SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly report pursuant to Section 12(b) or (g) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 1999
Commission File Number 0-17555
EVEREST FUTURES 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.)
508 North Second St., Suite 302, Fairfield, Iowa 52556
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (515) 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
<TABLE>
Part I. Financial Information
Item 1. Financial Statements
Following are Financial Statements for the fiscal quarter ending June 30, 1999
Fiscal Quarter Year to Date Fiscal Year Fiscal QuarterYear to Date
Ended 6/30/99 to 6/30/99 Ended 12/31/98Ended 6/30/98 to 6/30/98
-------------- -------------------------------------------------------
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Statement of
Financial Condition X X
Statement of
Operations X X X X
Statement of Changes
in Partners' Capital X
Statement of
Cash Flows X X
Notes to Financial
Statements X
EVEREST FUTURES FUND, LP
COMBINED STATEMENTS OF FINANCIAL CONDITION
UNAUDITED
Jun 30, 1999 Dec 31, 1998
------------- -------------
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ASSETS
Cash and cash equivalents 44,916,478 46,220,386
Equity in commodity trading accounts:
Amount Due from broker 7,182,547 4,919,607
Net unrealized trading gains on open contracts 4,880,970 5,802,585
Interest receivable 248,392 277,999
------------- -------------
Total assets 57,228,387 57,220,577
============= =============
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accrued expenses 20,250 27,364
Commissions payable 230,922 225,131
Advisor's management fee payable 188,817 188,693
Advisor's incentive fee payable 0 0
Redemptions payable 1,250,902 1,024,873
Deferred Partnership offering proceeds 0 0
Selling and Offering Expenses Payable 15,489 0
------------- -------------
Total liabilities 1,706,380 1,466,061
Minority Interest 590,585 556,759
Partners' Capital:
Limited partners (23,803.80 and 25,378.05 units 54,477,157 54,769,377
outstanding at 6/30/99 and 12/31/98, respectively)
(see Note 1)
General partners (198.49 units and 198.49 units 454,264 428,380
outstanding at 6/30/99 and 12/31/98, respectively)
(see Note 1) ------------- -------------
Total partners' capital 54,931,421 55,197,757
------------- -------------
Total liabilities, minority interest,
and partners' capital $57,228,387 $57,220,577
============= =============
Net asset value per outstanding unit of Partnership
interest $2,288.59 $2,158.14
============= =============
This Statement of Financial Condition, in the opinion of management, reflects all adjustments necessary
to fairly state the financial condition of Everest Futures Fund. (See Note 6)
EVEREST FUTURES FUND, L.P.
COMBINED STATEMENTS OF OPERATIONS
For the period January 1, 1999 through June 30, 1999
UNAUDITED
Apr 1, 1999 Jan 1, 1999 Apr 1, 1998 Jan 1, 1998
through through through through
Jun 30, 1999 Jun 30, 1999 Jun 30, 1998 Jun 30, 1998
------------- ------------- ------------- -------------
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REVENUES
Gains on trading of commodity futures
and forwards contracts, physical
commodities and related options:
Realized gain (loss) on closed positions 4,257,451 5,503,462 (1,841,338) (1,841,338)
Change in unrealized gain (loss)
on open positions 3,390,083 (910,672) (1,259,696) (1,259,696)
Net foreign currency translation gain (loss) (6,713) (68,677) (57,875) (57,875)
Brokerage Commissions (758,956) (1,544,903) (601,549) (601,549)
------------- ------------- ------------- -------------
Total trading income (loss) 6,881,865 2,979,210 (3,760,457) (3,760,457)
Interest income, net of cash management fees 586,935 1,182,764 528,132 528,132
------------- ------------- ------------- -------------
Total income (loss) 7,468,800 4,161,974 (3,232,325) (3,232,325)
General and administrative expenses
Advisor's management fees 530,776 1,043,675 384,372 384,372
Advisor's incentive fees 0 0 0 0
Administrative expenses 36,291 51,876 (12,699) (12,699)
------------- ------------- ------------- -------------
Total general and administrative expenses 567,067 1,095,550 371,673 371,673
Minority Interest 0 0 37,844 37,844
------------- ------------- ------------- -------------
Net income (loss) 6,901,733 3,066,424 (3,566,153) (3,566,153)
============= ============= ============= =============
PROFIT (LOSS) PER UNIT OF
PARTNERSHIP INTEREST $281.62 $130.45 ($182.71) ($182.71)
============= ============= ============= =============
(see Note 1) (see Note 1)
This Statement of Operations, in the opinion of management, reflects all adjustments
necessary to fairly state the financial condition of Everest Futures Fund. (See Note 6)
EVEREST FUTURES FUND, LP
COMBINED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the period January 1, 1999 through June 30, 1999
UNAUDITED
Limited General
Units* Partners Partners Total
------------- ------------- ------------- -------------
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Partners' capital at Jan 1, 1999 25,378.05 54,769,377 $428,380 $55,197,757
Net profit (loss) 3,040,539 25,884 3,066,424
Additional Units Sold 1,054.35 2,205,158 0 2,205,158
(see Note 1)
Redemptions (see Note 1) (2,628.59) (5,537,917) 0 (5,537,917)
------------- ------------- ------------- -------------
Partners' capital at June 30, 1999 23,803.81 $54,477,157 $454,264 $54,931,421
============= ============= ============= =============
Net asset value per unit
January 1, 1999(see Note 1) 2,158.14 2,158.14
Net profit (loss) per unit (see Note 1) 130.45 130.45
------------- -------------
Net asset value per unit
June 30, 1999 $2,288.59 $2,288.59
* Units of Limited Partnership interest.
This Statement of Changes in Partners' Capital, in the opinion of management, reflects all
adjustments necessary to fairly state the financial condition of Everest Futures Fund. (See Note 6)
EVEREST FUTURES FUND, LP
COMBINED STATEMENTS OF CASH FLOWS
UNAUDITED
Jan 1, 1999 Jan 1, 1998
through through
Jun 30, 1999 Jun 30, 1998
------------- -------------
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Net profit (loss) 3,066,424 (8,016,849)
Adjustments to reconcile net profit
(loss) to net cash provided by
(used in) operating activities:
Change in assets and liabilities:
Unrealized gain (loss) on open
futures contracts 921,615 3,550,344
Interest receivable 29,607 (29,596)
Decrease (Increase) in equity in commodity trading (2,262,940) (4,981,281)
Accrued liabilities (1,199) (387,408)
Redemptions payable 226,029 254,219
Deferred Offering Proceeds 0 (633,394)
Selling and Offering Expenses Payable 15,489 (2,591)
Increase in minority interest 33,826 45,752
------------- -------------
Net cash provided by (used in)
operating activities 2,028,852 (10,200,804)
Cash flows from financing activities:
Units Sold 2,205,158 15,615,013
Partner redemptions (5,537,917) (3,393,475)
------------- -------------
Net cash provided by (used in)
financing activities (3,332,760) 12,221,538
------------- -------------
Net increase (decrease) in cash (1,303,907) 2,020,734
Cash at beginning of period $46,220,386 31,204,067
------------- -------------
Cash at end of period $44,916,479 $33,224,801
============= =============
This Statement of Cash Flows, in the opinion of management, reflects all adjustments
necessary to fairly state the financial condition of Everest Futures Fund. (See Note 6)
</TABLE>
EVEREST FUTURES FUND, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
(1) GENERAL INFORMATION AND SUMMARY
Everest Futures Fund, L.P. (the "Partnership") is a limited partnership
organized on June 20, 1988 under the Iowa Uniform Limited Partnership Act.
The business of the Partnership is the speculative trading of commodity
futures contracts and other commodity interests, including forward contracts
on foreign currencies ("Commodity Interests") either directly or through
investing in other, including subsidiary, partnerships, funds or other
limited liability entities. The Partnership commenced its trading operations
on February 1, 1989 and its general partner is Everest Asset Management, Inc.
(the "General Partner") a Delaware corporation organized in December 1987.
The Partnership was initially organized on June 20, 1988 under the name
Everest Energy Futures Fund, L.P. and its initial business was the
speculative trading of Commodity Interests, with a particular emphasis on the
trading of energy-related commodity interests. However, effective September
12, 1991, the Partnership changed its name to "Everest Futures Fund, L.P."
and at the same time eliminated its energy concentration trading policy. The
Partnership thereafter has traded futures contracts and options on futures
contracts on a diversified portfolio of financial instruments and precious
metals and trades forward contracts on currencies.
The public offering of the Partnership's units of limited partnership
interest ("Units") commenced on or about December 6, 1988. On February 1,
1989, the initial offering period for the Partnership was terminated, by
which time the Net Asset Value of the Partnership was $2,140,315.74.
Beginning February 2, 1989, an extended offering period commenced which
terminated on July 31, 1989, by which time a total of 5,065.681 Units of
Limited Partnership Interest were sold. Effective May, 1995 the Partnership
ceased to report as a public offering. On July 1, 1995 the Partnership
recommenced the offering of its Units as a Regulation D, Rule 506 private
placement, which continues to the present with a total of $55,224,242.84 for
30,784.92 Units sold July 1, 1995 through June 30, 1999.
On February 29, 1996, the Partnership amended its Agreement of Limited
Partnership permitting the Partnership to conduct its trading business by
investing in other partnerships and funds and in subsidiary partnerships or
other limited liability entities. Effective the close of business on March
29, 1996, the Partnership invested all of its assets in another limited
partnership, Everest Futures Fund II L.P. ("Everest II" or the "Trading
Partnership"), a Delaware limited partnership in which the Partnership is the
sole limited partner. As a result, the Partnership does not currently invest
directly in Commodity Interests. Instead, the Partnership transferred all of
its assets to Everest II in return for its Everest II limited partnership
interest. Everest II invests directly in Commodity Interests through John W.
Henry & Company, Inc. ("JWH"), an independent commodity trading advisor which
had hitherto been the advisor to the Partnership.
Everest II has two general partners, Everest Asset Management, Inc., the
current General Partner of the Partnership and CIS Investments, Inc.
("CISI"), which is a wholly-owned subsidiary of Cargill Investor Services,
Inc., the former clearing broker of the Partnership and now the clearing
broker for Everest II (the "Clearing Broker"). CIS Financial Services, Inc.
("CISFS"), an affiliate of the Clearing Broker, acts as the Partnership's
currency dealer. CISI and the General Partner are both registered with the
CFTC as commodity pool operators and are members of the NFA in such capacity.
On September 13, 1996 the Securities and Exchange Commission accepted for
filing a Form 10 -- Registration of Securities for the Partnership. Public
reporting of Units of the Partnership sold as a private placement commenced
at that time and has continued to the present.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements are prepared on a combined basis and
include the accounts of Everest Futures Fund, L.P. and Everest Futures Fund
II, L.P. All significant intercompany transactions and balances have been
eliminated in the accompanying combined financial statements
Cash Equivalents
Cash equivalents represent short-term highly liquid investments with
maturities of three months or less at time of purchase and include money
market accounts, securities purchased under agreements to resell, commercial
paper, and U.S. government and agency obligations with variable rate and
demand features, that qualify them as cash equivalents. Securities purchased
under agreements to resell, with overnight maturity, are collateralized by
U.S. government and agency obligations and are carried at the amounts at
which the securities will subsequently be resold plus accrued interest.
Revenue Recognition
Realized and unrealized trading gains and losses on commodity and forward
contracts, which represent the difference between cost and selling price or
quoted market value, are recognized currently. All trading activities are
accounted for on a trade-date basis.
Deferred Partnership Offering Proceeds
Proceeds received during the month from the continuing offering of the
Partnership's units of limited partnership interest are deferred pending
investment on the first day of the following month.
Foreign Currency Translation
Assets and liabilities denominated in foreign currencies are translated at
the prevailing exchange rates as of the valuation date. Gains and losses on
investment activity are translated at the prevailing exchange rate on the
date of each respective transaction while year-end balances are translated at
the year-end currency rates.
Income Taxes
Income taxes are not provided for by the Partnership because taxable income
of the Partnership is includable in the income tax returns of the partners.
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 increase and decrease in net assets from operations
during the period. Actual results could differ from those estimates.
Reclassifications
Certain reclassifications of prior year amounts have been made to conform
with the current year presentation.
Minority Interest
Minority interest represents CISI's interest in the Trading Partnership.
(3) THE 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 his or her capital contribution and profits, if any,
and such other amounts as he may be liable for pursuant to the Iowa Uniform
Limited Partnership 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; however, the General Partner has delegated complete trading
authority to an unrelated party (note 4).
The Trading Partnership bears all expenses incurred in connection with its
trading activities, including commodity brokerage commissions and fees
payable to the trading advisor, as well as legal, accounting, auditing,
printing, mailing and extraordinary expenses. The Partnership bears all of
its administrative expenses.
Limited Partners may cause any or all of their Units to be redeemed as of the
end of any month at net asset value on ten days' prior written notice. The
Partnership will be dissolved at December 31, 2020, or upon the occurrence of
certain events, as specified in the Limited Partnership Agreement.
(4) OTHER AGREEMENTS
All Commodity Interests trading decisions for the Trading Partnership are
made by JWH. JWH receives from the Trading Partnership a monthly management
fee equal to 0.33% (4% annually) of the Trading Partnership's month-end net
asset value, as defined, and a quarterly incentive fee of 15% (20% prior to
April 1, 1995) of the Trading Partnership's new net trading profits, as
defined. The incentive fee is retained by JWH even though trading losses may
occur in subsequent quarters; however, no further incentive fees are payable
until any such trading losses (other than losses attributable to redeemed
units and losses attributable to assets reallocated to another advisor) are
recouped by the Trading Partnership.
The Clearing Broker charges the Trading Partnership monthly brokerage
commissions equal to 0.50% (1.0833% prior to April 1, 1995) of the Trading
Partnership's beginning-of-month net asset value, as defined. Effective
November 1, 1995, the General Partner receives a management fee from the
Clearing Broker of approximately 83% of the brokerage commission charged by
the Clearing Broker. Prior to November 1, 1995, no management fee was
received by the General Partner. From this management fee, CISI receives a
co-general partner fee from the General Partner equal to 1/12 of .25% of the
month-end net asset value, as defined.
A portion of assets are deposited with a commercial bank and invested under
the direction of Horizon Cash Management, Inc. ("Horizon"). Horizon will
receive a monthly cash management fee equal to 1/12 of .25% (.25% annually)
of the average daily assets under management if the accrued monthly interest
income earned on the Partnership's assets managed by Horizon exceeds the 91-
day U.S. Treasury bill rate.
(5) FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
The Partnership was formed to speculatively trade commodity interests. The
Partnership's commodity interest transactions and related cash balances are
on deposit with the Clearing Broker or CIS Financial Services, Inc. ("CISFS"
or "Forwards Currency Broker" and collectively, the "Brokers") at all times.
In the event that volatility of trading of other customers of the Brokers
impaired the ability of the Brokers to satisfy the obligations to the
Partnership, the Partnership would be exposed to off-balance sheet risk.
Such risk is defined in Statement of Financial Accounting Standards No. 105
(SFAS 105) as a credit risk. To mitigate this risk, the Clearing Broker,
pursuant to the mandates of the Commodity Exchange Act, is required to
maintain funds deposited by customers, relating to futures contracts in
regulated commodities, in separate bank accounts which are designated as
segregated customers' accounts. In addition, the Clearing Broker has set
aside funds deposited by customers relating to foreign futures and options in
separate bank accounts which are designated as customer secured accounts.
Lastly, the Clearing Broker is subject to the Securities and Exchange
Commission's Uniform Net Capital Rule which requires the maintenance of
minimum net capital at least equal to 4% of the funds required to be
segregated pursuant to the Commodity Exchange Act. The Clearing Broker and
Forwards Currency Broker both have controls in place to make certain that all
customers maintain adequate margin deposits for the positions which they
maintain at each Broker. Such procedures should protect the Partnership from
the off-balance sheet risk as mentioned earlier. Neither the Clearing Broker
or the Forwards Currency Broker engage in proprietary trading and thus have
no direct market exposure.
The counterparty of the Partnership for futures contracts traded in the
United States and most non-U.S. exchanges on which the fund trades is the
Clearing House associated with the exchange. In general, Clearing Houses are
backed by the membership and will act in the event of nonperformance by one
of its members or one of the members' customers and as such should
significantly reduce this credit risk. In the cases where the Partnership
trades on exchanges on which the Clearing House is not backed by the
membership, the sole recourse of the Partnership for nonperformance will be
the Clearing House. The Forwards Currency Broker is the counterparty for the
Partnership's forwards transactions. CISFS policies require that they
execute transactions only with top rated financial institutions with assets
in excess of $100,000,000.
The Partnership holds futures and futures options positions on the various
exchanges throughout the world and forwards positions with CISFS which
transacts with various top rated banks throughout the world. As defined by
SFAS 105, futures and foreign currency contracts are classified as financial
instruments. SFAS 105 requires that the Partnership disclose the market risk
of loss from all of its financial instruments. Market risk is defined as the
possibility that future changes in market prices may make a financial
instrument less valuable or more onerous. If the markets should move against
all of the futures positions held by the Partnership at the same time, and if
the markets moved such that the trading advisor was unable to offset the
futures positions of the Partnership, the Partnership could lose all of its
assets and the partners would realize a 100% loss. The Partnership has a
contract with one trading advisor who makes the trading decisions on behalf
of the Partnership. That trading advisor trades a program which is
diversified among the various futures contracts in the financials and metals
group on exchanges both in the U.S. and outside the U.S. Such
diversification should greatly reduce this market risk. Cash was on deposit
with the Clearing Broker in each time period of the financial statements
which exceeded the cash requirements of the Commodity Interests of the
Partnership.
The following chart discloses the dollar amount of the unrealized gain or
loss on open contracts related to Commodity Interests for the Partnership as
of June 30, 1999:
COMMODITY GROUP UNREALIZED GAIN/(LOSS)
FOREIGN CURRENCIES 718,166
STOCK INDICES 110,579
METALS 1,002,100
INTEREST RATE INSTRUMENTS 3,050,125
TOTAL 4,880,970
The range of maturity dates of these exchange traded open contracts is August
of 1999 to June of 2000. The average open trade equity for the period of
January, 1999 to June 30, 1999 was $6,624,373.
The margin requirement at June 30, 1999 was $7,350,117. To meet this
requirement, the Partnership had on deposit with the Clearing Broker
$2,742,968 in segregated funds, $3,580,345 in secured funds and $5,740,204 in
non-regulated funds.
(6) FINANCIAL STATEMENT PREPARATION
The interim financial statements are unaudited but reflect all adjustments
that are, in the opinion of management, necessary for a fair statement of the
results for the interim periods presented. These adjustments consist
primarily of normal recurring accruals. These interim financial statements
should be read in conjunction with the audited financial statements of the
Partnership for the year ended December 31, 1998, as filed with the
Securities and Exchange Commission on March 29, 1999, as part of its Annual
Report on Form 10-K.
The results of operations for interim periods are not necessarily indicative
of the operating results to be expected for the fiscal year.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation
Fiscal Quarter ended June 30, 1999
The Partnership recorded a gain of $6,901,733 or $281.62 per Unit for the
second quarter of 1999. This compares to a loss of $4,450,695 or $193.22 per
Unit for the second quarter of 1998.
In the first month of the quarter the Partnership posted a gain resulting
primarily from a rising Japanese stock market and continued appreciation of
the U.S. Dollar versus the Euro and Swiss Franc. The Partnership posted a
gain during the second month of the quarter resulting primarily from the
declining price of gold and the continued decline of the Euro currency.
During the third month of the quarter, the partnership posted a gain as it
continued to benefit from the freefall in gold prices and the declining Euro
currency. Overall, the second quarter of fiscal 1999 ended positively for
the Partnership accounts managed by JWH. At June 30, 1999, John W. Henry &
Company, Inc. was managing 100% of the Partnership's assets using its
Financial and Metals Portfolio.
In April, currencies were the most favorable sector for the Partnership. The
continued flight to quality to the U.S. dollar provided opportunities for the
Partnership to profit from long U.S.dollar positions versus the Euro and
Swiss franc. As the conflict in Kosovo persisted, the flow of money into the
U.S. dollar continued. Trading in the Japanese yen and Australian dollar was
also profitable. Confidence in the Japanese stock market restored
performance in the Nikkei 225 as the index was up approximately 20% year to
date. A long position in the Nikkei helped the Partnership generate profits
as did long positions in the S&P 500 Index and Hang Seng Index.
During April, the unprofitable trading sectors were primarily interest rates
and
precious metals. As Europe cut interest rates mid-month, the Fund's position
went from short to long. Short U.S. bond positions generated a small profit
by
month end. Short gold positions were also unprofitable. In the interim, this
position turned profitable as the United Kingdom decided to sell off over
50% of its gold reserves putting severe pressure on the price of gold. All
in all, the Partnership posted a gain of $789,066 or $32.13 per Unit in
April.
In May, gold fell below $270 per ounce, a 20 year low. The Partnership
benefited from this price decline since it held short gold positions during
the month. The interest rate rumors in the US, coupled with the inflation
fears caused the continuation of the decline in the US 10-year and 30-year
bonds. The Partnership held short positions in this sector during May,
resulting in profits for the period. In addition, the Partnership held long
positions in the Japanese government bond that were profitable.
For the third consecutive month, currencies continued to provide gains for
the Partnership. Profit opportunities came from long US dollar positions
versus the Euro and Swiss franc. During May, we saw the Euro fall to its
lowest level versus the US dollar since its inception at the beginning of the
year. Pressure on the Euro surrounded the conflict in Kosovo, as investors
saw the dollar as a safe haven. Small gains also came from the Japanese yen.
Overall, the Partnership posted a gain of $2,713,185 or $110.34 per Unit in
May.
In June, the rumor of the Fed raising interest rates in the US became a
reality. The Partnership's short positions in the 10-year and 30-year bonds
provided profits and strong gains were posted as European bond prices
continued to erode. A big reason was the weakening Euro, which declined 13%,
depreciating in a straight line against the U.S. dollar since its inception
January 1, 1999. Short positions in the German Bund, the German Bobl and
U.K. Gilt provided the lion's share of performance. Currencies also provided
gains for the Partnership for the fourth consecutive month. Once again, the
profit opportunities came from long US dollar positions versus the Euro and
Swiss franc. Pressure on the Euro which initially resulted from the conflict
in Kosovo, also seemed attributable to investors losing confidence in the
Euro.
During June, the Partnership continued to profit from its short positions in
the gold market. Long positions in the Nikkei stock index have been
profitable for the Partnership for the entire year, as the percentage gain in
this index for 1999 is 26.64%. Overall, the Partnership posted a gain of
$3,399,483 or $139.15 per Unit in June.
During the quarter, additional Units sold consisted of 1,054.35 limited
partnership units; there were no general partnership units sold during the
quarter. Additional Units sold during the quarter represented a total of
$853,934. Investors redeemed a total of 954.20 Units during the quarter. At
the end of the quarter there were 23,803.80 Units outstanding (including
198.49 Units owned by the General Partner).
During the fiscal quarter ended June 30, 1999, the co-General Partner of the
trading subsidiary, CISI, experienced the following officer changes: Shaun D.
O'Brien replaced former Vice President & Treasurer Richard A. Driver; James
Clemens replaced Henry W. Gjersdal as Assistant Secretary; Lillian Lundeen
replaced Bruce H. Barnett as Assistant Secretary.
As of June 30, 1999, the Partnership had a balance of $5,740,204 on deposit
with CISFS. CISFS is an affiliate of the Clearing Broker and is the broker
for the Partnership on forwards contracts in foreign currencies. Forward
currency contracts are defined as over-the-counter and require separate
disclosure should the total exposure to any entity dealing in over-the-
counter products exceed 10%. The balance on deposit at CISFS represents
10.03% of the total assets of the Partnership and requires this separate
disclosure as an off balance sheet credit risk to the Partnership.
See Footnote 5 of the Financial Statements for procedures established by the
General Partner to monitor and minimize market and credit risks for the
Partnership. In addition to the procedures set out in Footnote 5, the
General Partner reviews on a daily basis reports of the Partnership's
performance, including monitoring of the daily net asset value of the
Partnership. The General Partner also reviews the financial situation of the
Partnership's Clearing Broker on a monthly basis. The General Partner relies
on the policies of the Clearing Broker to monitor specific credit risks. The
Clearing Broker does not engage in proprietary trading and thus has no direct
market exposure which provides the General Partner assurance that the
Partnership will not suffer trading losses through the Clearing Broker.
Year 2000 Issue
CIS surveyed major applications in 1996 to see if they were Year 2000
compliant. Systems identified with Year 2000 issues were targeted for
replacement or modification. Replacement and modification projects are
currently underway. In addition, CIS has dedicated resources to assess our
work processes and verify that it will be able to handle the changes in the
next millennium. This process addresses software applications as well as key
vendor, bank and customer relationships.
During 1997, CIS participated in developing the industry-wide test plan with
the Futures Industry Association, with whom it continues to work closely.
CIS has participated in BETA testing, which began in September 1998, and
participated again with the FIA in "street wide" testing during the second
quarter of 1999.
In addition, CIS has begun developing various "contingency plans" in the
event that mission critical systems should fail. This development is
proceeding on schedule.
CIS is taking this issue seriously and has a goal of maintaining reasonable
procedures in order to eliminate as much risk as possible to its customers
(including the Partnership), its counterparties and itself. Despite the best
efforts of CIS, CISFS and CISI, there can be no assurance that the above
steps will be sufficient or that all potential problems have been identified
in order to avoid any adverse impact to the Partnership. CIS and its
affiliates make no representations or warrants related to Year 2000 readiness
or compliance, including but not limited to business interruption, whether
from failures in their own computer systems, those of the Advisors, or any
other third party.
Fiscal Quarter ended June 30, 1998
The Partnership recorded a loss of $4,450,695 or $193.22 per
Unit for the second quarter of 1998. This compares to a loss of
$1,677,066 or $145.22 per Unit for the second quarter of 1997.
During the first and third months of the quarter, the
Partnership experienced losses primarily as a result of
unprofitable positions in currencies, interest rates and metals,
while during the second month gains were recorded primarily due
to gains in the currency, interest rate and metals markets. At
June 30, 1998, John W. Henry & Company, Inc. was managing 100%
of the Partnership's assets using its Financial and Metals
Portfolio.
In April, positions in nearly all markets traded were
unprofitable. Positions in the U.S. 30-year bond and Euro
dollar markets resulted in losses for interest rate futures.
Unprofitable positions in the German mark and Swiss franc offset
gains in other currencies traded. Silver prices fell following
reports that a major investment company had sold a third of its
holdings. Losses in silver and copper offset profits in gold.
The Partnership recorded a loss of $3,302,362 or $153.41 per
Unit in April.
In May gains were recorded reflecting profitable positions in
interest rates, metals and currencies. The strongest gains
overall came from positions in the Japanese yen, Japanese
Government bond and silver. Silver prices slumped as investors
who bought on hopes of rising value lost patience and took
profits. Gains were also recorded in positions in the
Australian dollar as a nervous market dealt with rumors of
further currency devaluations in Asia; the Australian currency
fell to a 12-year low against the U.S. dollar. The Partnership
recorded a gain of $979,024 or $44.64 per Unit in May.
In June losses were recorded due largely to unprofitable
positions in global interest rates and metals. Unprofitable
positions in the Japanese Government bond led losses in global
interest rates as the yield rose from record lows following
intervention to support the yen. A marginal gain in the
Japanese yen failed to offset losses in the British pound and
Swiss franc. Positions in gold and silver also resulted in
losses as the prices of both metals remained coupled to
movements in the Japanese yen. The Partnership recorded a loss
of $2,127,357 or $84.45 per Unit in June.
During the quarter, additional Units sold consisted of 4,221.68
limited partnership units; and 36.93 general partnership units.
Additional Units sold during the quarter represented a total of
$7,496,559. Investors redeemed a total of 980.24 Units during
the quarter. At the end of the quarter there were 24,803.90
Units outstanding (including 252.22 Units owned by the General
Partner).
During the fiscal quarter ended June 30, 1998, the Partnership
had no credit exposure to a counterparty which is a foreign
commodities exchange or to any counterparty dealing in over the
counter contracts which was material.
Fiscal Quarter ended March 31, 1999
The Partnership recorded a loss of $3,835,309 or $151.17 per Unit for the
first quarter of 1999. This compares to a loss of $3,566,153 or $182.71 per
Unit for the first quarter of 1998.
In the first month of the quarter the Partnership posted a loss resulting
primarily from volatility in the currency sector as well as Japanese interest
rates. The Trust posted a gain for the second month of the quarter resulting
primarily from trading in precious metals and currencies. During the third
month of the quarter concerns about the military conflict in Kosovo mounted.
As a result the global markets experienced increased volatility, namely in
precious metals and interest rates, and the Partnership posted a small loss.
Overall, the first quarter of fiscal 1999 ended negatively for the
Partnership accounts managed by JWH. At March 31, 1999, John W. Henry &
Company, Inc. was managing 100% of the Partnership's assets using its
Financial and Metals Portfolio.
Currencies were the most volatile sector for the month of January; namely
short positions in the British pound and long positions in the Japanese yen.
The anxiously awaited Euro began trading and started out the year on a
positive note as short positions rendered small profits for the Partnership.
The only profitable interest rate market was in Germany where the Partnership
maintained a long German bund position, thereby taking advantage of falling
German rates. Short positions in the Japanese government bond and Australian
bond positions created losses for the Partnership. The Nikkei stock index
provided the majority of the loss in the stock indices, as short positions
were unprofitable. All in all, the Partnership posted a loss of $2,750,493
or $107.54 per Unit in January.
In February, long silver positions in the precious metals sector were
profitable and the Nikkei stock index provided gains amidst a falling and
then rising market. Currency trading rendered gains from short positions in
the Euro, British pound and Swiss franc as each currency declined against the
U.S. dollar. These gains were able to cover losses in the Australian dollar
and Japanese yen. Interest rates were the only unprofitable sector for the
Partnership. The Partnership was able to take advantage of rising interest
rates in the U.S. 10-year notes and 30-year bonds. However, long Japanese
government bond and German bund positions recorded more significant losses.
Overall, the Partnership posted a gain of $331,060 or $13.35 per Unit in
February.
In March, silver and gold positions were extremely volatile as the
Partnership recorded losses from long silver positions and short gold
positions. Short bond positions in Australia and in the United Kingdom were
unprofitable as interest rates in both began to rise. However, long Japanese
government bond positions were the largest loser in this sector as bond
prices plummeted. Currencies were the most favorable sector for the
Partnership. A flight to quality in the U.S. dollar has provided
opportunities for the Partnership to profit from long U.S. dollar positions
versus the Euro and Swiss franc. The conflict in Kosovo has exacerbated the
crisis-related selling of the Euro and the flow of money into the U.S.
dollar. The Nikkei stock index moved sharply higher during March and the
Partnership profited from long positions. Long positions in the Australian
All-Ordinaries index were also profitable. Overall, the Partnership posted a
loss of $1,415,876 or $56.98 per Unit in March.
During the quarter, additional Units sold consisted of 658.43 limited
partnership units; there were no general partnership units sold during the
quarter. Additional Units sold during the quarter represented a total of
$1,351,224. Investors redeemed a total of 1,674.39 Units during the quarter.
At the end of the quarter there were 24,560.57 Units outstanding (including
198.49 Units owned by the General Partner).
During the fiscal quarter ended March 31, 1999, the Partnership had no credit
exposure to a counterparty which is a foreign commodities exchange or to any
counterparty dealing in over the counter contracts which was material.
See Footnote 5 of the Financial Statements for procedures established by the
General Partner to monitor and minimize market and credit risks for the
Partnership. In addition to the procedures set out in Footnote 5, the
General Partner reviews on a daily basis reports of the Partnership's
performance, including monitoring of the daily net asset value of the
Partnership. The General Partner also reviews the financial situation of the
Partnership's Clearing Broker on a monthly basis. The General Partner relies
on the policies of the Clearing Broker to monitor specific credit risks. The
Clearing Broker does not engage in proprietary trading and thus has no direct
market exposure which provides the General Partner assurance that the
Partnership will not suffer trading losses through the Clearing Broker.
Fiscal Quarter ended March 31, 1998
The Partnership recorded a loss of $3,566,153 or $182.71 per Unit for the
first quarter of 1998.
During the first two months of the quarter, the Partnership experienced
losses primarily as a result of unprofitable positions in currencies and
interest rates, while during the third month losses were recorded primarily
due to losses in metals positions and in the global interest rate market. At
March 31, 1998, John W. Henry & Company, Inc. was managing 100% of the
Partnership's assets using its Financial and Metals Portfolio.
In January, performance was negatively impacted by sharp reversals in
Japanese financial markets and in gold. Investor optimism over efforts to
revive ailing Asian economies boosted the Japanese yen against the U.S.
dollar and gave support to the Nikkei; positions in both resulted in losses
for the Partnership. Benign inflation news in Europe and the U.S. boosted
bond markets in both regions, resulting in gains for the Partnership. These
gains were offset by losses in stock indices and in gold prices. Overall,
the Partnership recorded a loss of $1,416,522 or $76.35 per Unit in January.
In February, losses were incurred in nearly all currencies traded. Trading
was also unprofitable in U.S. Treasury bonds, interest rates and gold. The
purchase of large quantities of silver by a major investor caused the prices
of the precious metal to soar in world markets, before succumbing to some
profit taking at month end; positions in silver resulted in gains for the
Partnership. Profitable positions in most European bonds failed to offset
losses in other long- and short-term interest rates. The Partnership
recorded a loss of $1,566,571 or $79.17 per Unit in February.
In March, the U.S. dollar rose against most of its major counterparts,
gaining strength from the flight of international capital from a
deteriorating Japanese economy and the purchase of dollars to buy U.S.
Treasury bonds as yields in key European bond markets hit post-war lows.
Positions in the Swiss franc and the German mark resulted in gains for the
Partnership. Positions in the U.S. 30-year bond led losses in the global
interest rate market. Inflation concerns, fueled by rising oil prices,
propelled gold prices sharply higher. Positions in gold were unprofitable,
as were positions in silver, which became more volatile during the month.
The Partnership recorded a loss of $583,060 or $27.19 per Unit in March.
During the quarter, additional Units sold consisted of 4,128.21 limited
partnership units; and 33.34 general partnership units. Additional Units
sold during the quarter represented a total of $8,118,453. Investors
redeemed a total of 882.95 Units during the quarter. At the end of the
quarter there were 21,525.53 Units outstanding (including 215.29 Units owned
by the General Partner).
During the fiscal quarter ended March 31, 1998, the Partnership had no credit
exposure to a counterparty which is a foreign commodities exchange or to any
counterparty dealing in over the counter contracts which was material.
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, 1998.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
The Partnership and its affiliates are from time to time parties
to various legal actions arising in the normal course of business. The
General Partner believes that there is no proceedings threatened or pending
against the Partnership or any of its affiliates which, if determined
adversely, would have a material adverse effect on the financial condition or
results of operations of the Partnership.
Item 2. Changes in Securities
None
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
None
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 FUTURES FUND, L.P.
Date: August 11, 1999 By: Everest Asset Management, Inc.,
its General Partner
By: /s/ Peter Lamoureux
Peter Lamoureux
President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Everest
Futures Fund, L.P. for the second quarter of 1999 and is qualified in its
entirety by reference to such 10-Q.
</LEGEND>
<CIK> 0000837919
<NAME> EVEREST FUTURES FUND L P
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1999
<CASH> 56,979,995
<SECURITIES> 0
<RECEIVABLES> 248,392
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 57,228,387
<PP&E> 0
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<TOTAL-ASSETS> 57,228,387
<CURRENT-LIABILITIES> 2,296,965
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 54,931,421
<TOTAL-LIABILITY-AND-EQUITY> 57,228,387
<SALES> 0
<TOTAL-REVENUES> 7,468,800
<CGS> 0
<TOTAL-COSTS> 567,067
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
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<INCOME-PRETAX> 6,901,733
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<INCOME-CONTINUING> 6,901,733
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<EXTRAORDINARY> 0
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<NET-INCOME> 6,901,733
<EPS-BASIC> 281.62
<EPS-DILUTED> 281.62
</TABLE>
