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Everest Fund
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
8-K 2018-11-16
8-K 2018-06-06
GRAS Greenfield Farms Food
JADG Jade Global Holdings
NULF Nulife Sciences
RSCF Reflect Scientific
AEI24 AEI Income & Growth Fund 24
SCND Scientific Industries
WESC W&E Source
C765 Global Macro Trust
WWIN Wewin Group
PROC Procaccianti Hotel REIT
EVFD 2018-09-30
Part I. Financial Information
Item 1 Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4.		Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters To A Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
EX-31 ex_31.htm
EX-32 ex_32.htm

Everest Fund Earnings 2018-09-30

EVFD 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 everest_3q18.htm THE EVEREST FUND, L.P. 2018 3QTR 10Q
 

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, 2018 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, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” 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, 2018 (Unaudited) and December 31, 2017 (Audited) 3
  Condensed Schedule of Investments September 30, 2018 (Unaudited) 4
  Condensed Schedule of Investments December 31, 2017 (Audited) 5
  Statements of Operations For the Three and Nine Months Ended September 30, 2018 and 2017 (Unaudited) 6
  Statements of Changes in Partners’ Capital (Net Asset Value) For the Nine Months Ended September 30, 2018 and 2017 (Unaudited) 8-9
  Statements of Cash Flows For the Nine Months Ended September 30, 2018 and 2017 (Unaudited) 10
  Notes to Financial Statements September 30, 2018 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 21
     
Item 4. Controls and Procedures 21
     
Part II: Other Information 22
     
Item 1. Legal Proceedings 22
     
Item 1A. Risk Factors 22
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 22
     
Item 3. Defaults upon Senior Securities 22
     
Item 4. Submission of Matters to a Vote of Security Holders 22
     
Item 5. Other Information 22
     
Item 6. Exhibits 22

2
 

PART I. FINANCIAL INFORMATION

Item 1 Financial Statements

Following are Financial Statements for the nine months ended September 30, 2018

THE EVEREST FUND, L.P.

(An Iowa Limited Partnership)

STATEMENTS OF FINANCIAL CONDITION

September 30, 2018 (UNAUDITED) AND DECEMBER 31, 2017 (AUDITED)

   UNAUDITED   AUDITED 
   September 30,
2018
   DECEMBER 31,
2017
 
ASSETS          
           
Equity in broker trading accounts:          
Cash in broker trading accounts  $2,772,858   $3,265,688 
Net unrealized trading gains gain on open contracts   164,348    237,641 
    2,937,206    3,503,329 
Cash   11,751    9,632 
           
Other   3,825    2,633 
           
TOTAL ASSETS  $2,952,782   $3,515,594 
LIABILITIES AND PARTNERS’ CAPITAL          
LIABILITIES:          
Management fee payable - Advisor  $4,866   $5,760 
Management fee payable – General Partner   12,638    15,107 
Redemptions payable   167,020    0 
Accrued expenses   20,419    44,335 
           
TOTAL LIABILITIES   204,943    65,201 
           
PARTNERS’ CAPITAL (Net Assets)   2,747,839    3,450,393 
Limited partners, A Shares (1,806.53 and 2,137.27 units outstanding)          
           
TOTAL PARTNERS’ CAPITAL   2,747,839    3,450,393 
           
TOTAL LIABILITIES AND PARTNERS’ CAPITAL  $2,952,782   $3,515,594 

 

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

3
 

THE EVEREST FUND, L.P.

(AN IOWA LIMITED PARTNERSHIP)

CONDENSED SCHEDULE OF INVESTMENTS

September 30, 2018

UNAUDITED

 

   EXPIRATION   NUMBER OF   MARKET   % OF
PARTNERS’
 
   DATES   CONTRACTS   VALUE (OTE)   CAPITAL 
LONG POSITIONS:                    
FUTURES POSITION                    
Interest rates   Dec 18 - Sep 19    60   $(5,384)   -0.20%
Metals   Dec 18    4    14,060    0.51%
Energy   Nov 18 - Dec 18    27    68,375    2.49%
Grains   Dec 18    1    (638)   -0.02%
Livestock   Nov 18 - Dec 18    3    2,020    0.07%
Currencies   Dec 18    11    (9,555)   -0.35%
Financials   Dec 18    23    72,169    2.63%
                     
Total long positions            $141,047    5.13%
                     
SHORT POSITIONS:                    
FUTURES POSITIONS                    
                     
Interest rates   Dec 18 - Jun 20    114   $9,888    0.36%
Metals   Dec 18 - Jan 19    11    (8,955)   -0.33%
Agriculture   Nov 18    2    (371)   -0.01%
Foods   Nov 18 - Dec 18    7    19,534    0.71%
Grains   Dec 18 - Jan 19    19    (455)   -0.02%
Currencies   Dec 18 - Jun 20    110    21,111    0.77%
Financials   Dec 18    7    (17,451)   -0.63%
                     
Total short positions            $23,301    0.85%
                     
TOTAL Net unrealized gain on futures contracts – United States            $164,348    5.98%

 

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

4
 

THE EVEREST FUND, L.P.

(AN IOWA LIMITED PARTNERSHIP)

CONDENSED SCHEDULE OF INVESTMENTS

December 31, 2017
(AUDITED)

 

AUDITED  Expiration
Dates
   Number of
Contracts
   Market
Value (OTE)
   % of
Partners’

Capital
 
LONG POSITIONS:                    
FUTURES POSITIONS                    
Interest rates   Mar 18 - Mar 19    118   $(15,230)   -0.44%
Metals   Feb 18 - Mar 18    17    56,308    1.63%
Energy   Feb 18 - Mar 18    22    62,427    1.81%
Agriculture   Feb 18 - Mar 18    18    21,620    0.63%
Currencies   Mar 18    25    21,173    0.61%
Indices   Jan 18 - Mar 18    31    55,891    1.62%
              202,189    5.86%
Total long positions             202,189    5.86%
                     
SHORT POSITIONS                    
FUTURES POSITIONS                    
                     
Interest rates   Mar 18 - Mar 19    96    (6,549)   -0.19%
Metals   Apr 18    4    (2,320)   -0.07%
Energy   Feb 18    5    3,350    0.10%
Agriculture   Feb 18 - Mar 18    90    8,308    0.24%
Currencies   Mar 18 - Sep 19    89    20,845    0.60%
Indices   Mar 18    11    11,818    0.34%
              35,452    1.02%
Total short positions             35,452    1.02%
Total net unrealized gain on futures contracts – United States            $237,641    6.88%

 

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

5
 

THE EVEREST FUND, L.P.

(AN IOWA LIMITED PARTNERSHIP)

STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED September 30, 2018 AND 2017

UNAUDITED

 

   THREE MONTHS
ENDED
   THREE MONTHS
ENDED
 
   September 30,
2018
   September 30,
2017
 
TRADING INCOME (LOSS)               
Net realized trading (loss)  $(65,822)  $(294,873)
Change in net unrealized trading gain (loss)   87,943    150,339 
Brokerage commissions   (4,858)   (6,867)
           
NET TRADING GAIN (LOSS)   17,263    (151,401)
           
Interest income, net of cash management fees   12,331    6,982 
           
TOTAL INCOME (LOSS)   29,594    (144,419)
           
EXPENSES:          
General Partner management fees   39,511    46,612 
Advisor management fees   14,729    17,463 
Professional fees   24,559    25,342 
Administrative expenses   1,708    1,626 
           
TOTAL EXPENSES   80,507    91,043 
           
NET (LOSS)  $(50,913)  $(235,462)
           
NET (LOSS) PER UNIT OF PARTNERSHIP INTEREST  $(28.18)  $(108.39)

 

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

6
 

THE EVEREST FUND, L.P.

(AN IOWA LIMITED PARTNERSHIP)

STATEMENTS OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017

UNAUDITED

 

   NINE MONTHS
ENDED
   NINE MONTHS
ENDED
 
   SEPTEMBER 30,
2018
   SEPTEMBER 30,
2017
 
TRADING INCOME (LOSS)          
Net realized trading gain  $176,721   $(292,994)
Change in net unrealized trading (loss)   (78,362)   (4,554)
Brokerage commissions   (13,492)   (21,273)
           
NET TRADING INCOME (LOSS)   84,867         (318,821)
           
Interest income, net of cash management fees   34,613    16,964 
           
TOTAL INCOME (LOSS)   119,480    (301,857)
           
EXPENSES:          
General partner management fees   128,777    148,249 
Advisor management fees   47,271    55,615 
Professional fees   76,782    79,808 
Administrative expenses   5,108    5,586 
           
TOTAL EXPENSES   257,938    289,258 
           
NET (LOSS)  $(138,458)  $(591,115)
           
NET LOSS PER UNIT OF PARTNERSHIP INTEREST  $(76.64)  $(272.10)

 

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

7
 

THE EVEREST FUND, L.P.

(An Iowa Limited Partnership)

STATEMENT OF CHANGES IN PARTNERS’ CAPITAL

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018

UNAUDITED

 

   UNITS   LIMITED PTRS     
   A SHARES   A SHARES   TOTAL 
BALANCES, January 1, 2018  $2,137.27   $3,450,393   $3,450,393 
Additional Units Sold   0    0    0 
Redemptions   (330.74)   (564,096)   (564,096)
Less Offering Costs       0    0 
Net (loss)       (138,458)   (138,458)
                
BALANCES, September 30, 2018  $1,806.53   $2,747,839   $2,747,839 
                
Net asset value per unit January 1, 2018  $1,614.39           
Net (loss) per unit   (93.33)          
               
Net asset value per unit SEPTEMBER 30, 2018  $1,521.06           

 

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

8
 

THE 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  $2,211.96   $3,957,148   $3,957,148 
Additional Units Sold   0    0    0 
Redemptions   (39.57)   (64,264)   (64,264)
Less Offering Costs       0    0 
Net (loss)       (591,115)   (591,115)
                
BALANCES, September 30, 2017  $2,172.39   $3,301,770   $3,301,770 
                
Net asset value per unit January 1, 2017  $1,788.98           
Net (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 financial statements.

9
 

THE EVEREST FUND, L.P.

(An Iowa Limited Partnership)

STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017

UNAUDITED

 

        
  NINE MONTHS
ENDED
   NINE MONTHS
ENDED
 
   SEPTEMBER 30,
2018
   SEPTEMBER 30,
2017
 
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:        
Net income (loss)  $(138,458)  $(591,115)
Net changes to reconcile net income (loss) to net cash provided (used) by operating activities:          
Unrealized loss on open contracts   73,293    17,860 
Interest receivable   (1,192)   (1,037)
Management fee payable - General partner   (2,469)   (3,605)
Management fee payable - Advisor   (893)   (1,163)
Accrued expenses   (23,916)   (2,847)
           
Net cash provided by (used in) operating activities   (93,635)   (581,907)
           
Cash flows for financing activities:          
Cash Redemptions paid   (397,076)   (105,285)
           
Net cash (used in) financing activities   (397,076)   (105,285)
               
Net decrease in cash and cash equivalents   (490,711)   (687,192)
Cash and cash equivalents          
Beginning of period   3,275,320    3,967,943 
End of Period   2,784,609    3,280,751 
End of period cash and cash equivalents consist of:          
Cash at Banks   11,751    10,189 
Cash in broker trading accounts   2,772,858    3,270,562 
           
CASH AND CASH EQUIVALENTS, at end of period   2,784,609    3,280,751 

 

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

10
 

The Everest Fund, L.P.

(an Iowa Limited Partnership)

Notes to the Financial Statements

September 30, 2018

 

1. Nature of Business and Significant Accounting Policies

 

Nature of Operations

 

The Everest Fund, L.P. (the “Partnership”) was organized in June 1988 pursuant to the Iowa Uniform Limited Partnership Act for the purpose of engaging in the speculative trading of futures and forward contracts for commodities, financial instruments, stock indexes and currencies, any rights pertaining thereto and any options thereon or on physical commodities. As part of its objective, the Partnership may also engage in hedge, arbitrage and cash trading of commodities and futures.

 

On November 1, 2018 the Partnership suspended trading and the General Partner began the process of withdrawing as General Partner of the Fund. This will effectively shut down the Partnership. All positions were closed in an orderly manner on November 1, 2018 and the Asian and European positions were closed on November 2, 2018. Foreign currencies were converted to US Dollars on November 5, 2018. This concludes all trading and open positions in the Partnership. The Partnership still has some positions that the London Metal Exchange (LME) needs to settle on December 19, 2018. The results of those trades are known as they have been offset but the exchange still needs to settle them.

 

The suspension of trading was triggered, in accordance with the Partnership’s Offering Memorandum and letters from the General Partner, by a large and sudden decline in Net Asset Value (NAV) which superseded the ’suspension of trading’ level. This was due to volatile trading in October and the first day of November 2018. The Partnership will calculate an NAV for October 2018 as usual within the first 10-12 days of November 2018. As soon as is practical and possible thereafter the Partnership will calculate the same for the trading in November 2018. Once final NAV is determined, approximately 95% of investor monies will be returned. The holdback will be in order to pay for the final audit, K-1 tax forms and Partnership operating costs, which we estimate will be completed by end of March 2019. As soon as practical after that, the remaining monies, if any, will be returned to the investors.

 

The sole General Partner of the Partnership is Everest Asset Management, Inc. (the “General Partner”). All management and investment decisions are vested in the General Partner. The General Partner is registered with the United States Commodity Futures Trading Commission (CFTC) as a Commodity Pool Operator (“CPO”) and a Commodity Trading Advisor (“CTA”) and is a member of the United States National Futures Association (NFA). The General Partner acts as the Partnership’s sole CPO, and an unrelated party EMC Capital Advisors, LLC (the “Advisor”), acts as the Partnership’s sole CTA, to whom the General Partner has delegated complete trading authority. The Partnership clears all of its trades through one clearing broker, RJ O’Brien (the “Clearing Broker”).

11
 

A summary of the Partnership’s significant accounting polices follows.

 

Basis of Accounting

 

The Partnership follows accounting principles generally accepted in the United States (“U.S. GAAP”), as established by the Financial Accounting Standards Board (the “FASB”), to ensure consistent reporting of financial condition and results of operations.

 

In accordance with FASB Accounting Standards Codification (“ASC”) Topic 946, Financial Services – Investment Companies, management has determined that it is an investment company, as defined for accounting purposes, and has applied such guidance.

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP 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

 

Cash in broker trading accounts is on deposit at the Clearing Broker. The Partnership at times maintains deposits with 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. Margin requirements are satisfied by the deposit of cash with such broker. At September 30, 2018 and December 31, 2017, the amount of restricted cash held by the Partnership for margin requirements was $480,477 and $602,280, respectively.

 

Valuation of Investments

 

Investments consist of open futures contracts. Open futures contracts are reflected in the accompanying statements of financial condition at fair value. The fair value of open futures positions is based upon daily exchange settlement prices.

 

Offsetting of Amounts Related to Certain Contracts

 

When the requirements are met, the Partnership offsets certain fair value amounts recognized for cash collateral receivables or payables against fair value amounts recognized for net derivative positions executed with the same counterparty under the same master netting arrangement.

 

Income Recognition on Investments

 

Income on futures contracts is recorded on a trade date basis. Gains (losses) are realized when contracts are liquidated. Unrealized gains (losses) on open futures contracts are calculated based on the size of a given contract and the difference between the open futures contract closing price and the price at which the contract was initially purchased or sold. Any change in net unrealized gain or loss from the preceding period is reported in the statements of operations. Fair value of exchange-traded contracts is based upon exchange settlement prices. Fair value of non-exchange-traded contracts, if any, is based on third party quoted dealer values on the Inter-bank market.

12
 

Interest income is recognized on an accrual basis.

 

Brokerage Commissions

 

Brokerage commissions and exchange fees are reflected separately in the statements of operations.

 

Cash and Cash Equivalents

 

Cash equivalents represent highly liquid investments with maturities of 90 days or less at the date of acquisition.

 

Foreign Currency

 

The Partnership has certain investments denominated in foreign currencies. The purchase and sale of investments and income and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions.

 

The Partnership does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of positions held. Such fluctuations are included with the net realized and unrealized gain or loss on such investments.

 

Redemptions Payable

 

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.

 

Income Taxes

 

The Partnership is not subject to federal income taxes, because its income and losses are includable in the tax returns of its partners. The Partnership may be required to file returns and pay tax in various state and local jurisdictions as a result of its operations or the residency of its partners.

 

The Partnership assesses the potential outcome of uncertain tax positions. As of September 30, 2018, management believes the Partnership has no material uncertain tax positions requiring recognition or measurement. The federal and state income tax returns for tax years according to federal and state statutes remain open to examination by taxing authorities through their statutory periods.

 

Subsequent Events

 

The Partnership has evaluated subsequent events for potential recognition and/or disclosure through November 14, 2018, the date the financial statements were issued. As described in the Nature of Operations footnote, the Partnership suspended trading November 1, 2018 and is in the process of closing.

13
 

2. Fair Value of Financial Instruments

 

The Partnership records its investments at fair value. Fair value is 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 Partnership utilizes valuation techniques to maximize the use of observable inputs and minimize the use of unobservable inputs. Inputs are broadly defined as assumptions market participants would use in pricing an asset or liability. Assets and liabilities recorded at fair value are categorized within the fair value hierarchy based upon the level of judgment associated with the inputs used to measure their value. 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 Partnership 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.

 

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.

 

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Partnership’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the investment.

 

The Partnership assesses the levels of the investments at each measurement date, and transfers between levels are recognized on the actual date of the event or change in circumstances that caused the transfer in accordance with the Partnership’s accounting policy regarding the recognition of transfers between levels of the fair value hierarchy. For the nine months ended December 31, 2018 and year ended December 31, 2017, there were no such transfers.

 

Exchange-traded futures contracts are typically categorized within Level 1 or Level 2 of the fair value hierarchy depending on whether or not they are deemed to be actively traded. Futures contracts that are not actively traded are valued based on quoted prices in markets or by reference to broker or dealer quotations and are generally classified within Level 2 of the fair value hierarchy. All financial instruments listed in the condensed schedules of investments as of September 30, 2018 and December 31, 2017 are considered Level 1, measured at fair value on a recurring basis based on quoted prices for identical assets in active markets.

 

Substantially all of the Partnership’s assets and liabilities are considered financial instruments, and are either already reflected at fair value or are short-term or replaceable on demand. Therefore, their carrying amounts approximate their fair values.

14
 

3. Derivative Transactions

 

The following table identifies the fair value amounts of derivative contracts by type of risk as of September 30, 2018:

 

Risk Type  Asset
Derivatives
   Liability
Derivatives
   Net   Number of
Contracts
 
Agricultural  $21,774   $(1,684)  $20,090    32 
Currencies   42,989    (31,433)   11,556    121 
Energy   68,375    0    68,375    27 
Indices   72,169    (17,450)   54,719    30 
Interest rates   14,601    (10,098)   4,503    174 
Metals   29,418    (24,313)   5,105    15 
   $249,326   $(84,978)   164,348    399 

 

The following table identifies the fair value amounts of derivative contracts by type of risk as of December 31, 2017:

Risk Type  Asset
Derivatives
   Liability
Derivatives
   Net   Number of
Contracts
 
Agricultural  $21,620   $8,308   $29,928    108 
Currencies   21,173    20,845    42,018    114 
Energy   62,427    3,350    65,777    27 
Indices   55,891    11,818    67,709    42 
Interest rates   (15,231)   (6,549)   (21,780)   214 
Metals   56,309    (2,320)   53,989    21 
   $202,189   $35,452   $237,641    526 

 

The Partnership does not consider any derivative instruments to be hedging instruments, as those terms are generally understood under U.S. GAAP.

4. Offsetting Assets and Liabilities

As of September 30, 2018 and December 31, 2017, the Partnership holds derivative instruments that are eligible for offset in the statements of financial condition and are subject to master netting arrangements. Master netting arrangements allow the counterparty to net applicable collateral held on behalf of the Partnership against applicable liabilities or payment obligations of the Partnership to the counterparty. These arrangements also allow the counterparty to net any of its applicable liabilities or payment obligations it has to the Partnership against any collateral sent to the Partnership.

15
 

The following tables provide disclosure regarding the potential effect of offsetting of recognized assets presented in the statements of financial condition.

Offsetting of Derivative Assets

September 30, 2018

       Gross Amounts   Net Amounts of
Unrealized Gain
 
   Gross   Offset in the   Presented in the 
   Amounts of   Statements of   statements of 
   Recognized   Financial   Financial 
Description  Assets   Condition   Condition 
Futures contracts  $249,326   $(84,978)  $164,348 
                
December 31, 2017            
       Gross Amounts   Net Amounts of
Unrealized Gain
 
   Gross   Offset in the   Presented in the 
   Amounts of   Statements of   statements of 
   Recognized   Financial   Financial 
Description  Assets   Condition   Condition 
Futures contracts  $261,741   $(24,100)  $237,641 

 

Derivative Assets and Collateral Received by Counterparty

 

September 30, 2018

   Net Amounts of             
   Unrealized Gain    
   Presented in the
statements of
   Gross Amounts Not Offset in the
Statements of Financial Condition
 
   Financial   Financial   Cash Collateral     
Counterparty  Condition   Instruments   Received   Net Amount 
R.J. O’Brien  $164,348   $   $   $164,348 
                     
December 30, 2017                    
   Net Amounts of             
   Unrealized Gain    
   Presented in the
statements of
   Gross Amounts Not Offset in the
Statements of Financial Condition
 
   Financial   Financial   Cash Collateral     
Counterparty  Condition   Instruments   Received   Net Amount 
R.J. O’Brien  $

237,641

   $   $   $

237,641

 

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5. Limited Partnership Agreement

Pursuant to the terms of the seventh amended and restated agreement of limited partnership (the “Agreement”), dated and effective as of May 1, 2004, net income and losses are allocated to the partners in accordance with each partner’s ownership percentage.

Generally, a limited partner may withdraw all or a portion of its capital only as of the close of business on the last day of a fiscal month, provided they have given at least 15 days’ prior written notice, although the General Partner may in its sole discretion accept at other times. Also see a description of withdrawals due to suspension of trading in the Nature of Operations footnote.

 

6. Fees and Related-Party Transactions

The Partnership pays its Advisor a monthly management fee of 0.167% of each limited partner’s capital balance as of the end of each month (2.0% per annum) and a quarterly incentive fee equal to 20% of trading profits, as defined. No incentive fee was earned during the nine months ended September 30, 2018 and year ended December 31, 2017 because no limited partner capital account balances have reached a new high water mark.

The General Partner charges the Partnership a monthly management fee equal to 0.50% (6.0% annually) of the Partnership’s Class A beginning-of-month NAV.

7. Deposits with Brokers

The Partnership deposits cash with the Clearing Broker subject to CFTC regulations and various exchange and broker requirements. Margin requirements are satisfied by the deposit of cash with such broker. The Partnership earns interest income on its cash deposited with the Clearing Broker.

8. Indemnifications

In the normal course of business, the Partnership enters into contracts that contain a variety of representations and warranties that provide indemnifications under certain circumstances. The Partnership’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Partnership that have not yet occurred. The Partnership expects the risk of future obligation under these indemnifications to be remote.

9. Financial Instruments with Off-Balance-Sheet Risk

In connection with its trading activities, the Partnership enters into transactions with a variety of derivative financial instruments, including exchange-traded futures contracts. These derivative financial instruments may have market and/or credit risk in excess of the amounts recorded in the statements of financial condition.

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Market Risk: Market risk arises primarily from changes in the market value of financial instruments. Theoretically, the Partnership’s exposure is equal to the notional value of contracts purchased and unlimited on such contracts sold short.

Exposure to market risk is influenced by a number of factors, including the relationships between financial instruments, and the volatility and liquidity in the markets in which the financial instruments are traded. In many cases, the use of financial instruments serves to modify or offset market risk associated with other transactions and, accordingly, serves to decrease the Partnership’s overall exposure to market risk. The Partnership attempts to control its exposure to market risk through various analytical monitoring techniques.

Credit Risk: Credit risk arises primarily from the potential inability of counterparties to perform in accordance with the terms of a contract. The Partnership’s exposure to credit risk associated with counterparty nonperformance is limited to the current cost to replace all contracts in which the Partnership has a gain. Exchange-traded financial instruments generally do not give rise to significant counterparty exposure due to the cash settlement procedures for daily market movements and the margin requirements of individual exchanges.

Concentrations of Credit Risk: The Partnership is engaged in various trading and brokerage activities in which counterparties primarily include broker-dealers, banks, and other financial institutions. In the event counterparties do not fulfill their obligations, the Partnership may be exposed to risk. The risk of default depends on the creditworthiness of the counterparty or issuer of the instrument. It is the Partnership’s policy to review, as necessary, the credit standing of each counterparty.

The General Partner has established procedures to actively monitor market risk and minimize credit risk, although there can be no assurance that it will, in fact, succeed in doing so. The partners bear the risk of loss only to the extent of the market value of their respective investments.

Futures Risk: The Partnership is subject to equity price risk, interest rate risk, and foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The Partnership may use futures contracts to gain exposure to, or hedge against changes in the value of equities, interest rates or foreign currencies. A futures contract represents a commitment for the future purchase or sale of an asset at a specified price on a specified date. Upon entering into such contracts, the Partnership is required to deposit with the broker either in cash or securities an initial margin in an amount equal to a certain percentage of the contract amount. Subsequent payments (variation margin) are made or received by the Partnership each day, depending on the daily fluctuations in the value of the contract, and are recorded for financial statement purposes as amounts due to or from the broker; fluctuations in the value of the contract are recorded for financial statement purposes as unrealized gains or losses by the Partnership. Upon entering into such contracts, the Partnership bears the risk of interest or exchange rates or securities prices moving unexpectedly, in which case the Partnership may not achieve the anticipated benefits of the futures contracts and may realize a loss. With futures, there is minimal counterparty credit risk to the Partnership since futures are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded futures, guarantees the settlement of futures against default.

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10. Financial Highlights

The following financial highlights show the Partnership’s financial performance for the nine months ended September 30, 2018 and September 30, 2017.

 

   September 30, 2018   September 30, 2017 
   Class A   Class A 
Per unit operating performance:          
Net asset per unit at beginning of period  $1,614.39   $1,788.98 
           
Net gain (loss) from investment operations:          
           
Net realized and unrealized gain (loss) on investments   21.42    (145.46)
Net investment gain (loss)   (114.75)   (123.64)
           
Total net gain (loss) from investment operations   (93.33)   (269.10)
           
Net asset value per unit at the end of period  $1,521.06   $1,519.88 
           
Total return *   -5.78%   -15.04%
Ratio to average net assets:          
Net investment Income (loss)**   -9.54%        -9.76%
           
Expenses**   11.02%   10.37%
           
* Not annualized          
** Annualized          

 

Interim Financial Statements

The statements of financial condition, including the consolidated schedule of investments, as of September 30, 2018, the statements of operations for the three and nine months ended September 30, 2018 and 2017, the statements of cash flows and changes in partners’ capital (net asset value) for the nine months ended September 30, 2018 and 2017 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. GAAP 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, 2018, results of operations for the three and nine months ended September 30, 2018 and 2017, cash flows and changes in partners’ capital (net asset value) for the nine months ended September 30, 2018 and 2017. The results of operations for the full three months ended September 30, 2018 and 2017 are not necessarily indicative of the results to be expected for the full year or any other period. These financial statements should be read in conjunction with the audited financial statements and the notes thereto included in our form 10-k as filed with the Securities and Exchange Commission.

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation

Each months ended September 30, 2018 compared to each months ended September 30, 2017.

Class A Units were positive 12.35% in January 2018 resulting in a Net Asset Value per unit of $1,813.79 as of January 31, 2018.

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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.

The Fund had an outsized gain of +12.35% to begin the New Year. Stock indices, currencies, interest rates, energies and softs led the way. There was a small loss in grains with most other sectors flat.

Class A Units were negative 6.73% in February 2018 resulting in a Net Asset Value per unit of $1,691.76 as of February 28, 2018.

 

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.

The Fund had a loss of -6.73% for the month of February. The Fund gave back more than 1/2 the gains from a very robust January. Losses came across the board but mainly in global stock indices and currencies which reversed directions from January. Smaller losses were posted in energies, interest rates and metals.

 

Class A Units were negative 2.28% in March 2018 resulting in a Net Asset Value per unit of $1,653.17 as of March 31, 2018.

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.

Losses came from interest rates, grains, metals and stock indices. Smaller gains came from softs, currencies, energies and meats.

Class A Units were negative 0.64% in April 2018 resulting in a Net Asset Value per unit of $1,642.54 as of April 30, 2018.

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.

The Fund was down 0.64% in April as gains in energies, softs and stock indices were not enough to overcome losses in interest rates, currencies, metals, meats and grains.

With the exception of energies, markets remain directionless overall, and reactive to news out of Washington on trade and arms negotiations.

Class A Units were negative 3.89% in May 2018 resulting in a Net Asset Value per unit of $1,578.65 as of May 31, 2018.

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.

Then Fund had a loss of 3.89% in May coming from positions in stock indices, interest rates, grains and currencies. Smaller gains came in energies and softs.

Among other things, on again off again then on again threats of tariffs and then actual tariffs played havoc on the above markets, especially at the end of the month.

Class A Units were negative 1.97% in June 2018 resulting in a Net Asset Value per unit of $1,547.63 as of June 30, 2018.

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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.

Then Fund had a loss of -1.97% in June. A large gain in currencies was not enough to offset larger overall losses from almost every other sector in June. Declines came from softs, interest rates, energies, metals and stock indices.

Class A Units were negative 1.14% in July 31, 2018 resulting in a Net Asset Value per unit of $1,530.04 as of July 31, 2018.

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.

On the 19th of July, the Fund was hit with losses from interest rate and currency market dislocations after President Trump’s comment that the Fed should not be raising rates. The administration also blasted China and the EU for manipulating their currencies. The losses came primarily from the currencies and long term fixed income sectors. Long positions in the US dollar sold off against most major currencies and global fixed income declined as well.

Class A Units were positive 1.10% in August 31, 2018 resulting in a Net Asset Value per unit of $1,546.89 as of August 31, 2018.

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.

The profit came in metals, as precious metals declined and gold broke through technical support of $1,200 per oz. Gains also came from energies and currencies. Smaller losses were sustained in interest rates and grains.

Class A Units were negative 1.67% in September 30, 2018 resulting in a Net Asset Value per unit of $1,521.06 as of September 30, 2018.

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.

Gains in energies and global stock indices were overshadowed by larger losses in interest rates, currencies, softs and to a lesser extent, metals.

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, 2017.

Item 4. Controls and Procedures

As of September 30, 2018 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.

21
 

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, 2017.

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

     

RECENT SALES OF UNREGISTERED SECURITIES A UNITS

 

   Nine months ended   Nine months ended  
   September 30, 2018         September 30, 2017 
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

22
 

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, 2018 By: Everest Asset Management, Inc.,
    its General Partner
     
     
  By:  /s/ Peter Lamoureux
    Peter Lamoureux
    President
23