profit from its short positions in
the
gold market. Long positions in the Nikkei stock index had been profitable
for
the Partnership for the entire year, as the percentage gain in this index for
1999 was 26.64%. Overall, the Partnership posted a gain of $3,399,483 or
$139.15 per Unit in June.
During the quarter, additional Units sold consisted of 1,054.35 limited
partnership units; there were no general partnership units sold during the
quarter. Additional Units sold during the quarter represented a total of
$853,934. Investors redeemed a total of 954.20 Units during the quarter. At
the end of the quarter there were 23,803.80 Units outstanding (including
198.49 Units owned by the General Partner).
During the fiscal quarter ended June 30, 1999, the co-General Partner of the
trading subsidiary, CISI, experienced the following officer changes: Shaun D.
O'Brien replaced former Vice President and Treasurer Richard A. Driver; James
Clemens replaced Henry W. Gjersdal as Assistant Secretary; Lillian Lundeen
replaced Bruce H. Barnett as Assistant Secretary.
As of June 30, 1999, the Partnership had a balance of $5,740,204 on deposit
with CISFS. CISFS is an affiliate of the Clearing Broker and is the broker
for the Partnership on forward contracts in foreign currencies. Forward
currency contracts are defined as over-the-counter and require separate
disclosure should the total exposure to any entity dealing in over-the-
counter products exceed 10%. The balance on deposit at CISFS represents
10.03% of the total assets of the Partnership and requires this separate
disclosure as an off balance sheet credit risk to the Partnership.
Fiscal Quarter ended March 31, 2000
The Partnership recorded a loss of $5,502,945 or $200.52 per Unit for the
first quarter of 2000. This compares to a loss of $3,835,309 or $151.17 per
Unit for the first quarter of 1999.
In the first month of the quarter the Partnership posted a loss resulting
primarily from volatility in the currency sector. The Partnership posted a
loss for the second month of the quarter resulting primarily from trading in
global interest rates. During the third month of the quarter currency
destabilization and massive capital shifts out of the U.S. dollar resulted in
a loss for the Partnership. Overall, the first quarter of fiscal 2000 ended
negatively for the Partnership accounts managed by JWHr. At March 31, 2000,
John W. Henry & Company, Inc. was managing 100% of the Partnership's assets
using its Financial and Metals Portfolio.
January 2000 marked the turning of the millennium. This coupled with the
build-up to Y2K came and went without a hitch. However, the currency sector
was all but quiet as extreme volatility prompted large swings in the price of
the U.S. dollar relative to the Japanese yen. Within the first couple of
days of the New Year, the Japanese banks intervened and started pouring money
into the dollar. This abrupt reversal in the dollar/yen relationship
resulted in a reversal of the Partnership positions from long yen to short
yen within a matter of days. Similarly, yen trading relative to the euro and
Swiss franc contributed to Partnership losses. Short Australian dollar
positions proved difficult and also resulted in losses. Stock indices, namely
the Nikkei fell in response to volatility in the tech sector, which is
factored into that index. Long positions hurt the Partnership performance.
Despite realizing profits from short U.S. bond and long Japanese Government
Bond positions, the Partnership posted overall losses. All in all, the
Partnership posted a loss of $1,624,691 or $71.22 per Unit in January.
Changing expectations regarding economic growth and inflation created a
difficult trading environment in February. The strategic news item was the
U.S. Federal Reserve's decision to buy back part of the debt, which led to a
powerful rally in the U.S.30-year bond. The decision by the Fed created havoc
in the Partnership interest rate portfolio, which was dominated by short
positions. Losses were taken in North American, Asian, and European interest
rates. The yield on the 10-year U.S. government bond currently exceeds that
of the 30-year, creating an inverted yield curve, which is a very unusual
occurrence. Currency trading was mixed. Profitable long U.S. dollar
positions were bolstered by the revised 4th quarter Gross National Product
number, which reflected a robust economy. However, gains in the dollar were
offset by losses incurred by long Europe/short Japan positions. Precious
metals trading suffered as gold prices rallied and then fell sharply. On
March 2, the General Partner received a letter from Verne Sedlacek, President
of John W. Henry & Company, Inc. detailing modifications to the Financial and
Metals trading program. All changes are designed to add balance to the
program without giving up any upside potential. Most noteworthy are the
dramatic reductions in precious metals and Far Eastern interest rate trading
as well as the addition of offshore stock indices, base metals, and the
expansion of non-dollar currency trading. JWH remains steadfast in their
commitment to research. Overall, the Partnership posted a loss of $2,925,475
or $97.24 per Unit in February.
In March, profit taking in U.S. tech stocks led to massive capital shifts out
of the dollar and into yen. These events destabilized currency and stock
markets worldwide. The appreciation of the yen contributed the majority of
the losses to the Partnership in that long positions in dollar and euro
versus the yen both suffered. Marginal gains in dollar positions against
Europe and Australia's currencies proved inadequate in offsetting these
losses. Performance in precious, as well as industrial metals was down
slightly. Positive performance in March came from the interest rate sector.
The 7% correction in tech stocks coupled with the U.S. Treasury's continued
buying of longer dated bonds led to positive performance in our bond
position. The European Central Bank's decision to raise short term interest
rates led to purchasing European bonds, which assisted our position as well.
Overall, the Partnership posted a loss of $952,778 or $32.06 per Unit in
March.
During the quarter, additional Units sold consisted of 8,388.88 limited
partnership units; there were no general partnership units sold during the
quarter. Additional Units sold during the quarter represented a total of
$14,033,699. Investors redeemed a total of 2,054.59 Units during the
quarter. At the end of the quarter there were 29,148.08 Units outstanding
(including 198.49 Units owned by the General Partner).
During the fiscal quarter ended March 31, 2000, the Partnership had no credit
exposure to a counterparty which is a foreign commodities exchange or to any
counterparty dealing in over the counter contracts which was material.
Fiscal Quarter ended March 31, 1999
The Partnership recorded a loss of $3,835,309 or $151.17 per Unit for the
first quarter of 1999. This compares to a loss of $3,566,153 or $182.71 per
Unit for the first quarter of 1998.
In the first month of the quarter the Partnership posted a loss resulting
primarily from volatility in the currency sector as well as Japanese interest
rates. The Trust posted a gain for the second month of the quarter resulting
primarily from trading in precious metals and currencies. During the third
month of the quarter concerns about the military conflict in Kosovo mounted.
As a result the global markets experienced increased volatility, namely in
precious metals and interest rates, and the Partnership posted a small loss.
Overall, the first quarter of fiscal 1999 ended negatively for the
Partnership accounts managed by JWH. At March 31, 1999, John W. Henry &
Company, Inc. was managing 100% of the Partnership's assets using its
Financial and Metals Portfolio.
Currencies were the most volatile sector for the month of January; namely
short positions in the British pound and long positions in the Japanese yen.
The anxiously awaited Euro began trading and started out the year on a
positive note as short positions rendered small profits for the Partnership.
The only profitable interest rate market was in Germany where the Partnership
maintained a long German bund position, thereby taking advantage of falling
German rates. Short positions in the Japanese government bond and Australian
bond positions created losses for the Partnership. The Nikkei stock index
provided the majority of the loss in the stock indices, as short positions
were unprofitable. All in all, the Partnership posted a loss of $2,750,493
or $107.54 per Unit in January.
In February, long silver positions in the precious metals sector were
profitable and the Nikkei stock index provided gains amidst a falling and
then rising market. Currency trading rendered gains from short positions in
the Euro, British pound and Swiss franc as each currency declined against the
U.S. dollar. These gains were able to cover losses in the Australian dollar
and Japanese yen. Interest rates were the only unprofitable sector for the
Partnership. The Partnership was able to take advantage of rising interest
rates in the U.S. 10-year notes and 30-year bonds. However, long Japanese
government bond and German bund positions recorded more significant losses.
Overall, the Partnership posted a gain of $331,060 or $13.35 per Unit in
February.
In March, silver and gold positions were extremely volatile as the
Partnership recorded losses from long silver positions and short gold
positions. Short bond positions in Australia and in the United Kingdom were
unprofitable as interest rates in both began to rise. However, long Japanese
government bond positions were the largest loser in this sector as bond
prices plummeted. Currencies were the most favorable sector for the
Partnership. A flight to quality in the U.S. dollar has provided
opportunities for the Partnership to profit from long U.S. dollar positions
versus the Euro and Swiss franc. The conflict in Kosovo has exacerbated the
crisis-related selling of the Euro and the flow of money into the U.S.
dollar. The Nikkei stock index moved sharply higher during March and the
Partnership profited from long positions. Long positions in the Australian
All-Ordinaries index were also profitable. Overall, the Partnership posted a
loss of $1,415,876 or $56.98 per Unit in March.
During the quarter, additional Units sold consisted of 658.43 limited
partnership units; there were no general partnership units sold during the
quarter. Additional Units sold during the quarter represented a total of
$1,351,224. Investors redeemed a total of 1,674.39 Units during the quarter.
At the end of the quarter there were 24,560.57 Units outstanding (including
198.49 Units owned by the General Partner).
During the fiscal quarter ended March 31, 1999, the Partnership had no credit
exposure to a counterparty which is a foreign commodities exchange or to any
counterparty dealing in over the counter contracts which was material.
Item 3. Quantitative and Qualitative Disclosures
About Market Risk
There has been no material change with respect to market risk since the
"Quantitative and Qualitative Disclosures About Market Risk" was made in the
Form 10K of the Partnership dated December 31, 1999.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
The Partnership and its affiliates are from time to time parties
to various legal actions arising in the normal course of business. The
General Partner believes that there is no proceedings threatened or pending
against the Partnership or any of its affiliates which, if determined
adversely, would have a material adverse effect on the financial condition or
results of operations of the Partnership.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
Exhibit-27
b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned and thereunto duly authorized.
EVEREST FUTURES FUND, L.P.
Date: November 14, 2000 By: Everest Asset Management, Inc.,
its General Partner
By: /s/ Peter Lamoureux
Peter Lamoureux
President
Part I. Financial Information
Item 1. Financial Statements
"Following are Financial Statements for the fiscal quarter ending September
30, 2000"
Fiscal Quarter Year to Date Fiscal Year
Fiscal Quarter Year to Date
Ended 9/30/00 Ended 9/30/00 Ended 12/31/99
Ended 9/30/99 Ended 9/30/99
Statement of
Financial Condition X X
Statement of
Operations X X X X
Statement of Changes
in Partners' Capital X
Statement of
Cash Flows X X
Notes to Financial
Statements X
"EVEREST FUTURES FUND, LP"
COMBINED STATEMENTS OF FINANCIAL CONDITION
UNAUDITED
"Sep 30, 2000" "Dec 31, 1999"
ASSETS
Cash and cash equivalents "19,762,036 " "16,410,917 "
Equity in commodity trading accounts:
Cash on deposit with brokers "7,788,267 " "5,281,725 "
Net unrealized trading gains (losses) on open contracts "(2,092,793)"
"670,107 "
"Investments, at fair value" "12,396,816 " "18,867,562 "
Interest receivable "176,597 " "618,294 "
Total assets "38,030,923 " "41,848,605 "
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accrued expenses "18,210 " "29,962 "
Commissions payable "162,254 " "192,660 "
Advisor's management fee payable "70,697 " "138,225 "
Advisor's incentive fee payable 0 0
Redemptions payable "1,369,036 " "1,055,043 "
Selling and Offering Expenses Payable "16,322 " 0
Total liabilities "1,636,519 " "1,415,890 "
Minority Interest 0 "452,105 "
Partners' Capital:
" Limited partners (26,923.70 and 22,615.30 units" "36,128,056 "
"39,632,760 " "27,122.18635 "
" outstanding at 9/30/00 and 12/31/99, respectively)"
198.49071
(see Note 1) "26,923.69564 "
General partners (198.49 units outstanding at "266,348 "
"347,850 "
" 9/30/00 and 12/31/99, respectively)"
(see Note 1)
Total partners' capital "36,394,404 " "39,980,610 "
" Total liabilities, minority interest,"
and partners' capital "$38,030,923 " "$41,848,605 "
$0
Net asset value per outstanding unit of Partnership
interest "$1,341.87 " "$1,752.48 "
"These Statements of Financial Condition, in the opinion of management,
reflects all adjustments necessary"
to fairly state the financial condition of Everest Futures Fund. (See Note 6)
See accompanying notes to the financial statements.
"EVEREST FUTURES FUND, L.P."
COMBINED STATEMENTS OF OPERATIONS
"For the period January 1, 2000 through September 30, 2000"
UNAUDITED
"Jul 1, 2000" "Jan 1, 2000" "Jul 1, 1999"
"Jan 1, 1999" Jan 1 thru
through through through through
Jun 30 2000
"Sep 30, 2000" "Sep 30, 2000" "Sep 30, 1999"
"Sep 30, 1999"
Trading Income (loss)
Net realized trading gain (loss) on closed contracts "286,559 "
"(7,077,577)" "(63,404)" "5,498,287 "
"(7,364,136)"
Change in unrealized trading gain (loss)
on open contracts "(1,597,528)" "(2,762,900)"
"(6,235,308)" "(7,154,621)"
"(1,165,372)"
Change in net unrealized gain (loss) on investments "6,470 "
"37,442 " "46,106 " "23,565 "
"30,972 "
Net foreign currency translation gain (loss) "(60,260)" "(332,305)"
"67,631 " "(1,750)" "(272,045)"
Brokerage Commissions "(587,180)" "(1,950,492)"
"(808,229)" "(2,369,217)" "(1,363,312)"
Total trading income (loss) "(1,951,940)" "(12,085,833)"
"(6,993,204)" "(4,003,736)"
"(10,133,893)"
" Interest income, net of cash management fees" "610,583.59 "
"1,804,811 " "633,310 " "1,850,924 "
"1,194,228 "
Total income (loss) "(1,341,356)" "(10,281,022)"
"(6,359,894)" "(2,152,812)"
"(8,939,665)"
General and administrative expenses
Advisor's management fees "250,745 " "1,129,651 "
"517,579 " "1,572,126 " "878,907 "
Advisor's incentive fees 0 0
0
Administrative expenses "14,141 " "10,411 " "11,366 "
"63,652 " "(3,730)"
Total general and administrative expenses "264,886 " "1,140,062
" "528,945 " "1,635,778 " "875,176 "
Minority Interest "8,639 " "99,920 " "73,400 "
"39,574 " "91,281 "
Net income (loss) "(1,597,603)" "(11,321,164)"
"(6,815,439)" "(3,749,016)"
"(9,723,561)"
PROFIT (LOSS) PER UNIT OF
PARTNERSHIP INTEREST ($58.14) ($410.61) ($284.10)
($153.65) ($352.47)
(see Note 1) (see Note 1)
"These Statements of Operations, in the opinion of management, reflects all
adjustments "
necessary to fairly state the financial condition of Everest Futures Fund.
(See Note 6)
See accompanying notes to the financial statements.
"EVEREST FUTURES FUND, LP"
COMBINED STATEMENT OF CHANGES IN PARTNERS' CAPITAL
"For the period January 1, 2000 through September 30, 2000"
UNAUDITED
Limited General
Units* Partners Partners Total
"Partners' capital at Jan 1, 2000" "22,615.30 " "39,632,760 "
"$347,850 " "$39,980,610 "
Net profit (loss) "(11,239,662)" "(81,502)"
"(11,321,164)"
Additional Units Sold "9,802.94 " "15,967,928 " 0
"15,967,928 "
(see Note 1)
Redemptions (see Note 1) "(5,494.54)" "(8,232,970)"
0 "(8,232,970)"
"Partners' capital at September 30, 2000" "26,923.70 "
"$36,128,056 " "$266,348 " "$36,394,404 "
Net asset value per unit
" January 1, 2000(see Note 1)" "1,752.48 " "1,752.48 "
Net profit (loss) per unit (see Note 1) (410.61)
(410.61)
Net asset value per unit
" September 30, 2000" "$1,341.87 " "$1,341.87 "
* Units of Limited Partnership interest.
"This Statement of Changes in Partners' Capital, in the opinion of
management, reflects all"
adjustments necessary to fairly state the financial condition of Everest
Futures Fund. (See Note 6)
See accompanying notes to the financial statements.
"EVEREST FUTURES FUND, LP"
COMBINED STATEMENTS OF CASH FLOWS
UNAUDITED
"Jan 1, 2000" "Jan 1, 1999"
through through
"Sep 30, 2000" "Sep 30, 1999"
Cash flows from operating activities:
Net income (loss) "(11,321,164)" "(3,749,016)"
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Decrease (increase) in net unrealized trading
gain (loss) on open contracts "2,762,900 " "7,156,924
"
Decrease in net unrealized gain (loss) on investments "(37,442)"
"(23,565)"
Decrease (Increase) in investments "6,508,188 "
"(24,048,017)"
Increase (decrease) in interest receivable "441,697 " "(128,798)"
Increase (decrease) in commission payable "(30,406)" "(2,765)"
Increase (decrease) in management and incentive
fee payable "(67,528)" "(25,812)"
Increase (decrease) in redemptions payable "313,993 " "(154,371)"
Increase (decrease) in accrued expenses "(11,752)" "(2,614)"
Increase (decrease) in selling and offering expenses "16,322 "
"8,302 "
Increase (decrease) in minority interest "(452,105)" "(39,573)"
Net cash provided by (used in)
operating activities "(1,877,298)" "(21,009,305)"
Cash flows from financing activities:
Units Sold "15,967,928 " "3,283,255 "
Partner redemptions "(8,232,970)" "(7,095,933)"
Net cash provided by (used in)
financing activities "7,734,958 " "(3,812,678)"
Net increase (decrease) in cash "5,857,660 " "(24,821,983)"
Cash and cash equivalents at beginning of period "$21,692,642 "
"49,909,388 "
"Due to the 1999 audit change made by KPMG at year end, they restated cash at
boy and eoy to include broker acct balance."
Cash and cash equivalents at end of period "$27,550,302 "
"$25,087,405 " ($0)
"These Statements of Cash Flows, in the opinion of management, reflects all
adjustments "
necessary to fairly state the financial condition of Everest Futures Fund.
(See Note 6)
See accompanying notes to the financial statements.