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	Commission File Number
ended June 30, 2016	0-17555

The Everest Fund, L.P.

(Exact name of registrant as specified in its charter)

Iowa	42-1318186
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer 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 o

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 o		Accelerated filer o
	Non-accelerated filer o		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 o No x

Table of Contents

Part I:	Financial Information
Item 1.	Financial Statements		3
Statements of Financial Condition June 30, 2016 (Unaudited) and December 31, 2015 (Audited)			3
Condensed Schedule of Investments June 30, 2016 (Unaudited)			4
Condensed Schedule of Investments December 31, 2015 (Audited)			5
Statements of Operations For the Three and Six Months Ended June 30, 2016 and 2015 (Unaudited)			6-7
Statements of Changes in Partners’ Capital (Net Asset Value) For the Six Months Ended June 30, 2016 and 2015 (Unaudited)			8-9
Statements of Cash Flows For the Six Months Ended June 30, 2016 and 2015 (Unaudited)			10
Notes to Financial Statements June 30, 2016			11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		18
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		20
Item 4.	Controls and Procedures		20
Part II:	Other Information		20
Item 1.	Legal Proceedings		20
Item 1A.	Risk Factors		20
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		20
Item 3.	Defaults upon Senior Securities		21
Item 4.	Submission of Matters to a Vote of Security Holders		21
Item 5.	Other Information		21
Item 6.	Exhibits		21

PART I. FINANCIAL INFORMATION

Item 1 Financial Statements

Following are Financial Statements for the three months ended June 30, 2016

EVEREST FUND, L.P.

(An Iowa Limited Partnership)

STATEMENTS OF FINANCIAL CONDITION

June 30, 2016 (UNAUDITED) AND DECEMBER 31, 2015 (AUDITED)

		UNAUDITED				AUDITED
		June 30, 2016				DECEMBER 31, 2015
ASSETS
Equity in broker trading accounts:
Cash and investments in marketable securities		$	16,278			$	13,442
Cash in broker trading accounts			4,709,998				5,543,020
Net unrealized trading gains (losses) on open contracts			181,890				157,585
			4,908,166				5,714,047
Other Assets
Investments in marketable securities
Interest receivable			683				461
TOTAL ASSETS		$	4,908,849			$	5,714,508
LIABILITIES AND PARTNERS’ CAPITAL
LIABILITIES:
Management fee payable		$	8,111			$	9,501
General partner fees payable			19,443				24,935
Redemptions payable			0				8,209
Incentive fee payable
Accounts payable & accrued expenses			29,070				42,597
TOTAL LIABILITIES			56,623				85,242
PARTNERS’ CAPITAL (Net Assets)			4,852,226				5,629,265
Limited partners, A Shares (2,258.19963 and 2,491.81469 units outstanding)
TOTAL PARTNERS’ CAPITAL			4,852,226				5,629,265
TOTAL LIABILITIES AND PARTNERS’ CAPITAL		$	4,908,849			$	5,714,508

 

The accompanying notes are an integral part of this statement.

EVEREST FUND, L.P.

(AN IOWA LIMITED PARTNERSHIP)

CONDENSED SCHEDULE OF INVESTMENTS

June 30, 2016

UNAUDITED

			EXPIRATION			NUMBER OF				MARKET				% OF PARTNERS’
			DATES			CONTRACTS				VALUE (OTE)				CAPITAL
LONG POSITIONS:
FUTURES POSITIONS
Interest rates			Sep 16 - Mar 17				324			$	185,905				3.83	%
Metals			Aug 16 - Oct 16				13				37,378				-0.77	%
Energy			Aug 16				3				9,150				0.19	%
Agriculture			Aug 16 - Dec 16				31				9,533				0.20	%
Currencies			Sep 16 - Mar 18				51				30,730				0.63	%
Indices			Sep 16				24				14,584				0.30	%
										$	287,280				5.92	%
Total long positions										$	287,280				5.92	%
SHORT POSITIONS:
FUTURES POSITIONS
Interest rates			Jul 16 - Sep 16				2			$	-7,873				-0.16	%
Metals			Sep 16 - Nov 16				8				-56,338				-1.16	%
Energy			Aug 16 - Sep 16				7				5,210				0.11	%
Agriculture			Aug 16 - Sep 16				15				-12,034				-0.25	%
Currencies			Sep 16				17				-11,589				-0.24	%
Indices			Sep 16				8				-22,765				-0.47	%
											-105,389				-2.17	%
Total short positions											-105,389				-2.17	%
TOTAL OPEN CONTRACTS										$	181,891				3.75	%

 

The accompanying notes are an integral part of these financial statements.

EVEREST FUND, L.P.

(AN IOWA LIMITED PARTNERSHIP)

CONDENSED SCHEDULE OF INVESTMENTS

December 31, 2015

Audited

 

		EXPIRATION				NUMBER OF				MARKET				% OF PARTNERS’
		DATES				CONTRACTS				VALUE (OTE)				CAPITAL
LONG POSITIONS:
FUTURES POSITIONS
Interest rates			Mar 16–Mar 17				100				-0.77	%		$	-43,148
Metals			Mar 16				7				0.05	%			2,863
Agriculture			Mar 16				39				-0.19	%			-10,842
Currencies			Mar 16				8				0.14	%			8,100
Indices			Mar 16				100				-0.02	%			-1,333
Total Long Futures Contracts											-0.79	%		$	-44,360
Forward Positions
Currencies											0.00	%			0
Total Long Positions											-0.79	%		$	-44,360
Short U.S. Futures Contracts
Interest Rates			Mar 16-Dec 16				289				-0.33	%		$	-18,847
Metals			Mar 16-Apr 16				30				0.25	%			14,202
Energy			Feb 16-Mar 16				22				0.80	%			45,036
Agriculture			Feb 16-Mar 16				89				1.00	%			56,446
Currencies			Mar 16-Sep 17				160				1.98	%			111,628
Indices			Jan 16-Mar 16				11				-0.12	%			-6,519
Total Short Futures Contracts											3.59	%		$	201,945
Forward Positions
Currencies											0.00	%			0
Total Short Positions											3.59	%		$	201,945
Total Contracts											2.80	%		$	157,585

 

The accompanying notes are an integral part of these financial statements.

EVEREST FUND, L.P.

(AN IOWA LIMITED PARTNERSHIP)

STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED June 30, 2016 AND 2015

UNAUDITED

 

		THREE MONTHS ENDED				THREE MONTHS ENDED
		June 30, 2016				June 30, 2015
TRADING INCOME (LOSS)
Net realized trading gain (loss)		$	-546,097			$	-5,424
Change in net unrealized trading gain (loss)			186,737				-217,071
Net foreign currency translation loss			2.336				1,115
Brokerage Commissions			-9,366				-6,602
NET TRADING INCOME (LOSS)			-366,390				-227,982
Interest income, net of cash management fees			2,074				89
TOTAL INCOME			-364,316				-227,893
EXPENSES:
General partner management fees			66,103				89,792
Advisor Management fees			24,394				31,553
Incentive fees			0				0
Professional fees			25,647				25,008
Administrative expenses			1,765				4,148
TOTAL EXPENSES			117,909				150,501
NET INCOME		$	-482,225			$	-378,394
NET INCOME (LOSS) PER UNIT OF PARTNERSHIP INTEREST		$	-213.54			$	-151.06

 

The accompanying notes are an integral part of these statements.

EVEREST FUND, L.P.

(AN IOWA LIMITED PARTNERSHIP)

STATEMENTS OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE 30, 2016 AND 2015

UNAUDITED

 

		SIX MONTHS ENDED				SIX MONTHS ENDED
		JUNE 30, 2016				JUNE 30, 2015
TRADING INCOME (LOSS)
Net realized trading gain (loss)		$	48,188			$	357,667
Change in net unrealized trading gain (loss)			29,156				-370,136
Net foreign currency translation loss			-10,874				10,985
Brokerage Commissions			-17,208				-10,932
NET TRADING INCOME (LOSS)			49,262				-12,417
Interest income, net of cash management fees			4,931				223
TOTAL INCOME			54,193				-12,194
EXPENSES:
General partner management fees			146,475				188,901
Advisor Management fees			54,329				66,195
Incentive fees			0				0
Professional fees			43,666				43,192
Administrative expenses			3,365				5,242
TOTAL EXPENSES			247,835				303,530
NET INCOME		$	-193,643			$	-315,724
NET INCOME (LOSS) PER UNIT OF PARTNERSHIP INTEREST		$	-85.75			$	-126.04

 

The accompanying notes are an integral part of these statements.

EVEREST FUND, L.P.

(An Iowa Limited Partnership)

STATEMENT OF CHANGES IN PARTNERS’ CAPITAL

FOR THE SIX MONTHS ENDED June 30, 2016

UNAUDITED

		UNITS				LIMITED PTRS
		A SHARES				A SHARES				TOTAL
BALANCES, January 1, 2016		$	2,491.815			$	5,629,265			$	5,629,265
Additional Units Sold			0				0				0
Redemptions			-233.615				-583,397				-583,397
Less Offering Costs			—				0				0
Net profit (Loss)			—				-193,644				-193,644
BALANCES, June 30, 2016		$	2,258.200			$	4,852,226			$	4,852,226
Net asset value per unit January 1, 2016		$	2,259.10
Net profit (loss) per unit			-110.39
Net asset value per unit June 30, 2016		$	2,148.71

The accompanying notes are an integral part of these statements.

EVEREST FUND, L.P.

(An Iowa Limited Partnership)

STATEMENT OF CHANGES IN PARTNERS’ CAPITAL

FOR THE SIX MONTHS ENDED June 30, 2015

UNAUDITED

		UNITS				LIMITED PTRS
		A SHARES				A SHARES				TOTAL
BALANCES, January 1, 2015		$	2,797.984			$	6,810,207			$	6,810,207
Additional Units Sold			0				0				0
Redemptions			-293.003				-711,755				-711,755
Less Offering Costs			—				0				0
Net profit (Loss)			—				-315,724				-315,724
BALANCES, June 30, 2015		$	2,504.981			$	5,782,729			$	5,782,729
Net asset value per unit January 1, 2015		$	2,433.97
Net profit (loss) per unit			-125.48
Net asset value per unit June 30, 2015		$	2,308.49

The accompanying notes are an integral part of these statements.

EVEREST FUND, L.P.

(An Iowa Limited Partnership)

STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2016 AND 2015

UNAUDITED

 

		SIX MONTHS ENDED				SIX MONTHS ENDED
		JUNE 30, 2016				JUNE 30, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)		$	-193,643			$	-315,724
Net changes to reconcile net income (loss) to net cash provided (used) by operating activities:
Unrealized gain (loss) on open contracts			-24,306				379,849
Interest receivable			-222				96
Incentive fees payable			0				0
General partner fees payable			-5,492				-3,035
Redemption Payable			-8,209				89,207
Management fees payable			-1,391				-1,566
Accounts payable & accrued expenses			-13,528				-14,315
Net cash provided (used) in operating activities			-246,791				134,512
Cash flows from (for) financing activities:
Cash Redemptions paid			-583,397				-711,755
Partner addition of units, net of offering costs			0				0
Net cash provided (used) by financing activities			-583,397				-711,755
Net increase (decrease) in cash and cash equivalents			-830,188				-577,243
Cash and cash equivalents
Beginning of period			5,556,462				6,581,366
End of Period			4,726,274				6,004,123
End of period cash and cash equivalents consist of:
Cash in Banks			16,278				15,276
Cash in broker trading accounts			4,709,998				5,988,848
Cash and cash equivalents			0				0
CASH AND CASH EQUIVALENTS, at end of period			4,726,276			$	6,004,123

 

The accompanying notes are an integral part of these statements.

The Everest Fund, L.P.

(an Iowa Limited Partnership)

Notes to the Financial Statements

June 30, 2016

 

(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 Intercontinental Exchange, 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 June 30, 2016 and June 30, 2015:

		Level 1				Level 2				Level 3
Assets at June 30, 2016:
Open positions in futures and option contracts		$	181,891
Total assets at fair value		$	181,891			$	0			$	0
		Level 1				Level 2				Level 3
Assets at June 30, 2015:
Open positions in futures and option contracts		$	-63,491
Total assets at fair value		$	-63,491			$	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.

A substantial portion of the Partnership’s assets are held in a cash account a Everest’s futures broker R.J. O’Brien, the FCM. As is standard in the industry Everest receives 90% of the 3 month T-bill rate on its cash that is unused for trading. The Partnership’s assets at RJO cash account are subject to potential loss resulting from interest rate fluctuations and default.

(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
				2016				2015
Speculative Instruments		Location- Statement of Financial Condition		Fair Value				Fair Value
Futures Contracts		Net unrealized gain (loss)
		on open contracts		$	181,891			$	-63,491
				2016				2015
Speculative Instruments		Location- Statement of Operations		Fair Value				Fair Value
Futures Contracts		Net realized trading gains (losses)		$	48,188			$	357,667
Futures Contracts		Change in unrealized gains (losses)		$	29,156			$	-370,136

 

Asset Derivatives
Balance Sheet Location		Fair Value				#of contracts
Agricultural
Net unrealized trading gains on open contracts			9,533				31
Currencies
Net unrealized trading gains on open contracts			30,730				51
Energy
Net unrealized trading gains on open contracts			9,150				3
Metals
Net unrealized trading gains on open contracts			37,378				13
Interest rates
Net unrealized trading gains on open contracts			185,905				324
Indices
Net unrealized trading gains on open contracts			14,584				24
			287,280				446

Liability Derivatives
Balance Sheet Location		Fair Value				#of contracts				Net
Agricultural
Net unrealized trading gains on open contracts			-12,034				15				-2,501
Currencies
Net unrealized trading gains on open contracts			-11,589				17				19,141
Energy
Net unrealized trading gains on open contracts			5,210				7				14,360
Metals
Net unrealized trading gains on open contracts			-56,338				8				-18,960
Interest rates
Net unrealized trading gains on open contracts			-7,873				2				178,032
Indices
Net unrealized trading gains on open contracts			-22,765				8				-8,181
			-105,389				57				181,891

 

Trading Revenue for the Six Months Ended June 30, 2016
Line Item in Income Statement
Realized		$	20,106
Change in unrealized		$	29,156
		$	49,261
Includes net foreign currency translation gain (loss)
Trading Revenue for the Six Months Ended June 30, 2015
Line Item in Income Statement
Realized		$	357,720
Change in unrealized		$	-370,136
		$	-12,417
Includes net foreign currency translation gain (loss)
Total average of futures contracts bought and sold
Six months ended June 30, 2016
Total		$	20,106
6 month average		$	3,350.96
Total average of futures contracts bought and sold
Six months ended June 30, 2015
Total		$	357,720
6 month average		$	59,620

 

For the six months ended June 30, 2016, the monthly average of futures contracts bought and sold was approximately $3,350.96.

(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 six months ended June 30, 2016 and June 30, 2015.

		June 30, 2016				June 30, 2015
		Class A				Class A
Total return before distributions*			-4.89	%			-5.16	%
Ratio to average net assets:
Net investment Income (loss)**			-9.05	%			-9.28	%
Management fees			5.46	%			5.78	%
Incentive fees			0.00	%			0.00	%
Other expenses			3.78	%			3.51	%
Total expenses**			9.23	%			9.29	%

*Not annualized

**Annualized

Interim Financial Statements

The statements of financial condition, including the consolidated schedule of investments, as of June 30, 2016, the statements of operations for the three and six months ended June 30, 2016 and 2015, the statements of cash flows and changes in partners' capital (net asset value) for the six months ended June 30, 2016 and 2015 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 June 30, 2016, results of operations for the three months ended June 30, 2016 and 2015, cash flows and changes in partners’ capital (net asset value) for the three months ended June 30, 2016 and 2015. The results of operations for the full three months ended June 30, 2016 and 2015 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 month ended June 30, 2016 compared to each month ended June 30, 2015.

Class A Units were positive 8.23% in January 2016 resulting in a Net Asset Value per unit of $2,445.12 as of January 31, 2016.

Class A Units were positive 3.44% in January 2015 resulting in a Net Asset Value per unit of $2,517.72 as of January 31, 2015.

Large gains came from trends in interest rates (both directions, at different times of the month), energies and stock indices. Much smaller losses came from grains and softs.

 

The great start for the New Year for the Fund more than erased the loss from last year’s trading. It also came during a month of considerable stress on the equity markets, with the S&P 500 losing 3.24% despite the stock market recovery at the end of the month.

 

Class A Units were positive 4.89% in February 2016 resulting in a Net Asset Value per unit of $2,564.60 as of February 29, 2016.

Class A Units were negative 2.33% in February 2015 resulting in a Net Asset Value per unit of $2,459.13 as of February 28, 2015.

The gains came mostly from interest rate positions, with smaller gains in softs, grains and global stock indices. Losses were posted in currencies.

After fluctuating up and down for most of the month, our energy and metals positions were essentially flat for the month for the month of February.

Class A Units were negative 7.98% in March 2016 resulting in a Net Asset Value per unit of $2,359.86 as of March 31, 2016.

Class A Units were negative 0.11% in March 2015 resulting in a Net Asset Value per unit of $2,456.35 as of March 31, 2015.

The Fund was negatively correlated with the S&P 500 which was +6.6% in March. The Fund was +4.46% YTD through the end of March with the S&P 500 +0.77% for the same period.

 

The losses came across the board from interest rates, currencies, softs, global stock indices, energies, grains, metals and meats. Trends that were established and very profitable for the Fund in January and February abruptly reversed in March for the largest one month decline since EMC took over the trading for the Fund in December of 2012.

 

Class A Units were negative 7.81% in April 2016 resulting in a Net Asset Value per unit of $2,175.61 as of April 30, 2016.

Class A Units were negative 0.68% in April 2015 resulting in a Net Asset Value per unit of $2,439.66 as of April 30, 2015.

The Everest Fund had a loss of -7.81% in April. Gains in currencies, meats and grains were not enough to offset losses in stock indices, softs, interest rates, energies and metals.

April was another volatile month of fluctuating trendless price action. These kinds of market conditions wreak havoc for technical trend following systems like EMC.

Class A Units were negative 3.21% in May 2016 resulting in a Net Asset Value per unit of $2,105.82 as of May 31, 2016.

Class A Units were negative 0.02% in May 2015 resulting in a Net Asset Value per unit of $2,439.23 as of May 31, 2015.

The Everest Fund had a loss of -3.21% in May. Another month of abrupt price swings saw losses in metals, currencies, softs, stock indices and short financials. Smaller gains were posted in grains and to a lesser extent long financials and energies.

May was another month of unfavorable conditions for trend followers like EMC. We look forward to the possibility of a return to trending, and therefore tradeable, markets.

Class A Units were positive 2.04% in June 2016 resulting in a Net Asset Value per unit of $2,148.71 as of June 30, 2016.

Class A Units were negative 5.36% in June 2015 resulting in a Net Asset Value per unit of $2,308.49 as of June 30, 2015.

The Everest Fund’s gains came mostly in interest rates with smaller gains from softs and energies. Smaller overall losses came in stock indices and grains.

Brexit was the main driver of markets for the month of June. The Fund suffered losses in anticipation of the U.K. vote, and then made up the losses plus 2% after the Brexit vote to leave the EU. We were impressed by the risk management at EMC, especially after the vote took place.

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, 2015. 

Item 4.

Controls and Procedures

As of June 30, 2016 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 1 A.

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, 2015.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

RECENT SALES OF UNREGISTERED SECURITIES A UNITS

		Three months				Three months
		ended June 30, 2016				ended June 30, 2015
Units Sold			0				0
Value of Units Sold		$	0			$	0

 

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
32	Certification by Chief Executive Officer and Chief Financial Officer  Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	E-2

 

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: August 15, 2016		By:	Everest Asset Management, Inc.,
			its General Partner
		By:	/s/ Peter Lamoureux
			Peter Lamoureux
			President