-----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, PRhylgaDkjC75IyvLZOvHI08K7ncSI8DawwehgxZH4Voog77qkojJJUGkTFfYhZv rOV9ChmILtYm2nL0cXYstw== 0001262876-09-000006.txt : 20090331 0001262876-09-000006.hdr.sgml : 20090331 20090331165718 ACCESSION NUMBER: 0001262876-09-000006 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20081231 FILED AS OF DATE: 20090331 DATE AS OF CHANGE: 20090331 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-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-108629 FILM NUMBER: 09719792 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-K 1 psf10k1208.txt FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the year ended 12-31-2008 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 333-119635 PROVIDENCE SELECT FUND, LIMITED PARTNERSHIP (Exact name of registrant as specified in its charter) Delaware 20-0069251 State or other jurisdiction of (I.R.S. Employer incorporation or organization Identification No.) 505 Brookfield Drive, Dover, DE 19901 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (800) 331-1532 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered None None Securities registered pursuant to Section 12(g) of the Act: Limited Partnership Units (Title of class) Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X] Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X] 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Sec 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] 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 definitions 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] (Do not check if a smaller reporting company) 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] State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter.: Not applicable. There is no market for the Units of partnership interests and none is expected to develop. The Registrant is a commodity pool. The Units are registered to permit the initial sale of Units at month end net asset value. Documents Incorporated by Reference Registration Statement on Form S-1 and all amendments thereto filed with the United States Securities and Exchange Commission at Registration Nos. 333- 119635 and 333-108629 are incorporated by reference to Parts I, II, III, and IV. PART I Item 1. Business On September 12, 2005, the registration statement filed by Providence Select Fund, Limited Partnership, (the "Fund") with the Securities and Exchange Commission (the "SEC"), which incorporated the disclosure document filed with the Commodity Futures Trading Commission (the "CFTC"), was declared effective. The Fund initially sold the Units of partnership interests at the initial price of $1,000 per Unit. On March 2, 2007, the Fund commenced business after admission of 46 limited partners, with total subscriptions of $1,088,370. Subsequently, Units are sold at the net asset value per Unit as of the then current month end. The Fund maintains separate Unit values for subscription and redemption purposes, and for financial reporting purposes. The Fund will continue to offer the unsold balance of its Units which, as of December 31, 2008, was $46,136,631 for sale to the public via its fully amended and restated prospectus dated July 31, 2008 (the "Prospectus"), as it may be amended in the future, until it has sold the total of $50,000,000 in registered securities or the offering terminates as permitted or required by the terms of the Limited Partnership Agreement. Pursuant to the terms of the Limited Partnership Agreement, the Fund is engaged in the business of speculative and high risk trade of commodity futures and options selected by of one or more commodity trading advisors ("CTA") as that term is defined in the Commodity Exchange Act. 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, in its sole discretion it selects the CTA and the amount of equity assigned to the CTAs, from time to time. The trades for the Fund are selected and placed with the futures commission merchant ("FCM"), i.e., clearing broker, for the account of the Fund by the currently selected sole commodity trading advisor, Clarke. The books and records of the trades placed by the CTA in the Fund's trading account are kept and available for inspection by the Limited Partners at the office of the corporate General Partner, 5914 N. 300 West, Fremont, IN 46737. During the twelve months ended December 31, 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%. The Fund Limited Partnership Agreement is included as Exhibit A to the Prospectus delivered to the prospective investors and filed as part of the Registration Statement. The Limited Partnership Agreement defines the terms of operation of the Fund and is incorporated herein by reference. None of the purchasers of Limited Partnership Units has a voice in the management of the Fund. Reports of the Net Asset Value of the Fund are sent to all Partners at the end of each month. The sale of Units is regulated by Securities Act of 1933 and the Commodity Exchange Act. Once the Units are issued, the operation of the Fund is subject to regulation pursuant to the Securities and Exchange Act of 1934 and the Commodity Exchange Act. The U.S. Securities and Exchange Commission and the Securities Commissions and securities acts of the several States where its Units are offered and sold have jurisdiction over the operation of the Fund. The National Futures Association has jurisdiction over the operation of the General Partner and the Commodity Trading Advisors. This regulatory structure is not intended, nor does it, protect investors from the risks inherent in the trading of futures and options. 2 Item 1A. Risk Factors The trading of futures, options on futures and other commodities related investments is highly speculative and risky. You should make an investment in the Fund only after consulting with independent, qualified sources of investment and tax advice and only if your financial condition will permit you to bear the risk of a total loss of your investment. You should consider an investment in the Units only as a long-term investment. Moreover, to evaluate the risks of this investment properly, you must familiarize yourself with the relevant terms and concepts relating to commodities trading and the regulation of commodities trading, which are discussed in the Risk Factors section of the Prospectus, which is incorporated herein by reference. You should carefully consider all the information we have included or incorporated by reference in this Report and our subsequent periodic filings with the SEC. In particular, you should carefully consider the risk factors described above and read the risks and uncertainties as set forth in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" Section of this Report. Any of the heretofore mentioned risks and uncertainties could materially adversely affect the Fund, its trading activities, operating results, financial condition and Net Asset Value and therefore could negatively impact the value of your investment. You should not invest in the Units unless you can afford to lose all of your investment. Item 1B. Unresolved Staff Comments None. Item 2. Properties The general partner has sole authority to determine the percentage of Fund assets that will be held on deposit with the futures commission merchant (FCM), used for other investments, and held in bank accounts to pay current obligations. The Fund maintains approximately 64% of its assets in a Treasury Direct Account maintained with the United States Department of the Treasury and 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 maintains approximately 33% of our net assets with the futures commission merchant for margin for trading by the trading advisor. Approximately 3% of the previous month's net assets are retained in the Fund's bank accounts to pay expenses and redemptions. MF Global Inc. is registered with the National Futures Association pursuant to the Commodity Exchange Act as a FCM. The trading of futures, options on futures and other commodities is highly speculative and the Fund has an unlimited risk of loss, including the pledge of all of its assets to the FCM to secure the losses on the trades made on its behalf by the commodity trading advisor or advisors selected, from time to time, by the General Partner. Item 3. 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., has had the following described reportable events, none of which, in the opinion of the FCM, is material to the performance of the FCM on behalf of 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 Partnership. 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: 3 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 Fund, 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. 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. 4 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 4. Submission of Matters to a Vote of Security Holders The General Partner makes all day to day decisions regarding the operation of the Fund. The Limited Partners have not exercised any right to vote their Units and there have been no matters which would cause the Fund to conduct a vote of the Limited Partners. The Limited Partners, (sic the Security Holders), have no right to participate in the management of the Fund. All of their voting rights, as defined in the Limited Partnership Agreement, are limited to the selection of the General Partner, amendments to the Limited Partnership Agreement, and other similar decisions. PART II Item 5. Market for Registrant's Limited Partnership Units, Related Stockholder Matters and Issuer Purchases of Equity Securities The Fund desires to be taxed as a partnership and not as a corporation. In furtherance of this objective, the Limited Partnership Agreement, subject to certain exceptions upon the death of a Limited Partner, requires a Limited Partner to obtain the approval of the General Partner prior to the transfer of any Units. Accordingly, there is no trading market for the Fund Units and none is likely to develop. The Limited Partners must rely upon the right of Redemption provided in the Limited Partnership Agreement to liquidate their interest. The Fund has fewer than 300 holders of its securities. Limited Partners are required to represent to the issuer that they are able to understand and accept the risks of investment in a commodity pool for which no market will develop and the right of redemption will be the sole expected method of withdrawal of equity from the Fund. The General Partner has sole discretion in determining what distributions, if any, the Fund will make to the Limited Partners. The Fund has not made any distributions as of the date hereof. The Fund has no securities authorized for issuance under equity compensation plans. See the Limited Partnership Agreement attached as Exhibit A to the Registration Statement, incorporated herein by reference, for a complete explanation of the right of redemption provided to Limited Partners. Item 6. Selected Financial Data The Fund is not required to pay dividends or otherwise make distributions and none are expected. The Limited Partners must rely upon their right of redemption to obtain their return of equity after consideration of profits, if any, and losses from the Fund. See the Registration Statement, incorporated herein by reference, for a complete explanation of the allocation of profits and losses to a Limited Partner's capital account. Following is a summary of certain financial information for the Registrant for the period from inception to December 31, 2008. 5 Years Ended December 31, 2008 2007 2006 2005 2004 Performance per Unit (2) Net unit value, beginning of year $828.67 $(131,759.00) $(61,995.00) $(6,454.00) $(424.00) Net realized and unrealized gain (loss) on commodity transactions 120.48 34.80 - - Investment and other income 10.77 32.89 - - Expenses (1) (217.61) (189.41) (69,764.00) (15,603.00) (6,030.00) Net (decrease) related to operations (86.36) (121.72) (69,764.00) (15,603.00) (6,030.00) Syndication costs transferred to capital - - - (39,938.00) - Reallocation of initial offering costs - 132,709.39 - - - Net increase (decrease) for the year (86.36) 132,587.67 (69,764.00) (55,541.00) (6,030.00) Net unit value at the end of the year $742.31 $828.67 $(131,759.00) $(61,995.00) $(6,454.00) Net assets, end of the year ($000) $1,629 $3,061 $(264) $(124) $(13) Total return (1) (10.42)% (12.81)% (78.79)% (57.08)% (175.34)% Number of units outstanding at the end of the year 2,194.92 3,693.39 2.00 2.00 2.00 Ratio to average net assets Investment and other income (2) 1.00 % 4.76 % 0.00 % 0.00 % 0.00 % Expenses (16.27)% (22.66)% (78.79)% (57.08)% (175.34)%
Total return is calculated based on the change in value of a unit during the year. An individual partner's total return and ratios may vary from the above total returns and ratios based on the timing of additions and redemptions. (1) Includes brokerage commissions (2) For the year ended December 31, 2006 and prior years, investment and other income and expenses are calculated using the average number of units outstanding during the year. Net realized and unrealized gains and losses on commodity transactions is a balancing amount necessary to reconcile the change in net unit value. For the years ended December 31, 2008 and 2007, 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. 6 The following summarized quarterly financial information presents the results of operations for the quarterly periods during the years ended December 31, 2008 and 2007. 2008 2007 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total Investment Gain 556,681 (218,978) (217,481) 252,948 32,565 101,490 (360,354) 311,899 Net Income (Loss) 326,998 (373,060) (311,146) 148,946 (35,827) 26,563 (427,379) 204,095 Net Income (Loss) per limited partnership unit 87.19 (98.99) (102.83) 28.27 (227.27) 137.65 (107.10) 75.00 Net Income (Loss) per general partnership unit 87.19 (98.99) (102.83) 28.27 (227.27) 137.65 (107.10) 75.00 Net asset value per partnership unit at the end of period. 915.86 816.87 714.04 742.31 723.12 860.77 $753.67 828.67 Capitalized Syndication Costs - - - - - - - -
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. Critical Accounting Policies and Estimates The Fund records all investments at market value in its financial statements, with changes in market value reported as a component of realized and change in unrealized trading gain (loss) in the Statements of Operations. In certain circumstances, estimates are involved in determining market value in the absence of an active market closing price (e.g. swap and forward contracts which are traded in the inter-bank market). Capital Resources The Fund will raise additional capital only through the sale of Units offered pursuant to the continuing offering, and does not intend to raise any capital through resale of Units once issued or borrowing. Due to the nature of the Fund's business, it will make no capital expenditures and will have no capital assets which are not operating capital or assets. Liquidity Most United States commodity exchanges limit fluctuations in commodity futures contracts prices during a single day by regulations referred to as "daily price fluctuation limits" or "daily limits". During a single trading day, no trades may be executed at prices beyond the daily limit. Once the price of a futures contract has reached the daily limit for that day, positions in that contract can neither be taken nor liquidated. Commodity futures prices have occasionally moved to the daily limit for several consecutive days with little or no trading. Similar occurrences could prevent the Fund from promptly liquidating unfavorable positions and subject the Fund to substantial losses which could exceed the margin initially committed to such trades. In addition, even if commodity futures prices have not moved the daily limit, the Fund may not be able to execute futures trades at favorable prices, if little trading in such contracts is taking place. Other than these limitations on liquidity, which are inherent in the Fund's commodity futures trading operations, the Fund's assets are expected to be highly liquid. The entire offering proceeds will be credited to the Fund's bank and brokerage accounts to engage in trading activities and as reserves for that trading. The Fund meets its margin requirements by depositing U.S. government securities or cash or both with the futures broker and the over-the-counter counterparties. In this way, substantially all (i.e., 97% or more) of the Fund's assets, whether used as margin for trading purposes or as reserves for such trading, can be invested in U.S. government securities and time deposits with U.S. banks. Investors should note that maintenance of the Fund's assets in U.S. government securities and banks does not reduce the risk of loss from trading futures, forward and swap contracts. The Fund receives all interest earned on its assets. No other person shall receive any interest or other economic benefits from the deposit of Fund assets. 7 Approximately 10% to 40% of the Fund's assets normally are committed as required margin for futures contracts and held by the futures broker, although the amount committed may vary significantly. Such assets are maintained in the form of cash or U.S. Treasury bills in segregated accounts with the futures broker pursuant to the Commodity Exchange Act and regulations thereunder. When combined with the previously described assets committed to margin, a total of up to approximately 40% of the Fund's assets may be deposited with over-the- counter counterparties in order to initiate and maintain forward and swap contracts. Such assets are not held in segregation or otherwise regulated under the Commodity Exchange Act, unless such over-the-counter counterparty is registered as a futures commission merchant. These assets are held either in U.S. government securities or short-term time deposits with U.S.-regulated bank affiliates of the over-the-counter counterparties. The remaining 60% to 90% of the Fund's assets are normally invested in cash equivalents, such as U.S. Treasury bills, and held by the futures broker or the over-the-counter counterparties, or in the Treasury Direct account or cash management fund account identified in Part I, Item 2 of this Report. The Fund's assets are not and will not be, directly or indirectly, commingled with the property of any other person in violation of law or invested with or loaned to the Fund, the General Partner or any affiliated entities. 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 CTAs selected are 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 twelve month periods ended December 31 2008 and December 31, 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. Discussion for Financial Reporting Purposes The Fund's realized and unrealized trading gains (losses) before commissions were $373,170 [$120.48 per Unit] and $[85,600] [$[34.80] per Unit] for the twelve months ended December 31, 2008 and December 31, 2007, respectively. The Fund's results after payment and accrual of expenses for the twelve months ended December 30, 2008 and December 30, 2007 were profits (losses) of $(208,262) [$(86.36) per Unit] and ($232,548) [$(121.72) per Unit], respectively. The NAV per Unit as of December 31, 2008 and December 31, 2007 were $742.31 and $828.67, respectively. Discussion for Subscription and Redemption Purposes The Fund's realized and unrealized trading gains (losses) before commissions were $373,170 [$120.48 per Unit] and [$85,600] [$34.80 per Unit] for the twelve months ended December 31, 2008 and December 31, 2007, respectively. The Fund's results after payment and accrual of expenses for the twelve months ended December 31, 2008 and December 31, 2007 were profits (losses) of $(322,726) [$(86.83) per Unit] and $(223,725) [$(121.72) per Unit], respectively. The net asset value ("NAV") per Unit as of December 31, 2008, was $815.15, a decrease of 9.72% from the December 31, 2007 NAV per Unit of $902.94. 8 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 twelve months ended December 31, 2008 and December 31, 2007 were $(1,223,006) and $3,536,650, 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 twelve months ended December 31, 2008 was $37,951, a 44.74% decrease over the interest income for the twelve months ended December 31, 2007 of $68,671. The increase in interest income for the comparative twelve month periods was primarily due to the fact that the Fund was not operational during approximately two of the twelve 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 twelve months ended December 31, 2008 were $172,538, a 74.70% increase over the commissions for twelve months ended December 31, 2007 of $98,761. The increase in commissions for the comparative twelve month periods was primarily due to the fact that the Fund was not operational during approximately two of the twelve 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 twelve months ended December 31, 2008 were $98,868 a 64.30% increase over such fees for twelve months ended December 31, 2007 of $60,177. The increase in continuing service fees for the comparative twelve month periods was primarily due to the fact that the Fund was not operational during approximately two of the twelve months of the prior period and had significantly less net assets during the prior period. Pursuant to the Trading Advisory Agreement, the Fund paid a management fee to the prior trading advisor until it was removed in December 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 twelve months ended December 31, 2008 were $46,072 a 3.52% increase over the management fee for the twelve months ended December 31, 2007 of $44,505. The increase in management fee for the comparative twelve month periods was primarily due to the fact that the Fund was not operational during approximately two of the twelve 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 twelve months ended December 31, 2008 and December 31, 2007 were $165,453 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 twelve months ended December 31, 2008 and December 31, 2007 were $123,126 and $149,222respectively. The decrease over the comparative twelve 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. 9 Inflation has had no material impact on the operations or on the financial condition of the Fund from inception through December 31, 2008. Off-Balance Sheet Risk The term "off-balance sheet risk" refers to an unrecorded potential liability that, even though it does not appear on the balance sheet, may result in future obligation or loss. The Fund trades in futures, forward and swap contracts and is therefore a party to financial instruments with elements of off-balance sheet market and credit risk. In entering into these contracts there exists a risk to the Fund, market risk, that such contracts may be significantly influenced by market conditions, such as interest rate volatility, resulting in such contracts being less valuable. If the markets should move against all of the futures interests positions of the Fund at the same time, and if the Fund's trading advisor was unable to offset futures interests positions of the Fund, the Fund could lose all of its assets and the Limited Partners would realize a 100% loss. The Fund, the General Partner and the CTAs minimize market risk through real-time monitoring of open positions, diversification of the portfolio and maintenance of a margin-to-equity ratio that rarely exceeds 40%. In addition to market risk, in entering into futures, forward and swap contracts there is a credit risk that a counterparty will not be able to meet its obligations to the Fund. The counterparty for futures contracts traded in the United States and on most foreign exchanges is the clearinghouse associated with such exchange. In general, clearinghouses are backed by the corporate members of the clearinghouse who are required to share any financial burden resulting from the non-performance by one of their members and, as such, should significantly reduce this credit risk. In cases where the clearinghouse is not backed by the clearing members, like some foreign exchanges, it is normally backed by a consortium of banks or other financial institutions. In the case of forward and swap contracts, which are traded on the interbank market rather than on exchanges, the counterparty is generally a single bank or other financial institution, rather than a group of financial institutions; thus there may be a greater counterparty credit risk. The CTAs trade for the Fund only with those counterparties which they believe to be creditworthy. All positions of the Fund are valued each day on a mark-to-market basis. There can be no assurance that any clearing member, clearinghouse or other counterparty will be able to meet its obligations to the Fund. Item 7A. Quantitative and Qualitative Disclosures About Market Risk The securities of the Fund are not traded and no market for the Fund securities is expected to develop. The Fund is engaged in the speculative trading of futures and options on futures. The risks are fully explained in the Fund prospectus delivered to each prospective Limited Partner prior to their investment. Item 8. Financial Statements and Supplementary Data. The Fund financial statements as of December 31, 2008, were audited by Jordan, Patke & Associates, Ltd., 300 Village Green Drive Ste 210, Lincolnshire, IL 60069 and are provided in this Report beginning on page F-1. The supplementary financial information specified by Item 302 of Regulation S-K is included in Item 6. Selected Financial Data. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. 10 Item 9A(T). 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 Section 404 of the Sarbanes-Oxley Act of 2002 requires the General Partner to evaluate annually the effectiveness of its internal controls over financial reporting as of the end of each fiscal year, and to include a management report assessing the effectiveness of its internal control over financial reporting in all annual reports. There were no changes in the General Partner's internal control over financial reporting during the quarter ended December 31, 2008 that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting applicable to the Fund. Management's Annual Report on Internal Control over Financial Reporting The General Partner is responsible for establishing and maintaining adequate internal control over the Fund's financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act as a process designed by, or under the supervision of, a company's principal executive and principal financial officers and effected by a company's board of directors, management and other personnel 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. The General Partner's internal control over financial reporting includes those policies and procedures that: * pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Fund's assets; * provide reasonable assurance that transactions are recorded as necessary to permit preparation of the Fund's financial statements in accordance with generally accepted accounting principles, and that the Fund's receipts and expenditures are being made only in accordance with authorizations of the General Partner's management and directors; and * provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Fund's assets that could have a material effect on the Fund's financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 11 The Fund securities are not publicly traded so that there can be no insider trading or leaks of confidential information to the public. All Fund money is on deposit either with a bank or a futures commission merchant. See Subsequent Events in Item 1 of this Report. There is an audit trail produced by both. A certified public accountant prepares the monthly financial statements. The Fund units are sold during the month at a net asset value to be determined as of the close of business on the last day of trading each month. No information related to the value of the units during the month is available to the Fund sales force or the prospects. All quarterly financial statements are reviewed by an independent certified public accountant who audits the Fund financial statements at the end of each calendar year. The Fund maintains its subscription agreements and other records for six years. The management of the General Partner assessed the effectiveness of its internal control over financial reporting with respect to the Fund as of December 31, 2008. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework. Based on its assessment, management has concluded that, as of December 31, 2008, the General Partner's internal control over financial reporting with respect to the Fund is effective based on those criteria. This Report does not include an attestation report of the Fund's registered public accounting regarding control over financial reporting. The General Partner's report was not subject to attestation by the Fund's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management's report in this annual report. Item 9B. Other Information. None Part III Item 10. Directors and Executive Officers and Corporate Governance The Fund is a Delaware Limited Partnership which acts through its corporate General Partner. Accordingly, the Registrant has no Directors or Executive Officers. The General Partners of the Registrant during the year 2008 were White Oak Financial Services, Incorporated, a Delaware corporation, and Michael P. Pacult. The General Partners are both registered with the National Futures Association as commodity pool operators pursuant to the Commodity Exchange Act, and Mr. Michael Pacult, age 64, is the sole shareholder, director, registered principal and executive officer of the corporate General Partner. The background and qualifications of Mr. Pacult are disclosed in the Registration Statement, incorporated herein by reference. Mr. Pacult is also a registered representative with Futures Investment Company, the affiliated broker dealer which conducts the "best efforts" offering of the Units. There has never been a material administrative, civil or criminal action brought against the Fund, the General Partner or any of its directors, executive officers, promoters or control persons. No Forms 3, 4, or 5 have been furnished to the Registrant since inception. To the best of the Fund's knowledge, no such forms have been or are required to be filed. Audit Committee Financial Expert Mr. Pacult, in his capacity as the sole principal for the General Partner of the Fund, has determined that he qualifies as an "audit committee financial expert" in accordance with the applicable rules and regulations of the Securities and Exchange Commission. He is not independent of management. Code of Ethics The Fund General Partner is registered with the National Futures Association as a Commodity Pool Operator and its President, Michael P. Pacult is registered as its principal. Both the Fund and the General Partner are subject to Federal Commodity Exchange Act and audit for compliance and the rules of good practice of the Commodity Futures Trading Commission and the industry self regulatory organization, the National Futures Association. Having said that, neither the Commodity Futures Trading Commission nor the National Futures Association are responsible for the quality of the Fund disclosures or its operation, those functions are exclusively the responsibility of the Fund and its General Partner. 12 Item 11. Executive Compensation. Although there are no executives of the Fund, the corporate General Partner and certain persons Affiliated with the General Partners are paid compensation that the Fund has elected to disclose on this Report. As described previously, the General Partner is paid fixed brokerage commissions of seven percent (7%) per year, payable monthly, to cover the cost of the trades entered by the CTA. The corporate General Partner retains the difference, if any, between the cost to enter the trades and the seven percent (7%). Item 12. Security Ownership of Certain Beneficial Owners and Management. (a) The following Limited Partners owned more than five percent (5%) of the total equity of the Fund on December 31, 2008: Name Percent Ownership Christopher Klee 6.7% Robert Agnoletti 5.5% Jack Murphy 5.3% (b) As of December 31, 2008, the corporate General Partner owned 39.71 Units of Limited Partnership Interest, which constituted approximately 1.8% ownership in the Fund. (c) The Limited Partnership Agreement governs the terms upon which control of the Fund may change. No change in ownership of the Units will, alone, determine the location of control. The Limited Partners must have 120 days advance notice and the opportunity to redeem prior to any change in the control from the General Partner to another general partner. Control of the management of the Partnership may never vest in one or more Limited Partners. Item 13. Certain Relationships and Related Transactions, and Director Independence. See Item 11, Executive Compensation and Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The General Partner has sole discretion over the selection of trading advisors. White Oak Financial Services, Inc., the corporate General Partner, is paid a fixed commission for trades and, therefore, the General Partner has a potential conflict in the selection of a CTA that makes few trades rather than produces profits for the Fund. This conflict and others are fully disclosed in the Registration Statement, which is incorporated herein by reference. Item 14. Principal Accountant Fees and Services. (1) Audit Fees The fees and costs paid to Jordan, Patke and Associates for the audit of the Fund's annual financial statements, for review of financial statements included in the Fund's Forms 10-Q and other services normally provided in connection with regulatory filing or engagements (i.e., consents related to SEC registration statements) for the years ended December 31, 2008 and 2007 were $15,234 and $15,878, respectively. (2) Audit Related Fees None (3) Tax Fees The aggregate fees paid to Jordan, Patke and Associates, Ltd. for tax compliance services for the years ended December 31, 2008 and 2007 were $2,500 and $475, respectively. (4) All Other Fees None 13 (5) The Board of Directors of White Oak Financial Services, Inc., General Partner of the Fund, approved all of the services described above. The Board of Directors has determined that the payments made to its independent certified public accountants for these services are compatible with maintaining such auditors' independence. The Board of Directors explicitly pre-approves all audit and non-audit services and all engagement fees and terms. (6) Close to 100% of the hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year were attributed to work performed by persons other than the principal accountant's full-time permanent employees. However, all work performed was supervised by a full-time permanent employee. Part IV Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K (a) The following documents are filed as part of this report: 1. All Financial Statements The Financial Statements begin on page F-1 of this Report. 2. Financial Statement Schedules required to be filed by Item 8 on this form, and by paragraph (b) below. Not applicable, not required, or included in the Financial Statements. 3. List of those Exhibits required by Item 601 of Regulation S-K (Sec 229.601 of this chapter) and by paragraph (b) below. Incorporated by reference from the Fund's Registration Statement on Form S-1, and all amendments at file Nos. 333-119635 and 333-108629 previously filed with the Securities and Exchange Commission. 31.1 Certification of CEO and CFO pursuant to Section 302 32.2 Certification of CEO and CFO pursuant to Section 906 (b) Exhibits required by Item 601 of Regulation S-K (Sec 229.601 of this chapter). See response to 15(a)(3), above. (c) Financial statements required by Regulation S-X (17 CFR 210) which are excluded from the annual report to shareholders by Rule 14a-3(b) including (1) separate financial statements of subsidiaries not consolidated and fifty percent or less owned persons; (2) separate financial statements of affiliates whose securities are pledged as collateral; and (3) schedules. None. 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-K for the period ended December 31, 2008, to be signed on its behalf by the undersigned, thereunto duly authorized. Registrant: Providence Select Fund, Limited Partnership By White Oak Financial Services, Inc. Its General Partner Date: March 31, 2009 By: /s/ Michael Pacult Mr. Michael P. Pacult Sole Director, Sole Shareholder President and Treasurer 14 PROVIDENCE SELECT FUND, LIMITED PARTNERSHIP (A Delaware Limited Partnership) ANNUAL REPORT December 31, 2008 GENERAL PARTNER: White Oak Financial Services, Inc. % Corporate Systems, Inc. 505 Brookfield Drive Dover, Kent County, Delaware 19901 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 - December 31, 2008 F-4 Schedule of Investments - Cash and Securities - December 31, 2007 F-5 Schedule of Investments - Futures Contracts - December 31, 2007 F-6 - F-7 Statements of Operations F-8 Statements of Changes in Net Assets F-9 Statements of Cash Flows F-10 Notes to the Financial Statements F-11 - F-18 Affirmation of the Commodity Pool Operator F-19 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 audited the accompanying statements of assets and liabilities, including the schedules of investments, of Providence Select Fund, Limited Partnership as of December 31, 2008 and 2007, and the related statements of operations, changes in net assets and cash flows for each of the three years in the period ended December 31, 2008. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Partnership is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion of the effectiveness of the Partnership's internal control over financial reporting. Accordingly, we do not express such an opinion. An audit includes, examining on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Providence Select Fund, Limited Partnership as of December 31, 2008 and 2007. and the results of its operations, its changes in net assets and its cash flows for each of the three years in the period ended December 31, 2008 in conformity with accounting principles generally accepted in the United States of America. /s/ Jordan, Patke & Associates, Ltd. Jordan, Patke & Associates, Ltd. Lincolnshire, Illinois March 30, 2009 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 December 31, 2008 and 2007 2008 2007 Assets Investments Equity in broker trading accounts Cash and cash equivalents at broker $489,774 $3,264,919 Net unrealized gain on open futures contracts - 48,797 Total equity in broker trading accounts 489,774 3,313,716 U.S. Treasury Bills (cost $998,736 and $0) 999,803 - Cash 11,826 37,476 Interest receivable 12 7,209 Money market fund 166,464 - Prepaid continuing service fee - 45,650 Total assets 1,667,879 3,404,051 Liabilities Accrued expenses 18,426 16,959 Due to related parties 10,292 278,658 Accounts payable 2,479 14,887 Accrued incentive and management fees 7,367 18,685 Redemptions payable - 14,278 Total liabilities 38,564 343,467 Net assets $1,629,315 $3,060,584 Analysis of net assets Limited partners $1,606,139 $3,031,282 General partners 23,176 29,302 Net assets (equivalent to $742.31 and $828.67 per unit) $1,629,315 $3,060,584 Partnership units outstanding Limited partners units outstanding 2,155.21 3,658.03 General partners units outstanding 39.71 35.36 Total partnership units outstanding 2,194.92 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 December 31, 2008 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 January 2009 998,736 1,000,000 999,803 $999,803 61.36% Cash and cash equivalents in trading accounts: United States Markets 489,774 $489,774 30.06% Total cash denominated in U.S. Dollars 489,774 30.06% Total cash and cash equivalents in trading accounts $489,774 30.06% Money market fund (166,464 shares at $1 per share) 166,464 $166,464 10.22%
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 - 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-5 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) (0.04)% 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) (0.09)% Total United States commodity futures positions held short 24,345 0.80 %
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, 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 1.60 %
The accompanying notes are an integral part of the financial statements F-7 Providence Select Fund, Limited Partnership (A Delaware Limited Partnership) Statements of Operations For the Years Ended December 31, 2008, 2007 and 2006 2008 2007 2006 Investment income Interest income $37,951 $68,671 $- Total investment income 37,951 68,671 - Expenses Commission expense to affiliates 172,538 98,761 Commission expense 13,326 7,303 - Management fees 46,072 44,505 - Continuing service fee 98,868 60,177 - Incentive fees 165,453 26,851 - Professional accounting and legal fees 71,062 142,097 135,992 Other operating and administrative expenses 52,064 7,125 3,536 619,383 386,819 139,528 Net investment (loss) (581,432) (318,148) (139,528) Realized and unrealized gain (loss) from investments and foreign currency Net realized gain (loss) from: Investments 933,252 368,916 - Foreign currency transactions (511,285) (332,113) - Net realized gain from investments and foreign currency transactions 421,967 36,803 - Net increase (decrease) in unrealized appreciation (depreciation) on: Investments (24,588) 24,588 - Foreign currency transactions (24,209) 24,209 - Net increase (decrease) in unrealized appreciation (depreciation) on investments and foreign currency transactions (48,797) 48,797 - Net gain on investments and foreign currency 373,170 85,600 - Net (decrease) in net assets resulting from operations $(208,262) $(232,548) $(139,528) Net (loss) per unit (1) Limited partnership unit (86.36) (121.72) (69,764.00) General partnership unit (86.36) (121.72) (69,764.00)
(1) For the years ended December 31, 2008 and 2007, the amount is based on a single unit outstanding for an entire year. For the year ended December 31, 2006, the amount is calculated using average units outstanding. The accompanying notes are an integral part of the financial statements F-8 Providence Select Fund, Limited Partnership (A Delaware Limited Partnership) Statements of Changes in Net Assets For the Years Ended December 31, 2008, 2007 and 2006 Partners' Capital General Limited Total Net assets at December 31, 2005 $(61,995) $(61,995) $(123,990) (Decrease) in net assets from operations: Net investment (loss) (69,764) (69,764) (139,528) Net realized (loss) from investments and foreign currency transactions - - - Net increase (decrease) in unrealized appreciation (depreciation) on investments and foreign currency transactions - - - Net (decrease) in net assets resulting from operations (69,764) (69,764) (139,528) Subscriptions - - - Redemptions - - - Transfers - - - Offering Costs - - - Net assets at December 31, 2006 (131,759) (131,759) (263,518) (Decrease) in net assets from operations: Net investment (loss) (4,385) (313,763) (318,148) Net realized gain from investments and foreign currency transactions 507 36,296 36,803 Net increase (decrease) in unrealized appreciation (depreciation) on investments and foreign currency transactions 673 48,124 48,797 - - - Net (decrease) in net assets resulting from operations (3,205) (229,343) (232,548) Subscriptions 32,050 3,566,311 3,598,361 Redemptions - (41,711) (41,711) Transfers 1,000 (1,000) - Offering Costs 131,216 (131,216) - Net assets at December 31, 2007 29,302 3,031,282 3,060,584 (Decrease) in net assets from operations: Net investment (loss) (28,270) (553,162) (581,432) Net realized gain from investments and foreign currency transactions 20,517 401,450 421,967 Net increase (decrease) in unrealized appreciation (depreciation) on investments and foreign currency transactions (2,373) (46,424) (48,797) (10,126) (198,136) (208,262) Net (decrease) in net assets resulting from operations Subscriptions 4,000 261,009 265,009 Redemptions - (1,488,016) (1,488,016) Transfers - - - Offering Costs - - - Net assets at December 31, 2008 $23,176 $1,606,139 $1,629,315
The accompanying notes are an integral part of the financial statements F-9 Providence Select Fund, Limited Partnership (A Delaware Limited Partnership) Statements of Cash Flows For the Years Ended December 31, 2008, 2007 and 2006 2008 2007 2006 Cash Flows from Operating Activities Net (decrease) in net assets resulting from operations $(208,262) $(232,548) $(139,528) Adjustments to reconcile net increase (decrease) in net assets from operations to net cash provided by (used in) operating activities: Changes in operating assets and liabilities: Unrealized appreciation (depreciation) on investments 48,797 (48,797) - (Increase) decrease in interest receivable 7,197 (52,859) - Decrease in prepaid continuing service fee 45,650 - - Increase (decrease) in accrued management and incentive fees (11,318) 18,685 - Increase (decrease) in accounts payable (12,408) 14,887 - Increase in accrued expenses 1,467 9,883 7,076 Increase (decrease) in due to related parties 5,378 4,914 - Net cash (used in) operating activities (123,499) (293,044) (132,452) Cash Flows from Financing Activities Increase (decrease) in due to related parties (273,744) (16,998) 132,375 Proceeds from sale of units, net of sales commissions 265,009 3,598,361 - Partner redemptions (1,502,294) (27,433) - Net cash provided by (used in) financing activities (1,511,029) 3,553,930 132,375 Net increase (decrease) in cash and cash equivalents (1,634,528) 3,260,886 (77) Cash and cash equivalents at the beginning of the year 3,302,395 304 381 Cash and cash equivalents at the end of the year $1,667,867 $3,302,395 $304 End of period cash and cash equivalents consist of: Cash and cash equivalents at broker $489,774 $3,264,919 $- U.S. Treasury Bills 999,803 - - Cash 11,826 37,476 304 Money market fund 166,464 - - Total cash and cash equivalents $1,667,867 $3,302,395 $304
The accompanying notes are an integral part of the financial statements F-10 Providence Select Fund, Limited Partnership (A Delaware Limited Partnership) Notes to the Financial Statements 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. Consequently, as of December 31, 2008 and 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 December 31, December 31, 2008 2007 2008 2007 Net Asset Value for financial reporting purposes $1,629,315 $3,060,584 $742.31 $828.67 Adjustment for initial offering costs 79,876 79,876 36.39 21.63 Adjustment for other offering costs and organizational expenses 80,000 194,464 36.45 52.65 Net Asset Value for all other purposes $1,789,191 $3,334,924 $815.15 $902.94 Number of units 2,194.92 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-11 Providence Select Fund, Limited Partnership (A Delaware Limited Partnership) Notes to the Financial Statements 2. Significant Accounting Polices, Continued Revenue Recognition - Commodity futures contracts are recorded on the trade date and are reflected in the balance sheet at the difference between the original contract amount and the market value on the last business day of the reporting period. Market value of commodity futures contracts is based upon exchange or other applicable market best available closing quotations. Interest income is recognized when it is earned. Use of Accounting Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 prepares calendar year U.S. and applicable state tax information tax returns and reports to the partners their allocable shares of the Fund's income, expenses and trading gains or losses. No provision for income taxes has been made in the accompanying financial statements as each partner is individually responsible for reporting income or loss based on such partner's respective share of the Fund's income and expenses as reported for income tax purposes. Management has continued to evaluate the application of Financial Accounting Standards Board (FASB) Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109 (FIN 48)," to the Fund and has determined that FIN 48 does not have a material impact on the Fund's financial statements. The Fund files federal and state tax returns. The 2005 through 2008 tax years generally remain subject to examination for the U.S. federal and most state tax authorities. 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 December 31, 2008, 2007 and 2006. 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 Fund 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 The Fund adopted the provisions of Statement of Financial Accounting Statement No. 157 - "Fair Value Measurement", or SFAS 157, as of January 1, 2008. SFAS 157 provides guidance for determining fair value and requires increased disclosure regarding the inputs to valuation techniques used to measure fair value. SFAS 157 clarifies the definition of fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. SFAS No. 157 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access at the measurement date. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for an asset or liability, including the Fund's own assumptions used in determining the fair value of investments. Unobservable inputs shall be used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. As of and for the year ended December 31, 2008, the Fund did not have any Level 3 assets or liabilities. The following table sets forth by level within the fair value hierarchy the Fund's investments accounted for at fair value on a reoccurring basis as of December 31, 2008. Description Level 1 Level 2 Level 3 Total U.S. Treasury Bills $- $999,803 $- $999,803 Total $- $999,803 $- $999,803 In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities ("SFAS 161"). SFAS 161 is intended to improve financial reporting about derivate instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand how those instruments and activities are accounted for; how and why they are used; and their effects on a Fund's financial position, financial performance, and cash flows. SFAS 161 is effective for financial statement issued for fiscal years beginning after November 15, 2008, and interim periods within those fiscal years. The Fund is currently evaluating the impact that the adoption of SFAS 161 will have on its financial statement disclosures. F-12 Providence Select Fund, Limited Partnership (A Delaware Limited Partnership) Notes to the Financial Statements 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-13 Providence Select Fund, Limited Partnership (A Delaware Limited Partnership) Notes to the Financial Statements 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-14 Providence Select Fund, Limited Partnership (A Delaware Limited Partnership) Notes to the Financial Statements 6. Related Party Transactions, Continued """Due to related parties"" at December 31, 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 December 30, 2008 and December 31, 2007 were $10,292 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. There were no incentive fees due at December 31, 2008 and 2007. Continuing service fee: The Fund pays Futures Investment Company a continuing service fee. Continuing service fees prepaid to Futures Investment Company amounted to $0 and $45,650 at December 31, 2008 and December 31, 2007, respectively. Commissions and due to related parties included in accrued expenses: 2008 2007 Futures Investment Company $- $86,017 Ashley Capital Management, Inc. - 62,355 Michael Pacult - 46,650 White Oak Financial Services, Inc. 10,292 83,636 Due to related parties $10,292 $278,658 Commissions and fees included in expenses: 2008 2007 2006 White Oak Financial Services, Inc. - commissions $172,538 $98,761 $- White Oak Financial Services, Inc. - incentive fee $3,761 $2,509 $- Futures Investment Company -continuing service fee $98,868 $60,177 $- 7. Partnership Unit Transactions As of December 30, 2008, 2007 and 2006 partnership units were $742.31, $828.67, and $(131,759) per unit respectively for financial reporting purposes. Transactions in partnership units were as follows: Units Amount 2008 2007 2006 2008 2007 2006 Limited Partner Units Subscriptions 299.84 3,705.20 - $261,009 $3,566,311 $- Redemptions (1,802.66) (47.17) - (1,488,015) (41,711) - Net (loss) for the year ended - - - (198,136) (229,343) (69,764) Transfers - (1.00) - - (1,000) - Offering costs - - - - (131,216) - Total (1,502.82) 3,657.03 - (1,425,142) 3,163,041 (69,764) General Partner Units Subscriptions 4.35 33.36 - 4,000 32,050 - Redemptions - - - - - - Net (loss) for the year ended - - - (10,126) (3,205) (69,764) Transfers - 1.00 - - 1,000 - Offering costs - - - - 131,216 - Total 4.35 34.36 - (6,126) 161,061 (69,764) Total Units Subscriptions 304.19 3,738.56 - 265,009 3,598,361 - Redemptions (1,802.66) (47.17) - (1,488,015) (41,711) (139,528) Net (loss) for the year ended - - - (208,262) (232,548) - Offering costs - - - - - - Total (1,498.47) 3,691.39 - $(1,431,268) $3,324,102 $(139,528)
F-15 Providence Select Fund, Limited Partnership (A Delaware Limited Partnership) Notes to the Financial Statements 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 December 31, 2008 and December 31, 2007 was $489,774. and $3,264,919, respectively, which equals approximately 30.1% 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 $0 on long positions at December 31, 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 December 31, 2008 were $0. The fund had no open commodity futures contracts at December 31, 2008. Open contracts generally mature within three months of December 31, 2008. The fund had no open commodity futures contracts at December 31, 2008. 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-16 Providence Select Fund, Limited Partnership (A Delaware Limited Partnership) Notes to the Financial Statements 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 assets and liabilities 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-17 Providence Select Fund, Limited Partnership (A Delaware Limited Partnership) Notes to the Financial Statements 12. Financial Highlights Years Ended December 31, 2008 2007 2006 2005 2004 Performance per Unit (2) Net unit value, beginning of year $828.67 $(131,759.00) $(61,995.00) $(6,454.00) $(424.00) Net realized and unrealized gain (loss) on commodity transactions 120.48 34.80 - - Investment and other income 10.77 32.89 - - Expenses (1) (217.61) (189.41) (69,764.00) (15,603.00) (6,030.00) Net (decrease) related to operations (86.36) (121.72) (69,764.00) (15,603.00) (6,030.00) Syndication costs transferred to capital - - - (39,938.00) - Reallocation of initial offering costs - 132,709.39 - - - Net increase (decrease) for the year (86.36) 132,587.67 (69,764.00) (55,541.00) (6,030.00) Net unit value at the end of the year $742.31 $828.67 $(131,759.00) $(61,995.00) $(6,454.00) Net assets, end of the year ($000) $1,629 $3,061 $(264) $(124) $(13) Total return (1) (10.42)% (12.81)% (78.79)% (57.08)% (175.34)% Number of units outstanding at the end of the year 2,194.92 3,693.39 2.00 2.00 2.00 Ratio to average net assets Investment and other income (2) 1.00 % 4.76 % 0.00 % 0.00 % 0.00 % Expenses (16.27)% (22.66)% (78.79)% (57.08)% (175.34)%
Total return is calculated based on the change in value of a unit during the year. An individual partner's total return and ratios may vary from the above total returns and ratios based on the timing of additions and redemptions. (1) Includes brokerage commissions (2) For the year ended December 31, 2006 and prior years, investment and other income and expenses are calculated using the average number of units outstanding during the year. Net realized and unrealized gains and losses on commodity transactions is a balancing amount necessary to reconcile the change in net unit value. For the years ended December 31, 2008 and 2007, 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. F-18 Providence Select Fund, Limited Partnership Affirmation of the Commodity Pool Operator ***************************************************************************** To the best of the knowledge and belief of the undersigned, the information contained in this report is accurate and complete. /s/ Michael Pacult March 31, 2009 Michael Pacult Date President, White Oak Financial Services, Inc. General Partner Providence Select Fund, Limited Partnership F-19 EX-31 2 psf10k1208ex31.txt Exhibit 31.01 CERTIFICATION I, Michael Pacult, do hereby certify that: 1. I have reviewed this annual report on Form 10-K 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: March 31, 2009 EX-32 3 psf10k1208ex32.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, LP, certify that (i) the Form 10-K for the year ended December 31, 2008 of Providence Select Fund, LP 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-K for the year ended December 31, 2008 fairly presents, in all material respects, the financial condition and results of operations of Providence Select Fund, LP. PROVIDENCE SELECT FUND, LP By: White Oak Financial Services, Inc., General Partner By: /s/ Michael Pacult Michael Pacult Chief Executive Officer & Chief Financial Officer Date: March 31, 2009 -----END PRIVACY-ENHANCED MESSAGE-----