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, 2011
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
Small Reporting Company 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
Table of Contents
Part I: Financial Information
Item 1. Financial Statements 4
Statements of Financial Condition 4
March 31, 2011 (Unaudited) and December 31, 2010 (Audited)
Condensed Schedule of Investments 6
March 31, 2011 (Unaudited)
Condensed Schedule of Investments 7
December 31, 2010 (Audited)
Statements of Operations 9-10
For the Three Months Ended March 31, 2011 and 2010 (Unaudited)
Statements of Changes in Partners' Capital (Net Asset Value) 11-12
For the Three Months Ended March 31, 2011 and 2010 (Unaudited)
Statements of Cash Flows
For the Three Months Ended March 31, 2011 and 2010 (Unaudited) 12-14
Notes to Financial Statements March 31, 2011 15
Item 2. Management's Discussion and Analysis of Financial 36
Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures about 38
Market Risk
Item 4. Controls and Procedures 39
Part II: Other Information 39
Item 1. Legal Proceedings 39
Item 1A. Risk Factors 40
Item 2. Unregistered Sales of Equity Securities and Use 40
of Proceeds
Item 3. Defaults upon Senior Securities 41
Item 4. Submission of Matters to a Vote of Security Holders 41
Item 5. Other Information 41
Item 6. Exhibits 41-42
2
PART I. FINANCIAL INFORMATION
Item 1 Financial Statements
Following are Financial Statements for the three months ended March 31, 2011
EVEREST FUND, L.P.
(An Iowa Limited Partnership)
STATEMENTS OF FINANCIAL CONDITION
March 31, 2011 (UNAUDITED) AND DECEMBER 31, 2010 (AUDITED)
UNAUDITED AUDITED
March 31, 2011 DECEMBER 31, 2010
----------------- -----------------
ASSETS
Cash and cash equivalents $15,760,042 $14,708,768
Equity in broker trading accounts:
Cash and cash equivalents 1,331,643 1,623,908
Net unrealized trading gains(losses)
on open contracts 1,108,779 1,035,839
Interest receivable (21) 198
----------------- ----------------
TOTAL ASSETS $18,200,443 $17,368,713
=============== ================
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Redemptions payable $ 0 $ 0
Management fee payable 29,902 28,685
Brokerage commissions and fees payable 84,678 75,486
Incentive fee payable 143,073 119,237
O&O Payable 931 0
Accounts payable & accrued expenses 80,594 82,135
----------- ------------
TOTAL LIABILITIES 339,178 305,543
----------- ------------
PARTNERS' CAPITAL
Limited partners, A Shares (4,562.89568
and 4,504.57959 units outstanding) 17,861,265 17,063,170
------------- ------------
TOTAL PARTNERS' CAPITAL 17,861,265 17,063,170
------------- ------------
TOTAL LIABILITIES AND PARTNERS'
CAPITAL $18,200,443 $17,368,713
============= ============
The accompanying notes are an integral part of this statement.
3
EVEREST FUND, L.P.
(AN IOWA LIMITED PARTNERSHIP)
CONDENSED SCHEDULE OF INVESTMENTS
March 31, 2011
UNAUDITED
EXPIRATION NUMBER OF MARKET % OF PARTNERS'
DATES CONTRACTS VALUE (OTE) CAPITAL
---------------- --------- ------------ --------------
LONG POSITIONS:
FUTURES POSITIONS
Interest rates Jun 11 20 $(47,642) -0.27%
Metals May 11 - Jun 11 56 544,420 3.05%
Energy Jun 11 - Jul 11 58 130,720 0.73%
Agriculture May 11 97 597,108 3.34%
Currencies Jun 11 - Mar 12 86 133,050 0.74%
----------- ---------- ----------
Total long positions 1,357,656 7.60%
SHORT POSITIONS:
FUTURES POSITIONS
Interest rates Jun 11 - Dec 12 59 8,891 0.05%
Agriculture May 11 49 (129,335) -0.72%
Currencies Jun 11 12 (1,350) -0.01%
Indices Jun 11 8 (127,083) -0.71%
----------- ---------- -----------
Total short positions (248,877) -1.39%
----------- -----------
TOTAL OPEN CONTRACTS 1,108,779 6.21%
=========== ===========
The accompanying notes are an integral part of this statement.
THE EVEREST FUND, L.P.
(an Iowa Limited Partnership)
CONDENSED SCHEDULE OF INVESTMENTS
December 31, 2010
AUDITED
Unrealized
% of(Loss)
Expiration Number Partners' On Open
Date of Contracts Capital Contracts
________ ____________ _________ __________
Long U.S. Futures Contracts
Interest rates Sep 11 9 0.01% $1,053
Metals Feb 11 - Mar 11 56 3.02% 515,000
Energy Mar 11 - Apr 11 50 0.49% 84,126
Agriculture Mar 11 230 1.54% 262,745
Currencies Mar 11 80 0.87% 147,700
Indices Mar 11 16 0.07% 12,212
---------- ----------
Total Long Futures Contracts 5.99 % 1,022,836
---------- ----------
Short U.S. Futures Contracts
Interest rates Mar 11 118 0.17% $29,347
Energy Apr 11 1 -0.01% (1,250)
Currencies Mar 11 - Dec 11 22 -0.09% (15,094)
---------- ----------
Total Short Futures Contracts 0.08 % $13,004
---------- ----------
Total Futures Contracts 6.07 % $1,035,840
========== ==========
The accompanying notes are an integral part of these financial statements.
4
EVEREST FUND, L.P.
(AN IOWA LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED March 31, 2011 AND 2010
UNAUDITED
THREE MONTHS ENDED THREE MONTHS ENDED
March 31, 2011 March 31, 2010
-------------------- -------------------
TRADING INCOME (LOSS)
Net realized trading gain(loss)
on closed contracts $1,001,785 $(1,026,140)
Change in net unrealized trading gain
(loss) on open contracts 72,939 457,442
Net foreign currency translation loss (8,425) 2,407
Brokerage Commissions (11,245) (11,726)
-------------------- -------------------
NET TRADING INCOME (LOSS) 1,055,054 (578,017)
Interest income, net of cash management fees 9,848 18,044
---------------- -------------------
TOTAL INCOME 1,064,902 (559,973)
---------------- -------------------
EXPENSES:
General partner management fees 250,635 188,872
Advisor Management fees 89,052 65,570
Incentive fees 143,073 0
Professional fees 10,793
Administrative expenses 1,962 28,728
---------------- -------------------
TOTAL EXPENSES 495,515 283,170
---------------- -------------------
NET INCOME $569,387 $(843,143)
================ ===================
NET INCOME (LOSS) PER UNIT OF PARTNERSHIP INTEREST
A SHARES, OUTSTANDING ENTIRE PERIOD $126.50 ($178.81)
================ ===================
The accompanying notes are an integral part of these statements.
5
EVEREST FUND, L.P.
(An Iowa Limited Partnership)
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE THREE MONTHS ENDED March 31, 2011
UNAUDITED
UNITS LIMITED PTRS
A SHARES A SHARES TOTAL
---------- ---------------- ------------
BALANCES, January 1, 2011 4,504.58 17,063,171 17,063,171
Additional Units Sold 64.76 256,010 256,010
Redemptions (6.45) (24,768) (24,768)
Less Offering Costs -- (2,535) (2,535)
Net profit (Loss) -- 569,387 569,387
----------- --------------- -------------
BALANCES, MARCH 31,2011 4,522.0931 $17,861,265 $17,861,265
=========== =============== =============
Net asset value per unit,
January 1, 2011 $3,787.96
Net profit (loss) per unit 126.50
------------
Net asset value per unit
MARCH 31, 2011 $3,914.46
============
The accompanying notes are an integral part of these statements.
6
EVEREST FUND, L.P.
(An Iowa Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED March 31, 2011 AND 2010
UNAUDITED
<CAPTI
THREE MONTHS ENDED THREE MONTHS ENDED
March 31, 2011 March 31, 2010
--------------------------- ----------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $569,387 $(843,144)
Adjustments to reconcile net income(loss) to net cash
used in operating activities:
Unrealized gain or loss on open commodity
futures contracts (72,940) (459,012)
Decrease (increase) in interest receivable 219 36,192
(Decrease) increase in incentive fees payable 23,836 --
(Decrease) increase in management fees payable 1,217 (16,591)
(Decrease)increase in Broker commissions &
fees payable 9,192 --
(Decrease) increase in O&O Expense 931 2,426
(Decrease) increase in other accrued expenses (1,541) 4,830
---------------- --------------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 530,301 (1,275,299)
---------------- --------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of partnership units (24,768) (604,945)
Partner addition of units,net of offering costs 253,475 242,574
---------------- --------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 228,707 (362,371)
---------------- --------------------
NET INCREASE (DECREASE)IN CASH AND CASH EQUIVALENTS 759,008 (1,637,670)
CASH AND CASH EQUIVALENTS, AT BEGINNING OF PERIOD 16,332,676 14,197619
---------------- --------------------
CASH AND CASH EQUIVALENTS, AT END OF PERIOD $17,091,684 $12,559949
================ ====================
END OF THE YEAR CASH AND CASH EQUIVALENTS CONSIST OF:
Cash in broker trading accounts $1,331,643 $ 1,105,051
Cash and cash equivalents 15,760,042 11,454,898
----------------- --------------------
TOTAL END OF THE YEAR CASH AND CASH EQUIVALENTS $17,091,684 $12,559,949
================= ====================
The accompanying notes are an integral part of these statements
7
EVEREST FUND, L.P.
NOTES TO FINANCIAL STATEMENTS
March 31, 2011
(1) GENERAL INFORMATION AND SUMMARY
The Everest Fund, L.P., formerly Everest Futures Fund, L.P. (an Iowa
Limited Partnership), (the "Partnership'') is a limited partnership
organized in June 1988, under the Iowa Uniform Limited Partnership Act
(the "Act'') for the purpose of engaging in the speculative trading of
commodity futures and options thereon and forward contracts (collectively
referred to as "Commodity Interests''). The sole General Partner of the
Partnership is Everest Asset Management, Inc. (the "General Partner'').
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 net asset
value (NAV) per unit, plus an organization and offering cost reimbursement
fee payable to the General Partner, and an ongoing 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 Newedge USA, LLC. (NE), its clearing broker, and all of its
foreign currency trading through Newedge Group an affiliate of NE.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
Commodity futures contracts, forward contracts, physical commodities,
and related options are recorded on the trade-date basis and realized
gains or losses are recognized when contracts are liquidated. All
such transactions are recorded on the identified cost basis and marked
to market daily. Unrealized gains or losses on open contracts (the
difference between contract trade price and market price) are reported
in the statement of financial condition as a net unrealized gain or
loss, as there exists a right of offset of unrealized gains or losses
in accordance with the Financial Accounting Standards Board
Interpretation No. 39 - "Offsetting of Amounts Related to Certain
Contracts." Any change in net unrealized gain or loss from the preceding
period is reported in the statement of operations. Fair value of
exchange-traded contracts is based upon exchange settlement prices.
Fair value of non-exchange-traded contracts is based on third party
quoted dealer values on the Interbank market.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Cash and Cash Equivalents
Cash equivalents represent short-term highly liquid investments with
maturities of 90 days or less at the date of acquisition. The
Partnership maintains deposits with high quality financial institutions
in amounts that are in excess of federally insured limits; however, the
Partnership does not believe it is exposed to any significant credit risk.
Redemptions Payable
Pursuant to the provisions of FASB ASC 480, Distinguishing Liabilities
from Equity, redemptions approved by the General Partner prior to month
end with a fixed effective date and fixed amount are recorded as
redemptions payable as of month end.
Fair Value of Financial Instruments
The financial instruments held by the Company are reported in the statements
of financial condition at fair value, or at carrying amounts that approximate
fair value, due to their highly liquid nature and short-term maturity.
Foreign Currency Translation
The Partnership's functional currency is the U.S. dollar, however, it
transacts business in currencies other than the U.S. dollar. Assets and
liabilities denominated in foreign currencies are translated at the
prevailing exchange rates as of the date of the statement of financial
conditions. Gains and losses on investment activity are translated at the
prevailing exchange rate on the date of each respective transaction while
period end balances are translated at the period end currency rates. Realized
and unrealized foreign exchange gains or losses are included in trading
income or 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.
The Partnership files U.S. federal and state tax returns.
Recently adopted accounting pronouncements
Financial Accounting Standards Board ("FASB") Accounting Standard
Codification ("ASC") 820, Fair Value Measurements and Disclosures
("ASC 820" and formerly referred to as FAS-157), establishes a framework
for measuring fair value in GAAP, clarifies the definition of fair value
within that framework, and expands disclosures about the use of fair
value measurements. ASC 820 is effective for fiscal years beginning after
November 15, 2007. ASC 820-10-65, Transition and Open Effective Date
Information, deferred the effective date of ASC 820, for non-financial
assets and liabilities that are not on a recurring basis recognized or
disclosed at fair value in the financial statements, to fiscal years,
and interim periods, beginning after November 15, 2008. The Partnership
has adopted the guidance within ASC 820 for non-financial assets and
liabilities measured at fair value on a nonrecurring basis at
January 1, 2009 and will continue to apply its provisions prospectively
from January 1, 2009. The application of ASC 820 for non-financial assets
and liabilities did not have a significant impact on earnings nor the
financial position of the Partnership.
FASB ASC 815, Derivatives and Hedging ("ASC 815"), ASC 815-10-65,
Transition and Open Effective Date Information ("ASC 815-10-65"and
formerly referred to as FAS-161) includes a requirement for enhanced
disclosures about an entity's derivative and hedging activities and
thereby improves the transparency of financial reporting. ASC 815 is
effective prospectively for fiscal years beginning after
November 15, 2008. The application of ASC 815 did not have a significant
impact on earnings nor the financial position of the Partnership.
FASB ASC 855, Subsequent Events ("ASC 855" and formerly referred to
as FAS-165), modified the subsequent event guidance. The three
modifications to the subsequent events guidance are: 1) To name
the two types of subsequent events either as recognized or
non-recognized subsequent events, 2) To modify the definition
of subsequent events to refer to events or transactions that occur
after the balance sheet date, but before the financial statement are
issued or available to be issued and 3) To require entities to
disclose the date through which an entity has evaluated subsequent
events and the basis for that date, i.e. whether that date represents
the date the financial statements were issued or were available to be
issued. The adoption of FASB ASC 855, did not have a material affect
on the Partnership's financial position.
Effective January 1, 2009 the Partnership adopted SFAS No. 161,
Disclosure about Derivative Instruments and Hedging Activities.(See note 6)
(3) FAIR VALUE OF FINANCIAL INSTRUMENTS
Effective January 1, 2008, the Partnership adopted FASB ASC 820
(formerly Statement of Financial Accounting Standard No. 157, Fair
Value Measurement), issued by the FASB. ASC 820 defines fair value
as the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the
measurement date and sets out a fair value hierarchy. The fair value
hierarchy gives the highest priority to quoted prices in active markets
for identical assets or liabilities (Level 1) and the lowest priority to
unobservable inputs (Level 3). Inputs are broadly defined under
ASC 820 as assumptions market participants would use in pricing
an asset or liability. The three levels of the fair value hierarchy under
ASC 820 are described below:
Level 1. Unadjusted quoted prices in active markets for identical assets
or liabilities that the reporting entity has the ability to access at
the measurement date.
Level 2. Inputs other than quoted prices within Level 1 that are observable
for the asset or liability, either directly or indirectly; and fair value
is determined through the use of models or other valuation methodologies.
A significant adjustment to a Level 2 input could result in the Level 2
measurement becoming a Level 3 measurement.
Level 3. Inputs are unobservable for the asset or liability and include
situations where there is little, if any, market activity for the asset
or liability. The inputs into the determination of fair value are based
upon the best information in the circumstances and may require significant
management judgment or estimation.
The following section describes the valuation techniques used by the
Partnership to measure different financial instruments at fair value and
includes the level within the fair value hierarchy in which the financial
instrument is categorized. Fair value of exchange-traded contracts is based
upon exchange settlement prices. Fair value of non-exchange-traded contracts
is based on third party quoted dealer values on the Interbank market. These
financial instruments are classified in Level 1 of the fair value hierarchy.
The following table presents the Partnership's fair value hierarchy for those
assets and liabilities measured at fair value on a recurring basis as of
March 31, 2011:
Fair Value Measurements Using
-------------------------------------------------------------
Quoted Prices in Significant Significant
Active Markets for Other Unobservable
Identical Assets Observable Inputs Inputs
Total (Level I) (Level II) (Level III)
----------- ------------------ ----------------- --------------
Assets
Cash and equivalents $17,091,685 $ 17,091,685 $ - $ -
-------------- ----------------- --------------- --------------
Investments Long Futures
Contracts 1,357,656 1,357,656 - -
Short Futures
Contracts (248,877) (248,877) - -
--------------- ---------------- --------------- --------------
1,108,779 1,108,779 - -
--------------- ---------------- --------------- --------------
Total assets at fair value $ 18,200,464 $18,200,464 $ - $ -
================ ================ =============== ==============
The following table presents the Partnership's fair value hierarchy for those
assets and liabilities measured at fair value on a recurring basis as of
March 31, 2010:
Fair Value Measurements Using
-------------------------------------------------------------------
Quoted Prices in Significant Significant
Active Markets for Other Unobservable
Identical Assets Observable Inputs Inputs
Total (Level I) (Level II) (Level III)
----------- ---------------- --------------- --------------
Assets
Cash and equivalents $12,559,949 $12,559,949 $ - $ -
--------------- ----------------- --------------- --------------
Investments
Long Futures
Contracts 143,361 143,361 - -
Short Futures
Contracts 466,385 466,385 - -
------------- ----------------- --------------- --------------
609,745 609,745 - -
------------- ----------------- --------------- --------------
Total assets at fair
value $13,169,694 $13,169,694 $ - $ -
============= ================= =============== ==============
(4) 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 (see Note 5).
Although the Agreement does not permit redemptions for the first six months
following a Limited Partner's admission to the Partnership, the Agreement
does permit the Partnership to declare additional regular redemption dates.
The Partnership will be dissolved on December 31, 2020, or upon the
occurrence of certain events, as specified in the Limited Partnership agreement.
(5) AGREEMENTS AND RELATED PARTY TRANSACTIONS
John W. Henry & Company, Inc. (JWH) serves as the Partnership's commodity
trading advisor. 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. 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 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 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 General Partner
may replace or add trading advisors at any time.
The clearing agreements with the clearing brokers 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 National Futures Association 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 clearing brokers at a rate equal to the
average 91-day Treasury Bill rate during that month.
The Partnership has also entered into an investment advisory agreement with
Horizon Cash Management L.L.C. ("HCM''). At March 31, 2011 and 2010
approximately 99.86% and 99.75%, respectively of the partnership's capital were
funds deposited with a commercial bank and invested under the direction of
HCM. HCM 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 HCM
exceeds the 91-day U.S. Treasury bill rate.
(6) DERIVATIVE INSTRUMENTS
In the normal course of business, the Partnership engages in trading
derivatives by purchasing and selling futures contracts and options
on future contracts for its own account. All such trading is effectuated
as speculative as opposed to hedging. Effective January 1, 2009, the
Partnership adopted the provisions of Accounting Standards Codification
815, Derivatives & Hedging, which requires enhanced disclosures about
the objectives and strategies for using derivatives and quantitative
disclosures about the fair value amounts, and gains and losses on derivatives.
See below for such disclosures.
Asset Derivatives
Balance Sheet
Location Fair Value #of contracts
Agricultural
Net unrealized trading gains on open contracts 597,108 97
Currencies
Net unrealized trading gains on open contracts 133,050 86
Energy
Net unrealized trading gains on open contracts 130,720 58
Metals
Net unrealized trading gains on open contracts 544,420 56
Interest rates
Net unrealized trading gains on open contracts (47,642) 20
========= ======
1,357,656 317
Liability Derivatives
Balance Sheet
Location Fair Value #of contracts Net
Agricultural
Net unrealized trading gains on open contracts (129,355) 49 467,773
Currencies
Net unrealized trading gains on open contracts (1,350) 12 131,700
Energy
Net unrealized trading gains on open contracts 0 0 130,720
Metals
Net unrealized trading gains on open contracts 0 0 544,420
Interest rates
Net unrealized trading gains on open contracts 8,891 59 (38,751)
Indices
Net unrealized trading gains on open contracts (127,083) 8 (127,083)
============ ========== ==========
(248,877) 128 1,108,779
Trading Revenue for the Three Months Ended March 31, 2011
Line Item in Income Statement
Realized 982,115
Change in unrealized 72,939
===========
1,055,055
Includes net foreign currency translation gain(loss)
Trading Revenue for the Three Months Ended March 31, 2010
Line Item in Income Statement
Realized (1,035,459)
Change in unrealized 457,442
===========
(578,018)
Includes net foreign currency translation gain (loss)
Total average of futures contracts bought and sold
Three months ended March 31, 2011
Total 982,115
============
3 month average 327,372
Total average of futures contracts bought and sold
Three months ended March 31, 2010
Total (1,035,459)
3 month average (345,153)
For the three months ended March 31, 2011, the monthly average of futures
contracts bought and sold was approximately 327,372.
(7) FINANCIAL INSTRUMENTS, OFF-BALANCE SHEET RISKS AND CONTINGENCIES
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 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.
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.
In the case of forward contracts, over-the-counter options contracts or
swap contracts, which are traded on the interbank or other institutional
market rather than on exchanges, the counterparty is generally a single
bank or other financial institution, rather than a clearinghouse backed
by a group of financial institutions; thus, there likely will be greater
counterparty credit risk. The Partnership trades only with those
counterparties that it believes to be creditworthy. All positions of
the Partnership are valued each day on a mark-to-market basis. There
can be no assurance that any clearing member, clearinghouse or other
counterparty will be able to meet its obligations to the Partnership.
(8) FINANCIAL HIGHLIGHTS
The following financial highlights show the Partnership's financial
performance for the three months ended March 31, 2011 and
March 31, 2010.
March 31, 2011 March 31, 2010
--------------------- ---------------------
Class A Class A
-------------------- ---------------------
Total return before distributions* 3.34% (6.01)%
=============== ===============
Ratio to average net assets:
Net investment Income (loss)** (2.77)% (2.01)%
=============== ===============
Management fees 1.93% 1.93%
Incentive fees 0.81% 0%
Other expenses 0.07% 0.22%
--------------- ----------------
Total expenses** 2.82% 2.14%
=============== ===============
*Not annualized
**Annualized
Interim Financial Statements
The statements of financial condition, including the consolidated schedule
of investments, as of March 31, 2011, the statements of operations for
the three months ended March 31, 2011 and 2010, the statements
of cash flows and changes in partners' capital (net asset value) for the three
months ended March 31, 2011 and 2010 and the accompanying notes to the
financial statements are unaudited. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with U.S. generally accepted accounting principles may be omitted pursuant
to such rules and regulations. In the opinion of management, such financial
statements and accompanying disclosures reflect all adjustments, which
were of a normal and recurring nature, necessary for a fair presentation
of financial position as of March 31, 2011, results of operations for the
three months ended March 31, 2011 and 2010, cash flows and
changes in partners' capital (net asset value) for the three months ended
March 31, 2011 and 2010. The results of operations for the full three
months ended March 31, 2011 and 2010 are not necessarily
indicative of the results to be expected for the full year or any other
period. These financial statements should be read in conjunction with the
audited financial statements and the notes thereto included in our form
10-k as filed with the Securities and Exchange Commission.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation
Each months ended March 31, 2011 compared to each months ended
March 31, 2010
Class A Units were positive 1.40% in January 2011 resulting in
a Net Asset Value per unit of $3,841.11 as of January 31, 2011.
Class A Units were negative 3.48% in January 2010 resulting in
a Net Asset Value per unit of $2,873.42 as of January 31, 2010.
The interest rate sector produced slightly positive results as global
rates moved modestly higher amid signs the economy was improving.
The currency sector was unprofitable in January as directionless
price patterns prevailed. Gains from trading in the British pound
were not enough to offset losses from other markets in the sector.
Trading in the equity sector was slightly profitable as stocks
continued to move higher. Positions in Asian, European and U.S.
stock index futures were all profitable. Oil and petroleum products
moved higher in January, contributing to gains for the month.
Positions in heating oil were buoyed by unseasonably cold
temperatures in many parts of the United States. Trading in the
metals sector was unprofitable for the month. The trend in
precious metals prices may have come to an end in January
as gold failed to participate in an otherwise broad-based
rally in commodity prices. Silver also produced negative
performance in January. Trading in the agricultural sector
continued to be an important source of Fund's returns.
All of the positions in the sector were profitable in January.
Class A Units were positive 3.09% in February 2011 resulting in
a Net Asset Value per unit of $3,959.69 as of February 28, 2011.
Class A Units were negative 3.62% in February 2010 resulting in
a Net Asset Value per unit of $2,769.41 as of February 28, 2010.
Performance in February was strong as the Fund gained 3.09%
for the month. The consistency of the Fund's returns is in part
due to a rotation in performance leadership across the portfolio.
While one sector is undergoing a correction, performance from
another sector has been strong enough to generate gains in the
overall Fund. This was the case in February. As key markets
in the agricultural sector suffered from meaningful pullbacks,
certain energy prices, such as crude oil, surged. On the
surface, it may seem that the good performance in February
was simply an extension of January's positive results; generally,
commodity prices were up on the month and equities continued
their movement higher. The energy sector was the difference
maker for the Fund in February as the price of crude oil,
heating oil and gasoline all surged during the month. Positions in
crude oil and crude oil products were all profitable and more than
sufficient to offset small losses from trading in natural gas. The
agricultural sector, which has been an important influence on the
Fund's positive performance in recent months, was once again
profitable in February. Cotton, for example, was the
best-performing single market in the Fund during the month.
Sugar, which had been rallying along with other agricultural markets,
suffered a sharp pull back and was the worst-performing market in
the Fund. The metals sector produced positive results despite
mixed performance from the normally correlated gold and silver
markets. Significant gains from trading in silver more than offset
losses from trading in gold. Positions in U.S., European and
Japanese equity futures were all profitable for the month. Trading
in the interest rate sector was flat in February. Trading in currencies
was slightly unprofitable as the Fund suffered from intra-month
reversals. The price action observed in the Japanese yen and Swiss
franc was consistent with the price action in the Treasury market
and an indication of the strong safe haven flows that upset trends
in both bonds and currencies.
Class A Units were negative 1.14% in March 2011 resulting in
a Net Asset Value per unit of $3,914.46 as of March 31, 2011.
Class A Units were positive 1.04% in March 2010 resulting in
a Net Asset Value per unit of $2,798.33 as of March 31, 2010.
Performance for the Fund declined one percent in March as a
number of long-standing trends were disrupted by the tragic events
that occurred in Japan during the month. The metals sector was a
bright spot for the Fund as precious metals, and silver in particular,
surged amidst the global turmoil. The energy market was also
profitable in March, helping to offset losses from the Fund's
Japanese exposures. In general, the price pattern of crude oil and
crude oil products was similar to that of other risk assets, including
equities; they moved lower following the news from Japan and
then traded higher in the second half of the month. Price patterns
across the agriculture sector were diverse with some markets
following the direction of overall investor risk sentiment while
other markets were more tethered to idiosyncratic fundamentals.
Performance from the sector was negative as gains from trading
in the coffee and cotton markets were insufficient to offset losses
from trading in grains and sugar. Trading in global interest rates
was unprofitable in March as the sector was hit by sudden
reversals that followed news of the Japanese earthquake. Trading
in currencies was slightly unprofitable, with the largest losses
coming from positions in the U.S. dollar against the Japanese yen.
The Fund's systematic non-predictive approach to trading these
markets allowed it to maintain exposure and profit from the
extension of ongoing trends in many markets, while limiting losses
and adjusting positions to newly formed trends in others.
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, 2010.
Item 4. Controls and Procedures
As of March 31, 2011 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
Neither the Partnership, nor the General Partner, is party to
any pending material legal proceeding.
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, 2010.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
RECENT SALES OF UNREGISTERED SECURITIES A UNITS
Three months ended March 31, 2011 Three months ended March31,2010
Units Sold 64.76 86.69
Value of Units Sold $256,010 $245,000
1% of the proceeds from the above sales were used to pay the
Partnership's Organization and Offering charge. The remaining 99%
was invested in the Partnership.
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 16, 2011 By: Everest Asset Management, Inc.,
its General Partner
By:__/s/ Peter Lamoureux_______________________________-
Peter Lamoureux
President
32