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 June 30, 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 (as defined
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 June 30, 2007
Fiscal Quarter Year to Date Fiscal Year Fiscal Quarter Year to Date
Ended 6/30/07 to 6/30/07 Ended 12/31/06 Ended 6/30/06 to 6/30/06
------------- ------------ -------------- -------------- -------------
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 to Financial X
Statements
see accompanying notes to financial statements
3
EVEREST FUND, L.P.
(An Iowa Limited Partnership)
STATEMENTS OF FINANCIAL CONDITION
---------------------------------
UNAUDITED
JUNE 30, 2007 DECEMBER 31, 2006
----------------- -----------------
ASSETS
Cash and cash equivalents $ 9,791,636 $13,513,720
Equity in commodity trading accounts:
Cash 2,552,026 4,204,891
Net unrealized trading gains (losses) on open contracts 930,855 328,654
Receivable from Refco Capital Markets, Ltd. (Note 1) 590,356 1,627,407
Interest receivable 80,629 94,086
----------- -----------
TOTAL ASSETS $13,945,501 $19,768,758
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Redemptions payable $ 1,163,940 $ 898,266
General partner management fee payable 33,068 72,484
Advisor's management fee payable 21,523 31,286
Accrued expenses 137,240 55,424
----------- -----------
TOTAL LIABILITIES 1,355,772 1,057,460
----------- -----------
PARTNERS' CAPITAL
Limited partners, A Shares (5,054.48 and 7,712.69 units
outstanding) 9,591,967 14,785,460
Limited partners, I Shares (984.36 and 932.14 units
outstanding) 2,050,197 1,930,473
Limited partners, AA Shares (854.16 and 1,786.21 units
outstanding) 851,402 1,792,866
Limited partners, II Shares (92.75 and 193.97 units
outstanding) 96,163 202,499
----------- -----------
TOTAL PARTNERS' CAPITAL 12,589,729 18,711,298
----------- -----------
TOTAL LIABILITIES AND PARTNERS'
CAPITAL $13,945,501 $19,768,758
=========== ===========
The accompanying notes are an integral part of these statements.
4
EVEREST FUND, L.P.
(AN IOWA LIMITED PARTNERSHIP)
CONDENSED SCHEDULE OF INVESTMENTS
JUNE 30, 2007
-------------
UNAUDITED
NUMBER OF MARKET VALUE % OF PARTNERS'
EXPIRATION DATES CONTRACTS (OTE) CAPITAL
---------------- --------- ------------ --------------
LONG POSITIONS:
FUTURES POSITIONS
Interest rates Sep 07 38 $ (20,096) -0.16%
Energy Jun 07 - Oct 07 132 165,732 1.32%
Agriculture Sep 07 - Dec 07 347 222,666 1.77%
Indices Sep 07 16 5,408 0.04%
----------- -----
373,710 2.97%
FORWARD POSITIONS
Currencies Jul 07 63,459 0.50%
----------- -----
Total long positions $ 437,169 3.47%
----------- -----
SHORT POSITIONS:
FUTURES POSITIONS
Interest rates Sep 07 - Mar 08 600 408,684 3.25%
Metals Aug 07 - Sep 07 136 56,900 0.45%
Energy Oct 07 28 150,980 1.20%
Agriculture May 07 142 (931) -0.01%
Currencies Jun 07 81 (17,213) -0.14%
----------- -----
598,420 4.75%
FORWARD POSITIONS
Currencies Jun 08 (104,735) -0.83%
----------- -----
Total short positions 493,685 3.92%
----------- -----
TOTAL OPEN CONTRACTS 930,855 7.39%
CASH AND CASH EQUIVALENTS 9,791,636 77.77%
CASH ON DEPOSIT WITH BROKERS 2,552,026 20.27%
LESS LIABILITIES IN EXCESS OF OTHER ASSETS (684,788) -5.44%
----------- -----
NET ASSETS $12,589,729 100%
=========== =====
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 APRIL 1, 2007 THROUGH JUNE 30, 2007
--------------------------------------------------
UNAUDITED
APRIL 1, 2007 JANUARY 1, 2007
THROUGH THROUGH
JUNE 30, 2007 JUNE 30, 2007
---------------- ---------------
TRADING INCOME (LOSS)
Net realized trading loss
on closed contracts $ 970,708 $ (780,531)
Change in net unrealized trading gain
(loss) on open contracts 445,698 602,200
Net foreign currency translation loss (6,451) (9,556)
Brokerage Commissions (39,237) (77,676)
----------- ------------
NET TRADING INCOME (LOSS) 1,370,719 (265,563)
Interest income, net of cash management fees 161,574 365,630
----------- ------------
TOTAL INCOME (LOSS) 1,532,293 100,067
----------- ------------
EXPENSES:
General partner management fees 126,703 311,780
Advisor Management fees 66,541 149,636
Administrative expenses 83,420 106,336
----------- ----------
TOTAL EXPENSES 276,665 567,752
----------- ----------
NET INCOME (LOSS) $ 1,255,628 $ (467,686)
=========== ===========
NET INCOME (LOSS) PER UNIT OF PARTNERSHIP INTEREST
A SHARES, OUTSTANDING ENTIRE PERIOD $ 195.26 $ (19.31)
=========== ==========
NET INCOME (LOSS) PER UNIT OF PARTNERSHIP INTEREST
I SHARES, OUTSTANDING ENTIRE PERIOD $ 228.44 $ 11.75
=========== ==========
NET INCOME (LOSS) PER UNIT OF PARTNERSHIP INTEREST
AA SHARES, OUTSTANDING ENTIRE PERIOD $ (8.39) $ (6.96)
=========== ==========
NET INCOME (LOSS) PER UNIT OF PARTNERSHIP INTEREST
II SHARES, OUTSTANDING ENTIRE PERIOD $ (8.72) $ (7.23)
=========== ==========
The accompanying notes are an integral part of these statements.
6
EVEREST FUND, L.P.
(AN IOWA LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS-CONTINUED
FOR THE PERIOD APRIL 1, 2006 THROUGH JUNE 30, 2006
--------------------------------------------------
UNAUDITED
APRIL 1, 2006 JANUARY 1, 2006
THROUGH THROUGH
JUNE 30, 2006 JUNE 30, 2006
---------------- ---------------
TRADING INCOME (LOSS)
Net realized trading loss
on closed contracts $ 2,133,711 $ (162,183)
Change in net unrealized trading gain
(loss) on open contracts (2,298,034) (515,461)
Net foreign currency translation gain (loss) (31,508) (32,245)
Brokerage Commissions (33,270) (75,931)
----------- ------------
NET TRADING INCOME (LOSS) (229,100) (785,820)
Interest income, net of cash management fees 265,028 497,800
----------- ------------
TOTAL INCOME LOSS) 35,928 (288,020)
----------- ------------
EXPENSES:
General partner management fees 296,305 586,731
Advisor Management fees 132,731 266,133
Administrative expenses 27,541 46,947
----------- ----------
TOTAL EXPENSES 456,578 899,811
----------- ----------
NET INCOME (LOSS) $ (420,650) $(1,187,831)
=========== ===========
NET INCOME (LOSS) PER UNIT OF PARTNERSHIP INTEREST
A SHARES, OUTSTANDING ENTIRE PERIOD $ (77.87) $ (148.16)
=========== ==========
NET INCOME (LOSS) PER UNIT OF PARTNERSHIP INTEREST
I SHARES, OUTSTANDING ENTIRE PERIOD $ (64.19) $ (119.61)
=========== ==========
NET INCOME (LOSS) PER UNIT OF PARTNERSHIP INTEREST
AA SHARES, OUTSTANDING ENTIRE PERIOD $ (0.80) $ 1.22
=========== ==========
NET INCOME (LOSS) PER UNIT OF PARTNERSHIP INTEREST
II SHARES, OUTSTANDING ENTIRE PERIOD $ (0.84) $ 1.27
=========== ==========
The accompanying notes are an integral part of these statements.
7
EVEREST FUND, L.P.
(An Iowa Limited Partnership)
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE PERIOD JANUARY 1, 2007 THROUGH JUNE 30, 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 50,000 23.78 50,000
Redemptions (2,913.23) (5,189,043) (9.32) (17,273)
Transfers Between Classes 229.51 415,578 37.76 75,337
Less Offering Costs -- (495) -- (936)
Net Loss -- (469,533) -- 12,596
---------- ------------ -------- ----------
BALANCES, June 30, 2007 5,054.48 $ 9,591,967 984.36 $2,050,197
========== ============ ======== ==========
Net asset value per unit,
January 1, 2007 $ 1,917.03 $ 2,071.02
Net profit (loss) per unit (19.31) 11.75
Net asset value per unit
June 30, 2007 $ 1,897.72 $2,082.77
============ ==========
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 -- -- -- -- 100,000
Redemptions (156.54) (516,228) (10.18) (29,908) (5,752,452)
Transfers Between Classes (775.51) (415,578) (91.04) (75,337) 0
Less Offering Costs -- -- -- -- (1,431)
Net Profit (Loss) -- (9,658) -- (1,091) (467,686)
-------- ---------- ------ --------- ------------
BALANCES, June 30, 2007 854.16 $ 851,402 92.75 $ 96,163 $ 12,589,729
======== ========== ====== ========= ============
Net asset value per unit,
January 1, 2007 $ 1,003.73 $1,043.98
Net profit (loss) per unit (6.96) (7.23)
---------- ----------
Net asset value per unit
June 30, 2007 $ 996.77 $1,036.75
========== ==========
The accompanying notes are an integral part of these statements.
8
EVEREST FUND, L.P.
(An Iowa Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE PERIOD JANUARY 1, 2007 THROUGH JUNE 30, 2007
----------------------------------------------------
UNAUDITED
APRIL 1, 2007 JANUARY 1, 2007
THROUGH THROUGH
JUNE 30, 2007 JUNE 30, 2007
----------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) $ 1,255,628 $ (467,686)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Decrease (increase) in commodity futures trading accounts:
Cash (208,456) 1,652,865
Unrealized gain or loss on open commodity futures contracts (444,937) (602,200)
Decrease (increase) in interest receivable 17,518 13,457
Decrease (increase) in receivable from Refco Capital Markets, Ltd 507,924 1,037,051
(Decrease) increase in General Partner management fees payable (24,018) (39,416)
(Decrease) increase in management fees payable (3,252) (9,763)
(Decrease) increase in other accrued expenses 71,524 81,818
------------ ------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 1,171,931 1,666,126
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of partnership units (3,189,035) (5,486,779)
Sale of partnership units, net (448) 98,569
------------ ------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (3,189,483) (5,388,210)
------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,017,552) (3,722,084)
CASH AND CASH EQUIVALENTS, AT BEGINNING OF PERIOD 11,809,188 13,513,720
------------ ------------
CASH AND CASH EQUIVALENTS, AT END OF PERIOD $ 9,791,636 $ 9,791,636
============ ============
The accompanying notes are an integral part of these statements
9
EVEREST FUND, L.P.
(An Iowa Limited Partnership)
STATEMENTS OF CASH FLOWS-CONTINUED
FOR THE PERIOD JANUARY 1, 2006 THROUGH JUNE 30, 2006
----------------------------------------------------
UNAUDITED
APRIL 1, 2006 JANUARY 1, 2006
THROUGH THROUGH
JUNE 30, 2006 JUNE 30, 2006
----------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (420,650) $ (1,187,831)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Decrease (increase) in commodity futures trading accounts:
Cash 832,165 667,400
Unrealized gain or loss on open commodity futures contracts 2,335,033 552,449
Decrease (increase) in interest receivable 5,697 (10,327)
(Decrease) increase in management fees payable (3,069) (39,571)
(Decrease) increase in other accrued expenses (18,518) (34,119)
------------ ------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 2,730,658 (51,999)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of partnership units (3,716,955) (4,802,844)
Sale of partnership units, net 355,066 924,245
------------ ------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (3,361,889) (3,878,599)
------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (631,231) (3,930,598)
CASH AND CASH EQUIVALENTS, AT BEGINNING OF PERIOD 18,184,376 21,483,743
------------ ------------
CASH AND CASH EQUIVALENTS, AT END OF PERIOD $ 17,553,145 $ 17,553,145
============ ============
The accompanying notes are an integral part of these statements
10
EVEREST FUND, L.P.
NOTES TO FINANCIAL STATEMENTS
June 30, 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 its offering under a
Regulation D, Rule 506 private placement. The private placement offering is
continuing at a gross subscription price per unit equal to the net asset
value (NAV) per unit, plus an organization and offering cost reimbursement
fee payable to the General Partner, and an on going compensation fee equal
to 3% of the net asset value of Class A 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.
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 first distribution received by
the Fund in the amount of $1,365,525.51 was 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, 2007 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 for a
cumulative total received of $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. These changes do not apply to those who have come into the
Fund after October 2005.
On June 28, 2007 Everest received a third distribution from Refco in the
amount of $668,172.21. That amount is equal to approximately 9 cents on the
dollar of the original amount that was frozen in October 2005. This, in
addition to the other distributions, brings the recovery to approximately
32 cents on the dollar so far. 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.
These changes do not apply to those who have come into the Fund after
October 2005.
(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.
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. CSAP was eliminated as a trading program on January 1st, 2007, and
WBP was dropped on May 31st 2007, leaving GAP as the sole JWH program.
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. 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.
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, substantially all of cash and cash equivalents
at June 30, 2007 and 2006 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 and open positions on deposit in the amount of
$619,863.23 as of June 30, 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 subject 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 0.6 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 six months ended June 30, 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.
Selected Financial Statistics and Ratios:
6/30/07 6/30/06
1. Total return: A Shares -1.01% -6.62%
I Shares 0.57% -5.11%
AA Shares -0.69% 0.05%
II Shares -0.69% 0.05%
2. Ratio to average net assets:
Total income A Shares 0.23% -1.06%
I Shares 3.12% -2.64%
AA Shares 0.79% 0.12%
II Shares 0.79% 0.12%
3. Expenses, excluding incentive fees:
A Shares 4.23% 4.16%
I Shares 2.50% 2.63%
AA Shares 1.43% 0.07%
II Shares 1.43% 0.07%
4. Incentive fees 0.00% 0.00%
5. Total expenses
A Shares 4.23% 4.16%
I Shares 2.50% 2.63%
AA Shares 1.43% 0.07
II Shares 1.43% 0.07
The total income and general and expense ratios are computed based upon the
weighted average net assets for the Partnership for the period ended June 30,
2007 and 2006.
(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.
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
3 months ended ended June 30, 2007
The Partnership recorded a gain of $ 1,255,628 or $195.26 per Unit of
Class A Units ($ 228.44 for Class I Units, a loss of $8.39 for Class
AA Units and a loss of $8.72 for Class II Units) for the fiscal quarter
ended June 30, 2007. This compares to a loss of $420,650 or $77.87 per
Unit of Class A Units ($64.19 for Class I Units, .80 for Class AA
Units and .84 for Class II Units) for the fiscal quarter ended June
30, 2006. The quarter ended June 30, 2007 showed a gain of 11.47%
( total return) for the Class A Units of the fund (12.32% for the
Class I Units, -0.83% for Class AA Units and -0.83% for Class II Units).
The Partnership continued to employ John W. Henry & Company, Inc. ' s (JWH)
GlobalAnalyticsR Family of Programs, Worldwide Bond Program.
Class A Units were negative -0.06 % in April 2007 resulting in a
Net Asset Value per unit of $ 1,701.514 as of April 30, 2007.
Class I Units were positive 0.21 % resulting in a Net Asset Value
per unit of $1,858.17 as of April 30, 2007.
The Fund s performance was essentially even for the month of April.
The Fund s disciplined systematic trading approach took
advantage of opportunities that emerged as global financial markets
recovered from the explosion in volatility that occurred at the end
of February and continued into March. The temporary dislocation of
the financial markets appears to have laid the foundation for a
major shift in trends. The currency, indices and agriculture sectors
all achieved gains as various components of each sector developed
and sustained profitable trends. The currency sector was the Fund s
best performer as various previously range-bound currencies set
historic highs and lows. The euro reached an all-time high against
both the U.S. dollar and the Japanese yen, while the British pound
reached a 25-year high against the dollar. The stock indices sector
was positive for April as stronger-than-expected 1st quarter
earnings, an increase in mergers and acquisitions, economic growth
in Europe, and benign inflation in the U.S. drove global equity
prices higher. The agriculture sector was slightly positive for
the month as the majority of the gains achieved in N.Y. cotton and
coffee were partially offset by losses in CBOT wheat. The metals
sector was negative for the month. Gold slightly offset losses as the
precious metal reached an 11 month high when demand for a hedge against
the weakness in the dollar increased. The energy sector
was negative for the month as weather and geopolitical events once
again were the driving force behind price movements. The
interest rate sector was negative for the month as uncertainty grew
over the interest rate policy of the central banks of the world s two
largest economies.
In conclusion, the Fund s performance was essentially even for
the month as new trends materialized in the aftermath of the
dislocation of the markets caused by the overreaction to the drop
in global equity markets towards the end of the first quarter. The
Fund benefited as range-bound markets, which have been detrimental
to the Fund s performance, gave way to potentially strong
directional movements. The Fund will continue to apply its disciplined
systematic trading approach to potentially take advantage of
continuing or new opportunities as they present themselves.
Trading Allocation
At the end of May 2007 we will redeem our allocation to the World
Wide Bond Program and be invested 100% in the Global Analytics Program
(GAP). The JWH GAP has been JWH s most efficient program as measured
by various risk/reward parameters and it trades a diverse portfolio of
bonds, currencies and commodities.
We would like all investors to know that although we are trying
to stay the course with JWH and exercise patience, we are also
exploring the possibility of adding other managers who may complement
JWH due to their differences in style, holding periods and
markets traded. Before we make a decision (if any) to add other
managers, we will keep you informed.
Class A Units were positive 0.60 % in May 2007 resulting in a Net Asset
Value per unit of $1,711.64 as of May 31, 2007.
Class I Units were positive 0.86% resulting in a Net Asset Value per
unit of $1,874.11 as of May 31, 2007.
The Fund s performance was positive for the month of May. The interest
rate sector drove performance with strong gains as the
Fund s disciplined systematic trend-following approach enabled it to
profit from falling bond markets in the U.S. and Europe. The
stock indices sector also added to positive performance as
better-than-expected earnings and stronger-than-expected economic growth
sent equity indexes across the globe to new highs. The currency sector
was slightly positive for the month also as the dollar
strengthened against the Japanese yen.
The energy sector was negative for the month as energy markets remained
range-bound. The metals sector was negative for the month
as a reversal in precious metals hurt performance as the Fund exited
positions. The agriculture sector was negative for the month as
supply once again drove price action.
In conclusion, performance was positive for the month as the Fund s
systematic trading approach benefited from continued strong
directional movements in European debt markets, and the apparent
emergence of a weakened trend in U.S. debt markets. While we
cannot say how long this trend will last, this sector s move is
encouraging. The Fund will continue to apply its trading approach to
potentially take advantage of continuing or new opportunities as
they present themselves.
Trading Manager Allocation
We are very pleased to announce that the Fund will be making an
allocation to the Morningstar Long / Short commodity Index. The
Index is a momentum based strategy that holds a basket of 19
physical commodity contracts either long or short.
We will send more information about the allocation and the Morningstar
Commodity Index in the next few weeks. We anticipate an
allocation on or about the 1st of August.
Class A Units were positive 10.87 % in June 2007 resulting in a
Net Asset Value per unit of $1,897.72 as of June 30, 2007.
Class I Units were positive 11.13 % resulting in a Net Asset Value per unit
of $2,082.77 as of June 30, 2007.
The Fund s performance was positive for the month of June. Despite
potentially market-dislocating events, including terrorism
incidents in the United Kingdom and the subprime mortgage problems
in the United States, the Fund was able to profit as its long-
term trend-following approach excelled, holding profitable positions
through the market turmoil. The Fund s systematic approach has
profited over the past few months since the equity induced dislocation
of financial markets that occurred towards the end of the 1st
quarter, which we suggested might be a precursor for a major shift
in market trends. While discretionary funds and shorter-term
trend-followers may have been forced out of profitable positions due
to instability in the market, the Fund s clients were rewarded for
its longer-term focus. The fixed income, energy, agriculture and
currency sectors all achieved gains as various components of each
sector sustained previously existing or developed new profitable trends.
The interest rate sector was one of the Fund s best
performing sectors for the second consecutive month as it continued
to take advantage of the fall in U.S. and European bond markets.
The energy sector was the Fund s best performing sector in June as
increased terrorism fears combined with lower-than-expected
supplies in petroleum-based products and higher-than-expected
supplies in natural gas drove the sector s performance. The currency
sector was positive for the month as the Japanese yen suffered
its biggest quarterly loss against the euro and the dollar since
2001. The agriculture sector was positive for the month as cotton
and CBOT wheat drove performance.
The metals sector was basically flat for the month while the
stock indices sector was negative as range-bound markets
and trend reversals dominated both these sectors.
In conclusion, the Fund s systematic long-term trading approach
profited from strong trends that have developed in various
components of the fixed income, energy, agriculture and currency
sectors, while avoiding the short-term effects of financial market
dislocations that occurred during the month. The Fund s long-term
trend following philosophy has allowed it to post gains as many
trends have extended through the 2nd quarter and we remain optimistic
that this is only the beginning. The Fund will continue to apply
its disciplined trading philosophy to potentially take advantage
of any new or continuing opportunities as they present themselves.
New Allocation
We are very pleased to announce that the Fund will be making an
allocation to the Morningstar Long / Short Commodity Index. The
Index is a momentum based strategy that holds a basket of 19
physical commodity contracts either long or short.
We will send more information about the allocation and the Morningstar
Commodity Index in the next few weeks. We anticipate an
allocation within the next few months.
Update on the RCM recovery efforts (For those investors in the
Fund in 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. We expect additional distributions
between now and the end of June 2007
On June 28th, 2007 Everest received a third distribution from
Refco in the amount of $668,172.21. That amount is equal to
approximately 9 cents on the dollar of the original amount that was
frozen in October 2005. This, in addition to the other distributions,
brings the recovery to approximately 32 cents on the dollar so far.
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.
The Plan Administration Committee is working with the other
estate professionals to effect additional distributions. We will
continue to keep you informed.
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.
3 months ended June 30, 2006
The Partnership recorded a loss of $420,650 or $77.87 per Unit of Class A Units
($64.19 for Class I Units, $0.80 for Class AA Units and $0.84 for Class II
Units) for the fiscal quarter ended June 30, 2006. This compares to a gain of
$1,781,153 or $113.12 per Unit of Class A Units ($134.00 for Class I Units) for
the fiscal quarter ended June 30, 2005. The quarter ended June 30, 2006
showed a loss of 3.59%( total return) for the Class A Units of the fund (2.81%
for the Class I Units, 0.03% for Class AA Units and 0.03% 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.
Class A Units were positive 13.63% in April 2006 resulting in a Net Asset Value
per unit of $2,463.35 as of April 30, 2006.
Class I Units were positive 13.50% resulting in a Net Asset Value
per unit of $2,594.70 as of April 30, 2006.
The interest rate sector led performance in April with strong gains as
the Fund's systematic trend-following approach enabled it to profit
from higher global interest rates. The metal and currency sectors
also added to performance as both gold and silver continued to trend
higher on inflationary fears and increased demand, while currencies
benefited from a weakening U.S. dollar. The energy sector had gains
due to increased concerns over Iran's nuclear program. The indices
sectors had more modest gains, while the agriculture sector incurred
losses as performance within these sectors was hampered by volatility.
The fixed-income sector was the Fund's strongest performing sector as European,
Japanese and U.S. fixed income markets sold off. The metals sector was also
profitable as all components were positive for the month. Gold climbed above
$650/oz for the first time in 25-years after Iran failed to meet an April 28th
deadline to cooperate with United Nations inspectors who are trying to
determine if the country is enriching uranium for military purposes.
Also adding to performance was silver which rallied on speculation investor
demand willgrow as Barclays Bank PLC began offering an exchange-traded fund
backed by the metal. Silver has rallied 51 percent this year, and rose 17%
this month alone.
The currency sector was also positive on the month as the U.S. dollar fell on
expectations of narrowing interest rate differentials. The dollar fell 4.1
percent against the euro, the biggest monthly decline since December 2003 and
the British pound gained against the dollar for a fourth week, its longest
winning streak in a year. The largest gain in this sector was the euro, while
the largest loss was in the Japanese yen. Keeping with the prevailing theme
performance in the energy sector was also positive during the month. Concerns
that the UN Security Council will impose sanctions that could lead Iran, the
fourth-largest oil producer, to cut shipments drove crude oil for June delivery
to a new high of $75.35 a barrel on April 21st and 24th. Crude oil for June
delivery ended up 7.8% this month. The global stock indices sector was
slightly positive for the month as the Fund's performance was hindered by
increased geopolitical instability in the global stock markets, as well
as a volatile interest rate environment.
The agriculture sector was the Fund's worst performing sector for the month as
volatility hurt performance. Cotton limited the sectors losses, with the
largest loss occurring in N.Y. coffee as growers in Latin America and Africa
took advantage of a recent rally to sell beans.
In conclusion, the Fund's performance was strong for the month of April with
interest rates, metals and currencies leading profitability. As always, the
Fund stands ready to potentially take advantage of any continuing or new trends
that may emerge.
Class A Units were negative 3.85% in May 2006 resulting in a Net Asset
Value per unit of $2,368.52 as of May 31, 2006.
Class I Units were negative 3.24% resulting in a Net Asset Value per
unit of $2,510.69 as of May 31, 2006.
The Fund's performance was negative in May as the interest rate, metal,
agriculture and stock indices sectors suffered from large market corrections
during the second half of the month. Increased inflationary fears and concerns
over the global economy led investors to take profits and reduce risk
exposure. A major catalyst for the reversal was the news that the
Federal Reserve on May 10th signaled that "further policy firming may
yet be needed" instead of signaling a possible "pause" at it's next
meeting at the end of June. This caught the market by surprise causing
equity markets, which had been near or at record highs, to fall in
response. This news also eventually caused a "contagion effect" in
the metal and currency sectors.
The currency sector was positive for the month despite the extreme volatility
that dominated the sector. The fixed income sector was the Fund's worst
performing sector as uncertainty surrounding inflation prospects and global
growth led to increased volatility. Performance in the energy sector was also
negative for the month as petroleum products retreated from record or near
record highs during the month. The metal sector was also negative
for the month as precious metals fell from record highs set towards the
beginning of the month. Gold fell 12% after reaching a 26-year high of
$732 an ounce on May 12th. The largest loss in this sector occurred
in silver.
Global StockIndices also underperformed for the month. Attributing to
the underperformance of the sector was the Federal Reserve's uncertainty
about inflation, which took the markets by surprise, and the lackluster
U.S. consumer confidence report. The agriculture sector was also negative
for the month as London and New York sugar hindered performance.
Sugar, whose demand has increased on its ability to be made into ethanol,
fell as energy prices dropped during the month.
In conclusion, the Fund's performance was negative for the month of May as
volatile market conditions and strong market reversals hindered the Fund's
systematic trading approach. However, as usual JWH stands ready to potentially
take advantage of any continuing or new trends that may emerge.
Update on the RCM recovery efforts
Recent Progress in the Recovery of Assets:
* The ongoing dispute at the Refco Capital Markets (RCM) between the securities
customers and the FX customers (Everest) has been resolved after much
negotiation. This should greatly facilitate the distribution of assets at hand
and the distribution of future recoveries. This agreement should avoid much
costly litigation and time delays.
* The 'bar date' for the filing of all claims against RCM has been set for July
17th. Everest has already filed it's claim. It may take six to eight weeks to
process and verify all claims. Although there could be further delays, it is
possible that we will see a distribution of the assets on hand at RCM by the
fourth quarter of this year, maybe as early as October.
* The Bankruptcy court approved a settlement whereby the Sphinx entities have
agreed to pay back $262 million to the Refco estates.
* The Austrian Bank BAWAG settled with the creditors committee and the
Department of Justice (DOJ) and agreed to pay up to $675 million. Please keep
in mind that a portion of the BAWAG settlement goes to the DOJ and some to the
Refco estate, not directly to the Refco Capital Markets. However, most of the
other bankrupt Refco entities owe RCM money so there should be benefits coming
down to the RCM level, which is where Everest money is frozen.
The agreement between parties at RCM and the two substantial recoveries of
assets are some of the most significant steps of progress in the recovery
of our assets since the events of October 2005. The Committee (and Peter
Lamoureux, president of the Fund's general partner, as a member of
the Committee) is continuing to work hard to recover assets in a
timely manner.
Class A Units were negative 11.76% in June 2006 resulting in a Net Asset Value
per unit of $2,089.94 as of June 30, 2006.
Class I Units were negative 11.50% resulting in a Net Asset Value per unit
of $2,221.98 as of June 30, 2006.
The Fund's performance was negative for the month of June. All six sectors were
negative with the currency sector, and to a lesser extent the interest rate
sector, responsible for the majority of the Fund's losses. These sectors were
affected by trend-reversing markets caused by anticipated, but unrealized,
fears that the Federal Reserve would not only raise rates at its June 29th
meeting, but also reinforce expectations for further rate increases to curb
inflation.
Currencies were the Fund's worst performing sector as the U.S. dollar spent the
majority of the month strengthening against most major currencies. The
interest rate sector was also unprofitable for the month as U.S.
10-year and 30-year treasury bonds led the sector's decline. The interest
rate speculation that dominated the currency markets also affected
the U.S. treasury markets.
The metals sector was also negative for the month as precious metals
continued to retreat from highs set in May. Gold fell to a three month
low of $542.45 an ounce on June 14th after reaching a 26-year high of
$732 an ounce on May 12th. The dramatic sell-off was caused by the
combination of a stronger dollar, as investors bought dollars as an
alternative to gold, and increased speculation that the Federal Reserve
could hike interest rates as much as 50 basis points. Despite the recent
weakness in the precious metal, gold is up 18 percent for the
year. All components of this sector were negative with the largest loss coming
from gold. The agriculture sector also underperformed during the month as
weather conditions had severe affects on various crops in the U.S. and around
the world. Global Stock Indices were slightly negative for the month as
speculation over the outcome of the June 29th Federal Reserve meeting caused
severe market fluctuations. The energy sector was also slightly negative for
the month as choppy market conditions hindered performance. All of the
petroleum based products were negative for the month.
The combined losses in the currency and interest rate sectors drove the Fund's
negative performance. Comments from the Federal Reserve combined with stronger
than expected economic data caused speculation that the Federal Reserve might
raise interest rates 50 basis points instead of previously
expected 25 at the June 29th meeting. The possibility of a larger than
expected interest rate move sent the U.S. dollar and U.S. treasury yields
higher. However, the markets reversed themselves upon the announcement
that the Federal Reserve had raised rates by 25 basis points, and
signaled to the markets that they have possibly reached the end of
the rate hiking cycle. The resulting increase in uncertainty and
speculation led to volatility in the markets and caused several
reversals making it difficult for our disciplined systematic
investment style to capitalize on longer-term trends. As always,
the Fund stands ready to potentially take advantage from any continuing
or new trends that may emerge.
Update on the RCM recovery efforts
During the reporting period, fiscal quarter ended June 30, 2006, additional
Units sold consisted of 156.72 limited partnership Units; there were zero
general partnership Units sold during the period. Additional Units sold during
the period represented a total of $350,495. Investors redeemed a total of
1,550.34 Units during the period and the General Partner redeemed zero
Units. At the end of the period there were 12,547.25 Units outstanding
including zero Units owned by the General Partner). As of June 30, 2006
the estimated Class AA NAV per unit was $2,347.50 and Class II NAV per unit
was $2,441.65.
During the fiscal quarter ended June 30, 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.
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, 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.
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.
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.
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, $2.03 for Class AA Units and $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, 0.09% for Class AA
Units and 0.09% 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.
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.
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.
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.
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.
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.
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
amended Form 10K/A of the Partnership dated May 15, 2006.
Item 4. Controls and Procedures
The Company s management, including the President, based on it s evaluation
of the Company's disclosure controls and procedures as of the end of this
reporting period,June 30, 2007, have concluded that they 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 $ $590,000 remaining at
RCM. The amount of such assets which the Partnership will ultimately
recover, if any, is unknown at this time.
In October 2000, there was a discrepancy between the performance of the Barclay
Futures Index Program (BFIP) as traded for the Partnership and the Barclay
Futures Index (BFI). Certain transactions executed by Trilogy on behalf of the
Partnership resulted in a loss of approximately $520,000 that was recorded
in the statement of operations. The General Partner believes that
these transactions were not executed in accordance with the provisions
of BFIPand has demanded that Trilogy reimburse the Partnership for the
loss. The parties are currently attempting to resolve the issue.
A demand for arbitration was filed with the NFA on October 3, 2002. Trilogy has
responded to the demand for arbitration and has counterclaimed for the amount of
$130,210, together with attorney's fees, interest and costs of suit. That figure
represents the amount of management fees, otherwise payable to Trilogy under its
advisory contract, that both parties agreed would be held as a credit to the
Partnership to offset the losses. The General Partner has a letter to that
effect which was signed by the president of Trilogy on January 29, 2001.
The General Partner anticipates a hearing in front of an NFA arbitration panel
in the coming months, but no date has been set for the hearing. At the present
time, the General Partner is unable to determine whether any of the losses will
be recovered.
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, 2006.
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
Filed notice of late 2nd quarter 10 Q filing on August 14th, 2007
in the form of 8-K.
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: August 16, 2007 By: Everest Asset Management, Inc., its General Partner
By:/s/ Peter Lamoureux
-------------------------
Peter Lamoureux
President