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, 2000
Commission File Number 0-17555
EVEREST FUTURES FUND, L.P.
(Exact name of registrant as specified in its charter)
Iowa 42-1318186
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2280 W. Tyler St., Suite 105, Fairfield, Iowa 52556
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (515) 472-5500
Not Applicable
(Former name, former address and former fiscal year, if changed since
last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Following are Financial Statements for the fiscal quarter ending March 31, 2000
Fiscal Quarter Year to Date Fiscal Year Fiscal Quarter Year to Date
Ended 3/31/00 to 3/31/00 Ended 12/31/99 Ended 3/31/99 to 3/31/99
---------------- -------------- ---------------- ---------------- --------------
Statement of
Financial Condition X X
Statement of
Operations X X X X
Statement of Changes
in Partners' Capital X
Statement of
Cash Flows X X
Notes to Financial
Statements X
EVEREST FUTURES FUND, LP
COMBINED STATEMENTS OF FINANCIAL CONDITION
UNAUDITED
Mar 31, 2000 Dec 31, 1999
------------ ------------
ASSETS
Cash and cash equivalents 17,404,414 16,410,917
Equity in commodity trading accounts:
Amount Due from broker 6,899,756 5,281,725
Net unrealized trading gains on open contracts 2,802,652 670,107
Investments, at fair value 20,064,362 18,867,562
Interest receivable 276,168 618,294
------------ ------------
TOTAL ASSETS 47,447,353 41,848,605
------------ ------------
------------ ------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accrued expenses 20,300 29,962
Commissions payable 183,065 192,660
Advisor's management fee payable 155,464 138,225
Advisor's incentive fee payable 0 0
Redemptions payable 1,417,517 1,055,043
Deferred Partnership offering proceeds 0 0
Selling and Offering Expenses Payable 34,451 0
------------ ------------
Total liabilities 1,810,798 1,415,890
Minority Interest 400,002 452,105
Partners' Capital:
Limited partners (28,949.59 and 22,615.30 units 44,928,506 39,632,760
outstanding at 3/31/00 and 12/31/99, respectively)
(see Note 1)
General partners (198.49 units outstanding 308,049 347,850
at 3/31/00 and 12/31/99) ------------ ------------
(see Note 1)
Total partners' capital 45,236,555 39,980,610
------------ ------------
TOTAL LIABILITIES, MINORITY INTEREST,
AND PARTNERS' CAPITAL $47,447,353 $41,848,605
------------ ------------
------------ ------------
Net asset value per outstanding unit of Partnership
interest $1,551.96 $1,752.48
------------ ------------
------------ ------------
These Statements of Financial Condition, in the opinion of management, reflect
all adjustments necessary to fairly state the financial condition of the Everest
Futures Fund combination. (See Note 6)
EVEREST FUTURES FUND, L.P.
COMBINED STATEMENTS OF OPERATIONS
FOR THE PERIOD JANUARY 1, 2000 THROUGH MARCH 31, 2000
UNAUDITED
Jan 1, 2000 Jan 1, 2000 Jan 1, 1999 Jan 1, 1999
through through through through
Mar 31, 2000 Mar 31, 2000 Mar 31, 1999 Mar 31, 1999
------------ ------------ ------------ ------------
REVENUES
Gains on trading of commodity futures and
forwards contracts, physical
commodities and related options:
Realized gain (loss) on closed positions (6,925,697) (6,925,697) 1,246,011 1,246,011
Change in unrealized gain (loss)
on open positions 2,111,834 2,111,834 (4,300,755) (4,300,755)
Net foreign currency translation gain (loss) (187,591) (187,591) (61,964) (61,964)
Brokerage Commissions (687,812) (687,812) (785,947) (785,947)
----------- ----------- ----------- -----------
Total trading income (loss) (5,689,266) (5,689,266) (3,902,655) (3,902,655)
Interest income, net of cash management fees 605,852 605,852 595,829 595,829
----------- ----------- ----------- -----------
Total income (loss) (5,083,415) (5,083,415) (3,306,826) (3,306,826)
GENERAL AND ADMINISTRATIVE EXPENSES
Advisor's management fees 441,472 441,472 512,899 512,899
Advisor's incentive fees 0 0 0 0
Administrative expenses (21,942) (21,942) 15,585 15,585
Total general and administrative expenses 419,530 419,530 528,484 528,484
Minority Interest 0 0 0 0
----------- ----------- ----------- -----------
NET INCOME (LOSS) (5,502,945) (5,502,945) (3,835,310) (3,835,310)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
PROFIT (LOSS) PER UNIT OF
PARTNERSHIP INTEREST ($200.52) ($200.52) ($151.17) ($151.17)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
(see Note 1) (see Note 1)
This combined Statements of Operations, in the opinion of management, reflects
all adjustments necessary to fairly state the financial condition of the Everest
Futures Fund combination. (See Note 6)
EVEREST FUTURES FUND, LP
COMBINED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
FOR THE PERIOD JANUARY 1, 2000 THROUGH MARCH 31, 2000
UNAUDITED
Limited General
Units* Partners Partners Total
---------- ------------ -------- ------------
Partners' capital at Jan 1, 2000 22,615.30 39,632,760 $347,850 $39,980,610
Net profit (loss) (5,463,143) (39,801) (5,502,945)
Additional Units Sold 8,388.88 14,033,699 0 14,033,699
(see Note 1)
Redemptions (see Note 1) (2,054.59) (3,274,811) 0 (3,274,811)
---------- ------------ -------- ------------
Partners' capital at March 31, 2000 28,949.59 $44,928,506 $308,049 $45,236,555
---------- ------------ -------- ------------
---------- ------------ -------- ------------
Net asset value per unit
January 1, 2000 (see Note 1) 1,752.48 1,752.48
Net profit (loss) per unit (see Note 1) (200.52) (200.52)
---------- ----------
Net asset value per unit
March 31, 2000 $1,551.96 $1,551.96
* Units of Combined Limited Partnership interest.
This combined Statement of Changes in Partners' Capital, in the opinion of
management, reflects all adjustments necessary to fairly state the financial
condition of the Everest Futures Fund combination. (See Note 6)
EVEREST FUTURES FUND, LP
COMBINED STATEMENTS OF CASH FLOWS
UNAUDITED
Jan 1, 2000 Jan 1, 1999
through through
Mar 31, 2000 Mar 31, 1999
------------- -------------
Net profit (loss) (5,502,945) (3,835,309)
Adjustments to reconcile net profit
(loss) to net cash provided by
(used in) operating activities:
Change in assets and liabilities:
Unrealized gain (loss) on open
futures contracts (2,132,545) 4,347,526
Interest receivable 342,126 88,801
Decrease (Increase) in commodity trading accounts 0 (5,100,047)
Accrued liabilities (2,018) (59,268)
Redemptions payable 362,474 (271,516)
Investments, at fair value (1,196,800) 0
Deferred Offering Proceeds 0 0
Selling and Offering Expenses Payable 34,451 5,946
Decrease in minority interest (52,103) (39,009)
------------- -------------
Net cash provided by (used in)
operating activities (8,147,361) (4,862,876)
Cash flows from financing activities:
Units Sold 14,033,699 1,351,224
Partner redemptions (3,274,811) (3,421,409)
------------- -------------
Net cash provided by (used in)
financing activities 10,758,889 (2,070,185)
------------- -------------
Net increase (decrease) in cash 2,611,528 (6,933,061)
Cash at beginning of period $21,692,642 $46,220,386
------------- -------------
Cash at end of period $24,304,170 $39,287,325
------------- -------------
------------- -------------
This Statement of Cash Flows, in the opinion of management, reflects all
adjustments necessary to fairly state the financial condition of Everest Futures
Fund. (See Note 6)
EVEREST FUTURES FUND, L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
(1) GENERAL INFORMATION AND SUMMARY
Everest Futures Fund, L.P. (the "Partnership") is a limited partnership
organized on June 20, 1988 under the Iowa Uniform Limited Partnership Act. The
business of the Partnership is the speculative trading of commodity futures
contracts and other commodity interests, including forward contracts on foreign
currencies ("Commodity Interests") either directly or through investing in
other, including subsidiary, partnerships, funds or other limited liability
entities. The Partnership commenced its trading operations on February 1, 1989
and its general partner is Everest Asset Management, Inc. (the "General
Partner") a Delaware corporation organized in December 1987.
The Partnership was initially organized on June 20, 1988 under the name Everest
Energy Futures Fund, L.P. and its initial business was the speculative trading
of Commodity Interests, with a particular emphasis on the trading of
energy-related commodity interests. However, effective September 12, 1991, the
Partnership changed its name to "Everest Futures Fund, L.P." and at the same
time eliminated its energy concentration trading policy. The Partnership
thereafter has traded futures contracts and options on futures contracts on a
diversified portfolio of financial instruments and precious metals and trades
forward contracts on currencies.
The public offering of the Partnership's units of limited partnership interest
("Units") commenced on or about December 6, 1988. On February 1, 1989, the
initial offering period for the Partnership was terminated, by which time the
Net Asset Value of the Partnership was $2,140,315.74. Beginning February 2,
1989, an extended offering period commenced which terminated on July 31, 1989,
by which time a total of 5,065.681 Units of Limited Partnership Interest were
sold. Effective May, 1995 the Partnership ceased to report as a public offering.
On July 1, 1995 the Partnership recommended the offering of its Units as a
Regulation D, Rule 506 private placement, which continues to the present with a
total of $70,929,633 for 40,011 Units sold July 1, 1995 through March 31, 2000.
On February 29, 1996, the Partnership amended its Agreement of Limited
Partnership permitting the Partnership to conduct its trading business by
investing in other partnerships and funds and in subsidiary partnerships or
other limited liability entities. Effective the close of business on March 29,
1996, the Partnership invested all of its assets in another limited partnership,
Everest Futures Fund II L.P. ("Everest II" or the "Trading Partnership"), a
Delaware limited partnership in which the Partnership is the sole limited
partner. As a result, the Partnership does not currently invest directly in
Commodity Interests. Instead, the Partnership transferred all of its assets to
Everest II in return for its Everest II limited partnership interest. Everest II
invests directly in Commodity Interests through John W. Henry & Company, Inc.
("JWH"), an independent commodity trading advisor which had been the advisor to
the Partnership.
Everest II has two general partners, Everest Asset Management, Inc., the current
General Partner of the Partnership and CIS Investments, Inc. ("CISI"), which is
a wholly-owned subsidiary of Cargill Investor Services, Inc., the former
clearing broker of the Partnership and now the clearing broker for Everest II
(the "Clearing Broker"). CIS Financial Services, Inc., an affiliate of the
Clearing Broker, acts as the Partnership's currency dealer. CISI and the General
Partner are both registered with the CFTC as commodity pool operators and are
members of the NFA in such capacity.
On September 13, 1996 the Securities and Exchange Commission accepted for filing
a Form 10 -- Registration of Securities for the Partnership. Public reporting of
Units of the Partnership sold as a private placement commenced at that time and
has continued to the present.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements are prepared on a combined basis and
include the accounts of Everest Futures Fund, L.P. and Everest Futures Fund II,
L.P. All significant intercompany transactions and balances have been eliminated
in the accompanying combined financial statements.
Cash Equivalents
Cash equivalents represent short-term highly liquid investments with remaining
maturities of 60 days or less and include money market accounts, securities
purchased under agreements to resell, commercial paper, and U.S. Government and
agency obligations with variable rate and demand features that qualify them as
cash equivalents. These cash equivalents, with the exception of securities
purchased under agreement to resell, are stated at amortized cost, which
approximates fair value. Securities purchased under agreements to resell, with
overnight maturity, are collateralized by U.S. Government and agency
obligations, and are carried at the amounts at which the securities will
subsequently be resold plus accrued interest. For purposes of the statements of
cash flows, cash and cash equivalents includes cash and cash equivalents and
cash on deposit with Brokers in the equity in commodity futures trading
accounts.
Fair Value of Financial Instruments
The financial instruments held by the Company are reported in the statement of
financial condition at market or fair value, or at carrying amounts which
approximate fair value, because of their highly liquid nature and short-term
maturity.
Revenue Recognition
Realized and unrealized trading gains and losses on commodity and forward
contracts, which represent the difference between cost and selling price or
quoted market value, are recognized currently. All trading activities are
accounted for on a trade-date basis.
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 combined statement of
operations.
Income Taxes
Income taxes are not provided for by the Partnership because taxable income of
the Partnership is includable in the income tax returns of the partners.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the period. Actual results could differ from those estimates.
Minority Interest
Minority interest represents CISI's interest in the Trading Partnership.
(3) THE LIMITED PARTNERSHIP AGREEMENT
The Limited Partners and General Partner share in the profits and losses of the
Partnership in proportion to the number of Units or Unit equivalents held by
each. However, no Limited Partner is liable for obligations of the Partnership
in excess of his or her capital contribution and profits, if any, and such other
amounts as he may be liable for pursuant to the Iowa Uniform Limited Partnership
Act. Distributions of profits are made solely at the discretion of the General
Partner.
Responsibility for managing the Partnership is vested solely in the General
Partner; however, the General Partner has delegated complete trading authority
to an unrelated party (note 4).
The Trading Partnership bears all expenses incurred in connection with its
trading activities, including commodity brokerage commissions and fees payable
to the trading advisor, as well as legal, accounting, auditing, printing,
mailing and extraordinary expenses. The Partnership bears all of its
administrative expenses.
Limited Partners may cause any or all of their Units to be redeemed as of the
end of any month at net asset value on ten days' prior written notice. The
Partnership will be dissolved at December 31, 2020, or upon the occurrence of
certain events, as specified in the Limited Partnership Agreement.
(4) OTHER AGREEMENTS
All Commodity Interests trading decisions for the Trading Partnership are made
by JWH. JWH receives from the Trading Partnership a monthly management fee equal
to 0.33% (4% annually) of the Trading Partnership's month-end net asset value,
as defined, and a quarterly incentive fee of 15% of the Trading 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 Trading Partnership.
The Clearing Broker charges the Trading Partnership monthly brokerage
commissions equal to 0.50% of the Trading Partnership's beginning-of-month net
asset value, as defined. Effective November 1, 1995, the General Partner
receives a management fee from the Clearing Broker of approximately 83% of the
brokerage commission charged by the Clearing Broker. Prior to November 1, 1995,
no management fee was received by the General Partner. From this management fee,
CISI receives a co-general partner fee from the General Partner equal to 1/12 of
.25% of the month-end net asset value, as defined. Prior to January 1, 1999 CISI
received 1/12 of .40% of the month-end net asset value.
A portion of assets are deposited with a commercial bank and invested under the
direction of Horizon Cash Management, Inc. ("Horizon"). Horizon will receive a
monthly cash management fee equal to 1/12 of .25% (.25% annually) of the average
daily assets under management if the accrued monthly interest income earned on
the Partnership's assets managed by Horizon exceeds the 91-day U.S. Treasury
bill rate.
(5) FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
The Partnership was formed to speculatively trade commodity interests. The
Partnership's commodity interest transactions and related cash balances are on
deposit with the Clearing Broker or CIS Financial Services, Inc. ("CISFS" or
"Forwards Currency Broker" and collectively, the "Brokers") at all times. In the
event that volatility of trading of other customers of the Brokers impaired the
ability of the Brokers to satisfy the obligations to the Partnership, the
Partnership would be exposed to off-balance sheet risk. Such risk is defined in
Statement of Financial Accounting Standards No. 105 (SFAS 105) as a credit risk.
To mitigate this risk, the Clearing Broker, pursuant to the mandates of the
Commodity Exchange Act, is required to maintain funds deposited by customers,
relating to futures contracts in regulated commodities, in separate bank
accounts which are designated as segregated customers' accounts. In addition,
the Clearing Broker has set aside funds deposited by customers relating to
foreign futures and options in separate bank accounts which are designated as
customer secured accounts. Lastly, the Clearing Broker is subject to the
Securities and Exchange Commission's Uniform Net Capital Rule which requires the
maintenance of minimum net capital at least equal to 4% of the funds required to
be segregated pursuant to the Commodity Exchange Act. The Clearing Broker and
Forwards Currency Broker both have controls in place to make certain that all
customers maintain adequate margin deposits for the positions which they
maintain at each Broker. Such procedures should protect the Partnership from the
off-balance sheet risk as mentioned earlier. Neither the Clearing Broker or the
Forwards Currency Broker engage in proprietary trading and thus have no direct
market exposure.
The counterparty of the Partnership for futures contracts traded in the United
States and most non-U.S. exchanges on which the fund trades is the Clearing
House associated with the exchange. In general, Clearing Houses are backed by
the membership and will act in the event of nonperformance by one of its members
or one of the members' customers and as such should significantly reduce this
credit risk. In the cases where the Partnership trades on exchanges on which the
Clearing House is not backed by the membership, the sole recourse of the
Partnership for nonperformance will be the Clearing House. The Forwards Currency
Broker is the counterparty for the Partnership's forwards transactions. CISFS
policies require that they execute transactions only with top rated financial
institutions with assets in excess of $100,000,000.
The Partnership holds futures and futures options positions on the various
exchanges throughout the world and forwards positions with CISFS which transacts
with various top rated banks throughout the world. As defined by SFAS 105,
futures and foreign currency contracts are classified as financial instruments.
SFAS 105 requires that the Partnership disclose the market risk of loss from all
of its financial instruments. Market risk is defined as the possibility that
future changes in market prices may make a financial instrument less valuable or
more onerous. If the markets should move against all of the futures positions
held by the Partnership at the same time, and if the markets moved such that the
trading advisor was unable to offset the futures positions of the Partnership,
the Partnership could lose all of its assets and the partners would realize a
100% loss. The Partnership has a contract with one trading advisor who makes the
trading decisions on behalf of the Partnership. That trading advisor trades a
program which is diversified among the various futures contracts in the
financials and metals group on exchanges both in the U.S. and outside the U.S.
Such diversification should greatly reduce this market risk.
The following chart discloses the dollar amount of the unrealized gain or loss
on open contracts related to Commodity Interests for the Partnership as of March
31, 2000:
COMMODITY GROUP UNREALIZED GAIN/(LOSS)
FOREIGN CURRENCIES (282,208)
STOCK INDICES 136,031
METALS 105,361
INTEREST RATE INSTRUMENTS 2,843,468
TOTAL 2,802,652
The range of maturity dates of these exchange-traded open contracts is April,
2000 to December, 2000. The average open trade equity for the period of January
1, 2000 to March 31, 2000 was $2,210,684.
The margin requirement at March 31, 2000 was $8,977,816. To meet this
requirement, the Partnership had on deposit with the Clearing Broker $5,293,319
in segregated funds, $3,551,678 in secured funds and $857,411 in non-regulated
funds. Cash was on deposit with the broker's in each time period of the
financial statements which exceeded the cash requirements of the company of the
Commodity Interests of the Partnership.
(6) FINANCIAL STATEMENT PREPARATION
The interim financial statements are unaudited but reflect all adjustments that
are, in the opinion of management, necessary for a fair statement of the results
for the interim periods presented. These adjustments consist primarily of normal
recurring accruals. These interim financial statements should be read in
conjunction with the audited financial statements of the Partnership for the
year ended December 31, 1999, as filed with the Securities and Exchange
Commission on March 28, 2000, as part of its Annual Report on Form 10-K.
The results of operations for interim periods are not necessarily indicative of
the operating results to be expected for the fiscal year.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation
Fiscal Quarter ended March 31, 2000
The Partnership recorded a loss of $5,502,945 or $200.52 per Unit for the first
quarter of 2000. This compares to a loss of $3,835,309 or $151.17 per Unit for
the first quarter of 1999.
In the first month of the quarter the Partnership posted a loss resulting
primarily from volatility in the currency sector. The Partnership posted a loss
for the second month of the quarter resulting primarily from trading in global
interest rates. During the third month of the quarter currency destabilization
and massive capital shifts out of the U.S. dollar resulted in a loss for the
Partnership. Overall, the first quarter of fiscal 2000 ended negatively for the
Partnership accounts managed by JWH-Registered Trademark-. At March 31, 2000,
John W. Henry & Company, Inc. was managing 100% of the Partnership's assets
using its Financial and Metals Portfolio.
January 2000 marked the turning of the millennium. This coupled with the
build-up to Y2K came and went without a hitch. However, the currency sector was
all but quiet as extreme volatility prompted large swings in the price of the
U.S. dollar relative to the Japanese yen. Within the first couple of days of the
New Year, the Japanese banks intervened and started pouring money into the
dollar. This abrupt reversal in the dollar/yen relationship resulted in a
reversal of the Partnership positions from long yen to short yen within a matter
of days. Similarly, yen trading relative to the euro and Swiss franc contributed
to Partnership losses. Short Australian dollar positions proved difficult and
also resulted in losses. Stock indices, namely the Nikkei fell in response to
volatility in the tech sector, which is factored into that index. Long positions
hurt the Partnership performance. Despite realizing profits from short U.S. bond
and long Japanese Government Bond positions, the Partnership posted overall
losses. All in all, the Partnership posted a loss of $1,624,69 or $71.22 per
Unit in January.
Changing expectations regarding economic growth and inflation created a
difficult trading environment in February. The strategic news item was the U.S.
Federal Reserve's decision to buy back part of the debt, which led to a powerful
rally in the U.S.30-year bond. The decision by the Fed created havoc in the
Partnership interest rate portfolio, which was dominated by short positions.
Losses were taken in North American, Asian, and European interest rates. The
yield on the 10-year U.S. government bond currently exceeds that of the 30-year,
creating an inverted yield curve, which is a very unusual occurrence. Currency
trading was mixed. Profitable long U.S. dollar positions were bolstered by the
revised 4th quarter Gross National Product number, which reflected a robust
economy. However, gains in the dollar were offset by losses incurred by long
Europe/short Japan positions. Precious metals trading suffered as gold prices
rallied and then fell sharply. On March 2, the General Partner received a letter
from Verne Sedlacek, President of John W. Henry & Company, Inc. detailing
modifications to the Financial and Metals trading program. All changes are
designed to add balance to the program without giving up any upside potential.
Most noteworthy are the dramatic reductions in precious metals and Far Eastern
interest rate trading as well as the addition of offshore stock indices, base
metals, and the expansion of non-dollar currency trading. JWH remains steadfast
in their commitment to research. Overall, the Partnership posted a loss of
$2,925,475 or $97.24 per Unit in February.
In March, profit taking in U.S. tech stocks led to massive capital shifts out of
the dollar and into yen. These events destabilized currency and stock markets
worldwide. The appreciation of the yen contributed the majority of the losses to
the Partnership in that long positions in dollar and euro versus the yen both
suffered. Marginal gains in dollar positions against Europe and Australia's
currencies proved inadequate in offsetting these losses. Performance in
precious, as well as industrial metals was down slightly. Positive performance
in March came from the interest rate sector. The 7% correction in tech stocks
coupled with the U.S. Treasury's continued buying of longer dated bonds led to
positive performance in our bond position. The European Central Bank's decision
to raise short term interest rates led to purchasing European bonds, which
assisted our position as well. Overall, the Partnership posted a loss of
$952,778 or $32.06 per Unit in March.
During the quarter, additional Units sold consisted of 8,388.88 limited
partnership units; there were no general partnership units sold during the
quarter. Additional Units sold during the quarter represented a total of
$14,033,699. Investors redeemed a total of 2,054.59 Units during the quarter. At
the end of the quarter there were 29,148.08 Units outstanding (including 198.49
Units owned by the General Partner).
During the fiscal quarter ended March 31, 2000, the Partnership had no credit
exposure to a counterparty which is a foreign commodities exchange or to any
counterparty dealing in over the counter contracts which was material.
See Footnote 5 of the Financial Statements for procedures established by the
General Partner to monitor and minimize market and credit risks for the
Partnership. In addition to the procedures set out in Footnote 5, the General
Partner reviews on a daily basis reports of the Partnership's performance,
including monitoring of the daily net asset value of the Partnership. The
General Partner also reviews the financial situation of the Partnership's
Clearing Broker on a monthly basis. The General Partner relies on the policies
of the Clearing Broker to monitor specific credit risks. The Clearing Broker
does not engage in proprietary trading and thus has no direct market exposure
which provides the General Partner assurance that the Partnership will not
suffer trading losses through the Clearing Broker.
Fiscal Quarter ended March 31, 1999
The Partnership recorded a loss of $3,835,309 or $151.17 per Unit for the first
quarter of 1999. This compares to a loss of $3,566,153 or $182.71 per Unit for
the first quarter of 1998.
In the first month of the quarter the Partnership posted a loss resulting
primarily from volatility in the currency sector as well as Japanese interest
rates. The Trust posted a gain for the second month of the quarter resulting
primarily from trading in precious metals and currencies. During the third month
of the quarter concerns about the military conflict in Kosovo mounted. As a
result the global markets experienced increased volatility, namely in precious
metals and interest rates, and the Partnership posted a small loss. Overall, the
first quarter of fiscal 1999 ended negatively for the Partnership accounts
managed by JWH. At March 31, 1999, John W. Henry & Company, Inc. was managing
100% of the Partnership's assets using its Financial and Metals Portfolio.
Currencies were the most volatile sector for the month of January; namely short
positions in the British pound and long positions in the Japanese yen. The
anxiously awaited Euro began trading and started out the year on a positive note
as short positions rendered small profits for the Partnership. The only
profitable interest rate market was in Germany where the Partnership maintained
a long German bund position, thereby taking advantage of falling German rates.
Short positions in the Japanese government bond and Australian bond positions
created losses for the Partnership. The Nikkei stock index provided the majority
of the loss in the stock indices, as short positions were unprofitable. All in
all, the Partnership posted a loss of $2,750,493 or $107.54 per Unit in January.
In February, long silver positions in the precious metals sector were profitable
and the Nikkei stock index provided gains amidst a falling and then rising
market. Currency trading rendered gains from short positions in the Euro,
British pound and Swiss franc as each currency declined against the U.S. dollar.
These gains were able to cover losses in the Australian dollar and Japanese yen.
Interest rates were the only unprofitable sector for the Partnership. The
Partnership was able to take advantage of rising interest rates in the U.S.
10-year notes and 30-year bonds. However, long Japanese government bond and
German bund positions recorded more significant losses. Overall, the Partnership
posted a gain of $331,060 or $13.35 per Unit in February.
In March, silver and gold positions were extremely volatile as the Partnership
recorded losses from long silver positions and short gold positions. Short bond
positions in Australia and in the United Kingdom were unprofitable as interest
rates in both began to rise. However, long Japanese government bond positions
were the largest loser in this sector as bond prices plummeted. Currencies were
the most favorable sector for the Partnership. A flight to quality in the U.S.
dollar has provided opportunities for the Partnership to profit from long U.S.
dollar positions versus the Euro and Swiss franc. The conflict in Kosovo has
exacerbated the crisis-related selling of the Euro and the flow of money into
the U.S. dollar. The Nikkei stock index moved sharply higher during March and
the Partnership profited from long positions. Long positions in the Australian
All-Ordinaries index were also profitable. Overall, the Partnership posted a
loss of $1,415,876 or $56.98 per Unit in March.
During the quarter, additional Units sold consisted of 658.43 limited
partnership units; there were no general partnership units sold during the
quarter. Additional Units sold during the quarter represented a total of
$1,351,224. Investors redeemed a total of 1,674.39 Units during the quarter. At
the end of the quarter there were 24,560.57 Units outstanding (including 198.49
Units owned by the General Partner).
During the fiscal quarter ended March 31, 1999, the Partnership had no credit
exposure to a counterparty which is a foreign commodities exchange or to any
counterparty dealing in over the counter contracts which was material.
See Footnote 5 of the Financial Statements for procedures established by the
General Partner to monitor and minimize market and credit risks for the
Partnership. In addition to the procedures set out in Footnote 5, the General
Partner reviews on a daily basis reports of the Partnership's performance,
including monitoring of the daily net asset value of the Partnership. The
General Partner also reviews the financial situation of the Partnership's
Clearing Broker on a monthly basis. The General Partner relies on the policies
of the Clearing Broker to monitor specific credit risks. The Clearing Broker
does not engage in proprietary trading and thus has no direct market exposure
which provides the General Partner assurance that the Partnership will not
suffer trading losses through the Clearing Broker.
Item 3. Quantitative and Qualitative Disclosures
About Market Risk
There has been no material change with respect to market risk since the
"Quantitative and Qualitative Disclosures About Market Risk" was made in the
Form 10K of the Partnership dated December 31, 1999.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
The Partnership and its affiliates are from time to time
parties to various legal actions arising in the normal course of business. The
General Partner believes that there is no proceedings threatened or pending
against the Partnership or any of its affiliates which, if determined adversely,
would have a material adverse effect on the financial condition or results of
operations of the Partnership.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
None
b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned and thereunto duly authorized.
EVEREST FUTURES FUND, L.P.
Date: May 12, 2000 By: Everest Asset Management, Inc.,
its General Partner
By: /s/ Peter Lamoureux
Peter Lamoureux
President