<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, 1997
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 SEPTEMBER 30, 1997
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Statements of Financial Condition as of September 30, 1997
(unaudited) and December 31, 1996 (audited)................... 3
Statements of Operations for the Three Months and Nine
Months Ended September 30, 1997 and 1996 (unaudited).......... 4
Statements of Changes in Partners' Capital (Net Asset
Value) for the Nine Months Ended September 30, 1997
and 1996 (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 2. Changes in Securities and Use of Proceeds..................... 14
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
September 30, 1997 (unaudited) and December 31, 1996 (audited)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
ASSETS
Equity in broker trading accounts
Cash $31,819,337 $ 33,605,676
Net option premiums (received) (454,375) (444,673)
Unrealized gain on open contracts 11,247,894 2,685,134
----------- ------------
Deposits with brokers 42,612,856 35,846,137
Cash and cash equivalents 3,730,597 9,047,700
Fixed income securities (cost of $40,442,230 and
$73,923,849, including accrued interest) 40,695,874 73,903,987
Subscriptions receivable 0 500,000
Receivable for fixed income securities sold 223,189 0
----------- ------------
Total assets $87,262,516 $119,297,824
=========== ============
LIABILITIES
Accounts payable $36,915 $ 146,270
Commissions and other trading fees
on open contracts 737,019 563,004
Management fees 271,020 286,256
Incentive fees 141,466 3,383,341
Redemptions payable 3,959,198 3,888,678
Payable for fixed income securities purchased 152,882 0
----------- ------------
Total liabilities 5,298,500 8,267,549
----------- ------------
PARTNERS' CAPITAL (Net Asset Value)
General Partner - 53.5807 units outstanding at
September 30, 1997 and December 31, 1996, respectively 785,206 785,756
Limited Partners - 5,539.4572 and 7,517.5721 units
outstanding at September 30, 1997 and December 31, 1996,
respectively 81,178,810 110,244,519
----------- ------------
Total partners' capital
(Net Asset Value) 81,964,016 111,030,275
----------- ------------
$87,262,516 $119,297,824
=========== ============
</TABLE>
See accompanying notes.
3
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KENMAR PERFORMANCE PARTNERS L.P.
STATEMENTS OF OPERATIONS
For the Three Months Ended September 30, 1997 and 1996 and
For the Nine Months Ended September 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
INCOME
Commodity trading gains (losses)
Realized $ 9,492,828 $ 3,235,087 $ 3,290,317 $ (4,542,313)
Change in unrealized 5,685,604 13,536,160 8,562,760 99,123
----------- ----------- ----------- ------------
Gain (loss) from commodity trading 15,178,432 16,771,247 11,853,077 (4,443,190)
----------- ----------- ----------- ------------
Other trading gains (losses)
Realized (56,993) (114,142) (244,058) (44,240)
Change in unrealized 136,040 193,496 273,506 (153,649)
----------- ----------- ----------- ------------
Gain (loss) from other trading 79,047 79,354 29,448 (197,889)
----------- ----------- ----------- ------------
Interest income 1,298,941 1,284,606 3,974,683 4,456,471
----------- ----------- ------------ -------------
Total income (loss) 16,556,420 18,135,207 15,857,208 (184,608)
----------- ----------- ----------- ------------
EXPENSES
Brokerage commissions 4,085,784 4,065,819 13,276,134 12,429,949
Management fees 661,610 699,518 2,105,089 2,518,679
Incentive fees 145,999 2,443,244 1,403,415 3,022,318
General Partner administrative fee
for operating expenses 218,217 267,456 758,596 969,706
Cash management service charge 29,160 46,943 77,537 145,451
Legal expenses 9,636 0 28,577 22,995
----------- ----------- ----------- ------------
Total expenses 5,150,406 7,522,980 17,649,348 19,109,098
----------- ----------- ----------- ------------
NET INCOME (LOSS) $11,406,014 $10,612,227 $(1,792,140) $(19,293,706)
=========== =========== =========== ============
NET INCOME (LOSS) PER UNIT
(based on weighted average number of
units outstanding during the period) $ 1,840.87 $ 1,184.20 $ (259.95) $ (1,905.39)
=========== =========== =========== ===========
INCREASE (DECREASE) IN NET
ASSET VALUE PER UNIT $ 1,848.48 $ 1,307.36 $ (10.26) $ (1,455.01)
=========== =========== =========== ===========
</TABLE>
See accompanying notes.
4
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KENMAR PERFORMANCE PARTNERS L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (NET ASSET VALUE)
For the Nine Months Ended September 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Partners' Capital
-------------------------------------------------------------------------
General Limited Total
---------------- -------------------------- -------------------------
Units Amount Units Amount Units Amount
------ ------ --------- --------- ------- ---------
Nine Months Ended September 30, 1997
- ------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1996 53.5807 $785,756 7,517.5721 $110,244,519 7,571.1528 $111,030,275
Net (loss) for the nine months
ended September 30, 1997 (550) (1,791,590) (1,792,140)
Additions 0.0000 0 121.3538 1,714,251 121.3538 1,714,251
Redemptions 0.0000 0 (2,099.4687) (28,988,370) (2,099.4687) (28,988,370)
------- -------- ----------- ------------ ----------- ------------
Balances at September 30, 1997 53.5807 $785,206 5,539.4572 $81,178,810 5,593.0379 $81,964,016
======= ======== =========== ============ =========== ============
Nine Months Ended September 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 nine months
ended September 30, 1996 (77,960) (19,215,746) (19,293,706)
Additions 0.0000 0 734.3216 9,402,431 734.3216 9,402,431
Redemptions 0.0000 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
======= ======== =========== ============ =========== ============
</TABLE>
<TABLE>
<CAPTION>
Net Asset Value Per Unit
--------------------------------------------------------
September 30, December 31, September 30, December 31,
1997 1996 1996 1995
------------- ------------ ------------- ------------
<S> <C> <C> <C>
$14,654.65 $14,664.91 $12,777.79 $14,232.80
============= ============ ============= ============
</TABLE>
See accompanying notes.
5
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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 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 the 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 prices and market prices) 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.
Brokerage commissions include other trading fees and are charged to
expense when contracts are opened.
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)
Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
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. 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.
G. 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.
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.
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).
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KENMAR PERFORMANCE PARTNERS L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
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 $14,591 and $18,286 for the nine months
ended September 30, 1997 and 1996, 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 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.
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KENMAR PERFORMANCE PARTNERS L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
Note 7. TRADING ACTIVITIES AND RELATED RISKS (CONTINUED)
Purchases and sales of futures and options on futures contracts
require margin deposits with the brokers. Additional deposits may be
necessary for any loss of 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 in connection with 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.
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 for the nine
months ended September 30, 1997 and 1996 and the related fair values
as of September 30, 1997 and December 31, 1996 are as follows:
<TABLE>
<CAPTION>
For The Nine Months Ended As of
---------------------------------------- -------------------------------------
September 30, 1997 September 30, 1996 September 30, 1997 December 31, 1996
------------------ ------------------ ------------------ -----------------
<S> <C> <C> <C> <C>
Exchange traded futures and
options on futures contracts $6,380,000 $9,520,000 $10,794,000 $2,194,000
Forward contracts (3,000) (40,000) 0 46,000
</TABLE>
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<PAGE> 10
KENMAR PERFORMANCE PARTNERS L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
Note 7. TRADING ACTIVITIES AND RELATED RISKS (CONTINUED)
Net trading results from derivatives for the three months and nine
months ended September 30, 1997 and 1996 are reflected in the
statement of operations and consist of 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.
At September 30, 1997 and December 31, 1996, the notional amount of
open contracts is as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
---- ----
Contracts to Contracts to Contracts to Contracts to
Purchase Sell Purchase Sell
-------- ---- -------- ----
<S> <C> <C> <C> <C>
Derivatives (excluding
purchased options) $2,006,900,000 $1,621,800,000 $1,805,000,000 $671,800,000
Purchased options 31,600,000 14,900,000 41,600,000 5,800,000
</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, 1997, the
statements of operations for the nine months ended September 30, 1997
and 1996 and for the three months ended September 30, 1997 and 1996
and the statements of changes in partners' capital (net asset value)
for the nine months ended September 30, 1997 and 1996 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, 1997
and the results of operations for the nine months ended September 30,
1997 and 1996 and for the three months ended September 30, 1997 and
1996.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The assets of Kenmar Performance Partners L.P. (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 retention of professional commodity
trading advisors (the "Advisors").
The assets of the Partnership are deposited with commodity brokers and foreign
exchange dealers (collectively, the "Commodity Brokers") in trading
accounts established by the Partnership for the Advisors and are used by the
Partnership as margin to engage in trading. Such assets are held in either a
non-interest bearing bank account or in securities approved by the CFTC for
investment of customer funds. In addition, certain of the Partnership's assets
may be placed in a custodian account with a cash manager to maximize the
interest earned on assets not committed as margin.
CAPITAL RESOURCES. The Partnership does not have, nor does it expect to have,
any capital assets. Redemptions and sales of units of limited partnership
interests ("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
of the Partnership (the "Limited Partners"); and (iii) the capital invested or
redeemed by the Partnership's general partner, Kenmar Advisory Corp. (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. All
capital contributions by the General Partner necessary to maintain such capital
account balance are evidenced by units of general partnership interests, each
of which has an initial value equal to the Net Asset Value per Unit (as defined
below) at the time of such contribution. 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, at its option, additional units of general partnership
interests or Units at their then-current Net Asset Value (as defined below).
"Net Asset Value" is defined as total assets of the Partnership less total
liabilities as determined in accordance with the principles set forth in the
Second Restatement of the Limited Partnership Agreement of the Partnership,
dated September 1, 1993, as amended December 1, 1995 (the "Partnership
Agreement"), or where no such principles are specified therein, in accordance
with United States generally accepted accounting principles applied on a
consistent basis. The term "Net Asset Value Per Unit" is defined in the
Partnership Agreement to mean the Net Asset Value of the Partnership divided by
the number of Units issued and outstanding as of the date of computation.
RESULTS OF OPERATIONS. The Partnership incurs substantial charges from the
payment of management and/or incentive fees to the Advisors and administrative
fees to the General Partner which are payable based upon the Net Asset Value of
the Partnership and are payable without regard to the profitability of the
Partnership. The brokerage commissions to the Commodity Brokers are also
payable without regard to the profitability of the Partnership, although under
certain circumstances 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, in certain years the Partnership has incurred a net
loss when trading profits were not substantial enough to avoid depletion of the
Partnership's assets from such fees and expenses. Thus, due to the nature of
the Partnership's business, the success
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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.
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, 1997 and 1996.
As of September 30, 1997, the Net Asset Value of the Partnership was
$81,964,016, a decrease of approximately (2.48%) from its Net Asset Value of
$84,051,686 at June 30, 1997. The Partnership's subscriptions and redemptions
for the quarter ended September 30, 1997 totaled $99,200 and $13,592,883,
respectively. For the quarter ended September 30, 1997, the Partnership had
revenues comprised of $9,435,835 in realized trading gains, $5,821,644 in
change in unrealized trading gains and $1,298,941 in interest income compared
to 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 for the
same period in 1996. Total income for the third quarter of 1997 decreased by
$1,578,787 from the same period in 1996, while total expenses decreased by
$2,372,574 between these periods. The Net Asset Value per unit at September
30, 1997 increased 14.43% from $12,806.17 at June 30, 1997 to $14,654.65 at
September 30, 1997. The Partnership's positive performance for the quarter
ended September 30, 1997 resulted primarily from gains in currencies and global
interest rates.
The Net Asset Value of the Partnership decreased $29,066,259, or (26.18%) from
December 31, 1996 through September 30, 1997. The Partnership's subscriptions
and redemptions for the nine months ended September 30, 1997 totaled $1,714,251
and $28,988,370, respectively. For the nine months ended September 30, 1997,
the Partnership had revenues comprised of $3,046,259 in realized trading gains,
$8,836,266 in change in unrealized trading gains and $3,974,683 in interest
income compared to 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 for the same period in 1996. Total income for the nine months of 1997
increased by $16,041,816 from the same period in 1996 while expenses decreased
by $1,459,750 between these periods. The Net Asset Value per Unit at September
30, 1997 decreased (.07%) from $14,664.91 at December 31, 1996 to $14,654.65 at
September 30, 1997. Although the Partnership had a negative performance for
the nine month period ended September 30, 1997, which resulted primarily from
losses in U.S. stock indices, energies, grains, tropicals and metals, the
performance was better than the Partnership's performance for the same period
in 1996 due to gains in currencies, global interest rates and precious metals.
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 its 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 discussion above contains certain forward-looking
statements (as such term is defined in the regulations promulgated under
the Securities Exchange Act of 1934) that are based on the beliefs of the
Partnership, as well as assumptions made by, and information currently
available to, the Partnership. A number of important factors should cause the
Partnership's actual results, performance or achievements for 1997, 1998 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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<PAGE> 14
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
In September 1985, the Partnership commenced a private placement of Units in
reliance on the exemptions afforded by, among others, Sections 4 (2) of the
Securities Act of 1933, as amended (the "1933 Act") and Rule 506 of Regulation
D promulgated thereunder. Similar reliance has been placed on available
exemptions from securities qualification requirements under applicable state
securities laws. Units are offered monthly at a price per Unit equal to the
then current Net Asset Value per Unit, with a required minimum subscription of
$25,000 for new investors other than individual retirement accounts ("IRAs")
and qualified retirement plans and Keogh Plans ("Plans") and $10,0500 for IRAs,
Plans and existing Limited Partners, which minimums may be waived by the
General Partner in its sole discretion. A subscriber may subscribe for Units
in excess of the foregoing minimum amounts. As of the date hereof, Units are
continuing to be offered and there is no maximum number of Units that may be
purchased or sold.
During the third quarter of 1997, 64.6832 Units were sold for a total of
$909,199.98.
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, 1997 By: /s/ Robert L. Cruikshank
-------------------------
Robert L. Cruikshank
Executive Vice President
(Duly Authorized Officer
of the General Partner)
Dated: November 13, 1997 By: /s/ Thomas J. DiVuolo
-------------------------
Thomas J. DiVuolo
Senior Vice President
(Principal Financial and
Accounting Officer of the
Registrant)
15
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
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<SECURITIES> 40,695,874
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0
0
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<TOTAL-REVENUES> 15,857,208
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<INCOME-PRETAX> (1,792,140)
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