<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: September 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
--- ---
<PAGE> 2
KENMAR PERFORMANCE PARTNERS L.P.
QUARTER ENDED SEPTEMBER 30, 1996
INDEX
<TABLE>
<CAPTION>
PAGE
PART I - FINANCIAL INFORMATION ----
<S> <C>
Item 1. Financial Statements
Statements of Financial Condition September 30, 1996 (unaudited)
and December 31, 1995 (audited)..................................... 3
Statements of Operations for the Three Months and Nine Months
Ended September 30, 1996 and 1995 (unaudited)....................... 4
Statements of Changes in Partners' Capital (Net Asset
Value) for the Nine Months Ended September 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.......................................... 11-13
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K..................................... 14
SIGNATURES...................................................................... 15
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
KENMAR PERFORMANCE PARTNERS L.P.
STATEMENTS OF FINANCIAL CONDITION
September 30, 1996 (unaudited) and December 31, 1995 (audited)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
---- ----
<S> <C> <C>
ASSETS
Equity in broker trading accounts
Cash $ 33,083,544 $ 33,373,562
Net option premiums paid (received) 297,076 (1,186,496)
Unrealized gain on open contracts 18,776,697 18,677,574
------------ ------------
Deposits with brokers 52,157,317 50,864,640
Cash and cash equivalents 8,792,438 28,353,208
Fixed income securities 52,048,942 82,085,930
------------ ------------
Total assets $112,998,697 $161,303,778
============ ============
LIABILITIES
Accounts payable $171,649 $73,031
Commissions and other trading fees
on open contracts 797,251 1,058,444
Management fees 238,341 341,349
Incentive fees 2,443,244 1,309,446
Redemptions payable 4,388,452 4,743,423
------------ ------------
Total liabilities 8,038,937 7,525,693
------------ ------------
PARTNERS' CAPITAL (NET ASSET VALUE)
General Partner - 53.5807 units outstanding at
September 30, 1996 and December 31, 1995 684,643 762,603
Limited Partners - 8,160.6539 and 10,750.9076 units
outstanding at September 30, 1996 and December 31, 1995 104,275,117 153,015,482
------------ ------------
Total partners' capital
(Net Asset Value) 104,959,760 153,778,085
------------ ------------
$112,998,697 $161,303,778
============ ============
</TABLE>
See accompanying notes.
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<PAGE> 4
KENMAR PERFORMANCE PARTNERS L.P.
STATEMENTS OF OPERATIONS
For the Three Months Ended September 30, 1996 and 1995 and
For the Nine Months Ended September 30, 1996 and 1995
(Unaudited)
-----------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
INCOME
Commodity trading gains (losses)
Realized $ 3,235,087 $ (9,352,888) $ (4,542,313) $ 20,555,679
Change in unrealized 13,536,160 (4,055,186) 99,123 (8,959,990)
----------- ------------ ------------ -------------
Gain (loss) from commodity trading 16,771,247 (13,408,074) (4,443,190) 11,595,689
----------- ------------ ------------ -------------
Other trading gains (losses)
Realized (114,142) 15,300 (44,240) 453,925
Change in unrealized 193,496 17,005 (153,649) 65,727
----------- ------------ ------------ -------------
Gain (loss) from other trading 79,354 32,305 (197,889) 519,652
----------- ------------ ------------ -------------
Interest income 1,284,606 1,763,244 4,456,471 6,034,139
----------- ------------ ------------ -------------
Total income (loss) 18,135,207 (11,612,525) (184,608) 18,149,480
----------- ------------ ------------ -------------
EXPENSES
Brokerage commissions 4,065,819 4,285,213 12,429,949 13,281,240
Management fees 699,518 897,037 2,518,679 2,858,647
Incentive fees 2,443,244 10,780 3,022,318 5,797,247
General Partner administrative fee
for operating expenses 267,456 388,019 969,706 1,157,700
Cash management service charge 46,943 30,727 145,451 110,322
Legal expenses 0 0 22,995 36,055
----------- ------------ ------------ -------------
Total expenses 7,522,980 5,611,776 19,109,098 23,241,211
----------- ------------ ------------ -------------
NET INCOME (LOSS) $10,612,227 $(17,224,301) $(19,293,706) $ (5,091,731)
=========== ============ ============ =============
NET INCOME (LOSS) PER UNIT
(based on weighted average number of
units outstanding during the period) $ 1,184.20 $ (1,591.51) $ (1,905.39) $ (441.36)
=========== ============ ============ =============
INCREASE (DECREASE) IN NET
ASSET VALUE PER UNIT $ 1,307.36 $ (1,611.64) $ (1,455.01) $ (587.05)
=========== ============ ============ =============
</TABLE>
See accompanying notes.
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<PAGE> 5
KENMAR PERFORMANCE PARTNERS L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (NET ASSET VALUE)
For the Nine Months Ended September 30, 1996 and 1995
(Unaudited)
-----------
<TABLE>
<CAPTION>
Partners' Capital
----------------------------------------------------------------------
General Limited Total
--------------- ------------------ --------------------
Units Amount Units Amount Units Amount
----- ------ ----- ------ ----- -------
Nine Months Ended September 30, 1996
- ------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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 nine months
ended September 30, 1996 (77,960) (19,215,746) (19,293,706)
Additions 0 0 734.3216 9,402,431 734.3216 9,402,431
Redemptions 0 0 (3,324.5753) (38,927,050) (3,324.5753) (38,927,050)
------- -------- ------------ ------------ ------------ ------------
Balances at September 30, 1996 53.5807 $684,643 8,160.6539 $104,275,117 8,214.2346 $104,959,760
======= ======== ============ ============ ============ ============
Nine Months Ended September 30, 1995
- ------------------------------------
Balances at December 31, 1994 52.2682 $688,084 11,884.2564 $156,449,939 11,936.5246 $157,138,023
Net (loss) for the nine months
ended September 30, 1995 (30,177) (5,061,554) (5,091,731)
Additions 1.3125 16,000 1,599.9306 20,379,361 1,601.2431 20,395,361
Redemptions 0 0 (2,697.2787) (36,096,252) (2,697.2787) (36,096,252)
------- -------- ------------ ------------ ------------ ------------
Balances at September 30, 1995 53.5807 $673,907 10,786.9083 $135,671,494 10,840.4890 $136,345,401
======= ======== ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Net Asset Value Per Unit
------------------------------------------------------------------------------------
September 30, December 31, September 30, December 31,
1996 1995 1995 1994
---- ---- ---- ----
<S> <C> <C> <C>
$12,777.79 $14,232.80 $12,577.42 $13,164.47
========== ========== ========== ==========
</TABLE>
See accompanying notes.
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<PAGE> 6
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.
E. Fixed Income Securities
Fixed income securities are reported at market value plus accrued
interest. Investment transactions are accounted for on the trade
date.
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<PAGE> 7
KENMAR PERFORMANCE PARTNERS L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
-----------
Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
-----------------------------------------------------------
(CONTINUED)
-----------
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 nine months ended September 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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<PAGE> 8
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 1/3 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, net of such charges,
amounted to $18,286 and $151,643 for the nine months ended September
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 market value of the
contracts, and credit risk, the risk of failure by another party to
perform according to the terms of a contract.
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<PAGE> 9
KENMAR PERFORMANCE PARTNERS L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
-----------
Note 7. TRADING ACTIVITIES AND RELATED RISKS (CONTINUED)
------------------------------------------------
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 nine
months ended September 30, 1996 and 1995 was approximately $9,500,000
and $12,500,000, respectively, and the related fair values as of
September 30, 1996 and December 31, 1995 were approximately $19,100,000
and $17,500,000, respectively.
Net trading results from derivatives for the three months and nine
months ended September 30, 1996 and 1995 are reflected in the
statements of operations and equal gain (loss) from commodity trading
less brokerage commissions. Such trading results reflect the net gain
(loss) arising from the Partnership's speculative trading of futures
contracts, options on futures contracts and forward contracts.
-9-
<PAGE> 10
KENMAR PERFORMANCE PARTNERS L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
-----------
Note 7. TRADING ACTIVITIES AND RELATED RISKS (CONTINUED)
------------------------------------------------
At September 30, 1996 and December 31, 1995, the notional amount of open
contracts was as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
---- ----
Contracts to Contracts to Contracts to Contracts to
Purchase Sell Purchase Sell
-------- ---- -------- ----
<S> <C> <C> <C> <C>
Derivatives (excluding
purchased options) $2,701,600,000 $705,700,000 $2,621,900,000 $1,801,900,000
Purchased options 28,400,000 52,200,000 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 September 30, 1996, the
statements of operations for the nine months ended September 30, 1996
and 1995 and for the three months ended September 30, 1996 and 1995
and the statements of changes in partners' capital (net asset value)
for the nine months ended September 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 September 30, 1996
and the results of operations for the nine months ended September 30,
1996 and 1995 and for the three months ended September 30, 1996 and
1995.
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<PAGE> 11
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 administrative 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
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<PAGE> 12
qualitatively and quantitatively the performance and trading characteristics of
current and prospective Advisors in 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 nine month periods ended September 30, 1996.
As of September 30, 1996, the Net Asset Value of the Partnership was
$104,959,760, a decrease of approximately 3.31% from its Net Asset Value of
$108,547,983 at June 30, 1996. The Partnership's subscriptions and redemptions
for the quarter ended September 30, 1996 totaled $492,995 and $14,693,443,
respectively. For the quarter ended September 30, 1996, the Partnership had
revenues comprised of $3,120,945 in realized trading gains, $13,729,656 in
change in unrealized trading gains and $1,284,606 in interest income compared
to losses comprised of $(9,337,588) in realized trading losses, ($4,038,181) in
change in unrealized trading losses and $1,763,244 in interest income for the
same period in 1995. The total income for the third quarter of 1996 increased
by $29,747,732 from the same period in 1995, while total expenses increased by
$1,911,204 between these periods. The Net Asset Value per unit at September
30, 1996 increased 11.40% from $11,470.43 at June 30, 1996 to $12,777.79 at
September 30, 1996. The Partnership's positive performance for the quarter
ended September 30, 1996 resulted primarily from gains in European and Pacific
Rim interest rates, petroleums and metals.
The Net Asset Value of the Partnership decreased $48,818,325, or (31.75%) from
December 31, 1995 through September 30, 1996. The Partnership's subscriptions
and redemptions for the nine months ended September 30, 1996 totaled $9,402,431
and $38,927,050, respectively. For the nine months ended September 30, 1996,
the Partnership had losses comprised of ($4,586,553) in realized trading
losses, ($54,526) in change in unrealized trading losses and $4,456,471 in
interest income compared to profits comprised of $21,009,604 in realized
trading gains, ($8,894,263) in change in unrealized trading losses and
$6,034,139 in interest income for the same period in 1995. The total income
for the first nine months of 1996 decreased by $18,334,088 from the same period
in 1995 while expenses decreased by $4,132,113 between these periods. The Net
Asset Value per Unit at September 30, 1996 decreased 10.22% from $14,232.80 at
December 31, 1995 to $12,777.79 at September 30, 1996.
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
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<PAGE> 13
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 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.
-13-
<PAGE> 14
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
A. EXHIBITS.
27 Financial Data Schedule
B. REPORTS ON FORM 8-K.
None.
-14-
<PAGE> 15
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: November 13, 1996 By: /s/ Robert L. Cruikshank
-----------------------------------
Robert L. Cruikshank
Executive Vice President
(Duly Authorized Officer
of the General Partner)
Dated: November 13, 1996 By: /s/ Thomas J. DiVuolo
-----------------------------------
Thomas J. DiVuolo
Senior Vice President
(Principal Financial and Accounting
Officer of the Registrant)
-15-
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