<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended: June 30, 1996
Commission File Number: 0-23950
Kenmar Performance Partners L.P.
(Exact name of registrant as specified in its charter)
NEW YORK 11-2751509
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Two American Lane, P.O. Box 5150, Greenwich, Connecticut 06831-8150
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (203) 861-1000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
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KENMAR PERFORMANCE PARTNERS L.P.
QUARTER ENDED JUNE 30, 1996
INDEX
<TABLE>
<CAPTION>
PAGE
PART I - FINANCIAL INFORMATION ----
<S> <C>
Item 1. Financial Statements
Statements of Financial Condition June 30, 1996 (unaudited) and
December 31, 1995
(audited)........................................................... 3
Statements of Operations for the Three Months and Six Months
Ended June 30, 1996 and 1995 (unaudited)............................ 4
Statements of Changes in Partners' Capital (Net Asset
Value) for the Six Months Ended June 30, 1996 and 1995
(unaudited)......................................................... 5
Notes to Financial Statements....................................... 6-10
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.......................................... 11
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.................................... 14
SIGNATURES...................................................................... 15
</TABLE>
2
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
KENMAR PERFORMANCE PARTNERS L.P.
STATEMENTS OF FINANCIAL CONDITION
June 30, 1996 (unaudited) and December 31, 1995 (audited)
<TABLE>
<CAPTION>
June 30, 1996 December 31, 1995
------------- -----------------
<S> <C> <C>
ASSETS
Equity in broker trading accounts $31,196,953 $33,373,562
Cash 277,383 (1,186,496)
Net option premiums paid (received) 5,240,537 18,677,574
Unrealized gain on open contracts ------------- -----------------
Deposits with brokers 36,714,873 50,864,640
Cash and cash equivalents 13,924,629 28,353,208
Fixed income securities 65,784,863 82,085,930
------------- -----------------
Total assets $116,424,365 $161,303,778
============= =================
LIABILITIES
Accounts payable $133,851 $73,031
Commissions and other trading fees
on open contracts 650,282 1,058,444
Management fees 265,400 341,349
Incentive fees 476,596 1,309,446
Redemptions payable 6,350,253 4,743,423
------------- -----------------
Total liabilities 7,876,382 7,525,693
------------- -----------------
PARTNERS' CAPITAL (NET ASSET VALUE)
General Partner - 53.5807 units outstanding at
June 30, 1996 and December 31, 1995
Limited Partners - 9,409.7072 and 10,750.9076 units 614,594 762,603
outstanding at June 30, 1996 and December 31, 1995 107,933,389 153,015,482
Total partners' capital ------------- -----------------
(Net Asset Value) 108,547,983 153,778,085
------------- -----------------
$116,424,365 $161,303,778
============= =================
</TABLE>
See accompanying notes
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KENMAR PERFORMANCE PARTNERS L.P.
STATEMENTS OF OPERATIONS
For the Three Months Ended June 30, 1996 and 1995 and
For the Six Months Ended June 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
INCOME
Commodity trading gains (losses)
Realized $ 2,134,465 $ 28,837,138 $(7,777,400) $29,908,568
Change in unrealized (305,049) (5,802,804) (13,437,037) (4,904,804)
-------------------- -------------------- ------------- -----------
Gain (loss) from commodity trading 1,829,416 23,034,334 (21,214,437) 25,003,764
-------------------- -------------------- ------------- -----------
Other trading gains (losses)
Realized (184,238) 434,834 69,902 438,625
Change in unrealized 247,174 (59,261) (347,145) 48,722
-------------------- -------------------- ------------- -----------
Gain (loss) from other trading 62,936 375,573 (277,243) 487,347
-------------------- -------------------- ------------- -----------
Interest income 1,535,350 2,186,356 3,171,865 4,270,895
-------------------- -------------------- ------------- -----------
Total income (loss) 3,427,702 25,596,263 (18,319,815) 29,762,006
-------------------- -------------------- ------------- -----------
EXPENSES
Brokerage commissions 3,411,025 5,005,732 8,364,130 8,996,027
Management fees 872,660 1,055,718 1,819,161 1,961,611
Incentive fees 476,596 4,874,580 579,074 5,786,467
General Partner Administrative fee for
operating expenses 332,207 378,136 702,250 769,681
Cash management service charge 61,615 80,220 98,508 79,595
Legal expenses 22,595 26,556 22,995 36,055
-------------------- -------------------- ------------- -----------
Total expenses 5,176,698 11,420,942 11,586,118 17,629,436
-------------------- -------------------- ------------- -----------
NET INCOME (LOSS) $ (1,748,996) $14,175,321 $ (29,905,933) $12,132,570
==================== ==================== ============= ===========
NET INCOME (LOSS) PER UNIT
(based on weighted average number of
units outstanding during the period) $ (165.95) $1,201.35 $ (2,792.85) $1,020.12
==================== ==================== ============= ===========
INCREASE (DECREASE) IN NET
ASSET VALUE PER UNIT $ (186.56) $1,204.11 $ (2,762.37) $1,024.59)
==================== ==================== ============= ===========
</TABLE>
See accompanying notes
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KENMAR PERFORMANCE PARTNERS L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (NET ASSET VALUE)
For the Six Months Ended June 30, 1996 and 1995
(Unaudited)
-----------
<TABLE>
<Caption)
Partner's Capital
----------------------------------------------------------------------------------
General Limited Total
------- ------- -----
Units Amount Units Amount Units Amount
------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Six Months Ended June 30, 1996
- ------------------------------
Balances at December 31, 1995 53.5807 $762,603 10,750.9076 $153,015,482 10,804.4883 $153,778,085
Net (loss) for the six months
ended June 30, 1996 (148,009) (29,757,924) (29,905,933)
Additions 0 0 689.4411 8,900,436 689.4411 8,909,436
Redemptions 0 0 (2,030.6415) (24,233,605) (2,030.6415) (24,233,605)
------------- ------------ ------------ ------------ ------------ ------------
Balances at June 30, 1996 53.5807 $614,594 9,409.7072 $107,933.389 9,463.2879 $108,547,983
============= ============ ============ ============ ============ ============
Six Months Ended June 30, 1995
- ------------------------------
Balances at December 31, 1995 52.2682 $688,084 11,884.2564 $156,449,939 11,936.5246 $157,138,023
Net income for the six months
ended June 30, 1996 56,176 12,076,394 12,132,570
Additions 1.3125 16,000 847.5682 10,813,427 848.8807 10,829,427
Redemptions 0 0 (2,094.3798) (28,404,370) (2,094.3798) (28,404,370)
------------- ------------ ------------ ------------ ------------ ------------
Balances at June 30, 1995 53.5807 $760,260 10,637.4448 $150,935,390 10,691.0255 $151,695,650
============= ============ ============ ============ ============ ============
Net Asset Value Per Unit
--------------------------------------------------------
June 30, 1996 December 31, June 30, December 31,
------------- 1995 1995 1994
------------ ------------ ------------
$11,470.43 $14,232.80 $14,189.06 $13,164.47
============= ============ ============ ============
</TABLE>
See accompanying notes
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KENMAR PERFORMANCE PARTNERS L.P.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
-----------
Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. General Description of the Partnership
Kenmar Performance Partners L.P. (the Partnership) is a New
York limited partnership which operates as a commodity
investment pool. It is subject to the regulations of the
Commodity Futures Trading Commission, an agency of the United
States (U.S.) government which regulates most aspects of the
commodity futures industry, rules of the National Futures
Association, an industry self-regulatory organization, and
the requirements of commodity exchanges where the Partnership
executes transactions. Additionally, the Partnership is
subject to the requirements of Futures Commission Merchants
and interbank market makers (brokers) through which the
Partnership trades.
The Partnership is a registrant with the Securities and
Exchange Commission pursuant to the Securities Exchange Act
of 1934. As a registrant, the Partnership is subject to the
regulation of the Securities and Exchange Commission.
B. Method of Reporting
The Partnership's financial statements are presented in
accordance with generally accepted accounting principles,
which require the use of certain estimates made by the
Partnership's management.
C. Commodities
Gains or losses are realized when contracts are liquidated.
Unrealized gains or losses on open contracts (the difference
between contract purchase price and market price) at the date
of the statement of financial condition are included in
equity in broker trading accounts. Any change in net
unrealized gain or loss from the preceding period is reported
in the statement of operations.
D. Cash and Cash Equivalents
Cash and cash equivalents includes short-term time deposits
and cash on deposit at financial institutions.
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KENMAR PERFORMANCE PARTNERS L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
-----------
E. Fixed Income Securities
Fixed income securities are reported at market value plus
accrued interest. Investment transactions are accounted for
on the trade date.
F. Brokerage Commissions
Brokerage commissions include other trading fees and are
charged to expense when contracts are opened.
G. Income Taxes
The Partnership prepares calendar year U.S. and state
information tax returns and reports to the partners their
allocable shares of the Partnership's income, expenses and
trading gains or losses.
H. Foreign Currency Transactions
The Partnership's functional currency is the U.S. dollar;
however, it transacts business in currencies other than the
U.S. dollar. Assets and liabilities denominated in currencies
other than the U.S. dollar are translated into U.S. dollars
at the rates in effect at the date of the statement of
financial condition. Income and expense items denominated in
currencies other than the U.S. dollar are translated into
U.S. dollars at the rates in effect during the period. Gains
and losses resulting from the translation to U.S. dollars are
reported in income currently.
I. Reclassification
Certain amounts in the statements of operations for the three
months and six months ended June 30, 1995 were reclassified
to conform with the 1996 presentation.
Note 2. GENERAL PARTNER
The General Partner of the Partnership is Kenmar Advisory
Corp., which conducts and manages the business of the
Partnership. The General Partner is required by the Limited
Partnership Agreement to maintain an investment in the
Partnership of 1% of the Net Asset Value, up to a total of
$500,000.
A portion of the brokerage commissions paid by the Partnership
to certain brokers is, in turn, paid by the brokers to the
General Partner.
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KENMAR PERFORMANCE PARTNERS L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
-------------
Note 3. COMMODITY TRADING ADVISORS
The Partnership has advisory agreements with various commodity
trading advisors, pursuant to which the Partnership pays monthly
management fees of 0% to l/3 of 1% (4% annually) of the net asset
value under management (as defined in the advisory agreements) and
quarterly incentive fees of 15% to 25% of the profit subject to
incentive fee (as defined in the advisory agreements).
Note 4. DEPOSITS WITH BROKERS
The Partnership deposits funds with brokers subject to Commodity
Futures Trading Commission regulations and various exchange and
broker requirements. Margin requirements are satisfied by the
deposit of cash with such brokers. The Partnership earns interest
income on its assets deposited with the brokers.
Note 5. OTHER EXPENSES
The General Partner pays all ordinary operating and administrative
expenses incurred by the Partnership. The Partnership pays the
General Partner a monthly administrative fee equal to 1/12 of 1% of
the prior month's beginning Net Asset Value of the Partnership. The
Partnership also pays actual amounts incurred in connection with
services performed by independent legal counsel.
Note 6. SUBSCRIPTIONS, DISTRIBUTIONS AND REDEMPTIONS
Investments in the Partnership are made by subscription agreement,
subject to acceptance by the General Partner. The subscription
price is equal to the Net Asset Value of the units purchased, plus
a 5% selling commission, unless wholly or partly waived by the
General Partner. Additions to partners' capital are shown net of
such charges, which amounted to $15,036 and $116,267 for the six
months ended June 30, 1996 and 1995, respectively.
The Partnership is not required to distribute profits, but may do
so at the sole discretion of the General Partner. A Limited Partner
may request and receive redemption of units owned, subject to
restrictions in the Limited Partnership Agreement.
Note 7. TRADING ACTIVITIES AND RELATED RISKS
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 program. The
Partnership is exposed to both market risk, the risk arising from
changes in the
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KENMAR PERFORMANCE PARTNERS L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
-------------
market value of the contracts, and credit risk, the
risk of failure by another party to perform according to the terms
of a contract.
Purchase and sale of futures and options on futures contracts
requires margin deposits with the brokers. Additional deposits may
be necessary for any loss on contract value. The Commodity Exchange
Act requires a broker to segregate all customer transactions and
assets from such broker's proprietary activities. A customer's cash
and other property (for example, U.S. Treasury bills) deposited
with a broker are considered commingled with all other customer
funds subject to the broker's segregation requirements. In the
event of a broker'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 total cash and other property
deposited.
The Partnership has a substantial portion of its assets on deposit
with brokers and dealers in securities and other financial
institutions in connection with its trading of forward contracts
and its cash management activities. In the event of a financial
institution's insolvency, recovery of Partnership assets on deposit
may be limited to account insurance or other protection afforded
such deposits. In the normal course of business, the Partnership
requires collateral for repurchase agreements in excess of the face
value of such agreements. Since forward contracts are traded in
unregulated markets between principals, the Partnership also
assumes the risk of loss from counterparty nonperformance.
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. Written options expose the Partnership to potentially
unlimited liability, and purchased options expose the Partnership
to a risk of loss limited to the premiums paid.
The fair value of derivatives represents unrealized gains and
losses on open futures and forward contracts and long and short
options at market value. The average fair value of derivatives
during the six months ended June 30, 1996 and 1995 was
approximately $8,700,000 and $13,700,000, respectively, and the
related fair values as of June 30, 1996 and December 31, 1995 were
approximately $5,500,000 and $17,500,000, respectively.
Net trading results from derivatives for the three months and six
months ended June 30, 1996 and 1995 are reflected in the statement
of operations and equal gain (loss) from commodity trading less
brokerage commissions. Such trading
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KENMAR PERFORMANCE PARTNERS L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
------------
results reflect the net gain (loss) arising from the Partnership's
speculative trading of futures contracts, options on futures
contracts and forward contracts.
At June 30, 1996 and December 31, 1995, the notional amount of open
contracts was as follows:
<TABLE>
<CAPTION>
June 30, 1996 December 31, 1995
------------- -----------------
Contracts to Contracts to Contracts to Contracts to
Purchase Sell Purchase Sell
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Derivatives
(excluding
purchased options) $1,284,600,000 $1,474,500,000 $2,621,900,000 $1,801,900,000
Purchased options 71,800,000 10,000,000 27,800,000 25,000,000
</TABLE>
The above amounts do not represent the Partnership's risk of loss
due to market and credit risk, but rather represent the
Partnership's extent of involvement in derivatives at the date of
the statement of financial condition.
The General Partner has established procedures to actively monitor
and minimize market and credit risk. The Limited Partners bear the
risk of loss only to the extent of the market value of their
respective investments and. in certain specific circumstances,
distributions and redemptions received.
Note 8. INTERIM FINANCIAL STATEMENTS
The statement of financial condition as of June 30, 1996, the
statements of operations for the six months ended June 30, 1996 and
1995 and for the three months ended June 30, 1996 and 1995 and the
statements of changes in partners' capital (net asset value) for
the six months ended June 30, 1996 and 1995 are unaudited. In the
opinion of management, such financial statements reflect all
adjustments, which were of a normal and recurring nature, necessary
for a fair presentation of financial position as of June 30, 1996
and the results of operations for the six months ended June 30,
1996 and 1995 and for the three months ended June 30, 1996 and
1995.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The assets of the Partnership are used for trading, buying, selling, spreading,
swapping or otherwise acquiring, holding or disposing of commodities, futures
contracts, forward contracts, foreign exchange commitments, swap contracts,
exchange-for-physicals, spot (cash) commodities and other items, options on the
foregoing, and any rights pertaining to the foregoing contracts, instruments or
investments throughout the world ("Commodities") through the direct and
indirect retention of professional commodity trading advisors. Certain assets
of the Partnership are deposited (i) with banks for yield enhancement and
cash management, and (ii) with commodity brokers and interbank dealers
(collectively, the "Commodity Brokers") in trading accounts established by the
Partnership for its independent commodity trading advisors (the "Advisors") and
are used by the Partnership as margin to engage in trading.
CAPITAL RESOURCES. The Partnership does not have, nor does it expect to have,
any capital assets. Redemptions and sales of the units of limited partnership
interests (the "Units") in the future will affect the amount of funds available
for trading Commodities in subsequent periods.
There are three primary factors that affect the Partnership's capital
resources: (i) the trading profit or loss generated by the Advisors (including
interest income); (ii) the capital invested or redeemed by the Limited
Partners; and (iii) the capital invested or redeemed by the General Partner.
The General Partner has maintained, and has agreed to maintain, at all times a
capital account in such amount, up to a total of $500,000, as is necessary for
the General Partner to maintain a one percent (1%) interest in the capital,
income and losses of the Partnership. The General Partner, in its sole
discretion, may withdraw any excess above its required capital contribution
without notice to the Limited Partners. The General Partner, in its sole
discretion, may also contribute any greater amount to the Partnership, for
which it shall receive Units at their then-current Net Asset Value.
RESULTS OF OPERATIONS. The success of the Partnership is dependent upon the
ability of the Advisors to generate trading profits through the speculative
trading of Commodities sufficient to produce capital appreciation after payment
of all fees and expenses. Future results will depend in large part upon the
Commodities markets in general, the performance of the Advisors, the amount of
additions and redemptions, and changes in interest rates. Due to the highly
leveraged nature of Commodities trading, small price movements may result in
substantial losses. Because of the nature of these factors and their
interaction, it is impossible to predict future operating results.
The Partnership has incurred and will continue to incur substantial charges
from the payment of brokerage commissions to the Commodity Brokers, management
and/or incentive fees to the Advisors and fees to the General Partner. The
management fees and administrative fees are payable based upon the Net Asset
Value of the Partnership and without regard to the profitability of the
Partnership. Brokerage commissions are also payable without regard to the
profitability of the Partnership, although such commissions have been, and may
continue to be, higher when Advisors experience profits and as a result
increase their trading activity. As a result, the Partnership is required to
make substantial trading profits to avoid depletion of its assets from the
above-mentioned fees and expenses. In addition, because incentive fees are
determined and paid separately for each Advisor, the Partnership may pay an
incentive fee to an Advisor in a given period due to trading profits earned by
that Advisor despite losses experienced by, or lack of any trading profits
earned by, other Advisors or the Partnership as a whole.
The futures markets are constantly changing in character and degree of
volatility. The process of selecting Advisors is an ongoing one; even after
initial selections have been made, the General Partner continues to analyze
qualitatively and quantitatively the performance and trading characteristics of
current and prospective Advisors in
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an effort to determine which traders are best suited to the current market
environment. Based upon such continuing analysis, the General Partner actively
and dynamically reallocates assets among those Advisors currently trading for
the Partnership or changes the portfolio of Advisors when the trading
environment or an Advisor's individual performance dictates to the General
Partner that such change or changes are necessary. It is important to note,
however, that (i) the Advisors trade in various markets at different times and
that prior activity in a particular market does not mean that such markets will
be actively traded by an Advisor or will be profitable in the future and (ii)
the Advisors trade independently of each other using different trading systems
and may trade different markets with various concentrations at various times.
Consequently, the results of operations of the Partnership can only be
discussed in the context of the overall trading activities of the Partnership,
the Advisors' trading activities on behalf of the Partnership as a whole and
how the Partnership has performed in the past.
Set forth below is a comparison of the results of operations of the Partnership
for the three month and six month periods ended June 30, 1996 and 1995.
As of June 30, 1996, the Net Asset Value of the Partnership was $108,547,983, a
decrease of approximately 14.29% from its Net Asset Value of $126,651,045 at
March 31, 1996. The Partnership's subscriptions and redemptions for the
quarter ended June 30, 1996 totaled $1,977,464 and $18,331,531, respectively.
For the quarter ended June 30, 1996, the Partnership had gains comprised of
$1,950,227 in realized trading gains, ($57,875) in change in unrealized trading
losses and $1,535,350 in interest income compared to profits comprised of
$29,271,971 in realized trading gains, ($5,862,065) in change in unrealized
trading losses and $2,186,356 in interest income for the same period in 1995.
Total income for the second quarter of 1996 decreased by $22,168,561 from
the same period in 1995, while total expenses decreased by $6,244,244 between
these periods. Substantially all of the decrease in total expenses was due to a
decrease in trading fees and brokerage commissions paid. The Net Asset Value
per unit at June 30, 1996 decreased 1.60% from $11,656.99 at March 31, 1996 to
$11,470.43 at June 30, 1996. The Partnership's negative performance for the
quarter ended June 30, 1996 resulted primarily from losses in European and
Pacific Rim interest rates, metals and tropicals.
The Net Asset Value of the Partnership decreased $45,230,102, or 29.41%, from
December 30, 1995 through June 30, 1996. The Partnership's subscriptions and
redemptions for the six months ended June 30, 1996 totaled $8,909,436 and
$24,233,605, respectively. For the six months ended June 30, 1996, the
Partnership had losses comprised of ($7,707,498) in realized trading losses,
($13,784,182) in change in unrealized trading losses and $3,171,865 in interest
income compared to profits comprised of $30,347,193 in realized trading gains,
($4,856,082) in change in unrealized trading losses and $4,270,895 in interest
income for the same period in 1995. Total income for the first months of
1996 decreased by $48,081,821 from the same period in 1995, while total expenses
decreased by $6,043,318 between these periods. Substantially all of the
decrease in total expenses was due to a decrease in trading fees and brokerage
commissions paid. The Net Asset Value per Unit at June 30, 1996 decreased
19.41% from $14,232.80 at December 31, 1995 to $11,470.43 at June 30, 1996. The
Partnership's negative performance for the six months ended June 30, 1996
resulted primarily from losses in global interest rates, petroleums, metals and
tropicals.
For the reasons described in this section, past performance is not indicative
of future results. As a result, any recent increases in realized or unrealized
trading gains may have no bearing on any results that may be obtained in the
future.
LIQUIDITY. Although there is no public market for the Units, a Limited Partner
may redeem his Units in the Partnership as of any month-end occurring six
months or more after such investment was made.
With respect to the Partnership's trading, in general, the Partnership's
trading advisors will endeavor to trade only Commodities that have sufficient
liquidity to enable them to enter and close out positions without causing major
price movements. Notwithstanding the foregoing, most United States commodity
exchanges limit the amount by which certain commodities may move during a
single day by regulations referred to as "daily price fluctuation limits" or
"daily limits". Pursuant to such regulations, no trades may be executed on any
given day at prices beyond the daily limits. The price of a futures contract
has occasionally moved the daily limit for several consecutive days, with
little or no trading, thereby effectively preventing a party from liquidating
its position. While the occurrence of such an event may reduce or effectively
eliminate the liquidity of a particular market, it
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will not limit ultimate losses and may in fact substantially increase losses
because of this inability to liquidate unfavorable positions. In addition, if
there is little or no trading in a particular futures or forward contract
that the Partnership is trading, whether such illiquidity is caused by any of
the above reasons or otherwise, the Partnership may be unable to execute trades
at favorable prices and/or may be unable or unwilling to liquidate its position
prior to its expiration date, thereby requiring the Partnership to make or take
delivery of the underlying interest of the Commodity.
In addition, certain Advisors trade on futures markets outside the United
States on behalf of the Partnership. Certain foreign exchanges may be
substantially more prone to periods of illiquidity than United States
exchanges. Further, certain Advisors trade forward contracts which are not
traded on exchanges; rather banks and dealers act as principals in these
markets. The Commodity Futures Trading Commission does not regulate trading on
non-U.S. futures markets or in forward contracts.
SAFE HARBOR STATEMENT. The statements contained herein that are not historical
facts are forward-looking statements subject to the safe harbor created by the
Private Securities Litigation Reform Act of 1995. A number of important factors
should cause the Partnership's actual results, performance or achievements for
1996 and beyond to differ materially from the results, performance or
achievements expressed in, or implied by, such forward-looking statements.
These factors include, without limitation, the factors described above.
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
A. EXHIBITS.
The following exhibit is filed with this Report:
27 Financial Data Schedule.
B. REPORTS ON FORM 8-K.
None.
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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 thereunto duly authorized.
KENMAR PERFORMANCE PARTNERS L.P.
By: Kenmar Advisory Corp., general partner
Dated: August 13, 1996 By: /s/ Robert L. Cruikshank
------------------------------------------
Robert L. Cruikshank
Executive Vice President
(Duly Authorized Officer
of the General Partner)
Dated: August 13, 1996 By: /s/ Thomas J. DiVuolo
------------------------------------------
Thomas J. DiVuolo
Senior Vice President
(Principal Financial and Accounting
Officer of the Registrant)
15
<TABLE> <S> <C>
<ARTICLE> 5
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