-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EoOolPX6hEFMjioB0bqF2aFOu0obJWRSucnMrBGNQBmcxNibHiST+M+wOlo7z1KZ JQVbOm2QSCV1k+0nxcUesQ== 0001262876-08-000019.txt : 20081119 0001262876-08-000019.hdr.sgml : 20081119 20081119155431 ACCESSION NUMBER: 0001262876-08-000019 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20080930 FILED AS OF DATE: 20081119 DATE AS OF CHANGE: 20081119 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PROVIDENCE SELECT FUND LP CENTRAL INDEX KEY: 0001262876 STANDARD INDUSTRIAL CLASSIFICATION: [6221] IRS NUMBER: 200069251 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-108629 FILM NUMBER: 081201013 BUSINESS ADDRESS: STREET 1: 505 BROOKFIELD DRIVE CITY: DOVER STATE: DE ZIP: 19901 BUSINESS PHONE: 800-331-1532 MAIL ADDRESS: STREET 1: 505 BROOKFIELD DRIVE CITY: DOVER STATE: DE ZIP: 19901 10-Q 1 providence10q0908.txt FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2008 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 333-108629 Providence Select Fund, Limited Partnership (Exact name of registrant as specified in its charter) Delaware 20-0069251 (State or other jurisdiction of incorporation (I.R.S. Employer or organization) Identification No.) 505 Brookfield Drive, Dover, DE 19901 (Address of principal executive offices, including zip code) (800) 331-1532 (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report) 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 [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ X ] Smaller Reporting Company [ ] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [ ] No [X] APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) f the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes [ ] No [ ] Not applicable. APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Not Applicable Part 1 - FINANCIAL INFORMATION Item 1. Financial Statements. The reviewed financial statements for the Registrant for the nine months ended September 30, 2008 are attached hereto and made a part hereof. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. General Information The Registrant (the "Fund") was granted an effective date by the Securities and Exchange Commission on September 12, 2005. On March 2, 2007, the Fund commenced business after admission of 46 limited partners, with total subscriptions of $1,088,370. The Fund, pursuant to the terms of the Limited Partnership Agreement, is engaged in the business of speculative and high risk trading of commodity futures and options markets through the services of the commodity trading advisor its management has selected. Description of Fund Business The Fund grants one or more commodity trading advisors ("CTA") a power of attorney that is terminable at the will of either party to trade the equity assigned to each CTA by Fund management. From inception to June 2, 2008, NuWave Investment Corp. was the sole commodity trading advisor of the Fund, after which time a power of attorney was granted to Clarke Capital Management, Inc. to serve as sole trading advisor. The General Partner has reserved the right to add and delete CTAs and reallocate equity assigned as it shall determine, in its sole discretion, without prior notice to the partners (investors). The CTA has discretion to select the trades and does not disclose the methods it uses to make those determinations in its disclosure documents or to the Fund or to Fund management. There is no promise or expectation of a fixed or any other return to the investors. The investors must look solely to trading profits for a return their investment as the interest income is expected to be less than the fixed expenses to operate the Fund. Assets The general partner has sole authority to determine the percentage of our assets that will be held on deposit with the futures commission merchant, used for other investments, and held in bank accounts to pay current obligations. The partnership will maintain approximately 64% of its assets in a Treasury Direct Account maintained with the United States Department of the Treasury, and it also retains the right to invest in cash management funds that invest in U.S. Treasuries and have high liquidity. Funds maintained with the Department of Treasury and any cash management funds are in the name of the partnership and not commingled with those of any other entity. The general partner will maintain approximately 33% of our net assets with the futures commission merchant ("FCM") for margin for trading by the trading advisor. Approximately 3% of the previous month's net assets are retained in our bank accounts to pay expenses and redemptions. The Fund assets at the FCM consist of cash used as margin to secure futures (formerly called commodity) trades entered on its behalf by the commodity trading advisors it selects. The Fund deposits its cash with one or more FCMs (brokers) that hold and allocate the cash to use as margin to secure the trades made. The futures held in the Fund accounts are valued at the market price on the close of business each day by the FCM that holds the Fund equity made available for trading. The Capital accounts of the Partners are immediately responsible for all profit and losses incurred by trading and payment and accrual of the expenses of offering partnership interests for sale and the operation of the partnership. During the nine months ended September 30, 2008, until the removal of NuWave on June 2, 2008, the fixed costs of operation included a management fee of a percentage based on the rate of trading assigned by NuWave and approved by the General Partner of up to 3.25% annually and a quarterly incentive fee of 20% paid to the commodity trading advisor, a quarterly incentive fee of up to 0.5% paid to the general partner, fixed annual brokerage commissions of 6%, an annual continuing service fee of 3%, and accounting, legal and other operating expenses that must be paid before the limited partners may earn a profit on their investment. With the removal of NuWave, all fees to NuWave were eliminated, and the decision was made to change the Fund's fee structure such that the General Partner's incentive fee would be eliminated, Clarke would be paid a quarterly incentive fee of 25%, the annual brokerage commission to the General Partner would be increased to 7%, and the annual continuing service fee to the selling agents would be increased to 4%. 2 The Fund has not in the past and does not intend in the future to borrow from third parties. Its trades are entered pursuant to a margin agreement with the futures commission merchant which obligates the fund to the actual loss, if any, without reference or limit by the amount of cash posted to secure the trade. The limited partners are not personally liable for the debts of the Fund, including any trading losses. By its post effective amendment to its registration statement on Form S-1 filed June 13, 2008, the Fund updated its prospectus to include up-to-date performance and financials as well as to include the disclosures sent to partners via Notices since the last update of the prospectus, including the change in trading advisor and fee structure described above. Such amendment went effective July 31, 2008, pursuant to which, the Registrant will, in the future, offer Units for sale to the public until the balance, as of September 30, 2008 of $46,206,531 in face amount of registered Units are sold. As of September 30, 2008, of the $50,000,000 in Units registered, $3,793,469 has been sold and, upon redemption by the holder, will not be resold. Capital available will be dependent upon the marketing and sales effort put in place by Fund management to sell the registered limited partnership interests. Absent the registration of additional Units, the Fund will be capitalized at $50,000,000 subject to redemption of Units by the holders as they request, which are expected to be honored by the General Partner. An Investment in the Fund Depends upon Redemption of Fund Units The Fund Units are not traded and they have no market value. Liquidity of an investment in the Fund depends upon the credit worthiness of the exchanges, brokers, and third parties of off exchange traded futures that hold Fund equity or have a lien against Fund assets for payment of debts incurred. Those parties must honor their obligations to the Fund for the Fund to be able to obtain the return of its cash from the futures commission merchant that holds the Fund account. The commodity trading advisor selects the markets and the off exchange instruments to be traded. The General Partner selects the futures commission merchants to hold the Fund assets. Both the commodity trading advisor and the general partner believe all parties who hold Fund assets or are otherwise obligated to pay value to the Fund are credit worthy. Margin is an amount to secure the entry of a trade and is not a limit of the profit or loss to be gained from the trade. The general partner intends to allocate approximately 97% of the Fund equity to be used as margin to enter trades. Although it is customary for the commodity trading advisor to use 40% or less of the equity available as margin, there is no limit imposed by the Fund upon the amount of equity the advisors may commit to margin. It is possible for the Fund to suffer losses in excess of the margin it posts to secure the trades made. To have the purchase price or appreciation, if any, of the Units, paid to them, partners must use the redemption feature of the Partnership. Distributions, although possible in the sole discretion of the general partner, are not expected to be made. There is no current market for the Units sold, none is expected to develop and the partnership agreement limits the ability of a limited partner to transfer the Units. Results of Operations The Fund is subject to ongoing offering and operating expenses; however, profits or losses are primarily generated by the commodity trading advisor by methods that are proprietary to it. These results are not to be construed as an expectation of similar profits in the future. The Limited Partnership Agreement grants solely to the General Partner the right to select the trading advisor or advisors and to otherwise manage the operation of the Fund. The CTA selected is responsible for the selection of trades. See the Registration Statement, incorporated by reference herein, for an explanation of the operation of the Fund. The following comparison between the nine month periods ended September 30, 2008 and September 30, 2007 should be read taking into consideration that (i) the Fund did not commence business until March 2, 2007 and, therefore, had no expectation of profit generation prior to that; and, (ii) calculations of profits and losses, including calculation of the net asset value (NAV) and NAV per Unit, are calculated both for financial reporting purposes, in which the offering expenses were expensed as incurred during the two periods, and for subscription and redemption purposes, in which the offering expenses incurred prior to the commencement of business were deferred until after the twelfth month following the commencement of business. As of March 4, 2008, these expenses were amortized on a straight-line basis over the subsequent twenty four months. See Note 1 to the financial statements herein. 3 Discussion for Financial Reporting Purposes The Fund's realized and unrealized trading gains (losses) before commissions were $120.222 [$33.72 per Unit] and $[226,299] [$[58.89] per Unit] for the nine months ended September 30, 2008 and September 30, 2007, respectively. The Fund's results after payment and accrual of expenses for the nine months ended September 30, 2008 and September 30, 2007 were profits (losses) of $(357,208) [$(114.63) per Unit] and ($436,643) [$(179.84) per Unit], respectively. The NAV per Unit as of September 30, 2008 and September 30, 2007 were $714.04 and $753.67 respectively. The changes in NAV and NAV per Unit include the results of the intervening quarters of 2007. Discussion for Subscription and Redemption Purposes The Fund's realized and unrealized trading gains (losses) before commissions were $120,222 [$33.72 per Unit] and [$226,299] [$58.89 per Unit] for the nine months ended September 30, 2008 and September 30, 2007, respectively. The Fund's results after payment and accrual of expenses for the nine months ended September 30, 2008 and September 30, 2007 were profits (losses) of $[436,959.] [$[119.20] per Unit] and [$426,970] [$[153.53] per Unit], respectively. The net asset value ("NAV") per Unit as of September 30, 2008, was $783.74, a decrease of 7.41% from the September 30, 2007 NAV per Unit of $846.47. The changes in NAV and NAV per Unit include the results of the intervening quarters of 2007. Discussion for all Purposes The above described performance was primarily due to the trading of the commodity trading advisor that has traded for the Fund via its proprietary methods. If a large movement occurs in a sector that a trading advisor trades, such as agriculture, financials, metals or softs, it does not necessarily mean that the trading advisor will engage in trades that capture such moves. Accordingly, market movements and conditions are not necessarily correlated with Fund performance. Past performance is not necessarily indicative of future results. Net additions (withdrawals) for the nine months ended September 30, 2008 and September 30, 2007 were $(709,981) and $2,935,004, respectively. The substantial difference is primarily due to the commencement of business in March, 2007, whereupon all subscription proceeds held in the Fund's segregated subscription depository account were transferred to accounts in the name of the Fund to be used for trading. Interest income is earned on the Fund's assets, either through investment in short term cash instruments or through its deposits with the clearing broker. Interest income to the Fund varies monthly according to interest rates, trading performance, subscriptions and redemptions. Interest income for the nine months ended September 30, 2008 was $34,901, a 21.05% decrease over the interest income for the nine months ended September 30, 2007 of $44,209. The increase in interest income for the comparative nine month periods was primarily due to the fact that the Fund was not operational during approximately two of the nine months of the prior period and had significantly less net assets during the prior period. Brokerage commissions are calculated on the Fund's equity allocated to trading as of the end of each month and therefore, vary according to monthly trading performance, subscriptions and redemptions. See Note 5 to the financial statements herein for the current and historical brokerage fee amounts. Commissions for the nine months ended September 30, 2008 were $147,170 a 139.30% increase over the commissions for nine months ended September 30, 2007 of $61,499. The increase in commissions for the comparative nine month periods was primarily due to the fact that the Fund was not operational during approximately two of the nine months of the prior period and had significantly less net assets during the prior period. Continuing service fees are calculated on net asset value of the Units sold by the selling agents as of the end of each month and therefore, vary according to monthly trading performance, subscriptions and redemptions. See Note 5 to the financial statements herein for the current and historical continuing service fee amounts. Such fees for the nine months ended September 30, 2008 were $74,156 a 116.32% increase over such fees for nine months ended September 30, 2007 of $34,280. The increase in continuing service fees for the comparative nine month periods was primarily due to the fact that the Fund was not operational during approximately two of the nine months of the prior period and had significantly less net assets during the prior period. 4 Pursuant to the Trading Advisory Agreement, the Fund paid a management fee to the prior trading advisor until it was removed in September 2008, which was calculated on the value of the Fund equity allocated to the advisor as of the end of each month, and therefore, was affected by monthly trading performance, subscriptions and redemptions. No management fee is paid to the current trading advisor. See Note 5 to the financial statements herein for the current and historical management fee amounts. Management fees for the nine months ended September 30, 2008 were $46,073 a 78.03% increase over the management fee for the nine months ended September 30, 2007 of $25,878. The increase in management fee for the comparative nine month periods was primarily due to the fact that the Fund was not operational during approximately two of the nine months of the prior period and had significantly less net assets during the prior period. Pursuant to the Trading Advisory Agreement, the Fund pays a quarterly incentive fee to the trading advisor. It also paid the General Partner an incentive fee until the change in trading advisors. See Note 5 to the financial statements herein for the current and historical incentive fees. Incentive fees during the nine months ended September 30, 2008 and September 30, 2007 were $158,087 and $26,851 respectively. The amounts are directly related to the trading performance of the trading advisor. Operating expenses include accounting, audit, tax, and legal fees, as well as regulatory costs and printing and postage costs related to reports sent to limited partners. Operating expenses during the nine months ended September 30, 2008 and September 30, 2007 were $86,845 and $106,045 respectively. The decrease over the comparative nine month periods was primarily due to changes in accountants that were in progress during the prior period and costs related to the commencement of business. Inflation has had no material impact on the operations or on the financial condition of the Fund from inception through September 30, 2008. Item 3. Quantitative and Qualitative Disclosures about Market Risk The business of the Fund is speculative and involves a high degree of risk of loss. See the Fund's Registration Statement and prospectus contained therein, incorporated herein, for a full description of the risks attendant to Fund business. Item 4T. Controls and Procedures Disclosure Controls and Procedures The Registrant has adopted procedures in connection with the operation of its business including, but not limited to, the review of account statements sent to the General Partner before the open of business each day that disclose the positions held overnight in the Fund accounts, the margin to hold those positions, and the amount of profit or loss on each position, and the net balance of equity available in each account. The Fund brokerage account statements and financial books and records accounts are prepared by an independent CPA Firm and then are reviewed each quarter and audited each year by a different independent CPA firm. The General Partner of the Fund, under the actions of its sole principal, Michael Pacult, has evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) or 15d-15(e)) with respect to the Fund as of the end of the period covered by this Report. Based on their evaluation, Mr. Pacult has concluded that these disclosure controls and procedures are effective. Changes in Internal Control over Financial Reporting There were no changes in the General Partner's internal control over financial reporting during the quarter ended September 30, 2008 that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting applicable to the Fund. 5 Part II - OTHER INFORMATION Item 1. Legal Proceedings There have been no legal proceedings against the Fund, its General Partner, the CTA, the IB or any of their Affiliates, directors or officers. The FCM, MF Global Inc. ("MFG"), (MFG was formerly known as Man Financial Inc. ("MFI") until the change of name to MFG was effected on July 19, 2007), has had the following described reportable events. Neither the Fund nor the General Partner is a party to any of these events and they are included in reliance upon a report supplied by MFG without verification by the General Partner. MFG has represented to the General Partner that that none of the events it has reported below will not now, or at any time in the future, interfere with its performance as the FCM for the Fund's account. MF Global Inc. ("MFG") is registered under the Commodity Exchange Act, as amended, as a futures commission merchant and a commodity pool operator, and is a member of the National Futures Association in such capacities. In addition, MFG is registered with the Financial Industry Regulatory Authority as a broker-dealer. MFG was formerly known as Man Financial Inc. ("MFI") until the change of name to MFG was effected on July 19, 2007. MFG is a member of all major U.S. futures exchanges and most major U.S. securities exchanges. MFG's main office is located at 717 Fifth Avenue, 9th Floor, New York, New York 10022-8101. MFG's telephone number at such location is (212) 589-6200. At any given time, MFG is involved in numerous legal actions and administrative proceedings, which in the aggregate, are not, as of the date of this report, expected to have a material effect upon its condition, financial or otherwise, or to the services it will render to the Fund. There have been no administrative, civil or criminal proceedings pending, on appeal or concluded against MFG or its principals within the five years preceding the date of this Memorandum that MFI would deem material for purposes of Part 4 of the Regulations of the Commodity Futures Trading Commission, except as follows: In May, 2006, MFI was sued by the Receiver for Philadelphia Alternate Asset Fund ("PAAF") and associated entities for common law negligence, common law fraud, violations of the Commodity Exchange Act and RICO violations (the "Litigation"). In December, 2007, without admitting any liability of any party to the Litigation to any other party to the Litigation, the Litigation was settled with MFI agreeing to pay $69 million, plus $6 million of legal expenses, to the Receiver, in exchange for releases from all applicable parties and the dismissal of the Litigation with prejudice. In a related action, MFI settled a CFTC administrative proceeding (In the Matter of MF Global, f/k/a Man Financial Inc., and Thomas Gilmartin) brought by the CFTC against MFI and one of its employees for failure to supervise and recordkeeping violations. Without admitting or denying the allegations, MFI agreed to pay a civil monetary penalty of $2 million and accepted a cease and desist order. MFI has informed the General Partner, the Trading Advisor and the Selling Agent that the settlements referenced above will not materially affect MFG or its ability to perform as a clearing broker. On February 20, 2007, MFI also settled a CFTC administrative proceeding (In the Matter of Steven M. Camp and Man Financial Inc., CFTC Docket No. 07-04) in which MFI was alleged to have failed to supervise one of its former associated persons (AP) who was charged with fraudulently soliciting customers to open accounts at MFI. The CFTC alleged that the former AP misrepresented the profitability of a web-based trading system and of a purported trading system to be traded by a commodity trading advisor. Without admitting or denying the allegation, MFI agreed to pay restitution to customers amounting to $196,900.44 and a civil monetary penalty of $120,000. MFI also agreed to a cease and desist order and to strengthen its supervisory system for overseeing sales solicitations by employees in connection with accounts to be traded under letters of direction in favor of third party system providers. 6 On March 6, 2008, and thereafter, four virtually identical proposed class action securities suits were filed against MF Global Ltd., certain of its officers and directors, and Man Group plc. The complaints allege that the registration statement and prospectus issued in connection with MF Global Ltd.'s initial public offering in July 2007, were materially false and misleading to the extent that representations were made regarding the company's risk management policies, procedures and systems. The allegations are based upon the company's disclosure of $141.5 million in trading losses incurred in a single day by an associated person in his personal trading account, which losses the company was responsible to pay as an exchange clearing member. In connection with the incident involving the trading losses referenced above, the CFTC issued a formal order of investigation naming MFG and the AP. The CFTC, in coordination with the Chicago Mercantile Exchange ("CME"), has been collecting documentation and taking depositions of MFG employees. This investigation is ongoing and it is not yet certain what actions the CFTC and/or the CME might take. MF Global has established an accrual of $10.0 million to cover potential CFTC civil monetary penalties in this matter and the two CFTC matters referred to below. This is MF Global's best estimate at this time and there is no assurance that the $10.0 million accrual will be sufficient for these purposes or that the CFTC will not require remedial measures. No accrual has been made for the CME matter. In May 2007, MFG and two of its employees received what is commonly referred to as a "Wells notice" from the staff of the Division of Enforcement of the CFTC. The notice relates to two trades MFG executed in 2004 for a customer and reported to NYMEX. The notice indicates that the Division of Enforcement is considering recommending to the CFTC that a civil proceeding be commenced against MFG and the two employees, in which the CFTC would assert that MFG and the two employees violated Section 9(a)(4) of the Commodity Exchange Act, which generally prohibits any person from willfully making any false, fictitious, or fraudulent statements or representations, or making or using any false writing or document knowing the same to contain any false, fictitious, or fraudulent statement to a board of trade. The Division of Enforcement staff contends that MFG and the individuals presented or participated in the submission of information to NYMEX that falsely represented the dates on which the trades in question occurred. MFG and the individuals dispute these contentions. It is not yet certain what action the CFTC will take, but see the reference to a $10.0 million accrual above. Additionally, MF Global is currently cooperating in an investigation conducted by a New York County Grand Jury in conjunction with the U.S. Attorney's Office in the Southern District of New York, with which the CFTC and the SEC are also involved. The investigation centers around trading by a market making energy trader at Bank of Montreal (BMO) who allegedly mismarked his book. An MFG broker did business with the BMO trader, and used bid and offer prices for forward OTC trades the BMO trader sent to him as a basis for prices which the MFG broker disseminated to MFG's customers, including BMO, as price indications that reflected a consensus. MFG has been told that neither MFG nor the broker is a target of the Grand Jury investigation. In connection with this investigation, MFG has been served by the CFTC with a Wells notice in anticipation of civil charges against the broker under the anti-fraud provisions of CFTC Regulation 33.10 and MFG with derivative liability for the broker's actions. It is not yet certain what action the CFTC may take against MFG or the broker, but see the reference to a $10.0 million accrual above. The Fund is not aware of any threatened or potential claims or legal proceedings to which the Fund is a party or to which any of its assets are subject. Item 1A. Risk Factors There have been no material changes from risk factors as previously disclosed in the Fund's 2007 Form 10-K. The risks of the Fund are (1) described fully in its prospectus filed with its registration statement on Form S-1, which is incorporated herein by reference (2) described in summary in Part I of this Form 10-Q, which is incorporated herein by reference. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. None Item 3. Defaults Upon Senior Securities None 7 Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information (a) None (b) None Item 6. Exhibits 31.1 Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Form 10-Q for the period ended September 30, 2008, to be signed on its behalf by the undersigned, thereunto duly authorized. Registrant: Providence Select Fund, Limited Partnership By White Oak Financial Services, Incorporated Its General Partner By: /s/ Michael Pacult Mr. Michael Pacult Sole Director, Sole Shareholder, President, and Treasurer of the General Partner Date: November 19, 2008 8 PROVIDENCE SELECT FUND, LIMITED PARTNERSHIP (A Delaware Limited Partnership) NINE MONTHS ENDED SEPTEMBER 30, 2008 GENERAL PARTNER: White Oak Financial Services, Inc. % Corporate Systems, Inc. 505 Brookfield Drive Dover, Kent County, Delaware 19901 Providence Select Fund, Limited Partnership (A Delaware Limited Partnership) Index to the Financial Statements Page Report of Independent Registered Public Accounting Firm F-2 Statements of Assets and Liabilities F-3 Schedule of Investments - Cash and Securities - September 30, 2008 F-4 Schedule of Investments - Futures Contracts - September 30, 2008 F-5 Schedule of Investments - Cash and Securities - December 31, 2007 F-6 Schedule of Investments - Futures Contracts - December 31, 2007 F-7 F-8 Statements of Operations F-9 Statements of Changes in Net Assets F-10 Statements of Cash Flows F-11 Notes to Financial Statements F-12 F-19 Affirmation of the Commodity Pool Operator F-20 F-1 Jordan, Patke & Associates, Ltd. Certified Public Accountants Report of Independent Registered Public Accounting Firm To the Partners of Providence Select Fund, Limited Partnership Dover, Delaware We have reviewed the accompanying statements of assets and liabilities, including the schedule of investments, of Providence Select Fund, Limited Partnership as of September 30, 2008, and the related statements of operations for the three and nine months ended September 30, 2008 and 2007, and changes in net assets and cash flows for the nine months ended September 30, 2008 and 2007. These financial statements are the responsibility of the Partnership's management. We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to such interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America. We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the statement of assets and liabilities of Providence Select Fund, Limited Partnership as of December 31, 2007 and the related statements of operations, changes in net assets and cash flows for the year then ended (not presented herein); and in our report dated March 30, 2008 we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying statement of assets and liabilities as of December 31, 2007 is fairly stated, in all material respects, in relation to the statement of assets and liabilities from which it has been derived. /s/ Jordan, Patke & Associates, Ltd. Jordan, Patke & Associates, Ltd. Lincolnshire, Illinois November 18, 2008 300 Village Green Drive, Suite 210 * Lincolnshire, Illinois 60069 Phone: (847) 913-5400 * Fax: (847) 913-5435 F-2 Providence Select Fund, Limited Partnership (A Delaware Limited Partnership) Statements of Assets and Liabilities (A Review) September 30, December 31, 2008 2007 Assets Investments Equity in broker trading accounts Cash and cash equivalents at broker $537,687 $3,264,919 Net unrealized gain on open futures contracts 937 48,797 Total equity in broker trading accounts 538,624 3,313,716 U.S. Treasury Bills (cost $1,991,860 and $0) 1,998,553 - Cash 4,538 37,476 Interest receivable 493 7,209 Money market fund 1,008 - Prepaid continuing service fee 871 45,650 Total assets 2,544,087 3,404,051 Liabilities Accrued expenses 15,798 16,959 Due to related parties 27,235 278,658 Accounts payable 313 14,887 Accrued management fees - 18,685 Redemptions payable 507,346 14,278 Total liabilities 550,692 343,467 Net assets $1,993,395 $3,060,584 Analysis of net assets Limited partners $1,965,040 $3,031,282 General partners 28,355 29,302 Net assets (equivalent to $714.04 and $828.67 per unit) $1,993,395 $3,060,584 Partnership units outstanding Limited partners units outstanding 2,752.02 3,658.03 General partners units outstanding 39.71 35.36 Total partnership units outstanding 2,791.73 3,693.39
The accompanying notes are an integral part of the financial statements F-3 Providence Select Fund, Limited Partnership (A Delaware Limited Partnership) Schedule of Investments - Cash and Securities September 30, 2008 (A Review) Fair Value Percent Description Maturity Date Cost Face Value Local Currency U.S. Dollars of Net Assets United States Treasury Bill Total United States Treasury Bills October 2008 1,991,860 2,000,000 1,998,553 $1,998,553 100.26% Cash and cash equivalents in trading accounts: United States Markets 547,776 547,776 27.48% Total cash denominated in U.S. Dollars $547,776 27.48% Cash denominated in foreign currency: Euro Markets - Euro (7,159) (10,089) -0.51% Total cash denominated in foreign currency (10,089) -0.51% Total cash and cash equivalents in trading accounts $537,687 26.97% Money market fund (1,007.71 shares at $1 per share) 1,008 $1,008 0.05%
The accompanying notes are an integral part of the financial statements F-4 Providence Select Fund, Limited Partnership (A Delaware Limited Partnership) Schedule of Investments - Futures Contracts September 30, 2008 (A Review) Fair Value Percent Description Expiration Date Contracts Local Currency USD of Net Assets Net unrealized gain (loss) on open futures contracts Euro commodity futures positions held long: EURX EUROBOBL December 2008 11 (1,870) $(2,635) -0.13% EURX EUROBOBL December 2008 11 (2,695) (3,798) -0.19% Total United States Commodity Futures Positions (6,433) -0.32% Total commodity futures positions held long (6,433) -0.32% United States commodity futures positions held short: Imm Canadian Dollar December 2008 11 7,370 7,370 0.37% Total United States commodity futures positions held short 7,370 0.37% Total commodity futures positions held short 7,370 0.37% Net commodity futures positions $937 0.05%
The accompanying notes are an integral part of the financial statements F-5 Providence Select Fund, Limited Partnership (A Delaware Limited Partnership) Schedule of Investments - Cash and Securities December 31, 2007 Fair Value Percent Description Local Currency U.S. Dollars of Net Assets Cash and cash equivalents in trading accounts: Cash denominated in U.S. Dollars: United States Markets 3,184,450 $3,184,450 104.05% Total cash denominated in U.S. Dollars 3,184,450 104.05% Total cash and cash equivalents denominated in U.S. Dollars 3,184,450 97.54% Cash denominated in foreign currency: Euro Markets - Euro 19,810 28,869 0.94% British Pound Markets - GBP 10,607 21,031 0.69% Australian Dollar Markets - AUD 31,619 27,709 0.91% Japanese Yen Markets - JPY 320,000 2,860 0.09% Total cash denominated in foreign currency 80,469 2.63% Total cash and cash equivalents in trading accounts $3,264,919 106.68%
The accompanying notes are an integral part of the financial statements F-6 Providence Select Fund, Limited Partnership (A Delaware Limited Partnership) Schedule of Investments - Futures Contracts December 31, 2007 Fair Value Percent Description Expiration Date Contracts Local Currency USD of Net Assets Net unrealized gain (loss) on open futures contracts United States commodity futures positions held long: LME Copper US February 2008 1 (27,569) $(27,569) -0.90% LME Aluminum US January 2008 1 (1,459) (1,459) -0.05% LME Aluminum US February 2008 2 (5,170) (5,170) -0.17% LME Copper US February 2008 1 4,520 4,520 0.15% CMX Gold February 2008 2 7,000 7,000 0.23% NY Heating Oil February 2008 1 (214) (214) -0.01% NYM RBOB Gas February 2008 9 (4,347) (4,347) -0.14% CBOT Corn March 2008 3 250 250 0.01% CBOT Soybeans March 2008 2 3,625 3,625 0.12% CBOT Wheat March 2008 1 (2,013) (2,013) -0.07% CBT T Note 10Y March 2008 13 14,750 14,750 0.48% CMX Silver March 2008 3 6,575 6,575 0.21% IMM Euro FX March 2008 6 (9,406) (9,406) -0.31% IMM Euro Dollar September 2008 34 13,700 13,700 0.45% Total United States Commodity Futures Positions 242 0.01% Australian commodity futures positions held long: SFE 10Y T Bond March 2008 1 (799) (700) -0.02% Total Australian commodity futures positions held long (700) -0.02% Euro commodity futures positions held long: MONEP CAC40 January 2008 8 5,560 8,103 0.26% DTB DAX Index March 2008 2 9,000 13,116 0.43% EURX E-Bund March 2008 12 (18,810) (27,412) -0.90% LIF 3M Euribor September 2008 22 4,100 5,975 0.20% Total European commodity futures positions held long (218) -0.01% British commodity futures positions held long: LIF Long Gilt March 2008 6 9,170 18,181 0.59% LIF 3M Sterling Interest Rate September 2008 17 4,250 8,426 0.28% Total British commodity futures positions held long 26,607 0.87% Total commodity futures positions held long 25,931 0.85% United States commodity futures positions held short: LME Aluminum US February 2008 2 4,345 4,345 0.14% LME Copper US February 2008 1 7,424 7,424 0.24% LME Aluminum US January 2008 1 3,681 3,681 0.12% LME Aluminum US March 2008 3 2,829 2,829 0.09% LME Aluminum US March 2008 2 3,145 3,145 0.10% LME Aluminum US February 2008 1 12,087 12,087 0.39% LME Aluminum US February 2008 2 9,463 9,463 0.31% LME Aluminum US March 2008 1 536 536 0.02% LME Copper US February 2008 1 (589) (589) -0.02% LME Copper US March 2008 1 3,300 3,300 0.11% CME Cattle February 2008 9 7,380 7,380 0.24% NY Lt Crude February 2008 2 (11,350) (11,350) -0.37% NY Natural Gas February 2008 3 (7,130) (7,130) -0.23% CSC Sugar March 2008 5 (4,088) (4,088) -0.13% EMINI S&P 500 March 2008 1 1,165 1,165 0.04% IMM British Pounds March 2008 4 150 150 0.00% IMM Canadian Dollars March 2008 2 (4,890) (4,890) -0.16% IMM Japanese Yen March 2008 3 (3,113) (3,113) -0.10% Total United States commodity futures positions held short 24,345 0.80%
The accompanying notes are an integral part of the financial statements F-7 Providence Select Fund, Limited Partnership (A Delaware Limited Partnership) Schedule of Investments - Futures Contracts, Continued December 31, 2007 Fair Value Percent Description Expiration Date Contracts Local Currency USD of Net Assets Net unrealized gain (loss) on open futures contracts, con't. Australian commodity futures positions held short: SFE SPI 200 March 2008 2 (2,700) (2,366) -0.08% Total Australian commodity futures positions held short (2,366) - 0.08% Japanese commodity futures positions held short: SMX NIKKEI March 2008 2 407,500 3,643 0.12% Total Japanese commodity futures positions held short 3,643 0.12% British commodity futures positions held short: NEW FTSE 100 March 2008 1 (1,390) (2,756) -0.09% Total British commodity futures positions held short (2,756) -0.09% Total commodity futures positions held short 22,866 0.75% Net commodity futures positions $48,797 1.59%
The accompanying notes are an integral part of the financial statements F-8 Providence Select Fund, Limited Partnership Statements of Operations For the Nine Months Ended September 30, 2008 and 2007 (A Review) Three Months Ended September 30, Nine Months Ended September 30, 2008 2007 2008 2007 Investment income Interest income $9,687 $27,120 $34,901 $44,209 Total investment income 9,687 27,120 34,901 44,209 Expenses Commission expense 47,476 36,515 147,170 61,499 Management fees - 15,125 46,073 25,878 Continuing service fee 25,405 19,891 74,156 34,280 Incentive fees - - 158,087 26,851 Professional accounting and legal fees 21,509 22,199 52,149 101,069 Other operating and administrative expenses 8,962 415 34,696 4,976 103,352 94,145 512,331 254,553 Net investment (loss) (93,665) (67,025) (477,430) (210,344) Realized and unrealized gain (loss) from investments and foreign currency Net realized gain (loss) from: Investments (108,682) (125,191) 682,767 (79,895) Foreign currency transactions (50,463) (263,490) (514,685) (206,866) Net realized gain (loss) from investments and foreign currency transactions (159,145) (388,681) 168,082 (286,761) Net increase (decrease) in unrealized appreciation (depreciation) from: Investments (51,903) 107,756 (17,218) 130,027 Translation of assets and liabilities in foreign currencies (6,433) (79,429) (30,642) (69,565) Net increase (decrease) in unrealized appreciation (depreciation) from investments and translation of assets and liabilities in foreign currencies (58,336) 28,327 (47,860) 60,462 Net gain (loss) on investments and foreign currency (217,481) (360,354) 120,222 (226,299) Net (decrease) in net assets resulting from operations $(311,146) $(427,379) $(357,208) $(436,643) Net (loss) per unit (for a single unit outstanding during the entire period) Limited partnership unit (102.83) (107.10) (114.63) (313.53) General partnership unit (102.83) (107.10) (114.63) (313.53)
The accompanying notes are an integral part of the financial statements F-9 Providence Select Fund, Limited Partnership (A Delaware Limited Partnership) Statements of Changes in Net Assets (A Review) Partners' Capital General Limited Total Nine Months Ended September 30, 2008 Net assets at December 31, 2007 $29,302 $3,031,282 $3,060,584 Increase (decrease) in net assets from operations: Net investment (loss) (6,612) (470,818) (477,430) Net realized gain from investments and foreign currency transactions 2,328 165,754 168,082 Net (decrease) in unrealized depreciation from investments and translation of assets and liabilities in foreign currencies (663) (47,197) (47,860) Net decrease in net assets resulting from operations (4,947) (352,261) (357,208) Subscriptions 4,000 191,109 195,109 Redemptions (905,090) (905,090) Transfers - - - Offering Costs - - - Net assets at September 30, 2008 $28,355 $1,965,040 $1,993,395 Nine Months Ended September 30, 2007 Net assets at December 31, 2006 $(131,759) $(131,759) $(263,518) Increase (decrease) in net assets from operations: Net investment (loss) (2,557) (207,787) (210,344) Net realized (loss) from investments and foreign currency transactions (3,485) (283,276) (286,761) Net increase in unrealized appreciation from investments and translation of assets and liabilities in foreign currencies 735 59,727 60,462 Net (decrease) in net assets resulting from operations (5,307) (431,336) (436,643) Subscriptions 27,050 2,935,243 2,962,293 Redemptions - (27,289) (27,289) Transfers 1,000 (1,000) - Offering Costs 131,216 (131,216) - Net assets at September 30, 2007 $22,200 $2,212,643 $2,234,843
The accompanying notes are an integral part of the financial statements F-10 Providence Select Fund, Limited Partnership (A Delaware Limited Partnership) Statements of Cash Flows (A Review) Nine Months Ended September 30, 2008 2007 Cash Flows from Operating Activities Net (decrease) in net assets resulting from operations $(357,208) $(436,643) Adjustments to reconcile net income to net cash provided by (used in) operating activities: Changes in operating assets and liabilities: Unrealized appreciation (depreciation) on investments 47,860 (60,461) (Increase) decrease in interest receivable 6,716 (7,145) (Increase) decrease in prepaid continuing service fee 44,779 (52,759) Increase (decrease) in accrued management and incentive fees (18,685) 15,125 Increase (decrease) in accounts payable (14,574) 12,237 (Decrease) in accrued expenses (1,160) (2,419) Net cash (used in) operating activities (292,272) (532,065) Cash Flows from Financing Activities Increase (decrease) in due to related parties (251,423) 18,920 Increase in prepaid subscriptions - 5,000 Proceeds from sale of units, net of sales commissions 195,109 2,962,293 Partner redemptions (412,023) (14,627) Net cash provided by (used in) financing activities (468,337) 2,971,586 Net increase (decrease) in cash and cash equivalents (760,609) 2,439,521 Cash and cash equivalents at the beginning of the period 3,302,395 304 Cash and cash equivalents at the end of the period $2,541,786 $2,439,825 End of period cash and cash equivalents consist of: Cash and cash equivalents at broker $537,687 $2,420,423 Treasury Bills 1,998,553 - Cash 4,538 19,402 Money market fund 1,008 - Total cash and cash equivalents $2,541,786 $2,439,825
The accompanying notes are an integral part of the financial statements F-11 Providence Select Fund, Limited Partnership (A Delaware Limited Partnership) Nine Months Ended September 30, 2008 and 2007 (A Review) 1. Nature of the Business Providence Select Fund, Limited Partnership (the Fund) was formed on May 16, 2003 under the Delaware Uniform Limited Partnership Act. The Fund is engaged in high risk, speculative and hedge trading of futures and forward contracts, options on futures and forward contracts, and other instruments selected by registered commodity trading advisors (CTA's). On March 2, 2007, the Fund commenced business after admission of 46 limited partners, with total subscriptions of $1,088,370. The maximum offering is $50,000,000. White Oak Financial Services, Inc. (White Oak) and Michael Pacult are the General Partners and commodity pool operators (CPO's) of the Fund. From inception through June 2, 2008, the Fund's CTA was NuWave Investment Corp. From June 2, 2008 forward, the Fund's CTA has been Clarke Capital Management, Inc. The CTA has the authority to trade as much of the Fund's equity as is allocated to it by the General Partner. The selling agent is Futures Investment Company (FIC), which is controlled by Michael Pacult and his wife. The Partnership was in the development stage prior to March 2, 2007 and its efforts until then were principally devoted to organizational activities. 2. Significant Accounting Polices Regulation - The Fund is a registrant (effective September 12, 2005) with the Securities and Exchange Commission (SEC) pursuant to the Securities Act of 1933 (the Act). The Fund is subject to the regulations of the SEC and the reporting requirements of the Securities and Exchange Act of 1934. The Fund is also be subject to the regulations of the Commodities Futures Trading Commission (CFTC), an agency of the U.S. government which regulates most aspects of the commodity futures industry, the rules of the National Futures Association and the requirements of various commodity exchanges where the Fund executes transactions. Additionally, the Fund will be subject to the requirements of futures commission merchants and interbank market makers through which the Fund trades. Offering Costs and Organizational Expenses - For financial reporting purposes in conformity with U.S. Generally Accepted Accounting Principles (GAAP), on the Fund's initial effective date, September 12, 2005, the Fund deducted from Limited Partners' capital the total initial offering costs of $79,876 as of that date and began expensing all subsequent offering costs. The commencement of business was contingent upon the sale of at least $1,030,000 of partnership interests. Organizational and operating costs are expensed as incurred for GAAP purposes. For all other purposes, including determining the Net Asset Value per Unit for subscription and redemption purposes, the Fund capitalized all offering and organizational costs until after the twelfth month following the commencement of business. The Fund has agreed to reimburse White Oak and other affiliated companies for all expenses incurred up to the commencement of business, which was March 2, 2007, until after the twelfth month following the commencement of business. On March 4, 2008, during the thirteenth month following the commencement of business, White Oak and its affiliates were reimbursed for all such expenses, which totaled $274,715, and which are being amortized by the Fund on a straight-line basis at $11,446 per month for twenty four months commencing March 4, 2008. Any partner in the Fund during this twenty four month period will be exposed to this per month charge on a pro rata basis. As of September 30, 2008 and December 31, 2007, these reimbursement amounts had accumulated to $0 and $273,745. Consequently, as of September 30, 2008 and December 31, 2007, the Net Asset Value and Net Asset Value per Unit for financial reporting purposes and for all other purposes are as follows: Balance Per Unit Calculation September 30, December 31, September 30, December 31, 2008 2007 2008 2007 Net Asset Value for financial reporting purposes $1,993,395 $3,060,584 $714.04 $828.67 Adjustment for initial offering costs 79,876 79,876 28.61 21.63 Adjustment for other offering costs and organizational expenses 114,713 194,464 41.09 52.65 Net Asset Value for all other purposes $2,187,984 $3,334,924 $783.74 $902.94 Number of units 2,791.73 3,693.39
Registration Costs - Costs incurred for the initial filings with Securities and Exchange Commission, National Association of Securities Dealers, Inc. and the states where the offering is expected to be made are included in the offering expenses and, accordingly, are accounted for as described above under "Offering Costs and Organizational Expenses". F-12 Providence Select Fund, Limited Partnership (A Delaware Limited Partnership) Nine Months Ended September 30, 2008 and 2007 (A Review) 2. Significant Accounting Polices, Continued Revenue Recognition - Forward contracts, futures and other investments are recorded on the trade date and will be reflected in the statement of operations at the difference between the original contract amount and the market value on the last business day of the reporting period. Market value of forward contracts, futures and other investments is based upon exchange or other applicable closing quotations related to the specific positions. Interest income is recognized when it is earned. Use of Accounting Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Income Taxes - The Fund is not required to provide a provision for income taxes. Income tax attributes that arise from its operations are passed directly to the individual partners. The Fund may be subject to state and local taxes in jurisdictions in which it operates. Statement of Cash Flows - For purposes of the Statement of Cash Flows, the Fund considers cash at broker, cash, U.S. Treasury Bills and money market funds to be cash equivalents. Net cash provided by operating activities include no cash payments for interest or income taxes for the periods ended September 30, 2008 and 2007. Foreign Currency - Investment securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of investment securities and income and expense items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Company does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments. Reported net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. Reclassification Certain amounts in the 2007 financial statements were reclassified to conform with the 2008 presentation. Recently Issued Accounting Pronouncements In July 2006, the Financial Accounting Standards Board (FASB) issued interpretation No. 48 (FIN 48) entitled "Accounting for Uncertainty in Income Taxes - an interpretation of FASB 109". FIN 48 prescribes the minimum recognition threshold a tax position must meet in connection with accounting for uncertainties in income tax positions taken or expected to be taken by an entity before being measured and recognized in the financial statements. Adoption of FIN 48 was required for fiscal years beginning after December 15, 2006. The implementation of FIN 48 did not have a material impact on the Fund's financial statements. In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (FAS 157). FAS 157 defines fair value, establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America, and expands disclosures about fair value measurements. While FAS 157 does not require any new fair value measurements, for some entities, the application of FAS 157 may change current practice. FAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The implementation of FAS 157 did not have a material impact on the Fund's financial statements. F-13 Providence Select Fund, Limited Partnership (A Delaware Limited Partnership) Nine Months Ended September 30, 2008 and 2007 ( A Review) 3. General Partner Duties The responsibilities of the General Partner, in addition to directing the trading and investment activity of the Fund, including suspending all trading, includes executing and filing all necessary legal documents, statements and certificates of the Fund, retaining independent public accountants to audit the Fund, employing attorneys to represent the Fund, reviewing the brokerage commission rates to determine reasonableness, maintaining the tax status of the Fund as a limited partnership, maintaining a current list of the names, addresses and numbers of units owned by each Limited Partner and taking such other actions as deemed necessary or desirable to manage the business of the Partnership. The Corporate General Partner has contributed $38,050 in cash for deposit to the capital of the Fund for a General Partnership interest in the Partnership. If the net unit value of the partnership falls to less than 50% of the greater of the original $1,000 selling price, less commissions and other charges or such higher value earned through trading, then the General Partner will immediately suspend all trading, provide all limited partners with notice of the reduction in net unit value and give all limited partners the opportunity, for fifteen days after such notice, to redeem partnership interests. No trading shall commence until after the lapse of such fifteen day period. 4. The Limited Partnership Agreement The Limited Partnership Agreement provides, among other things, that- Capital Account - A capital account shall be established for each partner. The initial balance of each partner's capital account shall be the amount of the initial contributions to the partnership. Monthly Allocations - Any increase or decrease in the Partnership's net asset value as of the end of a month shall be credited or charged to the capital account of each Partner in the ratio that the balance of each account bears to the total balance of all accounts. Any distribution from profits or partners' capital will be made solely at the discretion of the General Partner. Federal Income Tax Allocations - As of the end of each fiscal year, the Partnership's realized capital gain or loss and ordinary income or loss shall be allocated among the Partners, after having given effect to the fees and expenses of the Fund. Subscriptions - Investors must submit subscription agreements and funds at least five business days prior to month end. Subscriptions must be accepted or rejected by the general partner within five business days. The investor also has five business days to withdraw his subscription. Funds are deposited into an interest bearing subscription account and will be transferred to the Fund's account after the minimum to commence business has been raised and, thereafter, on the first business day of the month after the subscription is accepted. Interest earned on the subscription funds will accrue to the account of the investor. Redemptions - A limited partner may request any or all of his investment be redeemed at the net asset value as of the end of a month. Unless this requirement is waived, the written request must be received by the general partner no less than ten days prior to a month end. Redemptions will generally be paid within twenty days of the effective month end. However, in various circumstances due to liquidity, etc. the general partner may be unable to comply with the request on a timely basis. For partners admitted after July 31, 2008, there will be a redemption fee commencing from the date of purchase of units of 4% during the first three months, 3% during the second three months, 2% during the third three months, 1% during the fourth three months and no redemption fees for redemption requests received in the thirteenth month or later. For partners admitted prior, there will be a redemption fee commencing from the date of purchase of units of 3% during the first four months, 2% during the second four months, 1% during the third four months and no redemption fees for redemption requests received in the thirteenth month or later. F-14 Providence Select Fund, Limited Partnership (A Delaware Limited Partnership) Nine Months Ended September 30, 2008 and 2007 (A Review) 5. Fees Until September 1, 2007, a monthly management fee was paid to the CTA based on the rate of trading assigned by the CTA and approved by the General Partner of up to 2.5% (annual rate) of the Fund's net assets allocated to the CTA to trade. As of September 1, 2007, such management fee was increased to up to 3.25% annually. The Fund pays the Corporate General Partner a fixed brokerage commission of 6% on total Fund net assets, from which the Corporate General Partner pays the round turn commissions to the futures commission merchant. A quarterly incentive fee of 20% of "new trading profits" is paid to the CTA and, until September 1, 2007, up to a 3% quarterly incentive fee was paid to the Corporate General Partner. As of September 1, 2007, the quarterly incentive fee to the Corporate General Partner was reduced to up to 0.5%. "New trading profits" includes all income earned by the CTA and expense allocated to his activity. In the event that trading produces a loss for the CTA, no incentive fees will be paid and all losses will be carried over to the following months until profits from trading exceed the loss. It is possible for the CTA to be paid an incentive fee during a quarter or a year when the Fund experienced a loss. The Fund pays the selling agents a 3% continuing service fee based on the initial investment the first year. Each year thereafter, for so long as the investment remains in the Fund, the Fund pays this fee at 1/4% monthly based on the net asset value of the investment. On June 2, 2008, the Fund changed trading advisors from NuWave to Clarke. The Fund also made the decision to change the fees as follows: A 25% quarterly incentive fee of new trading profits is paid to the CTA and no management fee is paid to it. Brokerage commissions of 7% annually on total Fund net assets are paid to the Corporate General Partner, and no incentive fee is paid to it. A 4% continuing service fee to the selling agents based on the initial investment the first year. Each year thereafter, for so long as the investment remains in the Fund, the Fund pays this fee at 1/3% monthly based on the net asset value of the investment. The General Partner has reserved the right to change the management fee and the incentive fee at its sole discretion. The total incentive fees may be increased to 27% if the management fee is eliminated. The Fund may also increase the management fees paid to the CTA and general partner to 6% of total net assets if the total incentive fees are decreased to 15%. 6. Related Party Transactions Financial Accounting Standards Board Interpretation No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, identifies certain disclosures to be made by a guarantor in its financial statements about its obligations under certain guarantees that it has issued. In the normal course of business, the Fund has provided general indemnifications to the General Partner, its CTA and others when they act, in good faith, in the best interests of the Fund. The Fund is unable to develop an estimate for future payments resulting from hypothetical claims, but expects the risk of having to make any payments under these indemnifications to be remote. F-15 Providence Select Fund, Limited Partnership (A Delaware Limited Partnership) Nine Months Ended September 30, 2008 and 2007 (A Review) 6. Related Party Transactions, Continued "Due to related parties" at September 30, 2008 and December 31, 2007 were amounts payable to White Oak Financial Services, Inc., Ashley Capital Management, Inc., Futures Investment Company, and Michael Pacult, president of Futures Investment Company, White Oak Financial Services, Inc. and Ashley Capital Management, Inc. The balances result from two types of transactions: Due to related parties: Due to related parties consist of offering, organizational and operating costs paid by the related parties on behalf of the Fund and cash advances. These amounts bear no interest or due dates and are unsecured. The balances are usually paid back within a year from the start of trading or when the Fund is financially capable of repaying the advance. Commissions: The Fund has an agreement to pay commissions to White Oak Financial Services, Inc. The related party is 100% owned by Michael Pacult, the Fund's CPO. Commissions payable to White Oak Financial Service, Inc. at September 30, 2008 and December 31, 2007 were $27,236 and $4,914, respectively. Incentive fees: Prior to June 2, 2008, White Oak Financial Services, Inc. received a quarterly incentive fee (see footnote 5) of new trading profits. As of September 30, 2008, $0 was payable to White Oak Financial Services, which is included in Incentive Fees Payable on the Statement of Assets and Liabilities. There were no incentive fees due at December 31, 2007. Continuing service fee: The Fund pays Futures Investment Company a continuing service fee. Continuing service fees prepaid to Futures Investment Company amounted to $9,573 and $45,650 at September 30, 2008 and December 31, 2007, respectively. The following amounts were due to related parties as of September 30, 2008 and December 31, 2007: 2008 2007 Futures Investment Company $- $86,017 Ashley Capital Management, Inc. - 62,355 Michael Pacult - 46,650 White Oak Financial Services, Inc. 27,235 83,636 Due to related parties $27,235 $278,658 The following commissions expense and fees were included in Statement of Operations: Nine Months Ended 2008 2007 White Oak Financial Services, Inc. - commissions $136,203 $57,595 White Oak Financial Services, Inc. - incentive fee $2,677 $2,509 Futures Investment Company - continuing service fee $9,573 $34,280 7. Partnership Unit Transactions As of September 30, 2008 and 2007, partnership units were $714.04 and $753.67 per unit respectively for financial reporting purposes. Transactions in partnership units were as follows: Units Amount 2008 2007 2008 2007 Limited Partner Units Subscriptions 210.67 2,967.04 $191,109 $2,935,243 Redemptions (1116.66) (31.20) (905,090) (27,289) Net income for the period ended 9/30 - - (352,261) (431,336) Transfers - (1.00) - (1,000) Offering costs - - - (131,216) Total (905.99) 2,934.84 (1,066,242) 2,344,402 General Partner Units Subscriptions 4.35 27.46 4,000 27,050 Redemptions - - - - Net income for the period ended 9/30 - - (4,947) (5,307) Transfers - 1.00 - 1,000 Offering costs - - - 131,216 Total 4.35 28.46 (947) 153,959 Total Units Subscriptions 215.02 2,994.50 195,109 2,962,293 Redemptions (1116.66) (31.20) (905,090) (27,289) Net income for the period ended 9/30 - - (357,208) (436,643) Offering costs - - - - Total (901.64) 2,963.30 $(1,067,189) $2,498,361
F-16 Providence Select Fund, Limited Partnership (A Delaware Limited Partnership) Nine Months Ended September 30, 2008 and 2007 (A Review) 8. Trading Activities and Related Risks The Fund is engaged in speculative trading of U.S. and foreign futures contracts in commodities. The Fund is exposed to both market risk, the risk arising from changes in market value of the contracts, and credit risk, the risk of failure by another party to perform according to the terms of a contract. A certain portion of cash in trading accounts are pledged as collateral for commodities trading on margin. Additional deposits may be necessary for any loss on contract value. The Commodity Exchange Act requires a broker to segregate all customer transactions and assets from such broker's proprietary activities. Each U.S. commodity exchange, with the approval of the CFTC and the futures commission merchant, establish minimum margin requirements for each traded contract. The futures commission merchant may increase the margin requirements above these minimums for any or all contracts. In general, the amount of required margin should never fall below 10% of the Net Asset Value. The cash deposited in trading accounts at September 30, 2008 and December 31, 2007 was $537,687 and $3,264,919, respectively, which equals approximately 27.0% and 106.7% of Net Asset Value, respectively. Trading in futures contracts involves entering into contractual commitments to purchase or sell a particular commodity at a specified date and price. The gross or face amount of the contract, which is typically many times that of the Fund's net assets being traded, significantly exceeds the Fund's future cash requirements since the Fund intends to close out its open positions prior to settlement. As a result, the Fund is generally subject only to the risk of loss arising from the change in the value of the contracts. The market risk is limited to the gross or face amount of the contracts held of approximately $4,438,520 on long positions at September 30, 2008 and $29,248,921 on long positions at December 31, 2007. However, when the Fund enters into a contractual commitment to sell commodities, it must make delivery of the underlying commodity at the contract price and then repurchase the contract at prevailing market prices or settle in cash. Since the repurchase price to which a commodity can rise is unlimited, entering into commitments to sell commodities exposes the Fund to unlimited potential risk. Market risk is influenced by a wide variety of factors including government programs and policies, political and economic events, the level and volatility of interest rates, foreign currency exchange rates, the diversification effects among the derivative instruments the Fund holds and the liquidity and inherent volatility of the markets in which the Fund trades. The net unrealized gains (losses) on open commodity futures contracts at September 30, 2008 were $937. Open contracts generally mature within three months of September 30, 2008. The latest maturity for open futures contracts is in December 2008. However, the Fund intends to close all contracts prior to maturity. Credit risk is the possibility that a loss may occur due to the failure of a counter party to perform according to the terms of a contract. The Fund has a substantial portion of its assets on deposit with financial institutions. In the event of a financial institution's insolvency, recovery of Fund deposits may be limited to account insurance or other protection afforded deposits. The Fund has established procedures to actively monitor market risk and minimize credit risk although there can be no assurance that it will succeed. The basic market risk control procedures consist of continuously monitoring open positions, diversification of the portfolio and maintenance of a desirable margin-to-equity ratio. The Fund seeks to minimize credit risk primarily by depositing and maintaining its assets at financial institutions and brokers which it believes to be creditworthy. F-17 Providence Select Fund, Limited Partnership (A Delaware Limited Partnership) Nine Months Ended September 30, 2008 and 2007 (A Review) 9. Derivative Financial Instruments and Fair Value of Financial Instruments A derivative financial instrument is a financial agreement whose value is linked to, or derived from, the performance of an underlying asset. The underlying asset can be currencies, commodities, interest rates, stocks, or any combination. Changes in the underlying asset indirectly affect the value of the derivative. As the instruments are recognized at fair value, those changes directly affect reported income. All investment holdings are recorded in the statement of financial condition at their net asset value (fair value) at the reporting date. Financial instruments (including derivatives) used for trading purposes are recorded in the statement of financial condition at fair value at the reporting date. Realized and unrealized changes in fair values are recognized in net investment gain (loss) in the period in which the changes occur. Interest income arising from trading instruments is included in the statement of operations as part of interest income. Notional amounts are equivalent to the aggregate face value of the derivative financial instruments. Notional amounts do not represent the amounts exchanged by the parties to derivatives and do not measure the Fund's exposure to credit or market risks. The amounts exchanged are based on the notional amounts and other terms of the derivatives. 10. Financial Instruments with Off-Balance Sheet Credit and Market Risk All financial instruments are subject to market risk, the risk that future changes in market conditions may make an instrument less valuable or more onerous. As the instruments are recognized at fair market value, those changes directly affect reported income. Included in the definition of financial instruments are securities, restricted securities and derivative financial instruments. Theoretically, the investments owned by the Fund directly are exposed to a market risk (loss) equal to the notional value of the financial instruments purchased and substantial liability on certain financial instruments purchased short. Generally, financial instruments can be closed. However, if the market is not liquid, it could prevent the timely close-out of any unfavorable positions or require the Fund to hold those positions to maturity, regardless of the changes in their value or the trading advisor's investment strategies. Credit risk represents the accounting loss that would be recognized at the reporting date if counterparties failed to perform as contracted. Concentrations of credit risk (whether on or off balance sheet) that arise from financial instruments exist for groups of counterparties when they have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions. 11. Indemnifications In the normal course of business, the Fund enters into contracts and agreements that contain a variety of representations and warranties and which provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund that have not yet occurred. The Fund expects the risk of any future obligation under these indemnifications to be remote. F-18 Providence Select Fund, Limited Partnership (A Delaware Limited Partnership) Nine Months Ended September 30, 2008 and 2007 (A Review) 12. Financial Highlights Three Months Ended Nine Months Ended September 30, September 30, 2008 2007 2008 2007 Performance per Unit (4) Net unit value, beginning of period $816.87 $860.77 $828.67 $(131,759.00) Net realized and unrealized gains/ (losses) on commodity transactions (62.35) (160.90) 33.72 (58.89) Investment and other income 2.81 12.15 9.60 25.50 Expenses (1) (43.29) (64.57) (157.95) (146.45) Net increase (decrease) related to operations (102.83) (213.32) (114.63) (179.84) Reconciling amount due to dual NAV 106.22 (16.88) Reallocation of initial offering costs - - - 132,709.39 Net increase (decrease) for the period (102.83) (107.10) (114.63) 132,512.67 Net unit value, end of period $714.04 $753.67 $714.04 $753.67 Net assets, end of period (000) 1,993 2,235 1,993 2,235 Total return (2) -12.59% -24.78% -13.83% -18.92% Number of units outstanding at the end of the period 2,791.73 2,965.30 2,791.73 2,965.30 Ratio to average net assets (3) Investment and other income 1.32% 5.56% 1.47% 5.87% Expenses (1) -14.28% 18.64% -21.47% 33.24% Total returns are calculated based on the change in value of a unit during the period. An individual partner's total return and ratios may vary from the above total return and ratios based on the timing of additions and redemptions. (1) Includes brokerage commissions (2) Not annualized (3) Annualized (4) Investments in other income and expenses and net realized and unrealized gains and losses on commodity transactions are calculated based on a single unit outstanding during the period. Reallocation of initial offering costs is a balancing amount necessary to reconcile the change in net unit value.
F-19 Providence Select Fund, Limited Partnership Affirmation of the Commodity Pool Operator Nine Months Ended September 30, 2008 and 2007 ***************************************************************************** To the best of the knowledge and belief of the undersigned, the information contained in this report is accurate and complete. /s/ Michael Pacult November 19, 2008 Michael Pacult Date President, White Oak Financial Services, Inc. General Partner Providence Select Fund, Limited Partnership F-20 EX-31 2 providence10q0908ex31.txt Exhibit 31.01 CERTIFICATION I, Michael Pacult, hereby certify that: 1. I have reviewed this quarterly report on Form 10-Q of Providence Select Fund, Limited Partnership; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonable likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. By: /s/ Michael Pacult Michael Pacult President of White Oak Financial Services, Inc. General Partner of the Registrant Date: November 19, 2008 EX-32 3 providence10q0908ex32.txt EXHIBIT 32.01 CERTIFICATION BY CHIEF EXECUTIVE OFFICER & CHIEF FINANCIAL OFFICER I, Michael Pacult, the Chief Executive Officer and Chief Financial Officer of White Oak Financial Services, Inc. as general partner of Providence Select Fund, L.P., certify that (i) the Form 10-Q for the period ended September 30, 2008 of Providence Select Fund, L.P. fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in the Form 10-Q for the period ended September 30, 2008 fairly presents, in all material respects, the financial condition and results of operations of Providence Select Fund, L.P. PROVIDENCE SELECT FUND, LIMITED PARTNERSHIP By: White Oak Financial Services, Inc., General Partner By: /s/ Michael Pacult Michael Pacult Chief Executive Officer & Chief Financial Officer Date: November 19, 2008 -----END PRIVACY-ENHANCED MESSAGE-----