<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, 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
--- ---
<PAGE> 2
KENMAR PERFORMANCE PARTNERS L.P.
QUARTER ENDED JUNE 30, 1997
INDEX
<TABLE>
<CAPTION>
PAGE
----
PART I - FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements
Statements of Financial Condition as of June 30, 1997 (unaudited) and December 31,
1996(audited).......................................................................... 3
Statements of Operations for the Three Months and Six Months
Ended June 30, 1997 and 1996 (unaudited)............................................... 4
Statements of Changes in Partners' Capital (Net Asset
Value) for the Six Months Ended June 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............................................................... 14
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
June 30, 1997 (unaudited) and December 31, 1996 (audited)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
------------ -------------
<S> <C> <C>
ASSETS
Equity in broker trading accounts
Cash $ 20,711,188 $ 33,605,676
Net option premiums paid (received) 432,822 (444,673)
Unrealized gain on open contracts 5,562,290 2,685,134
------------ -------------
Deposits with brokers 26,706,300 35,846,137
Cash and cash equivalents 4,660,164 9,047,700
Fixed income securities (cost of $58,013,328 and
$73,923,849, including accrued interest) 58,130,932 73,903,987
Subscriptions receivable 76,000 500,000
Receivable for fixed income securities sold 136,122 0
------------ -------------
Total assets $ 89,709,518 $ 119,297,824
============ =============
LIABILITIES
Accounts payable $ 138,328 $ 146,270
Commissions and other trading fees
on open contracts 597,825 563,004
Management fees 300,383 286,256
Incentive fees 166,470 3,383,341
Redemptions payable 3,571,790 3,888,678
Payable for fixed income securities purchased 883,036 0
------------ -------------
Total liabilities 5,657,832 8,267,549
------------ -------------
PARTNERS' CAPITAL (NET ASSET VALUE)
General Partner - 53.5807 units outstanding at
June 30, 1997 and December 31, 1996, respectively 686,164 785,756
Limited Partners - 6,509.7941 and 7,517.5721 units
outstanding at June 30, 1997 and December 31, 1996,
respectively 83,365,522 110,244,519
------------ -------------
Total partners' capital
(Net Asset Value) 84,051,686 111,030,275
------------ -------------
$ 89,709,518 $ 119,297,824
============ =============
</TABLE>
See accompanying notes.
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KENMAR PERFORMANCE PARTNERS L.P.
STATEMENTS OF OPERATIONS
For the Three Months Ended June 30, 1997
and 1996 and For the Six Months Ended
June 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INCOME
Commodity trading gains (losses)
Realized $ (5,900,591) $ 2,134,465 $ (6,202,511) $ (7,777,400)
Change in unrealized (3,360,437) (305,049) 2,877,156 (13,437,037)
------------ ----------- ------------ ------------
Gain (loss) from commodity trading (9,261,028) 1,829,416 (3,325,355) (21,214,437)
------------ ----------- ------------ ------------
Other trading gains (losses)
Realized (76,628) (184,238) (187,065) 69,902
Change in unrealized 521,414 247,174 137,466 (347,145)
------------ ----------- ------------ ------------
Gain (loss) from other trading 444,786 62,936 (49,599) (277,243)
------------ ----------- ------------ ------------
Interest income 1,234,169 1,535,350 2,675,742 3,171,865
------------ ----------- ------------ ------------
Total income (loss) (7,582,073) 3,427,702 (699,212) (18,319,815)
------------ ----------- ------------ ------------
EXPENSES
Brokerage commissions 4,651,479 3,411,025 9,190,350 8,364,130
Management fees 689,722 872,660 1,443,479 1,819,161
Incentive fees 166,470 476,596 1,257,416 579,074
General Partner administrative fee
for operating expenses 257,353 332,207 540,379 702,250
Cash management service charge 40,351 61,615 48,377 98,508
Legal expenses 18,941 22,595 18,941 22,995
------------ ----------- ------------ ------------
Total expenses 5,824,316 5,176,698 12,498,942 11,586,118
------------ ----------- ------------ ------------
NET (LOSS) $(13,406,389) $(1,748,996) $(13,198,154) $(29,905,933)
============ =========== ============ ============
NET (LOSS) PER UNIT
(based on weighted average number of
units outstanding during the period) $ (1,910.24) $ (165.95) $ (1,822.14) $ (2,792.85)
============ =========== ============ ============
(DECREASE) IN NET ASSET
VALUE PER UNIT $ (1,882.88) $ (186.56) $ (1,858.74) $ (2,762.37)
============ =========== ============ ============
</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 Six Months Ended June 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Partners' Capital
----------------------------------------------------------------------------
General Limited Total
------------------- -------------------------- ------------------------
Units Amount Units Amount Units Amount
------- --------- ---------- ----------- ---------- -----------
Six Months Ended June 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 six months
ended June 30, 1997 (99,592) (13,098,562) (13,198,154)
Additions 0.0000 0 150.1398 2,095,452 150.1398 2,095,452
Redemptions 0.0000 0 (1,157.9178) (15,875,887) (1,157.9178) (15,875,887)
------- --------- ----------- ------------ ----------- ------------
Balances at June 30, 1997 53.5807 $ 686,164 6,509.7941 $ 83,365,522 6,563.3748 $ 84,051,686
======= ========= =========== ============ =========== ============
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 0.0000 0 689.4411 8,909,436 689.4411 8,909,436
Redemptions 0.0000 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
======= ========= =========== ============ =========== ============
</TABLE>
<TABLE>
<CAPTION>
Net Asset Value Per Unit
-------------------------------------------------------
June 30, December 31, June 30, December 31,
1997 1996 1996 1995
---------- ------------ ---------- ------------
<S> <C> <C> <C>
$12,806.17 $14,664.91 $11,470.43 $14,232.80
========== ========== ========== ==========
</TABLE>
See accompanying notes.
5
<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 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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<PAGE> 7
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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<PAGE> 8
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 $8,494 and $15,036 for the six months
ended June 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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<PAGE> 9
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 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 for the six
months ended June 30, 1997 and 1996 and the related fair values as
of June 30, 1997 and December 31, 1996 are as follows:
<TABLE>
<CAPTION>
For The Six Months Ended As of
-------------------------------------------------------------------------
June 30, 1997 June 30, 1996 June 30, 1997 December 31, 1996
------------- ------------- ------------- -----------------
<S> <C> <C> <C> <C>
Exchange traded futures and
options on futures contracts $5,140,000 $8,740,000 $5,984,000 $2,194,000
Forward contracts (4,000) (60,000) 11,000 46,000
</TABLE>
-9-
<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 six
months ended June 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 (loss)
arising from the Partnership's speculative trading of futures
contracts, options on futures contracts and forward contracts.
At June 30, 1997 and December 31, 1996, the notional amount of open
contracts is as follows:
<TABLE>
<CAPTION>
June 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) $1,740,700,000 $473,900,000 $1,805,000,000 $671,800,000
Purchased options 18,600,000 86,100,000 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 June 30, 1997, the
statements of operations for the six months ended June 30, 1997 and
1996 and for the three months ended June 30, 1997 and 1996 and the
statements of changes in partners' capital (net asset value) for the
six months ended June 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 June 30, 1997
and the results of operations for the six months ended June 30, 1997
and 1996 and for the three months ended June 30, 1997 and 1996.
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<PAGE> 11
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 direct and indirect retention of
professional commodity trading advisors (the "Advisors").
The assets of the Partnership are deposited with commodity brokers and
interbank 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 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
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 may have 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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<PAGE> 12
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 six month periods ended June 30, 1997 and 1996.
As of June 30, 1997, the Net Asset Value of the Partnership was $84,051,686, a
decrease of approximately (20.41)% from its Net Asset Value of $105,602,515 at
March 31, 1997. The Partnership's subscriptions and redemptions for the quarter
ended June 30, 1997 totaled $933,881 and $9,078,322, respectively. For the
quarter ended June 30, 1997, the Partnership had losses comprised of
$(5,977,219) in realized trading losses, $(2,839,023) in change in unrealized
trading losses and $1,234,169 in interest income compared to revenue comprised
of $1,950,227 in realized trading gains, $(57,875) in change in unrealized
trading losses and $1,535,350 in interest income for the same period of 1996.
Total income for the second quarter of 1997 decreased by $11,009,775 from the
same period of 1996 while total expenses increased by $647,618 between these
periods. The Net Asset Value per unit at June 30, 1997 decreased (12.82)% from
$14,689.05 at March 31, 1997 to $12,806.17 at June 30, 1997. The Partnership's
negative performance for the quarter ended June 30, 1997 resulted primarily
from losses in the global interest rates.
The Net Asset Value of the Partnership decreased $26,978,589, or (24.30)% from
December 31, 1996 through June 30, 1997. The Partnership's subscriptions and
redemptions for the six months ended June 30, 1997 totaled $2,095,452 and
$15,875,887, respectively. For the six months ended June 30, 1997, the
Partnership had losses comprised of $(6,389,576) in realized trading losses,
$3,014,622 in change in unrealized trading gains and $2,675,742 in interest
income compared to 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 for the same period in 1996. Total income for the first six months of
1997 increased by $17,620,603 from the same period in 1996 while expenses
increased by $912,824 between these periods. The Net Asset Value per Unit at
June 30, 1997 decreased (12.67)% from $14,664.91 at December 31, 1996 to
$12,806.17 at June 30, 1997. The Partnership's negative performance for the six
month period ended June 30, 1997 resulted primarily from losses in the global
interest rates.
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 consecutive days, with
little or no trading, thereby effectively preventing a party from liquidating
its position.
12
<PAGE> 13
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 rules 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 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 2. CHANGES IN SECURITIES.
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
$26,250 for new investors other than individual retirement accounts ("IRAs")
and qualified retirement plans and Keogh Plans ("Plans") and $10,500 for IRAs,
Plans and existing Limited Partners, which amounts include selling commissions
of $1,250 and $500, respectively. A subscriber may subscribe for Units in
excess of the foregoing minimum amount in increments of $1,000. 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 second quarter of 1997, 71.0840 Units were sold for a total of
$933,880.95.
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: August 13, 1997 By: /s/ ROBERT L. CRUIKSHANK
------------------------
Robert L. Cruikshank
Executive Vice President
(Duly Authorized Officer
of the General Partner)
Dated: August 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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<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 4,660,164
<SECURITIES> 58,130,932
<RECEIVABLES> 0
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<CURRENT-ASSETS> 89,709,518
<PP&E> 0
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<CURRENT-LIABILITIES> 5,657,832
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0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 89,709,518
<SALES> 0
<TOTAL-REVENUES> (699,212)
<CGS> 0
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<OTHER-EXPENSES> 12,498,942
<LOSS-PROVISION> 0
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<INCOME-PRETAX> (13,198,154)
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