Item 1. Business
The Everest Fund, L.P. (the "Partnership" or''Everest") 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 indirectly through other entities, including subsidiaries, partnerships, Partnerships or other limited liability entities, which constitute one industry segment. The Partnership commenced its trading operations on February 1, 1989. Its General Partner is Everest Asset Management, Inc. (the "General Partner") a Delaware corporation organized in December, 1987.
During its operation, the Partnership has had various trading advisors. In December 1990, John W. Henry & Company, Inc. (JWH) began trading for the Partnership as one of the Partnership's trading advisors. In May 1994, JWH became the sole trading advisor to the Partnership.
On September 13, 1996 the U.S. Securities and Exchange Commission accepted a voluntary filing by the Partnership of a Form 10 - General Form for Registration of Securities, and public reporting of Units of the Partnership sold as a private placement commenced at that time and has continued to the present.
In 2008 the Partnership continued previously offered Class A Units (retail shares) and charged an initial 1% Offering and Organization fee as a reduction to capital.
In 2008 the Partnership selected the JWH Global Analytics Program ( JWH GAP )as its sole trading program. As of December 31, 2008 approximately 80% of the Partnership's assets are being traded by the JWH GAP with the remaining assets not being traded, and are held in interest bearing accounts. Therefore the Partnership is underleveraged as of December 31, 2008.
Upon fifteen days written notice, a Class A Limited Partner may require the Partnership to redeem all or part of his Units effective as of the close of business (as determined by the General Partner) on the last day of any month at the Net Asset Value thereof on such date. Notwithstanding the above, pursuant to the Amended and Restated Agreement of Limited Partnership, the General Partner may, in its sole discretion, and on ten days' notice, require a Limited Partner to redeem all or part of his Units in the Partnership as of the end of any month. There are no additional charges to the Limited Partner at redemption. The Partnership's Amended and Restated Agreement of Limited Partnership contains a full description of redemption and distribution procedures.
Since commencing trading operations, the Partnership has engaged in the speculative trading of Commodity Interests and will continue to do so until its dissolution and liquidation, which will occur on the earlier of December 31, 2020 or the occurrence of any of the events set forth in Paragraph 4(a) of the Agreement of Limited Partnership. Such events are (i) an election to dissolve the Partnership made by over 50% of the Limited Partnership Units at least 90 days prior to dissolution, (ii) withdrawal, insolvency, or dissolution of the General Partner (unless a new general partner is substituted), (iii) decline in the Net Asset Value of the Partnership at the close of any business day to less than $300,000, or (iv) any event which will make it unlawful for the existence of the Partnership to be continued or requiring termination of the Partnership.
The address of the General Partner and the Partnership is 1100 North 4th Street, Suite 143, Fairfield, Iowa 52556, and the telephone number at such location is (641) 472- 5500. The General Partner changed its name as of March 1, 1994 and amended its Certificate of Incorporation, with no other changes, accordingly. In accordance with the provisions of the Commodity Exchange Act and the rules of the National Futures Association (NFA), the General Partner is registered as a commodity pool operator and a commodity trading advisor, JWH is registered as a commodity trading advisor and the Commodity Broker is registered as a futures commission merchant, each subject to regulation by the Commodity Futures Trading Commission (CFTC). Each is also a member of the NFA in such capacity.
The General Partner, to the exclusion of the limited partners of the Partnership (the Limited Partners ), manages and conducts the business of the Partnership. Thus the General Partner (i) selects and monitors the independent commodity trading advisor(s) and the Commodity Broker; (ii) allocates and/or reallocates assets of the Partnership to or from JWH and/or the advisor(s); (iii) determines if an advisor or commodity broker should be removed or replaced; (iv) negotiates management fees, incentive fees and brokerage commissions; (v) determines its own compensation with respect to management and administrative fees; and (vi) performs such other services as the Partnership may from time to time request, except that all trading decisions are made by JWH and not the General Partner. In addition, the General Partner selects the commodity broker(s) that will clear trades for the advisor(s). Newedge Financial Inc., part of the Newedge Group joint venture between Societe Generale and Calyon currently acts as Everest's commodity broker.
The General Partner is responsible for the preparation of monthly and annual reports to the Limited Partners; filing reports required by the CFTC, the NFA, the SEC and any other federal or state agencies having jurisdiction over the Partnership's operations; calculation of the Net Asset Value (meaning the total assets less total liabilities of the Partnership ( for a more precise definition, see the Exhibit Form 10 - General Form for Registration of Securities incorporated by reference hereto ) and directing payment of the management and incentive fees payable to JWH or the advisor(s)under an advisory agreement(s) entered into with the commodity trading advisor(s).
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. The General Partner pays a portion of its fees for actual commission charges to its Clearing Broker.
In addition, the Partnership reimburses the General Partner for the actual organization and offering expenses advanced by it, not to exceed one percent of the Class A Net Asset Value of Units sold. Organization and offering expenses shall mean all expenses incurred by the Partnership or the General Partner in connection with and in preparation to offer and distribute the Units to investors, including, but not limited to, expenses for traveling, printing, engraving, mailing, salaries of employees while engaged in sales activity, charges of transfer agents, registrars, trustees, escrow holder, depositories, experts, expenses of qualification of the sales of its securities under state law, including taxes and fees and accountants and attorneys fees.
Everest pays John W. Henry & Company, Inc., its current commodity trading advisor, a monthly management fee equal to 0.167% (approximately 2% annually) of Everest s month- end Allocated Assets, as defined, and a quarterly incentive fee equal to 20% of Everest s trading profits allocable to its trading exclusive of interest income on Allocated Assets, 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 Everest.
The Commodity Broker has agreed to pay Everest interest on 95% of Everest assets (including open trade equity) deposited with it during a month at the average of 91-day U.S. Treasury Bills purchased by the Commodity Broker during each month. The Commodity Broker will retain all excess interest, if any, earned on the Everest assets, above the amount of interest paid to Everest. The interest rate to be paid by the Commodity Broker to Everest is a negotiated rate which has been negotiated between the Commodity Broker and the General Partner. The actual interest income on Everest s assets earned by the Commodity Broker may be greater than or less than the negotiated rate to be paid by the Commodity Broker to Everest. The Commodity Broker will also be responsible for execution and clearance of futures contracts (and possibly certain other Commodity Interests).
The Partnership pays no selling commission but does pay an ongoing compensation fee equal to 3% of the Net Asset Value of Class A Units sold, unless waived in whole or in part by the General Partner, to the selling agents in connection with the sale of the Units. The General Partner may pay up to 100% of the Partnerships it receives to the selling agents as additional selling commission. The Partnership is obligated to pay its periodic operating expenses and extraordinary expenses. Although those expenses will vary depending on the Partnership's size, it is estimated that the periodic operating expenses will be approximately $140,000 annually. Extraordinary expenses for these purposes include expenses associated with significant non-recurring litigation including, but not limited to, class action suits and suits involving the indemnification provisions of the Agreement of Limited Partnership or any other agreement to which the Partnership is a party. By their nature, the dollar amount of extraordinary expenses cannot be estimated. All expenses shall be billed directly and paid for by the Partnership. The Partnership s operating expenses for the years 2004-2008 can be found in the table in Item 6 below.
As of December 31, 2008, the General Partner had one employee. Further, the General Partner, in its capacity as a CFTC-regulated commodity pool operator, contracts certain services of research, administration, client support and management information systems and analysis to Capital Management Partners, Inc. (Capital). Capital is a CFTC- regulated introducing broker, and an NFA member. Capital is also registered with the Financial Industry Regulatory Authority, Inc. ( FINRA ) as a broker dealer. As of December 31, 2008, Capital had 7 employees.
The Partnership's business constitutes only one segment for financial reporting purposes; and the purpose of the Partnership is to trade, buy, sell, spread or otherwise acquire, hold or dispose of Commodity Interests including futures contracts, forward contracts, physical commodities and related options thereon. The objective of the Partnership s business is appreciation of its assets through speculative trading in such Commodity Interests. Financial information about the Partnership's business, as of December 31, 2008 is set forth under Items 6 and 7 herein.
For a description of commodity trading and its regulation, see the Prospectus filed on Form S-18 and the Confidential Private Placement Memorandum filed as part of the Form 10 and included in the exhibits hereto.
The Current Offering
On July 1, 1995 the Partnership reopened for investment as a Regulation D, Rule 506 private placement offering an unlimited amount of limited partnership interests. On September 19, 1996 the Commission accepted a Form 10 - General Form for Registration of Securities submitted by the Partnership thereby making the Partnership a public reporting private placement offering. It also qualified the Partnership as a publicly offered security as defined in the Employee Retirement Income Security Act of 1974 (ERISA) rules permitting it to accept investment of an unlimited amount of plan assets as defined in ERISA. Hitherto, as a private placement the Partnership could accept ERISA plan assets representing no more than 25% of the total investment in the Partnership. The limited partnership interests are offered by the Selling Agent and additional selling agents with a Class A minimum subscription amount of $25,000. (The Class A minimum subscription amount for employee benefit plans and individual retirement accounts is $10,000).
Competition
JWH and any other advisor(s) of the Partnership, its or their respective principals, affiliates and employees are free to trade for their own accounts and to manage other commodity accounts during the term of the Advisory Agreement and to use the same information and trading strategy which JWH obtains, produces or utilizes in the performance of services for the Partnership through its investment in Everest. To the extent that JWH recommends similar or identical trades to the Partnership and other accounts which it manages, the Partnership may compete with those accounts for the execution of the same or similar trades.
Other trading advisors who are not affiliated with the Partnership may utilize trading methods which are similar in some respects to those methods used by JWH, or any other future Partnership's advisor(s). These other trading advisors could also be competing with the Partnership for the same or similar trades as requested by the Partnership's advisor(s).
Item 1A.
Item 1A.	Risk Factors GENERAL
Trading in Commodity Interests Is Speculative. Commodity interest prices are highly volatile. Price movements for futures contracts, for example, which may fluctuate substantially during a short period of time, are influenced by numerous factors that affect the commodities markets, including, but not limited to: changing supply and demand relationships, government programs and policies, national and international political and economic events, and changes in interest rates. See, Risk Factors -- Commodity Interests Trading May Be Illiquid.
Commodity Interests Trading Is Highly Leveraged. The low margin deposits normally required in trading commodity interests permit an extremely high degree of leverage. Accordingly, a relatively small price movement in a commodity interest may result in an immediate and substantial loss to the investor. For example, if at the time of purchase 5% of the price of a futures contract is deposited as margin, a 5% decrease in the price of the futures contract would, if the contract were then closed out, result in a total loss of the margin deposit (brokerage commission expense would also be incurred). Like other leveraged investments, any commodity interest trade may result in losses in excess of the amount invested. Although more than the initial margin can be lost on a trade, the Partnership, and not investors personally, will be subject to margin calls.
The Partnership's Trading Account May Be Leveraged or de-levereged. The general partner may, in its sole discretion, periodically adjust the size of the trading account with JWH by increasing or decreasing the cash, other assets or notional Partnerships allocated to it (and thus the amount by which the Partnership's assets are leveraged). Because the trading account may be leveraged, (i) the Partnership may incur greater risk since the Partnership may experience greater losses, as measured by a percentage of assets actually allocated to JWH, due to the notional Partnerships component; (ii) the Partnership's returns may experience greater volatility compared to the returns which the Partnership would have achieved on a non- leveraged basis; and (iii) the Partnership may receive more frequent and larger margin calls. Because the trading account may be de-leveraged, the partnership may incur smaller gains than it would if the JWH trading program had been fully allocated to.
Commodity Interests Trading May Be Illiquid. Most U.S. commodity futures exchanges impose daily limits regulating the maximum amount above or below the previous day's settlement price which a futures contract price may fluctuate during a single day. During a single trading day no trades may be executed at prices beyond the daily limit. Once the price of a particular futures contract has increased or decreased to the limit point, it may be difficult, costly or impossible to liquidate a position. Futures prices in particular contracts have occasionally moved the daily limit for several consecutive days with little or no trading. If this occurs, the Partnership might be prevented from promptly liquidating unfavorable positions, which could result in substantial losses. Those losses could significantly exceed the margin initially committed to the trades involved. In addition, even if prices have not moved the daily limit or there are no limits for the contracts traded, trades might not be able to be executed at favorable prices if little trading in the contracts is taking place. It is also possible that an exchange or the Commodity Futures Trading Commission (CFTC) may suspend trading in a particular contract, order immediate settlement of a contract, or order the liquidation of open positions only.
Exchange for Physical. JWH may make use of a trading technique referred to as exchange for physical in which a cash or spot market position (which may be a forward contract) is exchanged, often outside of regular trading hours, for a comparable futures position. The CFTC has released a study of the exchange for physical market that recommended that a number of new regulatory restrictions be applied to it. If these recommendations or restrictions are adopted, the ability of JWH to use this market may be curtailed.
Trading Decisions Based on Technical Analysis. JWH uses trading programs that employ technical factors in identifying price moves. The success of technical analysis depends upon the occurrence in the future of price movements. Technical systems will not be profitable, and may in fact produce losses, if there are no market moves of the kind the system seeks to follow. Any factor that would make it more difficult to execute the trades identified, such as a reduction of liquidity, also would reduce profitability. There is no assurance that the trading systems of JWH will generate profits under all or any market conditions.
Possible Effects of Other Similar Systems. Commodity trading systems, which use market data like JWH uses, are not new. If many traders follow similar systems, these systems may generate similar buy and sell orders at the same time. Depending on the liquidity of a market, this could cause difficulty in executing orders. The General Partner believes that, although there has been an increase in the number of trading systems in recent years, there also has been an increase in the overall trading volume and liquidity in the futures markets. Any increase in the proportion of Partnerships traded using trend-following systems could alter trading patterns or affect execution of trades to the detriment of the Partnership.
No Assurance of JWH'S Continued Services. JWH has exclusive responsibility for trading commodity interests allocated to it. JWH is dependent on the services of certain key persons. The loss of the services of such persons would make it difficult or impossible for JWH to continue to provide services to the Partnership. In addition, the advisory contract between the Partnership and JWH may be terminated by either party on sixty (60) days written notice.
Changes in Trading Strategies. The trading strategies of most trading advisors are continually developing. JWH is free to make any changes in trading strategies. Changes in commodity interests traded or leverage used are not considered changes in trading strategy.
Possible Effects of Speculative Position Limits. The CFTC and U.S. exchanges have established speculative position limits. These limits control the number of net long or net short speculative futures or options (on futures) positions any person may hold or control in futures or options contracts traded on U.S. exchanges. JWH controls the commodity trading of other accounts. All positions and accounts owned or controlled by JWH and its principals are combined with the Partnership's positions established by JWH for position limit purposes. In order to avoid exceeding position limits, it is possible that JWH will have to modify its trading instructions, and that positions held by the Partnership will have to be liquidated. That could have a negative effect on the operations of the Partnership and its profitability. See, Risk Factors Increase in Amount of Partnerships Managed. In addition, all commodity accounts of the General Partner and its affiliates may also be combined with the Partnership for position limit purposes.
Increase in Amount of Partnerships Managed. JWH expects to manage additional Partnerships in the future. It is not known if managing additional Partnerships, including Partnerships raised in this offering, will have any effect on its performance or trading strategies. In many cases, the rates of return achieved by an advisor deteriorate as assets under management increase. Increases in Partnerships managed may affect the number of futures or options positions an advisor would otherwise hold for each account it manages because of speculative position limits imposed by U.S. exchanges. There is no assurance that changes in strategies, if any, in response to increased Partnerships will be successful. There can be no guarantee that the investment results of that portion of the assets allocated to JWH will be similar to those achieved by it in the past in its other accounts.
Changes in the Number of Available Futures Contracts and Related Options. U.S. and foreign exchanges have established new futures and options contracts in the past few years. This trend could continue. If JWH trades these contracts in the future, there is no assurance that its trading strategies will produce profits.
Past Performance Is Not Necessarily Indicative of Future Results. Although some of the client accounts of JWH have been profitable in the past, you should take seriously the warning the CFTC and the NFA require. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. AN INVESTMENT IN THE PARTNERSHIP IS SPECULATIVE AND INVOLVES A SUBSTANTIAL RISK OF LOSS.
Horizon Cash Management, L.L.C. Horizon is an Investment Advisor (IA) with Power of Attorney (POA), to manage Everest Partnership assets on deposit at Northern Trust through investments in short term interest bearing instruments. A substantial portion of the Partnership's assets is held in an omnibus custody account on behalf of the Partnership at The Northern Trust Company in the name of the Partnership. The Partnership has entered into an advisory contract with Horizon pursuant to which Horizon manages such assets in an attempt to maximize their yield through investment in various short- term interest bearing instruments including U.S. Treasury Securities, U.S. Government Agencies Securities, Bankers Acceptances, Certificates of Deposit, Time Deposits, Commercial Paper, Loan Participation Notes and Repurchase Agreements U.S. Treasury Securities and U.S. Government Agencies Securities. As a result, the Partnership's assets managed by Horizon are subject to potential loss resulting from interest rate fluctuations and default.
JWH PROGRAMS
Effects of Trading Multiple Investment Programs. JWH makes trading decisions for each of its investment programs independently of trading decisions for the other JWH investment programs.
Mandatory Closing Out of Offsetting Positions. CFTC rules require offsetting positions taken by JWH for clients be closed out.
Swap Transactions. JWH may periodically enter into transactions which are characterized as swap transactions and which may involve interest rates, currencies, securities interests, commodities, and other items. Swap contracts are not traded on exchanges and are not regulated by the CFTC. Swap transactions are individually negotiated, non-standardized agreements between two parties to exchange cash flows measured by different interest rates, exchange rates or prices, with payments calculated by reference to a principal amount or quantity. As a result, the Partnership will not receive the protection afforded by the Commodity Exchange Act in connection with this trading activity by JWH. The absence of regulation could expose the Partnership to significant losses in the event of trading abuses or financial failure by participants in the swap markets. JWH has not previously traded swaps and has no experience in that market. Transactions in these markets also present certain risks similar to those in the futures, forward and options markets. Only the accounts of eligible swap participants as defined in Part 35 of CFTC Regulations, may engage in swaps.
Options Transactions. JWH may engage in the trading of options (both puts and calls) on futures on behalf of the Partnership. The value of an option depends largely upon the likelihood of favorable price movements in the underlying futures contract in relationship to the exercise (or strike) price during the life of the option. Therefore many of the risks applicable to trading the underlying futures contract are also applicable to options trading. In addition, there are a number of other risks associated with the trading of options. For example, the purchaser of an option runs the risk of loss of his/her entire investment (the premium he pays). Similarly, the uncovered writer of an option is subject to an adverse price movement in the underlying futures position, any such movement may exceed the premium income from the option transaction. Spread positions using options are subject to the same risks involved in the purchase and writing of options. In addition, in the event the Partnership were to write uncovered options as one part of a spread position and such option were exercised by the purchasing party, the Partnership would be required to purchase and deliver the underlying futures contract in accordance with the terms of the option. Finally, an options trader runs the risk of market illiquidity preventing offsetting positions for any particular option. (See Commodity Trading May Be Illiquid above.)
	Business Interruption Risk. During both 2004 and 2005, the operations of JWH at its Boca Raton, Florida, offices were disrupted by hurricanes which required recovery periods to re-establish communications and other utilities. JWH continued its trading operations during those periods without interruption from back up locations. Any future business interruption events, whether weather- related or otherwise, that affect the south Florida area could similarly disrupt the trading operations of JWH, despite the back up precautions it has established. JWH has a business continuity plan, but it cannot guarantee that business interruption events will not have an impact on its operations.
Electronic Trading and Order Routing Systems. JWH may from time to time trade on electronic trading and order routing systems which differ from traditional open outcry pit trading and manual order routing methods. Transactions using an electronic system are subject to the rules and regulations of the exchanges offering the system or listing the contract. Characteristics of electronic trading and order routing systems vary widely among the different electronic systems with respect to order matching procedures, opening and closing procedures and prices, error trade policies and trading limitations or requirements. There are also differences regarding qualifications for access and grounds for termination and limitations on the types of orders that may be entered into the system. Each of these matters may present different risk factors with respect to the trading on or using a particular system. Each system may also present risks related to system access, varying response times and security. In the case of internet-based systems, there may be additional risks related to service providers and the receipt and monitoring of electronic mail.
	Trading through an electronic trading or order routing system is also subject to risks associated with system or component failure. In the event of system or component failure, it is possible that for a certain time period, it might not be possible to enter new orders, execute existing orders or modify or cancel orders that were previously entered. System or component failure may also result in loss of orders or order priority. Some contracts offered on an electronic trading system may be traded electronically and through open outcry during the same trading hours. Exchanges offering an electronic trading or order routing system and listing the contract may have adopted rules to limit their liability, the liability of futures brokers and software and communication system vendors and the amount that may be collected for system failures and delays. These limitation of liability provisions vary among the exchanges.
	Reliance on Timely and Accurate Market Data. JWH s ability to detect market trends and trade them profitably depends on its access to timely and accurate market price data throughout the trend identification and trading processes. If price data is not available or is delayed, JWH would be unable to trade for client accounts until reliable data sources have been restored. Data reconciliation procedures are applied each day to confirm accurate price quotations, and on the subsequent day prices that were employed in the JWH systems are re-reconciled in an attempt to identify changes from previously posted prices. JWH's traders are required to confirm a price from multiple sources before executing a trade, and, during volatile market conditions, traders request confirmation of high and low prices from the floor before placing a trade. Inaccurate information may be generated by a data vendor, or an exchange may transmit inaccurate prices that a vendor then distributes to JWH, but which are later cancelled or amended by the exchange. In addition, JWH may obtain from third parties, such as clearing firms, information about price or about contract specifications and changes to them. Inaccurate price information may cause JWH to enter or close trades that it would not otherwise have entered or closed, to trade or fail to trade at times that would have been indicated by accurate data, or to be completely unable to place a trade. Communications or technical failure may also cause an electronic trading tool to fail, which could cause JWH to fail to act when a trading stop is reached. As a result of such potential data problems, client accounts may be unable to exit positions or miss the opportunity to establish new positions. JWH receives price data electronically. Data providers typically make no representations or warranties about the accuracy or timeliness of the data they provide, and assume no financial liability for lost profits, trading losses or other consequential damages. Data providers also disclaim any responsibility for events of force majeure, as well as for actions (or inaction) of third party information, hardware and software providers, and for interruption of means of communication. Because all of the data required for JWH s trading is provided from third parties, JWH, cannot, despite its employment of the precautions described above, make any assurances that its efforts will detect erroneous or incomplete data, or prevent client accounts from incurring losses or missing profit opportunities.
PARTNERSHIP ISSUES
Substantial Charges to Partnership. The Partnership pays substantial fees and charges and has substantial operating costs. As a result, it must make substantial profits for your units to increase in value. These include an incentive fee to JWH that is based on, among other things, unrealized appreciation in open commodity interest positions. The incentive fee is paid (and retained by JWH) even if that portion of the Partnership s assets traded by it experience subsequent losses or the appreciation is never realized. It is therefore possible that the Partnership may pay an incentive fee in years in which the Partnership breaks even or experiences losses.
Possible Misallocation of Incentive Fees. The Partnership pays quarterly incentive fees on trading profits, if any, earned by JWH. Trading profits are calculated on the overall profits earned by JWH on its allocated assets and not just on increases in the Net Asset Value of each unit. As a result, the Partnership might pay incentive fees even if Partnership units decline in value. In addition, if, at the time limited partners purchase units, there is an accrued incentive fee expense, that accrued expense will reduce the purchase price of their units. If the accrual is reversed because of later losses, the incentive fee will be misallocated because the reversal of the accrued incentive fee expense will be allocated equally to all outstanding units rather than only to those outstanding during the period when the incentive fee expense accrued. Similarly, if you buy units after an incentive fee has been paid and after a later loss attributable to JWH, your units will not be assessed an incentive fee until there are new trading profits, even if your units have increased in value.
There Is No Intrinsic Value to the Partnership's Investments. The Partnership must be profitable for it to provide beneficial diversification to a limited partner's portfolio. Trading in commodity interests is a zero-sum activity in which for every gain there is an equal and offsetting loss (disregarding transaction costs). This differs from a typical securities investment, in which there is an expectation of consistent yields (in the case of bonds) or participation over time in general economic growth (in the case of stocks). The Partnership could lose money while stock and bond prices rise. Stocks and bonds (except penny stocks) generally have some intrinsic value. Limited partners generally can realize some value for their stocks or bonds even if they sell in a down market. In trading commodity interests, on the other hand, investors risk losing all of their investment if prices move against them. In general, performance statistics do not reflect the different risk profiles or tax treatment of traditional and managed commodity interest investments. See, Risk Factors Limited Partners Will Be Taxed on Profits whether or Not Distributed or Realized.
Partnership Trading Is Not Transparent. JWH makes all of the trading decisions for the portion of the Partnership's assets allocated to it. While the General Partner receives daily trade confirmations from the commodity broker, only the monthly performance of the Partnership is reported to limited partners. Accordingly, an investment in the Partnership does not offer limited partners the same transparency, i.e., an ability to review all investment positions daily that a personal trading account offers.
Non-Correlated, Not Negatively Correlated, Performance Objective. Historically, managed futures have been generally non-correlated to the performance of other asset classes such as stocks and bonds. Non-correlation means that there is no statistically valid relationship between the past performance of futures and forward contracts on the one hand and stocks or bonds on the other hand (as opposed to negative correlation, where the performance would be exactly opposite between two asset classes). Because of this non-correlation, the Partnership cannot be expected to be automatically profitable during unfavorable periods for the stock market, or vice versa. The futures and forward markets are Partnershipamentally different from the securities markets in that for every gain in futures and forward trading, there is an equal and offsetting loss. If the Partnership's investments do not perform in a manner non-correlated with the general financial markets, or do not perform successfully, limited partners will obtain no diversification benefits by investing in the units and the Partnership may have no gains to offset their losses from other investments.
Limited Partners Will Not Participate in Management. Limited Partners will not participate in the management of the Partnership. Under principles of limited partnership law, limited partners participation in the Partnership's management could result in unlimited liability for them. The limited partnership agreement provides that certain actions may be taken, or approved, by the vote of limited partners owning more than 50% of the units, but their role in the Partnership is passive and the profitability of their investment depends entirely on the efforts of others.
Indemnification of Partnership by Limited Partners. If someone signs the subscription agreement and the General Partner accepts their subscription, they will become a limited partner. Under the agreement, they will be required to indemnify the Partnership for any liability that it incurs as a result of their actions.
LIQUIDITY
Limited Ability to Liquidate Investment in Units. Limited partners cannot immediately liquidate their units. There is no market for the units and none is likely to develop. They may, however, redeem their Class A units, without penalty, on the last day of any month on fifteen (15) days prior written notice to the General Partner or such lesser time as is acceptable to the General Partner Because of the time delay between your Class A notice to the General Partner and the end of the month when their investment is redeemed, the value of their investment on the date of redemption may be substantially less than at the time they notify the General Partner of their request to redeem.
Possible Effect of Redemptions on Unit Values. The Partnership will lose money if it has to sell positions at a loss in order to raise capital so that the Partnership can pay substantial redemptions. If a large number of redemptions occur simultaneously, the need to liquidate positions could continue even after the redemption date. The Partnership would have fewer assets to trade after a high level of redemptions. This might make it more difficult for it to recover losses or generate trading profits. Market illiquidity could make it difficult to liquidate positions on favorable terms, and may also result in losses and thus a decline in the value of Partnership units.
Automatic Trading Suspension. Limited Partners should buy units only if you are looking for a long-term investment. If the net asset value per unit declines as of the close of business on any day to a trading suspension level (50% of the highest prior month-end net asset value per unit, after adjustment for prior distributions), the Partnership will liquidate its open positions and notify limited partners. The Partnership cannot assure limited partners that it can liquidate its investments without incurring substantial additional losses or that limited partner will receive any specific value for the units they own. See, Risk Factors Commodity Interest Trading May Be Illiquid.
Counterparty Creditworthiness -- U.S. Markets. Commodity exchanges provide centralized market facilities for trading in futures contracts relating to specified commodities. Each of the commodity exchanges in the United States has an associated clearinghouse. Once trades made between members of an exchange have been confirmed, the clearing house becomes substituted for the clearing member acting on behalf of each buyer and each seller of contracts traded on the exchange and in effect becomes the other party to the trade. Thereafter, each clearing member firm party to the trade looks only to the clearinghouse for performance. Clearinghouses do not deal with customers, but only with member firms, and the guarantee of performance under open positions provided by the clearinghouse does not run to customers. If a customer's commodity broker becomes bankrupt or insolvent, or otherwise defaults on such broker's obligations to such customer, the customer in question may not receive all amounts owing to such customer in respect of his or her trading, despite the clearing house fully discharging all of its obligations.
A substantial portion of the Partnership's assets are held in a custodial account and managed by Horizon. Failure of this firm might result in losses to the Partnership.
FOREIGN INSTRUMENTS
Counterparty Creditworthiness -- Non-U.S. Markets. JWH may trade commodity interests on foreign exchanges and in the over-the-counter markets. Unlike U.S. exchange traded futures contracts where the exchange clearing corporation acts as the counterparty to each customer transaction, the over-the-counter markets and some foreign markets are principals markets. This means that the performance of the contract is the responsibility only of the individual firm or member on the other side of the trade and not of any exchange or clearing corporation. In those transactions, the Partnership will be subject to the risk of the inability of, or refusal by, the counterparty to perform.
Trading on Foreign Exchanges and Currency Exchange Rate Fluctuations. Neither existing CFTC regulations nor regulations of any other U.S. governmental agency apply to transactions on foreign markets. If a foreign clearinghouse default or bankruptcy occurs, the Partnership s rights and responsibilities are likely to differ from those existing on U.S. exchanges. The Partnership is at risk for fluctuations in the exchange rate between the currencies in which the commodity interest is traded and U.S. dollars. It also is possible that in the future, U.S. or foreign governments could impose exchange controls. There is no restriction on how much of the Partnership's trading can be conducted on foreign markets. The Partnership may pay brokerage commissions in foreign currencies. If the exchange rate of those currencies and the U.S. dollar fluctuates, the commission rate paid for those trades might increase (decrease).
Possibility of Forward and Cash Trading. The Partnership might make spot and forward contracts for certain commodities, primarily currencies with U.S. or foreign banks or dealers. A forward contract is a contractual right to purchase or sell a commodity, such as a currency, at or before a specific date in the future at a specific price. Because forward contracts are not traded on exchanges, there is no regulatory protection provided by any exchange or the CFTC. There is no limit on daily price moves for forward contracts. Banks and dealers are not required to continue to make markets in any commodity. In the past, there have been times when certain banks have refused to quote prices for forward contracts or have quoted prices with an unusually wide spread between the price at which the bank is prepared to buy and that at which it is prepared to sell. There is a risk that the banks or dealers through which the Partnership trades could fail or refuse to perform.
The CFTC is studying questions about the regulation of off-exchange instruments such as forward contracts. A number of the major U.S. commodity exchanges have also expressed concerns about these instruments. The CFTC has indicated that it would regard marketing of forward contracts on a retail basis to the U.S. public at large as a violation of the CEAct. The CFTC might, in the future, prohibit the Partnership from trading in the forward markets.
TAX AND REGULATORY ISSUES
Possibility of Taxation as a Corporation. General Partner believes that under current federal income tax law and regulations the Partnership will be classified as a partnership and not as an association taxable as a corporation. The General Partner will not obtain a ruling from the Internal Revenue Service (IRS) or an opinion of counsel to confirm its belief. If the Partnership is taxed as a corporation for federal income tax purposes in any taxable year, its income or losses will not be passed through to you, and the Partnership will be subject to tax on its income at the corporate tax rate. In addition, any distributions made to you could be taxable to you as dividend or capital gain income, and those distributions will not be deductible in computing taxable income.
Possible Legislative Tax Changes. All of the statements in this Memorandum about taxes are based upon the current Internal Revenue Code (the Code). Congress and the IRS regularly revise the Code and the regulations. Those revisions could materially affect you and the Partnership.
Unrelated Business Taxable Income (UBTI) for Employee Benefit Plans. If the Partnership were a publicly-traded partnership and limited partners are a tax-exempt entity, or if they are a tax-exempt entity and debt finance their investment, their share of gross income less Partnership deductions is treated as UBTI, and subject to tax. The General Partner does not believe that the Partnership is publicly-traded for this purpose. However, if it were decided that the Partnership is publicly-traded, it may not be an appropriate investment for employee benefit plans, including individual retirement accounts (IRAs). In addition, if investing in commodity interests results in UBTI, each partner that is a tax-exempt entity would take into account its share of the Partnership s UBTI and the deductions attributable to that income (including a $1,000 deduction against UBTI which is generally available to all tax-exempt entities) in computing its tax liability. Benefit plan investors should consult with their own legal and financial advisers about the tax consequences of plan investments in the Partnership.
Limited Partners Will Be Taxed on Profits whether or Not Distributed or Realized. The Partnership is not required, and the General Partner does not intend, to distribute profits. If the Partnership has taxable income for a fiscal year, the income will be taxable to them based on their distributive share of Partnership profit even if no profits have been distributed. As a result, limited partners might owe taxes on undistributed profits. It is also possible that those profits could be lost by the Partnership after the end of its fiscal year, so that limited partners might never receive the profits on which they are taxed. However, they may redeem units to pay taxes, but this would result in a reduction in their interest in the Partnership s future profits (if any).
Foreign Limited Partners. If limited partners are not citizens or residents of the U.S. and are not otherwise engaged in a trade or business in the U.S., they will generally not be required to pay U.S. income tax on capital gains from commodity interest trading. Interest income will be taxable to them, if they are a foreign investor, unless there is an exemption from tax in an appropriate tax treaty. If the law requires the General Partner to withhold a portion of the income they earn because they are a foreign limited partner, the General Partner may redeem their units to pay the U.S. Department of Treasury taxes they owe. If a limited partner believes amounts were improperly withheld, they must deal directly with the U.S. Department of Treasury.
Failure of Commodity Brokerage Firms. Futures commission merchants must maintain the Partnership s assets in a segregated account. If the Partnership's futures clearing broker Newedge becomes bankrupt, the Partnership could lose money. In addition, even if Newedge adequately segregates the assets of the Partnership, the Partnership may be able to recover only a pro rata share of the property available for distribution to all of Newedge's customers.
Forex Trading Counterparty Creditworthiness. The Partnership will enter into an agreement with an equity in the Newedge Group which will result in such entity acting as the counter-party to the Partnership s foreign currency transactions. That is, the counterparty will be the seller of all forex instruments purchased by the Partnership and the buyer of all forex instruments sold by the Partnership. The counterparty's financial benefit from entering into these transactions with the Partnership is derived from its ability to participate in the foreign exchange interbank markets, which are only available to large institutional investors. The counterparty's compensation will be derived from a mark-up on the bid/ask spread price quoted to the Partnership on each transaction, and the counterparty's ability to offset these transactions in the foreign exchange interbank market. In the event that the counterparty is unable to successfully participate in this market, the ability of the counterparty to enter into transactions with the Partnership may be interrupted. In addition, the counterparty has entered into similar agreements with other persons, and thus acts as the counter-party in transactions effected by these other persons. Because the counterparty acts as counter-party in these transactions, the Partnership is subject to the additional risk that the counterparty will be unable to fulfill its obligations to the Partnership. Moreover, in the event of a bankruptcy of the counterparty, the Partnership may be unable to recover assets held at the counterparty, even if such assets are directly traceable to the Partnership. In the event of the counterparty s bankruptcy, there is no equivalent of the Securities Investors Protection Corporation insurance as applicable in the case of securities broker dealers bankruptcies.
A substantial portion of the Partnership s assets are held in a custodial account and managed by Horizon. Failure of this firm might result in losses to the Partnership.
Possibility of Tax Audit. The IRS might audit the tax returns of the Partnership, or adjustments to its returns might be made as a result of an audit. Uncertainty regarding the federal income tax treatment of certain management and incentive fees paid by the Partnership, or ongoing fees paid to others, may increase the likelihood of an audit. If an audit results in an adjustment, limited partners may be required to pay additional taxes, interest and penalties and may be subject to audit. The IRS is currently authorized to impose an interest penalty on tax deficiencies based on prevailing private sector interest rates.
Risk that Units Will Not Be Considered Publicly-Offered Securities under the Employee Retirement Income Security Act of 1974 (ERISA). The General Partner believes that it is reasonable to take the position that the units qualify as publicly-offered securities under Title I of ERISA, and that the underlying assets of the Partnership will therefore not be considered for any purposes of ERISA or Section 4975 of the Code to be assets of employee benefit plans and IRAs that purchase units. However, this position is not binding on the Department of Labor (DOL) and, therefore, there is no certainty that the units qualify. If the units are determined not to qualify as such publicly-offered securities, the General Partner intends to redeem units held by certain limited partners that are employee benefit plans or IRAs to the extent necessary to prevent the underlying assets of the Partnership from thereafter being considered for purposes of Title I of ERISA or Section 4975 of the Code to be assets of such employee benefit plans or IRAs. However, for any period that the underlying assets of the Partnership are considered to be assets of employee benefit plans or IRAs, the provisions of Title I of ERISA and Section 4975 of the Code would apply to the operation of the Partnership and could adversely affect the Partnership's investments and activities.
Absence of Regulation Applicable to Investment Companies. The Partnership is not registered as an investment company or mutual Partnership. Therefore, the SEC does not regulate it under the Investment Company Act of 1940 (the 1940 Act). Although the Partnership has the right to invest in securities, limited partners are not protected by the 1940 Act. The General Partner is, however, registered with the CFTC as commodity pool operator (CPO), JWH is registered with the CFTC as a CTA and Newedge Financial Inc. is registered with the CFTC as a futures commission merchant (FCM).
Item 1B.
Item 1B. N/A
Item 2.
Item 2.	Properties
The Partnership does not utilize any physical properties in the conduct of its business. The General Partner uses its offices to perform its administrative functions.
The address of the General Partner and the Partnership is 1100 North 4th Street, Suite 143, Fairfield, Iowa 52556, and the telephone number at such location is (641) 472- 5500.
Item 3.
Item 3.	Legal Proceedings
Neither the Partnership, nor the General Partner, is party to any pending material legal proceeding.
In October 2000, there was a discrepancy between the performance of the Barclay Futures Index Program (BFIP) as traded for the Partnership and the Barclay Futures Index (BFI). The General Partner believes that certain transactions executed by Trilogy Capital Management, LLC, (a Delaware corporation, CFTC registered CTA and NFA member) were not executed in accordance with the provisions of BFIP and demanded that Trilogy reimburse the Partnership for losses. The general Partner does not believe at this time that any of the losses will be recovered. The general Partner has negotiated a settlement with Mr. Alan R.Kaufman, President and principle of Trilogy, that would free the General Partner to distribute the withheld fees to the Limited Partners who were in the Partnership in October 2000. This matter was brought to a conclusion in the 1st quarter of 2008, and checks were sent to all investors who were in the Partnership in October 2000 representing their pro rata share of the withheld fees that remained in the account.
Item 4.
Item 4.	Submission of Matters to a Vote of Security Holders None PART II
Item 5.
Item 5.	Market for Registrant s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
(a) There is no established public market for the Units and none is expected to develop.
(b) As of December 31, 2008, there were 4,940.650 Class A Units held by Limited Partners. A total of 1,173.08 Class A units were purchased by Limited Partners during 2008. A total of 1,026.04 Units were redeemed by Class A Limited Partners during 2008.
RECENT SALES OF UNREGISTERED SECURITIES IN 2008 A UNITS
SALES OF SECURITIES IN 2007 A UNITS
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.
The Seventh Amended and Restated Agreement of Limited Partnership for the Partnership contains a full description of redemption and distribution procedures.
The Agreement of Limited Partnership does not provide for regular or periodic cash distributions, but gives the General Partner sole discretion in determining what distributions, if any, the Partnership will make to its partners. The General Partner has not declared any such distributions to date, and does not currently intend to declare any such distributions.
Item 6.
Item 6.	Selected Financial Data
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Liquidity and Capital Resources
We receive our capital resources from investor's contributions.
Net Asset Value of an interest is defined in the Partnership Agreement to mean the Net Assets allocated to the capital account represented by such interest on the date of calculation and includes that interest's pro-rata share of all assets attributable to that Class of units less all liabilities attributable to that Class of units determined in accordance with the principles specified in the Partnership Agreement or, where no principle is specified, in accordance with U.S. generally accepted accounting principles consistently applied under the accrual basis of accounting
Past performance is not necessarily indicative of future results. An investment in the partnership is speculative and involves a substantial Risk of loss.
Off-Balance Sheet Risk
The term''off-balance sheet risk" refers to an unrecorded potential liability that, even though it does not appear on the balance sheet, may result in future obligation or loss. The Partnership trades in futures and forward contracts and is therefore a party to financial instruments with elements of off-balance sheet market and credit risk. In entering into these contracts there exists a risk to the Partnership, market risk, that such contracts may be significantly influenced by market conditions, such as interest rate volatility, resulting in such contracts being less valuable. If the markets should move against all of the futures interests positions of the Partnership at the same time, and if the commodity trading advisors were unable to offset futures interest positions of the Partnership, the Partnership could lose all of its assets and the Limited Partners would realize a 100% loss. Everest Asset Management, Inc., the General Partner, minimizes market risk through diversification of the portfolio allocations to JWH, which in turn trades a diversified portfolio, and maintenance of a margin-to-equity ratio that rarely exceeds 30%.
In addition to market risk, in entering into futures and forward contracts there is a risk that the counterparty will not be able to meet its obligations to the Partnership. The counterparty for futures contracts traded in the United States and on most foreign exchanges is the clearinghouse associated with such exchange. In general, clearinghouses are backed by the corporate members of the clearinghouse who are required to share any financial burden resulting from the non-performance by one of their members and, as such, should significantly reduce this risk. In cases where the clearinghouse is not backed by the clearing members, like some foreign exchanges, it is normally backed by a consortium of banks or other financial institutions.
In the case of forward contracts, which are traded on the inter-bank market rather than on exchanges, the counterparty is generally a single bank or other financial institution, rather than a group of financial institutions; thus there may be a greater counterparty risk. Everest Asset Management, Inc. utilizes only those counterparties that it believes to be creditworthy for the Partnership. 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.
The Partnership will utilize high grade short-term commercial paper, which is an unsecured, short-term debt instrument issued by a corporation with maturities rarely longer than 365 days. Commercial paper is not usually backed by any form of collateral, so only firms with high-quality debt rating will be used. As commercial paper is not backed by the full faith and credit of the U.S. Government, if the issuing corporation defaults on their obligations to the Partnership, the Partnership bears the risk of loss of the amount expected to be received.
The Partnership has no Contractual Obligations.
Most U.S. commodity exchanges limit by regulations the amount of fluctuation in commodity futures contract prices during a single trading day. These regulations specify what are referred to as "daily price fluctuation limits" or "daily limits". The daily limits establish the maximum amount the price of a futures contract may vary either up or down from the previous day's settlement price at the end of a trading session. Once the daily limit has been reached in a particular commodity, no trades may be made at a price beyond the limit. Positions in the commodity could then be taken or liquidated only if traders are willing to effect trades at or within the limit during the period from trading on such day. Because the "daily limit" rule only governs price movement for a particular trading day, it does not limit losses. In the past, futures prices have moved the daily limit for numerous consecutive trading days and thereby prevented prompt liquidation of futures positions on one side of the market, subjecting commodity futures traders holding such positions to substantial losses for those days.
It is also possible for an exchange or the CFTC to suspend trading in a particular contract, order immediate settlement of a particular contract, or direct that trading in a particular contract be for liquidation only.
For the year ended December 31, 2008, Limited Partners redeemed a total of 1,026.04 Class A Units for $3,099,704. .. During 2008, investors purchased 1,173.08 Class A Units for $3,356,910.
The Partnership trades on recognized global futures exchanges. In addition, the Partnership trades over the counter contracts in the form of forward foreign currency transactions.
See Footnote 4 of the 2008 Financial Statements for procedures established by the General Partner to monitor and minimize market and credit risks for the Partnership. The General Partner of the Partnership reviews on a daily basis reports of the performance of the Partnership, including monitoring the daily net asset value of the Partnership. The financial situation of the Commodity Broker is monitored on a monthly basis to monitor specific credit risks. The Commodity Broker does not engage in proprietary trading and thus has no direct market exposure which provides the General Partner with assurance that the Partnership, will not suffer trading losses through the Commodity Broker.
Results of Operations
Calendar Year 2008
At December 31, 2008 the Partnership had approximately $18.7 million in Class A assets .The JWH allocation was approximately $ 14.7 million. The balance was being held in interest-bearing accounts in anticipation of future allocations to JWH or other traders.
The Partnership recorded a gain of $6,796,320 or $1,348.35 per Class A unit, for the year 2008. That represents a gain of 55.28% for the year.
The Partnership continued to employ John W. Henry & Company, Inc. s (JWH) GlobalAnalyticsR Family of Programs.
Class A Units were positive 8.62% in January 2008 resulting in a Net Asset Value per unit of $2,649.47 as of January 31, 2008.
The Partnership experienced strong positive performance for the month of January.Fear returned to the markets as the December holiday season proved to be just a brief respite from the turbulence of last quarter. An important shift in the markets focus seemed to be emerging at the start of 2008.Last year the global economy was relatively strong. The market consternation was idiosyncratic and related to specific issues affecting the housing and credit markets in the U.S. In January, the concern was more generalized, as the market began to adjust for the possibility of a U.S. recession and a significant slowdown in global growth.
The Partnership was able to provide clients with a strong positive, uncorrelated return during a difficult month for traditional investments.
Class A Units were positive 10.18% in February 2008 resulting in a Net Asset Value per unit of $2,919.21 as of February 28, 2009.
Trading performance for the Partnership in February was exceptional. The data released during the month continues to point to a weakening in the U.S. economy. As the severity of the credit crisis and its ramifications become more apparent, numerous remedies have been enacted or proposed. Pessimism about the deteriorating state of the economy was often met with optimism about the prospects of official forms of economic stimulus, creating an interesting trading dynamic during the month. Some sectors were confined to broad ranges, while others experienced explosive moves. The Partnership benefited from historic movement in the price of many commodities as energies, grains, metals and soft commodities all contributed positively to the Partnerships performance.
As global demand pushed commodity prices to historic levels, the commodity markets generated the majority of the Partnerships February returns. While all commodity sectors were profitable, the greatest profits came from the agriculture markets, particularly from grains and soft commodities.
The energy sector was also profitable as crude oil surged above $100 per barrel; this indicates the drop in prices at the start of the year was simply a stall on the way to continued new highs. In addition to the old themes of strong demand and dollar weakness, the perception in the market that OPEC would defend levels below $90 per barrel helped to support prices. Natural gas was a significant contributor to the sectors profits during the month as it rallied in response to colder weather across much of the country.
Performance from the metals sector was positive for the month. Februarys return continued the strong performance for the Partnership since September of 2007 with six consecutive positive months, four of which returned in excess of 10 percent. The Partnership benefited from powerful moves in the commodity markets and also benefited from strong performance from many other parts of the portfolio.
Class A Units were positive 0.36% in March 2008 resulting in a Net Asset Value per unit of $2,929.86 as of March 31, 2008.
Currencies were the most profitable sector this month as interest rate differentials between the U.S. and Europe widened further, providing a fresh incentive to sell the U.S. dollar. The interest rate sector was once again at the center of the storm in March as the U.S Federal Reserve was active in its effort to restore confidence in the markets. Performance from this sector was slightly positive as gains from early March eroded as trends corrected later in the month. Positions in U.S. and Japanese interest rates outperformed positions in European rates.
In general, price action in the precious metals keyed off of developments in the financial markets. Gold soared to record highs above $1,000 per ounce early in the month as it enjoyed its status as a safe haven and store of value. When the markets staged their recovery, gold sold off sharply. Positions In both precious and base metals were unprofitable for the month. While crude oil prices forged new ground above $100 per barrel in March, it was natural gas that supplied a majority of the profits in the sector. Natural gas rallied more than 7% during the month as colder-than-expected temperatures and increased demand are expected to slow the build in natural gas inventories. Positions in London gas oil were also profitable. Crude oil prices rallied during the first half of the month only to give back gains at the end of March as the dollar recovered and forecasts for global growth were revised lower. The agricultural sector was a significant drag on performance in March as trading in all component markets was negative. Trading and price action in the grain markets was largely independent from the moves in the financial markets and the dollar. Most grain prices were enjoying a remarkable bull market heading into March and arguably due for a correction.
While the month contained significant reversals in some trends that resulted in performance finishing March below the inter-month peak, the Partnership was pleased with the continued positive results for the month and the quarter. JWH models performed as expected, given the volatile price action across multiple market sectors.
Class A Units were negative 5.45 % in April 2008 resulting in a Net Asset Value per unit of $ 2,770.30 as of April 30, 2008.
The Partnership's performance was negative in April as many of the long- term trends that have contributed to the positive year-to-date performance were interrupted or came to an end. In retrospect, the actions taken by the Federal Reserve Board(the Fed) in the second half of March to bail out Bear Stearns and add liquidity to the financial system marked an intermediate turning point in many markets. As volatility subsided and sentiment improved into April, long held positions were unwound. The performance of the Partnership during the month was attributable to widespread trend reversals in most market sectors, including positions in global equity indices, interest rates, currencies, and precious metals. Performance in agricultural commodities was mixed for the month. Price action was relatively tame when compared to the extreme volatility of the first quarter. The Partnership's performance in the energy sector was positive in April. Crude oil continued its march higher bolstered by the positive Partnershipament backdrop of strong demand and tight supplies, which advanced crude oil prices more than 12 percent for the month.
While the performance of the Partnership was negative in April, it was not unusual given the significant moves of the last 7 months. Positive performance from the energy sector served to partially offset significant reversals in most of the financial markets during April.
Class A Units were positive 4.45% in May 2008 resulting in a Net Asset Value per unit of $2,893.59 as of May 31, 2008.
The Partnership bounced back in May to produce positive performance for the month.The majority of the markets traded were relatively quiet and directionless with the exception of the energy sector which was the main driver of monthly trading profits. In the most notable market activity, crude traded above $135 per barrel, gasoline topped $4.00 at the pump in the U.S. and natural gas rallied more than 11 percent during the month. The Partnership's trading in energies was profitable and accounted for a majority of the Partnership's gains for the month.
Outside of the energy markets, the interest rate sector also contributed to the monthly gains, as the prospect for higher inflation globally and more stable financial markets outweighed concerns over slowing economic activity in the U.S. and other developed nations. Global equity markets, on the surface, were stable in May. The ranges were relatively tight and offered few opportunities for trend-followers. The currency markets were also quiet in May. Trading in the metals markets was also calm in May as price action was directionless. Trading in the agricultural markets was mixed and largely uneventful in May.
Overall, the Partnership is pleased with the positive performance achieved in May. The portfolio's diversification and balance provided the Partnership the ability to minimize losses in sectors that are not trending while capitalizing on markets that are trending which is the foundation of the Partnership's trend following philosophy.
Class A Units were positive 1.34 % in June 2008 resulting in a Net Asset Value per unit of $2,932.49 as of June 30, 2008.
The Partnership was positive in June marking the ninth month in the past ten of positive performance. The majority of the gains for the Partnership came from the commodity markets where the global demand for energy continues to push prices higher at the same time major flooding in the Midwest was impacting the outlook for the future supply of grain. The Partnership's long-term perspective has allowed it to continue to benefit from the extended bull market in commodities even as the currency and bond portions of the Partnership struggle to find clear trends amidst a seemingly ever changing outlook for both growth and inflation.
June's market headlines were dramatic and spoke to the very real issues of declining global stock markets, floods, strains in the financial system and a global energy crisis. The long running trends in commodity prices once again generated gains for the Partnership while the turmoil in the world economy had the effect of disrupting price action in the financial markets which created challenges for other parts of the Partnership's portfolio.
Class A Units were negative 14.06% in July 2008 resulting in a Net Asset Value per unit of $2,520.23 as of July 31, 2008.
July was a difficult month for the Partnership as many global markets experienced abrupt reversals in trend. The Partnership experienced losses in every market sector it trades. The largest losses came from the interest rate sector as the markets struggled to find direction amidst the conflicting effects of both inflationary and deflationary forces. Losses were also incurred in the energy sector resulting from dramatic falls in the price of both natural gas and crude oil during the month. The weakness in the energy markets spilled into other commodity markets possibly as a function of asset allocation shifts out of commodities in general. Trading in currencies was also unprofitable as the dollar responded to the headlines of the month in a manner similar to the global bond market.
The combination of abrupt price reversals in many major market sectors and the absence of sustained trends made it a difficult environment for products employing a long-term trend following strategy.
Class A Units were positive 7.47% in August 2008 resulting in a Net Asset Value per unit of $2,708.54 as of August 31, 2008.
The Partnership's performance was positive for the month of August. A number of major market moves that began last month and contributed negatively to July's performance followed through in August to serve as a major source of the Partnership's returns as the portfolio shifted to reflect new trends in energy, metals and the U.S. dollar.
The Partnership's repositioning after the sharp reversals experienced in many markets sectors last month led to the significant recovery in August. The market action and intensity was varied throughout the many sectors traded as commodities and currencies experienced sharp moves and increased volatility while other major market sectors, including equities and bonds, traded quietly through the turmoil. The JWH GlobalAnalytics program ability to utilize multiple position signals that vary timing from very short-term to very long-term allowed for a quick recovery of a good portion of July's losses.
Class A Units were positive 14.25 % in September 2008 resulting in a Net Asset Value per unit of $3,094.59 as of September 30, 2008.
September was one of the most unstable and volatile periods in the history of the U.S. financial markets. During the month, the world's credit markets virtually seized up, commodity prices plunged, some major stock indices declined by more than 10 percent, while some of the largest U.S. financial institutions were pushed to extinction. High volatility across most market sectors was a manifestation of investor fears and anxiety. The lingering but still powerful effect of the housing and sub-prime credit crisis continued to wreak havoc on Wall Street, while at the same time generating social and political acrimony across the U.S. as the nation debated the cost and merit of the government's policy response. Amidst this backdrop, the Partnership thrived while generating a double-digit return for the month.
Class A Units were a positive 13.62% in October 2008 resulting in a Net Asset Value of $3,516.01 as of October 31, 2008.
The Partnership's performance was exceptionally strong in October. The Partnership gained in excess of 13 percent for the month and was able to navigate through extreme volatility and capitalize on market moves of historic proportions. Continued weakness in the credit markets and a global decline in equity prices were themes that have been in place for much of the summer.
Currency trading was positive during the month as the foreign exchange markets were roiled by the worldwide financial crisis. The dollar, reasserting its status as the world's reserve currency, strengthened appreciably as investors sought a haven from plunging emerging market stocks, bonds and currencies. Arguably, the center of the storm shifted from the credit markets to the equity markets during October as stock prices across the globe reeled amidst unprecedented volatility. The Partnership's positions in European, Japanese and U.S. equity index futures were all profitable in October. Trading in interest rates was slightly unprofitable in October. The multitude of cross currents that passed through the markets during the month affected interest rate trends and led to mixed performance in specific markets across this part of the Partnership's portfolio. The Partnership's trading in commodities in general was profitable in October as many markets suffered record declines. In addition to poor returns and credit concerns, investors in long-only commodity indices may be further disheartened by the rise in commodity correlation with other assets and their failure to provide much needed diversification. The energy markets in particular made significant contributions to the Partnership's performance for the second month running as the prices of energy of all kinds continue to freefall. The benchmark crude oil contract dropped 36 percent during the month. Energies were the best performing sector for the Partnership with all positions producing positive performance.
Trading in the precious metals markets was mixed in October. The Partnership's trading in gold was slightly unprofitable during the month. Silver on the other hand did produce profits for the Partnership during October as it fell along with other commodities, unabated by any safe haven flows. Agricultural markets, like most commodities, also declined in October while generating profits for the Partnership.
Class A Units were a positive 4.53% in November 2008 resulting in a Net Asset Value of $3,675.46 as of November 30, 2008.
The Partnership's run of strong performance continued in November as many of the themes that were behind the Partnership's outstanding October results remain in place. Most trading sectors contributed positively to performance during the month as the global economy and world markets remained under pressure. In November, interest rates were the best-performing sector for the month as the market began to price in the next phase of the "less conventional" Federal Reserve Board (the Fed) policy. Currency trading continued to contribute to the positive returns with positions in the Japanese yen among the most profitable in the group. The metals sector was the only unprofitable sector as precious metals traded in an uneven fashion during the month. Class A Units were a positive 3.05% in December 2008 resulting in a Net Asset Value of $3,787.64 as of December 31, 2008.
The performance of the Partnership was positive during this period, even as certain long-running trends came to an end or were correcting. The interest rate sector was the best-performing element of the portfolio this month and was responsible for more than half of the Partnership's gain. Trading in the currency sector was slightly profitable. A continuation in the trend toward a stronger Japanese yen was positive for the Partnership as well as the continued decline in the value of the British pound. Trading in the energy sector was also profitable as crude oil continued its fall for most of the month. Trading performance from the metals sector was relatively tame in December with small gains attributable to profits from positions in precious metals. Erratic price action in gold and silver for an extended period of time left the Partnership with underweighted positions or on the sideline for much of the month. Trading in agricultural commodities was not noteworthy.
Calendar Year 2007
At December 31, 2007 the Partnership had approximately $11.7 million in Class A assets and no Class I assets. The JWH allocation was approximately $7.7 million. The balance was being held in interest-bearing accounts in anticipation of future allocations to JWH or other traders.
The Partnership recorded a gain of $1,997,816 or $522.26 per Class A unit, for the year 2007. That represents a gain of 27.24% for the year. The Partnership recorded a gain of $630.86 per Class I Unit, which represents a gain of 30.46% through November 30, 2007 when all Class I shares were redeemed, and the share class was closed out.
3 months ended March 31, 2007
The Partnership recorded a loss of $1,723,314 or $214.58 per Unit of Class A Units ( $216.69 for Class I Units, a gain of $1.43 for Class AA Units and a gain of $1.49 for Class II Units ) for the fiscal quarter ended March 31, 2007. This compares to a loss of $ 767,181 or $70.29 per Unit of Class A Units ($55.42 for Class I Units, a gain of $2.03 for Class AA Units and a gain of $2.11 for Class II Units) for the fiscal quarter ended March 31, 2006. The quarter ended March 31, 2007 showed a loss of 11.19% (total return) for the Class A Units of the Partnership ( 10.46% for the Class I Units, a gain of 0.14% for Class AA Units and a gain of 0.14% for Class II Units).
The Partnership continued to employ John W. Henry & Company, Inc. s (JWH) GlobalAnalyticsR Family of Programs.
Class A Units were positive 1.24% in January 2007 resulting in a Net Asset Value per unit of $ 1,940.87 as of January 31, 2007.
Class I Units were positive 1.51% resulting in a Net Asset Value of $2,102.21 as of January 31, 2007.
The Partnership's performance was positive for the month of January. The interest rate sector led performance with strong gains as the program s systematic trend following approach enabled it to profit from a weakening trend in European and U.S. fixed income markets. The Partnership's disciplined systematic investment style was able to profit despite short-term market moving events that caused spikes in volatility resulting in strong reversals. This type of activity diminished the Partnerships returns as the currency sector experienced losses due to a continuation of the reversal in the U.S. dollar's weakening trend (which started in December) against major European currencies.
Class A Units were negative 4.77% in February 2007 resulting in a Net Asset Value per unit of $1,848.37 as of February 28, 2007.
Class I Units were negative 4.50% resulting in a Net Asset Value of $2,007.54 as of February 28, 2007.
The Partnership's performance was negative for the month of February. This negative performance was a direct result of the explosion in volatility accompanying the last week of the month. Trading up to that point was positive for the month, but the events of the week reverberated throughout global markets and reversed what few trends had been evident earlier in the month. The events were primarily portrayed in the U.S. media as a stock market decline, but the issues were far broader than that. Whether pundits cared to lay the blame on the Chinese stock market or the trouble in the sub-prime loan sector, global markets awoke to a measure of short-term volatility not seen for many months which was not confined simply to the equities markets. As an example, the gold market hovered around the high $690s, a level not seen since May of last year. Similarly, the wheat, corn and soybean markets were hitting full-year highs as the last week of February opened. All of these markets suffered sharp declines during the last week, which translated to losses for the Partnership.
Class A Units were negative 7.89% in March 2007 resulting in a Net Asset Value per unit of $1,702.45 as of March 31, 2007.
Class I Units were negative 7.63% resulting in a Net Asset Value per unit of $1,854.33 as of March 31, 2007.
The Partnership experienced losses in March as the explosion in volatility that occurred at the end of February continued into early March. On February 27th, the largest drop in China's stock market in a decade and the global sell-off that followed seemed to shift market sentiment towards fears about the slowdown in the U.S. housing market and the overall health of the U.S. economy.
Update on the RCM recovery effort
Second Refco Distribution (Not applicable to investors who came into the Partnership after October 2005).
On March 29 2007, The Everest Partnership, L.P. received the second in a series of anticipated distributions in the Refco matter in the amount of $368,878.96. Of the approximately $7,500,000 that became inaccessible in October 2005, the Partnership has now received $1,743,404.47. That represented an amount equal to approximately 23% of the frozen assets. The Partnership increased the Class A units for each investor in the Partnership by their pro rata share of the distribution. Checks were mailed for the benefit of any investors who had redeemed.
3 months ended June 30, 2007
The Partnership recorded a gain of $ 1,255,628 or $195.27 per Unit of Class A Units ($ 228.44 for Class I Units, a loss of $8.39 for Class AA Units and a loss of $8.72 for Class II Units) for the fiscal quarter ended June 30, 2007. This compares to a loss of $420,650 or $77.87 per Unit of Class A Units ($64.19 for Class I Units, .80 for Class AA Units and .84 for Class II Units) for the fiscal quarter ended June 30, 2006. The quarter ended June 30, 2007 showed a gain of 11.47%( total return) for the Class A Units of the Partnership (12.32% for the Class I Units, - -0.83% for Class AA Units and -0.83% for Class II Units).
Class A Units were negative -0.06 % in April 2007 resulting in a Net Asset Value per unit of $ 1,701.514 as of April 30, 2007.
Class I Units were positive 0.21 % resulting in a Net Asset Value per unit of $1,858.17 as of April 30, 2007.
The Partnership's performance was essentially even for the month of April.The Partnership's disciplined systematic trading approach took advantage of opportunities that emerged as global financial markets recovered from the explosion in volatility that occurred at the end of February and continued into March. The temporary dislocation of the financial markets appears to have laid the foundation for a major shift in trends. The currency, indices and agriculture sectors all achieved gains as various components of each sector developed and sustained profitable trends. The currency sector was the Partnership's best performer as various previously range-bound currencies set historic highs and lows.
Trading Allocation
At the end of May 2007 the Partnership redeemed it's allocation to the World Wide Bond Program and is invested 100% in the Global Analytics Program (JWH GAP).
Class A Units were positive 0.60 % in May 2007 resulting in a Net Asset Value per unit of $1,711.64 as of May 31, 2007.
Class I Units were positive 0.86% resulting in a Net Asset Value per unit of $1,874.11 as of May 31, 2007.
The Partnership's performance was positive for the month of May. The interest rate sector drove performance with strong gains as the Partnership's disciplined systematic trend-following approach enabled it to profit from falling bond markets in the U.S. and Europe. The stock indices sector also added to positive performance as better-than-expected earnings and stronger-than-expected economic growth sent equity indexes across the globe to new highs. The currency sector was slightly positive for the month also as the dollar strengthened against the Japanese yen.
Class A Units were positive 10.87 % in June 2007 resulting in a Net Asset Value per unit of $1,897.72 as of June 30, 2007.
Class I Units were positive 11.13 % resulting in a Net Asset Value per unit of $2,082.77 as of June 30, 2007.
The Partnership's performance was positive for the month of June. Despite potentially market-dislocating events, including terrorism incidents in the United Kingdom and the sub prime mortgage problems in the United States, the Partnership was able to profit as its long-term trend-following approach excelled, holding profitable positions through the market turmoil. The Partnership s systematic approach has profited over the past few months since the equity induced dislocation of financial markets that occurred towards the end of the 1st quarter, which we suggested might be a precursor for a major shift in market trends.
Update on the RCM recovery efforts (For those investors in the Partnership in October 2005)
On June 28th, 2007 Everest received a third distribution From Refco in the amount of $668,172.21. That amount was equal to approximately 9 cents on the dollar of the original amount that was frozen in October 2005. This, in addition to the other distributions, brought the recovery to approximately 32 cents on the dollar as of the end of June 2007. The Partnership increased the Class A units for each investor in the Partnership by their pro rata share of the distribution. Checks were mailed for the benefit of any investors who have redeemed.
3 months ended September 30, 2007
The Partnership recorded a gain of $453,710 or $ 82.25 per Unit of Class A Units $107.27 (for Class I Units, loss of $7.51 for Class AA Units and loss of $7.81 for Class II Units) for the fiscal quarter ended September 30, 2007. This compares to a loss of $ 4,750,979or $(26.08) per Unit of Class A Units $(10.28) for Class I Units), $1,340.82 for Class AA Units and $1,394.52 for Class II Units for the fiscal quarter ended September 30, 2006. The quarter ended September 30, 2007 showed a gain of 4.33%( total return) for the Class A Units of the Partnership (a gain of 5.15% for the Class I Units, a loss of 0.75% for Class AA Units and a loss of 0.75% for Class II Units).
Class A Units were negative 1.78% in July 2007 resulting in a Net Asset Value per unit of $1,863.90 as of July 31, 2007.
Class I Units were negative 1.52% resulting in a Net Asset Value of $2,051.12 as of July 31, 2007.
After a positive 10.87 performance in June, the Partnership declined in July as many of the financial market trends that contributed to the Partnership's second quarter gains were significantly disrupted or ended during the month. Although the Partnership was down for the month, JWH gave back less of the June gains than many of their peers in the managed futures industry. Some of the largest managers in the industry had losses greater than 10% in July, and even large Partnerships with multiple advisors had similar declines.
Clearing Broker News
The Partnerships futures clearing broker, Calyon Financial, Inc. announced plans to merge with the clearing broker Fimat, a subsidiary of Societe Generale. The Merger will create a new firm to be known as Newedge and should be completed sometime in the 1st quarter of 2008.
Class A Units were negative 8.25% in August 2007 resulting in a Net Asset Value per unit of $1,710.05 as of August 31, 2007.
Class I Units were negative 7.99% resulting in a Net Asset Value of $1,887.20 as of August 31, 2007.
Partnership's performance was impacted as the crisis that began in the sub-prime mortgage market continued spreading globally, undermining demand for corporate bonds, equities and commercial paper.The spread of the U.S. contagion produced short-lived, sharp and unusually well correlated spikes in volatility throughout global financial markets. As a result, the Partnership s long-term diversified trend- following methodology suffered losses as the market dislocations forced the exiting of positions.
Auditors
Spicer Jeffries LLP ceased to serve the Partnership as accountants effective September 17, 2007. The Sarbanes- Oxley Act of 2002 has mandatory rules on partner rotation in order for auditors to be considered independent, and those rules have forced this decision.
Class A Units were positive 15.78 % in September 2007 resulting in a Net Asset Value per unit of $1,979.97 as of September 30, 2007.
Class I Units were positive 16.05% resulting in a Net Asset Value of $2,190.04 as of September 30, 2007.
The Partnership posted significant gains in excess of 15% for the month of September as the U.S. Federal Reserve Board (the Fed) cut its benchmark rate on September 18th by 50 basis points to 4.75 percent in an attempt to shore up an economy threatened by a housing recession. The rate cut sparked concerns about inflation as some investors bought commoditiesto hedge against rising consumer prices. The falling U.S. dollar made raw materials priced in dollars cheaper for buyers holding foreign currencies.The Partnership gained for a second quarter in a row, as its systematic trend-following approach capitalized on the dollar's plunge and also benefited from the enhanced appeal of energies, grains and precious metals.
The agriculture sector was the Partnership s strongest performer for the month as the slumping dollar, which enhanced the appeal of grains as an inflation hedge, and a global grain shortfall drove wheat and soybean prices to record highs. The currency sector was positive for the month as the U.S. dollar hit record lows in the wake of the larger-than- expected interest rate cut by the Fed.
Refco Distribution (For those investors in the Partnership in October 2005)
On September 20, 2007 Everest received another Distribution from Refco in the amount of $342,699.06. That amount was equal to approximately 4.55 cents on the dollar of the original amount that was frozen in October 2005. This, in addition to the other distributions, brought the recovery to approximately 36.55 cents on the dollar so far. The Partnership increased the Class A units for each investor in the Partnership by their pro rata share of the distribution. Checks were mailed for the benefit of any investors who had redeemed. These changes did not apply those who have come into the Partnership after October 2005.
During the reporting period, fiscal quarter ended September 30, 2007, additional Units sold consisted of zero limited partnership Units; there were zero general partnership Units sold during the period. Additional Units sold during the period represented a total of $ zero. Investors redeemed a total of 1630.38 Units during the period and the General Partner redeemed zero Units. At the end of the period there were 5,298.499 Units outstanding (including zero Units owned by the General Partner). As of September 30, 2007 the estimated Class AA NAV per unit was $989.27 and Class II NAV per unit was $1,028.94.
During the fiscal quarter ended September 30, 2007, the Partnership was exposed to credit risk in connection with the bankruptcy filing by RCM, the Partnership ' s former foreign currency broker.
3 months ended December 31, 2007
The Partnership recorded a gain of $3,779,436 or $459.32 per Unit of Class A Units ($ $511.84 for Class I Units), $2,718.15 for Class AA Units and $2,827.17 for Class II Units) for the fiscal quarter ended December 31, 2007. This compares to a loss of $1,267,541 or $146.82 per Unit of Class A Units ($140.68 for Class I Units), $3.03 for Class AA Units and $3.15 for Class II Units) for the fiscal quarter ended December 31, 2006.
Class A Units were a positive 8.19% in October 2007 resulting in a Net Asset Value of $2,142.08.
Class I Units were a positive 8.45% resulting in a Net Asset Value of $2,375.10 as of October 31, 2007.
The Partnership's performance was positive for the month of October. Apprehension returned to the financial markets resulting from speculation that credit market losses could potentially further hurt the broader U.S. economy. The resulting increase in market volatility benefited the Partnership's disciplined, long-term systematic trading approach as energy and metals markets surged as the dollar continued its plunge and as the Federal Reserve Board (the Fed) lowered its benchmark rate by 25 basis points to 4.5 percent in the hopes of keeping the U.S. economy from stalling.
The energy sector was the Partnership's strongest performer for the month as crude oil led petroleum products higher. The metals and stock indices sectors were both positive for the month after the economy expanded more-than-forecasted and the Fed cut its benchmark rate. U.S. stocks rose for the third straight month and gold reached its highest price in 27 years.
Class A Units showed a gain of 13.50% in November 2007 resulting in a Net Asset Value of $2,431.19. The year-to- date return for 2007 was +26.82% for the Class A Units.
The interest rate sector was the Partnership's best performer in November as global interest rates continued their move lower. The decline in interest rates in November had an impact on currency exchange rates. The dollar dropped precipitously against a number of the world's major currencies. The sharp decline in the value of the dollar against some of the world's major currencies impacted other markets and contributed to profits in other sectors of the portfolio.
Auditors
The Partnership has selected the Chicago firm of Ryan & Juraska, Certified Public Accountants (R&J), to conduct the 2007 audit and tax work. R&J specialize in Broker-Dealers, Commodity Pool Operators, Commodity Trading Advisors and Hedge Partnerships.
Class A Units showed a gain of 0.33% in December 2007, resulting in a Net Asset Value of $2,439.29. The year-to- date return for 2007 was +27.24% for the Class A Units.
Everest held on to its investment with JWH while two of the nation's top 5 broker-dealers either pulled out of all JWH investments (Merrill Lynch) or issued a sell signal for JWH managed Partnerships with a white paper to back up their conclusions. Although I understand their frustration, the fact is that each of these firms acted at almost the exact bottom of JWH's performance cycle for our Partnership, recommending a pull out at almost the exact wrong time. Long term trend following requires a lot of patience. We appreciate the discipline of every investor and broker who has remained with the Partnership, and we are making efforts to create a better investor experience.
Refco
On December 14, 2007 Partnership received $1,912,484 upon the sale of the remaining Refco receivable. This brought the recovery from 36.69 cents on the dollar to 62.25 cents on the dollar and ended the Refco recovery effort. The Partnership increased the class A units for each investor in the Partnership by their pro-rate share, and mailed checks for the benefit of those who have redeemed. These changes did not apply those who have come into the Partnership after October 2005.
During the reporting period, fiscal quarter ended December 31, 2007, no additional Units were sold by the limited partnership; there were no general partnership Units sold during the period. Additional Units sold during the period represented a total of $0.00 . Investors redeemed a total of 145.20299 Class A Units, 351.88382 Class AA Units, 48.14901 Class I Units and 58.95415 Class II Units during the period. Additionally, there were 191.014 Units transferred from Class AA to Class A 0.00 Units transferred from Class II to Class I. At the end of the period there were 4793.61 Units outstanding (including no Units owned by the General Partner).
See Footnote 7 of the Financial Statements for 2007 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 7, the General Partner reviews on a daily basis reports of the Partnership's performance, including monitoring of the daily net asset value of the Partnership. The General Partner also reviews the financial situation of the Partnership's Clearing Broker on a monthly basis. The General Partner relies on the policies of the Clearing Broker to monitor specific credit risks. The Clearing Broker does not engage in proprietary trading and thus has no direct market exposure, which provides the General Partner assurance that the Partnership will not suffer trading losses through the Clearing Broker.
During the fiscal quarter ended December 31, 2007, the Partnership was exposed to credit risk in connection with the bankruptcy filing by RCM, the Partnership's former foreign currency broker. See Items 1 and 3 above for additional information.
Inflation
Inflation does have an effect on commodity prices and the volatility of commodity markets; however, inflation is not expected to have an adverse effect on the Partnership's operations or assets.
Calendar Year 2006
At December 31, 2006 the Partnership had approximately $14.8 million in Class A assets and approximately $1.9 million in Class I assets. The JWH allocation was approximately $18.0 million which includes $ 1.3 million of notional Partnershiping.
The Partnership recorded a loss of $7,206,352 or $321.07 per Class A unit, for the year 2006. That represents a loss of 14.35% for the year. The Partnership recorded a loss of $270.57 per Class I Unit, which represents a loss of 11.56% for the year.
First Quarter 2006
The Partnership recorded a loss of $767,181 or $70.29 per Unit of Class A Units ($55.42 for Class I Units, $2.03 for Class AA Units and $2.11 for Class II Units) for the fiscal quarter ended March 31, 2006. This compares to a loss of $3,249,420 or $218.23 per Unit of Class A Units ($202.84 for Class I Units) for the fiscal quarter ended March 31, 2005. The quarter ended March 31, 2006 showed a loss of 3.14% (total return) for the Class A Units of the Partnership (- 2.37% for the Class I Units, 0.09% for Class AA Units and 0.09% for Class II Units).
The Partnership continued to employ John W. Henry &
Company, Inc.'s (JWH) GlobalAnalyticsR Family of Programs, Worldwide Bond Program and Currency Strategic Allocation Program.
Class A Units were negative 2.71% in January 2006 resulting in a Net Asset Value per unit of $2,177.48 as of January 31, 2006.
Class I Units were negative 2.45% resulting in a Net Asset Value of $2,284.32 as of January 31, 2006.
Update on the RCM recovery efforts
The Official Committee of Creditors in the Refco case posted a website for information and updates. It has a summary of events in October, November and December 05; a calendar of events for January and February of 06; a bankruptcy basics primer; FAQs; and a section to ask questions. The site is at: www.refcocommittee.com.
Everest Asset Management, Inc. remained available to answer any questions specific to the Everest Partnership. The Partnership's offering documents were updated and the Partnership received new investments in January and February.
Class A Units were negative 5.91% in February 2006 resulting in a Net Asset Value per unit of $2,048.72 as of February 28, 2006.
Class I Units were negative 5.65% resulting in a Net Asset Value of $2,155.24 as of February 28, 2006.
Class A Units were positive 5.81% in March 2006 resulting in a Net Asset Value per unit of $2,167.80 as of March 31, 2006.
Class I Units were positive 6.08% resulting in a Net Asset Value per unit of $2,286.17 as of March 31, 2006.
During the reporting period, fiscal quarter ended March 31, 2006, additional Units sold consisted of 264.9 limited partnership Units; there were zero general partnership Units sold during the period. Additional Units sold during the period represented a total of $575,000. Investors redeemed a total of 637.11 Units during the period and the General Partner redeemed zero Units. At the end of the period there were 13,940.87 Units outstanding (including zero Units owned by the General Partner).
As of March 31, 2006 the estimated Class AA NAV per unit was $2,348.31 and Class II NAV per unit was $2,442.49.
During the fiscal quarter ended March 31, 2006, the Partnership was exposed to credit risk in connection with the bankruptcy filing by RCM, the Partnership s former foreign currency broker. See Note 1 of the Notes to Financial Statements above for additional information.
Second Quarter 2006
The Partnership recorded a loss of $420,650 or $77.87 per Unit of Class A Units ($64.19 for Class I Units, $0.80 for Class AA Units and $0.84 for Class II Units) for the fiscal quarter ended June 30, 2006. This compares to a gain of $1,781,153 or $113.12 per Unit of Class A Units ($134.00 for Class I Units) for the fiscal quarter ended June 30, 2005. The quarter ended June 30, 2006 showed a loss of 3.59%( total return) for the Class A Units of the Partnership (2.81% for the Class I Units, 0.03% for Class AA Units and 0.03% for Class II Units).
The Partnership continued to employ John W. Henry & Company, Inc.'s (JWH) GlobalAnalyticsR Family of Programs, Worldwide Bond Program and Currency Strategic Allocation Program.
Class A Units were positive 13.63% in April 2006 resulting in a Net Asset Value per unit of $2,463.35 as of April 30, 2006.
Class I Units were positive 13.50% resulting in a Net Asset Value of $2,594.70 as of April 30, 2006.
Update on the RCM recovery efforts
The Committee has been successful in bringing money into the various Refco estates during the last month, with two legal actions settled or pending settlement. In addition, on May 2nd, the Judge in the case granted the two RCM groups two more weeks to work out a consensual plan which would allow the case to remain in a Chapter 11. The general partner remains available to answer any questions specific to the Everest Partnership.
Class A Units were negative 3.85% in May 2006 resulting in a Net Asset Value per unit of $2,368.52 as of May 31, 2006.
Class I Units were negative 3.24% resulting in a Net Asset Value of $2,510.69 as of May 31, 2006.
Update on the RCM recovery efforts
* The ongoing dispute at the Refco Capital Markets (RCM) between the securities customers and the FX customers (Everest) has been resolved after much negotiation. This should greatly facilitate the distribution of assets at hand and the distribution of future recoveries. This agreement should avoid much costly litigation and time delays.
* The 'bar date' for the filing of all claims against RCM has been set for July 17th. Everest has already filed it's claim. It may take six to eight weeks to process and verify all claims. Although there could be further delays, it is possible that we will see a distribution of the assets on hand at RCM by the fourth quarter of this year, maybe as early as October.
Class A Units were negative 11.76% in June 2006 resulting in a Net Asset Value per unit of $2,089.94 as of June 30, 2006.
Class I Units were negative 11.50% resulting in a Net Asset Value of $2,221.98 as of June 30, 2006.
Update on the RCM recovery efforts
An agreement among securities customers and general unsecured creditors of RCM was filed with the courts on June 30. A motion was filed seeking bankruptcy court approval of the agreement. The terms of the agreement are complex, to say the least. It is a settlement between certain parties claiming to be 'securities' customers of RCM and certain parties purporting to be foreign exchange customers/general unsecured creditors of RCM. Everest would fall into the latter camp.
During the reporting period, fiscal quarter ended June 30, 2006, additional Units sold consisted of 156.72 limited partnership Units; there were zero general partnership units sold during the period. Additional Units sold during the period represented a total of $350,495. Investors redeemed a total of 1,550.34 Units during the period and the General Partner redeemed zero Units. At the end of the period there were 12,547.25 Units outstanding (including zero Units owned by the General Partner).
As of June 30, 2006 the estimated Class AA NAV per unit was $2,347.50 and Class II NAV per unit was $2,441.65.
During the fiscal quarter ended June 30, 2006, the Partnership was exposed to credit risk in connection with the bankruptcy filing by RCM, the Partnership ' s former foreign currency broker. See Note 1 of the Notes to Financial Statements above for additional information.
Third Quarter 2006
The Partnership recorded a loss of $4,750,979 or $ (26.08) per Unit of Class A Units ($ (10.28) for Class I Units, $1,340.82 for Class AA Units and $1,394.52 for Class II Units) for the fiscal quarter ended September 30, 2006. This compares to a gain of $801,389 or $49.22 per Unit of Class A Units ($69.81 for Class I Units) for the fiscal quarter ended September 30, 2005. The quarter ended September 30, 2006 showed a loss of 1.25 %( total return) for the Class A Units of the Partnership (a loss of 0.46% for the Class I Units, 57.09% for Class AA Units and 57.09% for Class II Units).
The Partnership continued to employ John W. Henry & Company, Inc.'s (JWH) GlobalAnalyticsR Family of Programs, Worldwide Bond Program and Currency Strategic Allocation Program. Class A Units were negative 11.06% in July 2006 resulting in a Net Asset Value per unit of $1,858.73 as of July 31, 2006.
Class I Units were negative 10.80% resulting in a Net Asset Value of $1,982.00 as of July 31, 2006.
Class A Units were positive 7.63% in August 2006 resulting in a Net Asset Value per unit of $2,000.56 as of August 31, 2006.
Class I Units were positive 7.89% resulting in a Net Asset Value of $2,138.44 as of August 31, 2006.
Update on the RCM recovery efforts
There has been a substantial development in the Refco case. After weeks of intensive efforts, on September 14, 2006 Refco, Inc. and all of its subsidiaries and affiliates who are the Debtors, filed a plan of Chapter 11 ( the Plan ) and a Disclosure Document with the bankruptcy Court. The Plan has the support of the Creditor Committees, the Debtors, the RCM Trustee and has signatures of a 'supermajority' of creditors at the RCM level.A hearing for approval of the Disclosure Statement is scheduled for October 16, 2006, at which time any objections will be heard. It cannot be determined in advance whether any objections will become an obstacle, or whether the Court will approve the Plan. If it moves forward, the Plan is slated to be confirmed by the Court on or before December 15, 2006, and it should become effective on or before December 31, 2006 (Effective Date).
During the reporting period, fiscal quarter ended September 30, 2006, additional Units sold consisted of 70.08 limited partnership Units; there were zero general partnership Units sold during the period. Additional Units sold during the period represented a total of $150,505. Investors redeemed a total of 374.02 Units during the period and the General Partner redeemed zero Units. At the end of the period there were 12,243.312 Units outstanding (including zero Units owned by the General Partner).
As of September 30, 2006 the estimated Class AA NAV per unit was $1,006.76 and Class II NAV per unit was $1,047.13.
During the fiscal quarter ended September 30, 2006, the Partnership was exposed to credit risk in connection with the bankruptcy filing by RCM, the Partnership ' s former foreign currency broker. See Note 1 of the Notes to Financial Statements above for additional information.
Fourth Quarter 2006
The Partnership recorded a loss of $1,267,541 or $ 146.82 per Unit of Class A Units ($140.68 for Class I Units), $3.03 for Class AA Units and $ 3.15 for Class II Units) for the fiscal quarter ended December 31, 2006. This compares to a loss of $1,634,747 or $138.06 per Class A Unit for the fiscal quarter ending December 31, 2005, ($123.35 for Class I Units). The quarter ended December 31, 2006 showed a loss of 7.11% (total return) for the Class A Units of the Partnership; a loss of 6.36% (total return) for the Class I Units, and 0.01% for Class AA and II Units.
Class A Units were a negative 5.53% in October 2006 resulting in a Net Asset Value of $1,949.77.
Class I Units were a negative 5.27% resulting in a Net Asset Value of $2095.25 as of October 31, 2006.
Update on the RCM Recovery Efforts / Write Down of RCM Receivable
Refco, Inc. filed a plan under Chapter 11 (the 'Plan') and a Disclosure Document with the Bankruptcy Court. The Plan was confirmed by the Bankruptcy Court and became effective December 26, 2006. Based on the estimated recovery amounts contained in the schedules of the Plan and Disclosure Document which the Bankruptcy Court is being asked to approve in the Refco case, the General Partner as of October 31, 2006 (but effective September 30, 2006) reduced the value of the Class AA and Class II assets to 40% of the amounts at which such assets held at Refco were valued as of October 17, 2005. As of October 17, 2005 the assets were valued at $7,482,332. The adjustment is $4,489,399 with a remaining asset balance of $2,992,933.
In accordance with Generally Accepted Accounting Principles the write down was reflected in the statement of operations at September 30, 2006. The estimate was determined after the issuance of our September 30, 2006 investor account statements, and therefore the October investor statements that were issued in November reflected the revised Net Asset Values for September 30, 2006.
Class A Units showed a gain of 6.38% in November 2006 resulting in a Net Asset Value of $ 2074.23.
Class I Units showed a gain of 6.65% resulting in a Net Asset Value of $ 2234.50.
Class A Units showed a loss of 7.58% in December 2006, resulting in a Net Asset Value of $ 1,917.03.
Class I Units showed a loss of 7.32% resulting in a Net Asset Value of $ 2071.02. Refco Summary for Investors in the Partnership October 2005
On December 28, 2006, The Everest Partnership, L.P. received the first in a series of anticipated distributions in the Refco matter. Of the approximately $7,500,000 that became inaccessible in October 2005, the Partnership received $1,365,525.51. That represented an amount equal to approximately 18% of the frozen assets. The Partnership increased the Class A units for each investor in the Partnership by their pro rata share of the distribution, and lowered the Class 'AA' units. This was reflected as an increase in the Class 'A' (or Class 'I') units on the December 2006 client statements and a decrease in the Class 'AA' (or Class II units). Checks were mailed in the middle of January 2007 for the benefit of any investors who had redeemed.
During the reporting period, fiscal quarter ended December 31, 2006, additional Units sold consisted of 113.61 limited partnership Units; there were no general partnership Units sold during the period. Additional Units sold during the period represented a total of $ 238,000. Investors redeemed a total of 824.27 Class A Units, 460.17 Class AA Units and 36.73 Class II Units during the period. Additionally, there were 762.22 Units transferred from Class AA to Class A 96.01 Units transferred from Class II to Class I. At the end of the period there were 10,625.001 Units outstanding (including no Units owned by the General Partner).
As of December 31, 2006 the estimated Class AA NAV was $1,003.73 and the estimated Class II NAV was $1,043.98.
See Footnote 4 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 4, 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.
During the fiscal quarter ended December 31, 2006, the Partnership was exposed to credit risk in connection with the bankruptcy filing by RCM, the Partnership's former
foreign currency broker. See Items 1 and 3 above for additional information.
Inflation
Inflation does have an effect on commodity prices and the volatility of commodity markets; however, inflation is not expected to have an adverse effect on the Partnership's operations or assets.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Introduction
Past Results Are Not Necessarily Indicative of Future Performance
The Partnership is a speculative commodity pool. The market sensitive instruments held by it are acquired for speculative trading purposes, and all or substantially all of the Partnership's assets are subject to the risk of trading loss. Unlike an operating company, the risk of market sensitive instruments is integral, not incidental, to the main line of business of the Partnership.
Market movements result in frequent changes in the fair market value of the open positions of the Partnership and, consequently, in its earnings and cash flow. The market risk of the Partnership is influenced by a wide variety of factors, including the level and volatility of interest rates, exchange rates, equity price levels, the market value of financial instruments, the diversification effects among the open positions of the Partnership and the liquidity of the markets in which it trades.
The Partnership can acquire and/or liquidate both long and short positions in a wide range of different financial and metals markets. Consequently, it is not possible to predict how a particular future market scenario will affect performance, and the past performance of the Partnership is not necessarily indicative of its future results.
Value at Risk is a measure of the maximum amount which the Partnership could reasonably be expected to lose in a given market sector. However, the inherent uncertainty of the Partnership's speculative trading and the recurrence in the markets traded by the Partnership of market movements far exceeding expectations could result in actual trading or non-trading losses far beyond the indicated Value at Risk or the experience of the Partnership to date (i.e., "risk of ruin"). In light of the foregoing as well as the risks and uncertainties intrinsic to all future projections, the inclusion of the quantification included in this section should not be considered to constitute any assurance or representation that the losses of the Partnership in any market sector will be limited to Value at Risk or by the attempts of the Partnership to manage its market risk.
Standard of Materiality Materiality as used in this section, "Qualitative and Quantitative Disclosures About Market Risk," is based on an assessment of reasonably possible market movements and the potential losses caused by such movements, taking into account the leverage, optionality and multiplier features of the market sensitive instruments of the Partnership.
Quantifying the Trading Value at Risk of the Partnership
Qualitative Forward-Looking Statements
The following quantitative disclosures regarding the market risk exposures of the Partnership contain "forward-looking statements" within the meaning of the safe harbor from civil liability provided for such statements by the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934). All quantitative disclosures in this section are deemed to be forward- looking statements for purposes of the safe harbor, except for statements of historical fact.
The risk exposure of the Partnership in the various market sectors traded by the commodity trading advisor is quantified below in terms of Value at Risk. Due to the mark-to-market accounting of the Partnership, any loss in the fair value of the Partnership's open positions is directly reflected in the earnings (realized or unrealized) of the Partnership and cash flow (at least in the case of exchange-traded contracts in which profits and losses on open positions are settled daily through variation margin).
Exchange maintenance margin requirements have been used by the Partnership as the measure of its Value at Risk. Maintenance margin requirements are set by exchanges to equal or exceed the maximum losses reasonably expected to be incurred in the fair value of any given contract in 95%- 99% of any one-day intervals. The maintenance margin levels are established by dealers and exchanges using historical price studies as well as an assessment of current market volatility (including the implied volatility of the options on a given futures contract) and economic Partnershipamentals to provide a probabilistic estimate of the maximum expected near-term one-day price fluctuation. Maintenance margin has been used rather than the more generally available initial margin, because initial margin includes a credit risk component which is not relevant to Value at Risk.
In the case of market sensitive instruments which are not exchange traded (almost exclusively currencies in the case of the Partnership), the margin requirements for the equivalent futures positions have been used as Value at Risk. In those rare cases in which a futures-equivalent margin is not available, margins of the dealers have been used.
In quantifying the Value at Risk of the Partnership, 100% positive correlation in the different positions held in each market risk category has been assumed. Consequently, the margin requirements applicable to the open contracts have simply been aggregated to determine the aggregate Value at Risk for each trading category. The diversification effects resulting from the fact that the positions of the Partnership are rarely, if ever, 100% positively correlated have not been reflected.
The Trading Value at Risk in Different Market Sectors of the Partnership
The following table indicates the trading Value at Risk associated with the open positions of the Partnership by market category as of December 31, 2008. All open position trading risk exposures of the Partnership have been included in calculating the figures set forth below. As of December 31, 2008, the total capitalization of the Partnership was approximately $18,713,395, all in Class A shares. .
Material Limitations on Value at Risk as an Assessment of Market Risk
The face value of the market sector instruments held by the Partnership is typically many times the applicable maintenance margin requirement (maintenance margin requirements generally ranging between approximately 1% and 10% of contract face value) as well as many times the capitalization of the Partnership. The magnitude of the open positions of the Partnership creates a "risk of ruin" not typically found in most other investment vehicles. Because of the size of its positions, certain market conditions that are unusual, but historically recurring from time to time, could cause the Partnership to incur severe losses over a short period of time. The foregoing Value at Risk table, as well as the past performance of the Partnership, give no indication of this "risk of ruin."
Non-Trading Risk
The Partnership has non-trading market risk on its foreign cash balances not needed for margin. However, these balances (as well as any market risk they represent) are immaterial.
The Partnership holds a portion of its assets in cash on deposit with Newedge Financial Inc. ("Newedge") with substantially all of the remainder on deposit with Horizon Cash Management, LLC. (Horizon) in short term, highly liquid investments. The Partnership has cash flow risk on these cash deposits because if interest rates decline, so will the interest paid out by Newedge at the 91-day Treasury bill rate. In addition, should short term interest rates decline, so will the interest earnings for assets on deposit with Horizon. The Partnership assets managed by Horizon are deposited in an account in the custodial department of the Northern Trust Company, and invested in U.S. government securities and other interest- bearing obligations at the direction of Horizon. Horizon is responsible for the investment management of the assets of the Partnership not deposited with Newedge as margin monies or held in Partnership operating accounts. Horizon is registered with the Securities and Exchange Commission (SEC) as an investment adviser. Horizon may invest in U.S. government securities and other instruments as permitted by the agreement with the Partnership. Horizon receives an annual fee of 0.25% payable monthly on the assets it manages. However, Horizon only receives its service fee if the accrued monthly interest income earned on the assets of the Partnership managed by Horizon exceeds the 91-day U.S. Treasury Bill rate. As of December 31, 2008, the Partnership had approximately $19.2 million in cash on deposit with Newedge and Horizon.
Qualitative Disclosures Regarding Primary Trading Risk Exposures
The following qualitative disclosures regarding the market risk exposures of the Partnership, except for (i) those disclosures that are statements of historical fact and (ii) the descriptions of how the Partnership and the Trading Advisor manage the primary market risk exposures of the Partnership, constitute forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. The primary market risk exposures of the Partnership as well as the strategies used and to be used by the Trading Advisor for managing such exposures are subject to numerous uncertainties, contingencies and risks, any one of which could cause the actual results of the risk controls of the Partnership to differ materially from the objectives of such strategies. Government interventions, defaults and expropriations, illiquid markets, the emergence of dominant Partnershipamental factors, political upheavals, changes in historical price relationships, an influx of new market participants, increased regulation and many other factors could result in material losses as well as in material changes to the risk exposures and the risk management strategies of the Partnership. There can be no assurance that the current market exposure and/or risk management strategies of the Partnership will not change materially or that any such strategies will be effective in either the short- or long-term. Investors must be prepared to lose all or substantially all of their investment in the Partnership.
The following were the primary trading risk exposures of the Partnership as of December 31,2008, by market sector.
Interest Rates. Interest rate risk is a major market exposure of the Partnership. Interest rate movements directly affect the price of the sovereign bond positions held by the Partnership and indirectly the value of its stock index and currency positions. Interest rate movements in one country as well as relative interest rate movements between countries materially impact the profitability of the Partnership. The primary interest rate exposure of the Partnership is to interest rate fluctuations in the United States and the other G-7 countries. However, the Partnership also takes positions in the government debt of smaller nations - e.g., Australia. The General Partner anticipates that G-7 interest rates will remain the primary market exposure of the Partnership for the foreseeable future. The changes in interest rates which have the most effect on the Partnership are changes in long-term, as opposed to short- term, rates. Most of the speculative positions held by the Partnership are in medium to long-term instruments. However, since February 2000, the JWH program added a European short rate, the Euribor, which is closely tied to the actions of the European Central Bank. This was done to add short term interest rate diversification.
Currencies. The currency exposure of the Partnership is to exchange rate fluctuations, primarily fluctuations which disrupt historical pricing relationships between different currencies and currency pairs. These fluctuations are influenced by interest rate changes as well as political and general economic conditions. The Partnership trades in a large number of currencies, including cross-rates - i.e., positions between two currencies other than the U.S. dollar. However, the Partnership's major exposures have typically been in the dollar/yen, dollar/Euro, dollar/Swiss franc, dollar/Australian dollar and dollar/pound positions. The General Partner does not anticipate that the risk profile of the Partnership's currency sector will change significantly in the future. The currency trading Value at Risk figure includes foreign margin amounts converted into U.S. dollars with an incremental adjustment to reflect the exchange rate risk inherent to the dollar-based Partnership in expressing Value at Risk in a functional currency other than dollars.
Stock Indices. The primary equity exposure of the Partnership is to equity price risk in the G-7 countries. The stock index futures traded by the Partnership are by law limited to futures on broadly based indices. Ordinarily the primary exposures are in the FTSE (England), Nikkei (Japan) and All Ordinaries (Australia) stock indices. However, in February 2000, the JWH firm added the German DAX Index Futures. The General Partner anticipates little trading in non-G-7 stock indices. The Partnership is primarily exposed to the risk of adverse price trends or static markets in the major U.S., European and Japanese indices. (Static markets would not cause major market changes but would make it difficult for the Partnership to avoid being "whipsawed" into numerous small losses.)
Metals. The metals market exposure of the Partnership is to fluctuations in the price of gold and silver (precious metals) and the base metals of copper, aluminum, zinc, and nickel at JWH.
Commodities. The exposure to commodities of the Partnership from JWH GAP includes corn, soybeans, soybean meal, soybean oil, wheat, and the softs of coffee, cotton, and sugar, as well as a full complement of other agricultural commodities.
Energy. The exposure of the Partnership to energy contracts in the JWH GAP is heating oil, unleaded gasoline, crude oil natural gas and others.
Qualitative Disclosures Regarding Non-Trading Risk Exposure
The following were the only non-trading risk exposures of the Partnership as of December 31, 2008.
Foreign Currency Balances. The primary foreign currency balances of the Partnership are in Japanese yen, Euros, British pounds and Australian dollars. The Partnership controls the non-trading risk of these balances by regularly converting these balances back into dollars (no less frequently than twice a month).
Cash Position. The Partnership holds a portion of its assets in cash at Newedge Financial Inc and Newedge SNC. 95% of these assets earn interest at the average rate paid on 91-day U.S. Treasury Bills purchased during the month. Substantially all of remainder is held at Horizon in short term liquid investments.
Qualitative Disclosures Regarding Means of Managing Risk Exposure
The General Partner monitors the performance of the Partnership and the concentration of its open positions, and consults with the commodity trading advisor concerning the overall risk profile of the Partnership. If the General Partner felt it necessary to do so, the General Partner could require the commodity trading advisor to close out individual positions as well as entire programs traded on behalf of the Partnership. However, any such intervention would be a highly unusual event. The General Partner primarily relies on the commodity trading advisor's own risk control policies while maintaining a general supervisory overview of the Partnership's market risk exposures.
Risk Management
JWH attempts to control risk in all aspects of the investment Process - from confirmation of a trend to determining the optimal exposure in a given market, and to money management issues such as the startup or upgrade of investor accounts. JWH double checks the accuracy of market data, and will not trade a market without multiple price sources for analytical input. In constructing a portfolio, JWH seeks to control overall risk as well as the risk of any one position, and JWH trades only markets that have been identified as having positive performance characteristics. Trading discipline requires plans for the exit of a market as well as for entry. JWH factors the point of exit into the decision to enter (stop loss). The size of the JWH positions in a particular market is not a matter of how large a return can be generated but of how much risk it is willing to take relative to that expected return.
To attempt to reduce the risk of volatility while maintaining the potential for excellent performance, proprietary research is conducted on an ongoing basis to refine the JWH investment strategies. Research may suggest substitution of alternative investment methodologies with respect to particular contracts; this may occur, for example, when the testing of a new methodology has indicated that its use might have resulted in different historical performance. In addition, risk management research and analysis may suggest modifications regarding the relative weighting among various contracts, the addition or deletion of particular contracts from a program, or a change in position size in relation to account equity. The weighting of capital committed to various markets in the investment programs is dynamic, and JWH may vary the weighting at its discretion as market conditions, liquidity, position limit considerations and other factors warrant.
JWH may determine that risks arise when markets are illiquid or erratic, such as may occur cyclically during holiday seasons, or on the basis of irregularly occurring market events. In such cases, JWH at its sole discretion may override computer-generated signals and may at times use discretion in the application of its quantitative models, which may affect performance positively or negatively.
Adjustments in position size in relation to account equity have been and continue to be an integral part of the JWH investment strategy. At its discretion, JWH may adjust the size of a position in relation to equity in certain markets or entire programs. Such adjustments may be made at certain times for some programs but not for others. Factors which may affect the decision to adjust the size of a position in relation to account equity include ongoing research, program volatility, assessments of current market volatility and risk exposure, subjective judgment, and evaluation of these and other general market conditions.
Item 8.
Item 8.	Financial Statements and Supplementary Data
Reference is made to the financial statements and the notes thereto attached to this report.
THE EVEREST FUND, LIMITED PARTNERSHIP Supplementary Summarized Quarterly Data For the four Quarters for 2008 and 2007
Item 9.
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
During fiscal year 2008 The Partnership has selected the firm of McGladrey & Pullen, LLP Independent Registered Public Accountant, to conduct the 2008 audit and tax work and the 2007 audit work related to the 2007 financial statements to be included in the 2007 amended Form 10-K filing with the SEC. The former auditor of the Partnership, Ryan & Juraska, was dismissed by the Partnership on December 31, 2008 and such dismissal was approved by the audit committee. The audit report issued by Ryan & Juraska on the 2007 financial statements contained an unqualified opinion on those financial statements. During the two most recent fiscal years and any subsequent period preceding the dismissal of Ryan & Juraska as auditors of the Partnership, there were no disagreements with Ryan & Juraska.
During fiscal year 2007, The Partnership selected the Chicago firm of Ryan & Juraska, Certified Public Accountants, to conduct the 2007 audit and tax work The former auditor of the Partnership, Spicer Jefferies, LLP, was dismissed by the Partnership on September 17, 2007 and such dismissal was approved by the audit committee. The audit report issued by Spicer Jefferies, LLP on the 2006 financial statements contained an unqualified opinion on those financial statements. During the two most recent fiscal years and any subsequent period preceding the dismissal of Spicer Jefferies, LLP as auditors of the Partnership, there were no disagreements with Spicer Jefferies, LLP.
Item 9A(T).
Item 9A(T).	Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The General Partner carried out an evaluation, under the supervision and with the participation of the General Partner's management, including its principal executive Officer, Peter Lamoureux, and financial officer, Peter Ecob, of the effectiveness of the design and operation of the Partnership's disclosure controls and procedures as contemplated by Rule 13(a)-15(e) of the Securities Exchange Act of 1934, as amended. Any control system, no matter how well designed and operated, can provide only reasonable (not absolute) assurance that its objectives will be met. Furthermore, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Based on their evaluation as of December 31, 2008, the General Partner's principal executive officer and principal financial officer concluded that the Partnership's disclosure controls and procedures were effective.
Changes In Internal Control Over Financial Reporting
There was no change in the Partnership's internal control over financial reporting in the 12 months ended December 31, 2008 that has materially affected, or is reasonably likely to materially affect, the Partnership's internal control over financial reporting.
The General Partner's management has conducted the evaluation of the internal control over financial reporting, as required by Exchange Act Rules 13a-15 and 15d-15.
Report on Management's Assessment of Internal Control Over Financial Reporting
The management of the General Partner is responsible for establishing and maintaining adequate internal control over financial reporting by the Partnership.
The General Partner's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. The Partnership's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Partnership; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States, and that receipts and expenditures of the Partnership are being made only in accordance with authorizations of management of the Partnership; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Partnership's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. All internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention of overriding controls. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of the Partnership's internal control over financial reporting , based on the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on that assessment, management concluded that, as of December 31, 2008, the Partnership's internal control over financial reporting was effective based on the criteria established in Internal Control-Integrated Framework.
This annual report does not include an attestation report of the Partnership's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management's report in this annual report.
Item 9B.
Item 9B.	Other Information.
None
Part III
Item 10.
Item 10.	Director and Executive Officer of the Registrant.
The General Partner, Everest Asset Management, Inc., is the sole General Partner and commodity pool operator of the Partnership. It is a Delaware corporation incorporated in 1987, is and has been registered with the CFTC as a commodity pool operator since July 1, 1988 and is and has been a member of the National Futures Association since that date. Its address is 1100 North 4th Street, Suite 143, Fairfield, Iowa 52556 and its telephone number at such location is (641) 472-5500.
The officer and director of the General Partner as of December 31, 2008 is listed below:
Peter Lamoureux. Mr. Lamoureux, (born in 1950), has been President, Treasurer and Secretary of the General Partner since November 1996. He joined the General Partner and Capital Management Partners, Inc., a selling agent and affiliate of the Partnership at that time, in 1991 and has had primary responsibility for Partnership syndication since October 1994. Prior to joining the General Partner, Mr. Lamoureux was Manager of Refined Products with United Fuels International, Inc., an energy brokerage firm in Waltham, Massachusetts. He received his B.S. in Education from Rhode Island College, R.I.
Financial Officer of the Registrant. Peter Ecob is the financial officer of the General Partner. Peter Ecob. Mr. Ecob (born in 1949) has been Financial Officer of the General Partner since May 2002. Prior to joining the General Partner, Mr. Ecob was Controller of Sea Mar Community Health Centers, a non-profit health care provider in Washington State. He received his B.A. and M.B.A. from the University of Washington in Seattle, Washington.
The General Partner does not trade commodities for its own account but its principals may. Because of their confidential nature, records of such trading will not be available to Limited Partners for inspection.
There have been no material criminal, civil or administrative actions during the preceding five years or ever against the General Partner or its principal.
Audit Committee Financial Expert
The Board of Directors of Everest Asset Management, Inc. has determined that Peter Lamoureux, President, Treasurer and Secretary of the General Partner, qualifies as an audit committee financial expert in accordance with the applicable rules and regulations of the U.S. Securities and Exchange Commission. Mr. Lamoureux is not "independent" as that term is defined in Item 7(a)(3)(iv) of Schedule 14A under the Exchange Act.
Code of Ethics
The General Partner has adopted a code of ethics for its chief executive officer and persons performing similar functions. A copy of the General Partner's code of ethics may be obtained at no charge by written request to Everest Asset Management, Inc., 1100 North 4th Street, Suite 143, Fairfield, Iowa 52356 or by calling 641-472-5500.
Item 11.
Item 11. Executive Compensation.
The Partnership has no directors or executive officers. As a limited partnership, the business of the Partnership is managed by its General Partner which is responsible for the administration of the business affairs of the Partnership and receives the compensation described in Item 1 "Business" hereof. The officers and directors of the General Partner receive no compensation from the Partnership for acting in their respective capacities with the General Partner.
The General Partner is the manager of the Partnership. General Partner receives .05% management fees monthly.
Item 12.
Item 12. Security Ownership of Certain Owners and Management and Related Stockholder Matters.
(a) As of December 31, 2008 there were two partners known to the Partnership to own beneficially more than 5% of the outstanding Units: RBRF Limited Partnership 5.24% Alan L Schoolcraft 15.14%
(b) As of December 31, 2008, management ownership was: by Peter Lamoureux with 45.69336 class A units. This represents 0.9248% of class A units of the Partnership.
(c) As of December 31, 2008, no arrangements were known to the Partnership, including no pledge by any person of Units of the Partnership or shares of the General Partner or the affiliates of the General Partners, such that a change in control of the Partnership may occur at a subsequent date.
Item 13.
Item 13. Certain Relationships and Related Transactions.
(a) None other than the compensation arrangements described herein.
(b) None.
(c) None.
The Partnership filed Registration Statements on Form S-18 and Form 10, therefore this information is not required to be included.
Item 14.
Item 14. Principal Accounting Fees and Services
Audit Fees
For the year ended December 31,2008 the aggregate fee billed by McGladrey and Pullen, LLP, Independent Registered Public Accountant, for professional services rendered for the audit of the financial statements included in this annual report was $55,000. . For the year ended December 31,2007 the aggregate fee billed by McGladrey and Pullen, LLP, Independent Registered Public Accountant, for professional services rendered for the audit of the financial statements included in this annual report was $20,000. .
For the year ended December 31,2007 the aggregate fee billed by Ryan and Juraska, Certified Public accountants, for professional services rendered for the audit of the financial statements included in this annual report was $17,500. .
Audit Related Fees
None.
Tax Fees
The audit committee pre-approved all fees for the Everest Partnership, L.P. for fiscal year 2008 and 2007.
For the year ended December 31, 2008, the aggregate fees billed by RSM McGladrey, Inc.( an associated entity of McGladrey & Pullen, LLP) for federal and state tax return preparation totaled $20,000.
For the year ended December 31, 2007 the aggregate fees billed by Ryan and Juraska, Certified Public accountants, for federal and state tax return preparation totaled $20,000.
All Other Fees
None.
Part IV
Item 15.
Item 15. Exhibits, Financial Statement, Schedules.
(a) The following documents are included herein:
(1) Financial Statements:
	a. Report of Independent Registered Public Accounting Firm: McGladrey & Pullen for 2008 and 2007 Spicer Jeffries for 2006
b. Statements of Financial Condition, December 31, 2008, 2007 and 2006.
c. Schedule of Investments, December 31, 2008
d. Schedule of Investments, December 31, 2007
e. Statements of Operations, Years Ended December 31, 2008 2007 and 2006.
f. Statements of Changes in Partners' Capital, Years Ended December 31, 2008, 2007 and 2006 .
g. Statements of Cash Flows, Years Ended December 31, 2008, 2007 and 2006.
Notes to Financial Statements.
Acknowledgment
(2) All financial statement schedules have been omitted because the information required by the schedules is not applicable, or because the information required is contained in the financial statements included herein or the notes thereto.
(3) Exhibits:
See the Index to Exhibits annexed hereto.
See form 8-K
Exhibits:
		 See The Index to Exhibits annexed hereto.
	(c)	Financial Statement Schedules
		None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Partnership has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date:	 April 15, 2009		The Everest Fund, L.P.
By: Everest Asset Management, Inc. (General Partner) By: /s/ Peter Lamoureux Peter Lamoureux, President Secretary, Treasurer, and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Partnership and in the capacities and on the date indicated.
Date:	April 15, 2009
By: /s/ Peter Lamoureux Peter Lamoureux, President, Secretary, Treasurer, and Director Index to Exhibits:
Exhibit No. Description
3.4 Amended and Restated Agreement of Limited Partnership dated as of May 1, 1995.
Advisory Contract between the Partnership, the General Partner and John W. Henry & Company, Inc. dated December 1, 1990.
10.6	 Amendment to Advisory Contract between the Partnership, the General Partner and John W. Henry & Company, Inc. dated April 1, 1995.
10.9	 Certificate of Limited Partnership for Everest Futures Fund II L.P. dated March 15, 1996.
Limited Partnership Agreement for Everest Futures Fund II L.P. dated as of March 29, 1996.
Confidential Private Placement Memorandum and Disclosure Document dated August 21, 1996.
Notes to the Exhibits:
Exhibits 3.4, 10.5, 10.6, 10.9, 10.10 and 28.1 are incorporated by reference to the Partnership's Form 10 accepted on September 19, 1996.
The Exhibits referenced above bear the exhibit numbers corresponding to those indicated in the Partnership's Registration Statements.
Number of Attached Exhibits
None.
Yours truly,
Peter Lamoureux President
EVEREST FUND, L.P. (An Iowa Limited Partnership)
ACKNOWLEDGEMENT
THE EVEREST FUND, L.P. (an Iowa Limited Partnership)
Years Ended December 31, 2008 and 2007 ______________________________
Page(s)
Report of Independent Registered Public Accounting Firm
Financial Statements
Statements of Financial Condition
Condensed Schedules of Investments 						 4-5
Statements of Operations
Statements of Changes in Partners' Capital 					 7-8
Statements of Cash Flows
Notes to Financial Statements 							10-21
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the General Partner of The Everest Fund, L.P.
We have audited the accompanying statements of financial condition, including the condensed schedules of investments, of The Everest Fund, L.P. (the "Partnership") as of December 31, 2008 and 2007, and the related statements of operations, changes in partners' capital (net asset value) and cash flows for each of the two years in the period ended December 31, 2008. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The Everest Fund, L.P. as of December 31, 2008 and 2007, and the results of its operations, its cash flows and changes in its partners' capital (net asset value) for each of the two years in the period ended December 31, 2008, in conformity with U.S. generally accepted accounting principles.
We were not engaged to examine management's assessment of the effectiveness of The Everest Fund, L.P. internal control over financial reporting as of December 31, 2008, included in the accompanying Management's Annual Report on Internal Control over Financial Reporting and, accordingly, we do not express an opinion thereon.
/S/ McGladrey & Pullen, LLP
Chicago, Illinois March 30, 2009
THE EVEREST FUND, L.P. (an Iowa Limited Partnership)
STATEMENTS OF FINANCIAL CONDITION December 31, 2008 and 2007 ______________________________
ASSETS
	 2008	2007 Equity in broker trading accounts Cash and cash equivalents		$19,223,344 $10,886,787 Net unrealized gain on open contracts	 659,646	 282,372 			 ----------- ----------- 	 19,882,990 11,169,159
Cash and cash equivalents	 42,444	 761,476 Interest receivable		 19,985	 45,406 			 ----------- ----------- Total assets $19,945,419 $11,976,041 =========== ===========
LIABILITIES AND PARTNERS' CAPITAL (NET ASSETS)
Liabilities Management fees payable 26,278 13,855 Advisor Incentive fees payable 885,100 Brokerage commissions and fees payable 87,955 50,840 Accounts payable and accrued expenses 99,809 93,067 Redemptions payable 132,882 125,272 ---------- ----------- 1,232,024 283,034 ---------- -----------
Partners' Capital (Net Assets)
Limited partners, A shares -4,940.65 and 4,793.61 units outstanding, respectively 18,713,395 11,693,007 ---------- -----------
Total liabilities and partners' capital (net assets)m $19,945,419 $11,976,041 =========== ===========
The accompanying notes are an integral part of these financial statements.
THE EVEREST FUND, L.P. (an Iowa Limited Partnership)
CONDENSED SCHEDULE OF INVESTMENTS December 31, 2008 _____________________________
Unrealized Percent of Gain (Loss) Expiration Number Partners' On Open Date of Contracts Capital Contracts ___________ ____________ ____________ __________ Long U.S. Futures Contracts Interest rates Mar09 - Sept09 135 2.73 % $513,553 Metals Feb 09 6 0.13 23,440 Agriculture Mar 09 6 0.00 % (475) Currencies Mar 09 - Dec 09 79 0.20 % 36,638 ---------- ---------- Total Long Futures Contracts 3.06 % 573,156 ---------- ----------
Short U.S. Futures Contracts Interest rates Mar 09 4 (0.01)% (1,563) Energy Mar09 - April09 48 0.26 48,923 Agriculture Mar 09 56 0.15 % 28,206 Currencies Mar 09 16 0.06 % 10,800 Indices Mar 09 1 0.00 % 124 --------- ----------- Total Short Futures Contracts 0.46 % 86,490 --------- -----------
Total Futures Contracts 3.52 % $659,646 ========== ============
The accompanying notes are an integral part of these financial statements.
THE EVEREST FUND, L.P. (an Iowa Limited Partnership)
CONDENSED SCHEDULE OF INVESTMENTS December 31, 2007 __________________________
Unrealized Percent of Gain (Loss) Expiration Number Partners' On Open Date of Contracts Capital Contracts ___________ ____________ ___________ ___________ Long U.S. Futures Contracts Currency Dec 08 30 0.22 % $26,250 Agriculture Mar 08 189 1.65 % 192,168 Interest Rates Mar 08 59 (0.46)% (53,980) Metals Feb08-Mar08 22 0.03 % 4,000 Energy Mar08-Apr08 50 1.58 % 184,569 -------- --------- Total Long Futures Contracts 3.02 % 353,007 --------- --------- Short U.S. Futures Contracts Interest Rates Mar08-Sep08 (0.19)% (22,448) Petroleum Mar 08 .08 % 9,250 --------- --------- Total Short Futures Contracts (0.11)% (13,198) --------- --------- Total Futures Contracts 2.91 % 339,809 --------- ---------
Long U.S. Forward Contracts Currency Mar 08 0.46 % 53,396 --------- --------- Total Long Forward Contracts 0.46 % 53,396 --------- ---------
Short U.S. Forward Contracts Currency Mar 08 (0.95)% (110,833) --------- --------- Total Short Forward Contracts (0.95)% (110,833) --------- --------- Total Forward Contracts (0.49)% (57,437) --------- --------- Total Futures and Forward Contracts 2.42 % $282,372 --------- ---------
The accompanying notes are an integral part of these financial statements.
THE EVEREST FUND, L.P. (an Iowa Limited Partnership)
STATEMENTS OF OPERATIONS Years Ended December 31, 2008 and 2007 ________________________
2008		2007 ----------- ----------- Trading gains (losses)
Net gain (loss) from trading Realized $8,926,247 $2,590,992 Change in unrealized 377,274 (46,282) Foreign currency translation (65,372) 18,975 ----------- ----------- 9,238,149 2,563,685 Less:brokerage commissions and fees (46,283) (126,081) Net trading gain 9,191,866 2,437,604 ----------- -----------
Net Investment Income (loss)
Income Interest income 448,528 628,662 Dividend income 876 29,098 Gain on sale of Refco receivable - 1,664,824 Other income 3,845 - --------- ----------- 453,249 2,322,584 --------- ----------- Expenses General Partner management fees 820,394 548,389 Advisor management fees 231,992 255,844 Advisor incentive fees 1,651,810 - Professional fees 111,284 156,857 Administrative expenses 33,315 33,620 ---------- ----------- Total expenses 2,848,795 994,710 ---------- -----------
Net investment income (loss) (2,395,546) 1,327,874 ---------- ----------- Net Income $6,796,320 $3,765,478 ---------- -----------
Net income per unit of partnership interest outstanding for the entire year: Class A Units $1,348.35 $522.26 Class I Units - $630.86 Class AA Units - $2,703.69 Class II Units - $2,812.13 ----------- ------------
The accompanying notes are an integral part of these financial statements.
THE EVEREST FUND, L.P. (an Iowa Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (NET ASSETS)
Year Ended December 31, 2008 _________________________
Number of Net Asset Units Amount Value Per Class A Units Unit --------------- Partners' Capital,December 31,2007 4,793.61 $11,693,007
Additions 1,173.08 3,356,910 Redemptions (1,026.04) (3,099,704) Offering costs - (33,138) Net income - 6,796,320 ----------- ------------ Partners' Capital,December 31,2008 4,940.65 $18,713,395 $3,787.64 ----------- ------------ ----------
The accompanying notes are an integral part of these financial statements.
THE EVEREST FUND, L.P. (an Iowa Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (NET ASSETS)
Year ended December 31, 2007 ________________________
Number of Net Asset Units Amount Value Per Class A Units Unit --------------- Partners' Capital,December 31,2006 7,712.69 $14,785,460 Additions 25.51 50,000 Redemptions (3,520.97) (6,375,499) Transfers between classes 576.38 1,235,725 Offering costs - (495) Net income - 1,997,816 ----------- ------------ Partners' Capital,December 31,2007 4,793.61 $11,693,007 $2,439.29 ----------- ------------ --------- Class I Units --------------- Partners' Capital,December 31,2006 932.14 $1,930,473 Additions 23.78 50,000 Redemptions (993.87) (2,197,979) Transfers between classes 37.95 75,760 Offering costs - (1,448) Net income - 143,194 ----------- ------------ Partners' Capital,December 31,2007 - $- $- ----------- ------------ -------- Class AA Units --------------- Partners' Capital,December 31,2006 1,786.21 $1,792,866 Redemptions (1,066.54) (2,016,751) Transfers between classes (719.67) (1,235,725) Net income - 1,459,610 ------------ ------------- Partners' Capital,December 31,2007 - $- $- ------------ ------------- -------- Class II Units --------------- Partners' Capital,December 31,2006 193.97 $202,499 Redemptions (121.11) (291,597) Transfers between classes (72.86) (75,760) Net income 164,858 ------------ ------------- Partners' Capital,December 31,2007 - $- $- ------------ ------------- -------- Total - All Units ------------------ Partners' Capital,December 31,2006 10,625.01 $18,711,298 Additions 49.29 100,000 Redemptions (5,702.49) (10,881,826) Transfers between classes (178.20) - Offering costs (1,943) Net income - 3,765,478 ----------- ------------- Partners' Capital, December 31, 2007 4,793.61 $11,693,007 $2,439.29 ----------- ------------- ----------
The accompanying notes are an integral part of these financial statements.
THE EVEREST FUND, L.P. (an Iowa Limited Partnership)
STATEMENTS OF CASH FLOWS Year ended December 31, 2008 and 2007 ________________________________
2008 2007 ---------- ---------- Operating activities Net income $6,796,320 $3,765,478 Adjustments to reconcile net income to net cash provided by operating activities: Net change in unrealized gain (loss) on open contracts (377,274) 46,282
Decrease in receivable from Refco Capital Markets, Ltd. 1,627,407 Decrease in interest receivable 25,421 48,680 Increase in incentive fees payable 885,100 - Increase in brokerage commissions and fees payable 37,115 50,840 Increase (Decrease) in management fees payable 12,423 (17,431) (Decrease) in payable to the General Partner - (72,484) Increase in accounts payable and accrued expenses 7,080 37,305 ---------- ------------ Net cash provided by operating activities 7,386,185 5,486,077 ---------- ------------
Financing activities Partner additions of units, net offering cost 3,323,772 98,057 Redemptions (3,092,432) (11,654,482) ----------- ------------ Net cash provided by (used in) financing activities 231,340 (11,556,425) ----------- ------------
Net increase (decrease) in cash and cash equivalents 7,617,525 (6,070,348) ----------- ------------
Cash and cash equivalents Beginning of year 11,648,263 17,718,611 ----------- ------------ End of year 19,265,788 11,648,263 =========== ============
End of year cash and cash equivalents consist of: Cash in broker trading accounts 19,223,344 10,886,787 Cash and cash equivalents 42,444 761,476 ----------- ------------ Cash and cash equivalents, end of year $19,265,788 $11,648,263 ============ ==============
Supplemental schedule of noncash investing and financing activities Redemptions payable	 $132,882 $125,610
The accompanying notes are an integral part of these financial statements.
THE EVEREST FUND, L.P. (an Iowa Limited Partnership)
NOTES TO FINANCIAL STATEMENTS Years Ended December 31, 2008 and 2007 _____________________________________
1.	Organization and Business
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.
Effective June 4, 2004, the Partnership introduced a new share category, Class I Units or Institutional Units which have an ongoing Offering and Organization fee of 1/12 of 0.10% of the NAV per unit (as defined) per month. The private placement offering is continuing at a gross subscription price per unit equal to net asset value per unit, plus an organization and offering cost reimbursement to the General Partner, and an on going compensation fee equal to 1% of the net asset value of Class I Units sold. Effective December 31, 2007, Class I Units were terminated.
Pursuant to the discussion in Note 4, the Partnership had Class AA and II Units which are fully redeemed and terminated as of December 31, 2007.
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 toss, 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.
THE EVEREST FUND, L.P. (an Iowa Limited Partnership)
NOTES TO FINANCIAL STATEMENTS Years Ended December 31, 2008 and 2007 _______________________
2.	Summary of Significant Accounting Policies, continued
Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents Cash equivalents represent short-term highly liquid investments with maturities of 90 days or less at the date of acquisition. The Partnership maintains deposits with high quality financial institutions in amounts that are in excess of federally insured limits; however, the Partnership does not believe it is exposed to any significant credit risk.
Redemptions Payable Pursuant to the provisions of Statement of Financial Accounting Standards No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity ("SFAS 150"), redemptions approved by the General Partner prior to month end with a fixed effective date and fixed amount are recorded as redemptions payable as of month end.
Reclassifications Certain amounts in the 2007 financial statements have been reclassified to conform to the 2008 year classifications.
Fair Value of Financial Instruments The financial instruments held by the Company are reported in the statements of financial condition at fair value, or at carrying amounts that approximate fair value, due to their highly liquid nature and short-term maturity.
Foreign Currency Translation The Partnership's functional currency is the U.S. dollar, however, it transacts business in currencies other than the U.S. dollar. Assets and liabilities denominated in foreign currencies are translated at the prevailing exchange rates as of the date of the statement of financial conditions. Gains and losses on investment activity are translated at the prevailing exchange rate on the date of each respective transaction while year-end balances are translated at the year-end currency rates. Realized and unrealized foreign exchange gains or losses are included in trading income in the statements of operations.
Income Taxes No provision for income taxes has been made in the accompanying financial statements as each partner is responsible for reporting income (loss) based upon the pro rata share of the profits or losses of the Partnership. The Partnership files U.S. federal and state tax returns. The 2005 through 2008 tax years generally remain subject to examination by U.S. federal and most state tax authorities.
THE EVEREST FUND, L.P. (an Iowa Limited Partnership)
NOTES TO FINANCIAL STATEMENTS Years Ended December 31, 2008 and 2007 ________________________________
2.	Summary of Significant Accounting Policies, continued
Recently adopted accounting pronouncements In April 2007 the FASB issued Interpretation No. 39-1, Amendment of FASB Interpretation No. 39 ("FIN 39-1"). FIN 39-1 defines "right of setoff" and specifies what conditions must be met for a derivative contract to qualify for this right of setoff. It also addresses the applicability of a right of setoff to derivative instruments and clarifies the circumstances in which it is appropriate to offset amounts recognized for multiple derivative instruments executed with the same counterparty under a master netting arrangement and fair value amounts recognized for the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable) arising from the same master netting arrangement as the derivative instruments. This interpretation is effective for fiscal years beginning after November 15, 2007. The adoption of FIN 39-1 did not have a material impact on the Partnership's financial statements.
In January 2007, the Partnership adopted the Financial Accounting Standards Board Interpretation No No. 48, Accounting for Uncertainty in Income Taxes (FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with Statement No. 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition of tax benefits, classification on the balance sheet, interest and penalties, accounting in interim periods, disclosure, and transition. Adoption of FIN 48 did not have a material effect on the Partnership's financial position or results of operations.
Recent accounting pronouncements In March 2008, the FASB issued SFAS No. 161, Disclosure about Derivative Instruments and Hedging Activities, an Amendment of FASB Statement No. 133 ("SFAS No. 161"). SFAS No. 161 is intended to improve transparency in financial reporting by requiring enhanced disclosures of an entity's derivative instruments and hedging activities and their effects on the entity's financial position, financial performance, and cash flows. SFAS No. 161 applies to all derivative instruments within the scope of SFAS No. 133. It also applies to non-derivative hedging instruments and all hedged items designated and qualifying as hedges under SFAS No. 133. SFAS No. 161 amends the current qualitative and quantitative disclosure requirements for derivative instruments and hedging activities set forth in SFAS No. 133 and generally increases the level of disaggregation that will be required in an entity's financial statements. SFAS No. 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about credit-risk related contingent features in derivative agreements. SFAS No. 161 is effective prospectively for financial statements issued for fiscal years and interim periods beginning after November 15, 2008.
THE EVEREST FUND, L.P. (an Iowa Limited Partnership)
NOTES TO FINANCIAL STATEMENTS Years Ended December 31, 2008 and 2007 ____________________________________
3.	Fair Value of Financial Instruments
Effective January 1, 2008, the Partnership adopted Statement of Financial Accounting Standard No. 157, Fair Value Measurement (SFAS 157), issued by the FASB. SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and sets out a fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Inputs are broadly defined under SFAS 157 as assumptions market participants would use in pricing an asset or liability. The three levels of the fair value hierarchy under SFAS 157 are described below:
Level 1. Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
Level 2. Inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly; and fair value is determined through the use of models or other valuation methodologies. A significant adjustment to a Level 2 input could result in the Level 2 measurement becoming a Level 3 measurement.
Level 3. Inputs are unobservable for the asset or liability and include situations where there is little, if any, market activity for the asset or liability. The inputs into the determination of fair value are based upon the best information in the circumstances and may require significant management judgment or estimation.
The following section describes the valuation techniques used by the Partnership to measure different financial instruments at fair value and includes the level within the fair value hierarchy in which the financial instrument is categorized. Fair value of exchange-traded contracts is based upon exchange settlement prices. Fair value of non-exchange-traded contracts is based on third party quoted dealer values on the Interbank market. These financial instruments are classified in Level 1 of the fair value hierarchy.
THE EVEREST FUND, L.P. (an Iowa Limited Partnership)
NOTES TO FINANCIAL STATEMENTS Years Ended December 31, 2008 and 2007 ________________________________
3.	Fair Value of Financial Instruments, continued
The following table presents the Partnership's fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 31, 2008:
Fair Value Measurements Using ----------------------------- Quoted Prices in Significant Significant Active Markets for Other Unobservable Identical Assets Observable Inputs Inputs Total (Level I) (Level II) (Level III) --------- ---------------- ---------------- ---------- Assets Cash and equivalents $18,547,687 $ 18,547,687 $ - $ - ------------ --------------
Investments Long Futures Contracts 573,156 573,156
Short Futures Contracts 86,490 86,490 ------------ -------------- 659,646 659,646 - - ------------ -------------- ------------- -----------
Total assets at fair value $ 19,207,333 $19,207,333 $ - $ - ------------ -------------- ------------- -----------
4.	Receivable from Refco Capital Markets, Ltd.
On October 13, 2005, Refco, Inc. ("Refco'') announced that liquidity within one of its operating subsidiaries, Refco Capital Markets, Ltd. ("RCM''), was no longer sufficient to continue operations and that RCM was imposing a fifteen day moratorium on all of its activities in an attempt to protect the value of that business. RCM acted as the Partnership's foreign currency broker at that time and at such date, approximately 20% of the Partnership's assets were held on deposit in accounts at RCM.
On October 17, 2005, Refco and certain subsidiaries filed a bankruptcy petition in New York seeking protection from creditors under Chapter 11 of the United States Bankruptcy Code. RCM was included in this filing and as a result, all of the dealings with RCM are subject to control by the Bankruptcy Court. In connection with the bankruptcy, the president of the General Partner was appointed to the Official Creditors Committee on October 28, 2005. Based on information provided to the Partnership by RCM, the Partnership had cash and open trade equity in neutral currency positions of approximately $7,500,000 remaining at RCM at October 31, 2005.
THE EVEREST FUND, L.P. (an Iowa Limited Partnership)
NOTES TO FINANCIAL STATEMENTS Years Ended December 31, 2008 and 2007 __________________________
4.	Receivable from Refco Capital Markets, Ltd., continued
Due to the above, effective October 31, 2005, the Partnership has created Classes AA and II of shares and transferred to such classes the value of Partnership assets held at RCM as of October 17, 2005, together with a reserve for the estimated expenses of collection and related matters. The amount of such assets which will become available to the Partnership, if any, is dependent on several matters associated with the bankruptcy of RCM. Depending on the disposition of these matters, the final net asset value may differ materially from the preliminary amounts which the Partnership has published since October 31, 2005. Redemptions of Classes AA and II are restricted until the final net asset value can be determined. Subsequent to October 31, 2005, redemptions and certain fees were calculated and paid on the net asset value of Class A and Class I units only, thus segregating the assets held by RCM and the reserve established in connection with the RCM legal proceedings.
On September 30, 2006 the Partnership reduced the value of the Class AA and Class III assets to 40% of the amounts of assets held at RCM, resulting in a remaining balance of $2,992,933. On December 28, 2006, the Partnership received the first in a series of anticipated distributions in the RCM bankruptcy of $1,365,526, representing approximately 18% and 46% of the original and reduced frozen asset balances, respectively. Checks were mailed for the benefit of any investors who had redeemed prior to the distribution receipt.
During the year ended December 31, 2007, the Partnership received an additional anticipated distribution in the Refco matter in the amount of $1,379,747, representing approximately 18% and 46% of the original and reduced frozen asset balances, respectively, in October 2005. On December 14, 2007, the Partnership sold its claim of the remaining Refco receivable and received an additional sum of $1,912,484, and recognized a realized gain of $1,664,824 on the sale. This brings the total recovery from 36.69% to 62.25% of the original frozen asset balance, and ends the Refco recovery effort. Upon the final sale of the Refco receivable, Class AA and II Units were terminated.
5.	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 6).
THE EVEREST FUND, L.P. (an Iowa Limited Partnership)
NOTES TO FINANCIAL STATEMENTS Years Ended December 31, 2008 and 2007 _________________________________
5.	Limited Partnership Agreement, continued
Subject to restrictions on the redemption of Series AA and Series II units by existing investors as mentioned above, Limited Partners may cause any or all of their Class A units to be redeemed as of the end of any month at the month end net asset value on fifteen days' prior written notice to the Partnership, (for Class I Units, as of the end of any quarter on forty-five days' notice), or such lesser period as is acceptable to the Partnership. 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.
As of December 31, 2008, the Partnership did not have any Series AA, Series I and Series II units outstanding.
6.	Agreements and Related Party Transactions
John W. Henry & Company, Inc. (JWH) serves as the Partnership's commodity trading advisor. JWH receives a monthly management fee equal to 0.167% (2% annually) of the Partnership's month-end net asset value, (as defined), and a quarterly incentive fee of 20% of the Partnership's new net trading profits, (as defined). The incentive fee is retained by JWH even though trading losses may occur in subsequent quarters; however, no further incentive fees are payable until any such trading losses (other than losses attributable to redeemed units and losses attributable to assets reallocated to another advisor) are recouped by the Partnership.
Effective November 2003, the General Partner charges the Partnership a monthly management fee equal to 0.50% of the Partnership's Class A beginning-of-month net asset value.
Effective June 2004, the General Partner charges the Partnership a monthly management fee equal to 0.229% of the Partnership's Class I beginning-of-month net asset value. From the monthly management fee the General Partner deducts the round turn trading costs and related exchange fees (between $5.80 to $10.70 per round turn trade on domestic exchanges, and higher for foreign exchanges) and pays the selling agents and certain other parties, if any, up to 50% of the fee retained by the General Partner. The General Partner may replace or add trading advisors at any time.
THE EVEREST FUND, L.P. (an Iowa Limited Partnership)
NOTES TO FINANCIAL STATEMENTS Years Ended December 31, 2008 and 2007 _____________________________
6.	Agreements and Related Party Transactions, continued
Beginning in mid-October 2005, the Partnership engaged Calyon Financial, Inc. ("CFI'') as the Partnership's futures and options on futures broker, and engaged, Calyon Financial, SNC ("CFS'') as the Partnership's foreign currency or forwards currency broker, (collectively referred to as the "Clearing Brokers''). On January 2, 2008 Calyon Financial, Inc. and SNC changed their company title to Newedge Financial, Inc. Newedge Financial, Inc. further changed their name to Newedge USA, LLC, as a result of a merger on September 1, 2008 between Newedge Financial, Inc. and Newedge USA, LLC. The agreements provide that the Clearing Brokers charge the Partnership brokerage commissions at the rate of between $5.80 to $10.70 per round-turn trade, plus applicable exchange, give up fees and NFA fees for futures contracts and options on futures contracts executed on domestic exchanges and over the counter markets. For trades on certain foreign exchanges, the rates may be higher.
The Partnership also reimburses the Clearing Brokers for all delivery, insurance, storage or other charges incidental to trading and paid to third parties.
The Partnership earns interest on 95% of the Partnership's average monthly cash balance on deposit with its Brokers at a rate equal to the average 91-day Treasury Bill rate for US Treasury Bills issued during that month.
The Partnership has also entered into an investment advisory agreement with Horizon Cash Management L.L.C. ("HCM''). At December 31, 2008 and 2007 approximately 93% and 89%, respectively of the partnership's capital were funds deposited with a commercial bank and invested under the direction of HCM. HCM receives a monthly cash management fee equal to 1/12 of .25% (.25% annually) of the average daily assets under management if the accrued monthly interest income earned on the Partnership's assets managed by HCM exceeds the 91-day U.S. Treasury bill rate.
THE EVEREST FUND, L.P. (an Iowa Limited Partnership)
NOTES TO FINANCIAL STATEMENTS Years Ended December 31, 2008 and 2007 __________________________________
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.
THE EVEREST FUND, L.P. (an Iowa Limited Partnership)
NOTES TO FINANCIAL STATEMENTS Years Ended December 31, 2008 and 2007 ________________________________
7.	Financial Instruments, Off-Balance Sheet Risks and Contingencies, continued
The unrealized gain (loss) on open futures and forward contracts is comprised of the following:
-------------------------------------- Futures Forwards Total --------------- ------------- -------- Gross unrealized gains $573,631 $88,053 $661,684 Gross unrealized losses (475) (1,563) (2,038) --------------- ------------- --------- Net unrealized gains (losses) $573,156 $86,490 $659,646
--------------------------------------- Futures Forwards Total --------------- ------------- --------
Gross unrealized gains $416,237 $53,396 $469,633 Gross unrealized losses (76,428) (110,833) (187,261) --------------- ------------- --------- Net unrealized gains (losses) $339,809 $(57,437) $282,372 =============== ============= =========
The Partnership's policy is to continuously monitor its exposure to market and counterparty risk through the use of a variety of financial, position and credit exposure reporting and control procedures. In addition, the Partnership has a policy of reviewing the credit standing of each clearing broker or counter party with which it conducts business.
The limited partners bear the risk of loss only to the extent of the net asset value of their Partnership units.
THE EVEREST FUND, L.P. (an Iowa Limited Partnership)
NOTES TO FINANCIAL STATEMENTS __________________________
8.	Financial Highlights
The following financial highlights show the Partnership's financial performance for the years ended December 31, 2008 and 2007.
------------------------------------------- Class A Class I Class AA Class II ----------- ---------- --------- --------- Total return before distributions* 27.24 % 30.46% 269.37% 269.37% =========== =========== ========== ========= Ratio to average net assets: Net investment income 4.76 % 5.50% 142.18% 137.56% =========== =========== ========== ======== Management fees 7.24 % 2.32% 0.00% 0.00% Other expenses 1.94 % 1.13% 5.83% 5.64% ----------- ----------- ---------- -------- Total expenses 9.18 % 5.21% 5.83% 5.64%
--------------- Class A --------------- Total return before distributions* 55.28 % =============== Ratio to average net assets: Net investment loss (17.72)% =============== Management fees 5.75 % Incentive fees 11.58 % Other expenses 2.64 % --------------- Total expenses 19.97 % ===============
(*)	Total return is calculated for all shareholders throughout the year. An individual shareholder's return may vary from these returns based on the timing of share transactions.
THE EVEREST FUND, L.P. (an Iowa Limited Partnership)
NOTES TO FINANCIAL STATEMENTS ________________________
8.	Financial Highlights, continued
Per Unit Performance: (for unites outstanding through the entire period)
Class A Class I Class AA Class II ----------- ----------- ---------- --------- Net asset value - December 31,2006 $1,917.03 $2,071.02 $1,003.73 $1,043.98 ----------- ----------- ---------- --------- Total income 669.70 719.70 2,784.72 2,896.41 Total expenses (147.44) (88.84) (81.03) (84.28) ----------- ----------- ---------- --------- Increase in net assets 522.26 630.86 2,703.69 2,812.13 ----------- ----------- ---------- ---------
Net asset value - December 31,2007 (before final redemptions)** $2,439.29 $2,701.88 $3,707.42 $3,856.11 =========== ========== ========== ==========
Net asset value - December 31,2007 $2,439.29 ----------- Total income 1,911.61 Total expenses (563.26) ----------- Increase in net assets 1,348.35 ----------- Net asset value - December 31, 2008 (before final redemptions)** $3,787.64 ===========
(**)	Total return is calculated for all shareholders throughout the year. An individual shareholder's return may vary from these returns based on the timing of share transactions.
EVEREST FUND, L.P. (An Iowa Limited Partnership) FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
EVEREST FUND, L.P. (An Iowa Limited Partnership)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Partners of Everest Fund, L.P.
We have audited the accompanying statements of financial condition, including the condensed schedules of investments, of Everest Fund, L.P. (An Iowa Limited Partnership), ( the Partnership ) as of December 31 2006 and 2005 and the related statements of operations, changes in partners capital and cash flows for the years ended December 31, 2006, 2005 and 2004. These financial statements are the responsibility of the Partnership s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Everest Fund, L.P. (An Iowa Limited Partnership) as of December 31 2006 and 2005 and the results of its operations and its cash flows for the years ended December 31, 2006, 2005 and 2004, in conformity with accounting principles generally accepted in the United States of America.
/s/ SPICER JEFFRIES LLP
Greenwood Village, Colorado March 15, 2007
EVEREST FUND, L.P. (An Iowa Limited Partnership)
STATEMENTS OF FINANCIAL CONDITION
The accompanying notes are an integral part of these statements.
EVEREST FUND, L.P. (AN IOWA LIMITED PARTNERSHIP)
CONDENSED SCHEDULE OF INVESTMENTS DECEMBER 31, 2006
The accompanying notes are an integral part of this statement.
EVEREST FUND, L.P. (AN IOWA LIMITED PARTNERSHIP)
CONDENSED SCHEDULE OF INVESTMENTS DECEMBER 31, 2005
The accompanying notes are an integral part of this statement.
EVEREST FUND, L.P. (AN IOWA LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
The accompanying notes are an integral part of these statements.
EVEREST FUND, L.P. (An Iowa Limited Partnership)
STATEMENT OF CHANGES IN PARTNERS' CAPITAL YEARS ENDED DECEMBER 31, 2006, 2005, 2004
The accompanying notes are an integral part of these statements.
EVEREST FUND, L.P. (An Iowa Limited Partnership)
STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2006, 2005, AND 2004
The accompanying notes are an integral part of these statements
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
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 on going 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.
Effective June 4, 2004, the Partnership introduced a new share category, Class I Units or Institutional Units which have an ongoing Offering and Organization fee of 1/12 of 0.10% of the NAV per unit (as defined) per month. The private placement offering is continuing at a gross subscription price per unit equal to net asset value per unit, plus an organization and offering cost reimbursement to the General Partner, and an on going compensation fee equal to 1% of the net asset value of Class I Units sold.
Receivable from Refco Capital Markets, Ltd.
On October 13, 2005, Refco, Inc. ( Refco ) announced that liquidity within one of its operating subsidiaries, Refco Capital Markets, Ltd. ( RCM ), was no longer sufficient to continue operations and that RCM was imposing a fifteen day moratorium on all of its activities in an attempt to protect the value of that business. RCM acted as the Partnership s foreign currency broker at that time and as of such date, approximately 20% of the Partnership s assets were held on deposit in accounts at RCM.
On October 17, 2005, Refco and certain subsidiaries filed a bankruptcy petition in New York seeking protection from creditors under Chapter 11 of the United States Bankruptcy Code. RCM was included in this filing and as a result, all of the dealings with RCM are subject to control by the Bankruptcy Court. In connection with the bankruptcy, the president of the General Partner was appointed to the Official Creditors Committee on October 28, 2005. Based on information provided to the Partnership by RCM, the Partnership has cash and open trade equity in neutral currency positions of approximately $7,500,000 remaining at RCM.
Due to the above, effective October 31, 2005, the Partnership has created Classes AA and II of shares and transferred to such classes the value of Partnership assets held in RCM as of October 17, 2005, together with a reserve for the estimated expenses of collection and related matters. The amount of such assets which will become available to the Partnership, if any, is dependent on several matters associated with the bankruptcy of RCM. Depending on the disposition of these matters, the final net asset value may differ materially from the preliminary amounts which the Partnership has published since October 31, 2005. Redemptions of Classes AA and II are restricted until the final net asset value can be determined. Subsequent to October 31, 2005, redemptions and certain fees will only be calculated and paid on the net asset value of Class A and Class I units, thus segregating the assets held by RCM and the reserve established in connection with the RCM legal proceedings.
Based on the estimated recovery amounts which the Bankruptcy Court is being asked to approve, the General Partner as of October 31, 2006 has reduced the value of the Class AA and Class II assets to 40% of the amounts at which such assets being held at Refco were valued as of October 17, 2005. This write down of $4,489,400 is a preliminary adjustment. The estimate could also be adjusted depending upon the outcome of the processing of valid claims in the bankruptcy litigation. Beyond the initial recovery estimate, there are expected to be efforts at further recoveries through litigation against certain parties who have been identified by the Litigation Trust Committee. No assurance can be made that the claims processing will not result in a decrease or that the litigation efforts will result in an increase in the Class AA and Class II asset values.
NOTE 1-	ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 		(continued)
Receivable from Refco Capital Markets, Ltd. (concluded)
On December 28, 2006, The Everest Fund, L.P. received the first in a series of anticipated distributions in the Refco matter. Of the approximately $7,500,000 that became inaccessible in October 2005, the Partnership has received $1,365,526. That represents an amount equal to approximately 18% of the frozen assets. The Fund has increased the Class A units for each investor in the Fund by their pro rata share of the distribution. Checks have been mailed for the benefit of any investors who have redeemed. Based on the estimated recovery amounts that have been put in front of the Bankruptcy Court, the partnership s management believes that we will receive additional distributions in 2007.
Cash and Cash Equivalents
Cash equivalents represent short-term highly liquid investments with maturities of 90 days or less 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. These cash equivalents, with the exception of securities purchased under agreement to resell, are stated at amortized cost, which approximates fair value. 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.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year classifications.
Revenue Recognition
Commodity futures contracts, forward contracts, physical commodities, and related options are recorded on the trade-date basis. All such transactions are recorded on the identified cost basis and marked to market daily. Unrealized gains and losses on open contracts reflected in the statements of financial condition represent the difference between original contract amount and market value (as determined by exchange settlement prices for futures contracts and related options and cash dealer prices at a predetermined time for forward contracts, physical commodities, and their related options) as of the last business day of the year or as of the last date of the financial statements.
Net Income Per Unit of Partnership Interest
Net income per unit of partnership interest is the difference between the net asset value per unit at the beginning and end of each period.
Fair Value of Financial Instruments
The financial instruments held by the Company are reported in the statements of financial condition at market or fair value, or at carrying amounts that approximate fair value, due to their highly liquid nature and short-term maturity. Commodity futures contracts, forward contracts, physical commodities, and related options are valued as described above. The receivable from RCM is valued at management s best estimate as described above.
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. Realized and unrealized foreign exchange gains or losses are included in trading income in the statements of operations. NOTE 1-	ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 		(concluded)
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.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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.
NOTE 2-	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 3. Subject to restrictions on the redemption of Series AA and Series II units by existing investors as mentioned above, Limited Partners may cause any or all of their Class A units to be redeemed as of the end of any month at the month end net asset value on fifteen days prior written notice to the Partnership, (for Class I Units, as of the end of any quarter on forty-five days notice), or such lesser period as is acceptable to the Partnership. 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 Decemeber 31, 2020 or upon the occurrence of certain events, as specified in the Limited Partnership agreement.
NOTE 3-	CONTRACTS AND AGREEMENTS
John W. Henry & Company, Inc. (JWH) began trading its Strategic Allocation Program with a trading allocation of $40 million on July 1, 2001. JWH receives a monthly management fee equal to 0.167% (2% annually) of the Partnership s month-end net asset value, (as defined), and a quarterly incentive fee of 20% of the Partnership s new net trading profits, (as defined). The incentive fee is retained by JWH even though trading losses may occur in subsequent quarters; however, no further incentive fees are payable until any such trading losses (other than losses attributable to redeemed units and losses attributable to assets reallocated to another advisor) are recouped by the Partnership.
Beginning in June 2003, JWH began trading JWH Global Analytics Program ( GAP ); Currency Strategic Allocation Program ( CSAP ) and Worldwide Bond Program ( WBP ) with a trading allocatio n of $27 million.
Net brokerage commissions are recorded in the statements of operations as a reduction of trading income.
NOTE 3-	CONTRACTS AND AGREEMENTS 		(concluded)
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 May 2002 through October 2003, the General Partner charged the Partnership a monthly management fee of either 0.5104% or 0.5156%, depending on the total amount which the Partnership had allocated to trading, including notional funding. Prior to May 2002, the General Partner charged the Partnership a monthly management fee equal to 0.5052% of the Partnership beginning-of-month net asset value, as defined. Effective June 2004, the General Partner charges the Partnership a monthly management fee equal to 0.229% of the Partnership s Class I beginning-of-month net asset value. From the monthly management fee the General Partner deducts the round turn trading costs and related exchange fees (between $5.80 to $10.70 per round turn trade on domestic exchanges, and higher for foreign exchanges) and pays the selling agents and certain other parties, if any, up to 50% of the fee retained by the General Partner.
As of December 31, 2006 and 2005, JWH s allocation was approximately $18 and $28.2 million (including approximately $1.3 million of notional funding), respectively. The General Partner may replace or add trading advisors at any time.
Brokerage Agreement
The Partnership, through August 31, 2005, cleared all of its futures trades through Cargill Investor Services, Inc. ( CIS ) and all of its foreign currency trading activity through CIS Financial Services, Inc. ( CISFS ), an affiliate of CIS.
In September 2005, Refco Group Ltd. a cquired CIS and CISFS and the clearing and related services previously performed by CIS were performed by REFCO, LLC and the foreign currency trading previously performed by CISFS was provided by Refco Capital Markets, Ltd. Beginning in mid-October 2005, the Partnership engaged Calyon Financial, Inc. ( CFI ) as the Partnership s futures and options on futures broker, and engaged and Calyon Financial, SNC ( CFS ) as the Partnership s foreign currency or forwards currency broker, (collectively referred to as the Clearing Brokers ). The agreements provide that the Clearing Brokers charge the Partnership brokerage commissions at the rate of between $5.80 to $10.70 per round-turn trade, plus applicable exchange, give up fees and NFA fees for futures contracts and options on futures contracts executed on domestic exchanges and over the counter markets. For trades on certain foreign exchanges, the rates may be higher.
The Partnership also reimburses the Clearing Brokers for all delivery, insurance, storage or other charges incidental to trading and paid to third parties.
The Partnership earns interest on 95% of the Partnership ' s average monthly cash balance on deposit with its Brokers at a rate equal to the average 91-day Treasury Bill rate for US Treasury Bills issued during that month.
Excluding amounts held at RCM, approximately 87% and 98%, respectively of cash and cash equivalents at December 31, 2006 and 2005 are funds deposited with a commercial bank and invested under the direction of Horizon Cash Management, Inc. (Horizon). Horizon receives a monthly cash management fee equal to 1/12 of .25% (.25% annually) of the average daily assets under management if the accrued monthly interest income earned on the Partnership s assets managed by Horizon exceeds the 91-day U.S. Treasury bill rate.
NOTE 4-	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 ( The CEAct ) requires an FCM to segregate all customer transactions and assets from the FCM s proprietary activities. NOTE 4-	FINANCIAL INSTRUMENTS, OFF-BALANCE SHEET RISKS AND CONTINGENCIES 		(concluded)
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.
The Partnership has cash and open positions on deposit in the amount of $2,402,303 as of December 31, 2006 with an interbank market maker in connection with its trading of forward contracts. In the event of the interbank market maker's insolvency, recovery of the Partnership assets on deposit may be subject to forfeiture. In the normal course of business, the Partnership does not require collateral from such interbank market maker. Because forward contracts are traded in unregulated markets between principals, the Partnership assumes credit risk on its entire amount on deposit from counter party non-performance.
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.
The Partnership s policy is to continuously monitor its exposure to market and counterparty risk through the use of a variety of financial, position and credit exposure reporting and control procedures. In addition, the Partnership has a policy of reviewing the credit standing of each clearing broker or counter party with which it conducts business.
The limited partners bear the risk of loss only to the extent of the net asset value of their Partnership units.
The Partnership receivable from RCM of $1,627,407 represents the Partnership s receivable from RCM, who is currently in bankruptcy. These funds are unavailable to the Partnership until the bankruptcy proceedings are finalized.
NOTE 5-	TRADING DISCREPANCY
Effective August 1, 2000 Trilogy Capital Management, LLC ( Trilogy ) was added as a trading advisor. Trilogy was terminated effective June 30, 2001. Trilogy received a monthly management fee of 0.075% (0.9% annually) of the Partnership s month-end allocated assets as defined and did not receive an incentive fee.
In October 2000, there was a discrepancy between the performance of the Barclay Futures Index Program ( BFIP ) as traded for the Partnership and the Barclay Futures Index (BFI). Certain transactions executed by Trilogy on behalf of the Partnership resulted in a loss of approximately $520,000 that was recorded in the statement of operations. The General Partner believes that these transactions were not executed in accordance with the provisions of BFIP and has demanded that Trilogy reimburse the Partnership for the loss. The parties are currently attempting to resolve the issue.
Until a final resolution is reached, the parties have agreed that the management fees otherwise payable to Trilogy under its advisory contract would be applied as a credit to offset the losses. The offset is not in settlement, partial settlement, or indemnification of any kind and is without prejudice to any rights or claims by either side. Beginning in November 2000, and until approximately July 1, 2001, at which time Trilogy was terminated, all of the management fees that would otherwise be paid to Trilogy were deposited into a separate account for the benefit of those limited partners that were limited partners on November 1, 2000 and to cover the expenses associated with the collection of the losses. The separate account is not included in the financial statements of the Partnership. After its termination, Trilogy demanded that such fees be returned to it. The General Partner rejected Trilogy s demand and is assessing its options for collection. NOTE 5-	TRADING DISCREPANCY 		(concluded)
A demand for arbitration was filed with the NFA on October 3, 2002. Trilogy has responded to the demand for arbitration and has counterclaimed for the amount of $130,210, together with attorney s fees, interest and costs of suit. That figure represents the amount of management fees, otherwise payable to Trilogy under its advisory contract, that both parties agreed would be held as a credit to the Partnership to offset the losses. The General Partner has a letter to that effect which was signed by the president of Trilogy on January 29, 2001.
The General Partner anticipates a hearing in front of an NFA arbitration panel, but no date has been set for the hearing. At the present time, the General Partner is unable to determine whether any of the losses will be recovered.
NOTE 6-	FINANCIAL HIGHLIGHTS
The following financial highlights show the Partnership s financial performance for the years ended December 31, 2006, 2005, and 2004. This information has been derived from information presented in the financial statements.
(3)Selected data for a unit of beneficial interest outstanding throughout the year, or since inception for I shares. (2) An individual partner s total returns and ratios may vary from the above returns based on the timing of contributions and withdrawals. (3) Incentive fees accrued on units held as A shares were reversed due to losses after those units were transferred to I shares, resulting in a negative incentive fee for I shares. (4) I Shares have been annualized for the period ending December 31, 2004.
Acknowledgement To the best of my knowledge and belief, the information contained here is accurate and complete.
/s/Peter Lamoureux President Everest Asset Management, Inc. General Partner of Everest Fund, L.P.