Attached files
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly report pursuant to Section 12(b) or (g) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 2013
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 3
Statements of Financial Condition 3
September 30, 2013 (Unaudited) and December 31, 2012 (Audited)
Condensed Schedule of Investments 4
September 30, 2013 (Unaudited)
Condensed Schedule of Investments 5
December 31, 2012 (Audited)
Statements of Operations 5-6
For the Three and nine Months Ended
September 30, 2013 and 2012 (Unaudited)
Statements of Changes in Partners' Capital (Net Asset Value) 6-7
For the Nine Months Ended September 30, 2013
and 2012 (Unaudited)
Statements of Cash Flows
For the Nine Months Ended September 30, 2013 7-8
and 2012 (Unaudited)
Notes to Financial Statements September 30, 2013 8
Item 2. Management's Discussion and Analysis of Financial 18
Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures about 20
Market Risk
Item 4. Controls and Procedures 21
Part II: Other Information 21
Item 1. Legal Proceedings 21
Item 1A. Risk Factors 21
Item 2. Unregistered Sales of Equity Securities and Use 21
of Proceeds
Item 3. Defaults upon Senior Securities 22
Item 4. Submission of Matters to a Vote of Security Holders 22
Item 5. Other Information 22
Item 6. Exhibits 22
2
PART I. FINANCIAL INFORMATION
Item 1 Financial Statements
Following are Financial Statements for the three months ended September 30, 2013
EVEREST FUND, L.P.
(An Iowa Limited Partnership)
STATEMENTS OF FINANCIAL CONDITION
September 30, 2013 (UNAUDITED) AND DECEMBER 31, 2012 (AUDITED)
UNAUDITED AUDITED
September 30, 2013 DECEMBER 31, 2012
----------------- -----------------
ASSETS
Cash and cash equivalents $4,876,689 $7,309,483
Equity in broker trading accounts:
Cash and cash equivalents 2,086,418 1,593,346
Net unrealized trading gains(losses)
on open contracts (35,088) 392,692
Interest receivable 16 48
----------------- ----------------
TOTAL ASSETS $6,928,035 $9,295,569
============== ================
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Redemptions payable $20,753 $541,387
Management fee payable 11,413 15,096
Brokerage fees payable 29,027 37,014
Incentive fee payable 0 0
Accounts payable & accrued expenses 51,423 64,648
----------- ------------
TOTAL LIABILITIES 112,615 658,145
----------- ------------
PARTNERS' CAPITAL
Limited partners, A Shares (3,435.18732
and 3,658.32024 units outstanding) 6,815,420 8,637,424
------------- ------------
TOTAL PARTNERS' CAPITAL 6,815,420 8,637,424
------------- ------------
TOTAL LIABILITIES AND PARTNERS'
CAPITAL $6,928,035 $9,295,569
============= ============
The accompanying notes are an integral part of this statement.
3
EVEREST FUND, L.P.
(AN IOWA LIMITED PARTNERSHIP)
CONDENSED SCHEDULE OF INVESTMENTS
September 30, 2013
UNAUDITED
EXPIRATION NUMBER OF MARKET % OF PARTNERS'
DATES CONTRACTS VALUE (OTE) CAPITAL
---------------- --------- ------------ --------------
LONG POSITIONS:
FUTURES POSITIONS
Interest rates Dec 13 81 $84,019 1.23%
Metals Dec 13 4 (11,372) -0.17%
Energy Nov 13-Dec 13 20 (31,821) -0.47%
Agriculture Nov 13-Mar 14 94 (3,286) -0.05%
Currencies Dec 13 110 113,994 1.67%
Indices Oct 13-Dec 13 81 (46,480) -0.68%
----------- ---------- ----------
105,054 1.54%
Forward positions
Currencies (108,163) -1.59%
---------- ---------
Total long positions (3,109) -0.05%
SHORT POSITIONS:
FUTURES POSITIONS
Interest rates Dec 13-Jun 14 196 (102,928) -1.51%
Metals Dec 13-Jan 14 32 1,770 0.03%
Energy Nov 13 7 4,080 0.06%
Agriculture Nov 13-Jan 14 63 38,240 0.56%
Indices Dec 13 21 (2,748) -0.04%
----------- ---------- ----------
(61,586) -0.90%
Forward positions
Currencies 29,607 0.43%
---------- ---------
Total short positions (31,979) -0.47%
---------- ----------
TOTAL OPEN CONTRACTS (35,088) -0.51%
=========== ==========
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, 2012
AUDITED
Unrealized
% of(Loss)
Expiration Number Partners' On Open
Date of Contracts Capital Contracts
---------- ------------- ----------- -----------
Long U.S. Futures Contracts
Interest rates Mar 13 - Mar 14 171 -0.09% ($8,125)
Metals Mar 13 26 -0.35% (30,181)
Energy Feb 13 4 0.17% 14,519
Agriculture Feb 13 - Mar 13 12 -0.07% (6,225)
Currencies Mar 13 - Sep 14 156 0.33% 28,935
Indices Jan 13 - Mar 13 87 1.15% 99,602
---------- ---------
Total Long Futures Contracts 1.14% 98,525
---------- ---------
Forward Positions
Currencies -0.21% (17,763)
---------- ---------
Total Long Positions 0.94% 80,762
Short U.S. Futures Contracts
Interest rates Mar 13 - Mar 14 78 -0.05% ($4,399)
Metals Feb 13 9 0.07% 5,851
Energy Feb 13 - Mar 13 10 0.03% 3,000
Agriculture Mar 13 85 1.37% 118,333
Currencies Mar 13 46 1.88% 162,787
---------- ---------
Total Short Futures Contracts 3.31 % $285,572
---------- ---------
Forward Positions
Currencies 0.31% 26,358
---------- ---------
Total Short Positions 3.61% 311,930
---------- ---------
Total Futures Contracts 4.55 % $392,692
========== =========
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 September 30, 2013 AND 2012
UNAUDITED
THREE MONTHS ENDED THREE MONTHS ENDED
September 30, 2013 September 30, 2012
-------------------- -------------------
TRADING INCOME (LOSS)
Net realized trading gain(loss)
on closed contracts $ (391,337) $(836,784)
Change in net unrealized trading gain
(loss) on open contracts (313,292) 204,347
Net foreign currency translation loss (4,769) (324)
Brokerage Commissions (15,651) (12,122)
-------------------- -------------------
NET TRADING INCOME (LOSS) (725,050) (644,883)
Interest income, net of cash management fees 489 8,404
---------------- -------------------
TOTAL INCOME (724,561) (636,479)
---------------- -------------------
EXPENSES:
General partner management fees 96,370 177,627
Advisor Management fees 35,933 61,853
Incentive fees 0 0
Professional fees 22,977 17,416
Administrative expenses 834 6,473
---------------- -------------------
TOTAL EXPENSES 156,114 263,369
---------------- -------------------
NET INCOME $(880,675) $(899,848)
================ ===================
NET INCOME (LOSS) PER UNIT OF PARTNERSHIP INTEREST
A SHARES, OUTSTANDING ENTIRE PERIOD $(261.83) $(197.94)
================ ===================
The accompanying notes are an integral part of these statements.
5
EVEREST FUND, L.P.
(AN IOWA LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED September 30, 2013 AND 2012
UNAUDITED
NINE MONTHS ENDED NINE MONTHS ENDED
September 30, 2013 September 30, 2012
-------------------- ------------------
TRADING INCOME (LOSS)
Net realized trading gain(loss)
on closed contracts $(128,329) $(1,913,146)
Change in net unrealized trading gain
(loss) on open contracts (433,535) (589,371)
Net foreign currency translation loss (4,428) 78,788
Brokerage Commissions (41,949) (42,635)
-------------------- ------------------
NET TRADING INCOME (LOSS) (608,240) (2,467,363)
Interest income, net of cash management fees 3,351 27,129
---------------- ------------------
TOTAL INCOME (LOSS) (604,889) (2,440,234)
---------------- ------------------
EXPENSES:
General partner management fees 324,586 541,425
Advisor Management fees 120,612 189,612
Incentive fees 0 0
Professional fees 58,299 53,286
Administrative expenses 3,938 9,971
---------------- ------------------
TOTAL EXPENSES 507,435 794,295
---------------- ------------------
NET INCOME (LOSS) $(1,112,324) $(3,234,528)
================ ==================
NET INCOME (LOSS) PER UNIT OF PARTNERSHIP INTEREST
A SHARES, OUTSTANDING ENTIRE PERIOD $(330.70) $(711.49)
================ ==================
The accompanying notes are an integral part of these statements.
6
EVEREST FUND, L.P.
(An Iowa Limited Partnership)
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE NINE MONTHS ENDED September 30, 2013
UNAUDITED
UNITS LIMITED PTRS
A SHARES A SHARES TOTAL
---------- ---------------- -----------
BALANCES, January 1, 2013 3,658.32 8,637,424 8,637,424
Additional Units Sold 0 0 0
Redemptions (294.78) (709,680) (709,680)
Less Offering Costs -- 0 0
Net profit (Loss) -- (1,112,324) (1,112,324)
----------- --------------- ------------
BALANCES,SEPTEMBER 30,2013 3,363.536 $6,815,420 $6,815,420
=========== =============== ============
Net asset value per unit
January 1, 2013 $2,361.04
Net profit (loss) per unit (334.77)
--------------
Net asset value per unit
SEPTEMBER 30, 2013 $2,026.27
==============
The accompanying notes are an integral part of these statements.
7
EVEREST FUND, L.P.
(An Iowa Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED September 30, 2013 AND 2012
UNAUDITED
NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 2013 SEPTEMBER 30, 2012
--------------------- -------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(1,112,324) $(3,234,528)
Adjustments to reconcile net income(loss) to net cash
used in operating activities:
Unrealized gain or loss on open commodity
futures contracts 427,780 589,370
Decrease (increase) in interest receivable 32 (154)
(Decrease) increase in incentive fees payable 0 0
(Decrease) increase in management fees payable (3,683) 30,479
(Decrease)increase in Broker commissions &
fees payable (7,987) (49,165)
(Decrease) increase in O&O Expense 0 495
(Decrease) increase in other accrued expenses (13,224) (7,651)
---------------- ------------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (709,406) (2,671,154)
---------------- ------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of partnership units (1,230,315) (411,888)
Partner addition of units,net of offering cost 0 332,452
---------------- ------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES(1,230,315) (79,436)
---------------- ------------------
NET INCREASE (DECREASE)IN CASH AND CASH EQUIVALENTS(1,939,721) (2,750,590)
CASH AND CASH EQUIVALENTS, AT BEGINNING OF PERIOD 8,902,829 14,587,212
---------------- ------------------
CASH AND CASH EQUIVALENTS, AT END OF PERIOD $6,963,107 $11,836,622
================ ==================
END OF THE YEAR CASH AND CASH EQUIVALENTS CONSIST OF:
Cash in broker trading accounts $2,086,418 $2,039,736
Cash and cash equivalents 4,876,689 9,796,885
----------------- ------------------
TOTAL END OF THE YEAR CASH AND CASH EQUIVALENTS $6,963,107 $11,836,622
================= ==================
The accompanying notes are an integral part of these statements
8
EVEREST FUND, L.P.
NOTES TO FINANCIAL STATEMENTS
September 30, 2013
(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.
Currently, R.J. O'Brien and Associates, LLC ("RJO"), 222 South
Riverside Plaza, Suite 900, Chicago, Illinois 60606, serves as the Fund's
clearing broker to execute and clear Fund's futures and equities
transactions and provide other brokerage-related services. RJO
Professional FX is a division of RJO. RJO Professional FX may execute
foreign exchange or other over the counter transaction with the Fund
as principal. RJO is a subsidiary of R.J. O'Brien Holdings Corporation.
RJO is registered with the U.S. Commodity Futures Trading Commission
("CFTC") as a Futures Commission Merchant ("FCM") and is a member of
the National Futures Association ("NFA") in several capacities, including
as a Forex Dealer Member ("FDM") and is a member of certain principal
U.S. contracts markets. RJO is a full clearing member of the CME Group,
the IntercontinentalExchange, NYSE Liffe U.C., and the CBOE Futures
Exchange ("CFE").
(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.
(3) FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value is defined 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. The Financial Accounting Standards
Board has defined a hierarchy for fair value measurements. 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). The three levels of the fair value
hierarchy 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 table below demonstrates the Partnership's fair value hierarchy for
those assets and liabilities measured at fair value on a recurring basis
as of September 30, 2013 and September 30, 2012:
Level 1 Level 2 Level 3
Assets at September 30,2013:
Open positions in futures and
option contracts $(35,088)
---------- ---------- ---------
Total assets at fair value $(35,088) $0 $0
========== ========== ==========
Level 1 Level 2 Level 3
Assets at September 30,2012:
Open positions in futures and
option contracts $1,926
---------- ---------- ---------
Total assets at fair value $1,926 $0 $0
========== ========== ==========
(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
EMC Capital Management, Inc. (EMC), 2201 Waukegan
Road, Suite West 240, Bannockburn, IL 60015; telephone: 847-267-8700,
serves as the Partnership's Commodity Trading Advisor (CTA).
EMC 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 EMC 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 September 30, 2013 and 2012
approximately 99.636% and 99.824%, 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 0.25%
(0.25% annually) of the average daily assets under management if the accrued
monthly interest income earned on the Partnership's assets managed by 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.
Fair Value of Derivative Instruments
2013 2012
Speculative Instruments Location- Statement of Financial Fair Value Fair Value
Condition
______________________ ________________________________ __________ ___________
Futures Contracts Net unrealized gain (loss)
on open contracts ($35,088) $1,926
2013 2012
Speculative Instruments Location- Statement of Operations Fair Value Fair Value
_______________________ _________________________________ ____________ __________
Futures Contracts Net realized trading gains(losses) ($128,329) ($1,913,146)
Futures Contracts Change in unrealized gains(losses) ($433,535) ($589,371)
Asset Derivatives
Balance Sheet
Location Fair Value #of contracts
_____________________ ____________ _____________
Agricultural
Net unrealized trading gains on open contracts (3,286) 94
Currencies
Net unrealized trading gains on open contracts 113,994 110
Energy
Net unrealized trading gains on open contracts (31,821) 20
Metals
Net unrealized trading gains on open contracts (11,372) 4
Interest rates
Net unrealized trading gains on open contracts 84,019 81
Indices
Net unrealized trading gains on open contracts (46,480) 81
Currencies-Forward positions
Net unrealized trading gains on open contracts (108,163)
============ ===========
(3,109) 390
Liability Derivatives
Balance Sheet Location
Fair Value #of contracts Net
_____________ ______________ _______
Agricultural
Net unrealized trading gains on open contracts 38,240 63 34,954
Currencies
Net unrealized trading gains on open contracts 0 0 113,994
Energy
Net unrealized trading gains on open contracts 4,080 7 (27,741)
Metals
Net unrealized trading gains on open contracts 1,770 32 (9,602)
Interest rates
Net unrealized trading gains on open contracts (102,928) 196 (18,909)
Indices
Net unrealized trading gains on open contracts (2,748) 21 (49,228)
Currencies-Forward positions
Net unrealized trading gains on open contracts 29,607 (78,556)
============ ========== =========
(31,979) 319 (35,088)
Trading Revenue for the nine Months Ended September 30, 2013
Line Item in Income Statement
Realized (174,705)
Change in unrealized (433,535)
===========
(608,240)
Includes net foreign currency translation gain(loss)
Trading Revenue for the nine Months Ended September 30, 2012
Line Item in Income Statement
Realized (1,877,993)
Change in unrealized (589,371)
===========
(2,467,363)
Includes net foreign currency translation gain(loss)
Total average of futures contracts bought and sold
nine months ended September 30, 2013
Total (174,705)
============
9 month average (19,412)
Total average of futures contracts bought and sold
nine months ended September 30, 2012
Total (1,877,993)
============
9 month average (208,666)
For the three months ended September 30, 2013, the monthly average of
futures contracts bought and sold was approximately (137,253).
(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 nine months ended September 30, 2013 and
September 30, 2012.
September 30, 2013 September 30, 2012
----------------- ---------------
Class A Class A
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Total return before distributions* (14.18)% (21.61)%
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Ratio to average net assets:
Net investment Income (loss)** (8.38)% (7.96)%
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Management fees 5.40% 5.62%
Incentive fees 0.00% 0.00%
Other expenses 3.04% 2.62%
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Total expenses** 8.44% 8.24%
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*Not annualized
**Annualized
Interim Financial Statements
The statements of financial condition, including the consolidated schedule
of investments, as of September 30, 2013, the statements of operations for
the three and nine months ended September 30, 2013 and 2012, the statements
of cash flows and changes in partners' capital (net asset value) for the
nine months ended September 30, 2013 and 2012 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 September 30, 2013, results of operations for the
nine months ended September 30, 2013 and 2012, cash flows and changes in
partners' capital (net asset value) for the nine months ended September 30,
2013 and 2012. The results of operations for the full nine months ended
September 30, 2013 and 2012 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 September 30, 2013 compared to each months ended
September 30, 2012.
Class A Units were positive 6.17% in January 2013 resulting in
a Net Asset Value per unit of $2,506.77 as of January 31, 2013.
Class A Units were negative 13.32% in January 2012 resulting in
a Net Asset Value per unit of $2,845.95 as of January 31, 2012.
The Fund and EMC was up nicely in January. Price trends did
in fact reappear in January as the "fiscal cliff" was avoided.
Profits came in currency trading, metals, energies, and stock
indices. We are pleased to begin 2013 on a strong note.
Class A Units were negative 4.17% in February 2013 resulting in
a Net Asset Value per unit of $2,402.34 as of February 28, 2013.
Class A Units were negative 0.66% in February 2012 resulting in
a Net Asset Value per unit of $2,827.04 as of February 29, 2012.
In February the Fund gave back more than half the gains
from January. The "sequester" created uncertainty in the
markets and trend following systems do not usually do well
with uncertainty. Gains in commodities were not enough to
offset losses in currencies, energies, metals, and stock indices
for the month.
Class A Units were positive 2.32% in March 2013 resulting in
a Net Asset Value per unit of $2,457.99 as of March 31, 2013.
Class A Units were negative 3.57% in March 2012 resulting in
a Net Asset Value per unit of $2,726.12 as of March 31, 2012.
In March the Fund had a gain of just over 2%. EMC was able
to post a positive return despite the fact that energies, grains
and metals were "range bound" with little real change for
the month. Profits came from currencies, financials, softs and
stock indices.
Class A Units were positive 1.85% in April 2013 resulting in
a Net Asset Value per unit of $2,503.40 as of April 30, 2013.
Class A Units were negative 1.80% in April 2012 resulting in
a Net Asset Value per unit of $2,677.00 as of April 30, 2012.
In April the Fund gained 1.85%. Profits came in metals,
energies and stock indices, with smaller gains in financials.
We were impressed by EMC's ability to hold on to profits
in the metals sector as the abrupt decline in gold and
silver prices was followed by a sharp reversal to the upside.
This can be a very difficult combination for a trend
follower but EMC's sophisticated risks overlays were effective.
Class A Units were negative 6.32% in May 2013 resulting in
a Net Asset Value per unit of $2,345.31 as of May 31, 2013.
Class A Units were positive 15.78% in May 2012 resulting in
a Net Asset Value per unit of $3,099.31 as of May 31, 2012.
In May the Fund experienced a loss, most of which was
generated on Thursday/Friday the 23rd/24th by events and
news from China creating a one day downturn of 7 1/2% in
the Japanese equity index (Nikkei 225). There were reversals
in other China sensitive markets like the yen, the Hang Seng,
the SP200 Australian Index and even soybean prices. With
large abrupt price changes across a number of futures
contracts, EMC's trend following approach, despite what
we believe to be sophisticated risk management overlays,
got caught up and was not able to recover in the last
week of trading.
Class A Units were negative 2.54% in June 2013 resulting in
a Net Asset Value per unit of $2,285.75 as of June 30, 2013.
Class A Units were negative 10.54% in June 2012 resulting in
a Net Asset Value per unit of $2,772.63 as of June 30, 2012.
The Fund fluctuated during the month of June ending with
gains in metals, grains and financials but larger overall losses
in stock indices, energies, soft and currencies.
This was a very volatile month and while volatility can
be a friend of trend following the volatility this month had
metals, equity indices, bonds and currencies fluctuating in both
directions in short periods of time.
Class A Units were negative 4.39% in July 31, 2013 resulting in
a Net Asset Value per unit of $2,185.33 as of July 31, 2013.
Class A Units were positive 5.31% in July 31, 2012 resulting in
a Net Asset Value per unit of $2,919.89 as of July 31, 2012.
As the S&P 500 continues to make all-time highs, trend
followers in the managed futures industry continue to struggle.
The Fund's advisor EMC has been no exception. Futures
markets continue to be either range bound or having
dramatic reversals after what look to be promising trends.
We do not believe that trend following is dead or that the need
for meaningful diversification is over. We do recognize
that when one asset class outperforms another it tests the
patience of investors and asset allocators. Disciplined, long
term investing is not always easy, but we believe patience is
rewarded.
In July, the Fund had gains from grain markets and stock
indices, but larger losses almost across the board in metals,
energies, currencies and financials.
Class A Units were negative 2.71% in August 31, 2013 resulting in
a Net Asset Value per unit of $2,126.07 as of August 31, 2013.
Class A Units were negative 6.08% in August 31, 2012 resulting in
a Net Asset Value per unit of $2,742.39 as of August 31, 2012.
The Fund and S&P 500 had losses for August in almost
identical amounts. The Fund had gains in financials and
currencies but larger losses in energies, metals and stock
indices. As has been the case for the last few months,
these markets are range bound and reversing rather than
trending.
Equities seem top heavy and struggling with the reality
of the end of quantitative easing. Not if, but when. As the
war drums are sounding again we feel that this is the time
to stay diversified in an asset class that has the potential
for profit regardless of what direction the equity indices
move. Providing, of course, that the futures contracts
move (up or down) in one direction for sustained period of
time.
Class A Units were negative 4.69% in September 30, 2013 resulting in
a Net Asset Value per unit of $2,026.27 as of September 30, 2013.
Class A Units were negative 6.15% in September 30, 2012 resulting in
a Net Asset Value per unit of $2,573.71 as of September 30, 2012.
The Fund had another month of promising trends and positive
results in the first two weeks, followed by a return to reversing and
choppy price action for the last two weeks giving way to losses. EMC's
losses came pretty much across the board in energies, financials,
metals, grains and currencies. Gains came in stock index positions.
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, 2012.
Item 4. Controls and Procedures
As of September 30, 2013 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, 2012.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
RECENT SALES OF UNREGISTERED SECURITIES A UNITS
Nine months Nine months
ended September 30, 2013 ended September 30,2012
Units Sold 0 120.69
Value of Units Sold $0 $339,100
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: November 14, 2013 By: Everest Asset Management, Inc.,
its General Partner
By:__/s/ Peter Lamoureux___________________
Peter Lamoureux
President
32
