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 March 31, 2007
Commission File Number 0-17555
THE EVEREST 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
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of
accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange
Act. (Check one): Large accelerated filer Accelerated filer
Non-accelerated filer X
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Act). Yes No X
2
PART I. FINANCIAL INFORMATION
Item 1 Financial Statements
Following are financial Statements for the fiscal quarter ending March 31, 2007
Fiscal Quarter Year to Date Fiscal Year Fiscal Quarter Year to Date
Ended 3/31/07 to 3/31/07 Ended 12/31/06 Ended 3/31/06 to 3/31/06
------------- ------------ -------------- -------------- -------------
Statement of
Financial Condition X X
Schedule of Investments X
Statement of Operations X X X X
Statement of Changes
in Partner's Capital X
Statements of Cash Flows X X X X
Notes ot Financial X
Statements
see accompanying notes to financial statements
3
EVEREST FUND, L.P.
(An Iowa Limited Partnership)
STATEMENTS OF FINANCIAL CONDITION
UNAUDITED
MARCH 31, 2007 DECEMBER 31, 2006
----------------- -----------------
ASSETS
Cash and cash equivalents $11,809,189 $13,513,720
Equity in commodity trading accounts:
Cash 2,183,321 4,204,891
Net unrealized trading gains on open contracts 485,917 328,654
Receivable from Refco Capital Markets, Ltd. (Note 1) 1,258,529 1,627,407
Interest receivable 98,147 94,086
----------- -----------
TOTAL ASSETS $15,835,103 $19,768,758
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Redemptions payable $ 1,032,564 $ 898,266
General partner management fee payable 57,087 72,484
Advisor's management fee payable 24,775 31,286
Accrued expenses 65,717 55,424
----------- -----------
TOTAL LIABILITIES 1,180,143 1,057,460
----------- -----------
PARTNERS' CAPITAL
General partners, I shares (0 and 0 units outstanding) -- --
Limited partners, A Shares (6,604.30 and 7,712.69 units
outstanding) 11,243,513 14,785,460
Limited partners, I Shares (961.06 and 932.14 units
outstanding) 1,782,114 1,930,473
Limited partners, AA Shares (1,456.47 and 1,786.21 units
outstanding) 1,463,980 1,792,866
Limited partners, II Shares (158.16 and 193.97 units
outstanding) 165,353 202,499
----------- -----------
TOTAL PARTNERS' CAPITAL 14,654,960 18,711,298
----------- -----------
TOTAL LIABILITIES AND PARTNERS'
CAPITAL $15,835,103 $19,768,758
=========== ===========
The accompanying notes are an integral part of this statement.
4
EVEREST FUND, L.P.
(AN IOWA LIMITED PARTNERSHIP)
CONDENSED SCHEDULE OF INVESTMENTS
MARCH 31, 2007
UNAUDITED
NUMBER OF MARKET VALUE % OF PARTNERS'
EXPIRATION DATES CONTRACTS (OTE) CAPITAL
---------------- --------- ------------ --------------
LONG POSITIONS:
FUTURES POSITIONS
Interest rates Jun 07 145 $ (21,486) -0.15%
Metals 0 0.00%
Energy Jun 07 - Jul 07 140 208,022 1.42%
Agriculture May 07 98 47,393 0.32%
Currencies Mar 08 75 (6,525) -0.04%
----------- -----
227,404 1.55%
FORWARD POSITIONS
Currencies Jun 07 141,005 0.96%
----------- -----
Total long positions 368,409 2.51%
----------- -----
SHORT POSITIONS:
FUTURES POSITIONS
Interest rates Jun 07 - Dec 07 158 9,725 0.07%
Metals May 07 11 (14,575) -0.10%
Energy May 07 28 (19,040) -0.13%
Agriculture May 07 205 213,482 1.46%
Indices Jun 07 4 (2,624) -0.02%
----------- -----
186,968 1.28%
FORWARD POSITIONS
Currencies Jun 07 (69,460) -0.47%
----------- -----
Total short positions 117,508 0.81%
----------- -----
TOTAL OPEN CONTRACTS 485,917 3.32%
CASH AND CASH EQUIVALENTS 11,809,189 80.58%
CASH ON DEPOSIT WITH BROKERS 2,343,570 15.99%
LESS LIABILITIES IN EXCESS OF OTHER ASSETS 16,284 0.11%
----------- -----
NET ASSETS $14,654,960 100%
=========== =====
The accompanying notes are an integral part of this statement.
5
EVEREST FUND, L.P.
(AN IOWA LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
FOR THE PERIOD JANUARY 1, 2007 THROUGH MARCH 31, 2007
UNAUDITED
JANUARY 1, 2007 JANUARY 1, 2006
THROUGH THROUGH
MARCH 31, 2007 MARCH 31, 2006
---------------- ---------------
TRADING INCOME (LOSS)
Net realized trading loss
on closed contracts $(1,751,239) $(2,295,894)
Change in net unrealized trading gain
(loss) on open contracts 156,502 1,782,573
Net foreign currency translation loss (3,106) (738)
Brokerage Commissions (38,439) (42,661)
----------- ------------
NET TRADING INCOME (LOSS) (1,636,282) (556,720)
Interest income, net of cash management fees 204,056 232,772
----------- ------------
TOTAL INCOME (1,432,226) (323,948)
----------- ------------
EXPENSES:
General partner management fees 185,077 290,425
Advisor Management fees 83,094 133,402
Administrative expenses 22,917 19,406
----------- ----------
TOTAL EXPENSES 291,088 443,233
----------- ----------
NET INCOME $(1,723,314) $ (767,181)
=========== ===========
NET INCOME (LOSS) PER UNIT OF PARTNERSHIP INTEREST
A SHARES, OUTSTANDING ENTIRE PERIOD $ (214.58) $ (70.29)
=========== ==========
NET INCOME (LOSS) PER UNIT OF PARTNERSHIP INTEREST
I SHARES, OUTSTANDING ENTIRE PERIOD $ (216.69) $ (55.42)
=========== ==========
NET INCOME PER UNIT OF PARTNERSHIP INTEREST
AA SHARES, OUTSTANDING ENTIRE PERIOD $ 1.43 2.03
=========== ===========
NET INCOME PER UNIT OF PARTNERSHIP INTEREST
II SHARES, OUTSTANDING ENTIRE PERIOD $ 1.49 2.11
=========== ===========
The accompanying notes are an integral part of these statements.
6
EVEREST FUND, L.P.
(An Iowa Limited Partnership)
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE PERIOD JANUARY 1, 2007 THROUGH MARCH 31, 2007
UNAUDITED
LIMITED
UNITS LIMITED PTRS UNITS PTRS
A SHARES A SHARES I SHARES I SHARES
---------- ------------ -------- ----------
BALANCES, January 1, 2007 7,712.69 14,785,460 932.14 1,930,473
Additional Units Sold 25.51 49,505 23.78 50,000
Redemptions (1,236.16) (2,246,782) (9.32) (17,273)
Transfers Between Classes 102.26 174,096 14.46 26,797
Less Offering Costs -- -- -- (488)
Net Loss -- (1,518,766) -- (207,395)
---------- ------------ -------- ----------
BALANCES, March 31, 2007 6,604.30 $ 11,243,513 961.06 $1,782,114
========== ============ ======== ==========
Net asset value per unit,
January 1, 2007 $1,917.03 $2,071.02
Net profit (loss) per unit (214.58) (216.69)
------------ ----------
Net asset value per unit
March 31, 2007 $1,702.45 $1,854.33
============ ==========
UNITS LIMITED UNITS LIMITED
AA PTRS AA II PTRS II
SHARES SHARES SHARES SHARES TOTAL
-------- ---------- ------ --------- ------------
BALANCES, January 1, 2007 1,786.21 1,792,866 193.97 202,499 18,711,298
Additional Units Sold -- -- -- -- 99,505
Redemptions (156.54) (157,347) (10.18) (10,638) (2,432,041)
Transfers between Classes (173.20) (174,096) (25.63) (26,797) 0
Less Offering Costs -- -- -- -- (488)
Net Income (Loss) -- 2,557 -- 289 (1,723,314)
-------- ---------- ------ --------- ------------
BALANCES, March 31, 2007 1,456.47 $1,463,980 158.16 $165,353 $ 14,654,960
======== ========== ====== ========= ============
Net asset value per unit,
January 1, 2007 $ 1,003.73 $1,043.98
Net profit (loss) per unit 1.43 1.49
---------- ----------
Net asset value per unit
March 31, 2007 $ 1,005.16 $1,045.47
========== ==========
The accompanying notes are an integral part of these statements.
7
EVEREST FUND, L.P.
(An Iowa Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE PERIOD JANUARY 1, 2007 THROUGH MARCH 31, 2007
UNAUDITED
JANUARY 1, 2007 JANUARY 1, 2006
THROUGH THROUGH
MARCH 31, 2007 MARCH 31, 2006
----------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,723,314) $ (767,181)
Adjustments to reconcile net loss to net cash
used in operating activities:
Decrease (increase) in commodity futures trading accounts:
Cash 1,861,321 (164,765)
Unrealized gain or loss on open commodity futures contracts (157,263) (1,782,584)
Decrease (increase) in interest receivable (4,061) (16,024)
Decrease(increase) in receivable from Refco Capital Markets 368,879 --
(Decrease) increase in incentive fees payable -- --
(Decrease) increase in management fees payable (6,511) (4,148)
(Decrease)increase in General Partner management fees payable (15,398) (32,354)
(Decrease) increase in other accrued expenses 10,294 (15,601)
------------ ------------
NET CASH USED IN OPERATING ACTIVITIES 494,196 (2,782,656)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of partnership units (2,297,744) (1,085,889)
Sale of partnership units, net 99,017 569,179
------------ ------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (2,198,727) (516,710)
------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,704,531) (3,299,366)
CASH AND CASH EQUIVALENTS, AT BEGINNING OF PERIOD 13,513,720 21,483,743
------------ ------------
CASH AND CASH EQUIVALENTS, AT END OF PERIOD $ 11,809,189 $ 18,184,377
============ ============
The accompanying notes are an integral part of these statements
EVEREST FUND, L.P.
NOTES TO FINANCIAL STATEMENTS
March 31, 2007
(1) GENERAL INFORMATION AND SUMMARY
Everest 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. On September 12, 1991, the Partnership
changed its name to "Everest Futures Fund, L.P." The Partnership thereafter
has traded futures contracts and options on futures contracts on a
diversified portfolio of financial instruments and precious metals as well as
forward contracts on currencies. In November 2003 the Partnership changed its
name to its present form.
On July 1, 1995 the Partnership recommenced the offering of its Units as a
Regulation D, Rule 506 private placement. Effective June 4, 2004, the
Partnership introduced a new share category, Class I Units, or Institutional
Units which have an ongoing Offering and Organization fee of 1/12 of 0.10% of
the NAV per unit per month and an on going compensation fee equal to 1% of
the net asset value of Class I Units sold The Class A Units, (retail shares)
continue to be charged an initial 1% Offering and Organization fee as a
reduction to capital.
The Partnership clears all of its futures and options on futures trades
through Calyon Financial, Inc. (CFI), its clearing broker, and all of its
foreign currency trading through Calyon Financial SNC (CFS)an affiliate of
CFI.
Receivable from Refco Capital Markets, Ltd.
On October 13, 2005, Refco, Inc. ( Refco ) announced that liquidity within
one of its operating subsidiaries, Refco Capital Markets, Ltd. ( RCM ), was
no longer sufficient to continue operations and that RCM was imposing a
fifteen day moratorium on all of its activities in an attempt to protect the
value of that business. RCM acted as the Partnership s foreign currency
broker at that time and as of such date, approximately 20% of the Partnership
s assets were held on deposit in accounts at RCM.
On October 17, 2005, Refco and certain subsidiaries filed a bankruptcy
petition in New York seeking protection from creditors under Chapter 11 of
the United States Bankruptcy Code. RCM was included in this filing and as a
result, all of the dealings with RCM are subject to control by the Bankruptcy
Court. In connection with the bankruptcy, the president of the General
Partner was appointed to the Official Creditors Committee on October 28,
2005. Based on information provided to the Partnership by RCM, the
Partnership has cash and open trade equity in neutral currency positions of
approximately $7,500,000 remaining at RCM. Management believes there are
substantial assets at RCM, but the amount of such assets which the
Partnership will ultimately recover, if any, is unknown at the present time.
Due to the above, effective October 31, 2005, the Partnership has created
Classes AA and II of shares and transferred to such classes the value of
Partnership assets held in RCM as of October 17, 2005, together with a
reserve for the estimated expenses of collection and related matters. The
amount of such assets which will become available to the Partnership, if any,
is dependent on several matters associated with the bankruptcy of RCM.
Depending on the disposition of these matters, the final net asset value may
differ materially from the preliminary amounts which the Partnership has
published since October 31, 2005. Redemptions of Classes AA and II are
restricted until the final net asset value can be determined. Subsequent to
October 31, 2005, redemptions and certain fees will only be calculated and
paid on the net asset value of Class A and Class I units, thus segregating
the assets held by RCM and the reserve established in connection with the RCM
legal proceedings.
The Fund described the foregoing events in more detail in a general letter to
Limited Partners October 20, 2005 (the Letter ). The Letter appears as an
attachment to a filing on Form 8-K by the Fund on October 21, 2005. Both the
substance of the Form 8-K and its attached letter exhibit have
been incorporated into this Form 10-K by reference.
Mr. Lamoureux was appointed by the U.S. Trustee s Office as a member of the
Official Committee of Unsecured Creditors in the Refco bankruptcy on October
28,2005.
Refco , Inc. filed a plan under Chapter 11 ( the Plan ) and a Disclosure
Document with the Bankruptcy Court. The Plan was confirmed by the Bankruptcy
Court, and became effective December 26, 2006. Based on the estimated
recovery amounts contained in the schedules of the Plan and Disclosure
Document the General Partner as of October 31, 2006 (but effective
September 30, 2006) reduced the value of the Class AA and Class II
assets to 40% of the amounts at which such assets held at Refco were
valued as of October 17, 2005. In accordance with Generally Accepted
Accounting Principles and in particular rule FAS 5-3 paragraph 105,
the write down was taken at September 30, 2006. As of October 17, 2005
the assets were valued at $7,482,332. The adjustment is $4,489,399
with a remaining asset balance of $2,992,933.This write down is only
an estimate and was reflected in the statement of operations at
September 30, 2006. Everest has not included litigation recoveries,
if any, in the write down, because the success of such actions cannot
be estimated at this time. No assurances can be made that there will be any
further recoveries for Everest from these efforts.
The write down amount was determined after the issuance of Everest s
September 30, 2006 investor account statements, and therefore the October
investor statements that were issued in November reflected the revised
Net Asset Values for September 30, 2006.
The Fund described the foregoing events in more detail in a general
letter that appears as an attachment to a filing on Form 8-K by the
Fund on November 6, 2006 The Form 8-K has been incorporated into
this Form 10-K by reference.
On December 28, 2006, The Everest Fund, L.P. received the first in a series of
anticipated distributions in the Refco matter. Of the approximately $7,500,000
that became inaccessible in October 2005, the Fund has received $1,365,525.51.
That represents an amount equal to approximately 18% of the frozen assets. The
December 2006 statement reflected a prorata decrease in the number of AA and II
shares, and a corresponding increase in the A units or I units to reflect their
pro rata share of the distribution for investors who have been in the
Fund since October 12, 2005. For investors who were in the Fund on
October 12, 2005 and have since redeemed, the Partnership redeemed a
portion of their AA and II shares effective December 31,2006 and sent out
checks for their pro rata share of the distribution in January 2007.
These changes do not apply to those who have come into the Fund after
October 2005.
On March 29, The Everest Fund, L.P. received the second in a series of
anticipated distributions in the Refco matter in the amount of $368,878.96.
Of the approximately $7,500,000 that became inaccessible in October 2005, we
have now received $1,734,404.47. That represents an amount equal to
approximately 23% of the frozen assets. The Fund has increased the Class A
units for each investor in the Fund by their pro rata share of the
distribution. Checks have been mailed for the benefit of any investors who
have redeemed.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents
Cash equivalents represent short-term highly liquid investments with
maturities of 90 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.
Reclassifications
Certain prior year amounts have been reclassified to conform with the current
year classifications.
Revenue Recognition
Commodity futures contracts, forward contracts, physical commodities, and
related options are recorded on the trade date basis. 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.
Net Income (Loss) Per Unit of Partnership Interest
Net income (loss) per unit of partnership interest is the difference between
the net asset value per unit at the beginning and end of each period for
both.
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 that
approximate fair value, due to their highly liquid nature and short-term
maturity. Commodity futures contracts, forward contracts, physical
commodities, and related options are valued as described above. The
receivable from RCM is valued at management s best estimate as described
above.
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).
Subject to restrictions on the redemption of Series AA or Series II units by
existing investors as mentioned above, Limited Partners may cause any or all
of their Class A Units to be redeemed as of the end of any month at net asset
value on fifteen days' prior written notice to the Partnership, (for Class I
Units, as of the end of any quarter on forty-five days notice), 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. Class I Limited
Partners may cause any or all of their Units to be redeemed as of the end of
any quarter on 45 days prior written notice to the Partnership or such
lesser period as is acceptable to the Partnership. The Partnership will be
dissolved at December 31, 2020, or upon the occurrence of certain events, as
specified in the Limited Partnership Agreement.
(4) CONTRACTS AND AGREEMENTS
John W. Henry & Company, Inc. (JWH) began trading its Strategic Allocation
Program with a trading allocation of $40 million on July 1, 2001. JWH
receives a monthly management fee equal to 0.167% (2% annually) of the
Partnership s month-end net asset value, (as defined), and a quarterly
incentive fee of 20% of the Partnership s new net trading profits, (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 September 1, 2001, Mount Lucas Management Corporation ( MLM ) was
added as a 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. Effective February 2003, the
management fee was reduced to 0.04167% (0.50% annually). As MLM uses the MLM
Index -- Unleveraged, they do not receive an incentive fee. MLM was
terminated effective October 31, 2003.
Beginning in June 2003, John W. Henry & Company, Inc. ( JWH ) began trading
JWH Global Analytics Program ( GAP ); Currency Strategic Allocation Program
( CSAP ) and Worldwide Bond Program ( WBP ) with a trading allocation of
$27 million.
Net brokerage commissions are recorded in the statements of operations as a
reduction of trading income.
Effective November 2003, the General Partner charges the Partnership a
monthly management fee equal to 0.50% of the Partnership s Class A
beginning-of-month net asset value. From May 2002 through October 2003, the
General Partner charged the Partnership a monthly management fee of either
0.5104% or 0.5156%, depending on the total amount which the Partnership had
allocated to trading, including notional funding. Prior to May 2002, the
General Partner charged the Partnership a monthly management fee equal to
0.5052% of the Partnership beginning-of-month net asset value, as defined
Effective June 2004, the General Partner charges the Partnership a monthly
management fee equal to 0.229% of the Partnership s Class I beginning-of-
month net asset value. From the monthly management fee the General Partner
deducts the round turn trading costs and related exchange fees (between $5.80
to $10.70 per round turn trade on domestic exchanges, and higher for foreign
exchanges) and pays the selling agents and certain other parties, if any, up
to 50% of the fee retained by the General Partner.
As of March 31, 2007 JWH s allocation was approximately $ 13.9 million
(including approximately $ 0.89 million in notional funding). The General
Partner may replace or add trading advisors at any time.
The Partnership, through August 31, 2005, cleared all of its futures trades
through Cargill Investor Services, Inc. ( CIS ) and all of its foreign
currency trading activity through CIS Financial Services, Inc. ( CISFS ),
an affiliate of CIS. In September
2005, Refco Group Ltd. acquired CIS and CISFS and the clearing and related
services previously performed by CIS were performed by REFCO, LLC and the
foreign currency trading previously performed by CISFS was provided by Refco
Capital Markets, Ltd. Beginning in mid-October 2005, the Partnership engaged
Calyon Financial, Inc. ( CFI ) as the Partnership s futures and options
on futures broker, and engaged Calyon Financial, SNC ( CFS ) as the
Partnership s foreign currency or forwards currency broker, (collectively
referred to as the Clearing Brokers ). The agreements provide that the
Clearing Brokers charge the Partnership brokerage commissions at the rate of
between $5.80 to 10.70 per round-turn trade, plus applicable exchange, give
up fees and NFA fees for futures contracts and options on futures contracts
executed on domestic exchanges and over the counter markets. For trades on
certain foreign exchanges, the rates may be higher.
The Partnership also reimburses the Clearing Brokers for all delivery,
insurance, storage or other charges incidental to trading and paid to third
parties.
The Partnership earns interest on 95% of the Partnership's average monthly
cash balance on deposit with its Brokers at a rate equal to the average 91-
day Treasury Bill rate for US Treasury Bills issued during that month.
Excluding amounts held at RCM, approximately 87% and 99% respectively of cash
and cash equivalents at December 31, 2006 and 2005 are funds deposited with a
commercial bank and invested under the direction of Horizon Cash Management,
Inc. (Horizon). Horizon receives 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) 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 in the amount of $559,211 as of March
31, 2007 with an interbank market maker (Calyon Financial SNC) 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 forfeiture. 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, on its entire amount on deposit
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 Partnership s policy is to continuously monitor its exposure to market
and counterparty risk through the use of a variety of financial, position and
credit exposure reporting and control procedures. In addition, the
Partnership has a policy of reviewing the credit standing of each clearing
broker or counter party with which it conducts business.
The limited partners bear the risk of loss only to the extent of the net
asset value of their Partnership units.
The Partnership receivable from RCM of approximately $1.1 million represents
the Partnership s receivable from RCM, who is currently in bankruptcy.
These funds are unavailable to the Partnership until the bankruptcy
proceedings are finalized.
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.
(6)FINANCIAL HIGHLIGHTS
The following financial highlights show the Partnership s financial
performance for the three months ended March 31, 2007. Total return is
calculated as the change in a theoretical limited partner s investment over
the entire period. An individual partner s total returns and ratios may
vary from the total return based on the timing of contributions and
withdrawals.
3/31/07 3/31/06
1. Total return: A Shares -11.19% -3.14%
I Shares -10.46% -2.37%
AA Shares 0.14% 0.09%
II Shares 0.14% 0.09%
2. Ratio to average net assets:
Total income A Shares -9.41% -1.42%
I Shares -9.75% -1.22%
AA Shares 0.40% 0.06%
II Shares 0.40% 0.06%
3. Expenses, excluding incentive fees:
A Shares 1.99% 1.98%
I Shares 1.13% 1.21%
AA Shares 0.25% -0.02%
II Shares 0.25% -0.02%
Incentive fees
4. Total expenses
A Shares 1.99% 1.98%
I Shares 1.13% 1.21%
AA Shares 0.25% -0.02%
II Shares 0.25% -0.02%
\
The total income and general and expense ratios are computed based upon the
weighted average net assets for the Partnership for the period ended March
31, 2007.
(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, 2006, as filed with the
Securities and Exchange Commission on March 30, 2007, 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 March 31, 2007
The Partnership recorded a loss of $1,723,314 or $214.58 per Unit of Class A
Units ( $216.69 for Class I Units, a gain of $1.43 for Class AA Units
and a gain of $1.49 for Class II Units ) for the fiscal quarter ended
March 31, 2007. This compares to a loss of $ 767,181 or $70.29 per
Unit of Class A Units ($55.42 for Class I Units, a gain of $2.03
for Class AA Units and a gain of $2.11 for Class II Units) for
the fiscal quarter ended March 31, 2006. The quarter ended
March 31, 2007 showed a loss of 11.19% (total return) for the
Class A Units of the fund ( 10.46% for the Class I Units, a gain
of 0.14% for Class AA Units and a gain of 0.14% for Class II Units).
The Partnership continued to employ John W. Henry & Company, Inc. s (JWH)
GlobalAnalyticsR Family of Programs, Worldwide Bond Program and Currency
Strategic Allocation Program. The Partnership has changed it s allocation
to the Fund s investment firm, the John W. Henry & Company, Inc. (JWH).
To reiterate, the Partnership has dropped the Fund s allocation to the
Currency Strategic Allocation Program (CSAP) and increased the allocation
to the Global Analytics Program (GAP) to 75% with the remaining 25% going
to the World Wide Bond Program. We look forward to the possibility of
better risk adjusted returns from the new allocation.
JWH is taking steps to reduce the volatility so long associated
with JWH investment programs. The first step has been to install a new
management team. As of January 2007, Mark Rzepsinski, the former President
and Chief Investment Officer, has been replaced by Ken Webster as the new
President and Matt Driscoll as the new Chief Investment Officer. Mr.
Webster, who has been with the firm 12 years, is the former Senior Vice
President and Chief Operating Officer. Mr. Driscoll, who has been with the
firm 15 years, was the Senior Vice President of trading and research. We
believe these changes will be productive for our Fund s investment at JWH.
Class A Units were positive 1.24% in January 2007 resulting in a Net Asset
Value per unit of $ 1,940.87 as of January 31, 2007.
Class I Units were positive 1.51% resulting in a Net Asset Value of $2,102.21
as of January 31, 2007.
The Fund s performance was positive for the month of January. The interest
rate sector led performance with strong gains as the program s systematic
trend following approach enabled it to profit from a weakening trend in
European and U.S. fixed income markets. The Fund s disciplined systematic
investment style was able to profit despite short-term market moving events
that caused spikes in volatility resulting in strong reversals. This type of
activity diminished the Funds returns as the currency sector experienced
losses due to a continuation of the reversal in the U.S. dollar s weakening
trend (which started in December) against major European currencies.
The equity indices sector was slightly positive for the month despite losses
in the Nasdaq E-mini which partially offset gains of the other components in
the sector. The energy sector was slightly positive for the month despite
changing weather conditions which caused extreme volatility within the
sector. Despite the volatility within the sector, crude oil and London gas
oil were able to offset the losses caused by natural gas which was the
sectors worst performer. The currency sector was negative for the month as
currency markets continued to oscillate. Towards the end of January, the
dollar had its largest fall against the Japanese yen in more than two months
after U.S. Treasury Secretary Henry Paulson said he would be watching the
Japanese currency very carefully. This decline limited the Fund s gain in
this market. The Japanese yen was the best performer in the sector, while
the euro suffered the largest loss. The metals sector was negative for the
month as precious metal prices reacted to fluctuations in the U.S. dollar.
The early January reversal in the U.S. dollar s weakening trend reduced the
appeal of gold as an alternative investment. Gold generally moves in the
opposite direction of the dollar. However, gold rose 3.9 percent for the
month of January as the dollar once again weakened and speculation increased
that the precious metal s decline was excessive. All components of the
sector were negative for the month as a result of the increased volatility.
The agriculture sector was negative for the month as price instability hurt
performance. The sector s negative performance was limited by New York
sugar, which was the sector s best performer, as prices continued to fall due
to a global surplus of the commodity continued.
In conclusion, performance was positive for the month as the Fund benefited
from the continued sell-off in U.S., European and British fixed income
markets. The indices and energy sectors also added to performance and helped
to offset losses in the currency sector which suffered sharp reversals as
markets continued to speculate about the health of the world s industrialized
economies. The agriculture and metals sectors also limited gains as short-
term marketmoving events resulted in strong reversals or trend-less markets.
As always, the program stands ready to potentially take advantage of any
continuing or new trends that may emerge.
Update on the RCM recovery efforts
Refco, Inc. filed a plan under Chapter 11 (the Plan ) and a Disclosure
Document with the Bankruptcy Court. The Plan was confirmed by the Bankruptcy
Court and became effective December 26, 2006. An initial distribution was
made to investors in December 2006, please refer to last month s letter for
details. The Plan Administration Committee, of which Peter Lamoureux is a
member, is actively liquidating other assets. We anticipate another
distribution within the next two months.
Class A Units were negative 4.77% in February 2007 resulting in a Net Asset
Value per unit of $1,848.37 as of February 28, 2007.
Class I Units were negative 4.50% resulting in a Net Asset Value of
$2,007.54 as of February 28, 2007.
The Fund s performance was negative for the month of February. This negative
performance was a direct result of the explosion in volatility accompanying
the last week of the month. Trading up to that point was positive for the
month, but the events of the week reverberated throughout global markets and
reversed what few trends had been evident earlier in the month. The events
were primarily portrayed in the U.S. media as a stock market decline, but the
issues were far broader than that. Whether pundits cared to lay the blame on
the Chinese stock market or the trouble in the sub-prime loan sector, global
markets awoke to a measure of short-term volatility not seen for many months
which was not confined simply to the equities markets. As an example, the
gold market hovered around the high $690s, a level not seen since May of last
year. Similarly, the wheat, corn and soybean markets were hitting full-year
highs as the last week of February opened. All of these markets suffered
sharp declines during the last week, which translated to losses for the Fund.
Another example of this sudden reversal in price behavior was the Japanese
yen which was at its yearly low, but strengthened over 2 percent against the
dollar in the last three trading sessions. These examples in unconnected
markets give a flavor of how widespread the difficulty was in the last three
days of the month. As long-term trend followers, JWH will position the Fund
in the direction of a lasting move, so the Fund will be long a market that is
reaching new yearly highs or short a market that is reaching new yearly lows.
Part of the Funds strategy rests in investing in markets that behave
differently from each other. In the unusual circumstances where historical
uncorrelated markets reverse in lockstep, the Funds systematic approach will
be susceptible to setbacks.
The metals sector was the best performing sector despite strong reversals in
precious metals. The agriculture sector was also positive for the month as
corn rose to a 10-year high in Chicago and soybeans reached $8.0775, their
highest level since June 2004. The stock indices sector was slightly
positive for the month despite the severe volatility in global equity
markets.
The currency sector was negative for the month as the yen rallied against the
dollar to its highest level in more than 19 months on February 27th amid a
correction in U.S. stocks. The energy sector was negative for the month as
natural gas reversed its strengthening trend and had its biggest loss in more
than six weeks in New York. Crude oil s reversal also hurt performance as it
rose to $61.79 a barrel, its highest closing price this year. All components
of this sector exhibited negative performance for the month. The interest
rate sector was also negative for the month as global bond markets reversed
their weakening trend as the sell-off in the global equity markets at the end
of the month fueled demand for government debt.
In conclusion, the Fund finished negative for the month as the weakness in
global equity markets increased volatility in financial markets around the
world. What does this sudden burst of volatility across markets mean? No
one can be sure. Sometimes it is unexpected turbulence along the current
path. Other times it is a harbinger of a major shift in direction. In the
latter case, while the short-term performance is uncomfortable, the long-term
trends which come from the change can more than make up for the discomfort.
The Fund looks to the markets for its signals, and continues to apply its
disciplined systematic trading approach. The Fund was not positioned for this
sudden turn of events. However, an element of turmoil has been injected into
the markets, which if it persists, has the potential to be a positive
development for the Fund s style of trading. The Fund remains poised to
potentially take advantage of new opportunities as they present themselves.
Update on the RCM recovery efforts
Refco, Inc. filed a plan under Chapter 11 (the Plan ) and a Disclosure
Document with the Bankruptcy Court. The Plan was confirmed by the Bankruptcy
Court and became effective December 26, 2006. An initial distribution was
made to investors in December 2006. The Plan Administration Committee, of
which Peter Lamoureux is a member, is actively liquidating other assets. We
anticipate another distribution within the next two months.
Class A Units were negative 7.89% in March 2007 resulting in a Net Asset
Value per unit of $1,702.45 as of March 31, 2007.
Class I Units were negative 7.63% resulting in a Net Asset Value per unit
of $1,854.33 as of March 31, 2007.
The Fund experienced losses in March as the explosion in volatility that
occurred at the end of February continued into early March. On February 27th,
the largest drop in China s stock market in a decade and the global sell-off
that followed seemed to shift market sentiment towards fears about the
slowdown in the U.S. housing market and the overall health of the U.S.
economy. The sudden reappearance of risk in the world financial markets
caused losses in various sectors as the Fund s systematic trading approach
was not positioned for this sudden turn of events. The currency, metal and
agriculture sectors all suffered losses at the beginning of the month as
sharp reversals, which carried over from February, led to the exiting of
positions. The markets quickly stabilized and spent the remainder of the
month retracing their overextended moves. Performance suffered even further
towards the end of the month as global fixed-income markets weakened. The
energy sector was positive for the month as weather and geopolitical events
were the driving forces of price movements.
In conclusion, the Fund s performance was negative for the month as the drop
in global equity markets, which increased volatility in financial markets
around the world, carried over into the first few days of March. The Fund s
systematic trend following methodology caused it to exit positions during
this difficult turn of events. Short-term market dislocations can be a
harbinger of a major shift in trends. However, the dislocation of the
markets thus far has been a short-lived phenomenon, resulting in a temporary
spike in volatility. The Fund will continue to apply our disciplined
systematic trading approach to potentially take advantage of new
opportunities as they present themselves.
Update on the RCM recovery effort
Second Refco Distribution (Not applicable to investors who came into the
Fund after October 2005)
Refco, Inc. filed a plan under Chapter 11 (the Plan ) and a Disclosure
Document with the Bankruptcy Court. The Plan was confirmed by the Bankruptcy
Court and became effective December 26, 2006. An initial distribution was
made to investors in December 2006. The Plan Administration Committee, of
which Peter Lamoureux is a member, is actively liquidating other assets.
On March 29, The Everest Fund, L.P. received the second in a series of
anticipated distributions in the Refco matter in the amount of $368,878.96.
Of the approximately $7,500,000 that became inaccessible in October 2005, we
have now received $1,743,404.47. That represents an amount equal to
approximately 23% of the frozen assets. The Fund has increased the Class A
units for each investor in the Fund by their pro rata share of the
distribution. Checks have been mailed for the benefit of any investors who
have redeemed.
See Note 5 of the Notes to 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 Note 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.
Fiscal Quarter ended March 31, 2006
The Partnership recorded a loss of $767,181 or $70.29 per Unit of Class A
Units ($55.42 for Class I Units, a gain of $2.03 for Class AA Units and
a gain of $2.11 for Class II Units) for the fiscal quarter ended March 31, 2006.
This compares to a loss of $3,249,420 or $218.23 per Unit of Class A Units
($202.84 for Class I Units) for the fiscal quarter ended March 31, 2005.
The quarter ended March 31, 2006 showed a loss of 3.14% (total return)
for the Class A Units of the fund (-2.37% for the Class I Units,a gain of
0.09% for Class AA Units and a gain of 0.09% for Class II Units).
The Partnership continued to employ John W. Henry & Company, Inc. s (JWH)
Global Analytics Family of Programs, Worldwide Bond Program and Currency
Strategic Allocation Program.
Class A Units were negative 2.71% in January 2006 resulting in a Net Asset
Value per unit of $2,177.48 as of January 31, 2006.
Class I Units were negative 2.45% resulting in a Net Asset Value of $2,284.32
as of January 31, 2006.
The Fund s overall return was negative for the month of January as losses
in the interest rate, currency and energy sectors outweighed the gains
achieved in the other sectors. The interest rate sector led the Fund s
losses on increased speculation of rising global interest rates. The metals
sector led the positive performing sectors along with more moderate gains
achieved in both indices and agriculture. Metals benefited from gold rising
to a 25-year high as investors sought a safe haven in the precious metal.
This was due to increased fears about Iran s nuclear program and a Hamas
led-Palestinian government.
The fixed income sector was the Fund s worst performing sector as the fixed
income markets in the U.S., Europe and Japan sold-off over fears of their
respective central banks raising interest rates. The currency sector also
suffered losses as the U.S. dollar posted its biggest monthly decline against
the euro since November 2004. The dollar also suffered losses against the
Swiss franc, Japanese yen and the euro as investors no longer expected
interest rate differentials to benefit the dollar as the spread narrowed
between the U.S. and both European and Japanese interest rates. The Fund s
energy sector underperformed as volatility within the sector increased as oil
and natural gas are now being used as geopolitical weapons by Iran,
Russia, Venezuela and militants in Bolivia. Crude oil, which is up 41
percent from a year ago and 11 percent for the month, helped to limit losses
in this sector despite the increased volatility. However, the gains were not
enough to offset the losses incurred in natural gas, which for the first time
in almost 6 months dropped below $8 in New York. Natural gas fell 17 percent
for the month as mild weather in the largest U.S. consuming regions cut
demand which limited the need for utilities to pull from reserves stored in
underground aquifers and caverns.
The metals sector was the best performing sector for the month. Gold extended
its surge to a 25-year high, and silver climbed to its highest level since
March 1984. Gold s increase occurred on concerns that the dollar may weaken
because of higher oil prices, increasing the metal s appeal as a hedge
against further declines in the U.S. currency. Global Stock Indices were
positive for the month as European stock indices had their best January rally
in eight years as energy stocks along with miners and steelmakers gained on
expectations earnings would benefit from higher commodity prices. The
agriculture sector was also positive on the month as sugar reached a 16-year
high in London and a 25-year high in New York. The record highs were a
result of the surging cost of crude oil which increased the demand for
ethanol, a sugar cane by-product. Brazil, the biggest producer and exporter
of sugar, is converting more of its cane crop to ethanol to cope with record
gasoline prices.
In conclusion, the Fund finished negative for the month as the fixed income,
currency and energy sectors suffered losses. Although the Fund
underperformed, we remain confident that our trend following approach will
withstand the recent market volatility and remain poised to take advantage of
new opportunities as they present themselves.
Update on the RCM recovery efforts
The Official Committee of Creditors in the Refco case has posted a website
for information and updates. It has a summary of events in October, November
and December 05; a calendar of events for January and February of 06; a
bankruptcy basics primer; FAQs; and a section to ask questions. The site is
at: www.refcocommittee.com. This may be too much information in too legal a
format, and it is not specific to the recovery efforts of any one investment
fund, but at least something has been organized. The questions and the FAQ
section may be more common sense based and have less legal terminology.
The next issue to be determined by the court is a decision on whether Refco
Capital Markets (RCM) was acting as a stockbroker. If so, RCM would go into
a Chapter 7 liquidation. The Everest Fund has filed a motion objecting to
the conversion, as we do not believe that RCM was acting as a stockbroker.
The arguments are scheduled to be heard on February 14th. Everest Asset
Management, Inc. remains available to answer any questions specific to the
Everest Fund. The Fund's offering documents have been updated and we have
taken in investor money for January and February.
Class A Units were negative 5.91% in February 2006 resulting in a Net Asset
Value per unit of $2,048.72 as of February 28, 2006.
Class I Units were negative 5.65% resulting in a Net Asset Value of $2,155.24
as of February 28, 2006.
The Fund s performance was negative for the month as listless markets
continued to hamper the Fund s long-term trend following approach. The
majority of the losses were realized in the currency sector. Currency
markets gyrated over speculation surrounding potential global interest rate
moves. The energy sector incurred losses on concerns over geopolitical
events. While the market continued to be apprehensive over the situation in
Iran and Iraq, attacks in Nigeria and Saudi Arabia added to the market s
trepidation. Limiting losses in this sector was natural gas, as prices fell
to their lowest level in almost nine months. The metals sector was also
negative for the month as volatility hurt performance. Global Stock indices
did not perform well for the month as Asian stocks posted their first monthly
decline since October 2005 and the Nasdaq dropped 1.1 percent. Market
instability was also a factor in the indices sector as U.S. stocks suffered
their biggest loss in five weeks on the last day of trading in February. The
interest rate sector was slightly positive for the month as performance in
various markets counterbalanced each other. Performance in the agriculture
sector was slightly negative for the month as trading in N.Y coffee and N.Y.
sugar hindered returns, while trading in CBOT wheat limited losses.
In conclusion, the Fund finished negative for the month as market conditions
were unfavorable for JWH ' s systematic long-term following approach. As
always, the Fund stands ready to potentially profit from any new trends that
may emerge.
Update on the RCM recovery efforts
The Official Committee of Creditors in the Refco case has posted a website
for information and updates. It has a summary of events in October 05
through February 06; a calendar of events for March 06; a bankruptcy basics
primer; FAQs; and a section to ask questions. The site is at:
www.refcocommittee.com. This may be too much information in too legal a
format, and it is not specific to the recovery efforts of any one investment
fund, but at least something has been organized. The questions and the FAQ
section may be more common sense based and have less legal terminology.
The issue on whether the Refco Capital Markets (RCM) case should be converted
to Chapter 7 liquidation was heard by the courts during February and early
March. Closing arguments will be heard on Tuesday, March 14th. Everest Asset
Management, Inc., the Official Committee of Unsecured Creditors, and the
debtors (Refco) object to the conversion. We may know the Judge s ruling
on Tuesday the 14th, or shortly thereafter. Everest Asset Management, Inc.
remains available to answer any questions specific to the Everest Fund. The
Fund's offering documents have been updated and we have had new investments
for January, February and March.
Class A Units were positive 5.81% in March 2006 resulting in a Net Asset
Value per unit of $2,167.80 as of March 31, 2006.
Class I Units were positive 6.08% resulting in a Net Asset Value per unit
of $2,286.17 as of March 31, 2006.
The fixed income sector led performance with robust gains as the Fund s
systematic trend-following approach enabled it to profit from rising global
interest rates. The indices and metal sectors also added to the positive
performance as silver continued to trend higher, and the indices sector
benefited from stronger economic data in Europe. The indices sector also
profited from the continued strength of commodity stocks on the back of
global growth in China. Limiting the Fund s gains for the month was the
currency sector, which continued to suffer from range-bound trading, along
with underperformance in both the energy and agriculture sectors.
The fixed income sector was the Fund s strongest performer for month as
Japanese, German and U.S. government debt endured stronger than expected
consumer confidence and rising inflationary fears. The indices sector was
also positive for the month as Asian stocks approached a 16-year high on
surging demand for metals and oil, and the Nikkei 225 climbed above 17,000
for the first time in more than five years. The metals sector was also
profitable for the month as silver reached $11.66 on March
30th, the highest intraday price since September 1983.
The energy sector was the Fund s worst performer as geopolitical induced
volatility limited gains within the sector. Performance in the currency
sector was also negative for the month as range-bound trading continued to
negatively affect the Fund s long term trend following approach. Although
some currencies had directional moves during the month, they were then
accompanied by strong reversals. The agriculture sector also underperformed
for the month as gains made in London sugar were not enough to offset the
underperformance caused by the weakness in CBOT wheat and corn.
In conclusion, the Fund was positive for the month, with the fixed income
sector leading performance as Japanese, German and U.S. fixed income markets
fell. As always, the Fund stands ready to potentially take advantage from any
continuing or new trends that may emerge.
Update on the RCM recovery effort
The Official Committee of Creditors in the Refco case has posted a website
for information and updates. It has a summary of events in October 05
through February 06; a calendar of events for March 06; a bankruptcy basics
primer; FAQs; and a section to ask questions. The site is at:
www.refcocommittee.com. This may be too much information in too legal a
format, and it is not specific to the recovery efforts of any one investment
fund, but at least something has been organized. The questions and the FAQ
section may be more common sense based and have less legal terminology.
On March 14th the Judge tentatively ruled that Refco Capital Markets (RCM)
should be converted to a Chapter 7, but he agreed to give the parties 45 days
in order to try to work out a consensual plan for reorganizing RCM and
distributing the assets on hand. Everest Asset Management, Inc. remains
available to answer any questions specific to the Everest Fund. The Fund ' s
offering documents have been updated and we have had new investments for
January, February and March.
During the reporting period, fiscal quarter ended March 31, 2006, additional
Units sold consisted of 264.9 limited partnership Units; there were zero
general partnership Units sold during the period. Additional Units sold
during the period represented a total of $575,000. Investors redeemed a
total of 637.11 Units during the period and the General Partner redeemed zero
Units. At the end of the period there were 13,940.87 Units outstanding
(including zero Units owned by the General Partner). As of March 31, 2006
the estimated Class AA NAV per unit was $2,348.31 and Class II NAV per unit
was $2,442.49.
During the fiscal quarter ended March 31, 2006, the Partnership was exposed
to credit risk in connection with the bankruptcy filing by RCM, the
Partnership s former foreign currency broker. See Note 1 of the Notes to
Financial Statements above for additional information.
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, 2005.
Item 4. Controls and Procedures
Within 90 days of the date of this report an evaluation was performed by the
company under the supervision and with the participation of management,
including the President of the Company, of the effectiveness of the design
and operation of the Company s disclosure controls and procedures. Based on
that evaluation, the Company s management, including the President, concluded
that the Company s disclosure controls and procedures are effective in timely
alerting them to material information relating to the Company that is
required to be included in the Company s period filings with the Securities
and Exchange Commission. There have been no significant changes in the
company s internal controls or in other factors that could significantly
affect those internal controls subsequent to the date the company carried out
its evaluation.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
The Partnership is a creditor of RCM in the bankruptcy case filed in the
United States Bankruptcy Court, Southern District of New York, captioned In
re Refco Inc., et al., case number 05-60006 (RDD). Based on information
provided to the Partnership by RCM, the Partnership has cash and open trade
equity in neutral currency positions of approximately $7,500,000 remaining at
RCM. The amount of such assets which the Partnership will ultimately
recover, if any, is unknown at this time.
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 are 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 1A. Risk Factors
There has been no material change with respect to risk factors since the
"Risk Factors" were disclosed in the Form 10K of the Partnership dated
December 31, 2005.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
See Part I, Statement of Changes in Partner s
Capital
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 Number Description of Document Page Number
31 Certification by Chief Executive Officer
and Chief Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 E- 1-2
32 Certification by Chief Executive Officer
and Chief Financial Officer Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 E - 3
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 FUND, L.P.
Date: May 15, 2007 By: Everest Asset Management, Inc.,
its General Partner
By:__/s/ Peter Lamoureux_____
Peter Lamoureux
President