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, 2002
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.)
1100 North 4th Street, Suite 143, 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
Part I. Financial Information
Item 1. Financial Statements
Following are Financial Statements for the fiscal quarter ending September 30, 2002
Fiscal Quarter Year to Date Fiscal Year Fiscal Quarter Year to Date
Ended 9/30/02 to 9/30/02 Ended 12/31/01 Ended 9/30/01 to 9/30/01
Statement of
Financial Condition X X
Statement of
Operations X X X X
Statement of Changes
in Partners' Capital X
Schedule of Investments X
Notes to Financial
Statements X
EVEREST FUTURES FUND, LP
COMBINED STATEMENTS OF FINANCIAL CONDITION
UNAUDITED
Sept 30, 2002 Dec 31, 2001
ASSETS
Cash and cash equivalents 10,764,964 20,938,678
Equity in commodity trading accounts:
Cash on deposit with brokers 15,095,990 8,768,736
Net unrealized trading gains on open contracts 4,075,410 2,486,233
Investments, at fair value 16,756,039 9,988,541
Interest receivable 71,029 52,501
Total assets 46,763,433 42,234,689
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accrued expenses 31,450 34,692
Commissions payable 175,099 157,564
Advisor's management fee payable 86,493 73,208
Advisor's incentive fee payable 1,659,450 0
Redemptions payable 266,384 118,786
Selling and Offering Expenses Payable 7,485 0
Total liabilities 2,226,361 384,250
Partners' Capital:
Limited partners (19,638.04 and 24,907.39 units
outstanding at 9/30/02 and 12/31/01, respectively) 44,487,072 41,519,565
General partners (22.07 and 198.49 units
outstanding at 9/30/02 and 12/31/01, respectively) 50,000 330,874
Total partners' capital 44,537,072 41,850,439
Total liabilities
and partners' capital 46,763,433 42,234,689
Net asset value per outstanding unit of Partnership
interest 2,265.35 1,666.96
See accompanying notes to financial statements.
EVEREST FUTURES FUND, L.P.
COMBINED STATEMENTS OF OPERATIONS
For the period January 1, 2002 through September 30, 2002
UNAUDITED
July 1, 2002 Jan 1, 2002 July 1, 2001 Jan 1, 2001
through through through through
Sept 30, 2002 Sept 30, 2002 Sept 30, 2001 Sept 30, 2001
REVENUES
Gains on trading of commodity futures
and forwards contracts, physical
commodities and related options:
Realized gain (loss) on closed positions 12,365,227 15,151,643 152,628 6,373,810
Change in unrealized trading gain (loss)
on open contracts (3,014,021) 1,589,177 2,390,907 (2,388,098)
Net foreign currency translation gain (loss) 17,335 85,139 92,050 135,998
Brokerage Commissions (615,333) (1,778,118) (629,458) (1,915,921)
Total trading income (loss) 8,753,208 15,047,842 2,006,127 2,205,788
Interest income, net of cash management fees 205,398 572,255 381,527 1,481,059
Total income (loss) 8,958,606 15,620,097 2,387,655 3,686,847
General and administrative expenses
Advisor's management fees 247,819 701,595 208,423 531,318
Advisor's incentive fees 1,659,450 2,645,119 0 29,399
Administrative expenses 19,751 50,836 15,138 45,573
Total general and administrative expenses 1,927,021 3,397,549 223,561 606,291
Net income (loss) 7,031,585 12,222,548 2,164,094 3,080,556
PROFIT (LOSS) PER UNIT OF
PARTNERSHIP INTEREST 354.40 598.39 84.89 119.14
See accompanying notes to financial statements.
EVEREST FUTURES FUND, LP
COMBINED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the period January 1, 2002 through September 30, 2002
UNAUDITED
Limited General
Units Partners Partners Total
Partners' capital at Jan 1, 2002 25,105.88 41,519,565 330,874 41,850,439
Net profit (loss) 12,377,896 (155,348) 12,222,548
Additional Units Sold 603.80 1,253,257 0 1,253,257
Redemptions (6,049.57) (10,663,646) (125,526) (10,789,172)
Partners' capital at Sept 30, 2002 19,660.11 44,487,072 50,000 44,537,072
Net asset value per unit
January 1, 2002 1,666.96 1,666.96
Net profit (loss) per unit 598.39 598.39
Net asset value per unit
Sept 30, 2002 2,265.35 2,265.35
See accompanying notes to financial statements.
Everest Futures Fund, L.P
Schedule of Investments
Sept 30, 2002
Number of Principal Carrying
contracts (notional) Value/ Value
(OTE)
Long positions:
Futures positions (8.36%)
Interest rates 1,435 219,280,706 2,831,675
Metals 335 10,834,244 (162,697)
Energy 527 17,121,632 513,793
Agriculture 940 12,756,892 370,136
Currencies 200 38,964,775 170,113
Indices - 0 0
298,958,250 3,723,019
Forward positions (0.19%)
Currencies 75,601,370 86,309
Total long positions 374,559,620 3,809,328
Short positions:
Futures positions (1.70%)
Interest rates - 0 0
Metals 389 11,869,416 249,960
Energy 72 1,198,800 25,937
Agriculture 121 2,826,533 (80,570)
Currencies 17 1,068,790 0
Indices 172 8,594,394 562,278
25,557,933 757,606
Forward positions (-1.10%)
Currencies 85,376,760 (491,524)
Total short positions 110,934,692 266,082
Total open contracts (9.15%) 4,075,410
Securities Held
Maturity Over 60 days (37.62%) Coupon Maturity Cost
FANNIE MAE MED TERM NT 5.00% 2/14/03 728,012
FANNIE MAE MED TERM NT 5.75% 4/15/03 1,542,883
FANNIE MAE MED TERM NT 5.75% 4/15/03 617,033
FED HM LN BK BOND 2.250% 8/14/03 3,400,000
FREDDIE MAC NOTE 2.45% 1/23/04 902,176
FED HM LN BK BOND 2.33% 3/5/04 1,124,473
FANNIE MAE MED TERM NT 3.18% 5/26/04 2,833,637
FREDDIE MAC NOTE 11/14/03 252,763
FED HM LN BK BOND 2.50 2.50% 2/20/04 1,504,430
FANNIE MAE MED TERM NT 3.75% 5/12/04 717,687
FANNIE MAE MED TERM NT 3.15% 7/29/04 709,942
FANNIE MAE MED TERM NT 3.50% 6/24/04 918,042
FED HM LN BK BOND 2.50% 2/20/04 1,504,962
Total securities maturity over 60 days 16,756,039
Cash and cash equivalents (23.95%) 10,764,964
Cash on deposit with brokers (33.89%) 15,095,990
Less liabilities in excess of other assets (-4.61%) (2,155,332)
Net assets (100.0%) 44,537,072
EVEREST FUTURES FUND, L.P.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2002
(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 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 initial 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 $76,307,856 for 43,339.99 Units sold July
1, 1995 through September 30, 2002. On March 29, 1996, the
Partnership transferred all of its assets to, and became the sole
limited partner of, Everest Futures Fund II, L.P. (Trading
Partnership)), a newly formed limited partnership that invested
directly in commodity interests. The co-general partners of the
Trading Partnership were CIS Investments, Inc. (CISI) and the
General Partner (collectively, the General Partners). In July
2000, the Partnership redeemed approximately 50% of its assets
from the Trading Partnership. Effective as of the close of
business August 31, 2000, the Partnership liquidated its remaining
investment in the Trading Partnership. CISI also liquidated its
investment in the Trading Partnership and the Trading
Partnership was dissolved in September 2000.
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
Prior to the dissolution of the Trading Partnership, the
accompanying financial statements were prepared on a combined
basis and included the accounts of the Partnership and the Trading
Partnership. All significant intercompany transactions and
balances have been eliminated in the accompanying financial
statements. Certain prior year amounts have been reclassified to
be consistent with the current year presentation.
Cash and 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.
Fair Value of Financial Instruments
The financial instruments held by the Company are reported in the
statements
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.
The Partnership earns interest on 100% of the Partnership's
average monthly cash balance on deposit with the Brokers at a rate
equal to the average 91-day Treasury bill rate for U. S. Treasury
bills issued during that month.
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. Realized and unrealized foreign exchange gains or
losses are included in trading income (loss) in the statements of
operations.
Income Taxes
No provision for income taxes has been made in the accompanying
financial statements as each partner is responsible for reporting
income (loss) based upon the pro rata share of the profits or
losses of the Partnership.
Use of Estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America 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 revenues and
expenses during the reporting period. Actual results could differ
from those estimates.
(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 their
capital contribution and profits, if any, and such other amounts
as they may be liable for pursuant to the 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. The General Partner has delegated complete
trading authority to an unrelated party (note 4).
Prior to the dissolution of the Trading Partnership, the Trading
Partnership bore 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. In
addition, the Trading Partnership bore all of its administrative
expenses. After the dissolution, the Partnership bears all of
these 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 to the Partnership, or such lesser
period as is acceptable to the Partnership. Although the
Agreement does not permit redemptions for the first six months
following a Limited Partner's admission to the Partnership, the
Agreement does permit the Partnership to declare additional
regular redemption dates. The Partnership will be dissolved at
December 31, 2020, or upon the occurrence of certain events, as
specified in the Limited Partnership Agreement.
(4) FEES
Prior to August 1, 2000, the Partnership's trading advisor was
John W. Henry & Company, Inc. (JWH). Beginning July 1, 2001, JWH
began trading its Strategic Allocation Program with a trading
allocation of $40 million. Previously JWH traded its Financial
and Metals program. JWH receives a monthly management fee equal
to 0.167 (2% annually) of the Partnership's or Trading
Partnership's (prior to September 2000) month-end net asset value,
as defined, and a quarterly incentive fee of 20% of the
Partnership's or Trading Partnership's (prior to September 2000)
new net trading profits, as defined. The monthly management fee
was reduced as of October 1, 2000 from 0.33% (4% annually). 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 or
Trading Partnership (prior to September 2000).
Effective August 1, 2000, Trilogy Capital Management, LLC
(Trilogy) was added as a trading advisor. Trilogy was terminated
effective June 30, 2001. Trilogy received a monthly management
fee of 0.075% (0.9% annually) of the Partnership's month-end
allocated assets as defined and did not receive an incentive fee.
Effective September 1, 2001, Mount Lucas Management Corporation
(MLM) was added as trading advisor with an initial allocation of
$10 million. This allocation represented notional funding for the
Partnership. MLM receives a monthly management fee of 0.0625%
(0.75% annually) of the Partnership's month-end allocated assets
as defined. As MLM uses the MLM Index-Unleveraged, they do not
receive an incentive fee. MLM's allocation will be increased by
$10 million effective October 1, 2002.
Effective September 1, 2001, CIS charges the Partnership or
Trading Partnership (prior to September 2000) monthly brokerage
commissions equal to 0.5052% of the Partnership or Trading
Partnership's beginning-of-month net asset value, as defined.
Prior to September 1, 2001, the monthly brokerage commission was
0.5%. Monthly brokerage commissions will increase incrementally
to 0.5208% as the trading allocation to MLM increases. As of
September 30, 2002, the monthly brokerage commission is 0.5104%.
The General Partner receives a management fee of approximately 83%
of the brokerage commission charged by CIS. Net brokerage
commissions are recorded in the statement of operations as a
reduction of trading income and the amounts paid to the General
Partner are recorded as management fees. Prior to September 2000,
CISI received a co-general partner fee from the General Partner
equal to 1/12 of .25% of the month-end net asset value, as
defined. Prior to January 1, 1999, CISI received 1/12 of .40% of
the month-end net asset value. CISI no longer as a co-general
partner and no longer receives a co-general partner fee.
As of September 30, 2002, the Partnership has approximately $44.5
million of net assets. JWH's allocation was approximately $44.3
million and MLM's was approximately $26.3 million of notional
funding. The General Partner may replace or add trading advisors
at any time.
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 0.25% (0.25% 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) TRADING ACTIVITIES AND RELATED RISKS
The Partnership engages in the speculative trading of U.S. and
foreign futures contracts, options on U.S. and foreign futures
contracts, and forward contracts (collectively derivatives).
These derivatives include both financial and non-financial
contracts held as part of a diversified trading strategy. The
Partnership is exposed to both market risk, the risk arising from
changes in the market value of the contracts; and credit risk, the
risk of failure by another party to perform according to the terms
of a contract.
The purchase and sale of futures and options on futures contracts
requires margin deposits with a Futures Commission Merchant (FCM).
Additional deposits may be necessary for any loss on contract
value. The Commodity Exchange Act (CEAct) requires an FCM to
segregate all customer transactions and assets from the FCM's
proprietary activities. A customer's cash and other property such
as U. S. Treasury Bills, deposited with an FCM are considered
commingled with all other customer funds subject to the FCM's
segregation requirements. In the event of an FCM's insolvency,
recovery may be limited to a pro rata share of segregated funds
available. It is possible that the recovered amount could be less
than the total of cash and other property deposited.
The Partnership has cash on deposit with an interbank market maker
in connection with its trading of forward contracts. In the event
of interbank market maker's insolvency, recovery of the
Partnership assets on deposit may be limited to account insurance
or other protection afforded such deposits. In the normal course
of business, the Partnership does not require collateral from such
interbank market maker. Because forward contracts are traded in
unregulated markets between principals, the Partnership also
assumes a credit risk, the risk of loss from counter party non-
performance.
For derivatives, risks arise from changes in the market value of
the contracts. Theoretically, the Partnership is exposed to a
market risk equal to the value of futures and forward contracts
purchased and unlimited liability on such contracts sold short.
As both a buyer and seller of options, the Partnership pays or
receives a premium at the outset and then bears the risk of
unfavorable changes in the price of the contract underlying the
option.
The notional amounts of open contracts at September 30, 2002, as
disclosed in the Schedule of Investments, do not represent the
Partnership's risk of loss due to market and credit risk, but
rather represent the Partnership's extent of involvement in
derivatives at the date of the statement of financial condition.
Net trading results from derivatives for the periods presented are
reflected in the statement of operations and equal gains (losses)
from trading less brokerage commissions. Such trading results
reflect the net gain arising from the Partnership's speculative
trading of futures contracts, options on futures contracts, and
forward contracts.
The Limited Partners bear the risk of loss only to the extent of
the net asset value of their Partnership units.
(6)FINANCIAL HIGHLIGHTS
The following financial highlights show the Partnership's
financial performance for the nine months ended September 30,
2002. Total return is calculated as the change in a theoretical
limited partner's investment over the entire period. Total return
is calculated based on the aggregate return of the Partnership
taken as a whole.
Total return 35.90%
Ratio to average net assets:
Net income 31.11%
General and administrative expenses:
Expenses 1.92%
Incentive fees 6.73%
Total general and
Administrative expenses 8.65%
The net investment income and general and administrative expenses
ratios are computed based upon the weighted average net assets for
the Partnership for the period ended September 30, 2002.
(7) 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, 2001, as filed with the Securities and
Exchange Commission on March 31, 2002, 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, 2002
The Partnership recorded a gain of $7,031,585 or $354.40 per Unit
for the third quarter of 2002. This compares to a gain of
$2,164,094 or $84.89 per Unit for the third quarter of 2001.
The Partnership continued to employ John W. Henry & Company,
Inc.'s Strategic Allocation Program (JWH SAP) as its core manager,
and Mount Lucas Management Corporation's MLM IndexT (Unleveraged)
(MLM) for an overlay program. In July the Fund was up 6.97%.
The turbulence in the financial markets created a beneficial
trading environment for JWH SAP. Lower interest rates made fixed
income the strongest performer in July. The second biggest
contributor was equity indices as JWH was short. Energies were
also profitable, especially natural gas. Agriculturals and metals
were essentially flat for the month. The chain of market moves
continued from the last two months into July and produced solid
results for JWH.
The MLM IndexT Program (Unleveraged) was negative for the Fund in
July. The Index had profits in energies, grains, and financials,
but slightly larger losses in currencies, meats, metals, and
softs. The Partnership recorded a gain of $2,677,092 or $133.12
per unit in July.
August was a positive month for the Fund, up 3.79%. August saw a
smoothing of trends and diminished volatility in financial
markets, but there was considerable volatility in the energy and
financial markets. For JWH trading in fixed income markets was
profitable and energies were profitable as the U. S. continued to
discuss ways of disposing of Saddam Hussein. Agriculturals were
volatile and difficult for JWH to trade, currencies lost money,
and metals were flat. The MLM Index Program (Unleveraged) posted
profits for the Fund in energies, financials, and grains. The
Partnership recorded a gain of $1,537,949
or $77.48 per unit in August.
September saw a gain of 6.78% for the Fund. JWH had most of that
gain with a positive 6.35% performance, with profits in fixed
income, global indices, and energy markets. JWH has continued to
take full advantage of two recurring themes which have spurred
significant trends: the global economic slowdown and a possible
war with Iraq. The MLM Index Program (Unleveraged) had profits in
energies, financials, metals, and softs, with smaller overall
losses in meats, grains, and currencies. The Partnership recorded
a gain of $2,816,544 or $143.80 per Unit in September.
During the quarter, additional Units sold consisted of 352.27
limited partnership units; there were no general partnership units
sold during the quarter. Additional Units sold during the quarter
represented a total of $744,465. Investors redeemed a total of
747.29 Unitsduring the quarter and the General Partner redeemed
55.41 Units. At the end of the quarter there were 19,660.11 Units
outstanding (including 22.07 Units owned by the General Partner).
During the fiscal quarter ended September 30, 2002, 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.
Fiscal Quarter ended September 30, 2001
The Partnership recorded a gain of $2,164,094 or $84.89 per Unit
for the third quarter of 2001. This compares to a loss of
$1,597,603 or $58.14 per Unit for the third quarter of 2000.
At September 30, 2001, John W. Henry & Company, Inc. (JWH) was
managing approximately $42 million in allocated assets for the
Partnership, and Mount Lucas Management Corporation's MLM Index
(MLM) was managing approximately $10 million in allocated assets.
As of September 30, the Partnership had approximately $44 million
in assets.
In July, the Partnership had a loss of 3.92%. The JWH Strategic
Allocation Program replaced the JWH Financial and Metals Program
beginning in July. The month was one of transition, especially
for the currency markets, with a key reversal in the dollar's
upward movement and growing talk that the dollar trend may be
reaching an end. The currency sector under performed, while
diversified programs had more modest declines.
In July the MLM Index Program had not yet begun trading. The
Partnership had a loss of 1,651,375 or $64.87 per Unit in July.
In August, the Partnership had a gain of 5.63%. The monthly
performance was dominated by the active behavior of the central
banks, with easing by the Fed, the Bank of Japan, and the European
Central Bank (ECB). These actions drove trends in interest rates
and currencies. The most significant gains came in European
interest rates and the dollar/Euro exchange rate.
The MLM Program did not trade in August. The Partnership had a
gain of $2,282,136 or $89.45 per Unit in August.
In September, the Partnership had a gain of 3.59%. The JWH SAP
Program had a gain of 3.69%, making profits in the global bond
markets. Bond prices rose as investors came out of equities and
into bonds after the September 11th attacks on America. Profits
were made in precious metals, where prices rose as they often do
in a crisis. Profits were also made in overseas stock indices,
which tended to sell off as a reaction to the economic
uncertainties of the month.
The MLM Index Program received its first allocation in the month
of September and posted a gain of 0.67%. The Partnership recorded
a gain of $1,533,334 or $60.16 per Unit in September.
During the quarter, additional Units sold consisted of 78.71
limited partnership units; and 0 general partnership units.
Additional Units sold during the quarter represented a total of
$125,000. Investors redeemed a total of 268.67 Units
during the quarter. At the end of the quarter there were
25,327.03 Units outstanding (including 198.49 Units
owned by the General Partner).
During the fiscal quarter ended September 30, 2001, 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.
Fiscal Quarter ended June 30, 2002
The Partnership recorded a gain of $10,469,355 or $456.94 per Unit
for the second quarter of 2002. This compares to a loss of
$3,358,859 or $128.90 per Unit for the second quarter of 2001.
The Partnership continued to employ John W. Henry & Company,
Inc.'s Strategic Allocation Program (JWH SAP) as its core manager,
and Mount Lucas Management Corporation's MLM IndexT (Unleveraged)
(MLM) for an overlay program. In April the Fund was up 0.69%.
JWH SAP was down in the middle of April but rallied to slightly
positive after disappointing economic data and corporate earnings
forced many markets to reverse. In particular, the eventual
weakness in the dollar provided strong results in currencies. The
energy sector, stock indices, and gold were also positive, with
global interest rates negative. The MLM Index Program
(Unleveraged) was essentially flat for April. The markets in the
Index were choppy as the debate on the timing of the recovery
continued. The Partnership recorded a gain of $244,008 or $9.98
per unit in April.
May was a positive month for the Fund, up 8.68%. The JWH SAP was
up 9.39%. The theme for May at JWH was the weakening of the U.S.
dollar. The U.S. `crisis in confidence' brought about by
corporate accounting scandals and constant government warnings of
possible further terrorist attacks created a widespread
repatriation of assets out of the U.S. JWH SAP also had profits
in metals, with gold and silver continuing to shine. Stock index
results were mixed and the energy, interest rate and agricultural
sectors were slightly down. The MLM Index (Unleveraged) was down
0.60% for the Fund, suffering losses in energies, grains, and
softs that were larger than the profits in metals, meats,
financials, and currencies. The Partnership recorded a gain of
$2,914,124 or $127.02 per unit in May.
June saw a gain of 20.11% for the Fund. JWH SAP was up 20.37%.
Continued weakness in the U.S. dollar across the board was felt
against the major currencies. Continued accounting irregularities
further depressed the stock market while triggering a flight from
the U.S. dollar. JWH SAP had profits in interest rates and
agriculturals. Losses came in metals as gold retreated from its
peak. The energy market was directionless. The MLM Index
(Unleveraged) was slightly negative (down 0.16%) for the Fund in
June. Positive results in currencies, energies, and financials
were outweighed by losses in grains, meats, metals, and softs.
The Partnership recorded a gain of $7,311,224 or $319.94
per Unit in June.
During the quarter, additional Units sold consisted of 247.44
limited partnership units; there were no general partnership units
sold during the quarter. Additional Units sold during the quarter
represented a total of $472,851. Investors redeemed a total of
4,599.60 Units during the quarter. At the end of the quarter
there were 20,110.54 Units outstanding (including 77.48 Units
owned by the General Partner).
During the fiscal quarter ended June 30, 2002, 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.
Effective June 20, 2002, Teresa M. Prange resigned as Principal
and Chief Financial Officer of Everest Asset Management, Inc.
Effective August 12, 2002, Everest Asset Management, Inc.
relocated its offices to 1100 North 4th Street, Suite 143,
Fairfield, IA 52556.
Fiscal Quarter ended June 30, 2001
The Partnership recorded a loss of $3,358,859 or $128.90 per Unit
for the second quarter of 2001. This compares to a loss of
$4,221,518 or $151.95 per Unit for the second quarter of 2000.
The Partnership continued to employ two different trading advisors
for the second quarter 2001. The Fund had a loss of 7.31% in
April as both advisors suffered losses. The JWH firm had
reversals of trends that had created profits in the first quarter,
mostly in currencies and interest rates. The Barclay Futures
Index Program (BFIP) gave back most of its gains from March with
losses in six out of seven sectors traded. The Partnership
recorded a loss of $3,394,496 or $130.21 per unit in April.
May was a positive month for the Fund (up1.51%), with both JWH and
the BFIP showing profits. On the JWH side, currencies led the way
with the dollar showing strength against the Euro and Swiss franc.
Profits were also seen in the British pound. Interest rate
positions were slightly negative for JWH, as were overseas stock
indexes and metals. The BFIP had gains in 5 out of 7 sectors
traded. They were, in this order, softs, energies, grains,
financials and currencies. The two losing sectors were metals and
meats. The Partnership recorded a gain of $641,062 or $24.92 per
unit in May.
June saw a loss of 1.41% for the Fund. The JWH programs were
down4.29% coming from losses in interest rate and currency
sectors. However, the JWH losses were somewhat offset by the BFIP
gain of 1.92% coming in six of their seven sectors traded. The
largest gain for BFIP came in softs, following by metals and
energies. The Partnership recorded a loss of $605,424 or $23.61
per Unit in June.
During the quarter, no additional Units were sold. Investors
redeemed a total of 553.01 Units during the quarter. At the end
of the quarter there were 25,516.98 Units outstanding (including
198.49 Units owned by the General Partner).
During the fiscal quarter ended June 30, 2001, 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.
Fiscal Quarter ended March 31, 2002
The Partnership recorded a loss of $5,278,393 or $212.95 per Unit
for the first quarter of 2002. This compares to a gain of
$4,275,321 or $163.15 per Unit for the first quarter of 2001.
The Partnership continued to employ John W. Henry & Company,
Inc.'s Strategic Allocation Program (JWH SAP) as its core manager,
and Mount Lucas Management Corporation's MLM Index (Unleveraged)
(MLM) for an overlay program. In January the fund was down 0.85%.
JWH SAP had a loss of 1.05%. Gains from currency and energy
positions were outweighed by losses in interest rates,
agriculture, metals and stock indices. The gains in currencies
came from the Japanese yen, Swiss franc, and the Euro. In
energies, profits came from natural gas and crude oil positions.
The biggest losses came from US and European interest rate
positions. The MLM Index Program (Unleveraged) had a gain of
0.33%. Profits were in energies and softs, losses in metals,
meats, grains, currencies and financials. The Partnership posted
a loss of $355,767 or $14.17 per Unit in January.
Effective January 1, 2002, Mark S. Rzepczynski was appointed
President of John W. Henry & Company, Inc. Mr. Rzepczynski was
most recently Senior Vice President of Research and Trading.
Prior to joining JWH, Mr. Rzepczinski was Vice President and
Director of Taxable Credit and Quantitative Research in the fixed-
income division of Fidelity Management and Research from 1995 to
1998. Mr. Rzepczynski holds a BA (cum laude) in Economics from
Loyola University of Chicago and an AM and PhD in Economics from
Brown University.
In February the Partnership had a loss of 3.79%. The month was
particularly difficult for JWH SAP with conflicting U.S. economic
data released creating concerns as to when the U.S. recovery would
start. The result was a weaker U.S. dollar against major European
currencies causing the largest sector loss for the month. On the
flip side, renewed concerns over high levels of U.S. consumer and
corporate debt provided profitable trades in the short end of the
yield curve. Energies provided minimal profits, mostly from
crude. Other commodities markets offered mixed performance. The
Partnership posted a loss of $1,561,599 or $62.68 per Unit in
February.
During mid-month, the Japanese government announced the
possibility of implementing a stimulus package to include
inflating the economy and larger buy back programs in Japanese
government bonds. In addition, the Japanese government proposed a
possible program to buy stocks while at the same time introducing
new regulations making short selling more difficult. These
announcements adversely moved the Japanese government bond and
Nikkei against us. Interest Rate and Stock Indices sectors were
unprofitable for the month. Conversely, the Japanese government
announced that at the end of March they would no longer guarantee
time deposits in excess of 10 million yen. This caused concerned
Japanese citizens to lower their deposit amounts and in turn
purchase physical gold. The ensuing rally in gold pushed the
metals sector into positive territory.
The MLM Index Program (Unleveraged) had a loss of 0.75%. MLM had
a reversal of sector performance from January. All sectors were
positive in February except for energies.
Everest Asset Management has added two new branch offices to
assist with our ongoing effort to provide quality service to
selling agents. A branch office has been opened in Charlotte, NC
to represent Everest on the east coast, and a branch office has
also been set up in Minneapolis, MN to assist in states west of
the Mississippi. Ruth Mignerey will be the branch manager of the
Charlotte office. Ruth graduated from Syracuse University and was
most recently Assistant Vice President and Marketing Specialist in
Alternative Investments at IJL/Wachovia Securities. Ruth has five
years experience with Wachovia in structuring, marketing and
performing due diligence on futures funds. Randy Kelsey will be
the branch manager of the western office. Randy has been with
Cargill Investor Services (CIS) in Chicago between 1980 and 1997.
Between 1997 and 2001, Mr. Kelsey was a Senior Quality Consultant
at Cargill, Inc. in Minneapolis. While at CIS, Mr. Kelsey acted
as a wholesaler for the JWH Global Trust, a publicly offered trust
also traded by JWH.
In March the Fund had a loss of 8.56%. Both managers were
substantially down for the month. The Partnership posted a loss
of $3,361,027 or $136.10 per Unit in March.
JWH had a loss of 5.73%. For the JWH SAP, March was a
disappointing month despite positive returns from the energy,
interest rate, metals and agricultural sectors, which were over
powered by losses in currencies and indices. Japan's fiscal year
end in March played a key role in producing negative results from
yen-denominated markets. Japanese corporations repatriating yen
for year-end purposes initially put heavy downward pressure on the
USD yen from a level just shy of 134. However, a Japanese
government official drew a line in the sand calling for a floor at
a USD yen level of 125 126. Probably more influential was the
announcement by Japanese regulators tightening short selling rules
on the Nikkei higher from short covering and simultaneously moving
USD yen and yen crosses lower. The USD yen market quickly
reversed when the Japanese Government Pension and Investment Fund
announced a JPY 7 trillion larger allocation to non-government
fund managers for the new fiscal year. Fifteen percent of these
assets would be allocated to non-Japanese markets, creating a
demand for non-yen currencies. This brought USD yen quickly above
the 132 level. Needless to say, this type of volatility created a
very difficult trading environment.
The energy sector turned in a solid performance, with each market
in positive territory by taking advantage of the up trends.
Support for higher prices came from stronger-than-anticipated
economic numbers from the U.S. This provided strength to OPEC's
announcement in Vienna on March 15th, when they determined there
would be no changes in production, at least until the next meeting
on June 6th. Additionally, the U.S. Administration's overtures
towards Iraq gave further fuel to higher crude prices and put
doubt on the United Nations renewing the "Oil for Food" programs
for Iraq, which ends in May. Drawdowns in the U.S. stockpiles
this month in crude and energy products also provided strength to
the markets.
Currencies were particularly hard hit this month. As mentioned
previously, USD/yen and yen crosses were problematic. The U.S.
dollar against the British pound, Swiss franc and Euro traded in a
directionless fashion, resulting in losses as well. The South
African rand was especially volatile after two relatively quiet
weeks, resulting in trading losses. Minor currencies, including
the Australian and New Zealand dollar, provided small bright spots
with marginal profits.
Global indices were demanding because of the conflicting sentiment
surrounding both country specific and worldwide economic recovery.
The Nikkei, DAX, Eurostoxx and NASDAQ all started the month on a
positive note, but either failed to continue or simply faltered
and reversed trend, causing losses in these markets.
Profits in interest rates in Europe, Canada and Australia
marginally outweighed losses in the United States and Japan. The
Euro-Bund, Euro-Bobl and Australian 3-year bond futures provided
solid profits from the well-defined downtrend. U.S. interest
rates, which had been trending higher on fears of double dip
recession in February, turned sharply lower early in March and
experienced range bound trading for the remainder of the month,
which provided little opportunity for profits.
Metals were all positive with the exception of aluminum. Current
over-supply conditions in aluminum made it difficult to keep pace
with other base metals, copper, nickel and zinc, that trended
higher as a result of inventory building in the U.S. Gold and
silver continued to benefit from inflationary fears as nominal
rates of return remain very low.
MLM Index Program (Unleveraged) had a loss of 5.88% for the month,
but the effect on the Fund was a loss of approximately 2.96% since
the MLM Program is only one-half allocated for the overlay.
Dramatic market reversals, particularly in the energy markets,
spurred by the notion of a U.S. economic recovery and escalating
tension in the Middle East resulted in a very difficult March for
the MLM Index. Though certainly within the range of historical
experience, this kind of result is definitely on the lower end of
expectations for monthly returns of the Index. As noted last
month, the Index was positioned for continued weakness in
commodity prices and firmness in the bond market. As a result of
the action during the month, the Index now has a much more
balanced exposure to the commodity markets and currency markets,
and is short the U.S. bond markets. The change in positions after
a difficult month demonstrates the self-correcting nature of the
MLM Index technology. While there can be no assurance that the
new exposures will be successful, Mount Lucas Management
Corporation believes that the Index discipline limits the single
position risk.
During the quarter, additional Units sold consisted of 4.09
limited partnership units; there were no general partnership units
sold during the quarter. Additional Units sold during the quarter
represented a total of $5,941. Investors redeemed a total of
647.27 Units during the quarter. At the end of the quarter there
were 24,462.69 Units outstanding (including 77.48 Units owned by
the General Partner).
During the fiscal quarter ended March 31, 2002, the Partnership
had no credit exposure to a counterparty, which is a foreign
commodities exchange, or to any counter party dealing in over the
counter contracts, which was material.
Fiscal Quarter ended March 31, 2001
The Partnership recorded a gain of $4,275,321 or $163.15 per Unit
for the first quarter of 2001. This compares to a loss of
$5,502,945 or $200.52 per Unit for the first quarter of 2000.
The Partnership continued to employ two different trading
strategies for the first quarter 2001. The Fund was down 1.08% in
January. The John W. Henry & Company Financial and Metals
Portfolio (JWH) was profitable for the month due to interest rate
positions. A significant portion of the positive returns occurred
during the last days of the month surrounding the Fed cut in rates
on January 21st. In spite of the unusual action of two 50 basis
point rate cuts by the Fed in a single month, bond prices actually
declined by just over 2 points for January. All the remaining
sections traded, currencies, non-US stock indices and metals,
incurred losses. The Barclay Futures Index Program (BFIP) had an
allocation of approximately 50% of the Fund's assets for the first
quarter 2001. In January the Index had a decline for the Fund of
6.03%. The largest losses came in the energies and grains and
overall six of the seven sub-indexes (or sectors) were negative.
The only exception was profits in softs, especially sugar. All in
all, the Partnership posted a loss of $455,012 or $17.43 per Unit
in January.
The Fund was up 0.78% in February. The JWH allocation was again
positive with gains in short term interest rates. The short term
rates reacted to central bank easing and the massive rally in the
Japanese government Bond as the Japanese economy showed signs of
sputtering, realized gains. After eliminating their zero interest
rate policy last August because of the belief that a recovery was
around the corner, the Bank of Japan is again following a monetary
policy of easing as rates were brought down 15 basis points. The
Japanese stock market reacted and the Nikkei stock index hit a 15
year low during February. Currencies suffered losses for the
month as they were affected by a weakening in the euro, which
offset some of the earlier gains from the beginning of the year.
Late in the month, the euro tumbled to two-month lows against the
dollar in the wake of Turkey's lira currency float. Market
concerns about European bank exposure to Turkish assets helped
push the euro, already trending lower during the month, to fresh
troughs. Metals were slightly unprofitable for the month. The
BFIP allocation of the Fund lost 1.35%. The passive index had
losses in metals and currencies and profits in meats, softs, and
energies. Overall, the Partnership posted a gain of $318,381 or
$12.51 per Unit in February.
The Fund was up 10.42% in March. The JWH program was up 12.88%
with all four sectors being profitable. Currencies led the way
due to continued weakness in the Japanese yen, although the other
currencies were also profitable. Declining interest rates also
helped for the month, led by the Euro Bund and the Japanese
government bond. Many attributed the strength in bond prices to
be the result of the `flight to safety' due to continued weakness
in the equity markets. Stock index trading was mixed and there
was a small gain in metals. The BFIP gained back its losses from
January and February with a positive 7.49% result in March. The
gains came in the softs, metals, grains, currencies and energies.
Smaller losses came in meats and financials. Overall, the
Partnership posted a gain of $4,411,952 or $168.07 per Unit in
March.
During the quarter, additional Units sold consisted of 1026.49
limited partnership units; there were no general partnership units
sold during the quarter. Additional Units sold during the quarter
represented a total of $1,656,356. Investors redeemed a total of
1,060.18 Units during the quarter. At the end of the quarter
there were 26,069.99 Units outstanding (including 198.49 Units
owned by the General Partner).
During the fiscal quarter ended March 31, 2001, the Partnership
had no credit exposure to a counterparty, which is a foreign
commodities exchange, or to any counter party dealing in over the
counter contracts, which was material.
See Footnote 5 of the Financial Statements for procedures
established by the General Partner to monitor and minimize market
and credit risks for the Partnership. In addition to the
procedures set out in Footnote 5, the General Partner reviews on a
daily basis reports of the Partnership's performance, including
monitoring of the daily net asset value of the Partnership. The
General Partner also reviews the financial situation of the
Partnership's Clearing Broker on a monthly basis. The General
Partner relies on the policies of the Clearing Broker to monitor
specific credit risks. The Clearing Broker does not engage in
proprietary trading and thus has no direct market exposure, which
provides the General Partner assurance that the Partnership will
not suffer trading losses through the Clearing Broker.
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, 2001.
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 15, 2002 By: Everest Asset
Management, Inc.,
its General Partner
By: __/s/ Peter Lamoureux______________________
Peter Lamoureux
President
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
In connection with the accompanying second quarter report on Form
10-Q of Everest Futures Fund, L. P. for the quarter ended June 30,
2002, I, Peter Lamoureux, President and Treasurer of Everest Asset
Management, Inc., General Partner, Everest Futures Fund, L. P.,
hereby certify pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the
best of my knowledge and belief, that:
(1) such quarterly report on Form 10-Q for the quarter ended
September 30, 2002, fully complies with the
requirements of Section 13(a) or 15(d) of the Securities
Exchange Act 1934; and
(2) the information contained in such quarterly
report on Form 10Q for the quarter ended September 30, 2002,
fairly presents in all material respects, the financial
condition and results of operations of the
Everest Futures Fund, L. P.
EVEREST FUTURES FUND, L.P.
Date: November 15, 2002 By: Everest Asset Management, Inc.,
its General Partner
By: /s/ Peter Lamoureux
Peter Lamoureux
President, Treasurer, Secretary