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 September 30, 2017	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 232, 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	Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  o

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 September 30, 2017 (Unaudited) and December 31, 2016 (Audited)		3
	Condensed Schedule of Investments September 30, 2017 (Unaudited)		4
	Condensed Schedule of Investments December 31, 2016 (Audited)		5
	Statements of Operations For the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)		6-7
	Statements of Changes in Partners’ Capital (Net Asset Value) For the Nine Months Ended September 30, 2017 and 2016 (Unaudited)		8-9
	Statements of Cash Flows For the Nine Months Ended September 30, 2017 and 2016 (Unaudited)		10
	Notes to Financial Statements September 30, 2017		11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		19
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		20
Item 4.	Controls and Procedures		21
Part II:	Other Information		21
Item 1.	Legal Proceedings		21
Item 1A.	Risk Factors		21
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		21
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		22

PART I. FINANCIAL INFORMATION

Item 1 Financial Statements

Following are Financial Statements for the three months ended September 30, 2017

EVEREST FUND, L.P.

(An Iowa Limited Partnership)

STATEMENTS OF FINANCIAL CONDITION

September 30, 2017 (UNAUDITED) AND DECEMBER 31, 2016 (AUDITED)

		UNAUDITED				AUDITED
		September 30, 2017				DECEMBER 31, 2016
ASSETS
Equity in broker trading accounts:
Cash and investments in marketable securities		$	10,189			$	18,714
Cash in broker trading accounts			3,270,562				3,949,229
Net unrealized trading gains (losses) on open contracts			91,228				109,089
			3,371,979				4,077,032
Other Assets
Investments in marketable securities
Interest receivable			2,208				1,171
TOTAL ASSETS		$	3,374,188			$	4,078,203
LIABILITIES AND PARTNERS’ CAPITAL
LIABILITIES:
Management fee payable		$	5,536			$	6,699
General partner fees payable			14,821				18,426
Redemptions payable			14,490				55,511
Incentive fee payable
Accounts payable & accrued expenses			37,572				40,418
TOTAL LIABILITIES			72,418				121,054
PARTNERS’ CAPITAL (Net Assets)			3,301,770				3,957,148
Limited partners, A Shares (2,185.58181 and 2,211.95716 units outstanding)
TOTAL PARTNERS’ CAPITAL			3,301,770				3,957,148
TOTAL LIABILITIES AND PARTNERS’ CAPITAL		$	3,374,188			$	4,078,202

 

The accompanying notes are an integral part of this statement.

EVEREST FUND, L.P.

(AN IOWA LIMITED PARTNERSHIP)

CONDENSED SCHEDULE OF INVESTMENTS

September 30, 2017

UNAUDITED

			EXPIRATION			NUMBER OF				MARKET				% OF PARTNERS’
			DATES			CONTRACTS				VALUE (OTE)				CAPITAL
LONG POSITIONS:
FUTURES POSITIONS
Interest rates			Dec 17				62			$	3,558				0.11	%
Metals			Dec 17 - Jan 18				18				50,742				1.54	%
Energy			Nov 17 - Dec 17				11				1,175				0.04	%
Agriculture			Nov 17 - Dec 17				7				2,290				0.07	%
Currencies			Dec 17				49				-23,779				-0.72	%
Indices			Oct 17 - Dec 17				33				26,746				0.81	%
										$	60,731				1.84	%
Total long positions										$	60,731				1.84	%
SHORT POSITIONS:
FUTURES POSITIONS
Interest rates			Dec 17 - Dec 18				179			$	20,620				0.62	%
Metals			Dec 17				4				9,669				0.29	%
Energy			Nov 17				3				1,350				0.04	%
Agriculture			Nov 17 - Mar 18				43				3,228				0.10	%
Currencies			Dec 17 - Jun 19				7				2,806				0.08	%
Indices			Dec 17				8				-7,176				-0.22	%
											30,497				0.92	%
Total short positions											30,497				0.92	%
TOTAL OPEN CONTRACTS										$	91,228				2.76	%

 

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, 2016

AUDITED

										UNREALIZED GAIN
			EXPIRATION			NUMBER OF				% OF PARTNERS’				(LOSS) ON
			DATES			CONTRACT				CAPITAL				OPEN CONTRACTS
Long U.S. Futures Contracts
Interest rates			Mar 17-Mar 18				130				0.15	%		$	5,868
Metals			Mar 17				23				-0.93	%			(36,953	)
Energy			Feb 17-Mar 17				13				0.46	%			18,357
Agriculture			Feb 17-Mar 17				41				-0.40	%			(15,821	)
Currencies			Mar 17				2				-0.13	%			(5,190	)
Indices			Mar 17				50				1.64	%			64,758
Total Long Futures Contracts											0.78	%		$	31,019
Forward Positions
Currencies											0.00	%			0.00
Total Long Positions											0.78	%		$	31,019
Short U.S. Futures Contracts
Interest Rates			Mar 17-Dec 17				101				-0.08	%		$	(3,256	)
Metals			Mar 17				17				0.95	%			37,786
Agriculture			Mar 17				31				0.77	%			30,423
Currencies			Mar 17-Sep 18				73				0.48	%			18,818
Indices			Jan 17				2				-0.14	%			(5,701	)
Total Short Futures Contracts											1.97	%		$	78,070
Forward Positions
Currencies											0.00	%			0.00
Total Short Positions											1.97	%		$	78,070
Total Contracts											2.76	%		$	109,089

 

 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 September 30, 2017 AND 2016

UNAUDITED

 

		THREE MONTHS ENDED				THREE MONTHS ENDED
		September 30, 2017				September 30, 2016
TRADING INCOME (LOSS)
Net realized trading gain (loss)		$	-294,873			$	-138,029
Change in net unrealized trading gain (loss)			150,339				-56,977
Brokerage Commissions			-6,867				-5,739
NET TRADING LOSS			-151,401				-200,745
Interest income, net of cash management fees			6,982				2,468
TOTAL LOSS			-144,419				-198,278
EXPENSES:
General partner management fees			46,612				66,291
Advisor Management fees			17,463				23,529
Incentive fees			0				0
Professional fees			25,342				22,509
Administrative expenses			1,626				1,646
TOTAL EXPENSES			91,043				113,975
NET LOSS		$	-235,462			$	-312,253
NET LOSS PER UNIT OF PARTNERSHIP INTEREST		$	-108.39			$	-138.56

 

The accompanying notes are an integral part of these statements.

EVEREST FUND, L.P.

(AN IOWA LIMITED PARTNERSHIP)

STATEMENTS OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

UNAUDITED

 

		NINE MONTHS ENDED				NINE MONTHS ENDED
		SEPTEMBER 30, 2017				SEPTEMBER 30, 2016
TRADING INCOME (LOSS)
Net realized trading gain (loss)		$	-292,994			$	-100,715
Change in net unrealized trading gain (loss)			-4,554				-27,822
Brokerage Commissions			-21,273				-22,948
NET TRADING INCOME (LOSS)			-318,821				-151,484
Interest income, net of cash management fees			16,964				7,399
TOTAL INCOME (LOSS)			-301,857				-144,085
EXPENSES:
General partner management fees			148,249				212,766
Advisor Management fees			55,615				77,858
Incentive fees			0				0
Professional fees			79,808				66,175
Administrative expenses			5,586				5,011
TOTAL EXPENSES			289,258				361,810
NET LOSS		$	-591,115			$	-505,895
NET LOSS PER UNIT OF PARTNERSHIP INTEREST		$	-272.10			$	-224.49

 

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 NINE MONTHS ENDED SEPTEMBER 30, 2017

UNAUDITED

		UNITS				LIMITED PTRS
		A SHARES				A SHARES				TOTAL
BALANCES, January 1, 2017		$	2,211.957			$	3,957,148			$	3,957,148
Additional Units Sold			0				0				0
Redemptions			-39.569				-64,264				-64,264
Less Offering Costs			—				0				0
Net income (Loss)			—				-591,115				-591,115
BALANCES, September 30, 2017		$	2,172.388			$	3,301,770			$	3,301,770
Net asset value per unit
January 1, 2017		$	1,788.98
Net income (loss) per unit			-269.10
Net asset value per unit
September 30, 2017		$	1,519.88

 

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 NINE MONTHS ENDED SEPTEMBER 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			-238.299				-592,813				-592,813
Less Offering Costs			—				0				0
Net income (Loss)			—				-505,895				-505,895
BALANCES, September 30, 2016		$	2,253,516			$	4,530,557			$	4,530,557
Net asset value per unit
January 1, 2016		$	2,259.10
Net income (loss) per unit			-248.66
Net asset value per unit
September 30, 2016		$	2,010.44

 

The accompanying notes are an integral part of these statements.

EVEREST FUND, L.P.

(An Iowa Limited Partnership)

STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

UNAUDITED

 

		NINE MONTHS ENDED				NINE MONTHS ENDED
		SEPTEMBER 30, 2017				SEPTEMBER 30, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)		$	-591,115			$	-505,895
Net changes to reconcile net income (loss) to net cash provided (used) by operating activities:
Unrealized gain (loss) on open contracts			17,860				31,542
Interest receivable			-1,037				-329
Incentive fees payable			0				0
General partner fees payable			-3,605				-4,199
Redemption Payable			-41,021				1,207
Management fees payable			-1,163				-1,922
Accounts payable & accrued expenses			-2,847				-5,168
Net cash provided (used) in operating activities			-622,928				-484,764
Cash flows from (for) financing activities:
Cash Redemptions paid			-64,264				-592,813
Partner addition of units, net of offering costs			0				0
Net cash provided (used) by financing activities			-64,264				-592,813
Net increase (decrease) in cash and cash equivalents			-687,192				-1,077,577
Cash and cash equivalents
Beginning of period			3,967,943				5,556,462
End of Period			3,280,751				4,478,885
End of period cash and cash equivalents consist of:
Cash in Banks			10,189				10,483
Cash in broker trading accounts			3,270,562				4,468,402
CASH AND CASH EQUIVALENTS, at end of period			3,280,751				4,478,885

 

The accompanying notes are an integral part of these statements.

The Everest Fund, L.P.

(an Iowa Limited Partnership)

Notes to the Financial Statements

September 30, 2017

 

(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 September 30, 2017 and September 30, 2016: 

		Level 1				Level 2				Level 3
Assets at September 30, 2017:
Open positions in futures and option contracts		$	91,228
Total assets at fair value		$	91,228			$	0			$	0
		Level 1				Level 2				Level 3
Assets at September 30, 2016:
Open positions in futures and option contracts		$	126,043
Total assets at fair value		$	126,043			$	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 at 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

				2017				2016
Speculative Instruments		Location- Statement of Financial Condition		Fair Value				Fair Value
Futures Contracts		Net unrealized gain (loss) on open contracts		$	91,228			$	126,043
				2017				2016
Speculative Instruments		Location- Statement of Operations		Fair Value				Fair Value
Futures Contracts		Net realized trading gains (losses)		$	-292,994			$	-123,663
Futures Contracts		Change in unrealized gains (losses)		$	-4,554			$	-27,822

Asset Derivatives

Balance Sheet Location		Fair Value				# of contracts
Agricultural
Net unrealized trading gains on open contracts			2,290				7
Currencies
Net unrealized trading gains on open contracts			-23,779				49
Energy
Net unrealized trading gains on open contracts			1,175				11
Metals
Net unrealized trading gains on open contracts			50,742				18
Interest rates
Net unrealized trading gains on open contracts			3,558				62
Indices
Net unrealized trading gains on open contracts			26,746				33
			60,731				180

Liability Derivatives 

Balance Sheet Location		Fair Value				# of contracts				Net
Agricultural
Net unrealized trading gains on open contracts			3,228				43				5,518
Currencies
Net unrealized trading gains on open contracts			2,806				7				-20,973
Energy
Net unrealized trading gains on open contracts			1,350				3				2,525
Metals
Net unrealized trading gains on open contracts			9,669				4				60,411
Interest rates
Net unrealized trading gains on open contracts			20,620				179				24,178
Indices
Net unrealized trading gains on open contracts			-7,176				8				19,570
			30,497				244				91,230

Trading Revenue for the Nine Months Ended September 30, 2017

Line Item in Income Statement 

Realized		$	-314,267
Change in unrealized		$	-4,554
		$	-318,821

 

Includes net foreign currency translation gain (loss) 

Trading Revenue for the Nine Months Ended September 30, 2016

Line Item in Income Statement 

Realized		$	-123,663
Change in unrealized		$	-27,822
		$	-151,484

  

Includes net foreign currency translation gain (loss)

Total average of futures contracts bought and sold

Nine months ended September 30, 2017 

Total		$	-314,267
9 month average		$	-34,919

 

Total average of futures contracts bought and sold

Nine months ended September 30, 2016 

Total		$	-123,663
9 month average		$	-13,740

For the nine months ended September 30, 2017, the monthly average of futures contracts bought and sold was approximately $-34,919. 

(7) FINANCIAL INSTRUMENTS, OFF-BALANCE SHEET RISKS AND CONTINGENCIES

The Partnership engages in the speculative trading of U.S. and foreign futures contracts, options on U.S. and foreign futures contracts, and forward contracts (“collectively derivatives”). These derivatives include both financial and non-financial contracts held as part of a diversified trading strategy. The Partnership is exposed to both market risk, the risk arising from changes in the market value of the contracts; and credit risk, the risk of failure by another party to perform according to the terms of a contract.

The purchase and sale of futures and options on futures contracts requires margin deposits with a Futures Commission Merchant (“FCM”). Additional deposits may be necessary for any loss on contract value. The Commodity Exchange Act requires an FCM to segregate all customer transactions and assets from the FCM’s proprietary activities. A customer’s cash and other property such as U.S. Treasury Bills, deposited with an FCM are considered commingled with all other customer funds subject to the FCM’s segregation requirements. In the event of an FCM’s insolvency, recovery may be limited to a pro rata share of segregated funds available. It is possible that the recovered amount could be less than the total of cash and other property deposited.

For derivatives, risks arise from changes in the market value of the contracts. Theoretically, the Partnership is exposed to a market risk equal to the value of futures and forward contracts purchased and unlimited liability on such contracts sold short. As both a buyer and seller of options, the Partnership pays or receives a premium at the outset and then bears the risk of unfavorable changes in the price of the contract underlying the option.

In the case of forward contracts, over-the-counter options contracts or swap contracts, which are traded on the interbank or other institutional market rather than on exchanges, the counterparty is generally a single bank or other financial institution, rather than a clearinghouse backed by a group of financial institutions; thus, there likely will be greater counterparty credit risk. The Partnership trades only with those counterparties that it believes to be creditworthy. All positions of the Partnership are valued each day on a mark-to-market basis. There can be no assurance that any clearing member, clearinghouse or other counterparty will be able to meet its obligations to the Partnership.

(8) FINANCIAL HIGHLIGHTS

The following financial highlights show the Partnership’s financial performance for the nine months ended September 30, 2017 and September 30, 2016.

 

		September 30, 2017				September 30, 2016
		Class A				Class A
Total return before distributions*			-15.04	%			-11.01	%
Ratio to average net assets:
Net investment Income (loss)**			-14.64	%			-9.14	%
Management fees			7.97	%			5.49	%
Incentive fees			0.00	%			0.00	%
Other expenses			7.58	%			3.85	%
Total expenses**			15.55	%			9.34	%

 

*Not annualized

**Annualized

 

Interim Financial Statements

The statements of financial condition, including the condensed schedule of investments, as of September 30, 2017, the statements of operations for the three and nine months ended September 30, 2017 and 2016, the statements of cash flows and changes in partners’ capital (net asset value) for the nine months ended September 30, 2017 and 2016 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, 2017, results of operations for the three months ended September 30, 2017 and 2016, cash flows and changes in partners’ capital (net asset value) for the three months ended September 30, 2017 and 2016. The results of operations for the full three months ended September 30, 2017 and 2016 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, 2017 compared to each month ended June 30, 2016.

Class A Units were negative 1.64% in January 2017 resulting in a Net Asset Value per unit of $1,759.68 as of January 31, 2017.

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.

The month of January began with the promise of stability in the markets and turned chaotic in the days after January 20th.

 

The Fund had gains in stock indices and metals, but larger losses in energies, currencies, interest rates and grains as these markets had sharp reversals. 

 

Class A Units were positive 3.98% in February 2017 resulting in a Net Asset Value per unit of $1,829.77 as of February 28, 2017.

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. 

We had gains from international stock indices and interest rates. Smaller losses were incurred in metals, currencies and grains.

 

Class A Units were negative 6.85% in March 2017 resulting in a Net Asset Value per unit of $1,704.35 as of March 31, 2017.

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.

The Fund had gains in global stock indices but continued chaos in the US government created abrupt price reversals (and therefore losses for the Fund) in currencies, interest rates, metals and energies. 

 

Class A Units were negative 0.31% in April 2017 resulting in a Net Asset Value per unit of $1,699.15 as of April 30, 2017. 

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.

The Fund had gains from stock indices, meats and softs, but slightly larger losses in metals, currencies, energies, grains and interest rates where the markets remain prone to reversals rather than trending as the stock indices have.

Class A Units were positive 1.10% in May 2017 resulting in a Net Asset Value per unit of $1,717.81 as of May 31, 2017.

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.

Gains came from global stock indices, grains and interest rates. Smaller losses came from continued choppy markets in energies, metals and currencies.

Class A Units were negative 5.24% in June 2017 resulting in a Net Asset Value per unit of $1,627.81 as of June 30, 2017.

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.

Stocks and interest rates created a large loss for the Fund in the last few days of trading. Smaller gains in currencies and energies could not overcome large price swings in the last week. It was all the more disappointing as the Fund was in positive territory for most of the month.

Class A Units were positive 0.28% in July 31, 2017 resulting in a Net Asset Value per unit of $1,632.42 as of July 31, 2017.

Class A Units were positive 1.57% in July 31, 2016 resulting in a Net Asset Value per unit of $2,182.45 as of July 31, 2016.

Gains in global stock indices, currencies and metals just beat out smaller losses in grains, energies, interest rates and softs.

Class A Units were positive 0.24% in August 31, 2017 resulting in a Net Asset Value per unit of $1,636.28 as of August 31, 2017.

Class A Units were negative 6.15% in August 31, 2016 resulting in a Net Asset Value per unit of $2,048.30 as of August 31, 2016.

The Fund was just slightly positive +0.24% for the month of August with gains in metals and global stock indices tempered by smaller losses in currencies and energies.

Class A Units were negative 7.11% in September 30, 2017 resulting in a Net Asset Value per unit of $1,519.88 as of September 30, 2017.

Class A Units were negative 1.85% in September 30, 2016 resulting in a Net Asset Value per unit of $2,010.44 as of September 30, 2016.

The large down month came from reversing positions across the board, except the stock indices where we did make money. The Fund had losses in metals, interest rates, grains, energies, softs and currencies.

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, 2016. 

Item 4. Controls and Procedures 

As of September 30, 2017 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, 2016.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

RECENT SALES OF UNREGISTERED SECURITIES A UNITS 

		Three months				Three months
		ended September 30, 2017				ended September 30, 2016
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- 1-2
32	Certification by Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002		E - 3

 

b)       Reports on Form 8-K

none

SIGNATURES 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned and thereunto duly authorized. 

	EVEREST FUND, L.P.
Date: November 14, 2017	By:	Everest Asset Management, Inc.,
		its General Partner
	By:	/s/ Peter Lamoureux
		Peter Lamoureux
		President