<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, 1998
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, 1998
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Statements of Financial Condition as of June 30, 1998 (unaudited)
and December 31, 1997 (audited) 3
Statements of Operations for the Three Months and Six Months Ended
June 30, 1998 (unaudited) and 1997 (unaudited) 4
Statements of Changes in Partners' Capital (Net Asset Value) for
the Six Months Ended June 30, 1998 (unaudited) and 1997 (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
<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
KENMAR PERFORMANCE PARTNERS L.P.
STATEMENTS OF FINANCIAL CONDITION
June 30, 1998 (unaudited) and December 31, 1997 (audited)
---------
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
----------- ------------
<S> <C> <C>
ASSETS
Equity in broker trading accounts
Cash $28,338,689 $25,448,177
Net option premiums paid 440,461 155,195
Unrealized gain on open contracts 2,959,628 6,236,877
----------- -----------
Deposits with brokers 31,738,778 31,840,249
Cash and cash equivalents 10,019,656 4,756,235
Fixed income securities (cost, including accrued
interest, - $20,486,523 and $39,579,849) 20,578,305 39,804,349
Subscriptions receivable 32,675 0
Other assets 0 78,253
----------- -----------
Total assets $62,369,414 $76,479,086
=========== ===========
LIABILITIES
Accounts payable $ 35,024 $ 41,790
Commissions and other trading fees
on open contracts 611,781 634,814
Management fees 181,991 223,863
Incentive fees 548,528 13,634
Redemptions payable 769,540 8,170,028
----------- -----------
Total liabilities 2,146,864 9,084,129
----------- -----------
PARTNERS' CAPITAL (NET ASSET VALUE)
General Partner - 53.5807 units outstanding at
June 30, 1998 and December 31, 1997 774,360 769,245
Limited Partners - 4,113.4293 and 4,640.7205 units
outstanding at June 30, 1998 and December 31, 1997 59,448,190 66,625,712
----------- -----------
Total partners' capital
(Net Asset Value) 60,222,550 67,394,957
----------- -----------
$62,369,414 $76,479,086
=========== ===========
</TABLE>
See accompanying notes.
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<PAGE> 4
KENMAR PERFORMANCE PARTNERS L.P.
STATEMENTS OF OPERATIONS
For the Three Months Ended June 30, 1998 and 1997 and
For the Six Months Ended June 30, 1998 and 1997
(Unaudited)
---------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INCOME
Commodity trading gains (losses)
Realized $ (766,687) $ (5,900,591) $ 14,127,982 $ (6,202,511)
Change in unrealized (3,883,736) (3,360,437) (3,277,249) 2,877,156
------------ ------------ ------------ ------------
Gain (loss) from commodity
trading (4,650,423) (9,261,028) 10,850,733 (3,325,355)
------------ ------------ ------------ ------------
Fixed income securities gains (losses)
Realized 56,898 (76,628) 135,602 (187,065)
Change in unrealized (31,980) 521,414 (132,718) 137,466
------------ ------------ ------------ ------------
Gain (loss) from fixed income
securities 24,918 444,786 2,884 (49,599)
------------ ------------ ------------ ------------
Interest income 782,507 1,234,169 1,815,985 2,675,742
------------ ------------ ------------ ------------
Total income (loss) (3,842,998) (7,582,073) 12,669,602 (699,212)
------------ ------------ ------------ ------------
EXPENSES
Brokerage commissions 3,974,036 4,651,479 7,188,610 9,190,350
Management fees 549,212 689,722 1,181,793 1,443,479
Incentive fees 548,527 166,470 3,003,275 1,257,416
General Partner administrative fee for
operating expenses 151,595 257,353 331,237 540,379
Cash management service charge 21,499 40,351 33,792 48,377
Legal expenses 5,237 18,941 7,873 18,941
------------ ------------ ------------ ------------
Total expenses 5,250,106 5,824,316 11,746,580 12,498,942
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ (9,093,104) $(13,406,389) $ 923,022 $(13,198,154)
============ ============ ============ ============
NET INCOME (LOSS) PER UNIT
(based on weighted average number of
units outstanding during the period) $ (2,104.38) $ (1,910.24) $ 207.86 $ (1,822.14)
============ ============ ============ ============
INCREASE (DECREASE) IN NET
ASSET VALUE PER UNIT $ (2,035.24) $ (1,882.88) $ 95.46 $ (1,858.74)
============ ============ ============ ============
</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, 1998 and 1997
(Unaudited)
---------
<TABLE>
<CAPTION>
Partners' Capital
--------------------------------------------------------------------------------------------------
General Limited Total
---------------------------- ----------------------------- -----------------------------
Units Amount Units Amount Units Amount
---------- ------------- ---------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Six Months Ended June 30, 1998
Balances at December 31, 1997 53.5807 $ 769,245 4,640.7205 $ 66,625,712 4,694.3012 $ 67,394,957
Net income for the six months
ended June 30, 1998 5,115 ** 917,907 ** 923,022
Additions 0.0000 0 34.6895 521,886 34.6895 521,886
Redemptions 0.0000 0 (561.9807) (8,617,315) (561.9807) (8,617,315)
---------- ------------- ---------- ------------- ---------- -------------
Balances at June 30, 1998 53.5807 $ 774,360 4,113.4293 $ 59,448,190 4,167.0100 $ 60,222,550
========== ============= ========== ============= ========== =============
Six Months Ended June 30, 1997
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
========== ============= ========== ============= ========== =============
</TABLE>
<TABLE>
<CAPTION>
Net Asset Value Per Unit
---------------------------------------------------------------------------------------
June 30, December 31, June 30, December 31,
1998 1997 1997 1996
---------- ------------ ---------- ------------
<S> <C> <C> <C>
$14,452.22 $14,356.76 $12,806.17 $14,664.91
========== ========== ========== ==========
</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. The Partnership is a multi-advisor,
multi-strategy commodity pool which trades United States
(U.S.) and foreign futures, options, forwards and related
markets. It is subject to the regulations of the Commodity
Futures Trading Commission, an agency of the 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 ("FCMs") and
interbank market makers (collectively, "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. 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 cash, investments in money
market mutual funds and short-term time deposits at financial
institutions. Interest income includes interest equivalent
dividends on money market mutual funds.
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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. Fixed income securities transactions are
accounted for on the trade date. Interest is recorded on the
accrual basis.
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 1/6 of 1% (2% 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 cash 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 cash deposited with the brokers.
Note 5. OTHER EXPENSES
The General Partner pays substantially 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 for
cash management services and 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 waived in whole or in part by the General
Partner. Additions to partners' capital are shown net of such selling
commissions, which amounted to $5,128 and $8,494 for the six months
ended June 30, 1998 and 1997, respectively.
The Partnership is not required to make distributions, 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)
Purchase and sale of futures and options on futures contracts
requires margin deposits with the FCMs. Additional deposits may be
necessary for any loss on contract value. The Commodity Exchange Act
requires an FCM to segregate all customer transactions and assets
from such FCM's proprietary activities. A customer's cash and other
property (for example, U.S. Treasury bills) deposited with an FCM are
considered commingled with all other customer funds subject to the
FMC's segregation requirements. In the event of an FCM's insolvency,
recovery may be limited to a pro rata share of segregated funds
available. It is possible that the recovered amount could be less
than 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.
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 contracts purchased and unlimited
liability on such contracts sold short. As both a buyer and seller of
options, the Partnership pays or receives a premium at the outset and
then bears the risk of unfavorable changes in the price of the
contract underlying the option. Written options expose the
Partnership to potentially unlimited liability, and purchased options
expose the Partnership to a risk of loss limited to the premiums
paid.
The fair value of derivatives represents unrealized gains and losses
on open futures and forward contracts and long and short options at
market value. The average fair value of derivatives during the six
months ended June 30, 1998 and 1997 and the related fair values as of
June 30, 1998 and December 31, 1997 were as follows:
<TABLE>
<CAPTION>
For The Six Months Ended As of
-------------------------------- ----------------------------------
June 30, 1998 June 30, 1997 June 30, 1998 December 31, 1997
------------- ------------- ------------- -----------------
<S> <C> <C> <C> <C>
Exchange traded futures and
options on futures contracts $4,100,000 $5,140,000 $3,400,000 $6,392,000
Forward contracts 0 (4,000) 0 0
</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 six
months ended June 30, 1998 and 1997 are reflected in the statement 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.
At June 30, 1998 and December 31, 1997, the notional amount of open
contracts was as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
----------------------------------- ---------------------------------
Contracts to Contracts to Contracts to Contracts to
Purchase Sell Purchase Sell
-------------- -------------- -------------- ------------
<S> <C> <C> <C> <C>
Derivatives (excluding
purchased options) $1,327,100,000 $1,288,800,000 $1,490,800,000 $756,300,000
Purchased options 31,400,000 31,100,000 23,900,000 59,600,000
</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, 1998, the
statements of operations for the six months ended June 30, 1998 and
1997 and for the three months ended June 30, 1998 and 1997 and the
statements of changes in partners' capital (net asset value) for the
six months ended June 30, 1998 and 1997 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, 1998 and the
results of operations for the six months ended June 30, 1998 and 1997
and for the three months ended June 30, 1998 and 1997.
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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 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 Commodity Futures Trading
Commission for investment of customer funds. In addition, certain of the
Partnership's assets may be placed in a custodial 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 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.
The Advisors trade in various markets at different times, and 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. Further, the Advisors trade
independently
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<PAGE> 12
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, 1998 and 1997.
As of June 30, 1998, the Net Asset Value of the Partnership was $60,222,550, a
decrease of approximately 16.78% from its Net Asset Value of $72,363,295 at
March 31, 1998. The Partnership's subscriptions and redemptions for the quarter
ended June 30, 1998 totaled $223,951 and $3,271,586, respectively. For the
quarter ended June 30, 1998, the Partnership had losses comprised of $709,789 in
realized losses, $3,915,716 in change in unrealized losses and $782,507 in
interest income, compared to 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 for the same period in 1997. Total income for the second quarter
of 1998 increased by $3,739,075 from the same period in 1997, while total
expenses decreased by $574,210 between these periods. The Net Asset Value per
Unit at June 30, 1998 decreased 12.34% from $16,487.46 at March 31, 1998 to
$14,452.22 at June 30, 1998. The Partnership's negative performance for the
quarter ended June 30, 1998 resulted primarily from losses in currencies,
energies and metals.
The Net Asset Value of the Partnership decreased $7,172,407, or 10.64%, from
December 31, 1997 through June 30, 1998. The Partnership's subscriptions and
redemptions for the six months ended June 30, 1998 totaled $521,886 and
$8,617,315, respectively. For the six months ended June 30, 1998, the
Partnership had revenue comprised of $14,263,584 in realized trading gains,
$3,409,967 in change in unrealized trading losses and $1,815,985 in interest
income, compared to 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 for the same period in 1997. The total income for the first six months of
1998 increased by $13,368,814 from the same period in 1997 while expenses
decreased by $752,362 between these periods. The Net Asset Value per Unit at
June 30, 1998 increased 0.66% from $14,356.76 at December 31, 1997 to $14,452.22
at June 30, 1998. The Partnership's basically flat performance for the first six
months of 1998 resulted primarily from gains in global interest rates, global
stock indices and meats, which were offset by losses in currencies, energies,
metals, tropicals and grains.
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. 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.
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<PAGE> 13
The Partnership's trading may also be impacted by the various conflicts of
interest among the Partnership and the General Partner, the Advisors and the
Commodity Brokers.
Safe Harbor Statement. The discussion above contains certain "forward-looking
statements" (as such term is defined in Section 21E of 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 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 $10,500 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 second quarter of 1998, 16.6 Units were sold for a total of $223,951.
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, 1998 By: /s/ ROBERT L. CRUIKSHANK
Robert L. Cruikshank
Executive Vice President
(Duly Authorized Officer of the General
Partner)
Dated: August 13, 1998 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-31-1998
<PERIOD-END> JUN-30-1998
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0
0
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