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, 2009
Commission File Number 0-17555
THE EVEREST FUND, L.P.
(Exact name of registrant as specified in its charter)
Iowa 42-1318186
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1100 North 4th Street, Suite 143, Fairfield, Iowa 52556
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (641) 472-5500
Not Applicable
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of
accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange
Act. (Check one): Large accelerated filer Accelerated filer
Non-accelerated filer X
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Act). Yes No X
Table of Contents
Part I: Financial Information
Item 1. Financial Statements 4
Statements of Financial Condition 4
September 30, 2009 (Unaudited) and December 31, 2008 (Audited)
Condensed Schedule of Investments 5-6
September 30, 2009 (Unaudited)
Condensed Schedule of Investments 6-7
December 31, 2008 (Audited)
Statements of Operations 7-9
For the Three and nine Months Ended September 30, 2009 and 2008
(Unaudited)
Statements of Changes in Partners' Capital (Net Asset Value) 10-11
For the nine Months Ended September 30, 2009 and 2008 (Unaudited)
Statements of Cash Flows
For the nine Months Ended September 30, 2009 and 2008 (Unaudited)12-13
Notes to Financial Statements for the nine Months Ended 13
September 30, 2009 and 2008 (Unaudited)
Item 2. Management's Discussion and Analysis of Financial 29
Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures about 38
Market Risk
Item 4. Controls and Procedures 38-39
Part II: Other Information 39
Item 1. Legal Proceedings 39
Item 1A. Risk Factors 39
Item 2. Unregistered Sales of Equity Securities and Use 39-40
of Proceeds
Item 3. Defaults upon Senior Securities 40
Item 4. Submission of Matters to a Vote of Security Holders 40
Item 5. Other Information 40
Item 6. Exhibits 40-51
4
PART I. FINANCIAL INFORMATION
Item 1 Financial Statements
Following are financial Statements for the fiscal
quarter ending September 30, 2009
see accompanying notes to financial statements
EVEREST FUND, L.P.
(An Iowa Limited Partnership)
STATEMENTS OF FINANCIAL CONDITION
SEPTEMBER 30, 2009 (UNAUDITED) AND DECEMBER 31, 2008 (AUDITED)
UNAUDITED AUDITED
SEPTEMBER 30, 2009 DECEMBER 31, 2008
----------------- -----------------
ASSETS
Cash and cash equivalents $269,581 $42,444
Equity in broker trading accounts:
Cash and cash equivalents 14,231,935 19,223,344
Net unrealized trading gains(losses) on open contracts 737,733 659,646
Interest receivable 28,167 19,985
----------- -----------
TOTAL ASSETS $15,267,416 $19,945,419
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Redemptions payable $ 122,971 $ 132,882
General partner management fee payable 69,116 87,955
Advisor's management fee payable 18,123 26,278
Advisor's incentive fee payable 0 885,100
Accrued expenses 97,129 99,809
----------- -----------
TOTAL LIABILITIES 307,338 1,232,024
----------- -----------
PARTNERS' CAPITAL
Limited partners, A Shares (4,602.327 and 4,940.65 units
outstanding) 14,960,078 18,713,395
----------- -----------
TOTAL PARTNERS' CAPITAL 14,960,078 18,713,395
----------- -----------
TOTAL LIABILITIES AND PARTNERS'
CAPITAL $15,267,416 $19,945,419
=========== ===========
The accompanying notes are an integral part of this statement.
5
EVEREST FUND, L.P.
(AN IOWA LIMITED PARTNERSHIP)
CONDENSED SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2009
UNAUDITED
NUMBER OF MARKET VALUE % OF PARTNERS'
EXPIRATION DATES CONTRACTS (OTE) CAPITAL
---------------- --------- ------------ --------------
LONG POSITIONS:
FUTURES POSITIONS
Interest rates Dec 09 - Jun 10 162 $ 110,899 0.74%
Metals Dec 09 48 236,200 1.58%
Agriculture Dec 09 - Mar 10 62 51,376 0.34%
Currencies Dec 09 - Sep 10 128 208,400 1.39%
Indices Dec 09 8 (4,548) 0.03%
----------- -----
Total long positions 602,328 4.03%
SHORT POSITIONS:
FUTURES POSITIONS
Currencies Dec 09 6 2,775 0.02%
Energy Dec 09 - Jan 10 16 (34,828) -0.23%
Agriculture Nov 09 - Dec 09 89 167,458 1.12%
----------- -----
Total short positions 135,405 0.91%
----------- -----
TOTAL OPEN CONTRACTS 737,733 4.93%
============= =========
The accompanying notes are an integral part of this statement.
6
THE EVEREST FUND, L.P.
(an Iowa Limited Partnership)
CONDENSED SCHEDULE OF INVESTMENTS
December 31, 2008
-----------------------------------
Unrealized
Percent of Gain (Loss)
Expiration Number Partners' On Open
Date of Contracts Capital Contracts
----------- ------------ ----------- -----------
Long U.S. Futures Contracts
Interest rates Mar09 - Sept09 135 2.73 % $513,553
Metals Feb 09 6 0.13 % 23,440
Agriculture Mar 09 6 0.00 % (475)
Currencies Mar 09 - Dec 09 79 0.20 % 36,638
---------- ----------
Total Long Futures Contracts 3.06 % 573,156
---------- ----------
Short U.S. Futures Contracts
Interest rates Mar 09 4 (0.01)% (1,563)
Energy Mar09 - April09 48 0.26 % 48,923
Agriculture Mar 09 56 0.15 % 28,206
Currencies Mar 09 16 0.06 % 10,800
Indices Mar 09 1 0.00 % 124
--------- -----------
Total Short Futures Contracts 0.46 % 86,490
--------- -----------
Total Futures Contracts 3.52 % $659,646
========== ============
The accompanying notes are an integral part of these financial statements.
7
EVEREST FUND, L.P.
(AN IOWA LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
UNAUDITED
THREE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, 2009 SEPTEMBER 30, 2008
------------------ ------------------
TRADING INCOME (LOSS)
Net realized trading gain(loss)
on closed contracts $ (1,486,709) $ 1,010,223
Change in net unrealized trading gain
(loss) on open contracts 661,702 385,470
Net foreign currency translation loss 303 (27,148)
Brokerage Commissions (10,441) (16,318)
----------- ------------
NET TRADING INCOME (LOSS) (835,143) 1,352,228
Interest income, net of cash management fees 30,568 93,822
----------- ------------
TOTAL INCOME (LOSS) (804,575) 1,446,049
----------- ------------
EXPENSES
General partner management fees 216,091 195,739
Advisor Management fees 53,856 55,414
Incentive fees 0 308,633
Administrative expenses 32,230 21,523
----------- ----------
TOTAL EXPENSES 302,177 581,310
----------- ----------
NET INCOME (LOSS) $(1,106,752) $ 864,740
=========== ===========
NET INCOME (LOSS) PER UNIT OF PARTNERSHIP INTEREST
A SHARES, OUTSTANDING ENTIRE PERIOD $ (241.45) $ 162.10
=========== ==========
The accompanying notes are an integral part of these statements.
8
EVEREST FUND, L.P.
(AN IOWA LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
UNAUDITED
NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 2009 SEPTEMBER 30, 2008
------------------ ------------------
TRADING INCOME (LOSS)
Net realized trading gain(loss)
on closed contracts $(1,980,266) $ 4,206,154
Change in net unrealized trading gain
(loss) on open contracts 77,667 360,973
Net foreign currency translation loss (5,968) (29,359)
Brokerage Commissions (29,366) (38,532)
----------- ------------
NET TRADING INCOME (LOSS) (1,937,934) 4,499,236
Interest income, net of cash management fees 110,075 296,548
----------- ------------
TOTAL INCOME (LOSS) (1,827,859) 4,795,783
----------- ------------
EXPENSES:
General partner management fees 722,536 568,096
Advisor Management fees 186,493 155,972
Incentive fees 0 766,710
Administrative expenses 115,852 63,818
----------- ----------
TOTAL EXPENSES 1,024,881 1,554,595
----------- ----------
NET INCOME (LOSS) $(2,852,740) $3,241,188
============ =============
NET INCOME (LOSS) PER UNIT OF PARTNERSHIP INTEREST
A SHARES, OUTSTANDING ENTIRE PERIOD $ (605.17) $ 655.30
============ =============
The accompanying notes are an integral part of these statements.
9
EVEREST FUND, L.P.
(An Iowa Limited Partnership)
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009
UNAUDITED
UNITS LIMITED PTRS
A SHARES A SHARES TOTAL
---------- ------------ ------------
BALANCES, January 1, 2009 4,940.65 18,713,395 18,713,395
Additional Units Sold 177.68 575,000 575,000
Redemptions (417.55) (1,469,884) (1,469,884)
Less Offering Costs -- (5,693) (5,693)
Net Loss -- (2,852,740) (2,852,740)
---------- ------------ ------------
BALANCES, September 30, 2009 4,700.78 $ 14,960,078 $ 14,960,078
========== ============ ============
Net asset value per unit,
January 1, 2009 $3,787.64
Net profit (loss) per unit (605.17)
------------
Net asset value per unit
September 30, 2009 $3,182.47
============
The accompanying notes are an integral part of these statements.
10
EVEREST FUND, L.P.
(An Iowa Limited Partnership)
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008
UNAUDITED
UNITS LIMITED PTRS
A SHARES A SHARES TOTAL
---------- ------------ ------------
BALANCES, January 1, 2008 4,793.61 11,693,007 11,693,007
Additional Units Sold 1,159.50 3,274,267 3,274,267
Redemptions (732.02) (2,051,300) (2,051,300)
Net Profit (Loss) -- 3,241,188 3,241,188
---------- ------------ --------------
BALANCES, September 30, 2008 5,221.10 $16,157,163 $16,157,163
========== ============ ============
Net asset value per unit,
January 1, 2008 $2,439.29
Net profit (loss) per unit 655.30
------------
Net asset value per unit
September 30, 2008 $3,094.59
============
The accompanying notes are an integral part of these statements.
11
EVEREST FUND, L.P.
(An Iowa Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
UNAUDITED
NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 2009 SEPTEMBER 30, 2008
--------------------- -------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income(loss) $ (2,852,740) $ 3,241,188
Adjustments to reconcile net income(loss) to net cash
used in operating activities:
Unrealized gain or loss on open commodity futures contracts (78,087) (360,973)
Decrease (increase) in interest receivable (8,183) 13,068
Decrease (increase) in other receivable -- --
(Decrease) increase in incentive fees payable (885,101) 308,633
(Decrease) increase in management fees payable (8,154) 6,830
(Decrease)increase in General Partner management fees payable (18,839) 13,975
(Decrease) increase in other accrued expenses (2,680) (33,778)
------------ -------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (3,853,784) 3,188,943
------------ -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of partnership units (1,479,795) (2,066,475)
Partner addition of units,net of offering costs 569,307 3,274,267
------------ -------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (910,488) 1,207,792
------------ -------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (4,764,272) 4,396,735
CASH AND CASH EQUIVALENTS, AT BEGINNING OF PERIOD 19,265,788 11,648,263
------------ -------------
CASH AND CASH EQUIVALENTS, AT END OF PERIOD $ 14,501,516 $16,044,998
============ =============
END OF THE YEAR CASH AND CASH EQUIVALENTS CONSIST OF:
Cash in broker trading accounts $ 14,231,935 14,824,171
Cash and cash equivalents 269,581 1,220,827
------------ -------------
TOTAL END OF THE YEAR CASH AND CASH EQUIVALENTS $ 14,501,516 $16,044,998
============ =============
The accompanying notes are an integral part of these statements
12
EVEREST FUND, L.P.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2009
(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 Statement of Financial Accounting Standards
No. 150, Accounting for Certain Financial Instruments with Characteristics
of both Liabilities and Equity ("SFAS 150"), 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
year-end balances are translated at the year-end currency rates. Realized
and unrealized foreign exchange gains or losses are included in trading
income 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. The 2005 through
2008 tax years generally remain subject to examination by U.S. federal
and most state tax authorities.
Recently adopted accounting pronouncements
In May 2009, the FASB issued FASB Statement No. 165, Subsequent Events,
(FASB 165) which establishes general standards of and accounting for
and disclosure of events that occur after the balance sheet date but
before financial statements are issued or are available to be issued.
This FASB Statement was effective for interim and annual periods ending
after June 15, 2009.
Effective January 1,2009 the Partnership adopted SFAS No. 161,
Disclosure about Derivative Instruments and Hedging Activities.(See note 6)
Recent Accounting Pronouncements
On April 9, 2009, the FASB issued FASB Staff Position No. FAS 157-4,
Determining Fair Value When the Volume and Level of Activity for the
Asset or Liability Have Significantly Decreased and Identifying
Transactions That Are Not Orderly (FSP No. 157-4). FSP No. 157-4
requires entities to consider whether events and circumstances
indicate whether the transaction is or is not orderly as opposed
to a forced or distressed transaction. Entities would place more
weight on observable transactions determined to be orderly and
less weight on transactions for which there is insufficient information
to determine whether the transaction is orderly. An orderly transaction
is a transaction that assumes exposure to the market for a period prior
to the measurement date to allow for marketing activities that are
usual and customary for transactions involving such assets or liabilities.
FSP No. 157-4 provides additional guidance for making fair value
measurements more consistent with the principles presented in SFAS No. 157.
FSP No. 157-4 is effective for interim and annual periods ending after
June 15, 2009, with early adoption permitted for periods ending after
March 15, 2009. We do not believe this will have a material impact on
our financial statements.
In June 2009, the FASB issued SFAS No. 168, "FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting
Principles a replacement of FASB Statement No. 162" (SFAS 168).
The FASB Accounting Standards Codification (Codification) will be
the single source of authoritative nongovernmental U.S. GAAP.
The Codification will launch on July 1, 2009 and will be effective
for interim and annual periods ending after September 15, 2009.
The Codification is not expected to change U.S. GAAP, but will
combine all authoritative standards into a comprehensive, topically
organized online database. After the Codification launch on
July 1, 2009 only one level of authoritative GAAP will exist, other
than guidance issued by the SEC. All other accounting literature
excluded from the Codification will be considered non-authoritative.
The Codification will have an impact to the Company's financial
statement disclosures since all future references to authoritative
accounting literature will be references in accordance with the
Codification.
(3) FAIR VALUE OF FINANCIAL INSTRUMENTS
Effective January 1, 2008, the Partnership adopted Statement of Financial
Accounting Standard No. 157, Fair Value Measurement (SFAS 157), issued by
the FASB. SFAS No. 157 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 SFAS 157 as assumptions
market participants would use in pricing an asset or liability. The three
levels of the fair value hierarchy under SFAS 157 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
September 30, 2009:
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 $14,501,516 $14,501,516 $ - $ -
------------- --------------- --------------- --------------
Investments
Long Futures
Contracts 602,328 602,328 - -
Short Futures
Contracts 135,405 135,405 - -
--------------- -------------- --------------- --------------
737,733 737,733 - -
--------------- -------------- --------------- --------------
Total assets at fair
value $ 15,239,249 $15,239,249 $ - $ -
=============== ============== =============== ==============
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
September 30, 2008:
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 $16,044,998 $16,044,998 $ - $ -
-------------- ---------------- --------------- ---------------
Investments
Long Futures
Contracts -16,182 -16,182 - -
Short Futures
Contracts 659,527 659,527 - -
------------ -------------- --------------- ---------------
643,345 643,345 - -
------------ -------------- --------------- ---------------
Total assets at fair
value $16,688,343 $16,688,343 $ - $ -
============ =============== =============== ===============
(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, (as defined). The incentive fee is retained by JWH even though
trading losses may occur in subsequent quarters; however, no further
incentive fees are payable until any such trading losses (other than
losses attributable to redeemed units and losses attributable to assets
reallocated to another advisor) are recouped by the Partnership.
Effective November 2003, the General Partner charges the Partnership a
monthly management fee equal to 0.50% of the Partnership's Class A
beginning-of-month net asset value.
Effective June 2004, the General Partner charges the Partnership a monthly
management fee equal to 0.229% of the Partnership's Class I beginning-of-month
net asset value. From the monthly management fee the General Partner deducts
the round turn trading costs and related exchange fees (between $5.80 to
$10.70 per round turn trade on domestic exchanges, and higher for foreign
exchanges) and pays the selling agents and certain other parties, if any,
up to 50% of the fee retained by the General Partner. The General Partner
may replace or add trading advisors at any time.
Beginning in mid-October 2005, the Partnership engaged Calyon Financial, Inc.
("CFI") as the Partnership's futures and options on futures broker, and
engaged, Calyon Financial, SNC ("CFS") as the Partnership's foreign currency
or forwards currency broker, (collectively referred to as the "Clearing
Brokers"). On January 2, 2008 Calyon Financial, Inc. and SNC changed
their company title to Newedge Financial, Inc. Newedge Financial, Inc. further
changed their name to Newedge USA, LLC, as a result of a merger on September
1, 2008 between Newedge Financial, Inc. and Newedge USA, LLC. The agreements
provide that the Clearing Brokers charge the Partnership brokerage commissions
at the rate of between $5.80 to $10.70 per round-turn trade, plus applicable
exchange, give up fees and NFA fees for futures contracts and options on
futures contracts executed on domestic exchanges and over the counter markets.
For trades on certain foreign exchanges, the rates may be higher.
The Partnership also reimburses the Clearing Brokers for all delivery,
insurance, storage or other charges incidental to trading and paid to third
parties.
The Partnership earns interest on 95% of the Partnership's average monthly
cash balance on deposit with its Brokers at a rate equal to the average
91-day Treasury Bill rate for US Treasury Bills issued during that month.
The Partnership has also entered into an investment advisory agreement with
Horizon Cash Management L.L.C. ("HCM"). At September 30, 2009 and 2008
approximately 99.85% and 99.82%, 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 March 2008, the FASB issued Statement of Financial Accounting Standards
No. 161 (SFAS 161), Disclosures about Derivative Instruments and Hedging
Activities. SFAS 161 amends and expands the disclosure requirements of SFAS
133, Accounting for Derivative Instruments and Hedging Activities, to provide
users of financial statements with an enhanced understanding of the use of
derivative instruments, financial performance, and cash flows. This Statement
requires qualitative disclosures about objectives and strategies for using
derivatives, quantitative disclosures about fair value amounts of and gains
and losses on agreements. SFAS 161 is effective for financial statements
issued for the Partnership's first fiscal year beginning after November
15, 2008. The Partnership adopted the provisions of SFAS 161 effective
January 1, 2009.The Partnership's business is speculative trading of futures
contracts, options on futures contracts and physical commodities and other
commodity-related contracts traded primarily on domestic markets pursuant
to the trading and investment methodology of the General Partner. The
Partnership does not designate any derivative instruments as hedging
instruments under SFAS 133.
The following tables summarize quantitative information required by SFAS 161:
Derivatives not designated as hedging instruments under SFAS 133
Asset Derivatives
Balance Sheet
Location Fair Value #of contracts
Agricultural
Net unrealized trading gains on open contracts 51,376 62
Currencies
Net unrealized trading gains on open contracts 208,400 128
Energy
Net unrealized trading gains on open contracts - -
Metals
Net unrealized trading gains on open contracts 236,200 48
Interest rates
Net unrealized trading gains on open contracts 110,899 162
Indices
Net unrealized trading gains on open contracts (4,548) 8
======== ========
602,328 408
Liability Derivatives
Balance Sheet
Location Fair Value #of contracts Net
Agricultural
Net unrealized trading gains on open contracts 167,458 89 218,834
Currencies
Net unrealized trading gains on open contracts 2,775 6 211,175
Energy
Net unrealized trading gains on open contracts (34,828) 16 (34,828)
Metals
Net unrealized trading gains on open contracts - - 236,200
Interest rates
Net unrealized trading gains on open contracts - - 110,899
Indices
Net unrealized trading gains on open contracts - - (4,548)
======== ======== ===========
135,405 111 737,732
Trading Revenue for the
Three Months Ended September 30,2009
Line Item in Income Statement
Realized (1,496,845)
Change in unrealized 661,702
===========
(835,143)
Includes net foreign currency translation gain(loss)
Three months average of futures contracts bought and sold
July 2009 (703,905)
August 2009 (386,767)
September 2009 258,528
==========
Total (835,143)
==========
3 month average (278,381)
For the three months ended September 30, 2009, the monthly average of futures
contracts bought and sold was approximately (278,381), respectively.
(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.
September 30, 2009 unaudited
---------------------------------------------
Futures Forwards Total
-------------------- ----------- -----------
Gross unrealized gains 606,876 $170,233 $777,109
Gross unrealized losses (4,548) (34,828) (39,376)
-------------------- ----------- -----------
Net unrealized gains (losses) ($602,328) $135,405 737,733
==================== =========== ===========
September 30, 2008 unaudited
---------------------------------------------
Futures Forwards Total
------------------ ------------- -------------
Gross unrealized gains $8,264 $734,618 $742,882
Gross unrealized losses (24,446) (75,091) (99,537)
------------------ ------------- -------------
Net unrealized gains (losses) ($16,182) $659,527 $643,345
================= ============= =============
(8) FINANCIAL HIGHLIGHTS
The following financial highlights show the Partnership's financial
performance for the quarter ended September 30, 2009 and September 30, 2008.
Three months ended Three months ended
September 30, 2009 September 30, 2008
------------------- ---------------------
Class A Class A
------------------- ---------------------
Total return before distributions* (7.05%) 5.53%
=================== =====================
Ratio to average net assets:
Net investment Income (loss)** (7.32)% (13.48%)
=================== =====================
Management fees 5.83% 5.41%
Incentive fees 0 % 8.53%
Other expenses 2.32% 2.13%
------------------- ----------------------
Total expenses** 8.15% 16.07%
=================== ======================
*Not annualized
**Annualized
The following financial highlights show the Partnership's financial
performance for the nine months ended September 30, 2009 and September 30, 2008.
Nine months ended Nine months ended
September 30, 2009 September 30, 2008
------------------- ---------------------
Class A Class A
------------------- ---------------------
Total return before distributions* (15.98%) 26.86%
=================== =====================
Ratio to average net assets:
Net investment Income (loss)** (7.49)% (12.20%)
=================== =====================
Management fees 5.91% 5.51%
Incentive fees 0 % 7.44%
Other expenses 2.47% 2.13%
------------------- ----------------------
Total expenses** 8.39% 15.08%
=================== ======================
*Not annualized
**Annualized
(9) SUBSEQUENT EVENTS
Management of the Company evaluated subsequent events through
November 16, 2009, the date of the review of the financial statements
were issued. There are no subsequent events to disclosure.
Interim Financial Statements
The statements of financial condition, including the consolidated schedule
of investments, as of September 30, 2009, the statements of operations for
the three months and nine months ended September 30, 2009 and 2008, the
statements of cash flows and changes in partners' capital (net asset value)
for the nine months ended September 30, 2009 and 2008 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, 2009, results
of operations for the three months and nine months ended September 30, 2009
and 2008, cash flows and changes in partners' capital (net asset value) for
the nine months ended September 30, 2009 and 2008. The results of operations
for the full nine months ended September 30, 2009 and 2008 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
Fiscal Quarter ended September 30, 2009
Class A Units were negative 5.09% in July 2009 resulting in
a Net Asset Value per unit of $3,249.81 as of July 31, 2009.
The Fund suffered from negative performance in July.The Fund had a substantial
allocation to interest rates and currencies where the markets have been devoid
of trends. The markets continue to consolidate after the large moves of 2008
and while many continue to forecast "the worst is over" after a substantial
move higher in the stock markets, others point out that uncertainty around the
levels of massive consumer debt, estimated at 124% of disposable income,
unencumbered government spending and slow improvement in the real estate
markets are risks for sustained recovery. These conflicting views have left
many market sectors in an extended state of "whipsaw".
Class A Units were negative 3.21% in August 2009 resulting in
a Net Asset Value per unit of $3,145.60 as of August 31, 2009.
In August, the trading environment that prevailed for most of the month was
very similar to what has been in place in prior months. Interest rates, certain
commodity prices and the dollar continue to trade in broad ranges, limiting the
profit opportunities for the Fund's trend-following approach.
The Fund's positions in U.S., European and Japanese stock index futures were
all profitable in August. The energy sector produced the worst performance in
August for the Fund as crude oil and crude oil products finished down on the
month. Gains from natural gas only partially offset the losses from the other
markets in the sector. Trading in the metals sector was dominated by the price
action which continues to trade in a directionless manner albeit at higher
prices. The price of gold changed little month on month as it entered August
trading near $955 per ounce and closed the month trading just $2 lower near
$953. The intra-month swings were significant, however, which created false
signals for the shorter-term models used by the Fund. Trading in gold was
unprofitable in August, while trading in the silver market produced profitable
performance. The Fund was able to generate gains from trading in the
agricultural sector as it continues to profit from the bull market in sugar.
The Fund also benefited from the bear market in certain grain prices.
Position in wheat, corn and sugar were profitable for the month.
Class A Units were positive 1.17% in September 2009 resulting in
a Net Asset Value per unit of $3,182.47 as of September 30, 2009.
The Fund closed out the quarter on a positive note, returning 1.17 percent in
September. While price action was relatively subdued during the month, there
was enough movement for the Fund to capture returns in three of the six market
sectors in the portfolio. The largest gains during September came from the
currency sector. Currency investors are beginning to focus on more traditional
drivers of exchange rates such as expectations for interest rate differentials,
and are focusing on which currency will benefit from future interest rate
increases. Trading in the interest rate sector was slightly positive in
September as positioning and model direction was mixed across the portfolio.
The net effect for September was a market that ground slowly higher. Positions
in Japanese Government Bonds were the best-performing market in the sector.
The metals market was profitable as the Fund gained from rallies in the price
of both gold and silver.The energy markets had a negative impact on the Fund.
Losses from crude oil and the crude oil product markets were modest and due to
the absence of any clear trend during the period. Performance from the
agricultural sector was also negative for the month. There was no significant
theme tying the markets together.
Fiscal Quarter ended September 30, 2008
Class A Units were negative 14.06% in July 2008 resulting in
a Net Asset Value per unit of $2,520.23 as of July 31, 2008.
July was a difficult month for the Partnership as many global markets
experienced abrupt reversals in trend. The Partnership experienced losses
in every market sector it trades. The largest losses came from the interest
rate sector as the markets struggled to find direction amidst the conflicting
effects of both inflationary and deflationary forces. Losses were also
incurred in the energy sector resulting from dramatic falls in the price
of both natural gas and crude oil during the month. The weakness in the
energy markets spilled into other commodity markets possibly as a function
of asset allocation shifts out of commodities in general. Trading in
currencies was also unprofitable as the dollar responded to the headlines
of the month in a manner similar to the global bond market.
The combination of abrupt price reversals in many major market
sectors and the absence of sustained trends made it a difficult
environment for products employing a long-term trend following
strategy.
Class A Units were positive 7.47% in August 2008 resulting in
a Net Asset Value per unit of $2,708.54 as of August 31, 2008.
The Partnership's performance was positive for the month of August. A number
of major market moves that began last month and contributed negatively to
July's performance followed through in August to serve as a major source of
the Partnership's returns as the portfolio shifted to reflect new trends in
energy, metals and the U.S. dollar.
The Partnership's repositioning after the sharp reversals experienced in many
markets sectors last month led to the significant recovery in August. The market
action and intensity was varied throughout the many sectors traded as
commodities and currencies experienced sharp moves and increased volatility
while other major market sectors, including equities and bonds, traded quietly
through the turmoil. The JWH GlobalAnalytics program ability to utilize multiple
position signals that vary timing from very short-term to very long-term allowed
for a quick recovery of a good portion of July's losses.
Class A Units were positive 14.25 % in September 2008 resulting in
a Net Asset Value per unit of $3,094.59 as of September 30, 2008.
September was one of the most unstable and volatile periods in the history
of the U.S. financial markets. During the month, the world's credit markets
virtually seized up, commodity prices plunged, some major stock indices
declined by more than 10 percent, while some of the largest U.S. financial
institutions were pushed to extinction. High volatility across most market
sectors was a manifestation of investor fears and anxiety. The lingering
but still powerful effect of the housing and sub-prime credit crisis
continued to wreak havoc on Wall Street, while at the same time generating
social and political acrimony across the U.S. as the nation debated the
cost and merit of the government's policy response. Amidst this backdrop,
the Partnership thrived while generating a double-digit return for the month.
Fiscal Quarter ended June 30, 2009
Class A Units were negative 2.76% in April 2009 resulting in
a Net Asset Value per unit of $3,424.69 as of April 30, 2009.
The Partnership's performance was negative in April. Gains in the energy,
equity and agricultural sectors were not enough to offset losses in
currency, metals and interest rates. The currency sector was the
worst-performing sector for the Partnership. A portion of the losses in
this sector came from trading in the Japanese yen. The Partnership
held a mix of long and short positions in interest rates for most of
April, which resulted in a small net loss on the month.The energy markets
on balance had a positive effect on performance in April with much of
the gains coming from the sustained downtrend in natural gas prices.The
agricultural sector of the portfolio made a positive contribution to
performance in April. The Partnership's trading in the metal sector was
quiet as exposures were low for most of the month. Gold continues to
trade in a choppy fashion, alternately taking its cues from its status
as a store of value in times of strife and as a hedge against inflation
and as a de facto currency. The changing winds on all these fronts have
made Gold a very difficult market to trade. Similarly, the Partnership
suffered small losses in its trading in the Silver market.
Class A Units were positive 5.10% in May 2009 resulting in
a Net Asset Value per unit of $3,599.32 as of May 31, 2009.
All but one sector in the Partnership made a positive contribution to the
Partnership's gains. Currency trading led the way in May as the U.S.
dollar suffered a significant decline during the month. Trading in the
interest rate sector was also profitable in May.A number of agricultural
markets turned in strong performance in May. Soybeans was the
best-performing market in this sector as it benefited from global macro
factors, such as the weaker U.S. dollar, but also from positive seasonal
supply factors.The coffee market was also quite strong and an important
driver of the Partnership's performance in May. While energies were
hardly left out of the broad commodity market rally in May, the
Partnership's trading suffered small losses making it the lone
unprofitable sector for the month.
Class A Units were negative 4.87% in June 2009 resulting in
a Net Asset Value per unit of $3,423.92 as of June 30, 2009.
In June, the Partnership gave back most of the gains from the previous
month as many of the trends that emerged in May stalled or reversed
direction.The interest rate sector was negative for the month, where
there was at least a temporary reversal in the trend toward higher
global interest rates. Performance in currencies was slightly negative
in June as gains from trading in the British pound were not enough to
offset losses from trading in European currencies and the Japanese yen.
While equity markets worldwide have recovered from the multi-year lows
put in during March, the rally lost momentum in June.The Partnership
suffered losses in its trading of gold and silver. The energy markets
contributed positively to the Partnership's performance in June. The
direction of crude oil has loosely followed the path of equities for
much of the past year. While crude oil is up substantially from the
lows of February and March upside momentum did seem to slow in June.
The Partnership's trading models reduced exposure to the market at
different points during the month which limited overall losses.
Fiscal Quarter ended June 30, 2008
Class A Units were negative 5.45% in April 2008 resulting in
a Net Asset Value per unit of $2,770.30 as of April 30, 2008.
The Partnership's performance was negative in April as many of the long-
term trends that have contributed to the positive year-to-date performance
were interrupted or came to an end. In retrospect, the actions taken
by the Federal Reserve Board(the Fed) in the second half of March to
bail out Bear Stearns and add liquidity to the financial system marked
an intermediate turning point in many markets. As volatility subsided
and sentiment improved into April, long held positions were unwound.
The performance of the Partnership during the month was attributable to
widespread trend reversals in most market sectors, including
positions in global equity indices, interest rates, currencies, and
precious metals. Performance in agricultural commodities was mixed
for the month. Price action was relatively tame when compared to the
extreme volatility of the first quarter. The Partnership's performance in
the energy sector was positive in April. Crude oil continued its
march higher bolstered by the positive Partnershipament backdrop of strong
demand and tight supplies, which advanced crude oil prices more than 12
percent for the month.
Class A Units were positive 4.45% in May 2008 resulting in
a Net Asset Value per unit of $2,893.59 as of May 31, 2008.
The Partnership bounced back in May to produce positive performance for
the month.The majority of the markets traded were relatively quiet and
directionless with the exception of the energy sector which was the main
driver of monthly trading profits. In the most notable market activity,
crude traded above $135 per barrel, gasoline topped $4.00 at the pump in
the U.S. and natural gas rallied more than 11 percent during the month.
The Partnership's trading in energies was profitable and accounted for a
majority of the Partnership's gains for the month.
Outside of the energy markets, the interest rate sector also contributed
to the monthly gains, as the prospect for higher inflation globally and
more stable financial markets outweighed concerns over slowing economic
activity in the U.S. and other developed nations. Global equity markets,
on the surface, were stable in May. The ranges were relatively tight
and offered few opportunities for trend-followers. The currency markets
were also quiet in May. Trading in the metals markets was also calm in
May as price action was directionless. Trading in the agricultural
markets was mixed and largely uneventful in May.
Class A Units were positive 1.34 % in June 2008 resulting in
a Net Asset Value per unit of $2,932.49 as of June 30, 2008.
The Partnership was positive in June marking the ninth month in the past
ten of positive performance. The majority of the gains for the
Partnership came from the commodity markets where the global
demand for energy continues to push prices higher at the same
time major flooding in the Midwest was impacting the outlook for
the future supply of grain. The Partnership's long-term perspective has
allowed it to continue to benefit from the extended bull market in
commodities even as the currency and bond portions of the Partnership
struggle to find clear trends amidst a seemingly ever changing
outlook for both growth and inflation.
June's market headlines were dramatic and spoke to the very real
issues of declining global stock markets, floods, strains in the
financial system and a global energy crisis. The long running
trends in commodity prices once again generated gains for
the Partnership while the turmoil in the world economy had the
effect of disrupting price action in the financial markets
which created challenges for other parts of the Partnership's portfolio.
Fiscal Quarter ended March 31, 2009
The Partnership recorded a loss of $1,301,369 or $265.59 per Unit of Class
A Units for the fiscal quarter ended March 31, 2009. This compares to a
gain of $2,343,822 or $490.57 per Unit of Class A Units for the fiscal
quarter ended March 31, 2008. The quarter ended March 31, 2009 showed
a loss of 7.01% (total return) for the Class A Units of the fund.
The Partnership continued to employ John W. Henry &
Company, Inc.'s (JWH) GlobalAnalyticsR Family of Programs.
Class A Units were negative 2.49% in January 2009 resulting in
a Net Asset Value per unit of $3,693.33 as of January 31, 2009.
While macro-economic conditions continued to deteriorate in January and
pressure global equity prices, extreme short-term volatility in certain
markets around year-endand uncertainty regarding the impact of future
policy steps upset long-standing trends across multiple market sectors.
The stock market began to focus acutely on the shaping of economic policy
by the new administration. Uncertainty on this front proved to be a clear
negative for the stock market as most major averages posted their worst
January performance on record.
January represented a month of change for many of the markets and sectors
traded by the Fund. While overall market volatility seems to have declined
during the month, January performance was affected by price spikes and
reversals that impacted long-term trends carried over from 2008 creating
a challenging environment for the Fund. The Fund's two largest sector
exposures are in interest rates and currencies which were both hit by
major reversals in January.
Class A Units were positive 0.94% in February 2009 resulting in
a Net Asset Value per unit of $3,728.18 as of February 28, 2009.
The Fund gained 0.94 percent in February as the focus of the markets and
trading conditions were very similar to those that prevailed in January.
The S&P 500 followed up its worst January on record with a near 11 percent
decline in February.
Class A Units were negative 5.53% in March 2009 resulting in
a Net Asset Value per unit of $3,522.05 as of March 31, 2009.
The Fund's performance was negative in March, marking the first meaningful
month-on-month correction since the Fund's strong 2008 rally. The Fund's
decline in performance coincided with the S&P 500's best monthly return
since 1987. While it is never comforting to incur losses during these
reversal periods it is a natural component of trend-following. The Fund
gained 121% between September 2007 and December 2008 from a broad diversity
of markets and market sectors. It is not unusual or unexpected that we will
experience a period of give-back in some of these markets as new trends
emerge. The advisor's position size is currently light with a margin to
equity ratio of approximately 6-9% (JWH can go ashigh as 24-28%). In
addition, at the Fund level, we will remain approximately 80% allocated to
JWH with the remaining assets gaining interest income at our cash management
firm at least until we see a reemergence of price trends.
See Note 7 of the Notes to Financial Statements for procedures established by
the General Partner to monitor and minimize market and credit risks for the
Partnership. In addition to the procedures set out in Note 7, 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, 2008
The Partnership recorded a gain of $2,343,822 or $490.57 per Unit of Class
A Units for the fiscal quarter ended March 31, 2008. This compares to a
loss of $ 1,723,314 or $214.58 per Unit of Class A Units for the fiscal
quarter ended March 31, 2007. The quarter ended March 31, 2008 showed
a gain of 20.11%% (total return) for the Class A Units of the fund.
The Partnership continued to employ John W. Henry &
Company, Inc.'s (JWH) GlobalAnalyticsR Family of Programs.
Class A Units were positive 8.62% in January 2008 resulting in
a Net Asset Value per unit of $2,649.47 as of January 31, 2008.
The Partnership experienced strong positive performance for the
month of January. Fear returned to the markets as the December
holiday season proved to be just a brief respite from the
turbulence of last quarter. An important shift in the markets
focus seemed to be emerging at the start of 2008.Last year the
global economy was relatively strong. The market consternation
was idiosyncratic and related to specific issues affecting the housing
and credit markets in the U.S. In January, the concern was more
generalized, as the market began to adjust for the possibility of a
U.S. recession and a significant slowdown in global growth.
The Partnership was able to provide clients with a strong positive,
uncorrelated return during a difficult month for traditional investments.
Class A Units were positive 10.18% in February 2008 resulting in
a Net Asset Value per unit of $2,919.21 as of February 28, 2008.
Trading performance for the Partnership in February was exceptional.
The data released during the month continues to point to a weakening in
the U.S. economy. As the severity of the credit crisis and its
ramifications become more apparent, numerous remedies have been enacted
or proposed. Pessimism about the deteriorating state of the economy was
often met with optimism about the prospects of official forms of economic
stimulus,creating an interesting trading dynamic during the month. Some
sectors were confined to broad ranges, while others experienced explosive
moves.The Partnership benefited from historic movement in the price of
many commodities as energies, grains, metals and soft commodities all
contributed positively to the Partnership's performance.
Class A Units were positive 0.36% in March 2008 resulting in
a Net Asset Value per unit of $2,929.86 as of March 31, 2008.
While the month contained significant reversals in some trends that
resulted in performance finishing March below the inter-month peak,
the Partnership was pleased with the continued positive results for
the month and the quarter. JWH models performed as expected, given
the volatile price action across multiple market sectors.
See Note 7 of the Notes to Financial Statements for procedures established by
the General Partner to monitor and minimize market and credit risks for the
Partnership. In addition to the procedures set out in Note 7, 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, 2008.
Item 4. Controls and Procedures
Within 90 days of the date of this report an evaluation was performed by the
company under the supervision and with the participation of management,
including the President of the Company, of the effectiveness of the design
and operation of the Company's disclosure controls and procedures. Based on
that evaluation, the Company's management, including the President, concluded
that the Company's disclosure controls and procedures are effective in timely
alerting them to material information relating to the Company that is
required to be included in the Company's period filings with the Securities
and Exchange Commission. There have been no significant changes in the
company's internal controls or in other factors that could significantly
affect those internal controls subsequent to the date the company carried out
its evaluation.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
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, 2008.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
RECENT SALES OF UNREGISTERED SECURITIES A UNITS
3d quarter 2009 3d quarter 2008
Units Sold 177.68 1,159
Value of Units Sold 575,000 $3,274,267
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
1. Form 8-K Amendment filed 02/06/2009
2. Form 8-K Amendment filed 03/20/2009
3. Form 8-K Amendment filed 11/12/2009
1. Form 8-K Amendment filed 02/06/2009
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K AMENDMENT
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 6, 2009
THE EVEREST FUND, L.P.
(Exact name of registrant as specified in its charter)
Iowa 0-17555 42-1318186
(State or other jurisdiction (IRS Employer
of incorporation) (Commission file number) Identification No.)
1100 North 4th Street
Suite 143
Fairfield, Iowa 52556
(Address of principal executive offices)
Registrant's telephone number, including area code: (641) 472-5500
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under
any of the following provisions:
Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Securities
Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c))
12/31/2008
National Futures Association
Compliance Department
300 South Riverside Plaza, #1800
Chicago, IL 60606
Commodity Futures Trading Commission
Three Lafayette Centre
1155 21st Street, N.W.
Washington, DC 20581
RE: Replacement of Accountant
The Everest Fund, L.P. (NFA ID# P001601)
Please be notified that on December 31, 2008 The Everest Fund, L.P.
has dismissed its principal accountant and audit firm, Ryan & Juraska.
On February 5,2009 they were replaced with McGladrey & Pullen LLP, One
South Wacker, Suite 800, Chicago, Illinois 60606. Ryan & Juraska were
the audit and accountants for year 2007 only.
The decision to change accountants was recommended and apprpoved
by the board of directors.
There were no disagreements with the former accountant on any matter
of accounting principles or practices, financial statement disclosure,
auditing scope or procedures or compliance with the applicable rules
of the Commission during the most recent fiscal year and any
subsequent interim periods.
The reports on The Everest Fund, L.P.'s financial statements and
schedules for fiscal year 2007, conducted by Ryan & Juraska, did not
contain any adverse opinion, disclaimer of opinion or qualification.
We provided Ryan & Juraska with a copy of this amended
Form 8-Ka prior to its filing with the Securities and Exchange
Commission and requested that they furnish us with a letter
addressed to the Securities and Exchange Commission stating
whether they agreed with the statements made in this Form
8-Ka and, if not, stating the aspects with which they do not
agree. A copy of the letter provided by Ryan & Juraska
is attached to this Form 8-Ka as Exhibit A.
Neither Everest Fund, LP nor anyone on our behalf consulted
Ryan & Juraska on any matter relating to the application of
accounting principles to a specific completed or contemplated
transaction or the type of audit opinion that might be rendered
on our financial statements.
There has not been any consulting with new auditors up through the
date of engagement.
Exhibit A
February 4, 2009
Re: Change of Accountants
The Everest Fund, L.P. (NFA ID# P001601)
Dear Sir/Madam:
This letter is to inform you that Ryan & Juraska, CPAs, the former
designated accountant for The Everest Fund, LP ("TEF"), agrees
with the facts stated in the letter regarding the revised 8-K
which is dated December 31, 2008, pursuant to CFTC Rule 1.16(g)
from The Everest Fund, LP.
Specifically, during the last 12 months there have been no
disagreements between our firm and TEF, resolved or unresolved,
relating to any matter of accounting principles or practices,
financial statement disclosure, auditing scope or procedure or
compliance with applicable regulatory rules which would have
caused us to make reference to them in connection with our
report on the subject matter of the problems. Also, during
the preceding 12 months, we have not issued an adverse opinion,
disclaimer, or qualified opinion due to uncertainties, audit
scope, or accounting principle.
Sincerely,
/s/Ryan & Juraska,
Certified Public Accountants
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 hereunto duly authorized.
Date: February 6, 2009
THE EVEREST FUND, L.P.
By: Everest Asset Management, Inc.,
General Partner
By: /s/ Peter Lamoureux
Peter Lamoureux
President, Secretary, Treasurer and Director
2. Form 8-K Amendment filed 03/20/2009
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K AMENDMENT
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 20, 2009
THE EVEREST FUND, L.P.
(Exact name of registrant as specified in its charter)
Iowa 0-17555 42-131818
(State or other jurisdiction (IRS Employer
of incorporation) (Commission file number) Identification No.)
1100 North 4th Street
Suite 143
Fairfield, Iowa 52556
(Address of principal executive offices)
Registrant's telephone number, including area code: (641) 472-5500
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under
any of the following provisions:
Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Securities
Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c))
Upon the advice of our counsel and as reflected in the filing of our financial
statements, we did not engage a PCAOB accounting firm for the 2007 audit for
the Everest Fund, L.P. (Everest). Our counsel has been involved with Everest
only subsequent to the 1996 12g SEC filing and had no knowledge of it.
We were operating under the understanding and apparently mistaken believe
that we were 'voluntary filers' for at least the last 12 years. In light of
the foregoing, we have engaged McGladry & Pullen ( McGladrey ), a PCAOB
accounting firm, to perform an audit of the financial statements for Everest
for the years 2007 and 2008. We are working with McGladry in an attempt to
accomplish this by the deadline of March 31, but we must reserve for the
possible need to request an extension of time under the circumstances.
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 hereunto duly authorized.
Date: March 20, 2009
THE EVEREST FUND, L.P.
By: Everest Asset Management, Inc.,
General Partner
By: /s/ Peter Lamoureux
Peter Lamoureux
President, Secretary, Treasurer and Director
3. Form 8-K Amendment filed 11/12/2009
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K AMENDED
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): date November 6, 2009
THE EVEREST FUND, L.P.
(Exact name of registrant as specified in its charter)
Iowa 0-17555 42-1318186
(State or other jurisdiction
of incorporation) (Commission file number) (IRS Employer
Identification No.)
1100 North 4th Street
Suite 143
Fairfield, Iowa 52556
(Address of principal executive offices)
Registrant's telephone number, including area code: (641) 472-5500
Check the appropriate box below if the Form 8-K filing is
intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Securities
Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c))
Date: November 6, 2009
National Futures Association
Compliance Department
300 South Riverside Plaza, #1800
Chicago, IL 60606
Commodity Futures Trading Commission
Three Lafayette Centre
1155 21st Street, N.W.
Washington, DC 20581
RE: Replacement of Accountant
The Everest Fund, L.P. (NFA ID# P001601)
Please be notified that on November 3, 2009 The Everest Fund, L.P.
has dismissed its independent registered accounting firm, McGladrey
& Pullen, LLP. On November 7, 2009 they were replaced with
Donahue Associates, LLC, 27 Beach Road- C05A Monmouth Beach, NJ 07750.
McGladrey & Pullen LLP was the Company's auditor for years 2007 and 2008.
The decision to change accountants was recommended and approved
by the board of directors.
During two most recent years and subsequent interim period before
McGladrey and Pullen, LLP were dismissed there were no disagreements
on any matter of accounting principles or practices, financial statement
disclosure, auditing scope or procedures or compliance with the
applicable rules of the Commission.
There were no reportable events under 304(a)(1)(v) of Regulation SK.
McGladrey & Pullen, LLP's reports on The Everest Fund, L.P.'s financial
statements for fiscal years 2007 and 2008, did not contain any adverse
opinion, disclaimer of opinion or qualification.
We provided McGladrey & Pullen, LLP with a copy of this
Form 8-K Amended prior to its filing with the Securities and Exchange
Commission and requested that they furnish us with a letter
addressed to the Securities and Exchange Commission stating
whether they agreed with the statements made in this Form
8-K amended and, if not, stating the aspects with which they do not
agree. A copy of the letter provided by McGladrey & Pullen LLP
is attached to this Form 8-K amended as Exhibit A.
Neither Everest Fund, L.P. nor anyone on our behalf consulted
Donahue Associates, LLC on any matter relating to the application of
accounting principles to a specific completed or contemplated
transaction or the type of audit opinion that might be rendered
on our financial statements.
There has not been any consulting with the new auditors up through the
date of engagement.
Exhibit A
Re: Change of Accountants
The Everest Fund, L.P. (NFA ID# P001601)
November 6, 2009
Securities and Exchange Commission
Washington, D.C. 20549
Commissioners:
We have read The Everest Fund, L.P.'s statements included under Item
4.01 of its Form 8-K filed on November 6, 2009 and we agree with
such statements concerning our firm.
Sincerely,
McGladrey & Pullen, LLP
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 hereunto duly authorized.
Date: November 12, 2009
THE EVEREST FUND, L.P.
By: Everest Asset Management, Inc.,
General Partner
By: /s/ Peter Lamoureux
Peter Lamoureux
President, Secretary, Treasurer and Director
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 16, 2009 By: Everest Asset Management, Inc.,
its General Partner
By:__/s/ Peter Lamoureux_____
Peter Lamoureux
President
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