Item 1. Business
The Everest Fund, L.P. (the "Partnership") is a limited partnership organized on June 20, 1988 under the Iowa Uniform Limited Partnership Act. The business of the Partnership is the speculative trading of commodity futures contracts and other commodity interests, including forward contracts on foreign currencies (Commodity Interests) either directly or indirectly through other entities, including subsidiaries, partnerships, funds or other limited liability entities. 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.
The Partnership was initially organized under the name Everest Energy Futures Fund, L.P. On September 12, 1991, the Partnership changed its name to "Everest Futures Fund, L.P." The Partnership thereafter has traded futures contracts and options on futures contracts on a diversified portfolio of financial instruments and precious metals as well as forward contracts on currencies. In November 2003 the Partnership changed its name to its present form.
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. In March 1996, the Partnership transferred all of its assets to, and became the sole limited partner of, Everest Futures Fund II, L.P. (Everest II) and JWH began trading for Everest II.
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 July 2000, the Partnership redeemed approximately 50% of its assets from Everest II and allocated them to Trilogy Capital Management, LLC s (Trilogy) Barclay Futures Index Program (BFIP). The Partnership instructed Trilogy to trade its account using twice the leverage of Trilogy s un- leveraged portfolio to attempt to achieve a return greater than the return of the Index before fees and expenses. Effective as of the close of business August 31, 2000, the Partnership liquidated the balance of its investment in Everest II and opened a trading account directly with JWH. JWH has used its Financial and Metals Portfolio while trading for Everest II and the Partnership through June 30, 2001. Beginning July 1, 2001, JWH began trading its Strategic Allocation Program for the Partnership with a trading allocation of $40 million. Trilogy was terminated as trading advisor June 30, 2001. Effective September 1, 2001, Mount Lucas Management Corporation (MLM) was added as trading advisor with an initial allocation of $10 million. This allocation represented notional funding for the Partnership. Effective June 12, 2003 JWH began trading its GlobalAnalyticsR Family of Programs, Worldwide Bond Program and Currency Strategic Allocation Programs for the Partnership. Mount Lucas Management was terminated as trading advisor on October 31, 2003. 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 per month. The previously offered Partnership units were re-titled Class A Units (retail shares) and continue to be offered and charged an initial 1% Offering and Organization fee as a reduction to capital.
Effective January 1, 2007 the Fund allocated 75% of its assets to the JWH Global Analytics Program ( GAP ) and 25% to the Worldwide Bond Program ( WBP ). The Currency Strategic Allocation Program ( CSAP) was eliminated as a trading program for the Fund.
Effective June 1, 2007 the Fund allocated 100% of its assets to the JWH Global Analytics Program ( GAP ). The Worldwide Bond Program ( WBP ) was eliminated as a trading program for the Fund.
Prior to September 2005, the partnership cleared its futures trades through Cargill Investor Services, Inc ( CIS ) and its foreign currency trades through CIS Financial Services, Inc. (CISFS), an affiliate of CIS. Between September 1, 2005 and mid October, 2005 the Partnership cleared all of its futures trades through Refco, LLC (RL) and all of its foreign currency trading through Refco Capital Markets, Ltd. (RCM).
Subsequent to the purchase of Cargill Investor Services ( CIS ) by Refco, Inc. ( RI ) and the replacement of CIS by RL as the Fund's futures clearing broker on September 1, 2005, RI, the parent company of RL, announced on October 10, 2005 that it had discovered through an internal review an accounting issue involving a receivable owed to Refco, Inc. by an entity controlled by Philip R. Bennett, the then Chief Executive Officer and Chairman of the Board of Directors of RI. The amount at issue was approximately $430 million and was repaid by Mr. Bennett on October 11, 2005. Mr. Bennett was subsequently relieved of his duties and has been charged with securities fraud in connection with this matter. On February 15, 2008, Mr. Bennett plead guilty to 20 counts of securities fraud and other charges. In addition, various legal actions have been filed against RI in this regard.
On October 13, 2005, RI announced that liquidity within another of its operating subsidiaries, 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. As of such date RCM was the Fund's acting foreign currency broker, and the fund had approximately 20% (approximately $7,500,000) of its total assets on deposit in the accounts at that firm, which amount became frozen at that time.
On October 17, 2005, RI and certain subsidiaries (including RCM) filed for bankruptcy protection in the State of New York. Although RL was not involved in this filing, the Fund nevertheless terminated RL as its futures clearing broker and RCM as its foreign currency broker and replaced them with Calyon Financial, Inc. (CFI) and Calyon Financial, SNC, (CFS), respectively.
Effective October 31, 2005, the Partnership 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. Until the final net asset value can be determined, redemptions and certain fees will be calculated and paid on a preliminary basis using the net asset value of Class A and Class I units only, thus excluding the assets held by RCM and the reserve established in connection with the RCM legal proceedings. The Fund described the foregoing events in more detail in a general letter to Limited Partners October 20, 2005 (the Letter ). The Letter appears as an attachment to a filing on Form 8-K by the Fund on October 21, 2005. Both the substance of the Form 8-K and its attached letter exhibit have been incorporated into this Form 10-K by reference.
Mr. Lamoureux was appointed by the U.S. Trustee s Office as a member of the Official Committee of Unsecured Creditors in the Refco bankruptcy on October 28,2005.
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 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. In accordance with Generally Accepted Accounting Principles and in particular rule FAS 5-3 paragraph 105, the write down was taken at September 30, 2006. 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.This write down is only an estimate and was reflected in the statement of operations at September 30, 2006. Everest has not included litigation recoveries, if any, in the write down, because the success of such actions cannot be estimated at this time. No assurances can be made that there will be any further recoveries for Everest from these efforts.
The write down amount was determined after the issuance of Everest's 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.
The Fund described the foregoing events in more detail in a general letter that appears as an attachment to a filing on Form 8-K by the Fund on November 6, 2006 The Form 8-K has been incorporated into this Form 10-K by reference.
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 Fund has received $1,365,525.51. That represents an amount equal to approximately 18% of the frozen assets. The December 2006 statement reflected a prorata decrease in the number of AA and II shares, and a corresponding increase in the A units or I units to reflect their pro rata share of the distribution for investors who have been in the Fund since October 12, 2005. For investors who were in the Fund on October 12, 2005 and have since redeemed, the Partnership redeemed a portion of their AA and II shares effective December 31,2006 and sent out checks for their pro rata share of the distribution in January 2007. These changes do not apply to those who have come into the Fund after October 2005.
On March 29, 2007 The Everest Fund, 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, we have now received $1,743,404.47. That represents an amount equal to approximately 23% 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.
On June 28, 2007 Everest received a third distribution from Refco in the amount of $668,172.21. That amount is 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, brings the recovery to approximately 32 cents on the dollar so far. The Fund increased the Class A units for each investor in the Fund by their pro rata share of the distribution. Checks were mailed for the benefit of any investors who have redeemed.
On September 20, 2007 Everest received another distribution from Refco in the amount of $342,696.03. That amount is 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 Fund increased the Class A units for each investor in the Fund by their pro rata share of the distribution. Checks were mailed for the benefit of any investors who have redeemed.
On December 14, 2007 Everest received $1,912,484 upon the final sale of the remaining Refco receivable. This brought the total recovery from 36.69 cents on the dollar to 62.25 cents on the dollar and ends the Refco recovery effort. On December 31, 2007 the Fund increased the Class A units for each investor in the Fund by their pro-rate share of the amount collected, and mailed checks for the benefit of those investors who redeemed. These changes do not apply to investors who came into the Fund after October 2005.
Upon the final sale of the Refco receivable, Class AA and II units were terminated effective December 31, 2007. Also, effective December 31, 2007, Class I units were also terminated.
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. Upon forty-five days written notice, a Class I Limited Partner may require the Partnership to redeem all or part of his Units effective as of the close of business of the last day of any quarter 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. 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. Prior to September 1, 2001, the monthly management fee was 0.5%. The General Partner pays a portion of its fees for actual commission charges to its Clearing Broker.
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 this amount 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.
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. The Partnership reimburses the General Partner for the actual organization and offering expenses advanced by it, not to exceed one tenth of one percent of the Class I Net Asset Value of Units sold annually. 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.
MLM received a monthly management fee of 0.0625% (0.75% annually) of the Partnership s month-end allocated assets as defined. As MLM used the MLM Index-Unleveraged, they did not receive an incentive fee. Effective February 2003, the management fee was reduced to 0.04167% (0.50% annually).
Trilogy received a monthly management fee equal to 0.075% (approximately 0.90% annually) of Everest s month-end allocated assets, as defined. Trilogy did not receive an incentive fee.
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 Partnership pays no selling commission but does pay an ongoing compensation fee equal to 1% of the Net Asset Value of Class I 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 funds 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 $80,000 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. With respect to Class AA and II, extraordinary expenses paid or accrued were $ 69,449, for the year ended 12/31/07. All expenses shall be billed directly and paid for by the Partnership. The Partnership s operating expenses for the years 2003-2007 can be found in the table in Item 6 below.
As of December 31, 2007, the General Partner had no employees. 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, 2007, 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, 2007 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). Class I minimum subscription amount is $1,000,000, subject to the discretion of the General Partner to accept subscriptions of lesser amounts.
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 Will Be Leveraged. The use of notional funds by the Partnership in its trading account with JWH will result in increased trading leverage. The Fund is currently trading approximately $1.08 for every $1.00 in Class A and Class I, combined. 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 funds allocated to it (and thus the amount by which the Partnership s assets are leveraged). Because the trading account will be leveraged, (i) the Partnership will 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 funds 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.
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 funds 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 Funds 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 Funds Managed. JWH expects to manage additional funds in the future. It is not known if managing additional funds, including funds 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 funds 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 funds 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. 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. Because the CSAP Program which JWH employs in trading the Partnership s assets uses multiple JWH investment programs, it could hold opposite positions in the same or similar contracts at or about the same time or during the same period of time, with no net change in holdings.
In addition, due to similarities among JWH s investment programs, the potential diversification benefits of trading CSAP may be less than would be the case with multiple trading programs offered by independent managers. The Partnership loses risk control benefits of market diversification during these periods when an investment program s positions are concentrated in a limited number of markets.
The CSAP Program Is Discretionary. CSAP employs discretionary, judgmental asset allocation decisions among the JWH investment programs and currency trading models. The investment programs and models themselves are primarily technical and systematic in character. Since CSAP's discretion relates to allocations, not trading, reliance on judgment and discretion may, over time, produce less consistent results than implementing a systematic allocation approach. JWH has more experience implementing systematic methodologies as opposed to discretionary strategies. The Partnership may incur losses due to JWH s relative inexperience in implementing this discretionary strategy.
The CSAP Program May Under Perform Individual Programs. Even if individual JWH investment programs are successful, there can be no assurance that CSAP will be successful. The active allocation among the investment programs makes it possible for the program to incur losses even during periods in which a number of the individual investment programs are profitable. Mandatory Closing Out of Offsetting Positions. CFTC rules require offsetting positions taken by JWH for clients be closed out. This means that positions taken pursuant to different investment programs included in CSAP must be closed out, even though the positions are taken in different investment programs. JWH does not believe that the requirement of liquidating offsetting positions for CSAP by the different investment programs will, at this point, impede the operation of CSAP. It is possible under certain circumstances that the requirement to close out offsetting positions could adversely affect the performance of the Partnership s account.
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.
Fund 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 fundamentally 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. For Class I, they may redeem on the last day of any quarter on forty- five (45) 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 (or for your Class I notice, the end of the quarter) 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. Everest 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 CFI becomes bankrupt, the Partnership could lose money. In addition, even if CFI 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 CFI 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 fund. 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 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.
Item 3.
Item 3.	Legal Proceedings
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.
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 does not believe at this time that any of the losses will be recovered. Trilogy has closed their operations and an analysis of the principal's assets ( Mr. Alan Kaufman) reveals insufficient resources to make any material reimbursement. A judgment, if obtained, would likely put Mr. Kaufman into bankruptcy. As an alternative, the general Partner is attempting to negotiate a settlement with Mr. Kaufman that would free the General Partner to distribute the withheld fees to the Limited Partners who were in the Fund in October 2000. We anticipate bringing this matter to a conclusion in the 1st quarter of 2008.
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, 2007, there were 4,793.613 Class A Units held by Limited Partners. A total of 3,520.97 Units were redeemed by Class A Limited Partners during 2007. During this same period, there were 993.87 Units redeemed by Class I Limited Partners, 1,066.53 units redeemed by Class AA Limited Partners and 121.11 units redeemed by Class II Limited Partners. Additionally, there were 719.67 Units transferred from Class AA to A and 72.86 Units transferred from Class II to I. The Seventh Amended and Restated Agreement of Limited Partnership for the Partnership contains a full description of redemption and distribution procedures.
(c) To date no distributions have been made from the Class A or Class I units to Limited Partners.
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
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, 2007, Limited Partners redeemed a total of 3520.97 Class A Units for 6,375,499. Limited Partners redeemed a total of 993.87 Class I Units for 2,197,979. Limited Partners redeemed a total of 1,066.53 Class AA Units for 2,016,751 and Limited Partners redeemed a total of 121.11 II units for 291,597. Additionally, there were 719.67 Units representing $1,235,725 transferred from Class AA to Class A and 72.86 Units representing $75,760 transferred from Class II to Class I.
For the year ended December 31, 2006, Limited Partners redeemed a total of 3139.34 Class A Units for $6,866,488. Limited Partners redeemed a total of 246.40 Class I Units for $554,414. Limited Partners redeemed a total of 460.17 Class AA Units for $461,886 and Limited Partners redeemed a total of 36.73 units for $38,343. Additionally, there were 762.22 Units representing $765,050 transferred from Class AA to Class A and 96.01 Units representing $100,236 transferred from Class II to Class I.
During 2007, investors purchased 25.51 Class A Units for $50,000. No Class I Units were purchased by Limited Partners.
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. As of December 31, 2007, the Partnership had $100,047 on deposit at Newedge Financial Inc.
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. 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 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 1,997,815 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.
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 fund ( 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, Worldwide Bond Program and Currency Strategic Allocation Program. The Partnership has changed it s allocation to the Fund s investment firm, the John W. Henry & Company, Inc. (JWH). To reiterate, the Partnership has dropped the Fund s allocation to the Currency Strategic Allocation Program (CSAP) and increased the allocation to the Global Analytics Program (GAP) to 75% with the remaining 25% going to the World Wide Bond Program. We look forward to the possibility of better risk adjusted returns from the new allocation.
JWH is taking steps to reduce the volatility so long associated with JWH investment programs. The first step has been to install a new management team. As of January 2007, Mark Rzepsinski, the former President and Chief Investment Officer, has been replaced by Ken Webster as the new President and Matt Driscoll as the new Chief Investment officer. Mr. Webster, who has been with the firm 12 years, is the former Senior Vice President and Chief Operating Officer. Mr. Driscoll, who has been with the firm 15 years, was the Senior Vice President of trading and research. We believe these changes will be productive for our Fund s investment at JWH.
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 Fund 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 Fund 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 Funds 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.
The equity indices sector was slightly positive for the month despite losses in the Nasdaq E-mini which partially offset gains of the other components in the sector. The energy sector was slightly positive for the month despite changing weather conditions which caused extreme volatility within the sector. Despite the volatility within the sector, crude oil and London gas oil were able to offset the losses caused by natural gas which was the sectors worst performer. The currency sector was negative for the month as currency markets continued to oscillate. Towards the end of January, the dollar had its largest fall against the Japanese yen in more than two months after U.S. Treasury Secretary Henry Paulson said he would be watching the Japanese currency very carefully. This decline limited the Fund s gain in this market. The Japanese yen was the best performer in the sector, while the euro suffered the largest loss. The metals sector was negative for the month as precious metal prices reacted to fluctuations in the U.S. dollar. The early January reversal in the U.S. dollar s weakening trend reduced the appeal of gold as an alternative investment. Gold generally moves in the opposite direction of the dollar. However, gold rose 3.9 percent for the month of January as the dollar once again weakened and speculation increased that the precious metal s decline was excessive. All components of the sector were negative for the month as a result of the increased volatility. The agriculture sector was negative for the month as price instability hurt performance. The sector s negative performance was limited by New York sugar, which was the sector s best performer, as prices continued to fall due to a global surplus of the commodity continued.
In conclusion, performance was positive for the month as the Fund benefited from the continued sell-off in U.S., European and British fixed income markets. The indices and energy sectors also added to performance and helped to offset losses in the currency sector which suffered sharp reversals as markets continued to speculate about the health of the world s industrialized economies. The agriculture and metals sectors also limited gains as short- term marketmoving events resulted in strong reversals or trend-less markets. As always, the program stands ready to potentially take advantage of any continuing or new trends that may emerge.
Update on the RCM recovery efforts
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. An initial distribution was made to investors in December 2006, please refer to last month' s letter for details. The Plan Administration Committee, of which Peter Lamoureux is a member, is actively liquidating other assets. We anticipate another distribution within the next two months.
Class A Units were negative 4.77% in February 2007 resulting in a Net AssetValue 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 Fund 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 eviden 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 Fund. Another example of this sudden reversal in price behavior was the Japanese yen which was at its yearly low, but strengthened over 2 percent against the dollar in the last three trading sessions. These examples in unconnected markets give a flavor of how widespread the difficulty was in the last three days of the month. As long-term trend followers, JWH will position the Fund in the direction of a lasting move, so the Fund will be long a market that is reaching new yearly highs or short a market that is reaching new yearly lows. Part of the Funds strategy rests in investing in markets that behave differently from each other. In the unusual circumstances where historical uncorrelated markets reverse in lockstep, the Funds systematic approach will be susceptible to setbacks.
The metals sector was the best performing sector despite strong reversals in precious metals. The agriculture sector was also positive for the month as corn rose to a 10-year high in Chicago and soybeans reached $8.0775, their highest level since June 2004. The stock indices sector was slightly positive for the month despite the severe volatility in global equity markets.
The currency sector was negative for the month as the yen rallied against the dollar to its highest level in more than 19 months on February 27th amid a correction in U.S. stocks. The energy sector was negative for the month as natural gas reversed its strengthening trend and had its biggest loss in more than six weeks in New York. Crude oil s reversal also hurt performance as it rose to $61.79 a barrel, its highest closing price this year. All components of this sector exhibited negative performance for the month. The interest rate sector was also negative for the month as global bond markets reversed their weakening trend as the sell-off in the global equity markets at the end of the month fueled demand for government debt.
In conclusion, the Fund finished negative for the month as the weakness in global equity markets increased volatility in financial markets around the world. What does this sudden burst of volatility across markets mean? No one can be sure. Sometimes it is unexpected turbulence along the current path. Other times it is a harbinger of a major shift in direction. In the latter case, while the short-term performance is uncomfortable, the long-term trends which come from the change can more than make up for the discomfort. The Fund looks to the markets for its signals, and continues to apply its disciplined systematic trading approach. The Fund was not positioned for this sudden turn of events. However, an element of turmoil has been injected into the markets, which if it persists, has the potential to be a positive development for the Fund s style of trading. The Fund remains poised to potentially take advantage of new opportunities as they present themselves.
Update on the RCM recovery efforts
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. An initial distribution was made to investors in December 2006. The Plan Administration Committee, of which Peter Lamoureux is a member, is actively liquidating other assets. We anticipate another distribution within the next two months.
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 Fund 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. The sudden reappearance of risk in the world financial markets caused losses in various sectors as the Fund s systematic trading approach was not positioned for this sudden tur of events. The currency, metal and agriculture sectors all suffered losses at the beginning of the month as sharp reversals, which carried over from February, led to the exiting of positions. The markets quickly stabilized and spent the remainder of the month retracing their overextended moves. Performance suffered even further towards the end of the month as global fixed-income markets weakened. The energy sector was positive for the month as weather and geopolitical events were the driving forces of price movements.In conclusion, the Fund s performance was negative for the month as the drop in global equity markets, which increased volatility in financial markets around the world, carried over into the first few days of March. The Fund s systematic trend following methodology caused it to exit positions during this difficult turn of events. Short-term market dislocations can be a harbinger of a major shift in trends. However, the dislocation of the markets thus far has been a short-lived phenomenon, resulting in a temporary spike in volatility. The Fund will continue to apply our disciplined systematic trading approach to potentially take advantage of new opportunities as they present themselves.
Update on the RCM recovery effort
Second Refco Distribution (Not applicable to investors who came into theFund after October 2005)
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. An initial distribution was made to investors in December 2006. The Plan Administration Committee, of which Peter Lamoureux is a member, is actively liquidating other assets. On March 29, The Everest Fund, 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, we have now received $1,743,404.47. That represents an amount equal to approximately 23% 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.
3 months ended June 30, 2007
The Partnership recorded a gain of $ 1,255,628 or $195.26 per Unit of Class A Units ($ 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 quarterended 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 fund (12.32% for the Class I Units, - -0.83% for Class AA Units and -0.83% for Class II Units).
The Partnership continued to employ John W. Henry & Company, Inc. ' s (JWH) GlobalAnalyticsR Family of Programs, Worldwide Bond Program.
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 Fund s performance was essentially even for the month of April.The Fund 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 ofthe 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 Fund' s
best performer as various previously range-bound currencies set historic highs and lows. The euro reached an all-time high against both the U.S. dollar and the Japanese yen, while the British pound reached a 25-year high against the dollar. The stock indices sector was positive for April as stronger-than-expected 1st quarter earnings, an increase in mergers and acquisitions, economic growth in Europe, and benign inflation in the U.S. drove global equity prices higher. The agriculture sector was slightly positive for the month as the majority of the gains achieved in N.Y. cotton and coffee were partially offset by losses in CBOT wheat. The metals sector was negative for the month. Gold slightly offset losses as the precious metal reached an 11 month high when demand for a hedge against the weakness in the dollar increased. The energy sector was negative for the month as weather and geopolitical events once again were the driving force behind price movements. The interest rate sector was negative for the month as uncertainty grew over the interest rate policy of the central banks of the world s two largest economies.
In conclusion, the Fund s performance was essentially even for the month as new trends materialized in the aftermath of the dislocation of the markets caused by the overreaction to the drop in global equity markets towards the end of the first quarter. The Fund benefited as range-bound markets, which have been detrimental to the Fund s performance, gave way to potentially strong directional movements. The Fund will continue to apply its disciplined systematic trading approach to potentially take advantage of continuing or new opportunities as they present themselves.
Trading Allocation
At the end of May 2007 we will redeem our allocation to the World Wide Bond Program and be invested 100% in the Global Analytics Program (GAP). The JWH GAP has been JWH s most efficient program as measured by various risk/reward parameters and it trades a diverse portfolio of bonds, currencies and commodities. We would like all investors to know that although we are trying to stay the course with JWH and exercise patience, we are also exploring the possibility of adding other managers who may complement JWH due to their differences in style, holding periods and markets traded. Before we make a decision (if any) to add other managers, we will keep you informed.
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 perunit of $1,874.11 as of May 31, 2007.
The Fund s performance was positive for the month of May. The interestrate sector drove performance with strong gains as the Fund 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 sectorwas slightly positive for the month also as the dollar strengthened against the Japanese yen.
The energy sector was negative for the month as energy markets remainedrange-bound. The metals sector was negative for the month as a reversal in precious metals hurt performance as the Fund exited positions. The agriculture sector was negative for the month as supply once again drove price action.
In conclusion, performance was positive for the month as the Fund s systematic trading approach benefited from continued strong directional movements in European debt markets, and the apparent emergence of a weakened trend in U.S. debt markets. While we cannot say how long this trend will last, this sector s move is encouraging. The Fund will continue to apply its trading approach to potentially take advantage of continuing or new opportunities as they present themselves.
Trading Manager Allocation We are very pleased to announce that the Fund will be making an allocation to the Morningstar Long / Short commodity Index. The Index is a momentum based strategy that holds a basket of 19 physical commodity contracts either long or short. We will send more information about the allocation and the Morningstar Commodity Index in the next few weeks. We anticipate an allocation on or about the 1st of August.
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 Fund 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 Fund was able to profit as its long-term trend-following approach excelled, holding profitable position through the market turmoil. The Fund s systematic approach has profited over the past few months since the equity induced dislocationof 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. While discretionary funds and shorter-term trend-followers may have been forced out of profitable positions dueto instability in the market, the Fund s clients were rewarded for its longer-term focus. The fixed income, energy, agriculture and currency sectors all achieved gains as various components of each sector sustained previously existing or developed new profitable trends.The interest rate sector was one of the Fund s best performing sectors for the second consecutive month as it continued to take advantage of the fall in U.S. and European bond markets.
The energy sector was the Fund s best performing sector in June as increased terrorism fears combined with lower-than-expected supplies in petroleum-based products and higher-than-expected supplies in natural gas drove the sector s performance. The currency sector was positive for the month as the Japanese yen suffered its biggest quarterly loss against the euro and the dollar since 2001. The agriculture sector was positive for the month as cotton and CBOT wheat drove performance.
The metals sector was basically flat for the month while the stock indices sector was negative as range-bound markets and trend reversals dominated both these sectors.
In conclusion, the Fund s systematic long-term trading approach profited from strong trends that have developed in various components of the fixed income, energy, agriculture and currency sectors, while avoiding the short-term effects of financial market dislocations that occurred during the month. The Fund s long-term trend following philosophy has allowed it to post gains as many trends have extended through the 2nd quarter and we remain optimistic that this is only the beginning. The Fund will continue to apply its disciplined trading philosophy to potentially take advantage of any new or continuing opportunities as they present themselves.
New Allocation
We are very pleased to announce that the Fund will be making an allocation to the Morningstar Long / Short Commodity Index. The Index is a momentum based strategy that holds a basket of 19 physical commodity contracts either long or short. We will send more information about the allocation and the Morningstar Commodity Index in the next few weeks. We anticipate an allocation within the next few months.
Update on the RCM recovery efforts (For those investors in the Fund in October 2005)
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. An initial distribution was made to investors in December 2006. The Plan Administration Committee, of which Peter Lamoureux is a member, is actively liquidating other assets.
On March 29, The Everest Fund, 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, we have now received $1,743,404.47. That represents an amount equal to approximately 23% 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. We expect additional distributions between now and the end of June 2007.
On June 28th, 2007 Everest received a third distribution from Refco in the amount of $668,172.21. That amount is 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, brings the recovery to approximately 32 cents on the dollar so far. The Fund has increased the Class A units for each investor in the Fund by their pro rata share of the distribution. Checks have beenmailed for the benefit of any investors who have redeemed.
3 months ended September 30, 2007
The Partnership recorded a gain of $453,710 or $ 82.26 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 fund (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).
The Partnership continued to employ John W. Henry & Company, Inc. ' s (JWH) GlobalAnalyticsR Family of Programs.
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 Fund declined in Julyas many of the financial market trends that contributed to the Fund s second quarter gains were significantly disrupted or ended during the month. Although the Fund 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 funds with multiple advisors had similar declines.
For the month of July, concerns about strains in the U.S. housing market,exposure to sub-prime mortgages and excess leverage in the financial system resurfaced prompting investors to reduce positions in risky assets. The manifestation of this flight to quality was most noticeable in the credit markets where market forces pushed borrowing costs significantly higher. In this volatile trading environment, government bond prices rose while global equities and higher yielding currencies declined. The Fund benefited from the diversification associated with its commodity allocation.While the financial sectors of the Fund were negatively impacted by trend reversals and rising volatility, overall Fund losses were partially mitigated by gains resulting from the rising price of crude oil and trends in the grain markets. Strong global growth, rising inflationary concerns and vigilant central banks were three factors that combined to drive global interest rates higher during the second quarter of 2007. Festering near the surface of the market consciousness however, was real concern about the state of the U.S. housing market, hedge fund and investment bank exposure to sub-prime mortgages and the fragility of the liquidity dependent capital markets. These fears increased in July resultingin higher bond prices and a clear re-pricing of risk. The benchmark U.S. 10-year yield fell from a high of 5.19 percent during the month to close at 4.74 percent. At the same time bond yields were falling, spreads were rising at an even faster pace. Mortgage, high yield andswap spreads also widened during the month. The broad-based trend reversals in global bonds caused the Fund to incur losses in the interest rate sector.
Trading in currencies was also unprofitable. The turmoil in the credit markets had a collateral effect on the currency markets as investors bought back short positions in low yielding currencies that were used to finance long positions in higher yielding currencies. The Fund s largest loss was in the Japanese yen.
Trading in the metal markets was negative for the month as precious metals reversed their downward trend. Gold led the sectors negative performance as it rose to an 11-week high in New York during the month as the dollar tumbled to a record low against the euro and the British pound. The dollars fall boosted the appeal of the precious metal as an alternative investment as gold generally moves in the opposite direction of the U.S. currency. The metal finished the month up 4.1 percent as the dollar fell 1.1 percent against the euro.
Global equity prices suffered a significant setback in July, and trading in this sector was difficult in for the month as a number of long held positions were stopped out.
In summary, trends in global bonds and equities were halted when problems in the U.S. housing market and sub-prime mortgages spread throughout the global financial markets. This contagion led to a broad-based reduction in risk. The Fund s diversification and risk management techniques helped to minimize losses in this difficult environment. It is hard to know where the markets will go from here but it is possible that elevated levels of volatility will persist in certain sectors that could be a positive development for the Fund.The Fund stands ready to potentially take advantage of new opportunitiesas they arise.
Clearing Broker News
The Funds futures clearing broker, Calyon Financial, Inc. has 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. We believe that the merger will provide even greater financial strength for our clearing broker relationship. The merger will create one of the top 5 FCM s in the world.
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.
The Fund 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 Fund s long-term diversified trend- following methodology suffered losses as the market dislocations forced the exiting of positions.
The energy sector was the Fund s worst performer for the month as petroleum products suffered strong trend reversals. Crude oil finished the month down 5.3 percent. The currency sector was negative for the month as the credit debacle sparked extreme short-term moves in global currencies. The long-term nature of the Fund s models seek to capitalize on market trends that have both sufficient price amplitude and extended duration. The metals and stock indices sectors were negative for the month as range-bound markets and trend reversals dominated these sectors.
The interest rate sector was the Fund s strongest performer for the month as investors sought the relative safety of government debt as concerns increased over a global credit crisis. Japanese Government 10-year bonds (JGBs) were the sector s best performer. The agriculture sector was slightly positive as CBOT wheat exhibited the most noteworthy performance.
In conclusion, the far reaching influence of the sub-prime mortgage crisis spread throughout global financial markets. While such market dislocations often portend strong structural shifts in trends, thus far the emergence of such trends has been short-lived and filled with extreme price volatility. This volatility is not unusual in times of significant market realignment and the Fund will continue to apply its disciplined systematic trading approach to potentially take advantage of new opportunities as they present themselves.
Auditors
Due to regulatory circumstances beyond Everest or Spicer Jeffries control, Spicer Jeffries LLP ceased to serve the Fund 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. We have begun the process of selecting a new firm and we will notify all investors as to who will replace Spicer asthe Fund s new independent auditors. It should be noted that Spicer s opinion in 2006, 2005 and
2004 was that The Everest Fund, L.P. financial statements present fairly, in all material respects, the financial position of the Fund and the results of its cash flows have been in conformity with accounting principles generally accepted in the United States.
New Allocation
The Partnership anticipates making an allocation to the Morningstar Long / Short Commodity Index sometime in 2008. The Index is a momentum based strategy that holds a basket of 19 physical commodity contracts either long or short.
Offering Memorandum
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 Fund 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 Fund 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 Fund 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. The weakness of the dollar against the euro was a significant contributor to this month s gains as its downward trend led to an all-time low of $1.4278 per euro. The energy sector was positive in September as petroleum products rose to record highs on speculation that the combination of U.S. interest rate cuts and a falling dollar would boost demand. The falling dollar makes oil cheaper in countries using foreign currencies. Crude oil reached a record-breaking $83.90 a barrel on September 20th. This record high was less than a dollar from the all-time inflation-adjusted high reached in 1981, when prices jumped because Iran cut oil exports. Both the stock indices and metal sectors were positive for the month as stocks rose to complete their steepest September advance since 1998. The Fed s interest rate cut helped energy and raw-material companies lead the market s recovery after a summer rout. Gold extended its rally to its highest price since 1980 due,to speculation that a weakening dollar and surging energy costs will boost demand for the precious metal as an alternative investment. The interest rate sector was negative for September.
In conclusion, the Fund exhibited strong performance for the month of September as the larger-than-expected interest rate cut by the Fed drove the U.S. dollar lower, sparking inflationary fears and driving commodity prices to record highs. The Fund s systematic trend- following approach profited as trends strengthened. As always, the Fund stands ready to potentially take advantage of any continuing or new trends that may emerge.Refco Distribution (For those investors in the Fund in October 2005) 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. An initial distribution was made to investors in December 2006. The Plan Administration Committee, of which Peter Lamoureux is a member, is actively liquidating other assets.
On March 29, The Everest Fund, 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, we have now received $1,743,404.47. That represents an amount equal to approximately 23% 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. We expect additional distributions between now and the end of June 2007
On June 28th, 2007 Everest received a third distribution from Refco in the amount of $668,172.21. That amount is 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, brings the recovery to approximately 32 cents on the dollar so far. 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.
On September 20, 2007 Everest received another distribution from Refco in the amount of $342,699.06. That amount is 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,brings the recovery to approximately 36.55 cents on the dollar so far. 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. The Plan Administration Committee is working with the other estate professionals to effect additional distributions. We will continue to keep you informed. These changes do not apply those who have come into the Fund after October 2005.
During the reporting period, fiscal quarter ended September 30, 2007, additional Units sold consisted of zero limited partnershi 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 $459.31 per Unit of Class A Units ($ $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 Fund'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 Fund'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 Fund'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.
The currency sector was slightly negative in October as the dollars plunge against both the euro and British pound was not enough to offset the losses caused by trend reversals in the Japanese yen. The interest rate sector was negative for the month as the Fund exited positions in European and U.S. fixed income markets. The agriculture sector was negative for October as the Fund systematically exited positions as markets retreated from a seven-year high in NY coffee and an all-time high of $9.6175 a bushel in CBOT wheat on September 28th. 	In conclusion, the Fund's performance was positive for the month of October. Its' long-term, trend-following approach capitalized on increasing concerns about the health of the global credit-markets which drove bullish trends in both the energy and metals sectors. As always, the Fund stands ready to potentially take advantage of any continuing or new trends that may emerge.
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 Fund'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. This was most evident in the energy sector, where the majority of the actively traded products are priced in U.S. dollars. Performance for the agricultural sector was slightly positive in November. Precious metals prices were also impacted by movements in the dollar. In times of crisis, gold is often seen as a safe harbor and can function as if it is a de facto currency. Overall, performance for the metals sector was slightly negative for the month. Performance for the equity sector was negative for the month. The tendency for November to be a good month for equity returns did not prove to be the case this year as the S&P 500 declined approximately 4.50 percent during the month, but global equity prices rallied sharply at the end of the month.
November performance resulted in the third consecutive positive month for the Fund. The ongoing concern about the health of the U.S. economy and the Fed's ability to proactively react to signs of impending problems continue to drive performance across the market sectors. As always, the Fund stands ready to potentially take advantage of any continuing or new trends that may emerge.
Auditors
The Fund 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 Funds.
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 funds with a white paper to back up their conclusions (a firm who has a selling agreement with Everest). 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 fund, 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 fund, and we are making efforts to create a better investor experience.
Now that JWH has delivered a +27.24% year, we are taking steps to improve the experience of long term trend following by allocating approximately 40% of the Fund to vehicles that are designed to replicate the Morningstar Long/Short Commodity Index. We anticipate the allocation will occur either in late January or February, depending on the regulatory process.
Refco
On December 14, 2007 Everest received $1,912,484 upon the sale of the remaining Refco receivable. This brings the recovery from 36.69 cents on the dollar to 62.25 cents on the dollar and ends the Refco recovery effort. The Fund increased the class A units for each investor in the Fund by their pro-rate share, and mailed checks for the benefit of those who have redeemed. These changes do not apply those who have come into the Fund 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 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, 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 funding.
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 fund (- 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.
The Fund ' s overall return was negative for the month of January as losses in the interest rate, currency and energy sectors outweighed the gains achieved in the other sectors. The interest rate sector led the Fund ' s losses on increased speculation of rising global interest rates. The metals sector led the positive performing sectors along with more moderate gains achieved in both indices and agriculture. Metals benefited from gold rising to a 25-year high as investors sought a " safe haven " in the precious metal. This was due to increased fears about Iran's nuclear program and a Hamas led-Palestinian government.
The fixed income sector was the Fund ' s worst performing sector as the fixed income markets in the U.S., Europe and Japan sold-off over fears of their respective central banks raising interest rates. The currency sector also suffered losses as the U.S. dollar posted its biggest monthly decline against the euro since November 2004. The dollar also suffered losses against the Swiss franc, Japanese yen and the euro as investors no longer expected interest rate differentials to benefit the dollar as the spread narrowed between the U.S. and both European and Japanese interest rates. The Fund ' s energy sector underperformed as volatility within the sector increased as oil and natural gas are now being used as " geopolitical weapons " by Iran, Russia, Venezuela and militants in Bolivia. Crude oil, which is up 41 percent from a year ago and 11 percent for the month, helped to limit losses in this sector despite the increased volatility. However, the gains were not enough to offset the losses incurred in natural gas, which for the first time in almost 6 months dropped below $8 in New York. Natural gas fell 17 percent for the month as mild weather in the largest U.S. consuming regions cut demand which limited the need for utilities to pull from reserves stored in underground aquifers and caverns.
The metals sector was the best performing sector for the month. Gold extended its surge to a 25-year high, and silver climbed to its highest level since March 1984. Gold's increase occurred on concerns that the dollar may weaken because of higher oil prices, increasing the metal's appeal as a hedge against further declines in the U.S. currency. Global Stock Indices were positive for the month as European stock indices had their best January rally in eight years as energy stocks along with miners and steelmakers gained on expectations earnings would benefit from higher commodity prices. The agriculture sector was also positive on the month as sugar reached a 16-year high in London and a 25-year high in New York. The record highs were a result of the surging cost of crude oil which increased the demand for ethanol, a sugar cane by-product. Brazil, the biggest producer and exporter of sugar, is converting more of its cane crop to ethanol to cope with record gasoline prices.
In conclusion, the Fund finished negative for the month as the fixed income, currency and energy sectors suffered losses. Although the Fund underperformed, we remain confident that our trend following approach will withstand the recent market volatility and remain poised to take advantage of new opportunities as they present themselves.
Update on the RCM recovery efforts
The Official Committee of Creditors in the Refco case has 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. This may be too much information in too legal a format, and it is not specific to the recovery efforts of any one investment fund, but at least something has been organized. The questions and the FAQ section may be more common sense based and have less legal terminology.
The next issue to be determined by the court is a decision on whether Refco Capital Markets (RCM) was acting as a stockbroker. If so, RCM would go into a Chapter 7 liquidation. The Everest Fund has filed a motion objecting to the conversion, as we do not believe that RCM was acting as a stockbroker. The arguments are scheduled to be heard on February 14th. Everest Asset Management, Inc. remains available to answer any questions specific to the Everest Fund. The Fund's offering documents have been updated and we have taken in investor money for 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.
The Fund's performance was negative for the month as listless markets continued to hamper the Fund's long-term trend following approach. The majority of the losses were realized in the currency sector. Currency markets gyrated over speculation surrounding potential global interest rate moves. The energy sector incurred losses on concerns over geopolitical events. While the market continued to be apprehensive over the situation in Iran and Iraq, attacks in Nigeria and Saudi Arabia added to the market's trepidation. Limiting losses in this sector was natural gas, as prices fell to their lowest level in almost nine months. The metals sector was also negative for the month as volatility hurt performance. Global Stock indices did not perform well for the month as Asian stocks posted their first monthly decline since October 2005 and the Nasdaq dropped 1.1 percent. Market instability was also a factor in the indices sector as U.S. stocks suffered their biggest loss in five weeks on the last day of trading in February. The interest rate sector was slightly positive for the month as performance in various markets counterbalanced each other. Performance in the agriculture sector was slightly negative for the month as trading in N.Y coffee and N.Y. sugar hindered returns, while trading in CBOT wheat limited losses.
Update on the RCM recovery efforts
The Official Committee of Creditors in the Refco case has posted a website for information and updates. It has a summary of events in October 05 through February 06; a calendar of events for March 06; a bankruptcy basics primer; FAQs; and a section to ask questions. The site is at: www.refcocommittee.com. This may be too much information in too legal a format, and it is not specific to the recovery efforts of any one investment fund, but at least something has been organized. The questions and the FAQ section may be more common sense based and have less legal terminology.
The issue on whether the Refco Capital Markets (RCM) case should be converted to Chapter 7 liquidation was heard by the courts during February and early March. Closing arguments will be heard on Tuesday, March 14th. Everest Asset Management, Inc., the Official Committee of Unsecured Creditors, and the debtors (Refco) object to the conversion. We may know the Judge ' s ruling on Tuesday the 14th, or shortly thereafter. Everest Asset Management, Inc. remains available to answer any questions specific to the Everest Fund. The Fund's offering documents have been updated and we have had new investments for January, February and March.
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.
The fixed income sector led performance with robust gains as the Fund s systematic trend-following approach enabled it to profit from rising global interest rates. The indices and metal sectors also added to the positive performance as silver continued to trend higher, and the indices sector benefited from stronger economic data in Europe. The indices sector also profited from the continued strength of commodity stocks on the back of global growth in China. Limiting the Fund s gains for the month was the currency sector, which continued to suffer from range-bound trading, along with underperformance in both the energy and agriculture sectors.
The fixed income sector was the Fund s strongest performer for month as Japanese, German and U.S. government debt endured stronger than expected consumer confidence and rising inflationary fears. The indices sector was also positive for the month as Asian stocks approached a 16-year high on surging demand for metals and oil, and the Nikkei 225 climbed above 17,000 for the first time in more than five years. The metals sector was also profitable for the month as silver reached $11.66 on March 30th, the highest intraday price since September 1983.
The energy sector was the Fund s worst performer as geopolitical induced volatility limited gains within the sector. Performance in the currency sector was also negative for the month as range-bound trading continued to negatively affect the Fund s long term trend following approach. Although some currencies had directional moves during the month, they were then accompanied by strong reversals. The agriculture sector also underperformed for the month as gains made in London sugar were not enough to offset the underperformance caused by the weakness in CBOT wheat and corn.
Update on the RCM recovery effort
The Official Committee of Creditors in the Refco case has posted a website for information and updates. It has a summary of events in October 05 through February 06; a calendar of events for March 06; a bankruptcy basics primer; FAQs; and a section to ask questions. The site is at: www.refcocommittee.com. This may be too much information in too legal a format, and it is not specific to the recovery efforts of any one investment fund, but at least something has been organized. The questions and the FAQ section may be more common sense based and have less legal terminology. On March 14th the Judge tentatively ruled that Refco Capital Markets (RCM) should be converted to a Chapter 7, but he agreed to give the parties 45 days in order to try to work out a consensual plan for reorganizing RCM and distributing the assets on hand. Everest Asset Management, Inc. remains available to answer any questions specific to the Everest Fund. The Fund s offering documents have been updated and we have had new investments for January, February and March.
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 fund (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.
The interest rate sector led performance with strong gains as the Fund s systematic trend-following approach enabled it to profit from higher global interest rates. The metal and currency sectors also added to performance as both gold and silver continued to trend higher on inflationary fears and increased demand, while currencies benefited from a weakening U.S. dollar. The energy sector had gains due to increased concerns over Iran's nuclear program. The indices sectors had more modest gains, while the agriculture sector incurred losses as performance within these sectors was hampered by volatility.
The fixed-income sector was the Fund's strongest performing sector as European, Japanese and U.S. fixed income markets sold off. The metals sector was also profitable as all components were positive for the month. Gold climbed above $650/oz for the first time in 25-years after Iran failed to meet an April 28th deadline to cooperate with United Nations inspectors who are trying to determine if the country is enriching uranium for military purposes. Also adding to performance was silver which rallied on speculation investor demand will grow as Barclays Bank PLC began offering an exchange-traded fund backed by the metal. Silver has rallied 51 percent this year, and rose 17% this month alone. The currency sector was also positive on the month as the U.S. dollar fell on expectations of narrowing interest rate differentials. The dollar fell 4.1 percent against the euro, the biggest monthly decline since December 2003 and the British pound gained against the dollar for a fourth week, its longest winning streak in a year. The largest gain in this sector was the euro, while the largest loss was in the Japanese yen. Keeping with the prevailing theme performance in the energy sector was also positive during the month. Concerns that the UN Security Council will impose sanctions that could lead Iran, the fourth-largest oil producer, to cut shipments drove crude oil for June delivery to a new high of $75.35 a barrel on April 21st and 24th. Crude oil for June delivery ended up 7.8% this month. The global stock indices sector was slightly positive for the month as the Fund's performance was hindered by increased geopolitical instability in the global stock markets, as well as a volatile interest rate environment.
The agriculture sector was the Fund's worst performing sector for the month as volatility hurt performance. Cotton limited the sectors losses, with the largest loss occurring in N.Y. coffee as growers in Latin America and Africa took advantage of a recent rally to sell beans.
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 Fund.
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.
The Fund's performance was negative in May as the interest rate, metal, agriculture and stock indices sectors suffered from large market corrections during the second half of the month. Increased inflationary fears and concerns over the global economy led investors to take profits and reduce risk exposure. A major catalyst for the reversal was the news that the Federal Reserve on May 10th signaled that "further policy firming may yet be needed" instead of signaling a possible "pause" at it's next meeting at the end of June. This caught the market by surprise causing equity markets, which had been near or at record highs, to fall in response. This news also eventually caused a "contagion effect" in the metal and currency sectors.
The currency sector was positive for the month despite the extreme volatility that dominated the sector. The fixed income sector was the Fund's worst performing sector as uncertainty surrounding inflation prospects and global growth led to increased volatility. Performance in the energy sector was also negative for the month as petroleum products retreated from record or near record highs during the month. The metal sector was also negative for the month as precious metals fell from record highs set towards the beginning of the month. Gold fell 12% after reaching a 26-year high of $732 an ounce on May 12th. The largest loss in this sector occurred in silver. Global Stock Indices also underperformed for the month. Attributing to the underperformance of the sector was the Federal Reserve's uncertainty about inflation, which took the markets by surprise, and the lackluster U.S. consumer confidence report. The agriculture sector was also negative for the month as London and New York sugar hindered performance. Sugar, whose demand has increased on its ability to be made into ethanol, fell as energy prices dropped during the month.
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.
* The Bankruptcy court approved a settlement whereby the Sphinx entities have agreed to pay back $262 million to the Refco estates.
* The Austrian Bank BAWAG settled with the creditors committee and the Department of Justice (DOJ) and agreed to pay up to $675 million. Please keep in mind that a portion of the BAWAG settlement goes to the DOJ and some to the Refco estate, not directly to the Refco Capital Markets. However, most of the other bankrupt Refco entities owe RCM money so there should be benefits coming down to the RCM level, which is where Everest money is frozen.
The agreement between parties at RCM and the two substantial recoveries of assets are some of the most significant steps of progress in the recovery of our assets since the events of October 2005. The Committee (and Peter Lamoureux, president of the Fund's general partner, as a member of the Committee) is continuing to work hard to recover assets in a timely manner.
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.
The Fund's performance was negative for the month of June. All six sectors were negative with the currency sector, and to a lesser extent the interest rate sector, responsible for the majority of the Fund's losses. These sectors were affected by trend-reversing markets caused by anticipated, but unrealized, fears that the Federal Reserve would not only raise rates at its June 29th meeting, but also reinforce expectations for further rate increases to curb inflation.
Currencies were the Fund's worst performing sector as the U.S. dollar spent the majority of the month strengthening against most major currencies. The interest rate sector was also unprofitable for the month as U.S. 10-year and 30- year treasury bonds led the sector's decline. The interest rate speculation that dominated the currency markets also affected the U.S. treasury markets. The metals sector was also negative for the month as precious metals continued to retreat from highs set in May. Gold fell to a three month low of $542.45 an ounce on June 14th after reaching a 26-year high of $732 an ounce on May 12th. The dramatic sell-off was caused by the combination of a stronger dollar, as investors bought dollars as an alternative to gold, and increased speculation that the Federal Reserve could hike interest rates as much as 50 basis points. Despite the recent weakness in the precious metal, gold is up 18 percent for the year. All components of this sector were negative with the largest loss coming from gold. The agriculture sector also underperformed during the month as weather conditions had severe affects on various crops in the U.S. and around the world. Global Stock Indices were slightly negative for the month as speculation over the outcome of the June 29th Federal Reserve meeting caused severe market fluctuations. The energy sector was also slightly negative for the month as choppy market conditions hindered performance. All of the petroleum based products were negative for the month.
The combined losses in the currency and interest rate sectors drove the Fund's negative performance. Comments from the Federal Reserve combined with stronger than expected economic data caused speculation that the Federal Reserve might raise interest rates 50 basis points instead of previously expected 25 at the June 29th meeting. The possibility of a larger than expected interest rate move sent the U.S. dollar and U.S. treasury yields higher. However, the markets reversed themselves upon the announcement that the Federal Reserve had raised rates by 25 basis points, and signaled to the markets that they have possibly reached the end of the rate hiking cycle. The resulting increase in uncertainty and speculation led to volatility in the markets and caused several reversals making it difficult for our disciplined systematic investment style to capitalize on longer-term trends. As always, then Fund stands ready to potentially take advantage from any continuing or new trends that may emerge.
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. The agreement defers attempts to convert the current RCM Chapter 11 case to a case in Chapter 7, but if a global consensus settlement in Chapter 11 fails, a conversion to Chapter 7 would be on a more efficient pre-planned basis. The agreement defines a process for allocating the assets on hand at RCM, provides a mechanism for determining who is a securities customer and who is an FX/unsecured customer, and sets a schedule for distributions of other expected RCM assets such as intercompany claims and third party (litigation) recoveries.
Although this agreement is a major step toward recovering Everest's assets, keep in mind that it is contingent upon a number of things such as Bankruptcy Court approval and the Rogers Raw Material Fund becoming a party to the agreement. We will know more about the contingencies being met by the next court date of August 10th.
The Official Committee of Creditors in the Refco case has posted a website for information and updates. It has a summary of events in October 05 through June 06; a calendar of events for July 06; a bankruptcy basics primer; FAQs; and a section to ask questions. The site is at: www.refcocommittee.com
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 fund (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.
The Fund s performance was negative for the month of July. All six sectors traded were negative, with the interest rate, agriculture and currency sectors responsible for the majority of the Fund s losses. While some markets had strong directional moves, the overall trading environment was unfavorable for the Fund s long-term trend following approach. Geopolitical events, extreme weather conditions, and speculation over U.S. interest rate policy caused harmful spikes in volatility within the sectors traded by the Fund.
The interest rate sector was the Fund s worst performing sector as speculation of a slowing U.S. economy and the crisis in the Middle East attracted investors to the perceived safety in fixed-income markets. The agriculture sector was also negative for the month. The currency sector also underperformed for the month as fighting between Israel and Hezbollah caused a sharp reversal in the weakening U.S. dollar trend. Performance in the energy sector was negative for the month as geopolitical events and a record-breaking heat wave in the Midwest and Northeastern U.S. caused volatility throughout the entire energy sector. The metals sector was also negative for the month as increased volatility in gold hurt the sector s performance. Gold was up 5 percent in July after dropping 5.1 percent in June. The indices sector was only slightly negative for the month as the Nasdaq slumped about 3.7 percent.
In conclusion, performance was negative for the month as volatility affected trends throughout markets traded by the Fund. Concern surrounding the U.S. economy continued to keep the markets speculating about the Federal Reserve s next move, causing uncertainty within the interest rate, currency and indices sectors. Meanwhile, the eruption of violence in the Middle East added to the Fund s losses as investors fled from equities into safe haven investments such as gold and treasuries. Finally, the Fund also suffered as a heat wave swept across the nation driving energy and agricultural prices suddenly higher. As a result, short-term market moving events increased volatility and induced strong reversals making it difficult for JWH s disciplined systematic investment style to capitalize on longer-term trends.
Update on the RCM recovery efforts
*	On June 30th the two groups of creditors at Refco Capital Markets (RCM) entered into a Settlement Agreement. This concluded months of negotiating between the Securities Customers and the FX/General Unsecured Creditors of RCM, Everest being in the second group. *	On July 24th the Rogers funds agreed to become parties to the Settlement Agreement. *	Immediately thereafter the Official Committee of Unsecured Creditors began to attempt to reach a global consensual settlement agreement with the other Refco bankrupt entities. Everest's claims at Refco are at the RCM level, however there are 23 other bankrupt entities. Most of the parties to the case are attempting to reach a global consensus involving all the Refco estates.
*	The RCM Settlement Agreement, if approved by the Judge, provides for a schedule of payments to be made from the assets on hand at RCM, and it provides a formula for sharing the anticipated intercompany receivables and finally the third party recoveries. Everest is still hopeful for an initial distribution of the assets on hand by the end of the 4th quarter of this year, but many things may impact that time frame.
The Official Committee of Creditors in the Refco case has posted a website for information and updates. It has a summary of events in October 05 through July 06; a calendar of events for August 06; a bankruptcy basics primer; FAQs; and a section to ask questions. The site is at: www.refcocommittee.com
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.
The Fund's performance was positive in August as four out of the six sectors traded were profitable for the month. The fixed-income sector led performance with robust gains as U.S., Japanese, and European bond markets trended higher on signs that inflationary pressures in the world s largest economies are receding. The currency sector also added to the Fund s positive performance as the Japanese yen weakened against the U.S. dollar and euro on speculation that Japan s central bank wouldn t raise interest rates again this year. The Fund s performance was further enhanced by more modest gains in the metals and agriculture sectors, while the Fund suffered small loses in the indices and energy sectors.
The fixed-income sector was the Fund s strongest performer as Japanese government bonds (JGBs), German bunds, and the U.S. benchmark 10-year bond all rallied for the month. The currency sector was the Fund s other solid performer for the month, as the Japanese yen fell against the U.S. dollar and euro on increased speculation that the BOJ would keep interest rates at their current level. The metals sector was also profitable for the month as silver futures for December delivery reached $13 an ounce, the highest price since May 30th. The precious metal has gained 90 percent in the past year. Silver s rally is due to increased demand throughout the world, and expectations of continued economic expansion in developing nations. The largest gain in this sector was achieved in silver, while the only loss occurred in gold as geopolitical tension in the Middle East, due to Iran s continued pursuit of uranium enrichment, kept the metal vulnerable to price fluctuations. The agriculture sector was also positive for the month as losses in CBOT wheat were offset by gains made in London and New York sugar. Sugar prices in London have dropped almost 25 percent in the past three months after rising to a record $497 a metric ton on May 12th. The global stock indices sector was slightly negative for the month as global equity markets reversed the recent losing trend and rallied on decreased fears of inflation. The energy sector was the Fund s worst performing sector as higher price trends at the beginning of the month experienced strong reversals. Natural gas soared on August 2nd in New York on concern s that Tropical Storm Chris could strengthen into the season s first hurricane and track towards the Gulf of Mexico where about a quarter of the United States gas supply is produced. However by August 31st, natural gas closed at a six-week low in New York as Tropical Storm Chris was a non- event and mild weather across the central and eastern U.S. reduced demand for the fuel to be sent to power stations.
In conclusion, the Fund was positive for the month, with the fixed income sector leading performance as Japanese, German and U.S. fixed income markets trended higher on contained inflation fears. The currency sector also helped profitability as the Japanese yen weakened on speculation that interest rates in Japan will remain at their current level. As always, the Fund stands ready to potentially take advantage from any continuing or new trends that may emerge.
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). Although I am hopeful that getting distributions will be an expedited process, we do not yet have a timetable for distributions to be made. One thing that could impact the timeliness of distributions is that the processing of claims and the objections to claims have not been completed. To the extent that the process continues beyond the Effective Date, it could either delay distributions or cause distributions to be diluted due to the need to reserve amounts equal to any disputed claims.
The schedules show initial distributions of assets on hand at RCM for creditors like Everest who had margin money for the purposes of foreign exchange trading at RCM/FX will be in the range of 26 cents on the dollar. An exact figure is difficult to determine as all the claims have not been processed yet and all the legal fees are not calculated yet. The Plan calls for a second level of recovery for the intercompany receivables that are owed to RCM by the other Refco entities. It is anticipated that this second distribution will bring the Everest recovery to the range of 36 to 40 cents on the dollar, again subject to the total claims allowed. Looking beyond those two distributions, we anticipate additional recoveries from litigation proceeds against various parties. The amount of those recoveries is obviously dependent on the success of the litigation. In either case the amount cannot be determined at this time.
It is Everest's belief that the Court will approve the Plan or a plan that is close to the current draft. We remain available to answer any questions that you may have.
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 fund; 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.
The Fund's performance was negative for the month of October. Three of the six sectors traded had positive performance. However, the gains made in the energy, indices and agriculture sectors were not able to offset the combined losses of the remaining sectors. The underperforming sectors were affected by trend-reversing markets caused by shifting expectations about global inflationary fears, as well as the health of the U.S. economy. 	The fixed income sector was the Fund's worst performing sector for the month as U.S., European, and Japanese debt markets suffered similar reversals over speculation surrounding potential global interest rate moves. The currency sector was negative for the month. The economic data and speculation about future interest rates which led to the losses in the fixed-income sector also caused underperformance within this sector, as the U.S. dollar suffered a strong reversal at the end of the month. The largest sector loss occurred in the euro. Performance in the metals sector was also negative for the month. 	The energy sector was the Fund's strongest performer for the month of October. Crude oil plunged 25 percent since reaching a record $78.40 a barrel on July 14th, amid concern that fighting in Lebanon would spread through the Middle East. Since July 14th, three factors have caused prices to drop; a cease fire between Israel and Lebanon has been achieved, crude oil inventories have risen, and there has been a calm Atlantic hurricane season. The stock indices sector was also positive for the month. Asian stocks climbed, for their best month since April. Also advancing were the U.S. benchmark indices, as earlier optimism that U.S. households would sustain economic growth pushed the Dow industrials to a record high during the month and sent the S&P 500 to its highest level since November 2000. Performance in the agriculture sector was also positive during the month as corn and CBOT wheat were the sectors best performers. In conclusion, the Fund was negative for the month as an unexpected shift in the global interest rate environment shocked the markets and resulted in sharp reversals in the fixed-income and currency markets. While gains in energy, indices and agriculture sectors helped to limit losses, they were not enough to offset the combined losses from the fixed-income and currency markets. As always, the Fund stands ready to potentially profit from any new trends that may emerge.
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. This is a preliminary adjustment and could be negatively impacted if the Plan is not confirmed by the Bankruptcy Court on December 15, 2006. The estimate could also be adjusted depending upon the outcome of the processing of valid claims in the bankruptcy litigation and certain other factors. Looking beyond the recovery estimates described above, there is the potential for further recoveries through litigation efforts. A Litigation Trust is being established and funded. A Litigation Trust Committee has been formed and a Litigation Trustee is being appointed to pursue claims against a targeted list of parties who may have acted fraudulently or with negligence in the conduct of Refco business. We have not included litigation recoveries, if any, in the write down, because the success of such actions cannot be estimated at this time. No assurances can be made that there will be any further recoveries for Everest from these efforts. 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.
The Fund was +6.38% for November. The currency sector led performance with strong gains as the Fund's systematic trend following approach enabled it to profit from a weakening U.S. dollar. The agricultural and interest rate sectors also added to the positive performance as corn continued to trend higher on increased export demand and U.S. treasuries rallied as signs of slowing economic growth bolstered speculation that the Federal Reserve (Fed) will cut interest rates. The metal sector was also positive on the strength of silver while the energy and indices sectors incurred losses as performance within these sectors was hampered by trend reversals towards the end of the month.
December's results cannot be predicted, and we are hopeful for a positive year. Under market conditions that favor JWH's systematic trading system, this manager has shown the ability to recover quickly in the past. However, the Fund is down for the year at the end of November and we have had a number of questions regarding potential tax advantages from a negative year that could be used to offset gains in other investments. Although your clients should consult with their own tax advisors, we would like to remind everyone that it is not necessary to redeem the investment in order to trigger the tax advantage, if there is one. The Fund's results are recognized for tax purposes in each year of trading and will be reported on the K-1.
We appreciate your patience during what has been a disappointing period of performance in the managed futures industry and by our manager, John W. Henry & Company, Inc. (JWH). By their very nature, uncorrelated asset classes can produce different results, which may lead to better combined returns over time. A 10% Everest 90% S&P 500 allocation had higher total returns with lower standard deviation than a 100% S&P 500 investment for the last 5 year, 7 year and 10 year periods ending with the 3rd quarter of 2006 (rebalancing quarterly). In the last three years that has not been the case. At Everest, we have always tried to look at the long term results, and we encourage investors to do the same. We have seen no fundamental change in management or style of investing at JWH which have caused under performance, and we look forward to the potential return of markets that are more favorable to JWH's systematic trading system. We continue to review the allocation to three programs at JWH.
	For investors who have been in the Fund since October 2005, we anticipate getting a number of distributions from the frozen assets at Refco over the next few months which should equate to most of the assets on hand at RCM being paid out by June of 2007. In addition, the Litigation Trust will be pursuing actions against a targeted list of individuals and firms with the hope of further recoveries. Obviously, the success of that litigation cannot be determined at this time, nor can we predetermine a time frame for results.
	In summary, we are reviewing our allocation to the JWH programs and winding down the Refco issues. We wish everyone a Joyous Holiday Season and a Healthy and Prosperous New Year.
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.
The Fund's performance was negative for the month of December. Four out of six sectors traded were negative, with the interest rate sector responsible for the majority of the Fund's losses. Speculation over the future of the U.S. Federal Reserve's (FED), European Central Bank's (ECB), and the Bank of Japan's (BOJ) interest rate policies caused harmful and sharp reversals in global fixed income markets. The same uncertainty surrounding the future direction of world interest rates also hurt performance in the Fund's currency sector, as fluctuating interest rate expectations caused excessive volatility in global currency markets. The health of U.S., European, and Japanese economies continued to keep markets speculating about the direction of global interest rates, causing uncertainty within the fixed income, currency, and metal sectors. As a consequence, short-term market moving events resulted in strong reversals or trend-less markets making it difficult for JWH's disciplined systematic investment style to capitalize on longer-term trends.
	The poor performance in December ensured a losing year for the Fund. We have decided to make a change in allocation to the JWH programs. Since June of 2003 the Fund has been allocated to three JWH programs in approximately the following amounts: 50% to the JWH Global Analytics Program (GA), 25% Worldwide Bond Program (WWB), and 25% Currency Strategic Allocation Program (CSAP). Effective January 3rd, 2007 we have dropped the CSAP and increased GA to 75% while keeping WWB at 25%. We still have exposure to currency trading within the Global Analytics Program. For the past three years CSAP has underperformed both GA and WWB Programs, and we believe this change will help improve the results of our trading with JWH.
Refco Summary for Investors in the Fund October 2005
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, we have now received $1,365,525.51. That represents an amount equal to approximately 18% of the frozen assets. We have increased the Class A units for each investor in the Fund by their pro rata share of the distribution, and lowered the Class 'AA' units. This will be seen 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 2006 for the benefit of any investors who have redeemed.
	There is approximately 26.5 cents on the dollar on hand at Refco for FX clients like Everest. Subject to the claims processing, we anticipate receiving additional distributions that may bring us to that level of recovery within the first half of 2007. The Disclosure Document filed with the Court in October 2006 estimates on page 8 that the Everest Fund's category of recovery (FX unsecured creditors) could come to 37.5 cents on the dollar subject to a number of contingencies. In order to approach the 37.5 % recovery, a number of entities involved in Refco need to be liquidated, further transfers need to be effected between Refco entities, and some appeals need to be heard by the courts. It is difficult to estimate the length of time to complete this process or the degree of success in approaching the 37.5 % recovery level. Peter Lamoureux is a member of the Plan Administration Committee and will endeavor to communicate any results in a timely fashion.
	As mentioned before, there is the possibility of further recoveries through litigation against certain parties who are being targeted by the Litigation Trust Committee. At this time no assurance can be made that the litigation efforts will result in further recoveries for the Fund.
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 fundamentals 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, 2007. All open position trading risk exposures of the Partnership have been included in calculating the figures set forth below. As of December 31, 2007, the total capitalization of the Partnership was approximately $11,693,007, 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, 2007, the Partnership had approximately $11.6 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 fundamental 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 31,2007, 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, 2007.
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 CFI and CFS. 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.
Item 9.
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A.
Item 9A.	Controls and Procedures
As of December 31, 2007, 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 and principal financial officer, of the effectiveness of the design and operation of the Partnership's disclosure controls and procedures as contemplated by Rule 13a-15 of the Securities Exchange Act of 1934, as amended. Based on and as of the date of that evaluation, the General Partner's principal executive officer and principal financial officer concluded that the Partnership's disclosure controls and procedures are effective, in all material respects, in timely alerting him to material information relating to the Partnership required to be included in the reports required to be filed or submitted by the Partnership with the SEC under the Exchange Act.
There was no change in the Partnership's internal control over financial reporting in the 12 months ended December 31, 2007 that has materially affected, or is reasonably likely to materially affect, the Partnership's internal control over financial reporting.
Item 9B.
Item 9B.	Other Information.
None
Part III
Item 10.
Item 10.	Directors and Executive Officers 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 officers and directors of the General Partner as of December 31, 2007 are 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.
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.
Item 12.
Item 12. Security Ownership of Certain Owners and Management and Related Stockholder Matters.
(a) As of December 31, 2007 the no partners were known to the Partnership to own beneficially more than 5% of the outstanding Units:
(b)As of December 31, 2007, management ownership was: none
(b)As of December 31, 2007, management ownership was: none.
(c) As of December 31, 2007, 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 31,2007 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 .
For the year ended December 31,2006 the aggregate fee billed by Spicer Jeffries LLP for professional services rendered for the audit of the financial statements included in this annual report and review of the quarterly 10Q's for the year ended were $37,000.
Audit Related Fees
None.
Tax Fees
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.
For the year ended December 31, 2006 the aggregate fees billed by Spicer Jeffries LLP for federal and state tax return preparation totaled $28,000.
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. (Independent Auditor's Report)
b. Statements of Financial Condition, December 31, 2007, 2006 and 2005.
c. Schedule of Investments, December 31, 2007
d. Schedule of Investments, December 31, 2006
e. Statements of Operations, Years Ended December 31, 2007 2006 and 2005 .
f. Statements of Changes in Partners' Capital, Years Ended December 31, 2007, 2006 and 2005 .
g. Statements of Cash Flows, Years Ended December 31, 2007, 2006 and 2005.
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 filed 10.20.2005
See form 8-K filed 11.06.2006
See form 8-K filed 8.14.2007 See form 8-Ka filed 9.25.2007
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:	 March 29, 2008		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:	March 29, 2008
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.
Form 8-K Date: October 20, 2005
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
THE EVEREST FUND, L.P. Iowa 0-17555 42-1318186
1100 North 4th Street Suite 143 Fairfield, Iowa 52556 (641) 472-5500
Item 8.01 Other Events. On October 13, 2005, Refco Inc. ( Refco ), the parent company of Refco LLC and Refco Capital Markets, Ltd. ( RCM ) the futures commission merchant and foreign currency broker, respectively, for The Everest Fund, L.P. (the Fund ), announced that liquidity within RCM was no longer sufficient to continue operations and that it had imposed a 15 day moratorium on all of its activities to protect the value of that business. Subsequently, Refco and certain of its subsidiaries, including RCM, filed for bankruptcy protection. Attached as Exhibit 99.1 to this Form 8-K, and incorporated herein by reference, is a Letter to Limited Partners dated October 20, 2005 discussing these events that was distributed by the Fund on October 20, 2005.
99.1 Letter to Limited Partners dated October 20,
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: October 20, 2005
THE EVEREST FUND, L.P.
By: Everest Asset Management, Inc., General Partner
By: /s/ Peter Lamoureux
Peter Lamoureux President, Secretary, Treasurer and Director
FORM 8-K Date: November 6, 2006
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 31, 2006
THE EVEREST FUND, L.P.
		Iowa 0-17555 42-1318186
1100 North 4th Street Suite 143 Fairfield, Iowa 52556) (641) 472-5500
Item 8.01 Other Events.
On September 14, 2006, Refco, Inc. and all of its subsidiaries and affiliates who are the Debtors in the Bankruptcy Court proceeding filed a plan under 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' super majority' of creditors at the RCM level. The Disclosure Statement was the subject of a hearing before the Bankruptcy Court on October 16, 2006, at which time objections were heard. The Plan is slated to be confirmed by the Bankruptcy Court on or before December 15, 2006, and it would then become effective on or before December 31, 2006 (the "Effective Date"). Although Everest is hopeful that distributions will be made on an expedited basis, a timetable for distributions has yet to be released. The processing of claims and the objections to claims, which as of the date hereof have not been completed, could impact the timeliness of distributions. To the extent that the process continues beyond the Effective Date, it could either delay distributions or cause distributions to be diluted due to the need to reserve amounts equal to any disputed claims. The schedules filed with the Bankruptcy Court indicate recoveries at RCM for creditors like Everest who had margin money for the purposes of foreign exchange trading at RCM will be in the range of 37.5 cents on the dollar. An exact figure is difficult to determine as all the claims have not been processed yet and all the legal fees are not calculated yet.
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, 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 were valued as of October 17, 2005. As of October 17,2005 the assets were valued at $7,482,331.68, resulting in a write down of $4,489,399.01 and a remaining asset balance of $2,992,932.67. This write down is only an estimate at this time and could be adjusted upward or downward in the future. The write down estimate could be negatively impacted by a number of things such as, but not limited to, the Plan not being confirmed by the Court by December 15, 2006 or the allowed claims exceeding the amounts listed on the schedules currently.
Looking beyond the initial recovery estimates described above, there is the potential for further recoveries through litigation efforts. A Litigation Trust is being established and funded. A Litigation Trust Committee has been formed and a Litigation Trustee is being appointed to pursue claims against a targeted list of parties who may have acted fraudulently or with negligence in the conduct of Refco business. We have not included litigation recoveries, if any, in the write down, because the success of such actions cannot be estimated at this time. No assurances can be made that there will be any further recoveries for Everest from these efforts.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: November 6, 2006
THE EVEREST FUND, L.P.
By: Everest Asset Management, Inc., General Partner
By: /s/ Peter Lamoureux
Peter Lamoureux President, Secretary, Treasurer and Director
Form 8-K Date: August 14, 2007
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
				 FORM 8-K
				CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 14, 2007
				THE EVEREST FUND, L.P. 		(Exact name of registrant as specified in its charter)
	Iowa 			0-17555 	 42- (State or other jurisdiction of incorporation)(Commission file number) (IRS Employer 							Identification No.)
			1100 North 4th Street 				Suite 143 			Fairfield, Iowa 52556 		(Address of principal executive offices)
Registrant's telephone number, including area code: (641) 472-5500
	Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Securities Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d- 2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e- 4(c) under the Exchange Act (17 CFR 240.13e-4(c))
The Everest Fund, L.P. will be late filing the 2nd quarter 2007 10Q. 1. Due to last minute computer issues, the Fund will not be able to file 10Q by August 14 , 2007. 2. We expect to be able to file the 2nd quarter 2007 10Q on or before August 17, 2007.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: August 14, 2007.
THE EVEREST FUND, L.P.
By: Everest Asset Management, Inc., General Partner
By: /s/ Peter Lamoureux
Peter Lamoureux President, Secretary, Treasurer and Director
Form 8-Ka Date: September 25, 2007
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
				 FORM 8-K AMENDMENT
				CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 25, 2007
				THE EVEREST FUND, L.P. 		(Exact name of registrant as specified in its charter)
		Iowa 			0-17555 42-1318186 (State or other jurisdiction of incorporation)(Commission file number) (IRS Employer 							Identification No.)
			1100 North 4th Street 				Suite 143 			Fairfield, Iowa 52556 		(Address of principal executive offices)
Registrant's telephone number, including area code: (641) 472-5500
	Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Securities Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d- 2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e- 4(c) under the Exchange Act (17 CFR 240.13e-4(c))
On September 18, 2007, Spicer Jeffries LLP resigned as The EverestFund, LP's principal independent accountant. Spicer Jeffries LLP resigned due to the rules under the Sarbanes-Oxley Act of 2002 regarding partner rotation. Spicer Jeffries LLP will not be considered independent with respect tothe Everest Fund, LP. for the December 31, 2007 audit. The report on the financial statements prepared by Spicer Jeffries LLP for the years ended December 31, 2006, 2005 and 2004 did not contain an adverse opinion or a disclaimer of opinion, nor was it qualified or modified as to audit scope or accounting principles. During the two most recent fiscal years 2005 and 2006,and subsequent interim period through the date of resignation - September 17,2007, we did not have any disagreements with Spicer Jeffries LLP onany accounting principles or practices, financial statement disclosure, or auditing scope or procedure. We provided Spicer Jeffries LLP with a copy of this Form 8-K prior to its filing with the Securities and ExchangeCommission and requested that they furnish us with a letter addressed to the Securities and Exchange Commission stating whether they agreed with the statements made in this Form 8-K and, if not, stating the aspects with which they do not agree. A copy of the letter provided by Spicer Jeffries LLP is attached to this Form 8-K as Exhibit A. Neither Everest Fund, LP nor anyone on our behalf consulted Spicer Jeffries LLP on any matter relating to the application of accounting principles to a specific completed or contemplated transaction or the type of audit opinion that might be rendered on our financial statements.
Exhibit A
Securities and Exchange Commission Washington, D.C. 20549
Ladies and Gentlemen: We were previously the principal accountants for Everest Fund, LP and, under the date of March 15, 2007, we reported on the financial statements of Everest Fund, LP as of and for the years ended December 31, 2006, 2005 and 2004. Effective September 17, 2007, Spicer Jeffries LLP is resigning as the principal accountants due to the rules under the Sarbanes-Oxley Act of 2002 regarding partner rotation. We regret taking this action but due to the partner rotation rule as stated above, Spicer Jeffries LLP will not be considered independent with respect to the Everest Fund, LP s December 31, 2007 audit. We have read Everest Fund, LP s statements included under Item 4 of its Amended Form 8-K dated September 25, 2007, and we agree with such statements.
/s/ SPICER JEFFRIES LLP Greenwood Village, Colorado September 25, 2007
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: September 25, 2007.
THE EVEREST FUND, L.P.
By: Everest Asset Management, Inc., General Partner
By: /s/ Peter Lamoureux
Peter Lamoureux President, Secretary, Treasurer and Director
Settlement of Refco receivebles
On December 14, 2007, Everest Asset Management, Inc. received $1,912,484.00 from the sale of our Refco receivable and in settlement of our claims at Refco. The fund has increased the Class A units for each investor in the fund by their pro rata share of the distribution. Prior to the sale we had received distributions totaling $2,761,336.98 out of our total claim of $7,482,331.66 or approximately 36.69%. The claim has been sold for the additional $1,912,484 bringing the total recovery to $4,657,751.46 or 62.25%. The enclosed check is for the benefit of investors who have redeemed.
I have worked toward recapturing this money for just over two years. I have logged hundreds of hours of conference calls, thousands of emails with spreadsheets and service of court document attachments and made a number of trips to NY city as a member of the Official Committee of Unsecured Creditors of Refco, Inc. I believe that I have made a difference in recoveries, while at the same time being able to keep investors well informed and keep the Fund's legal costs at a minimum.
I believe, at this time, this is the best settlement result we could achieve for the following reasons: To my knowledge, this is the highest percent recovery yet entered into for an FX unsecured claim such as ours, which is solely at Refco Capital Markets, Ltd. (RCM). The previous 36.69% recovery has one or two more distributions yet to be made for approximately3-5 more cents, (which are known to me and I have factored into our settlement number) but that will essentially 'tap out' the cash & securities that are available for FX unsecured claims at RCM. The future distributions will be based upon the success of the litigation actions, and those could take between 1 and 5 years to resolve (although some quick settlements may take place). Settling now gives the money to you, the investors, so that you may maximize the time value of your own money. Settling now stops the clock on the legal and accounting expenses. If we can distribute all the money in December 2007, we avoid audit and tax return costs for 2008 for the AA and II units of the Fund. We are making our best efforts to get the money to you this month.
The disadvantage of settling at this time is that we have no way of knowing whether or not the long term litigation results, if any, will yield substantially higher than the time value of money and cost savings we get from settling now.
As most of you know, white collar crimes have been alleged against former Refco principals, which at the time were not detected by Refco's auditors or the underwriters of Refco's IPO. These situations are difficult to avoid and not easily resolved. In the end, I hope that all investors will appreciate the effort that has been made to recover these assets.
Yours truly,
Peter Lamoureux President
EVEREST FUND, L.P. (An Iowa Limited Partnership)
ACKNOWLEDGEMENT
EVEREST FUND, L.P. (An Iowa Limited Partnership) FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
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 of The Everest Fund, L.P.(an Iowa limited Partnership), including the condensed schedule of investments, as of December 31, 2007, and the related statements of operations, changes in partners capital and cash flows for the year ended December 31, 2007. 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 audit. The financial statements for the year ended December 31, 2006 were audited by another auditor whose report dated March 15, 2007 expressed an unqualified opinion on those financial statements.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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, 2007, and the results of its operations for the year ended, in conformity with accounting principles generally accepted in the United States of America.
Ryan & Juraska
Chicago, Illinois March 24, 2008
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, 2007
The accompanying notes are an integral part of this statement.
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)
STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
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, 2007, 2006, 2005
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, 2007, 2006, AND 2005
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.
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.
During the year ended December 31, 2007, the Partnership received additional anticipated distributions in the Refco matter in the amount of $1,379,747. This amount is equal to approximately 18% of the original amount that was frozen 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. This brings the total recovery from approximately 36.69% to 62.25% and ends the Refco recovery effort.
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, 2007 and 2006, JWH s allocation was approximately $7 and $88 million , 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 Fund s clearing broker, Calyon Financial, Inc. merged with the clearing broker Fimat, a subsidiary of Societe Generale. The Merger created a new firm known as Newedge and became effective January 2nd 2008.
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, 2007 and 2006 approximately 89% and 87%, 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.
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.
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.
NOTE 5-	FINANCIAL HIGHLIGHTS
The following financial highlights show the Partnership s financial performance for the years ended December 31, 2007, 2006, and 2005. 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.