As Filed with the Securities and Exchange Commission on November 22, 2006
Registration No. 333-119635
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM S-1
POST-EFFECTIVE AMENDMENT NO. 3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PROVIDENCE SELECT FUND, LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
6221 Delaware 20-0069251
(Primary SIC Number) (State of organization) (IRS EIN)
505 Brookfield Drive
Dover, Delaware 19901
Telephone: (800) 331-1532
(address and telephone number of registrant's principal executive offices)
Mr. Michael Pacult
c/o White Oak Financial Services, Inc.
5914 N. 300 West
Fremont, Indiana 46737
Telephone: (260) 833-1306; Facsimile (260) 833-4411
(Name, address and telephone number of agent for service of process)
Copies to:
William S. Scott, Esquire
The Scott Law Firm, P. A.
940 Northeast 79th Street, Suite A
Miami, FL 33138
Telephone (305) 754-3603; Facsimile (305) 754-2668
wscott@wscottlaw.com
If any of the securities being offered on the Form are to be offered on a
continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box: X
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. 0
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. 0
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. 0
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. 0
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
section 8(a) of the Securities Act of 1933 or until the registration
statement shall become effective on such date as the Commission acting
pursuant to said section 8(a), may determine.
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Part I - Disclosure Document
Providence Select Fund, Limited Partnership
Amended and Fully Restated Prospectus to Offer
$1,030,000 (1,030 Units) Minimum / $50,000,000 (50,000 Units)
Maximum in Units of Limited Partnership Interest
To Be Sold at $1,000 per Unit
The Offering
The Fund is a registered commodity pool that trades in the speculative trade
of U.S. and international futures, options on futures and forward contracts
in a diversified portfolio that includes currencies, interest rates, energy,
metals and commodities in both U.S. and global markets. An independent
trading advisor is employed with the primary objective of the Fund
appreciating over time. An investment in the Fund may provide valuable
diversification to a traditional portfolio of stocks and bonds.
Two general partners, White Oak Financial Services, Inc. and Mr. Michael
Pacult, have the authority to manage the Fund. We refer to them collectively
as "the general partner." The general partner is authorized by the
partnership agreement to use its sole judgment to employ, establish the terms
of employment, and terminate commodity trading advisors and futures
commission Merchant.
This is a best efforts offering. The underwriters are not required to sell
any specific number or dollar amount of securities but will use their best
efforts to sell the securities offered. The initial offering price has been
set by the general partner at $1,000 per partnership interest. After the
sale of the minimum, the limited partners will be admitted and limited
partnership interests will be sold on the first business day of each month at
a price that will be the month-end net asset value of the partnership divided
by the number of outstanding partnership interests. Net asset value will be
calculated and partnership interests will be issued on a monthly basis.
All subscriptions received will be placed in a depository account maintained
by the general partner at Star Financial Bank, Angola, IN until the minimum,
$1,030,000 is sold. Neither the general partner nor its affiliates may
purchase partnership interests to meet the minimum. If the minimum is not
sold by the termination of the offering, which will be one year from the date
of this prospectus or at the discretion of the general partner pursuant to
Section 13.3 of the Limited Partnership Agreement, whichever occurs first,
the general partner will return your original investment promptly after the
offering is terminated, together with any interest accrued and without
deduction for any fees, costs or other charges. The general partner has sole
and absolute discretion to terminate the offering for any reason, including
if the minimum is reached. However, that is unlikely because the general
partner would not recover the expenses advanced and it would suffer the loss
of the opportunity to manage the Fund.
You must purchase at least $25,000 in partnership interests, though the
general partner may reduce this to no less than $5,000. You have the
right to rescind your subscription for five business days after it is
submitted. There is a redemption fee of 3% during the first four months
of investment, 2% the second four months, 1% the third four months, and
none after the first twelve months. There will be no selling commission,
however, the selling agents will receive a continuing service fee for the
partnership interests sold by them of 3% of the initial investment the
first year. Each year thereafter, for so long as the investment remains
in the Fund, the Fund will pay this fee at 1/4% monthly based on the net
asset value of the investment. If you purchase $500,000 or more in
partnership interests, you will be issued additional partnership interests
from the registered offering to reduce the continuing service fee. See
Summary, Subscription Procedure.
The Risks - These securities are highly speculative. Before you decide
whether to invest, read this entire prospectus carefully and consider risks
below and the complete description of "Risks you face" beginning on page 6.
* The Fund business is the speculative trading in futures, commodity options
and unregulated currency contracts selected by registered commodity trading
advisors.
* This investment involves a high degree of risk. You should purchase
these securities only if you can afford a complete loss of your investment.
* The Fund is new and has no operating history.
* Trading profits and interest income must be generated to offset
substantial expenses. To receive your investment back during the first
twelve months, the Fund must generate a return of at most 10.69% should we
sell the minimum and 7.53% should we sell the maximum.
* Transfer of your partnership interests will be restricted and subject to
general partner approval. No public market for the partnership interests
exists and none is expected to develop.
* Although you will not receive distributions, you must pay annual Federal
and State income taxes on your share of any profits earned, if any.
* We must pay the following fees: Up to 2.5% annual management fee on our
net assets and 20% incentive fee on new net profits to the trader; 6% annual
fixed brokerage commissions and up to 3% incentive fee on new net profits to
the corporate general partner; 3% continuing service fee to the selling
agents; and, annual accounting and legal fees of $27,000.
* This partnership will not make distributions. To receive a return on your
investment, you must use our redemption procedure, which is subject to
restrictions.
* The general partner and affiliates have conflicts of interest with regard
to the management of this partnership including, but not limited to, the
individual general partner is the sole principal of the corporate general
partner and a 50% owner of the principal selling agent.
* Commodity trading is highly leveraged. A small change in the market price
of a contract can produce adverse consequences to the value of the Fund.
Investors are required to make representations and warranties relating to
their suitability in connection with this investment. Each investor is
encouraged to discuss the investment with his/her individual financial, legal
and tax adviser.
These securities have not been approved or disapproved by the Securities and
Exchange Commission, or any State securities commission or agency, nor have
any of them confirmed or passed upon the accuracy or adequacy of this
prospectus. Any representation to the contrary is a criminal offense. The
Fund is not a registered mutual fund under the Investment Company Act of
1940.
This prospectus is in two parts: a disclosure document and a statement of
additional information. These parts are bound together, and both contain
important information.
THE COMMODITY FUTURES TRADING COMMISSION HAS NOT PASSED UPON THE MERITS OF
PARTICIPATING IN THIS POOL NOR HAS THE COMMISSION PASSED ON THE ADEQUACY OR
ACCURACY OF THIS DISCLOSURE DOCUMENT.
FUTURES INVESTMENT COMPANY
5914 N. 300 West, Fremont, Indiana 46737 (260) 833-1306
Best Efforts Principal Selling Agent
November ___, 2006
Commodity Futures Trading Commission
Risk Disclosure Statement
YOU SHOULD CAREFULLY CONSIDER WHETHER YOUR FINANCIAL CONDITION PERMITS YOU TO
PARTICIPATE IN A COMMODITY POOL. IN SO DOING, YOU SHOULD BE AWARE THAT
FUTURES AND OPTIONS TRADING CAN QUICKLY LEAD TO LARGE LOSSES AS WELL AS
GAINS. SUCH TRADING LOSSES CAN SHARPLY REDUCE THE NET ASSET VALUE OF THE
POOL AND CONSEQUENTLY THE VALUE OF YOUR INTEREST IN THE POOL. IN ADDITION,
RESTRICTIONS ON REDEMPTIONS MAY AFFECT YOUR ABILITY TO WITHDRAW YOUR
PARTICIPATION IN THE POOL.
FURTHER, COMMODITY POOLS MAY BE SUBJECT TO SUBSTANTIAL CHARGES FOR
MANAGEMENT, AND ADVISORY AND BROKERAGE FEES. IT MAY BE NECESSARY FOR THOSE
POOLS THAT ARE SUBJECT TO THESE CHARGES TO MAKE SUBSTANTIAL TRADING PROFITS
TO AVOID DEPLETION OR EXHAUSTION OF THEIR ASSETS. THIS DISCLOSURE DOCUMENT
CONTAINS A COMPLETE DESCRIPTION OF EACH EXPENSE TO BE CHARGED THIS POOL AT
PAGE 6 AND A STATEMENT OF THE PERCENTAGE RETURN NECESSARY TO BREAK EVEN, THAT
IS, TO RECOVER THE AMOUNT OF YOUR INITIAL INVESTMENT, AT PAGE 13.
THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER FACTORS
NECESSARY TO EVALUATE YOUR PARTICIPATION IN THIS COMMODITY POOL. THEREFORE,
BEFORE YOU DECIDE TO PARTICIPATE IN THIS COMMODITY POOL, YOU SHOULD CAREFULLY
STUDY THIS DISCLOSURE DOCUMENT, INCLUDING A DESCRIPTION OF THE PRINCIPAL RISK
FACTORS OF THIS INVESTMENT, AT PAGE 6.
YOU SHOULD ALSO BE AWARE THAT THIS COMMODITY POOL MAY TRADE FOREIGN FUTURES
OR OPTIONS CONTRACTS. TRANSACTIONS ON MARKETS LOCATED OUTSIDE THE UNITED
STATES, INCLUDING MARKETS FORMALLY LINKED TO A UNITED STATES MARKET, MAY BE
SUBJECT TO REGULATIONS THAT OFFER DIFFERENT OR DIMINISHED PROTECTION TO THE
POOL AND ITS PARTICIPANTS. FURTHER, UNITED STATES REGULATORY AUTHORITIES MAY
BE UNABLE TO COMPEL THE ENFORCEMENT OF THE RULES OF REGULATORY AUTHORITIES OR
MARKETS IN NON-UNITED STATES JURISDICTIONS WHERE TRANSACTIONS FOR THE POOL
MAY BE EFFECTED.
- ------------------------------------
This prospectus does not include all of the information or exhibits in the
Fund's registration statement. You can read and copy the entire registration
statement at the public reference facilities maintained by the Securities and
Exchange Commission in Washington, D.C.
The Fund files monthly, quarterly and annual reports with the SEC. You can
read and copy these reports at the sec public reference facilities in
Washington, D.C. Please call the SEC at (800) SEC-0300 for further
information.
The Fund's filings are posted at the SEC website at http://www.sec.gov.
Suitability Standards
You should only invest a limited amount of the risk portion of your total
portfolio and should not invest more than you can afford to lose.
To invest the minimum $25,000 in this partnership, you must have either:
* a net worth of at least $150,000, exclusive of home, furnishings and
automobiles, or
* an annual gross income of at least $45,000 and a net worth, similarly
calculated of at least $45,000.
Residents of the following States must meet the specific requirements set
forth below. Net worth, is in all cases, to be calculated exclusive of home,
furnishings and automobiles. You may not invest more than 10% of your net
worth, exclusive of home, furnishings and automobiles, in the Fund. No
entity, including ERISA plans, should invest more than 10% of its liquid net
worth (readily marketable securities) in the Fund.
1. Alaska-Net worth of at least $225,000 or a net worth of at least $60,000
and annual taxable income of at least $60,000.
2. Arizona-Net worth of at least $225,000 or a net worth of at least $60,000
and annual taxable income of at least $60,000.
3. California-Net worth of at least $225,000 or a net worth of at least
$60,000 and annual taxable income of at least $60,000.
4. Iowa-Net worth of at least $500,000 or a net worth of at least $250,000
and an annual taxable income of at least $100,000.
5. Kansas-Net worth of at least $225,000 or a net worth of at least
$60,000 and an annual gross income of at least $60,000. It is recommended
by the Office of the Kansas Securities Commissioner that Kansas investors
not invest, in the aggregate, more than 10% of their liquid net worth in
this and similar direct participation investments. Liquid net worth is
defined as that portion of net worth which consists of cash, cash
equivalents and readily marketable securities.
6. Maine-Net worth of at least $200,000 or a net worth of at least $50,000
and an annual taxable income of at least $50,000.
7. Massachusetts-Net worth of at least $225,000 or a net worth of at least
$60,000 and annual taxable income of at least $60,000.
8. Michigan-Net worth of at least $225,000 or a net worth of at least
$60,000 and taxable income during the preceding year of at least $60,000.
9. Minnesota-Minnesota investors are deemed not to (i) represent that they
are legally competent to execute the Subscription Agreement and Power of
Attorney and (ii) make the representation in respect of risk tolerance in the
Subscription Agreement.
10. Mississippi-Net worth of at least $225,000 or a net worth of at least
$60,000 and annual taxable income of at least $60,000.
11. Missouri-Net worth of at least $225,000 or a net worth of at least
$60,000 and annual taxable income of at least $60,000.
12. Nebraska-Net worth of at least $225,000 or a net worth of at least
$60,000 and annual taxable income of at least $60,000.
13. New Hampshire-Net worth of at least $250,000 or a net worth of at least
$125,000 and an annual taxable income of at least $50,000.
14. North Carolina-Net worth of at least $225,000 or a net worth of at least
$60,000 and annual taxable income of at least $60,000.
15. Pennsylvania-Net worth of at least $175,000 or a net worth of at least
$100,000 and an annual income of at least $50,000. Because the minimum
closing amount is less than 1/10th of the maximum offering size, Pennsylvania
investors are cautioned to carefully evaluate the program's ability to fully
accomplish its stated objectives and to inquire as to the current dollar
volume of program subscriptions.
16. South Carolina-Net worth of at least $100,000 or a net income in the
preceding year some portion of which was subject to maximum federal and State
income tax.
17. South Dakota-Net worth of at least $225,000 or a net worth of at least
$60,000 and annual taxable income of at least $60,000.
18. Tennessee-Net worth of at least $250,000 or a net worth of at least
$65,000 and annual taxable income of at least $65,000.
19. Texas-Net worth of at least $225,000 or a net worth of at least $60,000
and annual taxable income of at least $60,000.
In the case of sales to fiduciary accounts, the net worth and income
standards may be met by the beneficiary, the fiduciary account, or, if the
donor or grantor is the fiduciary, by the donor or grantor who supplies the
funds to purchase the partnership interests.
The foregoing suitability standards are regulatory minimums only. Merely
because you meet such requirements does not necessarily mean that a high
risk, speculative and illiquid investment such as one in the Fund is, in
fact, suitable for you.
Table of Contents
Commodity Futures Trading Commission i
Risk Disclosure Statement i
Suitability Standards ii
Table of Contents iii
Summary of the Offering 1
The Fund 1
Description of Securities Offered for Sale 1
Plan For Sale of Partnership Interests 1
Subscription Procedure 1
Will You Benefit From An Investment In The Fund? 2
Business Objectives 2
Summary Risk Factors 2
Charges To The Fund 3
Use Of Proceeds 4
Selection Of Commodity Trading Advisors And Allocation Of Equity 4
Federal Income Tax Aspects 4
Redemptions 4
Diagram of Partnership Structure & Commissions Providence Select Fund,
Limited Partnership 5
The Risks You Face 6
The corporate general partner of this Fund has no experience. 6
We must pay substantial fees, charges and expenses regardless of
profitability which must be recovered before you can receive a return
on your investment. 6
You may not transfer your partnership interests and must rely on our
redemption procedures to receive your investment back. 6
Your right of redemption is limited. 6
The Fund depends upon the individual general partner, and his absence
could cause the Fund to cease operations. 6
General partner and commodity trading advisor will serve other businesses
and may not have adequate time to devote to the Fund. 6
There are conflicts of interest in the Fund structure that may limit our
profits. 7
You will be taxed on profits though you will not receive distributions. 7
You will have to pay taxes on profits in a current year which may be lost
in future years. 7
If the general partner selects new trading advisors, they may not be as
profitable as those replaced and the new advisors will not be responsible
for recouping any previous losses. 7
The general partner may change the commodity trading advisor and its
allocation of equity to or among advisors without prior notice to you. 7
You will not participate in management and may not contest the business
decisions of the general partner. 7
Commodity futures trading is speculative and highly risky. 7
As a result of leverage, small changes in the price of the Fund's
positions may result in major losses. 8
The general partner does not control the trading advisor or its methods
and may not be able to prevent large losses. 8
Illiquid markets could make it impossible for the Fund's advisors to
realize profits or limit losses. 8
Changes in trading equity may adversely affect Fund performance. 8
Failure of commodity broker or banks could result in loss of assets. 8
When trading in foreign exchanges, if the creditworthiness of the other
parties or the foreign currency is not maintained, we may lose the entire
value of our positions in those markets. 8
Option trading is highly risky and requires less equity to secure a
trade, thus providing greater potential for loss. 9
If the price of a contract changes dramatically, we may not be able to
exit the position without sustaining substantial loss due to government
imposed price limits or market illiquidity. 9
We may not be able to compete with others with greater resources which
could cause loss of Fund investment. 9
Resignation of the individual general partner may cause taxation as a
corporation. 9
The offering of units has not been subject to independent review. 9
You will not have the protections provided by the Investment Company
Act of 1940. 9
Investment in this Fund may subject you to the inconvenience of an IRS
audit. 9
General partner may settle IRS claim without your approval, whether or
not it is in your best interest. 9
You may be subject to back taxes and penalties. 10
The general partner may cause riskier trading by raising the incentive
fee to 27% without prior notice to you. 10
Conflicts Of Interest 10
General partner, the commodity trading advisor, the introducing broker,
the futures commission merchant, the selling agents and their
principals may preferentially trade for themselves and others. 10
Possible retention of voting control by the general partner may limit
your ability to control issues. 10
Partnership fees may be higher than they would be if they were
negotiated. 10
Individual general partner and spouse may receive continuing compensation
for partnership interests they sell. 11
General partner may select trading advisor to capitalize on incentive
fee 11
Commodity trading advisor may engage in high risk trading to generate
fees. 11
The individual general partner has sole control over the time he will
allocate to the management of the Fund. 11
No Resolution Of Conflicts Procedures 11
Interests Of Named Experts And Counsel 11
Management's Discussion And Analysis 11
The Fund 11
The General Partners 12
Experience 12
Authority 12
Analysis of Critical Accounting Policies 12
Partnership Books and Records 12
The Commodity Trading Advisor 12
Executive Compensation 12
The Advisory Contracts 13
Business Objective And Expenses 13
Explanatory Notes: 15
Securities Offered 16
Management's Discussion 16
Description of Intended Operations 16
Risk Control 16
Trading Risks 17
Fiduciary Responsibility and Remedies 17
Indemnification 18
Provisions of Limited Partnership Agreement 18
Provisions of Law 18
Provisions of Federal and State Securities Laws 18
Provisions of the Securities Act of 1933 and NASAA Guidelines 18
Provisions of the Clearing Agreement 18
Other Indemnification Provisions 18
Relationship With The Futures Commission Merchant, the Introducing
Broker And The General Partner 18
Fixed Commissions are Competitive 18
Relationship With The Commodity Trading Advisor 19
The Commodity Trading Advisor Will Trade For Other Accounts 19
Non-Disclosure Of The Commodity Trading Advisor's Methods 19
Charges To The Fund 19
Compensation Of General Partner 19
Compensation Of The Commodity Trading Advisor 19
Restrictions on Management Fees 20
Compensation of Futures Commission Merchant and Introducing Broker 20
Compensation of Selling Agents 20
Miscellaneous Fees To Futures Commission Merchant 21
Rights of General Partner 21
Other Expenses 21
Charges To The Fund 21
Potential Advantages 22
Equity Management 22
Investment Diversification 22
Limited Liability 22
Administrative Convenience 23
Access To The Commodity Trading Advisor 23
Use Of Proceeds 23
Determination Of The Offering Price 23
The General Partner 23
Identification 23
The Individual General Partner 24
No Ownership In Commodity Trading Advisor And Futures Commission
Merchant 24
Trading By The General Partner 24
No Prior Performance of this Fund and Regulatory Notice 24
Trading Management 24
No Affiliation With Commodity Trading Advisor 24
Rights of the General Partner With Respect To Commodity Trading Advisor
Selection And Allocation Of Equity 24
Performance of Other Partnerships Managed by the General Partner 25
Performance Record Of Bromwell Financial Fund, Limited Partnership 25
Performance Record Of Atlas Futures Fund, Limited Partnership 26
The Commodity Trading Advisor 27
NuWave Investment Corp 27
Business Background 27
Trading Program 27
Performance History 29
NuWave Investment Corp - Combined Portfolio 29
NuWave Investment Corp - Combined Portfolio (2x) 33
NuWave Investment Corp - Electronic Futures Portfolio 34
The Futures Commission Merchant 34
The Introducing Broker 35
Federal Income Tax Aspects 35
Scope Of Tax Presentation 35
No Legal Opinion As To Certain Material Tax Aspects 35
Partnership Tax Status 35
No IRS Ruling 36
Tax Opinion 36
Passive Loss And Unrelated Business Income Taxes Rules 37
Basis Loss Limitation 37
At-Risk Limitation 37
Income And Losses From Passive Activities 37
Allocation Of Profits And Losses 37
Taxation Of Futures And Forward Transactions 37
Section 988 Foreign Currency Transactions 38
Capital Gain And Loss Provisions 38
Business For Profit 38
Self-Employment Income And Tax 38
Alternative Minimum Tax 38
Interest Related To Tax Exempt Obligations 39
Not A Tax Shelter 39
Taxation Of Foreign Partners 39
Partnership Entity-Audit Provisions-Penalties 39
Employee Benefit, Retirement Plans And IRA's 40
The Limited Partnership Agreement 40
Formation Of The Fund 40
Units of Partnership Interests 40
Management Of Partnership Affairs 40
General Prohibitions 41
Additional Offerings 41
Partnership Accounting, Reports, And Distributions 41
Federal Tax Allocations 41
Transfer Of Partnership Interests Only With Consent Of The General
Partner 41
Termination Of The Fund 41
Meetings 42
Redemptions 42
Plan For Sale Of Partnership Interests 42
No NASD Limitation on Sales Commissions and Disclosure of Wholesaling
Fees 42
No Sales to Discretionary Accounts 42
The Selling Agent 42
Depository Account & Offering Price 43
Subscription Procedure 44
Subscription Amounts 44
Revocation and Acceptance of Subscription 44
Investor Suitability 44
Investor Warranties 44
Legal Matters 44
Litigation And Claims 44
Legal Opinion 44
Experts 45
Additional Information 45
Financial Statements
A. Providence Select Fund, Limited Partnership
Audited Financial Statements for the years ended 2005, 2004 and 2003
Interim Financial statements for the period ended September 30, 2006
B. White Oak Financial Services, Inc.
Audited Financial Statements for the years ended 2005, 2004 and 2003
[The balance of this page has been intentionally left blank.]
Summary of the Offering
This summary is to assist your understanding of the offer. To be certain you
have a full understanding of the risks of this investment, you must carefully
review the entire document, including the exhibits.
The Fund
The Providence Select Fund, LP allows you to participate in alternative or
non-traditional investments, namely the U.S. and international futures,
forward and swap markets. Specifically, the Fund trades in a portfolio that
includes financial futures and forwards, which are instruments designed to
hedge or speculate on changes in interest rates, currency exchange rates or
stock index values. It can also participate in agricultural commodities,
commodities in general, like metals and energy products, options on futures,
and the futures markets domestically and globally. The general partner uses
its discretion to employ advisors that look to manage risk and volatility.
The individual general partner has provided advisory services for individual
managed accounts for 25 years similar to the services he is providing for the
Fund, and he has developed and refined his approach to evaluating
professional advisors over that period. The performance data required to be
disclosed for the most recent five calendar years of the advisor selected is
included.
The Fund is a Delaware limited partnership organized on May 16, 2003, with
its main business office at 505 Brookfield Drive, Dover, DE 19901, (800)
331-1532, and keeps its financial records with Investor Services, 500 Park
Avenue #114, Lake Villa, IL 60046. The Fund is operated pursuant to a
limited partnership agreement which is included as Exhibit A and is managed
and controlled by White Oak Financial Services, Inc., a Delaware corporation,
and Michael Pacult, who are collectively referred to as the general partner.
The general partner employs independent professional trading managers called
commodity trading advisors to select trades for the Fund.
Description of Securities Offered for Sale
We are offering a minimum of $1,030,000 and a maximum of $50,000,000 in units
of limited partnership interest at a value per unit that is initially
established by the general partner at $1,000. The Fund's registration
statement was declared effective by the Securities and Exchange Commission
on September 12, 2005. After we commence business,
units will be offered at the month end net asset value per partnership
interest, which reflects trading profits, losses and expenses.
Plan For Sale of Partnership Interests
All sales will be made through broker dealers that will use their best
efforts, which means they will try, but not guarantee, to sell the
partnership interests.
All subscriptions accepted by the general partner will be placed in a
depository account maintained at Star Financial Bank, Angola, IN until the
minimum, $1,030,000 is sold. Neither the general partner nor its affiliates
may purchase partnership interests to meet the minimum. If the minimum is
sold, the depository account will be distributed into accounts in the name of
the Fund. Interest accrued on your subscription amount will be used to buy
additional partnership interests for you. If the minimum is not sold after
one year from the date of this prospectus, the general partner has directed
the bank to return your original investment, with any interest accrued and
without any deduction for any expenses.
This offering will continue until the maximum of $50,000,000 is sold. The
general partner may terminate this offering at any time.
Subscription Procedure
To purchase partnership interests, you must (i) complete and execute a
subscription agreement (Exhibit D), and deliver your executed subscription
documents and check for your investment, which should be made payable to
"Star Bank for the acct. of Providence," (ii) make representations and
warranties in the Subscription Agreement related to your suitability to
purchase the partnership interests, (iii) grant a Power of Attorney to the
general partner to take all actions necessary to admit you as a limited
partner to the Fund, (iv) and pay for at least $25,000 in partnership
interests, though the general partner may reduce this amount to not less than
$5,000. All units will be charged a 3% continuing service fee; provided,
however, investors who have purchased and not redeemed at least $1,000,000
in total partnership interests will be issued additional partnership
interests from the registered offering at the close of business each month
to reduce the annual continuing service fee by 1.5% of the dollar amount
of their holdings. Similarly, investors who have purchased and not redeemed
at least $500,000, but not more than $1,000,000, in total partnership
interests will be issued additional partnership interests at the close of
business each month to reduce the annual continuing service fee by 0.75%
of the dollar amount of their holdings.
The issuance of additional partnership interests will be made concurrently
with the monthly redemption of purchase of partnership interests pursuant to
the redemption procedures in this prospectus, the limited partnership
agreement and the subscription agreement. Fractional units of partnership
interest will be issued. For instance, if you purchase $2,000,000 in Fund
partnership interests, after the first month of investment, you will be
charged a continuing service fee of $5,000 and will be issued additional
partnership interests in the amount of $2,500, which is equal to a refund of
1.5 percentage points of the continuing service fee. Similarly, if you
purchased $600,000, you would be charged a continuing service fee of $1,500
after the first month and would be issued additional partnership interests
in the amount of $375, which is equal to a refund of 0.75 percentage points
of the continuing service fee.
And you must also have the minimum net worth and income provided in the State
of your residence, if it is listed, at the front of this prospectus or, one
of the following: (i) a minimum net worth, exclusive of your home, home
furnishings and automobiles, of $150,000, or (ii) a minimum annual gross
income of $45,000 and a minimum net worth of $45,000, both exclusive of your
home, home furnishings and automobiles.
These suitability standards are, in each case, regulatory minimums only, and
merely because you meet such standards do not mean that an investment in the
partnership interests is suitable for you. You may not invest more than 10%
of your net worth, exclusive of home, furnishings and automobiles, in the
Fund.
Will You Benefit From An Investment In The Fund?
You may benefit from an investment in the Fund if you want to diversify your
portfolio from traditional stock, bond and real estate investments and if you
have money available that you can afford to lose without adverse consequences
to your ability to support your family and your lifestyle. The purchase of
Fund partnership interests presents the opportunity to invest in futures
markets which are typically not represented in most investors' portfolios and
which, through long or short positions, offer the opportunity to profit from
rising or falling markets.
However, if you cannot afford the risk of losing your entire investment in
this partnership, you should not purchase these partnership interests.
The Fund has the potential to help diversify traditional securities
portfolios. A diverse portfolio consisting of assets that perform in an
unrelated manner, or non-correlated assets, has the potential to increase
overall return and reduce the volatility (a primary measure of risk) of a
portfolio. As a risk transfer activity, futures, forward and swap trading
has no inherent correlation with any other investment. However, non-
correlation will not provide any diversification advantages unless the non-
correlated assets are outperforming other portfolio assets, and there is no
guarantee that the Fund will outperform other sectors of an investor's
portfolio or not produce losses. The Fund's profitability also depends on
the success of the trading techniques. If the Fund is unprofitable, then it
will not increase the return on an investor's portfolio or achieve its
diversification objectives.
Investors in the Fund get the advantage of limited liability in highly
leveraged trading.
Business Objectives
We are organized to be a commodity pool to engage in the speculative trading
of futures and forward contracts, which are instruments designed to permit
producers to hedge or investors to speculate in various interest rates,
commodities, currencies, stock indices and other financial instruments. We
also trade options on futures and forward contracts, which give the purchaser
the right to acquire or sell a given contract at a specified time at a
specified price, and other financial instruments.
We cannot guarantee that we will meet our objectives or avoid substantial
losses.
Summary Risk Factors
Investment in the partnership interests is speculative, illiquid, and highly
risky. You should purchase partnership interests only if you can afford to
lose your entire investment. For a complete description of the risks of an
investment in the Fund, see the Risk Factors section beginning on page 6.
Our business is the speculative trading in futures and forward contracts, and
options on those contracts, selected by registered commodity trading
advisors. This trading is highly leveraged and takes place in very volatile
markets. You could lose all or a substantial amount of your investment in
the Fund.
The Fund has no operating history. Therefore, you have no performance
history of this Fund to serve as the basis for evaluating an investment in
the Fund. However, the track record of the commodity trading advisor
discloses the trading programs to be used for this Fund that give an
indication of future results; however, past results are no guarantee of
future results. In addition, the general partner may invest the offering
proceeds in a different program run by a separate advisor without prior
notification to the partners.
This partnership pays substantial fixed management fees and commission costs.
There is no guarantee that you will receive a return on your investment. To
return an initial investment at $1,000.00 per unit of partnership interest
after the first year of operation, we must earn a profit of 9.46%, or
$94.58 per initial $1,000 partnership interest should we sell the minimum
and 6.66% should we sell the maximum. To return an initial investment of
$1,000.00 during the first year of operation, we must earn a profit of at
most 10.69% should we sell the minimum and 7.53% should we sell the maximum.
Transfer of your partnership interests will be restricted and there are
limitations on your right of redemption to surrender your partnership
interests in return for their value. No public market for the partnership
interests exists and none is expected to develop.
This partnership will not make distributions. To receive a return on your
investment, you must use our redemption procedure. The redemption price will
be the net asset value of the partnership interests you hold at the end of
the month in which you provide the general partner with no less than five
business days prior written notice of your request to redeem.
Although you will not receive distributions, you must pay Federal and State
income taxes on your share of the profits, if any, earned by this partnership
for the year in which they are earned.
The general partner and affiliates have conflicts of interest with regard to
the management of this partnership. Specifically (i) the general partner's
fees and principal selling agent's continuing service fees have not been
negotiated at arm's length, (ii) the individual general partner is the sole
principal of the corporate general partner and an affiliate of the principal
selling agent, and (iii) the general partner, the commodity trading advisor
and their principals may preferentially trade for the own accounts or for
others.
Commodity trading is highly leveraged. A small change in the market price of
a contract can produce adverse consequences to the value of the Fund.
The general partner may at any time and it its sole discretion select and
allocate the Fund's assets to commodity trading advisors other than NuWave
Investment Corp., and investors in the partnership must rely on the
ability of the general partner to select such additional advisors.
The incentive nature of the compensation to be paid to the corporate general
partner and the commodity trading advisor may encourage riskier or more
speculative positions than would otherwise be assumed.
The Fund will not provide any benefit of diversification of your overall
portfolio unless it is profitable, and that may not occur.
Charges To The Fund
The Fund's charges are substantial and must be offset by trading gains and
interest income in order to avoid depletion of the Fund's assets.
Entity
Nature of Service
Amount of Compensation
The general partner
(White Oak Financial Services, Inc. and Mr. Michael Pacult)
Manages the Fund; negotiates and pays trading costs; assumes credit risk of
the partnership to the futures commission merchant
White Oak receives a fixed brokerage commission of 6% to clear trades and
retains the difference between the 6% and the round turn commissions paid
to the futures commission merchant. [$1,455+]
White Oak receives up to a 3% incentive fee computed quarterly on new net
profits the Fund has produced through trading.
The commodity trading advisor
(NuWave Investment Corp.)
Selects and enters trades for the Fund
White Oak receives a fixed brokerage commission of 6% to clear trades and
retains the difference between the 6% and the round turn commissions paid
to the futures commission merchant. [$1,455+]
20% quarterly incentive fee on new net profits it generates.
The futures commission merchant
(Man Financial Inc.)
Accepts trades from the advisor, clears the trades; hold the Fund's trading
equity
The corporate general partner pays the futures commission merchant the per
round turn commissions.
The introducing broker
(Mt. Kemble Futures)
Introduces the trades from the advisor to the futures commission merchant
May share the round turn brokerage commissions paid by the general
partner to Man Financial, Inc. for trades entered by unaffiliated
trading advisors.
The selling agents
(Futures Investment Company, a National Association of Securities Dealers
registered broker/dealer, principal selling agent and additional selling
agents it appoints)
Solicits and services investment in the Fund
White Oak receives a fixed brokerage commission of 6% to clear trades and
retains the difference between the 6% and the round turn commissions paid
to the futures commission merchant. [$1,455+]
Lawyers, Accountants and Others
Lawyers, Accountants and Others
(The Scott Law Firm, P. A. Jordan, Patke & Associates, Ltd., Shoup
Accounting Services, Inc., and Investor Services)
Initial and continuing legal, audit and accounting work
$90,996 in offering and organizational expenses up to $212,000 if the
maximum is sold, to be reimbursed by the Fund to the general partner after
the twelfth month of operation. [$106+] During operation, $27,000 in
annual audit and accounting, and legal costs ($22,000, and $5,000,
respectively). [$14+]
+ Each $25,000 investment pays this amount per year for this particular
charge. When the charge is not based on a percentage, but rather a fixed
amount, we have computed that expense upon an assumed net asset value of
$50,000,000.
Use Of Proceeds
After the twelfth month of operation following the commencement of business,
the Fund will reimburse the general partner for all offering and
organizational expenses incurred up to the end of the twelfth month of
operation after the commencement of business. Such expenses are currently
$90,996. Total offering costs if the maximum in face value of partnership
interests are sold are estimated to be $212,000. If the offering is
continued after the first twelve months of operation, additional offering
expenses will be paid by the Fund as incurred.
The general partner will initially apply all of the Fund assets toward
trading commodities and cash reserves.
Selection Of Commodity Trading Advisors And Allocation Of Equity
The general partner has selected NuWave Investment Corp. to serve as
commodity trading advisor of the Fund. The trading advisor is solely
responsible for making trades, and neither the general partner nor you will
have notice or the opportunity to approve the trades made. The advisor
trades its Diversified Program, which uses multiple non-correlated technical
strategies to trade financial and commodity futures contracts. The advisor
is expected to make short sales, with unlimited risk of loss, on behalf of
the Fund. The general partner, without prior notice to you, may terminate or
add trading advisors, or change the amount of equity allocated to any or all
advisors.
Federal Income Tax Aspects
In the opinion of The Scott Law Firm, P.A., counsel to the general partner,
the Fund is classified as a partnership and will not be considered a
publicly-traded partnership taxable as a corporation for Federal income tax
purposes. As such, whether or not the Fund has distributed any cash to the
limited partners, each limited partner must report his or her allocable share
of items of income, gain, loss and deduction of the Fund and is individually
liable for income tax on such share. The Fund invests in futures and other
commodity contracts, gain or loss on which will, depending on the contracts
traded, constitute a mixture of ordinary income or loss, and/or capital gain
or loss.
Trading losses of the Fund, which will generally constitute capital losses,
may only be available to offset a limited amount of interest income allocated
to the limited partners. Although the Fund treats the brokerage fees and
performance fees paid as ordinary expenses, such expenses may be subject to
restrictions on deductibility for federal income tax purposes or be treated
as non-deductible, syndication costs by the Internal Revenue Service.
Redemptions
You may request the general partner to accept the surrender of your
partnership interests for cash through our redemption procedures. The
general partner will try to comply with all redemption requests, but may not
be able to do so because of insufficient liquid assets or reserve for
contingent claims. There is a redemption fee of 3% during the first four
months of investment, 2% the second four months, 1% the third four months,
and none after the first twelve months. See, The Limited Partnership
Agreement, Redemptions.
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Diagram of Partnership Structure & Commissions
Providence Select Fund, Limited Partnership
Please see the previous table under Charges to the Fund for a description of
the parties and expenses.
The Risks You Face
Investment in the partnership interests is speculative, illiquid, and highly
risky. You should purchase partnership interests only if you can afford to
lose your entire investment. All of the following risks, except payment of
fixed expenses, are present without regard to the amount of partnership
interests sold.
The corporate general partner of this Fund has no experience.
The corporate general partner, has not previously operated a commodity pool
or engaged in any other business. Also, the Fund has not yet commenced
business and, therefore, has no performance history.
We must pay substantial fees, charges and expenses regardless of
profitability which must be recovered before you can receive a return on your
investment.
We must pay our fees, charges and expenses before you will realize a profit.
They are (i) fixed brokerage commissions to cover the cost of trades of 6%
annually of the equity assigned to the trading advisor to trade (ii) a 3%
annual continuing service fee, paid as described in Charges to the Partnership,
to the selling agents, (iii) a management fee to the commodity trading
advisor of up to 2.5% per year, (iv) yearly expenses estimated at $27,000, of
which $22,000 is paid for accounting and audit and $5,000 is paid for legal
services, (v) variable operating expenses such as telephone, postage, and
office supplies, and (vi) extra-ordinary expenses such as claims and defense
of claims from brokers, partners, and other parties.
The incentive fees of up to 3% to the general partner and to the commodity
trading advisor are accrued monthly but paid on a quarterly basis. The Fund
may increase the combined incentive fees paid to the trading advisor and general
partner to 27% if the management fee is eliminated. Conversely, the Fund may
increase the management fees to the commodity trading advisor and general
partner to a total of 6% if the total incentive fees are decreased to 15%.
The Fund may be subject to substantial incentive fees in the initial quarters
of operation of the Fund that will not be refunded, even if we experience
subsequent losses that produce a net loss for that year. See Charges to the
Fund.
You may not transfer your partnership interests and must rely on our
redemption procedures to receive your investment back.
You can assign or transfer your partnership interests with the consent of the
general partner, which will be granted only in limited circumstances. See
The Limited Partnership Agreement, Transfer Of Units Only With Consent Of The
General Partner and the Limited Partnership Agreement (Exhibit A).
Therefore, you must rely on our redemption procedures to receive your initial
investment adjusted to reflect profits, payment of expenses, and losses. See
The Limited Partnership Agreement, Redemptions.
Your right of redemption is limited.
Our redemption procedures provide (i) the redemption amount will be the net
asset value of the partnership interests as calculated at the end of the
month in which the redemption request is received, (ii) you must submit your
redemption request in a form acceptable to the general partner no less than
five business days prior to the withdrawal date (iii) it must be approved by
the general partner, and (iv) it may not be granted if we do not have enough
liquid assets.
Subject to the foregoing limitations, the general partner intends to grant
all redemption requests received no less than five business days prior to the
last business day of the month and will pay those requests within twenty days
after the last business day of the month in which the redemption request was
received. Intervening circumstances may prevent the redemption of
partnership interests before they are significantly devalued. See The
Limited Partnership Agreement, Exhibit A, Redemptions.
Further, substantial redemption requests could adversely affect us by the
liquidation of positions too rapidly or on unfavorable terms which prevent us
from satisfaction of all redemption requests, or the reduction of our
available trading equity at a time when we have an opportunity to earn
substantial profit.
The Fund depends upon the individual general partner, and his absence could
cause the Fund to cease operations.
You will be relying entirely on the ability of the general partners to select
and monitor the commodity trading advisor selected for the Fund. The
individual general partner is also the sole director and officer of the
corporate general partner. If he becomes unable to perform his duties, the
Fund could be required to cease operations and trading until a replacement
for him is found.
General partner and commodity trading advisor will serve other businesses and
may not have adequate time to devote to the Fund.
The individual general partner currently manages other commodity pools and
both general partners expect to manage additional pools in the future. Such
other pools may also use this pool's general partner to negotiate better
terms for clearing and other services. The commodity trading advisor
currently manages other commodity accounts and may manage new accounts,
including personal accounts and other commodity pools. Although the
commodity trading advisor intends to use similar trading methods for all
accounts it manages, it may vary those methods slightly. Accordingly, there
is no guarantee that our trading results will be similar to or better than
the trading advisor's other accounts. Our business could be adversely
affected by the failure of either the individual general partner, who is also
the sole director of the corporate general partner, or the trading advisor to
devote sufficient time to the Fund affairs. See Risk Factors, Trading
Management, and The Commodity Trading Advisors.
There are conflicts of interest in the Fund structure that may limit our
profits.
Before investing in this partnership, you must consider the actual and
potential conflicts of interest that exist in our structure and operation.
Specifically, the individual general partner is also a principal of Futures
Investment Company, the principal selling agent. Therefore, the individual
general partner will probably not replace Futures Investment Company as the
principal selling agent because it may retain a portion of the 3% annual
continuing service fee on sales made by associated persons it employs.
In addition, because the principal selling agent is affiliated with the
general partner, no independent due diligence of this offering will be
conducted in regard to interests it sells. The general partner retains a
portion of the 6% fixed annual fee for brokerage commissions and is paid up to
a 3% incentive fee and, therefore, is unlikely to resign. See Risk Factors,
Conflicts of Interest, and the Limited Partnership Agreement (Exhibit A).
You will be taxed on profits though you will not receive distributions.
We do not intend to make cash distributions from profits. Regardless of
whether distributions are made, if we realize profits for a fiscal year, you
must report that income on your tax returns.
You will have to pay taxes on profits in a current year which may be lost in
future years.
We might sustain losses that offset our profits after the end of the year.
We do not intend to make distributions, so you must receive a redemption
pursuant to our redemption procedures to receive a return of your investment.
And, losses after any year-end could require you to pay taxes on any prior
year's income from principal. See Federal Income Tax Aspects and The Limited
Partnership Agreement (Exhibit A).
If the general partner selects new trading advisors, they may not be as
profitable as those replaced and the new advisors will not be responsible for
recouping any previous losses.
We rely upon a commodity trading advisor to generate profits pursuant to an
Advisory Contract and Power of Attorney (Exhibit F). A trading advisor may
terminate its relationship with the Fund at any time. If this happens, or if
the trading advisor becomes unable to serve us for any other reason, the
general partner would have to find one or more alternate trading advisors.
We cannot guarantee that any alternate trading advisors will trade as
profitably as the original trading advisor, or that they will be retained on
terms that are as favorable. Also, any new trading advisors will not be
obligated to recoup losses, if any, incurred by the prior trading advisor
before they are paid incentive fees on new net profits they generates.
The general partner may change the commodity trading advisor and its
allocation of equity to or among advisors without prior notice to you.
Without prior notice to you, the general partner may change the commodity
trading advisor and the amount of equity to trade at any time, for any
reason.
You will not participate in management and may not contest the business
decisions of the general partner.
You may not manage or conduct our business in any way. If you did, you would
be deemed a general partner, which is not allowed by the Limited Partnership
Agreement (Exhibit A). Accordingly, you are bound by the business decisions
of the general partner.
Broad investment guidelines.
We have no policies restricting the manner in which the general partner may
allocate the Fund's assets to trading advisors or the manner in which the
Fund's trading advisor may invest for the Fund, other than those described
in "Summary of the Offering -- Business Objectives", "Trading Management",
and "The Commodity Trading Advisor". The General Partner has broad discretion
in allocating the Fund's assets to trading advisors and the trading advisor
has sole discretion in investing the Fund's assets, including the particular
trading strategies and the amount of leverage to be used. The Fund's
assets may be less diversified than they would be if allocated differently
or managed by other advisors and/or may be invested in instruments that
differ significantly from instruments you might select if you were managing
your own trading.
Commodity futures trading is speculative and highly risky.
Commodity futures, forward, and option contracts have a high risk of loss and
are highly volatile. Specifically (i) price movements are influenced by such
unpredictable variables as: changes in supply and demand; weather;
agricultural trade, fiscal, monetary and exchange control programs and
policies of governments; national and international political and economic
events; and, changes in interest rates, governments, exchanges, and other
market authorities that intervene to influence prices, (ii) even if the
analysis of the fundamental conditions by a commodity trading advisor is
correct, prices still may not react as predicted, (iii) analysis by the use
of a computer program to measure price, historical price averages, momentum
and other technical factors deemed important by the commodity trading advisor
may also fail to predict price direction, (iv) it is possible for most of our
open positions to be unprofitable at the same time (v) price changes may
reach a limit upon which trading rules require a suspension of trading for a
specified period of time. It is possible for these limits to be reached in
the same direction for successive days. This may prevent us from exiting a
position, and when the market reopens, we could suffer a substantial loss on
the position, (vi) losses are not limited to the margin allocated to hold the
position and may exceed the total equity in our account, and (vii) short
positions, which have unlimited risk of loss, will be taken on our behalf by
the trading advisor.
As a result of leverage, small changes in the price of the Fund's positions
may result in major losses.
A small amount of money relative to the value of the contract traded, called
margin, must be deposited to place and hold a trade. The margin amount is
typically between 10% and 30% of the value of the contract traded. This
permits a large percentage gain or loss relative to the margin deposit. For
example, if at the time of purchase, 10% of the futures contract price is
deposited as margin, a 10% decrease in the position's value will cause a loss
of all the equity allocated to the trade, which could equal the entire value
of the account. The losses could be substantially more than the margin
deposited and the total value of the account. Also, the trading advisor is
solely responsible for its trades and will not be limited in the amount of
leverage it may employ.
The general partner does not control the trading advisor or its methods and
may not be able to prevent large losses.
The commodity trading advisor enters trades on our behalf directly with the
futures commission merchant. The general partner does not know the trades
before they are made, nor does it know the trading advisor's methods, the
number of contracts bought or sold, or the margin required. The trading
advisor will not notify the general partner of any modifications, additions
or deletions to its trading methods and money management principles. We may
suddenly suffer large losses before the general partner knows remedial action
must be taken.
Illiquid markets could make it impossible for the Fund's advisors to realize
profits or limit losses.
It is not always possible to execute a buy or sell order. Such lack of
liquidity can be caused by a lack of interest in the contract caused by
market conditions which produce no persons willing to buy or sell, or the
suspension of trading which may occur because the price limit for a contract
has been reached.
Most United States commodity exchanges limit price movement in a single
direction by rules referred to as price limits. Once these limits have been
reached, no trades may be executed at prices beyond the limits for a
specified amount of time, usually until the next trading day. However, given
sufficient price movement the following day, price limits may be imposed
again. Accordingly, price limits may be in effect for protracted time
periods. No trading may be made in the direction of the price movement while
the limit is in place. The frequency of the imposition of price limits or
the length of time they will be in effect cannot be predicted. This causes a
lack of liquidity and exposure to substantial losses. These losses could
exceed the total equity in our account.
Changes in trading equity may adversely affect Fund performance.
Commodity trading advisors often are unable to adjust to changes in the
amount of money they manage. This is because (i) the larger amount of equity
under management requires larger trades to be made, which may be more
difficult to execute (ii) there are legal limits called position limits upon
the number of positions that may be taken on a particular commodity, and
(iii) it may be more difficult to scale in positions, which is when a trading
advisor takes positions at different prices at different times and then
allocates those positions on a ratable basis when a change in its allocated
equity occurs. See Appendix I for the full definitions of position limits
and scale in positions.
The commodity trading advisor will not limit the total equity it accepts and
may suffer losses that cause a withdrawal of the equity it manages. A
commodity trading advisor's rate of return tends to decrease as the amount of
equity under management increases.
Failure of commodity broker or banks could result in loss of assets.
If the futures commission merchant or other entities with which our money is
on deposit becomes bankrupt, we might only recover some, if any, of the
equity in our account. The deposits in our bank accounts will be insured for
only $100,000 and payment on insured deposits may be delayed.
When trading in foreign exchanges, if the creditworthiness of the other
parties or the foreign currency is not maintained, we may lose the entire
value of our positions in those markets.
Trading commodities involves entering a contract, or option to contract, for
the delivery of goods or money at a future date. The value of the contract
or option depends directly upon the creditworthiness of the parties and the
value of the item traded. The general partner has the authority to grant
the right to the commodity trading advisor to trade commodities on United
States commodity exchanges, foreign commodity exchanges, the inter-bank
currency markets, the physical commodity cash markets and any other markets
the general partner, in its sole judgment, deems appropriate. The commodity
exchange contracts and options traded on United States exchanges are
guaranteed by the members' credit. Contracts and options upon foreign
commodity exchanges and the inter-bank currency markets are usually not
regulated by specific laws and are backed only by the parties to the
contracts. It is possible for a price movement or a devaluation of a
particular foreign currency to be large enough to destroy the
creditworthiness or value of the contracts and options issued by a particular
party or government, or all of the contracts and options of an entire market.
In either of those situations, we could lose the entire value of a position
with little recourse to regain any of its value.
Option trading is highly risky and requires less equity to secure a trade,
thus providing greater potential for loss.
We expect to trade options, both puts and calls. After a position is taken,
a liquid market may not exist for any particular commodity option or at any
particular time. In an illiquid market, we may not be able to buy or sell to
offset, or liquidate, the positions we have taken.
Option trading allows us to trade with less equity on deposit. Accordingly,
the risk of loss of the entire account is great.
If the price of a contract changes dramatically, we may not be able to exit
the position without sustaining substantial loss due to government imposed
price limits or market illiquidity.
The Commodity Futures Trading Commission and the United States commodity
exchanges have established limits referred to as Speculative Position Limits
or Position Limits. These are different from the price limits described
before. They are limits on the maximum net long or net short futures or
options positions which any person or group of persons may own, hold, or
control in futures contracts. The positions taken among all commodity
accounts owned, controlled or managed by a trading advisor and its principals
are combined for position limit purposes. Thus, a trading advisor may not be
able to hold sufficient positions for us to maximize the return on a
particular trade because it may be taking similar positions for others.
We may not be able to compete with others with greater resources which could
cause loss of Fund investment.
Commodity futures trading is highly competitive. We compete with others who
may have, greater experience more extensive information about developments
affecting the futures markets, more sophisticated means of analyzing and
interpreting the futures markets, and greater financial resources.
Those with greater experience and financial resources have a better chance at
trading profitably. For instance, we will not maintain a warehouse to take
delivery of commodities and will not have a large capital base to allow us to
hold positions through bad times.
Resignation of the individual general partner may cause taxation as a
corporation.
Any general partner wishing to voluntarily withdraw from the Fund must give
120 days prior written notice to the limited partners. When the sole general
partner of a partnership is a corporation, the tax rules require conditions
to be met to allow the Fund to be taxed as a partnership and not as a
corporation. To be taxed as a partnership requires that two or more of the
following tests be met, decentralized management, unlimited liability,
limited transferability of shares, and limited continuation of existence.
Our tax status has not been confirmed by an IRS ruling. No such ruling has
been or will be requested on our behalf. If we are taxed as a corporation
for Federal income tax purposes in any taxable year(s), our income or loss
would not be passed through to you, we would be taxed at corporate rates, all
or a portion of any distributions made to you would be taxed to you as
dividend income, and the amount of such distributions would not be deductible
by us in computing our taxable income. See Federal Income Tax Aspects.
The offering of units has not been subject to independent review.
Purchasing partnership interests does not create an Individual Retirement
Account, commonly called an IRA, and the creation and administration of an
IRA are solely your responsibility. The assets of a retirement account
should be carefully diversified and you should only allocate high risk
capital to this partnership. If you invest a significant portion of your
retirement plan or IRA assets in this partnership, you could be exposing that
portion to significant loss. The general partner will not advise you in any
manner on an investment in this partnership, including matters of
diversification, prudence and liquidity. Accordingly, you must rely upon the
experience of qualified investment counsel you select.
You will not have the protections provided by the Investment Company Act of
1940.
Stock investment companies and investment advisors must be registered under
the Investment Company Act of 1940, as amended. Because the business of the
Fund, the corporate general partner, the individual general partner and the
commodity trading advisor involves only the trade of commodities, none of
them is required, nor does any of them intend, to be registered under the
Investment Company Act of 1940 or any similar State law. Therefore, you are
not protected by any such legislation.
Investment in this Fund may subject you to the inconvenience of an IRS audit.
If our return is audited, the IRS may make adjustments to our reported items.
If an audit results in an adjustment, you may be, required to file amended
returns, subject to a separate IRS audit, and required to pay back taxes,
plus penalty and interest.
General partner may settle IRS claim without your approval, whether or not it
is in your best interest.
The corporate general partner is named tax matters partner. This grants it
the power to settle any IRS claim on your behalf if you hold 1% or less
interest in this partnership and do not timely object to the tax matters
partner's authority, after notice. Such settlement may not necessarily be in
your best interest. See Federal Income Tax Aspects.
You may be subject to back taxes and penalties.
The Fund tax counsel has delivered an opinion to the general partner that
this partnership, as presently operated by the general partner, will be taxed
as a partnership and not as a corporation. This opinion does not include the
tax treatment of expenses to prepare the prospectus and selling expenses
because they have to be allocated between expenses attendant to formation and
ordinary business expenses by the general partner. In addition, commodity
trading advisor fees are combined with employee business expenses and other
expenses of producing income. The aggregate of such expenses is deductible
only if such amount exceeds 2% of the taxpayer's adjusted gross income. The
general partner believes that our intended operations will qualify as a trade
or business.
The general partner may cause riskier trading by raising the incentive fee to
27% without prior notice to you.
The general partner has reserved the right to raise, without prior notice to
you, the total incentive fee between the trading advisor and the general
partner to a maximum of 27% provided the total management fees charged by the
commodity trading advisor and general partner are 0%. If this occurs, the
trading advisor may engage in riskier trades, with the encouragement of the
general partner, because their fees would be tied exclusively to the
performance of the trading program.
Conflicts Of Interest
There are present and potential future conflicts of interest in our structure
and operation you should consider before you purchase partnership interests.
The general partner will use this notice of conflicts as a defense against
any claim or other proceeding made against the corporate general partner, the
individual general partner, the commodity trading advisor, the futures
commission merchant, the principal selling agent or any principal or
affiliate, agent or employee of any of them.
General partner, the commodity trading advisor, the introducing broker, the
futures commission merchant, the selling agents and their principals may
preferentially trade for themselves and others.
Because the general partner, the commodity trading advisor, the introducing
broker, the futures commission merchant, the selling agents and their
principals and affiliates may trade for themselves and others, conflicts of
interest may exist or be created in the future. For example, if any of them
trade for their own account, you will not have access to their trading
records. They could take their positions prior to the entry of positions
they know will be placed for the partnership, although, they have stated they
will not do so.
Possible retention of voting control by the general partner may limit your
ability to control issues.
The general partner, its principal and its affiliates may purchase an
unlimited amount of partnership interests. These persons include the
individual general partner, who is also a principal of Futures Investment
Company, the principal selling agent. It is possible that they could
purchase enough partnership interests to retain voting control. They could
then vote, individually or as a block, to create a conflict with your best
interests. Such voting control may limit the limited partners' ability to
achieve a majority vote on such issues as, amendment of the Limited
Partnership Agreement, change in our basic investment policy, dissolution of
this partnership, or the sale or distribution of our assets. However,
neither general partner may vote, directly or indirectly, on the issue of
their removal.
Partnership fees may be higher than they would be if they were negotiated.
The fixed annual brokerage commission to the corporate general partner has
not been negotiated at arm's length. The general partner (i) accepts the
credit risk of the Fund to the futures commission merchant, (ii) maintains
the day to day contact with the selling agents and the commodity trading
advisor, (iii) reviews the daily positions and margin requirements of the
Fund, (iv) pays the futures commission merchant's charges, (v) pays the
continuing service fees to the selling agents for communicating with
investors and maintaining investment in the partnership.
The individual general partner is the principal of the corporate general
partner and a principal and 50% owner of Futures Investment Company, the
principal selling agent. He has a conflict of interest because he receives
compensation from the fixed brokerage commissions paid to the corporate
general partner and the continuing service fee paid to the principal selling
agent, Futures Investment Company. From the fixed brokerage commissions paid
to the corporate general partner, the general partner must pay
round turn brokerage commissions to the futures commission merchant, whichmay
in turn share them with the introducing
broker. The corporate general partner will keep any remaining portion of the
fixed brokerage commission. The continuing service fee is paid by the
partnership to the selling agents for payment, as they determine, to the
associated persons who sold partnership interests to the other partners and
you. The individual general partner will be paid a portion of the continuing
service fee paid to Futures Investment Company, the principal selling agent,
for interests it sells.
Individual general partner and spouse may receive continuing compensation
for partnership interests they sell.
The individual general partner and his spouse are both 50% owners and
registered representative of Futures Investment Company. As such, they
may receive a portion of the 3% annual continuing service fee for their
work to retain investment in the Fund through service of the partnership
interest they sell, if any.
Introducing Broker and Commodity Trading Advisor are Affiliated
Mt. Kemble Futures, the Introducing Broker, and NuWave Investment Corp.,
the sole commodity trading advisor, are affiliated. Mt. Kemble will not
receive any portion of the brokerage commissions on trades made by NuWave;
however, it may receive a portion of the brokerage commissions on trades
made by other trading advisors, should they be engaged to trade for the
partnership.
General partner may select trading advisor to capitalize on incentive fee
The corporate general partner receives an incentive fee on new net profits.
The corporate general partner's incentive fee will be increased after
$10,000,000 is allocated to the advisor to trade. It may select a trading
advisor and accept an inordinately high exposure to risk to attempt to
achieve profits to be paid the incentive fee.
Commodity trading advisor may engage in high risk trading to generate fees.
As a general rule, the greater the risk assumed, the greater the potential
for profit. Because the commodity trading advisor receives an incentive fee,
it might select trades that are too risky for us.
The individual general partner has sole control over the time he will
allocate to the management of the Fund.
The individual general partner is responsible for managing this partnership
along with three other public and one private commodity pool, and for
performing other investor relations services as a principal and associated
person of Futures Investment Company.
The individual general partner has also reserved the right to trade for his
own account and to form and manage other commodity pools and ventures in the
future. He is solely responsible for the allocation of his time to the
management of this partnership as well as the other projects he currently
manages and will manage in the future. He manages his time, in part, by the
delegation of many of the tasks, such as trade selection and preparation of
financial reports and offering documentation, to independent commodity
trading advisors, accountants, and attorneys. He believes he presently has
and will, in the future, have sufficient time to devote to the affairs of the
Fund.
No Resolution Of Conflicts Procedures
The general partner has not and will not establish formal procedures to
resolve potential conflicts of interest. These future potential conflicts
may adversely affect both you and us.
The previous risk factors and conflicts of interest are complete as of the
date of this prospectus, however, additional risks and conflicts may occur
which are not presently foreseen by the general partner. You may not
construe this prospectus as legal or tax advice. Before making an investment
in this partnership, you should read this entire prospectus, including the
Limited Partnership Agreement (Exhibit A) and the subscription agreement.
You should also consult with your personal legal, tax, and other professional
advisors. See Investor Suitability.
Interests Of Named Experts And Counsel
The general partner has employed The Scott Law Firm, P.A., a Florida
professional corporation, to prepare this prospectus, provide tax advice and
opine upon the legality of issuing the partnership interests. Neither the
law firm, its principal, any accountant, nor any other expert hired by the
Fund to give advice on the preparation of this offering document have been
hired on a contingent fee basis. Nor do any of them have any present or
future expectation of interest in the general partner, the selling agent, the
commodity trading advisor, the introducing broker or the futures commission
merchant.
Management's Discussion And Analysis
The Fund
Providence Select Fund, Limited Partnership is a Delaware limited partnership
organized on May 16, 2003, and maintains its main business office at 101 N.
Fairfield Drive, Dover, DE 19901, (800) 331-1532. It is qualified to be a
commodity pool to engage in the speculative trading of futures, commodity
options and forward contracts on currencies, interest rates, energy and
agriculture products, metals, and stock indices.
Our business objective is to let our invested capital appreciate while
controlling losses; however, there can be no assurance that we will meet this
objective.
The Fund is managed by its general partners. The Fund does not have officers
or employees, which is why there is no report of executive compensation in
this prospectus.
We operate pursuant to the terms of the limited partnership agreement
attached as Exhibit A, which grants full management control to the general
partner including, the right to employ independent trading managers called
commodity trading advisors. The agreement will terminate at 11:59 p.m. on May
16, 2024, or upon an event causing an earlier termination.
Except for the limited partnership agreement, the Fund may not enter any
contract with the general partner or commodity trading advisors that is
greater than one year in duration. However, all such contracts may provide
for automatic annual renewal and be terminable at anytime without penalty
upon sixty days, or less, written notice by the either party to the contract.
The General Partners
The corporate general partner is White Oak Financial Services, Inc., a
Delaware corporation incorporated on April 21, 2003. It was registered as a
commodity pool operator on May 14, 2003 and maintains its main business
office at 5914 N. 300 West, P.O. Box C, Fremont, IN 46737, (260) 833-1306.
The individual general partner is Michael Pacult, who was registered as a
commodity pool operator on July 28, 2003 and maintains his main business
office at 5914 N. 300 West, P.O. Box C, Fremont, IN 46737, (260) 833-1306.
The individual and corporate general partners and the Fund will comply with
all applicable registration and other requirements under the Commodity
Exchange Act, as amended.
Experience
The corporate general partner has not previously operated a commodity pool
or engaged in any other business. The individual general partner's
background and experience can be found on page 22. The past performance of
the other funds that the individual general partner manages can be found at
pages 23 and 24.
Authority
The individual general partner is the sole shareholder, director, principal
and officer of the corporate general partner. Although the signature of
either the individual or corporate general partner may bind this partnership,
the individual general partner is the sole decision maker for this
partnership. He also is the sole decision maker for three other publicly
traded commodity pools and one privately held commodity pool.
The general partner is authorized to take all actions necessary to manage the
affairs of the Fund. See Article II of the Limited Partnership Agreement,
attached as Exhibit A.
Analysis of Critical Accounting Policies
The Fund's critical accounting policies are set forth in the financial
statements in this prospectus prepared in accordance with U.S. generally
accepted accounting principles, which require the use of certain accounting
policies that affect the amounts reported in these financial statements,
including the following: The contracts the Fund trades are accounted for on a
trade-date basis and marked to market on a daily basis. The difference
between their cost and market value is recorded as "change in unrealized
profit/loss" for open (unrealized) contracts, and recorded as "realized
profit/loss" when open positions are closed out; the sum of these amounts
constitutes the Fund's trading revenues. Earned interest income revenue, as
well as management fee, incentive fee, and brokerage fee expenses of the
partnerships are recorded on an accrual basis. The general partner believes
that all relevant accounting assumptions and policies have been considered.
Partnership Books and Records
Our books and records will be maintained for six years at the office of
Investor Services, 500 Park Avenue #114, Lake Villa, IL 60046. Shoup
Accounting Services, Inc., Certified Public Accountants, 306 S. West
Street, Angola, IN 46703, is an accounting expert who will maintain a
duplicate set of our books and records and handles the day to day fund
accounting. You may access our books and records related to the partnership
and your account by visiting the Investor Services office at a mutually
convenient time and you may have copies made at a reasonable charge per
page. The general partner serves as tax partner for the Fund. The CPA
firm of Jordan, Patke & Associates, Ltd., 300 Village Green Drive Ste 210,
Lincolnshire, IL 60069 conducts our annual audit and the annual audit of
the corporate general partner, and prepares the IRS Form K-1s sent to
investors and our tax returns.
The Commodity Trading Advisor
To conduct trading on our behalf, the general partner has initially selected
an independent commodity trading advisor, NuWave Investment Corp.
Without prior notice to you, the general partner has sole discretion to
employ additional trading advisors, terminate any trading advisor, and change
the amount of equity any advisor may trade. However, the general partner
will give you notice of any change in trading advisors within seven days of
such change. Such notice will include a description of your right to
redemption.
No change in trading advisors will constitute a material change to the
limited partnership agreement or the structure of our operation. All trading
advisors employed to trade for the Fund will be registered with the Commodity
Futures Trading Commission and will have at least three years of experience
as a trading advisor.
Executive Compensation
The corporate general partner, as an independent contractor, is compensated
to manage the pool. It receives a portion of the 6% fixed brokerage
commissions and up to a 3% incentive fee. Also, as a 50% owner of Futures
Investment Company, Mr. Pacult, the individual general partner, may receive
a portion of the 3% annual continuing service fee paid to Futures Investment
Company for sales made by associated persons it employs.
The Advisory Contracts
The general partner expects to assign 97% of our assets to trading by the
advisor. The authority granted to the trading advisor is expressed in the
advisory contract and power of attorney granted by the Fund to the trading
advisor, and the futures commission merchant. See Exhibit F.
This agreement provides the trading advisor with a revocable power of
attorney, which gives it sole authority to determine, the markets to be
traded, the location of those markets, the size of the position to be taken
in each market, and the timing of entry and exit in a market.
The advisory contract and power of attorney may be terminated, at any time,
upon notice by either the Fund or the trading advisor to the other and to the
futures commission merchant.
Business Objective And Expenses
Our objective is to achieve the potentially high rates of return that are
possible through the speculative trading of futures, commodity options and
forward contracts. We do not expect to engage in any other business.
The general partner organized this partnership to be a commodity pool, as
that term is defined in the Commodity Exchange Act. It employs independent
commodity trading advisors to trade for us.
The general partner intends to allocate 97% of our net assets to the selected
trading advisor to conduct this trading. The trading advisor typically
allocates between 10% and 30% of the trading equity assigned to it as a
deposit, or margin, to secure the trading positions it selects. The right to
increase the amount of equity utilized for margin is solely at the discretion
of the commodity trading advisor and under certain market conditions, this
range could be substantially higher.
Although we do not expect to make distributions, you will nevertheless be
required to pay yearly Federal, State and local taxes upon income, if any,
earned by this partnership.
There can be no assurance that we will achieve our business objectives, be
able to pay the substantial commissions, fees and other costs to do business,
or avoid substantial trading losses. See Charges to the Fund.
Below is a chart explaining the expenses we expect to incur during the first
twelve months of trading. All interest income is paid to the Fund. The
chart below assumes the value of each unit of partnership interest will
remain constant at $1,000 per partnership interest during the first twelve
months.
<Table>
<Caption>
Expenses Per Unit of Partnership Interest
For The Next 12-Month Period Of Operations
Based Upon Minimum Based Upon Maximum Based Upon Maximum
Units Sold Units Sold Units Sold During
2nd 12 Months of
Operations
Units (1) 1,030 Units 50,000 Units 50,000 Units
($1,030,000) ($50,000,000) ($50,000,000)
Selling Price per Unit (2) $1,000.00 $1,000.00 $1,000
Offering Expenses (3) 0.00 0.00 3.73
Operating Expenses (4) 26.21 0.54 0.54
Continuing Compensation (5) 30.00 30.00 30.00
Trading Advisor's Management Fee (6) 24.25 24.25 24.25
Trading Advisor's and General Partner's
Incentive Fee (7) 2.27 0.00 0.00
Brokerage Commissions and Trading Fees (8) 58.20 58.20 58.20
Interest Income (9) (46.35) (46.35) (46.35)
Trading Income Required to Redeem one
Unit at Initial Value at end of
period (10) $ 94.58 $ 66.64 $ 70.37
Income as a % of Selling Price Per Unit
with 0% redemption fee (11) 9.46% 6.66% 7.04%
Income as a % of Selling Price Per Unit
with 3% redemption fee (12) 6.84% 5.79% N/A
Income as a % of Selling Price Per Unit
with 2% redemption fee (13) 8.77% 6.66% N/A
Income as a % of Selling Price Per Unit
with 1% redemption fee (14) 10.69% 7.53% N/A
</Table>
Explanatory Notes:
(1) Your investment will be held in a depository account and not used for
trading until a minimum of 1,030 units of partnership interests for a total
equity to the partnership of $1,030,000 are sold. The partnership has
currently registered on a Form S-1, filed with the U.S. Securities and
Exchange Commission, a maximum of $50,000,000 of partnership interests to be
sold. The general partner may register additional partnership interests,
from time to time.
(2) You will purchase partnership interests at the partnership's initial unit
value established by the general partner of $1,000.
(3) All offering and organizational expenses incurred until the end of the
first twelve months of operation after the commencement of business will be
paid by the general partner and reimbursed by the Fund after the twelfth
month of operation after the commencement of business. Such expenses are
estimated to be $90,996 for the sale of the minimum and $212,000 for the
maximum.
(4) The partnership will incur yearly operating expenses commencing after
the commencement of business of approximately $22,000 for audit and
accounting and $5,000 for legal.
(5) The Fund pays to the principal selling agent a continuing service fee
for the partnership interests sold by them of 3% of the initial investment
the first year. Each year thereafter, for so long as the investment remains
in the Fund, the Fund will pay this fee at 1/4% monthly based on the net
asset value of the investment.
(6) The commodity trading advisor is paid a monthly management fee based
on the rate of trading assigned by NuWave and approved by the general
partner of up to 1/12 of 2.5% of the trading equity allocated to it on
deposit in the accounts with the futures commission merchant, calculated as
of the close of business of the last trading day for the then current
month. For purposes of this calculation, we have assumed that 97% of our
assets will be allocated to trading and subject to the fee, with a 3% cash
reserve not subject to the fee.
(7) The trading advisor receives a 20% quarterly incentive fee on new net
profits, which means the amount of income earned from trading, less losses,
brokerage commissions and fees, and excluding interest income. The
corporate general partner receives up to a 3% incentive fee, calculated the
same as the trading advisor; see note (6) above.
(8) Brokerage commissions and trading fees are fixed by the general partner
at 1/2% monthly, 6% annually, of our assets on deposit with the futures
commission merchant. For purposes of this calculation, we assume that 97%
of our assets will be allocated to trading, with a 3% reserve retained by
the Fund.
(9) For purposes of this calculation, we have assumed that 90% of the
partnership equity will earn interest at the current cash market interest
rate assumption of 5.15% annually.
(10) This computation assumes there will be no claims or other extra-ordinary
expenses.
(11) There is a redemption fee of 3% during the first four months of
investment, 2% the second four months and 1% the third four months. There
is no redemption fee after the first twelve months of investment, which is
why there is no redemption fee included in this calculation. You will be
permitted to withdraw your subscriptions for five business days after
submission to the general partner for acceptance.
(12) Assumes redemption request is made during the first four months of
investment, incurring a 3% redemption fee. Charges and interest have been
calculated as of the last day of the first four months.
(13) Assumes redemption request is made during the second four months of
investment, incurring a 2% redemption fee. Charges and interest have been
calculated as of the last day of the first eight months.
(14) Assumes redemption request is made during the third four months of
investment, incurring a 1% redemption fee. Charges and interest have been
calculated as of the last day of the first twelve months.
The break-even numbers in the above tables are our best estimates only.
Securities Offered
We, Providence Select Fund, Limited Partnership will offer and sell limited
partnership interests in this partnership at the initial price of $1,000.
After the sale of the minimum and commencement of business, the partnership
interests will be sold at the month end net asset value per partnership
interest of the Fund. See Determination Of The Offering Price.
You, the Investor, will have pro rata rights to profit and losses which will
vary with your investment amount and the right to vote on partnership matters
such as the replacement of the general partner. See The Limited Partnership
agreement attached as Exhibit A. You will not be responsible for our debts
in excess of your investment amount, unless (i) we become insolvent and you
receive distributions which represent a return on your investment, in which,
under certain circumstances, you would have to return to us to pay our debts,
or (ii) you acquire any interest in the corporate general partner, or (iii)
you manage this partnership. See Plan For Sale of Partnership Interests and
Subscription Requirements.
Your subscription agreement and check (i) must be approved by the general
partner before you will become a partner and will be either rejected within
five business days of receipt or accepted at the commencement of business or
on the close of business on the last day of the month in which your
subscription was received, (ii) becomes irrevocable and may not be withdrawn
after five business days after submission; unless, a longer statutory
withdrawal period applies to you, and (iii) will be deposited and held until
you are admitted into the Fund in a segregated depository account.
There cannot be any assurance that the minimum partnership interests will be
sold. The general partner is authorized, in its sole discretion, to
terminate this or any future offering of partnership interests.
Management's Discussion
This is the initial offering of our partnership interests. We may conduct
future offerings after the close of this offering, raise money only through
offerings, such as this one, and do not intend to borrow any money. We must
pay expenses to qualify and sell our partnership interests, such as fees for
the preparation of this prospectus, sales literature, and web site promotion,
as well as other expenses. We allocate all our net assets to trading and
other investments, except those assets used to pay operating expenses and
reserves for redemptions and contingencies. All our business is conducted
through the general partner.
Description of Intended Operations
The general partner has selected Man Financial Inc. as the unaffiliated
futures commission merchant and Mt. Kemble Futures to serve as an introducing
broker to Man. When the Fund sells the minimum and commences business, the
general partner will deposit its funds to the futures commission merchant to
hold as security for the trades selected by the commodity trading advisor.
The futures commission merchant has been directed to send the general
partner, before the open of business each day, a computer or fax report that
describes the positions held, the margin allocated, and the profit or loss
on the positions from the date the positions were taken.
Risk Control
The general partner reviews the daily transmissions provided by the futures
commission merchant and makes appropriate adjustments to the allocation of
trading equity. Based upon the amount of available trading equity, the
trading advisor has sole discretion to make specific trades, determine the
number of positions taken, and decide the timing of entry and departure from
each trade made.
The general partner uses its best efforts to monitor the daily value of the
Fund, which it provisionally calculates from the daily information provided by
the futures commission merchant, and will make such information available to
limited partners upon request. However, the accountant calculates the
partnership's net asset value per investor unit after the close of business on
the last day of each month. If the net asset value per unit falls to less
than 50% of the greater of the original $1000 selling price less commissions
and other charges, or such higher value earned through trading, then the general
partner will (i) immediately suspend all trading, (ii) provide you with
immediate notice of the reduction in net unit value, and (iii) give you the
opportunity, for 15 days after the date of such notice, to redeem your
partnership interests according to the provisions of Article IX, Sections 9.5
and 9.6 of the Limited Partnership Agreement. No trading shall commence
until after the lapse of such fifteen-day period. See Exhibit A attached.
Trading Risks
Most United States commodity exchanges limit daily fluctuations in commodity
futures contracts prices by regulations referred to as daily price
fluctuation limits or daily limits. 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
the daily limit for several consecutive days with little or no trading.
Such an occurrence could prevent us from promptly liquidating unfavorable
positions and subject us to substantial losses. These losses could exceed
the margin initially required to make the trade. In addition, even if
commodity futures prices have not moved the daily limit, we may not be able
to execute futures trades at favorable prices. This may be caused by light
trading in such contracts or by a sudden and substantial price move in a
futures or forward contract. These limitations on liquidity are inherent in
our proposed commodity futures trading operations. Otherwise, our assets are
expected to be highly liquid.
Except for payment of offering and other expenses, the general partner is
unaware of any anticipated known demands, commitments or required capital
expenditures, material trends, favorable or unfavorable, which will affect
our capital resources, or trends or uncertainties that will have a material
effect on operations.
Each United States commodity exchange, with the approval of the Commodity
Futures Trading Commission and the futures commission merchant, establishes
minimum margin requirements for each traded contract. The futures commission
merchant will require the margin assigned to each account to be on deposit
before a trade will be accepted. The futures commission merchant may
increase the margin requirements above these minimums for any or all
contracts for its customers. Because we generally use a small percentage of
assets for margin, we o not believe that any increase in margin requirements
will materially affect our proposed operations. However, it is possible for
an increase in margins applicable to the trades the advisor selects for us to
force us to liquidate positions because we cannot meet the additional margin
requirements.
Management cannot predict whether the value of our partnership interests will
increase or decrease. Inflation is not projected to be a significant factor
in our operations, except to the extent inflation influences futures prices.
Fiduciary Responsibility and Remedies
You have legal rights under Delaware partnership and applicable Federal and
State securities laws. In all dealings affecting this partnership, the
general partner has a fiduciary responsibility to you and all other partners
to exercise good faith and fairness. No contract shall permit the general
partner to contract away its fiduciary obligation under common law. The
limited partnership agreement conforms with the Uniform Limited Partnership
Act for the State of Delaware in regard to the definition of the fiduciary
duties of the general partner.
If the general partner acts in good faith and exercises its best judgment, it
will not be liable merely because we lost money or otherwise did not meet our
business objectives. There are substantial and inherent conflicts of interest
in the Fund's structure which are disclosed in the prospectus. The general
partner intends to raise the disclosures made in this prospectus and the
representations you make in the subscription agreement as a defense in any
proceeding brought which seeks relief based on the existence of such conflicts
of interest. See Conflicts of Interest.
In the event that you form the belief that the general partner has violated
its fiduciary duty, you may seek relief individually or on behalf of the
partnership under applicable laws, including the partnership laws of Delaware
and the Federal commodity laws, to recover damages from or require an
accounting by the general partner. You also have the right, subject to
applicable contractual, procedural and jurisdictional requirements, to bring
partnership class actions in Federal court to enforce your rights and the
rights of the other limited partners under the Federal and State securities
laws and the rules and regulations under those laws. Losses suffered by you
as a result of a breach of the securities laws related to sale of your
investment to you may be recovered from the general partner should the breach
of those laws been caused by the general partner. The responsibility of a
general partner to you and other partners is a changing area of the law. If
you have questions concerning the responsibilities of the general partner,
you should consult your legal counsel. The performance of the general
partner for the operation of the partnership and its fiduciary duty are
governed by the limited partnership agreement attached as Exhibit A.
Indemnification
Provisions of Limited Partnership Agreement
The limited partnership agreement protects the general partner from being
responsible or accountable for any act or omission, for which you, other
limited partners or the Fund itself may claim it is liable, provided that the
general partner determined such act or omission was within the scope of its
authority and in the best interest of this partnership, and such action or
failure to act does not constitute misconduct or a breach of the Federal or
State securities laws related to the sale of partnership interests.
Specifically, if the general partner has acted within the scope of its
authority and is being assessed a demand, claim or lawsuit by a partner or
other entity, the Fund will defend, indemnify and hold the general partner
harmless from and against any loss, liability, damage, cost or expense,
including attorneys' and accountants' fees and expenses incurred in defense
of any demands, claims or lawsuits which were actually and reasonably
incurred and arising from any act, omission, activity or conduct undertaken
by or on behalf of the Fund.
Provisions of Law
According to applicable law, indemnification of the general partner is
payable only if the general partner determined, in good faith, that the act,
omission or conduct that gave rise to the claim for indemnification was in
the best interest of the Fund and the act, omission or activity that was the
basis for such loss, liability, damage, cost or expense was not the result of
negligence or misconduct by the general partner, and such indemnification or
agreement to hold harmless is recoverable only out of the assets of the Fund
and not from the partners, individually.
Provisions of Federal and State Securities Laws
This offering is made pursuant to Federal and State securities laws. If any
indemnification of the general partner arises out of an alleged violation of
such laws, it is subject to the following legal conditions.
Those conditions require that no indemnification may be made in respect of
any losses, liabilities or expenses arising from or out of an alleged
violation of Federal or State securities laws unless: there has been a
successful adjudication on the merits of each count involving alleged
securities law violations as to the general partner or other particular
indemnitee, or such claim has been dismissed with prejudice on the merits by
a court of competent jurisdiction as to the general partner or other
particular indemnitee, or a court of competent jurisdiction approves a
settlement of the claims against the general partner or other agent of the
Fund and finds that indemnification of the settlement and related costs
should be made, provided, before seeking such approval, the general partner
or other indemnitee must apprise the court of the position held by regulatory
agencies against such indemnification. These agencies are the Securities and
Exchange Commission and the securities administrator of the State or States
in which the plaintiffs claim they were offered or sold partnership
interests.
Provisions of the Securities Act of 1933 and NASAA Guidelines
The Securities and Exchange Commission and the various State administrators
believe that indemnification for liabilities arising under the Securities Act
of 1933 are unenforceable because such indemnification is against public
policy as expressed in the Securities Act of 1933 and the North American
Securities Administrators Association, Inc. commodity pool guidelines.
Provisions of the Clearing Agreement
We clear trades through an unaffiliated futures commission merchant, Man
Financial, Inc.. According to the clearing agreement that governs trades
entered, we must indemnify Man for any reasonable outside and in-house
attorney's fees incurred by it arising from any failure to perform our
duties under the clearing agreement.
Other Indemnification Provisions
The general partner has indemnified the selling agent, Futures Investment
Company, and expects to indemnify any other selling agents it selects that
there are no misstatements or omissions of material facts in this prospectus.
Relationship With The Futures Commission merchant, the Introducing Broker
And The General Partner
The corporate general partner supervises the relationship with the futures
commission merchant and introducing broker, including the negotiation of the
round turn commission rates incurred through trading via the commodity
trading advisor, and review of the daily reports.
The general partner has engaged Man Financial Inc. to act as
the futures commission merchant to open and close the trades selected by the
trading advisor for the Fund account. It has engaged Mt. Kemble Futures to
introduce the trades to Man Financial Inc.
Fixed Commissions are Competitive
The annual fixed commission that we pay to clear our trades are less than
the presumptive fair and reasonable limit provided by the guidelines of the
North American Securities Administrators Association. The general partner
has the right to select any substitute or additional selling agents,
introducing brokers or futures commission merchant at any time, for any
reason. However, the general partner is unlikely to dismiss the current
principal selling agent because of its affiliation with the individual
general partner.
Either general partner or any other commodity pool operated by them may
obtain commission rates to clear trades that are more favorable to their
accounts than the brokerage commissions the general partner charges us.
Relationship With The Commodity Trading Advisor
The Commodity Trading Advisor Will Trade For Other Accounts
The commodity trading advisor will trade for its own accounts and for others
on a discretionary basis. It may use trading methods, policies and
strategies for others that differ from those used for us. Consequently, such
accounts may have different trading results from ours.
Because the trading advisor trades for itself and others, it is possible for
it to take positions ahead of or opposite to the positions taken for us.
This would present a potential conflict of interest. See Appendix I for
Taking Positions Ahead of the Fund.
Pursuant to Commodity Futures Trading Commission Regulation 421.03, the
trading advisor will use the average price system for those futures and
options contracts where its use is authorized, when trades taken on behalf of
both the Fund and the trading advisor's other accounts are identical, and the
prices of such trades are different. See Appendix I for the definition of
Average Price System.
The commodity trading advisor has also informed the general partner that when
the average price system is not available, trades will be filled in order
based on the numerical account numbers, with the lowest price allocated to
the lowest account number and in numerical matching sequence, thereafter.
Non-Disclosure Of The Commodity Trading Advisor's Methods
We have provided a general description of the commodity trading advisor's
methods and strategies under The Commodity Trading Advisor, Description of
Trading Program. However, the specific details of its trading methods are
proprietary and complex in nature and will not be disclosed to us or you. No
notice will be given to you of any changes the trading advisor may make in
its trading methods. See Risk Factors, No Notice of Trades or Trading
Method.
Charges To The Fund
As an investor in this partnership, you will pay your pro rata share of the
cost of our formation and operation. These charges are described in
narrative form and in the chart that follows this narrative. In this
prospectus, we have disclosed all compensation, fees, profits and other
benefits, including reimbursement of out-of-pocket expenses, which the
general partner and its affiliates will earn in connection with this
offering. Some of these charges were not negotiated at arm's length, but
rather were determined by the general partner.
Compensation Of General Partner
We pay the corporate general partner, White Oak Financial Services, Inc.,
fixed brokerage commissions of 6% annually from which it must pay the
futures commission merchant the cost of the trades entered by the commodity
trading advisor. The corporate general partner retains the difference, if
any, between the fixed brokerage commissions and the clearing costs and
fees paid to the futures commission merchant.
The partnership pays the general partner an incentive fee of up to 3% of
the new net profit produced by the partnership. The combined trading advisor
and general partner management fee may not exceed 6% without a corresponding
reduction in incentive fee. See Charges to the Fund, Restrictions on
Management Fees.
Compensation Of The Commodity Trading Advisor
NuWave Investment Corp., the commodity trading advisor will be allocated
equity to trade from funds that will be deposited in an account with the
futures commission merchant. The trading advisor is allocated equity through
partnership accounts maintained at Man Financial Inc. Each month, we deduct
from the Fund's account managed by the trading advisor a management fee
based on the rate of trading assigned by the trading advisor and approved
by the general partner of up to 1/12 of 2.5%, or 2.5% annually, of the dollar
amount of the equity assigned to it to trade, including equity in open trades,
with each position in a commodity interest accounted for at fair market value,
computed upon the close of business on the last trading day of the previous
month and pay it directly to the trading advisor as a management fee. The
general partner has reserved the right to change this fee at its sole
discretion. See Charges to the Fund, Restrictions on Management Fees.
The partnership pays the commodity trading advisor an incentive fee equal to
20% of the new net profit it produces. If the Fund has multiple trading
advisors, it would be possible for one advisor to earn an incentive fee while
the Fund as a whole lost money because of the poor trading performance of
another advisor.
New net profit:
* is calculated to determine how much a trading advisor has increased our
net assets through trading alone
* is based upon the net value of the equity assigned to the trading advisor
to trade
* is calculated after the payment of brokerage fees
* is calculated monthly but paid quarterly
* only occurs when any losses in previous quarters have been offset by new
profits regardless of whether:
* the general partner has changed the trading advisor's compensation, or
* the Fund and trading advisor have entered a new contract
* is adjusted to eliminate the effects of:
* any new subscriptions for partnership interests
* redemptions by partners
* any interest income paid to the partnership, and
* any other income earned on our assets that are not related to trading
activity, regardless of whether such assets are held separately or in a
margin account.
The following hypothetical table illustrates the quarterly incentive fee that
would be earned by the trading advisor and the general partner based on the
new net income, as calculated above.
Qtr Net Income CTA (20%) GP (3%)
1 $ 1,000 $ 200 $ 30
2 (200) 0 0
3 1,000 160 24
4 500 100 15
Restrictions on Management Fees
It is possible that some of the States in which we wish to sell partnership
interests will require that we apply the North American Securities
Administrators Association Guidelines for commodity pools. These guidelines
provide that (i) the total management fees, including that of the general
partner and the commodity trading advisors, may not exceed 6% of our net
assets, and (ii) incentive fees based upon profits earned may not exceed 15%
of new net profits.
As permitted by the guidelines, without prior notice to you, the general
partner has reserved the right to raise the current total incentive fee to
a maximum of 27%, provided the total management fees are correspondingly
lowered to 0%. However, the general partner will notify you of any change
in fees within seven business days. This prospectus discloses the maximum
management and incentive fees payable by the Fund; however, the general
partner intends to charge actual fees in such a manner that are permitted by
the guidelines by either lowering the management fee or the incentive fee.
If the management fees and incentive fees were charged in a manner not in
accordance with these guidelines, we could not offer or sell this
partnership's interests to residents of States that apply these guidelines
to this offering.
Compensation of Futures Commission merchant and Introducing Broker
The Fund pays the corporate general partner annual fixed brokerage
commissions of 6%, paid at 1/2% monthly, to cover all clearing costs,
including the pit brokerage fees, National Futures Association fees, and
exchange fees. The general partner is responsible for all payments to the
futures commission merchant and retains the difference between the 6%
brokerage commission paid to it by the Fund and the payments it makes to
the futures commission merchant for trades. Man Financial, Inc., as
futures commission merchant, may share a portion of its round turn brokerage
commissions with the introducing broker for trades entered by trading
advisors not affiliated with the introducing broker and is responsible for
all payments to the introducing broker.
Compensation of Selling Agents
The Fund pays a continuing service fee to the selling agents for the
partnership interests sold by them of 3% of the initial investment the
first year. For the second year and each year thereafter, for so long as
the investment remains in the Fund, the Fund will pay this fee at the rate
of 1/4% of the value of the partnership interests in the Fund at the close
of business on the last day of each month.
The recipients of the continuing service fee are responsible for maintaining
investment in this partnership. This must be done to spread the potential
risk of losses over a large number of investors to protect our ability to
continue in business, and allow the long-term trading strategies of the
commodity trading advisor to be profitable so additional investments can be
solicited.
The Fund pays continuing service fees to the persons responsible for selling
the partnership interests to (i) maintain continuous contact with the
partners to whom they sold interests in the Fund, (ii) review of the monthly
statement to be aware of the Fund results to discuss with the investors,
(iii) explain changes in trading advisors and results from operations, (iv)
answer questions regarding the Fund, and (v) work to retain investment in the
Fund.
All units will be charged a 3% continuing service fee; provided, however,
investors who have purchased and not redeemed at least $1,000,000 in total
partnership interests will be issued additional partnership interests from
the registered offering at the close of business each month to reduce the
annual continuing service fee by 1.5% of the dollar amount of their holdings.
Similarly, investors who have purchased and not redeemed at least $500,000,
but not more than $1,000,000, in total partnership interests will be issued
additional partnership interests at the close of business each month to
reduce the annual continuing service fee by 0.75% of the dollar amount of
their holdings.
Miscellaneous Fees To Futures Commission merchant
We will reimburse the futures commission merchant for all delivery,
insurance, storage or other charges incidental to trading and paid to third
parties. The general partner has instructed the trading advisor to avoid
these charges and, therefore, no significant charges of this nature are
anticipated.
Rights of General Partner
Without prior notification to you, the general partner has reserved the right
to (i) add a general partner management fee, (ii) increase or lower the
incentive fee, (iii) change the futures commission merchant, (iv) change the
commodity trading advisor, (v) change the introducing broker, (vi) have the
Fund pay a round turn brokerage commission as opposed to a fixed percentage,
at any time, with or without a change in circumstances; provided, however,
such brokerage commissions are presumed reasonable if they do not exceed 80%
of the published retail rate, excluding pit brokerage fees, and the futures
commission merchant plus pit brokerage fees, or 14% annually, including pit
brokerage fees, of the average Net Assets directly related to trading
activity.
Other Expenses
We must pay legal and accounting fees, as well as other expenses and claims.
For each year of normal operations, we must pay yearly legal, audit and
accounting costs of approximately $27,000, which includes $22,000 for
accounting and audit and $5,000 for legal services. We must also pay
customary and routine administrative expenses, and other direct expenses.
In addition, we will reimburse the general partner for direct expenses, such
as the cost to prepare and file periodic amendments and restatements of the
registration statement, prospectus, and financial statements. Also
reimbursable are web site promotion used in connection with the solicitation
and sale of partnership interests, together with audit fees, delivery
charges, statement preparation and mailing costs, telephone toll charges, and
postage.
Charges To The Fund
The following table includes all charges to the Fund.
Entity
Form of Compensation
Amount of Compensation
General Partner
(White Oak Financial Services, Inc. and Michael Pacult)
Fixed Brokerage Commission
White Oak receives 6% annually to clear trades and retains the difference
between the 6% and the round turn commissions paid to the futures commission
merchant. [$1,455+]
Incentive Fee
White Oak receives up to a 3% incentive fee computed quarterly on new net
profits the Fund has produced through trading.
Selling Agents
(Futures Investment Company, a National Association of Securities Dealers
registered broker/dealer, principal selling agent and additional selling
agents it appoints)
Continuing Service Fee
After Fund business has commenced, the Fund pays the selling agents a 3%
continuing service fee of the initial investment the first year.
Subsequently, the Fund will pay this fee at 1/4% monthly, based on the net
asset value of the investment for so long as the investment remains in the
Fund. [$750+]
Futures Commission merchant
(Man Financial Inc.)
Round-turn commissions
The corporate general partner pays the futures commission merchant the
round turn brokerage commissions.
Reimbursement of delivery, insurance, storage and any other charges
incidental to trading and paid to third parties
Reimbursement by the Fund of actual payments to third parties in connection
with Fund trading
Introducing Broker
(Mt. Kemble Futures)
Round-turn commissions
Man Financial, Inc. may pay the introducing broker a portion of the round
turn brokerage commissions paid by the general partner for trades entered
by unaffiliated trading advisors.
Commodity Trading Advisor
(NuWave Investment Corp.)
Fixed Management Fee
Annual management fee, paid monthly, based on the rate of trading
assigned by NuWave and approved by the general partner of up to 2.5% of
the trading equity assigned to it to trade. [$606.25+]
Incentive Fee
20% of the quarterly new net profits it generates
Third Parties
(The Scott Law Firm, P.A., Jordan, Patke & Associates, Ltd., Shoup
Accounting Services, Inc.)
Legal, accounting, audit and other actual expenses necessary to the operation
of the Fund, and all claims and other extraordinary expenses of the Fund.
Claims and other costs cannot be estimated and will be paid or reserved as
incurred.
$90,996 in offering and organizational expenses up to $212,000 if the
maximum is sold, to be reimbursed by the Fund to the general partner after
the twelfth month of operation. [$106+] During operation, $27,000 in
annual audit and accounting, and legal costs ($22,000 and $5,000,
respectively). [$14+]
+ Each $25,000 investment pays this amount per year for this particular
charge. When the charge is not based on a percentage, but rather a fixed
amount, we have computed that expense upon an assumed net asset value of
$50,000,000.
Potential Advantages
Commodity trading is speculative and involves a high degree of risk. See
Risk Factors. However, your investment in this partnership will offer the
following potential advantages:
Equity Management
We offer the opportunity for you to place equity with registered commodity
trading advisors who have demonstrated an ability to trade profitably in the
judgment of the general partner, and have that equity allocated to the
trading advisors in a manner that is intended by the general partner to
optimize future profit potential.
The individual general partner has over twenty-five years of experience in
selecting commodity trading advisors to manage individual investor accounts
and describing to investors how managed futures accounts work.
We expect this experience to benefit us in the quality of trading advisors
selected and in the explanation to prospective investors of our operation and
the attendant risks of investment.
Investment Diversification
If you are not prepared to spend substantial time trading various commodity
contracts or options, you may participate in these markets through a $25,000
investment in the Fund, thereby obtaining diversification from other
investments you may have in stocks, bonds and real estate.
Limited Liability
In the opinion of our legal counsel, , The Scott Law Firm, P.A., you will not
be subject to margin calls and cannot lose more than your original investment
amount plus, in the event of bankruptcy, distributed profits made within 90
days, provided the Fund's structure is maintained by the general partner, and
no limited partner participates in any phase of our management other than to
vote as a limited partner pursuant to the terms of the partnership agreement.
See the Limited Partnership Agreement (Exhibit A).
Administrative Convenience
We are structured to provide you with services that alleviate the
administrative details involved in trading commodities contracts directly,
including providing monthly and annual financial reports showing, among other
things: the value of each unit of partnership interest, trading profits or
losses, and expenses. We also have prepare for you all tax information
relating to your investment in this partnership.
Access To The Commodity Trading Advisor
An investment in the Fund provides access to the commodity trading advisor
and the portfolio diversification provided by that commodity trading advisor.
Use Of Proceeds
After the twelfth month of operation following the commencement of business,
the Fund will reimburse the general partner for all offering and
organizational expenses incurred up to the end of the twelfth month of
operation after the commencement of business. Such expenses are currently
$90,996. Total offering costs if the maximum in face value of partnership
interests are sold are estimated to be $212,000. If the offering is
continued after the first twelve months of operation, additional offering
expenses will be paid by the Fund as incurred.
The general partner will initially apply all of the Fund assets toward
trading commodities and cash reserves.
At the end of each month, the management, brokerage commission and continuing
service fees identified under Charges to the Fund are paid by the Fund.
Incentive fees are paid at the end of each quarter.
The general partner has sole authority to determine the percentage of our
assets that will be held on deposit with the futures commission merchant,
used for other investments, and held in bank accounts to pay current
obligations and as reserves.
The general partner expects to deposit substantially all of our net assets
with the futures commission merchant for trading by the trading advisor.
However, approximately 3% of the previous month's net assets will be retained
in our bank accounts to pay expenses and redemptions.
We use only cash and cash equivalents, such as United States Treasury Bills,
to satisfy margin requirements. All entities that will hold or trade our
assets will be based in the United States and will be subject to United
States regulations.
The general partner believes that 10% to 30% of our assets will normally be
committed as margin for commodity futures contracts. However, from time to
time, the percentage of assets committed as margin may be substantially more,
or less, than such range. All interest income is used for the Fund's
benefit. To estimate interest income earned upon our deposits, the general
partner has assumed that we will receive 5.00% interest on our deposits at
the futures commission merchant.
The futures commission merchant, government agency or commodity exchange
could increase margins applicable to us to hold trading positions at any
time. And, margin is merely a security deposit and has no bearing on the
profit or loss potential for any positions taken.
Determination Of The Offering Price
The general partner initially established the number of units to be offered
at fifty million dollars ($50,000,000) with the minimum number that must be
sold to commence business at one million thirty thousand dollars
($1,030,000), and set the value of each unit of partnership interest for sale
at one thousand dollars ($l,000). Upon the sale of the minimum and the
commencement of trading, we will offer partnership interests at their net
unit value, or the price per unit equal to our net assets, after payment and
accrual for all expenses and reserves, divided by the number of outstanding
units of partnership interests. This amount is calculated after the close of
business on the last business day of the month in which the general partner
accepts a duly executed subscription agreement and payment from a future
partner. Such future partner will be admitted as a partner on the open of
business on the first day of business of the following month.
The General Partner
Identification
Two general partners, White Oak Financial Services, Inc. and Mr. Michael
Pacult, manage us. See Management's Discussion and Analysis of Financial
Condition, The General Partners.
The purpose of a corporate general partner is to provide continuous
partnership operations in the unlikely event that the individual general
partner is unable to perform. If the individual general partner were unable
to also serve as the president of the corporate general partner, its
corporate duties as general partner would continue to operate pursuant to its
By-Laws, and the Fund would be able to select another individual general
partner pursuant to the Limited Partnership Agreement.
Audited financial statements for the corporate general partner for the period
ended December 31, 2006 are included in this prospectus. The individual
general
partner's net worth consists primarily of real estate that is not readily
marketable. However, it is sufficient to maintain compliance with the North
American Securities Administrators Association guidelines for commodity
pools. This will allow the partnership interests to be sold in States that
apply those guidelines. At all times during the operation of the Fund, a
general partner will meet the sponsor net worth requirements of the North
American Securities Administrators Association guidelines for commodity pools.
Also, see Experts.
You will not acquire or otherwise have any interest in the corporate general
partner, or any entity other than Providence, by purchasing the partnership
interests offered by this prospectus.
The Individual General Partner
Mr. Pacult, age 62, is the individual general partner and the sole
shareholder, director, principal, and officer of the corporate general
partner. He is also a principal, officer, director and 50% shareholder of
Futures Investment Company, the principal selling agent.
Mr. Pacult grew up in Detroit, MI and went to high school at Howe Military
School in Howe, IN. In 1969 he received a B.A. Degree from the University of
California, Berkeley, where he majored in English and in Zoology. Prior to
moving to Chicago in 1980 to become involved in the futures industry, he was
a part owner and Senior Vice President of a California real estate
development company.
In 1983, Mr. Pacult and his spouse as 50% owners, established Futures
Investment Company, an Illinois corporation, to sell futures investments
managed by independent commodity trading advisors to retail clients. From
inception to present, he has been a director and president of Futures
Investment Company. It serves as the principal selling agent of partnership
interests.
In addition to the partnership interests offered pursuant to this prospectus,
Futures Investment Company offers for sale, on a best efforts basis,
securities of other issuers and engages in other broker-dealer activities.
Mr. Pacult's affiliations with other commodity pools and commodity pool
operators is under Performance of Other Partnerships Managed by the General
Partner on page 23. His duties with respect to those entities are to make
all of the decisions and supervise all of the actions they take. Mr.
Pacult's net worth is $3,437,000, which consists primarily of real estate and
other holdings that are not liquid.
Mr. Pacult's business background for the past five years is as follows:
From To Employer Name & Address Position Held and Type of Business
1983 Present Futures Investment Company, 5914 N. 300 West, Fremont, IN
46737 President, Director and 50% Owner of Broker-Dealer/Introducing Broker
11/03 Present Ashley Capital Management, Inc., 5914 N. 300 West, Fremont,
IN 46737 President, Director and Owner of Commodity Pool Operator
11/03 Present Belmont Capital Management, Inc., 5914 N. 300 West, Fremont,
IN 46737 President, Director and Owner of Commodity Pool Operator
04/03 Present White Oak Financial Services, Inc., 5914 N. 300 West, Fremont,
IN 46737 President, Director and Owner of Commodity Pool Operator
10/04 Present TriView Capital Management, Inc., 5914 N. 300 West, Fremont,
IN 46737 President, Director and Owner of Commodity Pool Operator
05/05 Present Evergreen Capital Management, Inc., 5914 N. 300 West, Fremont,
IN 46737 President, Director and Owner of Commodity Pool Operator
No Ownership In Commodity Trading Advisor And Futures Commission merchant
Neither the individual general partner, nor any of his affiliates, has any
ownership in the commodity trading advisor, the introducing broker or the
futures commission merchant. Mr. Pacult's spouse will have no ownership or
role in the management of the Fund or the corporate general partner.
Trading By The General Partner
Either general partner may, from time to time, trade commodity interests for
their own accounts. The results and other records of any such trading
activities will not be made available to you. Neither general partner will
knowingly take positions ahead of identical positions taken by the Fund.
No Prior Performance of this Fund and Regulatory Notice
THIS POOL HAS NOT COMMENCED TRADING AND DOES NOT HAVE A PERFORMANCE HISTORY
The regulations of the Commodity Futures Trading Commission and the National
Futures Association prohibit any representation by a person registered with
the Commodity Futures Trading Commission or by any member of the National
Futures Association, respectively, that such registration or membership in
any respect indicates that the Commodity Futures Trading Commission or the
National Futures Association, as the case may be, has approved or endorsed
such person or such person's trading programs or objectives. The
registrations and memberships described in this prospectus must not be
considered as constituting any such approval or endorsement. Likewise, no
commodity or securities exchange, nor the Securities and Exchange Commission,
nor any other regulatory agency has given or will give any such approval or
endorsement.
Trading Management
No Affiliation With Commodity Trading Advisor
The trading advisor is not affiliated with either general partner.
Additionally, the general partner will not serve as a trading advisor or
select any other trading advisors to trade that are affiliated with either
general partner. See The Commodity Trading Advisor for a summary of the
trading advisor's performance information.
Rights of the General Partner With Respect To Commodity Trading Advisor
Selection And Allocation Of Equity
The general partner believes that a trading advisor should be retained on a
medium to long-term basis and should be allowed to implement fully its
trading strategy. However, the general partner may, in its sole discretion
and without notice to you terminate any current or future trading advisor,
select additional trading advisors, or change the allocation of equity to any
trading advisor.
The general partner periodically reviews our performance to determine if a
current trading advisor should be changed or if others should be added. In
doing so, the general partner may use computer generated correlation analysis
or other types of automated review procedures to evaluate trading advisors.
If a trading advisor is replaced, the new trading advisor will receive
incentive fees independent of the previous trading advisor's performance.
As the general partner receives an incentive fee and may engage more than one
trading advisor, the following may possibly occur (i) we may pay an incentive
fee to one trading advisor which is trading profitably while the other
trading advisor produces losses which cause us to be unprofitable overall,
(ii) the general partner may receive an incentive fee because the Fund is
profitable overall, though one or more trading advisors are trading at a
loss, or (iii) as the trading advisors trade independently, they may compete
for similar positions or take positions opposite each other, which may limit
our profitability.
Performance of Other Partnerships Managed by the General Partner
Within the last ten years, the individual managing member of the Fund,
Michael Pacult, has managed four other commodity pools, one of which,
Strategic Opportunities Fund, LLC, is privately offered and has not yet
commenced trading. Mr. Pacult is the sole principal of the corporate general
partner of Strategic, Evergreen Capital Management, Inc. The other three
pools are publicly offered: Atlas Futures Fund, LP, Bromwell Financial
Fund, LP and TriView Global Fund, LLC.
Atlas and Bromwell have commenced trading, however, TriView has not yet
commenced trading. The Fund's corporate general partner has not managed any
other commodity pools. As of August, 2003, Mr. Pacult became an individual
general partner and sole principal of the corporate general partner of both
Atlas and Bromwell, but is no longer an individual general partner of
Bromwell. Mr. Pacult has been the individual managing member and principal
of the corporate managing member of TriView since inception. As of Sep 30,
2006, the total amount of money raised for Atlas and Bromwell was $19,384,469
and the total number of investors in both pools was 236. There are not yet
any investors in TriView nor has any money been raised for it. In November,
2003, the two trading advisors for Bromwell were replaced because they were
unprofitable. As of January 12, 2005, the new trading advisor, Fall River
Capital, LLC had not been profitable and the general partner of Bromwell
suspended the offering and trading, and caused substantially all of the
partners to redeem their accounts in Bromwell. Bromwell is currently
undergoing reorganization with new terms and a new commodity trading advisor.
Atlas, however, has been profitable since inception and its offering is
ongoing.
Performance Record Of Bromwell Financial Fund, Limited Partnership
The individual general partner of the Fund serves as the principal of a
corporate general partner, Belmont Capital Management, Inc., which manages
another commodity pool called Bromwell Financial Fund, Limited Partnership.
Bromwell was declared effective by the Securities and Exchange Commission on
March 16, 2000 and commenced business on July 11, 2000.
Bromwell paid various expenses in relation its operation including (i) a
monthly management fee of 1/12%, or 1% annually, to its trading advisor, (ii)
a quarterly incentive fee to the trading advisor of 20% on new net profits it
generates, (iii) a quarterly incentive fee of 5% to the corporate general
partner on all new net profits of the partnership, (iv) a monthly brokerage
commission of 1/3%, or 4% annually, to the corporate general partner, (v) a
monthly continuing service fee to the selling agents of 1/3%, or 4% annually,
adjusted month to month to reflect profit and loss, for so long as the
investment remains in the partnership.
The following capsule shows the past performance of Bromwell Financial Fund,
LP for the period from inception of trading in July 2000 through September 30,
2006. Past Performance Is Not Necessarily Indicative Of Future Results.
You will receive no interest in Bromwell Financial Fund or any other entity
except Providence by your purchase of partnership interests in Providence
Select Fund offered by this prospectus.
Bromwell Financial Fund, Limited Partnership
Percentage Rate of Return
(Computed on a compounded monthly basis)*
2005 2000
(Jan 1 - Jan 12) 2004 2003 2002 2001 (Jul - Dec)
(14.54) (9.37) (9.27) (4.82) (1.84) (2.71)
Name of Pool: Bromwell Financial Fund, LP
How Offered: Publicly offered pursuant to Form S-1 Registration Statement
Name of Commodity Trading Advisors: Fall River Capital, LLC
Principal Protected: No
Date of Inception of trading: July, 2000
Aggregate Gross Capital Subscriptions: $2,525,062
Net Asset Value of the pool: $23,280.23 on total units outstanding: 36.44
Net Asset Value Per Unit: $638.78
Largest Monthly Draw-Down**: 4-01/16.49%
Worst Peak-to-Valley Draw-Down***: 9-02 to 1-05/43.15%
* Rate of Return is computed by dividing net performance by beginning net
asset value for the period. For those months when additions or withdrawals
exceed ten percent of beginning net assets, the Time-Weighting of Additions
and Withdrawals method is used to compute rates of return.
** "Draw-down" is defined by applicable CFTC regulations to mean losses
experienced by an account over the specified period.
*** Worst Peak-to-Valley Draw-Down means the greatest cumulative percentage
decline in month-end net asset value due to losses sustained by a pool,
account or trading program during any period in which the initial month-end
net asset value is not equaled or exceeded by a subsequent month-end net
asset value.
Performance Record Of Atlas Futures Fund, Limited Partnership
The individual general partner of the Fund serves as an individual general
partner and as the principal of a corporate general partner, Ashley Capital
Management, Inc., both of which manage another commodity pool called Atlas
Futures Fund, Limited Partnership. Atlas Futures Fund, LP was declared
effective by the Securities and Exchange Commission on September 3, 1999. It
commenced trading on October 15, 1999. Clarke Capital Management, Inc
selects and enters trades for Atlas Futures Fund, Limited Partnership.
Atlas Futures Fund pays various expenses in relation its operation including a
quarterly incentive fee of 25% to Clarke on its new net profits and 20% to
NuWave on its new net profits; a monthly management fee to NuWave on the first
$2,000,000 in equity assigned to it to trade of up to 1/4%, or 3% annually,
and 1/6% monthly, or 2% annually, of equity assigned to it above $2,000,000;
and, a monthly brokerage commission of 11/12%, or 11% annually, to its
corporate general partner and introducing broker.
The following capsule shows the past performance of Atlas Futures Fund, LP
for the period from the year 2000 through September 30, 2006. Past Performance
Is Not Necessarily Indicative Of Future Results.
You will receive no interest in Atlas Futures Fund or any other entity except
Providence by your purchase of partnership interests in Providence Select
Fund offered by this prospectus.
Atlas Futures Fund, Limited Partnership
Percentage Rate of Return
(Computed on a compounded monthly basis)*
2006
(Jan-Sep) 2005 2004 2003 2002 2001 2000
1.34 22.91 56.04 33.47 10.97 (5.70) 31.76
Name of Pool: Atlas Futures Fund, LP
How Offered: Publicly offered pursuant to Form S-1 Registration Statement
Name of Commodity Trading Advisor: Clarke Capital Management, Inc.
Principal Protected: No
Date of Inception of trading: October, 1999
Aggregate Gross Capital Subscriptions: $13,045,114
Net Asset Value of the pool: $16,859,407 on total units outstanding: 4,955.59
Net Asset Value Per Unit: $3,402.10
Largest Monthly Draw-Down**: 10-02/12.94%
Worst Peak-to-Valley Draw-Down***: 9-02 to 11-02/17.86%
* Rate of Return is computed by dividing net performance by beginning net
asset value for the period. For those months when additions or withdrawals
exceed ten percent of beginning net assets, the Time-Weighting of Additions
and Withdrawals method is used to compute rates of return.
** "Draw-down" is defined by applicable CFTC regulations to mean losses
experienced by an account over the specified period.
*** Worst Peak-to-Valley Draw-Down means the greatest cumulative percentage
decline in month-end net asset value due to losses sustained by a pool,
account or trading program during any period in which the initial month-end
net asset value is not equaled or exceeded by a subsequent month-end net
asset value.
The Commodity Trading Advisor
NuWave Investment Corp
The Trading Advisor has been registered with the Commodity Futures Trading
Commission ("CFTC") as a commodity trading advisor since February 24, 1993
and as a commodity pool operator since June 14, 2004. The Trading Advisor is
a member of the National Futures Association effective December 14, 2005.
The Trading Advisor operates its principal office at 1099 Mount
Kemble Avenue, Morristown, New Jersey 07960, Telephone: (973) 425-9192, Fax:
(973) 425-9190, E-mail: info@NuWavecorp.com.
Business Background
Troy W. Buckner has been a principal of the Trading Advisor since its
inception. Mr. Buckner is a 19 year industry veteran who began his career at
Salomon Brothers, Inc. as a derivatives and program trading specialist in 1986.
In 1989 Mr. Buckner left Salomon Brothers to focus his full attention on the
design and implementation of sophisticated trading models for use in the
futures and equity markets. After five years of full time position trading
based on his proprietary methodologies, Mr. Buckner joined Classic Capital as
a principal with responsibility for the design and execution of both futures
and U.S. equity investment models. In 1995 Hyman Beck & Company hired Mr.
Buckner as a principal to develop and manage systematic, short-term investment
strategies capable of trading the world's liquid futures and currency markets.
His extensive research into innovative, non-correlated investment programs is
complemented by years of trading experience and an in-depth understanding of
market theory. As of March 2003 Mr. Buckner is listed as a principal and AP
of Mt. Kemble Futures, a registered IB set up to service the needs of potential
NuWave Investment Corp. clients in need of a clearing relationship. Mr. Buckner
graduated Magna Cum Laude from the University of Delaware in 1984 with a double
major (finance/accounting) and a minor (economics) before earning his M.B.A
from the University of Chicago in 1986.
John S. Ryan has been a principal of the Trading Advisor since May 16, 2001.
Mr. Ryan began his career in 1998 at IBM, where he designed corporate networks
in New York City. Specializing in systems and communications, he implemented
custom solutions for top NYC law firms and universities. In 1993, after five
years at IBM, Mr. Ryan was recruited by Hyman Beck & Company to head their
technology effort, where he held the titles of Principal and Director of
Technology. He is credited with helping to build the infrastructure and
research effort that was critical to their success up until the time of his
departure Since joining NuWave in March of 2001 as Chief Technology Officer
and Chief Operating Officer, Mr. Ryan has also been actively involved with
research and development, where his programming and quantitative skills have
been utilized in the design of NuWave's trading systems and electronic trading
infrastructure. Mr. Ryan earned his B.B.A degree in Computer Information
Systems from Bernard Baruch College, City University of New York.
Yury V Orlov has been a principal of the Trading Advisor since July 19, 2005.
Dr. Orlov began his professional career in 1986 at the Nuclear Physics
Institute, Moscow State University where he held the title of Research
Scientist until October 2003. The principals of NuWave engaged Dr. Orlov as
an off-site consultant beginning in 1997, and by January of 2000 he had
become integral in the design of NuWave's advanced electronic execution and
modeling software. In October of 2003 Dr. Orlov moved to the United States,
joining NuWave as a Principal in their New Jersey offices. Dr. Orlov's
expertise is in the area of pattern recognition, genetic algorithms, time
series analysis, and programming. He obtained his Master's Degree in Physics
in 1983 and his PhD in Time Series Segmentation and Pattern Recognition, both
from Moscow State University. Dr. Orlov has authored or co-authored more than
50 publications relating to his specialties and has been published in several
scientific journals.
Any one or any combination of the three principals will direct the trades
NuWave enters on behalf of the Partnership.
Trading Program
The Combined Portfolio The Combined Portfolio evolved from the intent of the
principals of the Trading Advisor to achieve a more stable, lower volatility
return enhanced by diversification not only across different markets, but
across trading styles as well. The Trading Advisor believes, based on its
research to date, that the performance of each of its three programs, Alpha,
Pattern Recognition and Beta, exhibit a substantial degree of non-correlation
with one another as well as with other traditional strategies in any
investment arena. Combining the three programs in one portfolio provides
prospective investors with both enhanced diversification and expected cost
savings. It is common for the Alpha, Pattern Recognition or Beta programs to
hold opposite positions in any given market. Because positions for these
programs are netted within a single account, clients save needless
transactions costs that occur if these programs were managed by separate
advisors. Similarly, incentive fees are netted for the three trading programs
that comprise the Combined Portfolio. This prevents an incentive fee payment
to the Trading Advisor unless the net performance across programs warrants.
In the future, other programs and/or products may be included in the Combined
Portfolio in varying degrees. Client accounts participating in the Combined
Portfolio may thus be leveraged in a manor that reflects the addition of an
additional program. Allocation and leverage decisions are made by the Trading
Advisor with the aid of certain research studies, and combined experience, in
an effort to minimize risk and maximize profit opportunities.
Alpha Program The Alpha Program is a technical and systematic trading program
designed to provide broadly diversified, low correlation returns from a
trading style considerably different than that which is typical of the
managed futures industry. Portfolio composition includes a broad and diverse
group of domestic and international futures and currency markets. Nearly 65%
of market exposure is derived from international stock, bond and currency
markets. The remaining 35% includes various commodity markets. Alpha
positions itself to take advantage of significant longer term price moves,
often before it has become clear to market participants that such a movement
in price is underway. The program employs a series of proprietary algorithms
that highlight trading opportunities that may be with, or against, the
current trend. The result is a strategy with the ability to trade in varying
market conditions, multiple time frames, and in any liquid market. The
benefits are obvious. There is the potential for more consistent, low
correlation returns and the opportunity to manage larger pools of assets due
to the offbeat nature of trade selection, entry, and exit. History has shown
that managers of non-correlated futures portfolios are forced to trade the
very short-term. This fact typically limits asset growth significantly. The
Alpha Program, as it is applied here, generally trades the longer term time
frame. As a result, low correlations and more consistent returns are
possible. This program is offered only as a component of the Combined
Portfolio.
Pattern Recognition Program The Pattern Recognition Program is a unique,
systematic program that trades the world's 35 most liquid futures markets
while generating results that are designed to have little correlation with
other investment styles. Nearly 65% of market exposure is derived from
international stock, bond and currency markets. The remaining 35% includes
various commodity markets. The trading strategy is based upon the assumption
that markets exhibit a degree of repetitive price action that can be
identified throughout history. Factors responsible for such repetition may
include fundamental factors (economic cycles, interest rates, weather and
seasonality etc.) and human factors (fear, greed and other emotions). The
Trading Manager's experience suggests that all successful traders rely on
some form of pattern recognition, although the information they analyze to
discern repetitive price tendencies may differ. Consider discretionary
traders as
an example. Their historical knowledge and experience allow them to analyze
many kinds of information that give clues to future market direction. They
study current fundamental data, economic trends, technical factors, etc. that
collectively form the current pattern of events. This current pattern of
events is evaluated in the context of history in order to form an opinion of
the likely effect on prices. Trend-followers are another good example of
pattern recognizers. They attempt to identify the "trend" pattern in its
beginning and ending stages in order to capture repetitive profit
opportunities in various markets. It is arguable that all successful traders
benefit from repetitive patterns to market price movement. If this were not
true, then it would be difficult to explain how successful traders continue
to be profitable over the long run. The Pattern Recognition Program analyzes
current price patterns in the context of history, emphasizing those occasions
where there is statistical, evidence supporting the probability that prices
will move in a particular direction. The Trading Manager believes that
markets are, in general, very efficient and that price movement is to a large
extent random. These facts do not prevent the identification of repetitive
profit opportunities, however, they merely underscore the difficulty
associated with capturing these opportunities with reasonable consistency.
With a rigorous, probabilistic methodology that identifies repetitive
historical tendencies, the Trading Manager attempts to benefit from a modest
but consistent edge and solid risk control. This program is offered only as a
component of the Combined Portfolio.
Beta Program The Beta Program is a technical and systematic trading program
designed to provide broadly diversified, low correlation returns from a
short-term trading style considerably different than that which is typical of
the managed futures industry. Incorporating a broad and diverse group of
domestic and international futures and currency markets in its trading mix,
nearly 65% of market exposure is derived from international stock, bond, and
currency markets. The remaining 35% includes various commodity markets.
Designed to take advantage of short-term volatility and the more random
nature of short-term price movements, Beta will trade with 9-day average
holding periods. It has been designed to complement the Alpha and Pattern
Recognition programs that currently make up the Combined Portfolio and will
not be offered separately. Correlation between the Beta Program and the other
two Combined components will be approximately 0.1. History has shown that
managers of non-correlated futures portfolios are forced to trade the very
short-term. This fact typically limits asset growth significantly. The Beta
Program is unique in its ability to complement both short and long term
investment styles, while maintaining significant asset capacity.
Electronic Futures Portfolio The Electronic Futures Portfolio is based upon
NuWave Investment Corp.'s fully automated, state-of-the-art trading program.
Focusing only on those futures contracts that exist and trade in a purely
electronic fashion, the portfolio's returns are generated through the
identification of short-term price dislocations. All trading is 100%
automated, allowing a rapid style of trading that would not be possible
without the aid of sophisticated computer programming. While presently
focused on domestic stock index contracts, NuWave expects to broaden trading
in this program to include several worldwide futures contracts with a
particular focus on financial futures.
Performance History
NuWave Investment Corp - Combined Portfolio
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. A purchase
of partnership interests pursuant to this offering does not include any
interest in this program.
<page> 30
NuWave Investment Corp - Combined Portfolio
Percentage Rate of Return
(Computed on a compounded monthly basis)*
2006 2005 2004 2003 2002 2001
January 1.45 (1.35) 2.23 4.68 (1.11) N/A
February (1.77) (0.44) 2.40 5.26 (1.36) N/A
March 0.19 0.56 (0.41) (3.02) (2.81) N/A
April 1.54 (2.42) (2.12) (1.50) (1.81) N/A
May 0.42 2.17 (0.08) 1.11 0.75 N/A
June (0.68) 2.14 1.01 (1.04) 3.82 1.03
July (0.75) 1.94 (1.41) 0.26 4.09 0.45
August 1.36 3.60 0.21 2.24 2.20 0.48
September 0.95 1.69 1.45 (1.79) 4.66 (0.58)
October (2.80) 2.14 4.15 (1.43) 0.00
November 2.25 4.79 1.00 (4.34) (0.10)
December 1.29 1.35 0.63 7.53 1.48
Year-to-Date 2.68 8.73 11.99 12.25 9.94 2.76
Name of Commodity Trading Advisor: NuWave Investment Corp
Name of the Trading Program: Combined Portfolio
Date of Commencement of Trading by Advisor: May 2001
Date of Commencement of Program Trading: June 2001
Number of Accounts in Trading Program (8/06): 17
Aggregate assets in all programs (excl. notional funds) (8/06): $89,609,149
Aggregate assets in all programs (incl. notional funds) (8/06): $333,515,015
Aggregate assets in program (excl. notional funds) (8/06): $57,738,175
Aggregate assets in program (incl. notional funds) (8/06): $111,354,821
Largest Monthly Draw-down**: 11-02 / 4.34%
Worst Peak to Valley Draw-down***: 1-02 to 4-02 / 6.91%
* Monthly Rate of Return is calculated by dividing net performance by
beginning net asset value. The monthly rates are then compounded to arrive
at the annual rate of return.
** Worst Monthly Percentage Draw-down is the largest monthly loss experienced
by the program in any calendar month expressed as a percentage of the total
equity in the account and includes the month and year of such draw-down.
*** Worst Peak to Valley Draw-down is the greatest cumulative percentage
decline in month end net asset value of the program due to losses sustained
by an account during any period in which the initial month-end net asset
value of an account is not equaled or exceeded by a subsequent month-end net
asset value of the account and includes the time period in which it occurred.
NuWave Investment Corp - Combined Portfolio (2x)
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. A purchase
of partnership interests pursuant to this offering does not include any
interest in this program.
<page> 31
NuWave Investment Corp - Combined Futures Portfolio (2x)
Percentage Rate of Return
(Computed on a compounded monthly basis)*
2006 2005 2004 2003 2002 2001
January 2.84 (2.67) 4.68 9.70 (2.33) N/A
February (3.38) (0.48) 5.03 10.98 (2.82) N/A
March 0.84 1.10 (0.94) (6.51) (5.70) N/A
April 2.97 (4.93) (4.33) (3.09) (3.70) N/A
May 0.97 4.15 (0.26) 2.12 1.39 N/A
June (1.07) 3.98 1.91 (2.17) 7.49 2.13
July (1.41) 3.81 (2.93) 0.42 8.74 0.89
August 2.80 6.80 0.29 4.59 4.61 0.95
September 2.00 2.59 2.42 (3.89) 9.76 1.31)
October (7.18) 4.47 8.63 (2.87) (0.10)
November 5.06 10.54 2.07 (8.77) (0.31)
December 2.51 2.69 1.27 15.46 3.08
Year-to-Date 6.54 17.78 25.24 24.88 20.00 5.39
Name of Commodity Trading Advisor: NuWave Investment Corp
Name of the Trading Program: Combined Futures Portfolio (2x)
Date of Commencement of Trading by Advisor: May 2001
Date of Commencement of Program Trading: June 2001
Number of Accounts in Trading Program: 31
Aggregate assets in all programs (excl. notional funds) (8/06): $89,609,149
Aggregate assets in all programs (incl. notional funds) (8/06): $333,515,015
Aggregate assets in program (excl. notional funds) (8/06): $31,870,974
Aggregate assets in program (incl. notional funds) (8/06): $212,509,539
Largest Monthly Draw-down**: 11-02 / 8.77%
Worst Peak to Valley Draw-down***: 12-01 to 4-02 / 13.81%
* Monthly Rate of Return is calculated by dividing net performance by
beginning net asset value. The monthly rates are then compounded to arrive
at the annual rate of return.
** Worst Monthly Percentage Draw-down is the largest monthly loss experienced
by the program in any calendar month expressed as a percentage of the total
equity in the account and includes the month and year of such draw-down.
*** Worst Peak to Valley Draw-down is the greatest cumulative percentage
decline in month end net asset value of the program due to losses sustained
by an account during any period in which the initial month-end net asset
value of an account is not equaled or exceeded by a subsequent month-end net
asset value of the account and includes the time period in which it occurred.
<page> 32
NuWave Investment Corp - Electronic Futures Portfolio
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. A purchase
of partnership interests pursuant to this offering does not include any
interest in this program.
NuWave Investment Corp - Electronic Futures Portfolio
Percentage Rate of Return
(Computed on a compounded monthly basis)*
2006 2005 2004 2003 2002 2001
January (2.66) (0.51) (0.57) (0.07) 0.13 N/A
February (0.17) 1.21 0.17 0.20 0.12 N/A
March 0.18 0.63 0.07 (3.02) (0.19) N/A
April 0.74 0.48 (0.41) 0.62 0.73 N/A
May 0.46 (1.56) (0.35) 0.13 1.23 0.19
June 0.45 0.12 0.20 1.32 0.07 0.98
July 0.44 (1.77) (2.13) (0.72) 1.95 3.00
August (1.50) (0.74) 0.38 0.19 2.26 1.29
September 0.32 0.36 0.91 0.86 0.98 0.11
October 0.29 0.29 0.09 0.30 (0.73)
November (1.02) (1.49) 1.35 1.16 0.79
December 0.67 (0.21) 0.33 0.16 0.45
Year-to-Date (1.73) (1.87) (3.11) 0.53 9.22 6.02
Name of Commodity Trading Advisor: NuWave Investment Corp
Name of the Trading Program: Electronic Futures Portfolio
Date of Commencement of Trading by Advisor: May 2001
Date of Commencement of Program Trading: May 2001
Number of Accounts in Trading Program: 4
Aggregate assets in all programs (excl. notional funds) (8/06): $89,609,149
Aggregate assets in all programs (incl. notional funds) (8/06): $333,515,015
Aggregate assets in program (excl. notional funds) (8/06): $0
Aggregate assets in program (incl. notional funds) (8/06): $9,650,655
Largest Monthly Draw-down**: 03-03 / 3.02%
Worst Peak to Valley Draw-down***: 11-03 to 2-06 / 7.93%
* Monthly Rate of Return is calculated by dividing net performance by
beginning net asset value. The monthly rates are then compounded to arrive
at the annual rate of return.
** Worst Monthly Percentage Draw-down is the largest monthly loss experienced
by the program in any calendar month expressed as a percentage of the total
equity in the account and includes the month and year of such draw-down.
*** Worst Peak to Valley Draw-down is the greatest cumulative percentage
decline in month end net asset value of the program due to losses sustained
by an account during any period in which the initial month-end net asset
value of an account is not equaled or exceeded by a subsequent month-end net
asset value of the account and includes the time period in which it occurred.
The Futures Commission Merchant
The general partner has selected an unaffiliated futures commission
merchant, Man Financial Inc, 717 Fifth Avenue, 9th Floor, New York, New
York 10022-8101, (212) 589-6200. It holds, supervises and controls
approximately 97% of our equity, that which is used for trading by the
commodity trading advisor. Man is part of the Man Group of companies and
is a member of all major U.S. futures exchanges. It is a registered
futures commission merchant and commodity pool operator pursuant to the
Commodity Exchange Act, as amended, and is a member of the National Futures
Association in such capacities. As required by law, the general partner
will provide notice to you within 21 days of any change in futures
commission merchant.
At any given time, the futures commission merchant is involved in numerous
legal actions and administrative proceedings, which in the aggregate, are
not, as of the date of this prospectus, expected to have a material effect
upon its condition, financial or otherwise, or to the services it will
render to the accounts of the Partnership. There have been no material,
administrative, civil or criminal proceedings pending, on appeal or
concluded against the futures commission merchant or its principals within
the five years preceding the date of this prospectus, except that the futures
commission merchant has recently been 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"). The Receiver's claims for damages are
not quantified in the Complaint, but are believed to be substantial. The
Clearing Broker has informed the general partner, the trading advisor and
the placement agent, as applicable, that in acting as clearing broker for
PAAF it was not responsible for its losses. Accordingly, it will deny the
material allegations of the Complaint and/or move to dismiss various counts
of the Complaint, and will otherwise vigorously defend the Litigation.
Further, the outcome of the Litigation should not materially affect the
futures commission merchant or its ability to perform as clearing broker for
the accounts of the Partnership. The Commodity Futures Trading Commission
("CFTC") is also investigating the events involving PAAF's losses and the
futures commission merchant's relationship to PAAF. To date, the CFTC has
not brought any action against the futures commission merchant.
The futures commission merchant acts only as a clearing broker for the Fund
and, as such, is paid commissions for executing and clearing trades. It has
not passed upon the adequacy or accuracy of this prospectus. The futures
commission merchant will not act in any supervisory capacity with respect to
the trading advisor or the general partner nor participate in the management
of the trading advisor, the general partner or the Fund. Therefore,
prospective investors should not rely on the futures commission merchant's
agreements to clear trades for the Fund or for any other reason related to
it in deciding whether or not to purchase interests in the Fund.
The Introducing Broker
The Fund trading account was introduced to Man Financial Inc as futures
commission merchant by Mt. Kemble Futures LLC, 1099 Mt Kemble Ave, Morristown
NJ 07960, (973) 425-9194. Mt. Kemble is affiliated with NuWave, the trading
advisor, and will not share in the round turn brokerage commission paid by the
Fund to Man Financial Inc. for trades entered by NuWave. However, it may
share in brokerage commissions for trades made by other, non-affiliated trading
advisors, should they be selected to trade for the Fund in the future.
Federal Income Tax Aspects
Scope Of Tax Presentation
This presentation is based on:
* the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder which were in effect as of the effective
date of this prospectus and
* the express intent of the general partner to:
* operate the Fund as authorized and limited by the limited partnership
agreement, and
* cause us to invest only our equity capital and not to borrow money to
operate the Fund , and
* the belief by the general partner that no less than ninety percent of the
income generated by us will be from interest income and the trade of
commodities.
Any change in the Internal Revenue Code or deviation from the above
intentions of operation could alter this presentation and also have adverse
tax consequences on this partnership and you. For instance, if we were taxed
as a corporation, we would pay tax and you would have to pay a second tax.
In addition, if we were taxed as a corporation, none of the deductions for
expenses would pass through to your tax return.
Any adjustment made to our return by our auditors or the IRS will flow
through to your return and could result in a separate audit of your
individual return. If the IRS audits us or you, significant factual
questions may arise which, if challenged by the IRS, might only be resolved
at considerable legal and accounting expense. We will report our income for
tax and book purposes under the accrual method of accounting and our tax year
will be the calendar year. During taxable years in which little or no profit
is generated from trading activities, you may still have interest income that
will be taxed to you as ordinary income.
Subject to the above scope of presentation and assumption, following is the
opinion of The Scott Law Firm, P.A. that summarizes the material Federal
income tax consequences to individual investors in the partnership.
This discussion is not intended as a substitute for careful planning by you
after you consider your tax circumstances; particularly, since the income tax
consequences of an investment in the Fund will not be the same for all
taxpayers. Accordingly, you are urged to consult your tax advisors with
specific reference to your tax situation.
All matters upon which we have obtained an opinion of tax counsel are
discussed under the caption Tax Opinion below. Said opinion is based and
conditioned upon factual representations made by the general partner on
behalf of the Fund and assumptions that those facts will be applicable to the
Fund continuously during its operation.
No Legal Opinion As To Certain Material Tax Aspects
We will not request a legal opinion in regard to any State income tax issue.
In addition, our tax counsel cannot opine upon (i) any matter that concerns
the tax consequences to any specific partner of investment in the Fund based
on that partner's tax circumstances, (ii) any Federal income tax issue that
involves a determination by the IRS of the facts related to our operation, or
(iii) any other matter that may be subject to IRS interpretation or
adjustment upon audit.
For an example of an item that could be subject to determination by the IRS,
commodity trading advisor fees are aggregated with employee business expenses
and other expenses of producing income, and the aggregate of such expenses is
deductible only to the extent such amount exceeds 2% of the your adjusted
gross income. The Federal income tax deductibility of these expenses depends
upon factual determinations related to our operation by the general partner.
Partnership Tax Status
The Internal Revenue Code, at Section 7701, and the regulations promulgated
thereunder, provides the criteria used cannot be present if a partnership is
to be taxed as a partnership and not as a corporation. A partnership must
have two or more of the following characteristics: (i) decentralized
management, (ii) unlimited liability of the partners, (iii) limited
transferability of partnership interests, and (iv) limited continuation of
existence.
The limited partnership agreement obligates the general partner to operate
the Fund in a manner so that it will be taxed as a partnership and not as a
corporation.
If we were taxed as a corporation, (i) we would pay taxes at the corporate
rates upon our income and gains, (ii) items of deduction and losses would be
deductible only by us and not by you, (iii) tax credits would be available
only to us and not to you, and (iv) all or a part of any distributions we
make to you could be taxable as dividend income and would not be deductible
by us in computing our taxable income. This would substantially increase the
total amount of taxes paid on your investment income and potentially limit
your expense deductions.
Historically, the right of redemption, similar to your right to redeem your
partnership interests, renders a pool, such as ours, to be deemed a publicly
traded partnership, taxed as a corporation. However, the Revenue Act of 1987
provides an exception. The exception requires 90% or more of our gross
income to be derived from interest and the trade of commodities. Provided
the principal activity of the Fund is buying and selling commodities, income
may include interest, dividends, and income from the trade or holding of
futures, options or forward contracts on commodities. The general partner
intends to limit the principal business activity and sources of income so
that this exception will apply to us. In addition, the general partner has
placed restrictions upon the right of redemption. See The Limited
Partnership Agreement, Redemptions and Exhibit A, Right of Redemption.
No IRS Ruling
We have not applied for a ruling from the Internal Revenue Service regarding
our status as a partnership or with regard to any other tax aspect, nor do we
intend to seek a ruling. In the absence of a ruling, there can be no
assurance that the IRS will not attempt to take a position adverse to the
Fund and the opinions expressed in this prospectus.
Tax Opinion
The general partner believes, in reliance upon opinion of legal counsel, that
this prospectus accurately summarizes all material Federal tax matters
related to the Fund. In the opinion of The Scott Law Firm, P.A., tax counsel
to the Fund, based upon the facts stated in the certificate of intended
operation of the partnership supplied by the general partner, (i) we will be
treated as a partnership for Federal income tax purposes, (ii) the
allocations of profits and losses made when partners redeem their partnership
interests will be upheld for Federal income tax purposes, (iii) based upon
our contemplated trading activities, the IRS will consider us as conducting a
trade or business; and, as a result, the ordinary and necessary business
expenses we incur while conducting our commodity futures trading business
will not be subject to limitation under Section 67 or Section 68 of the
Internal Revenue Code (iv) the profit share will be respected as a
distributive share of our income allocable to Providence Select Fund, Limited
Partnership; and (v) the contracts we trade, as described in this prospectus,
will satisfy the commodities trading safe harbor as described in section
864(b) of the Internal Revenue Code.
Such opinion is based on the Internal Revenue Code as of the effective date
of this prospectus and a review of the Limited Partnership Agreement, and is
conditioned upon the following representations of facts by the general
partner:
* at all times, we will be operated in accordance with the Delaware Uniform
Limited Partnership Act and the Limited Partnership Agreement attached hereto
as Exhibit A
* for our first two years of operation, the aggregate deductions claimed by
the partners as their distributive shares of our net losses will not exceed
the equity capital invested in the Fund
* no creditor who makes us a loan, including margin accounts, will have or
acquire, as a result of making the loan, any direct or indirect interest in
our capital, profits or property, other than as a secured creditor
* the general partner will at all times actively direct the affairs of the
Fund
* interests in the Fund:
* will be transferable or redeemed only upon approval of the general partner
* will not be traded on an established securities market, and
* will not be readily tradable on a secondary market or the substantial
equivalent thereof
* we will not be registered under the Investment Advisor's Act of 1940; and
* over 90% of our earned income will be qualifying income as that term is
defined in the Revenue Act of 1987.
The Scott Law Firm, P.A. is not able to opine upon the tax treatment of
expenses because that determination depends upon questions of fact to be
resolved by the general partner on behalf of the Fund.
In addition, commodity trading advisor fees are aggregated with employee
business expenses and other expenses of producing income, and the aggregate
of such expenses is deductible only to the extent such amount exceeds 2% of
your adjusted gross income. It is the general partner's position that our
intended operations will qualify as a trade or business. If this position is
sustained, the brokerage commissions and performance fees will be deductible
as ordinary and necessary business expenses. Syndication costs to organize
the Fund and offering expenses are subject to limitations upon deduction
imposed by the Internal Revenue Code.
Any change in the representations of the general partner or the operative
facts will prevent you and us from relying upon the legal opinion from The
Scott Law Firm, P.A.
Passive Loss And Unrelated Business Income Taxes Rules
In addition to the imposition of a corporate level tax on publicly traded
partnerships, special rules apply to partnerships in regard to the
application of the passive loss and unrelated business income tax rules. In
Notice 88-75 issued on June 17, 1988, the IRS provided guidance as to
partnership operation. The general partner intends to use its best efforts
to cause us to comply with the applicable provisions of these guidelines. In
the event our expenses were deemed not to qualify as deductions from trading
profits, your total taxes would increase while your distributions would
remain the same.
Basis Loss Limitation
Generally, the basis of your interest in the Fund for tax purposes is equal
to (i) the cost decreased, but not below zero, by your share of any
partnership losses and distributions, and (ii) increased by your share of any
partnership income.
You may not deduct losses in excess of the adjusted basis for your interest
in the Fund at the end of the Fund year in which such losses occurred.
However, you may carry forward any excess to such time, if ever, as the basis
for the interest in the Fund is sufficient to absorb the loss. Upon the sale
or liquidation of your interest in the Fund, you will recognize a gain or
loss for Federal income tax purposes equal to the difference between the
amount you realize in the transaction and the basis for your interest in the
Fund at the time of such sale. For individuals, capital losses would offset
capital gains on a dollar for dollar basis, with any excess capital losses
subject to a $3,000 annual limitation. Accordingly, it is possible for you
to sustain a loss from our operation that will not be allowed as a deduction
for tax purposes or will be limited to a $3,000 annual limitation.
At-Risk Limitation
If you borrow money to invest in the Fund, there are at risk limitations that
will apply to you. Section 465 of the Internal Revenue Code provides that
the amount of any loss allowable for any year to be included in your personal
tax return is limited to the amount paid for the partnership interests, or
tax basis, of the amount at risk. Losses already claimed may be subject to
recapture if the amount at risk is reduced as a result of (i) cash
distributions from the activity, (ii) deduction of losses from the activity,
(iii) changes in the status of indebtedness from recourse to non-recourse,
(iv) the commencement of a guarantee, or (v) other events that affect your
risk of loss. You should consider the at risk provisions in arranging debt
financing for purchasing a partnership interest.
Income And Losses From Passive Activities
Internal Revenue Code Section 469 limits the deductibility of what are called
passive losses from business activities in which the taxpayer does not
materially participate. Under temporary Treasury regulations, (i) the
trading of personal property, such as futures contracts, will not be treated
as a passive activity, (ii) partnership gains allocable to you will not be
available to offset passive losses from sources outside the Fund, and (iii)
partnership losses will not be subject to limitation under the passive loss
rules.
Allocation Of Profits And Losses
The allocation of profits, losses, deductions and credits contained in the
Limited Partnership Agreement will be recognized for tax purposes only if the
allocations have substantial economic effect. While the general partner
believes that the Limited Partnership Agreement either meets the requirements
or satisfies a substitute capital account equivalency test, the Limited
Partnership Agreement does not meet a third requirement, that a partner must
make a capital contribution to the Fund equal to any deficit in its capital
account. Accordingly, under the regulations and the Limited Partnership
Agreement, losses would not be allocable to you in excess of your capital
contribution plus properly allocated profits less any prior distributions.
The general partner intends to allocate income and losses in accordance with
the Limited Partnership Agreement that it believes complies with applicable
Internal Revenue Code Section 704. However, no assurances can be given that
the IRS will not attempt to change any allocation that is made among partners
admitted on different dates, which could adversely affect the amount of
taxable income to one partner as opposed to another partner.
Taxation Of Futures And Forward Transactions
The commodity trading advisors selected to trade for us are expected to trade
primarily in contracts that are treated under Section 1256 of the Code. 1256
Contracts are any regulated futures contract, foreign currency contract, non-
equity option, or dealer equity option.
A regulated futures contract is a futures contract:
* if it is traded on or subject to the rules of:
* a national securities exchange which is registered with the Securities and
Exchange Commission,
* a domestic board of trade designated as a contract market by the Commodity
Futures Trading Commission or any other board of trade, exchange or other
market designated by the Secretary of Treasury, and
* which is marked-to-market to determine the amount of margin that must be
deposited or may be withdrawn. Marked-to-market means that the position is
taken in the account on day one at that price. Each day the position is
held, it is valued for account purposes at the price of the contract on the
close of that day.
A foreign currency contract is negotiated between banks and accepted for
trade among banks and private investors. The Fund is expected to purchase
or sell these contracts to speculate on the value of foreign currency as
contrasted with the U. S. dollar. These contracts are exempt from the
Commodity Exchange Act and are excluded from marked-to-market treatment.
A non-equity option means an option which is treated on a qualified board or
exchange and the value of which is not determined directly or indirectly by
reference to any stock, group of stocks, or stock index unless there is in
effect a designation by the Commodity Futures Trading Commission of a
contract market for a contract bond or such group of stocks or stock index.
A dealer equity option means, with respect to an options dealer, only a
listed option which is an equity option, is purchased or granted by such
options dealer in the normal course of his activity of dealing in options,
and is listed on the qualified board or exchange on which such options dealer
is registered.
All Section 1256 contracts will be marked-to-market upon the closing of every
contract, including closing by taking an offsetting position or by making or
taking delivery, by exercise or being exercised, by assignment or being
assigned; or by lapse or otherwise. Also, all open Section 1256 contracts
held by us at our fiscal year-end will be treated as sold for their fair
market value on the last business day of such taxable year. This will result
in all unrealized gains and losses being recognized for Federal income tax
purposes for the taxable year. As a consequence, you may have tax liability
relating to unrealized partnership profits in open positions at year-end.
Sixty percent of any gain or loss from a Section 1256 contract will be
treated as long-term capital gain or loss, and 40% as short-term capital gain
or loss, regardless of the actual holding period of the individual contracts.
The character of a your distributive share of profits or losses of the Fund
from Section 1256 contracts will thus be 60% long-term capital gain or loss
and 40% short-term capital gain or loss. Your distributive share of such
gain or loss for a taxable year will be combined with your other items of
capital gain or loss for such year in computing your Federal income tax
liability. The Internal Revenue Code contains rules designed to eliminate
the tax benefits flowing to high-income taxpayers from the graduated tax rate
schedule and from the personal and dependency exemptions. The effect of
these rules is to tax a portion of a high-income taxpayer's income at a
marginal tax rate of 35%. Most long-term capital gains after May 6, 2003 are
subject to a maximum tax rate of 15%. A limited partner, other than a
corporation, estate or trust, may elect to carry-back any net Section 1256
contract losses to each of the three preceding years. The marked-to-market
rules do not apply to interests in personal property of a nature that are
actively traded other than Section 1256 contracts.
Section 988 Foreign Currency Transactions
A Section 988 transaction is defined as the entering or acquiring of any
forward contract, futures contract, option or similar financial instrument if
the amount to be received or to be paid by reason of a transaction is
denominated in a nonfunctional currency or is determined by reference to one
or more nonfunctional currencies. If the Section 988 transaction results in
a gain or loss, it is considered to be a foreign currency gain or loss to the
extent it does not exceed gain or loss realized by reason of changes in
exchange rates.
Capital Gain And Loss Provisions
If short-term capital gains exceed long-term capital losses, the net capital
gain will be taxed at the same rates as ordinary income. Subject to an
annual limitation of $3,000, you may deduct the excess of capital losses over
capital gains against ordinary income. Excess capital losses that are not
used to reduce ordinary income in a particular taxable year may be carried
forward to, and treated as capital losses incurred in, future years.
Business For Profit
Internal Revenue Code Section 183 sets forth the general rule that no
deduction is allowable to an individual for an activity not engaged in for
profit. These are activities other than those constituting a trade or
business or engaged in for the production or collection of income or for the
management, conservation, or maintenance of property held for the production
of income. The determination of whether an activity is engaged in for profit
is based on all facts and circumstances, and no single factor is
determinative. The general partner believes that by employing independent
commodity trading advisors with strong track records of production of
profits, it is more likely than not, that our activity will be considered an
activity engaged for profit.
Self-Employment Income And Tax
Section 1402 of the Internal Revenue Code provides that an individual's net
earnings from self-employment shall not include the distributive share of
income or loss from any trade or business carried on by a partnership of
which he is a limited partner. Therefore, you should not consider that the
ordinary income from the Fund constitutes net earnings from self-employment
for purposes of either the Social Security Act or the Internal Revenue Code.
Alternative Minimum Tax
The alternative minimum tax for individuals is imposed on certain high income
persons as a method of collection of tax although income may to sheltered or
otherwise not subject to tax. Alternative minimum taxable income consists of
income deemed taxable without regard to availability of deductions or tax
preferences provided by the tax law. Alternative minimum taxable income may
not be offset by certain deductions, including (in certain circumstances)
interest incurred to purchase or carry interests in partnership such as this
partnership. Taxpayers subject to the alternative minimum tax could be
required to make estimated payments. The extent to which the alternative
minimum tax will be imposed or estimated payments required will depend on the
overall tax situation of each limited partner at the end of each taxable year
and, therefore, this question should be referred to your tax advisor.
Interest Related To Tax Exempt Obligations
Section 265(a)(2) of the Internal Revenue Code will disallow any deduction
for interest on indebtedness of a taxpayer incurred or continued to purchase
or carry obligations the interest on which is wholly exempt from tax. The
IRS announced in Revenue Procedure 72-18 that the proscribed purpose would be
deemed to exist with respect to indebtedness incurred to finance a portfolio
investment. The Revenue Procedure further states that a limited partnership
interest will be regarded as a portfolio investment, unless rebutted by other
evidence. Therefore, if you own tax-exempt obligations, the IRS might take
the position that any interest expense incurred by you to purchase or carry
partnership interests should be viewed as incurred by you to continue
carrying tax exempt obligations, and that you should not be allowed to deduct
all or a portion of the interest on any such loans.
Not A Tax Shelter
In the opinion of tax counsel, we do not constitute a tax shelter, as defined
in Internal Revenue Code Section 6111(c), since the general partner intends
to operate the Fund so that the tax shelter ratio will not exceed two-to-one
at the close of any of the first five years. Accordingly, the general
partner has not registered us as a tax shelter with the IRS.
Taxation Of Foreign Partners
An investment in the Fund should not, by itself, cause a foreign partner to
be engaged in a trade or business within the United States. A foreign person
is subject to a 30% withholding tax, unless reduced or exempted by treaty, on
United States source income that is not effectively connected with the
conduct of a United States trade or business. The person having control over
the payment of such income must withhold this tax.
Because we have permitted the trading advisor to trade foreign currency and
other contracts on foreign exchanges or derivative transactions such as
energy or interest rate swaps or forwards, based on current law it is
uncertain whether entering into foreign and derivative transactions may cause
us, and therefore any foreign limited partners, to be treated as engaged in a
trade or business within the United States. However, the Treasury has issued
proposed regulations which, if finalized in their current form, would provide
that foreign limited partners should not be deemed to be engaged in a United
States trade or business solely by virtue of an investment as a limited
partner in the partnership even if the partnership enters into foreign
exchange trades of currency and derivative transactions. These regulations
are proposed to be effective for taxable years beginning 30 days after the
date final regulations are published in the Federal Register. We may elect to
apply the final regulations retroactively once they are finalized. The Scott
Law Firm, P. A. has not opined on the issues related to the withholding by us
from distributions to foreign investors as the determination of how the treat
this issue will be resolved at the end of each taxable year or upon receipt
of a redemption request.
Accordingly, we may be required to withhold tax on items of such income that
are included in the distributive share of a foreign partner, whether or not
the income was actually distributed. If we are required to withhold tax on
such income of a foreign partner, the general partner may pay such tax out of
the redemption of partnership interests by the foreign partner.
Partnership Entity-Audit Provisions-Penalties
The Internal Revenue Code provides that the tax treatment of items of
partnership income, gain, loss, deduction and credit will be determined at
the Fund level in a single partnership proceeding. The Limited Partnership
Agreement has appointed the corporate general partner as the tax matters
partner to settle any issue involving any partner with less than a 1% profits
interest unless such a partner, upon notice, properly elects not to give such
authority to the tax matters partner. The tax matters partner may seek
judicial review for any adjustment to partnership income, but there will be
only one such action for judicial review to which all partners will be bound.
The Internal Revenue Code provides that a partner must report a partnership
item consistently with its treatment on the Fund return, unless the partner
specifically identifies the inconsistency or can show that its treatment of
the Fund item on its return is consistent with a schedule furnished to the
partner by the Fund. Failure to comply with this requirement may result in
penalties for underpayment of tax and could result in an extended statute of
limitations. The statute of limitations for adjustment of tax with respect
to partnership items will generally be three years from the date of filing
the Fund return.
Internal Revenue Code Section 6662 imposes a penalty for a substantial
understatement of income tax equal to 20% of the amount of any underpayment
attributable to that understatement. Understatement is defined as the excess
of the correct amount of tax required to be shown on the return over the
amount of tax that is actually shown on the return. A substantial
understatement exists for any taxable year if the amount of the
understatement for the taxable year exceeds the greater of (i) 10% of the
correct tax, or (ii) $5,000, or $10,000, in the case of a corporation other
than an S corporation or a personal holding company.
Employee Benefit, Retirement Plans And IRA's
The Employee Retirement Income Security Act of 1974 governs:
* employee benefit plans, such as:
* a qualified pension, profit-sharing or stock bonus plan, or
* a qualified health and welfare plan; and
* individual retirement accounts, commonly called IRAs.
You may not purchase limited partnership interests with the assets of a plan
if we, the general partner, the selling agent, the introducing broker, the
futures commission merchant, or any of their affiliates, agents or employees
has investment discretion over such plan, gives investment advice with
respect to such plan assets, for a fee, or is an employer maintaining or
contributing to such plan.
Before you invest in us through one of these qualified plans, you should
consult your own legal and financial advisors, and the fiduciary of your plan
should take into account the facts and circumstances of your plan, and
consider applicable fiduciary standards under the above act.
Acceptance of subscriptions on behalf of employee benefit plans is not a
representation by the general partner or any other party that this investment
meets all legal requirements or is appropriate with respect to investments by
any particular plan. The person with investment discretion should consult
the attorney for the plan as to the propriety of an investment in this
partnership.
The Limited Partnership Agreement
This prospectus explains all material terms of the Limited Partnership
Agreement; however, you are urged to read the entire agreement. See Exhibit
A.
Formation Of The Fund
Our Certificate of Limited Partnership is dated and was filed on May 16, 2003
pursuant to the Delaware Uniform Limited Partnership Act.
You are not liable for our losses, debts and obligations beyond your
investment amount and your share of any of our undistributed assets, so long
as you do not take part in the management of the business of the Fund or
transact any business for the Fund.
According to the Limited Partnership Agreement, this partnership will not
terminate or dissolve upon any limited partner's death, incompetence,
withdrawal, insolvency, bankruptcy, termination, liquidation, dissolution or
other legal incapacity. Also, the limited partnership agreement allows
successor representatives of such limited partner to redeem their partnership
interests, but third party creditors and trustees may not anticipate
distributions or seek redemption without permission of both the successor
representative and the general partner.
Units of Partnership Interests
The amount of partnership interests you hold will determine your percentage
interest in our net assets. The percentage interest will be calculated from
time to time by dividing the number of units of partnership interests you
hold by the aggregate number of outstanding units of partnership interests.
Management Of Partnership Affairs
Only the general partner may manage this partnership. All of the decisions
will be in the sole judgment of the general partner without any obligation to
provide you with advance notice of the decisions to be made. You will not
take part in the business or affairs of the Fund nor will you have any voice
in its or the general partner's management or operations.
You and the other limited partners have a right to vote and a majority of
those partners who hold outstanding partnership interests must give prior
written approval of any material change in either the Limited Partnership
Agreement or the Fund structure.
Without the limited partners' approval, the general partner may (i) change
the management and incentive fees within the limits described by this
prospectus, (ii) change or add or delete trading advisors, (iii) change or
add or delete introducing brokers, (iv) change or add or delete futures
commission merchants, (v) change the commissions, (vi) redeem and return a
limited partner account, (vii) change the commodity contracts traded, (viii)
change the diversification of our assets among the various types of or in the
positions held in commodity markets, or (ix) change or add legal counsel,
experts, and tax partner to the Fund.
To the extent the law permits, such limited partners who hold a majority of
the partnership interests may vote to amend any term in the Limited
Partnership Agreement and, if necessary, the Certificate of Limited
Partnership without the agreement of the general partner. This includes
removing the general partner and electing a new general partner.
The general partner may not make trades on our behalf. Independent commodity
trading advisors selected by the general partner must do the trading.
General Prohibitions
Except for the security posted for commodity trades made in the Fund accounts
on normal margin terms with the clearing broker, we may not borrow from or
loan money or any other assets to any person. However, this shall not apply
to the incurrence of debt to a partner or an affiliate with respect to:
* the offering of partnership interests for sale
* registration, or
* initiation and maintenance of our trading positions.
We may not permit rebates or give-ups to be received by the general partner
or any of its affiliates. Nor may we permit the general partner or any of
its affiliates to engage in reciprocal business arrangements that would
circumvent the foregoing prohibition. However, an affiliate or the general
partner may provide goods or services, including brokerage, at a competitive
cost to us.
The general partner or its affiliates are not required to advance or loan
funds to the Fund. If the general partner makes any advance or loan to the
Fund, it will not receive interest in excess of its interest costs, nor will
it receive interest in excess of the amounts that would be charged the Fund
by unrelated banks on comparable loans for the same purpose. The general
partner shall not receive points or other financing charges or fees
regardless of the amount.
Additional Offerings
The general partner has sole discretion to end this or any future offering of
partnership interests, register additional partnership interests, and make
additional public or private offerings of partnership interests.
You will not have any preemptive, preferential or other rights with respect
to the issuance or sale of any additional partnership interests. We have not
limited the amount of capital contributions or the maximum amount of
partnership interests that may be issued, offered or sold.
Partnership Accounting, Reports, And Distributions
You will have a capital account, and its initial balance will be the amount
you paid for your partnership interests. The net assets of this partnership
will be determined monthly, and any change from the previous month will be
passed on to your account in the ratio that your account bears to all
accounts.
The general partner has sole discretion to make distributions from profits or
net assets. You will receive a monthly report containing (i) the net unit
value as of the end of both the current and previous month, (ii) the
percentage change in net unit value between the two months, (iii) the amount
of distributions during the month, (iv) the brokerage commissions, other
fees, administrative expenses, and reserves for claims and other extra-
ordinary expenses incurred or accrued by us during the month, and (v) any
other information required by the rules of the Commodity Futures Trading
Commission.
You or your duly authorized representative may inspect our books and records
and any records related to your account, provided you give adequate notice,
you do so at a reasonable time, and you make copies at your expense.
Federal Tax Allocations
At the end of each fiscal year, the Fund, under the supervision of the
general partner and the financial experts selected, will allocate our capital
gain or loss and ordinary income or loss, fees and expenses among the
partners in accordance with the relationship of each capital account to all
capital accounts. You must include your share of such items in your personal
income tax return.
Transfer Of Partnership Interests Only With Consent Of The General Partner
Once admitted to this partnership and registered on the Fund records as the
owner of partnership interests, you may (i) receive all distributions,
allocations of losses and withdrawals, and reductions of capital
contributions, (ii) vote on any matters submitted to the limited partners for
voting, and (iii) exercise all rights granted to limited partners pursuant to
the partnership agreement and pursuant to Delaware law.
You may transfer your partnership interests only with the written consent of
the general partner. The general partner may not approve the transfer if it
(i) is not made for all of your partnership interests or, if you are not
assigning all of your partnership interests, you will not retain more than
five units of partnership interests, (ii) will violate any applicable laws or
governmental rules or regulations, including without limitation, any
applicable Federal or State securities laws, or the Delaware limited
partnership laws, or (iii) will jeopardize our ability to be taxed as a
partnership and not as a corporation, or (iv) will affect characterizations
or treatment of income or loss.
Termination Of The Fund
This partnership will terminate (i) at 11:59 p.m. twenty-one years from the
date of the Limited Partnership Agreement, (ii) by election of the general
partner, in its sole discretion, to terminate and dissolve this partnership,
(iii) upon the dissolution, death, resignation, withdrawal, bankruptcy or
insolvency of the general partner, unless the limited partners unanimously
elect to carry on the business and a new general partner has been
substituted, (iv) if it does not pay its annual franchise fee and file its
annual report with the State of Delaware, which will cause it to be dissolved
under Delaware law, (v) upon any event which makes the continued existence of
the Fund unlawful, or (vi) upon the unanimous vote of the Limited Partners.
Meetings
We are not required to hold regular meetings, however, partners may call
meetings to vote on certain issues, including (i) amendment of the limited
partnership agreement; provided, however, any amendment which modifies the
compensation or distributions to the general partner or which affects the
duties of the general partner requires its consent, (ii) removal of the
general partner and election of a new general partner, (iii) cancellation of
any contract for services with the general partner, without penalty, upon 60
days written notice; provided, however, the maximum period of any contract
between the general partner and the Fund is one year; and, provided further,
should any amendment to this partnership agreement attempt to modify the
compensation or distributions to which the general partner is entitled or
which affects the duties of the general partner, such amendment will become
effective only upon the consent of the general partner, (iv) the right to
approve, prior to sale, the sale or distribution, outside the ordinary course
of business, of all or substantially all of the assets of the Fund, (v)
dissolution of the Fund, (vi) and change of any of the Fund's basic
investment policies or in the structure of the Fund. See Management of
Partnership Affairs.
The general partner must receive in person or by certified mail a written
request with a check to cover the cost of sending notice of the meeting to
all partners. One or more partners who collectively own 10% or more of the
outstanding partnership interests must sign the written request. The general
partner then has 15 days to call the meeting
Redemptions
Redemption allows you to receive your share of the net assets of this
partnership. There will be a redemption fee from the time you have been
allocated partnerships interests from your subscription proceeds as follows:
3% during the first four months, 2% the second four months, 1% the third
four months and none after the first twelve months. The general partner must
receive written request, in form acceptable to it, no less than five
business days prior to the last day immediately preceding the desired
effective date of redemption. The effective date of redemption must be the
last day of the then current or a future month. The redemption price will
be the net asset value of the partnership interests on the effective date
of redemption, which will be the last day of each month for all redemption
requests received and approved for payment by the general partner. If you
wish to withdraw your redemption request, the general partner must receive
written notice of such withdrawal request prior to the last business day of
the month in which such request was submitted to be considered.
The general partner will pay the redemption requests within twenty days
following the effective date; i.e., provided the request was received
within five business days from the last day of the month, the effective date
is the close of business on the last day of the month. However, you should
be aware that the general partner may be unable to timely comply with the
request for the sole reason that there is not enough cash. This may be
because the trading advisor cannot liquidate the positions it has taken or
because there are contingent claims on partnership assets. Redemption
requests will be handled in the order in which they are received, with
preference given to requests received from limited partners, as opposed to
a general partner or one of its affiliates. If redemption requests
received from limited partners exceed funds available, redemptions will be
allocated on a prorated basis for the then current redemption period and
paid as a preference in future redemption periods as cash becomes available.
If the general partner notifies you in writing, it may declare additional
redemption dates or cause the Fund to redeem fractions of units of
partnership interests.
Plan For Sale Of Partnership Interests
No NASD Limitation on Sales Commissions and Disclosure of Wholesaling Fees
This offering is made in compliance with an exemption to Rule 2810 granted in
the discretion of the staff of the National Association of Securities
Dealers, Inc. ("NASD").
NASD Rule 2810 includes the continuing service fee as compensation of the
offering. In addition, the general partner may pay up to 1.75% of the net
asset value of investments made through an additional selling agent for so
long as the investment remains in the Fund to persons known as wholesalers
who solicit the additional selling agent agreement. The NASD's Rules also
treat this up to 1.75% as compensation attendant to the offering. This up
to 1.75%, should the general partner elect to use wholesalers, will be paid
entirely from the brokerage commissions paid by the Fund to the general
partner. The exemption from Rule 2810 will permit the wholesaling and
continuing service fees to be paid for so long as the investment remains
in the Fund.
No Sales to Discretionary Accounts
There will be no sales to discretionary accounts without the prior specific
written approval of the customer.
The Selling Agent
We are offering and selling the partnership interests through Futures
Investment Company, an Illinois corporation incorporated on December 6, 1983,
its address is 5914 N. 300 West, P.O. Box C, Fremont, Indiana 46737. It was
registered as a fully disclosed broker/dealer registered with the National
Association of Securities Dealers on July 24, 1997 and has been appointed the
principal selling agent. It may, with the consent of the general partner,
also select other broker dealers to sell partnership interests. All
partnership interests will be sold on a best efforts basis, which means the
selling agents will try, but not guarantee, to sell the partnership
interests.
Currently, Futures Investment Company principally offers securities and
interests in futures. It has and will continue to participate in offerings
of other commodity pools sponsored by the general partner or other persons or
entities in competition with us.
The individual general partner and his spouse own Futures Investment Company.
They are also registered with the National Futures Association as associated
persons and with the National Association of Securities Dealers, Inc. as
registered representatives of Futures Investment Company. In those
capacities, they earn commissions and continuing service fees on the
partnership interests they sell and service.
Although we are offering a maximum of $50,000,000 in partnership interests
pursuant to this registration statement, the Limited Partnership Agreement
authorizes the general partner to determine the amount of partnership
interests to be sold. If the Fund is to sell any partnership interests in
excess of the $50,000,000, such partnership interests must also be registered
with the Securities and Exchange Commission or sold by private offering
pursuant to applicable exemption from registration.
Depository Account & Offering Price
All subscriptions accepted by the general partner will be placed in an
account maintained at Star Financial Bank, Angola, IN until the minimum,
$1,030,000 in face amount of partnership interests are sold. If the minimum
is sold, the account will be delivered to the Fund to engage in trading.
Interest accrued on your subscription amount will be used to buy additional
partnership interests for you. If the minimum is not sold after twelve
months from the date of this prospectus, the general partner has directed the
bank to directly return your original subscription amount, plus accrued
interest, without deduction for any expenses and fees, to you.
After the sale of the minimum, (i) the partnership interests will be sold at
the month end net asset value per partnership interest of the Fund, which is
the net asset value of the partnership divided by the number of outstanding
partnership interests, and (ii) this offering will continue until the maximum
of $50,000,000 in face amount of partnership interests is sold. The net
asset value of the partnership is calculated before the open of the markets
on the first business day of each month and limited partners will be admitted
and issued partnership interests as of this date and price. Net asset value
will be calculated and partnership interests will be issued on a monthly
basis. Net asset value takes into consideration total assets, including all
cash and cash equivalents (valued at cost plus accrued interest and earned
discount), less total liabilities, of the Fund (each determined on the basis
of generally accepted accounting principles, consistently applied under the
accrual method of accounting or as required by applicable laws, regulations
and rules including those of any authorized self regulatory organization).
The general partner may terminate this offering at any time.
After the sale of the minimum, new partners will be admitted to the Fund on
the first business day of the month following the month in which their
subscription documents were accepted. Until they are admitted to the Fund
and assigned partnership interests, all cash and subscription documents will
be held in a segregated depository account. No funds, while held in such
account, will be available to pay debts or claims of the partnership or the
general partner.
All units will be charged a 3% continuing service fee; provided, however,
investors who have purchased and not redeemed at least $1,000,000 in total
partnership interests will be issued additional partnership interests from
the registered offering at the close of business each month to reduce the
annual continuing service fee by 1.5% of the dollar amount of their
holdings. Similarly, investors who have purchased and not redeemed at
least $500,000, but not more than $1,000,000, in total partnership
interests will be issued additional partnership interests at the close of
business each month to reduce the annual continuing service fee by 0.75%
of the dollar amount of their holdings. The issuance of additional
partnership interests will be made concurrently with the monthly redemption
of purchase of partnership interests pursuant to the redemption procedures
in this prospectus, the limited partnership agreement and the subscription
agreement. Fractional units of partnership interest will be issued. For
instance, if you purchase $2,000,000 in Fund partnership interests, after
the first month of investment, you will be charged a continuing service
fee of $5,000 and will be issued additional partnership interests in the
amount of $2,500, which is equal to a refund of 1.5 percentage points of
the continuing service fee. Similarly, if you purchased $600,000, you
would be charged a continuing service fee of $1,500 after the first month
and would be issued additional partnership interests in the amount of $375,
which is equal to a refund of 0.75 percentage points of the continuing
service fee.
Cash from subscriptions held in the depository account will be invested in
short-term investments that meet applicable regulatory requirements. These
include United States Treasury Bills or other comparable interest-bearing
instruments that are expected to be liquid, substantially risk-less
instruments, with correspondingly low yields.
There cannot be any assurance that the minimum partnership interests will be
sold. The general partner is authorized, in its sole discretion, to
terminate this or any future offering of partnership interests without
notice.
Subscription Procedure
To purchase partnership interests, you must complete and execute a
suitability questionnaire and a subscription agreement (Exhibit D), and
deliver the executed subscription documents and check to the sales agent.
You should make out the check to "Star Bank for the acct. of Providence".
Your check will then be deposited to the depository account by noon of the
second business day following receipt by the selling agent.
Under no circumstances should you make payment in cash, or make any checks
payable to the Fund, the general partner the selling agent or any of their
registered representatives or affiliates.
Subscription Amounts
You must purchase at least $25,000 in partnership interests; however, the
general partner may at its sole discretion reduce this to not less than the
regulatory minimum of $5,000. You may make additional investments above
$25,000 in $1,000 increments, but you may not invest more than 10% of your
net worth in the Fund. If you have not provided collectible funds, whether
in the form of a bad check or draft, or otherwise, any partnership interests
recorded in our books in your favor shall be cancelled.
Revocation and Acceptance of Subscription
Once you have purchased partnership interests, you may revoke your
subscription within five business days after you send it to us, or longer, if
there are Federal or State securities laws which allow you to do so. After
the lapse of five business days from submission, your subscription will be
irrevocable and, thereafter, you must redeem pursuant to the terms of the
Limited Partnership Agreement. The partnership interests offered to you are
subject to prior sale. The general partner has sole discretion to reject any
subscription, in whole or in part, within five days. If your subscription is
accepted, the general partner will admit you as a partner and send you
written confirmation to disclose the number of partnership interests
purchased within 20 days of the close of business for the month in which you
were admitted as a limited partner.
Investor Suitability
See Suitability Standards in Exhibit C and on page ii of this prospectus.
The general partner and the sales agent shall make every reasonable effort
to determine that the purchase of units of partnership interest is a
suitable and appropriate investment for you, on the basis of the information
regarding your financial situation and investment objectives obtained from
the suitability questionnaire and subscription agreement (Exhibit D) signed
and delivered by you in connection with your subscription for units. On
the basis of the information provided by you, the general partner and the
sales agent shall make every reasonable effort to ascertain that you:
(a) meet the minimum income and net worth standards established for the
Fund;
(b) can reasonably benefit from an investment in the Fund based on your
overall investment objectives and portfolio structure;
(c) are able to bear the economic risks of an investment in the Fund
based on your overall financial situation; and
(d) have an understanding of:
(i) the fundamental risks of an investment in the Fund;
(ii) the risk that you may lose your entire investment;
(iii) the restrictions on the liquidity and transferability of the units;
(iv) the background and qualification of the general partner and the
Fund's commodity trading advisor; and
(v) the tax consequences of an investment in the Fund.
Records of the information provided by you in the suitability questionnaire
and subscription agreement (Exhibit D) will be maintained by or on behalf
of the general partner and/or the sales agent for at least six years.
Investor Warranties
When you execute and deliver your Subscription Agreement and Power of
Attorney, you are making representations and warranties to the general
partner, the introducing broker, the futures commission merchant and the
selling agent including, but not limited to:
(a) you are of legal age to execute the Subscription Agreement and Power of
Attorney and are legally competent to do so;
(b) you acknowledge that you have received the prospectus, including the
Limited Partnership Agreement, prior to subscribing for partnership
interests;
(c) all information you have given to the general partner or that is set
forth in the Subscription Agreement and Power of Attorney submitted by you is
correct and complete as of the date of submission. Also, if there are any
changes in such information prior to acceptance of your subscription, you
will immediately furnish the revised or corrected information to the general
partner
(d) unless (e) or (f) below apply to you, your subscription is made with
your own funds for your own account and not as trustee, custodian or nominee
for another.
(e) the subscription, if made as custodian for a minor, is a gift you have
made to the minor and is not made with the minor's funds; or, if not a gift,
the representations as to net worth and annual income apply only to such
minor.
(f) if you are subscribing in a representative capacity:
* you have full power and authority to purchase the partnership interests
and enter and be bound by the Subscription Agreement and Power of Attorney on
behalf of the entity for which you are purchasing the partnership interests,
and
* such entity has full right and power to purchase the partnership interests
and enter and be bound by the Subscription Agreement and Power of Attorney
and become a limited partner pursuant to the Limited Partnership Agreement
attached as Exhibit A.
The general partner, the introducing broker, the futures commission merchant
and the selling agent may rely upon any of the above representations and
warranties as a defense to any claim made against it.
Legal Matters
Litigation And Claims
Within the past 5 years of the date of this prospectus, there have been no
material administrative, civil or criminal actions against either general
partner, the commodity trading advisors, the futures commission merchant,
the introducing broker, the selling agent, or any principal or affiliate of
any of them. This includes any actions pending, on appeal, concluded,
threatened, or otherwise known to them.
Legal Opinion
The Scott Law Firm, P.A., 940 Northeast 79th Street, Suite A, Miami, FL
33138, wscott@wscottlaw.com, is special securities counsel to advise the
partnership and the general partner with respect to the offering of
partnership interests, the preparation of this prospectus, the legality of
the partnership interests offered, and the classification of the Fund as a
partnership for tax purposes.
From time to time, the Fund will also advise the Fund regarding the
maintenance of the partnership's tax status, the legality of any subsequent
offers, and the legality of any transfers by partners. The general partner
may add, delete, and change legal counsel to the Fund at any time for any
reason. The general partner has granted the Firm the right to employ other
law firms to help in matters that relate to the sale of partnership interests
or our operation
The Firm will not give you or any persons affiliated with you legal advice.
You should seek investment, legal, and tax advice from your own legal counsel
and other professionals of your choice.
Experts
The general partner has employed financial experts to perform services for
the Fund. These experts currently are:
Jordan, Patke & Associates, Ltd. is our accounting and auditing expert, and
is responsible for auditing the books and records of both the partnership
and the corporate general partner, as well as preparing the Fund K-1's and
our tax returns. Another firm has audited the financial statements in this
prospectus; however, all future audits will be conducted by Jordan, Patke
& Associates, Ltd.
Shoup Accounting Services, Inc. a Certified Public Accountant, 306 S.
West Street, Angola, IN 46703 is an accounting expert that maintains a
duplicate set of our books and records and handles the day to day fund
accounting.
The corporate general partner serves as our tax partner. The general partner
is required by the rules and regulations of the Commodity Futures Trading
Commission to send you unaudited monthly account statements and annual
financial statements audited by an independent certified public accountant.
The general partner may add, delete and change the experts selected
to perform services for the Fund at any time for any reason.
We will send you the unaudited monthly account statements as soon as
practicable after the end of each month, and will send you the audited annual
financial statements within 90 days after the end of each calendar year.
Additional Information
By our general partner, we have filed a registration statement on Form S-1
with the Securities and Exchange Commission under the Securities Act of 1933
to allow us to issue and sell our limited partnership interests.
This prospectus does not contain all of the information in the Form S-1
filing, for example, the Selling Agreement and the futures commission
merchant's Customer Agreement that established the Fund accounts. The
descriptions in this prospectus of these exhibits are summaries. For further
information regarding the Fund and the partnership interests offered, you may
inspect and copy, without charge, our complete filings, including this
prospectus, the exhibits and periodic reports, at the public reference
facilities of the Securities and Exchange Commission at 450 Fifth Street, NW,
Washington, D.C. 20549.
Also, the Securities and Exchange Commission offices will send you copies of
all or any part of this filing by mail, upon payment of the prescribed rates.
This prospectus and other electronic filings made through the Electronic Data
Gathering, Analysis and Retrieval (EDGAR) system, including monthly prospectus
supplements reflecting the previous month-end net asset value, are publicly
available through the Commission's Internet site, http://www.sec.gov.
In addition, our books and records will be maintained for six years at the
office of Investor Services, 500 Park Avenue #114, Lake Villa, IL 60046.
You are invited to review any materials available to the general partner
relating to this partnership, our operations, this offering, the Advisory
Agreements between us and the commodity trading advisors, the Customer
Agreement between us and the futures commission merchant, the commodity
trading advisor's disclosure document, the forms filed with the National
Futures Association for any registered entity or person related to this
partnership, and any other matters relating to the laws applicable to this
offering or this partnership.
The officer and staff of the general partner will answer all reasonable
inquiries you may have. All the above materials will be made available at
any mutually convenient location at any reasonable hour after reasonable
prior notice.
The general partner will allow you to obtain any additional information from
third parties necessary to verify any representations or information in this
prospectus and its exhibits, assuming the general partner possesses such
information or has a right to acquire it with reasonable effort and expense.
However, your review is limited by the proprietary and confidential nature of
the commodity trading advisor's trading systems and by the confidentiality of
personal information relating to other investors.
*******************************************************************************
PROVIDENCE SELECT FUND,
LIMITED PARTNERSHIP
(A Development Stage Enterprise)
INDEX TO FINANCIAL STATEMENTS
DECEMBER 31, 2005, 2004 AND 2003
Page
Report of Independent Registered Public Accounting Firm F-2
Financial Statements
Balance Sheets F-3
Statements of Operations F-4
Statement of Partners' Equity F-5
Statements of Cash Flows F-6
Notes to Financial Statements F-7 - F-11
F-1
Frank L. Sassetti & Co.
Certified Public Accountants
To The Partners
Providence Select Fund, Limited Partnership
Fremont, Indiana
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have audited the accompanying balance
sheets of PROVIDENCE SELECT FUND, LIMITED PARTNERSHIP (a development stage
enterprise) as of December 31, 2005 and 2004 and the related statements of
operations, partners' equity and cash flows for the years ended December 31,
2005 and 2004, the period from May 16, 2003 (date of inception) through
December 31, 2003 and the cumulative period from May 16, 2003 (date of
inception) through December 31, 2005. 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 audits.
We conducted our audits 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 Fund 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 on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide 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,
2005 and 2004, and the results of its operations and its cash flows for the
years ended December 31, 2005 and 2004, the period from May 16, 2003 through
December 31, 2003 and the cumulative period from May 16, 2003 through
December 31, 2005 are in conformity with accounting principles generally
accepted in the United States.
/s/ Frank L. Sassetti & Co.
March 22, 2006
Oak Park, Illinois
6611 W. North Avenue * Oak Park, Illinois 60302
* Phone (708) 386-1433 * Fax (708) 386-0139
F-2
PROVIDENCE SELECT FUND,
LIMITED PARTNERSHIP
(A Development Stage Enterprise)
BALANCE SHEETS
DECEMBER 31, 2005 AND 2004
2005 2004
ASSETS
Cash $ 381 $ 1,872
Reimbursable syndication costs 105,776 80,466
Prepaid operating costs and other 562 128
Total Assets $106,719 $ 82,466
LIABILITIES AND PARTNERS' EQUITY
Liabilities -
Due to corporate general partner $104,719 $ 80,466
Partners' Capital -
Limited partners (1 unit)
Initial capital contribution 1,000 1,000
General partners (1 unit)
Initial capital contribution 1,000 1,000
Total Partners' Capital 2,000 2,000
$106,719 $82,466
The accompanying notes are an integral part of the financial statements.
F-3
PROVIDENCE SELECT FUND,
LIMITED PARTNERSHIP
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004, THE PERIOD FROM
MAY 16, 2003 (DATE OF INCEPTION) TO DECEMBER 31, 2003 AND THE CUMULATIVE
PERIOD FROM MAY 16, 2003 (DATE OF INCEPTION) TO DECEMBER 31, 2005
Years ended December 31, May 16, 2003 May 16, 2003
2005 2004 to December to December
31, 2003 31, 2005
REVENUES $- $- $- $-
Total Revenues - - - -
EXPENSES - - - -
Total Expenses - - - -
NET INCOME $- $- $- $-
NET INCOME -
Limited partnership unit $- $- $- $-
General partnership unit $- $- $- $-
The accompanying notes are an integral part of the financial statements.
F-4
PROVIDENCE SELECT FUND,
LIMITED PARTNERSHIP
(A Development Stage Enterprise)
STATEMENT OF PARTNERS' EQUITY
MAY 16, 2003 (INCEPTION)
TO DECEMBER 31, 2005
Total
Limited Partners General Partners Partners' Equity
Amount Units Amount Units Amount Units
Initial partner
contributions $1,000 1 $1,000 1 $2,000 2
Net income-
May 16, 2003
to December 31, 2003 - - -
Balance -
December 31, 2003 1,000 1 1,000 1 2,000 2
Net income-
Year ended
December 31, 2004 - - -
Balance -
December 31, 2004 1,000 1 1,000 1 2,000 2
Net income-
Year ended
December 31, 2005 - - -
Balance -
December 31, 2005 $1,000 1 $1,000 1 $2,000 2
December 31, December 31, December 31,
2005 2004 2003
Value per unit $1,000 $1,000 $1,000
Total partnership units 2 2 2
The accompanying notes are an integral part of the financial statements.
F-5
PROVIDENCE SELECT FUND,
LIMITED PARTNERSHIP
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004, THE PERIOD FROM
MAY 16, 2003 (DATE OF INCEPTION) TO DECEMBER 31, 2003 AND THE CUMULATIVE
PERIOD FROM MAY 16, 2003 (DATE OF INCEPTION) TO DECEMBER 31, 2005
Years ended December 31, May 16, 2003 May 16, 2003
2005 2004 to December to December
31, 2003 31, 2005
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income $- $- $- $-
Adjustments to reconcile
net income to net cash
used in operating
activities- - - - -
Changes in assets and
liabilities-
Reimbursable syndication
costs (1,057) (1,057)
Prepaid operating costs (434) (105) (23) (562)
Net Cash Used In
Operating Activities (1,491) (105) (23) (1,619)
CASH FLOWS FROM FINANCING
ACTIVITIES
Initial partner contributions - - 2,000 2,000
NET (DECREASE) INCREASE IN
CASH (1,491) (105) 1,977 381
CASH -
Beginning of period 1,872 1,977 - -
End of period $ 381 $1,872 $1,977 $ 381
NON-CASH INVESTING ACTIVITIES
Reimbursable syndication costs
paid by and owed to
general partner $24,253 $15,899 $64,567 $104,719
The accompanying notes are an integral part of the financial statements.
F-6
PROVIDENCE SELECT FUND, LIMITED PARTNERSHIP
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005, 2004 AND 2003
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Providence Select Fund, Limited Partnership (the Fund or Partnership)
was formed on May 16, 2003 under the laws of the State of Delaware. The Fund
expects to engage in high risk, speculative and hedge trading of futures and
forward contracts, options on futures and forward contracts, and other
instruments selected by the commodity trading advisors (CTA's). However, the
Fund will not commence business until at least $1,030,000 worth of
partnership interests are sold. 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. The initial CTA
is expected to be NuWave Investment Corp., which will have 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 (Futures), which is
controlled by Michael Pacult and his wife.
The Partnership is in the development stage and its efforts through
December 31, 2005 have been principally devoted to organizational activities.
Regulation - The Fund is a registrant (effective September 12, 2005)
with the Securities and Exchange Commission (SEC) pursuant to the Securities
and Exchange Act of 1934 (the Act). The Fund is subject to the regulations of
the SEC and the reporting requirements of the Act. The Fund will 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 Expenses and Organizational Costs - White Oak has incurred
$105,776 and $80,466 in offering costs through December 31, 2005 and 2004,
respectively. The Fund has agreed to reimburse White Oak for all
organization and offering expenses incurred up to the end of the twelfth
month of operations after the twelfth month following the commencement of
business. The commencement of business is contingent upon the sale of at
least $1,030,000 of partnership interests. All offering costs after the
twelfth month of operations will be paid directly by the Fund. The
organization costs for the Fund are expensed as incurred by the general
partner, White Oak, and are immaterial.
Registration Costs - Costs incurred for the initial filings with the
Securities and Exchange Commission, National Association of Securities
Dealers, Inc. and the states where the offering is expected to be made are
accumulated, deferred and charged against the gross proceeds of offering as
part of the offering expenses to be reimbursed to the general partner after
the twelfth month of operation following the commencement of business.
Recurring registration costs, if any, will be charged to expense as incurred.
F-7
PROVIDENCE SELECT FUND, LIMITED PARTNERSHIP
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005, 2004 AND 2003
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue Recognition - Forward contracts, futures and other investments
are recorded on the trade date and will be reflected in the statement of
operations at the difference between the original contract amount and the
market value on the last business day of the reporting period.
Market value of forward contracts, futures and other investments is
based upon exchange or other applicable closing quotations related to the
specific positions.
Use of Accounting Estimates - The preparation of financial statements
in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates.
Income Taxes - The Fund is not required to provide a provision for
income taxes. Income tax attributes that arise from its operations are passed
directly to the individual partners. The Fund may be subject to state and
local taxes in jurisdictions in which it operates.
Statement of Cash Flows - For purposes of the Statement of Cash Flows,
the Fund will consider money market funds to be cash equivalents. Net cash
used in operating activities includes no cash payments for interest or income
taxes through December 31, 2005. There were no cash equivalents as of
December 31, 2005 and 2004.
2. 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 $1,000 in cash for
deposit to the capital of the Fund for a non-trading General Partnership
interest in the Partnership.
F-8
PROVIDENCE SELECT FUND, LIMITED PARTNERSHIP
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005, 2004 AND 2003
2 GENERAL PARTNER DUTIES (CONTINUED)
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.
3. 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 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 business 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. 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 fee after the twelfth month.
F-9
PROVIDENCE SELECT FUND, LIMITED PARTNERSHIP
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005, 2004 AND 2003
4. FEES
The Fund will be charged the following fees on a monthly basis as of
the commencement of trading.
A monthly management fee of 2% (annual rate) of the Fund's net assets
allocated to the CTA to trade will be paid to the CTA.
The Fund will pay the Corporate General Partner a fixed brokerage
commission of 6%, from which the Corporate General Partner will pay the
round turn commissions to the introducing broker and the futures commission
merchant for trades made on U.S. markets..
A quarterly incentive fee of 20% of "new trading profits" will be paid
to the CTA and a 3% quarterly incentive fee will be paid to the Corporate
General Partner. "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 a CTA, no incentive fees will be paid to either party and all losses
will be carried over to the following months until profits from trading
exceed the loss.
After the Fund commences trading, the Fund will pay the selling agents
(including Futures) a 3% continuing service fee per year on the investment in
the Fund.
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's and general partner to 6% if
the total incentive fees are decreased to 15%.
5. RELATED PARTY TRANSACTIONS
The sole shareholder of White Oak has made an initial limited partner
capital contribution in the Fund of $1,000. He is also the sole shareholder
of Ashley Capital Management, Inc. (the general partner of another commodity
fund), which along with the shareholder has temporarily funded certain
syndication costs incurred by the Fund to date. In Accordance with Financial
Accounting Standards Board Interpretation No. 46(R), Consolidation of
Variable Interest Entities, a variable interest entity relationship exists
between White Oak and the Fund.
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-10
PROVIDENCE SELECT FUND, LIMITED PARTNERSHIP
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005, 2004 AND 2003
6. CONCENTRATIONS
The Fund will maintain all of its initial subscription deposits with a
commercial financial institution. In the event of the financial institution's
insolvency, recovery of Fund deposits may be limited to account insurance or
other protection afforded deposits by the institution.
*******************************************************************************
PROVIDENCE SELECT FUND,
LIMITED PARTNERSHIP
(A Development Stage Enterprise)
INDEX TO FINANCIAL STATEMENTS
Page
Accountants' Review Report F-2
Financial Statements
Balance Sheets as of September 30, 2006 and December 31, 2005 F-3
Statements of Operations for the Three and Nine Months Ended
September 30, 2006 and 2005 and the cumulative period from
May 16, 2003 (date of inception) to September 30, 2006 F-4
Statements of Partners' Equity from May 16, 2003 to
September 30, 2006 F-5
Statements of Cash Flows for the Nine Months Ended September
30, 2006 and 2005 and the cumulative period from May 16, 2003
(date of inception) to September 30, 2006 F-6
Notes to Financial Statements F-7 - F-11
Jordan, Patke & Associate, Ltd.
Certified Public Accountants
To The Partners
Providence Select Fund, Limited Partnership
Fremont, Indiana
We have reviewed the balance sheet of
PROVIDENCE SELECT FUND, LIMITED PARTNERSHIP as of September 30, 2006 and
December 31, 2005 and the related statements of operations for the three and
nine months ended September 30, 2006 and 2005 and the cumulative period from
May 16, 2003 (date of inception) to September 30, 2006, and the statements of
partners' equity from May 16, 2003 to September 30, 2006 and the statement of
cash flows for the nine months ended September 30, 2006 and 2005 and the
cumulative period from May 16, 2003 to September 30, 2006. These financial
statements are the responsibility of the Partnership's management.
We conducted our review in accordance with
standards established by the American Institute of Certified Public
Accountants. A review of interim financial information consists principally
of applying analytical procedures to financial data and making inquiries of
persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with
auditing standards generally accepted in the United States, the objective of
which is the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our review we are not aware of any
material modifications that should be made to the financial statements
referred to above for them to be in conformity with accounting principles
generally accepted in the United States.
Frank L. Sassetti & Co. have previously
audited, in accordance with auditing standards generally accepted in the
United States, the balance sheet, including the schedule of investments, of
PROVIDENCE SELECT FUND, LIMITED PARTNERSHIP as of December 31, 2005 and the
related statements of operations, partner's equity and cash flows for the
year then ended (not presented herein); and in their report dated March 22,
2006, they expressed an unqualified opinion on these financial statements.
In our opinion, the information set forth in the accompanying balance sheet
as of December 31, 2005 is fairly stated, in all material respects, in
relation to the balance sheet from which it has been derived.
/s/ Jordan, Patke & Associates
November 15, 2006
Lincolnshire, Illinois
F-2
PROVIDENCE SELECT FUND,
LIMITED PARTNERSHIP
(A Development Stage Enterprise)
BALANCE SHEETS
SEPTEMBER 30, 2006 AND DECEMBER 31, 2005
September 30,
2006 December 31,
(A Review) 2005
ASSETS
Cash $ 260 $ 381
Reimbursable syndication costs 194,806 105,776
Prepaid operating costs and other 698 562
Total Assets $ 195,764 $ 106,719
LIABILITIES AND PARTNERS' EQUITY
Liabilities -
Due to corporate general partner $ 193,764 $ 104,719
Partners' Capital -
Limited partners (1 unit)
Initial capital contribution 1,000 1,000
General partners (1 unit)
Initial capital contribution 1,000 1,000
Total Partners' Capital 2,000 2,000
$ 195,764 $ 106,719
The accompanying notes are an integral part of the financial statements.
F-3
PROVIDENCE SELECT FUND,
LIMITED PARTNERSHIP
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
AND THE CUMULATIVE PERIOD FROM MAY 16, 2003 (DATE OF INCEPTION)
TO SEPTEMBER 30, 2006
(A Review)
May 16, 2003
Three months ended Nine months ended to
Sep 30, Sep 30, Sep 30,
2006 2005 2006 2005 2006
INVESTMENT AND OTHER INCOME
Interest income $ - $ - $ - $ - $ -
Total Income - - - - -
EXPENSES
Commissions - - - - -
Management fees - - - - -
Other administrative
expenses - - - - -
Total Expenses - - - - -
Net Investment Loss - - - - -
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Realized gain/(loss) from
trading futures - - - - -
Change in unrealized
gain/(loss) on open commodity
futures contracts - - - - -
Total Realized and Unrealized
Gain on Investments - - - - -
NET INCOME $ - $ - $ - $ - $ -
NET INCOME -
Limited partner unit $ - $ - $ - $ - $ -
General partner unit $ - $ - $ - $ - $ -
Weighted average partnership
units outstanding:
Limited partner units 1.00 1.00 1.00 1.00 1.00
General partner units 1.00 1.00 1.00 1.00 1.00
The accompanying notes are an integral part of the financial statements.
F-4
PROVIDENCE SELECT FUND,
LIMITED PARTNERSHIP
(A Development Stage Enterprise)
STATEMENT OF PARTNERS' EQUITY
MAY 16, 2003 (INCEPTION)
TO SEPTEMBER 30, 2006
(A Review)
Total
Limited Partners General Partners Partners' Equity
Amount Units Amount Units Amount Units
Initial partner
contributions $1,000 1 $1,000 1 $2,000 2
Net income-
May 16, 2003
to December 31, 2003 - - -
Balance -
December 31, 2003 1,000 1 1,000 1 2,000 2
Net income-
January 1, 2004
to December 31, 2004 - - -
Balance -
December 31, 2004 1,000 1 1,000 1 2,000 2
Net income-
January 1, 2005
to December 31, 2005 - - -
Balance -
December 31, 2005 1,000 1 1,000 1 2,000 2
Net income-
January 1, 2006
to September 30, 2006 - - -
Balance -
September 30, 2006 $1,000 1 $1,000 1 $2,000 2
September 30, December 31,
2006 2005
Value per unit $1,000 $1,000
Total partnership units 2 2
The accompanying notes are an integral part of the financial statements.
F-5
PROVIDENCE SELECT FUND, LP
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
AND FOR THE PERIOD FROM MAY 16, 2003 (DATE OF INCEPTION)
TO SEPTEMBER 30, 2006
(A Review)
May 16, 2003
Nine months ended to
Sep 30, Sep 30,
CASH FLOWS FROM OPERATING ACTIVITIES 2006 2005 2006
Net Income $ - $ - $ -
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities-
Changes in operating assets and liabilities -
Reimbursable syndication costs 15 479 (1,042)
Prepaid operating costs (136) (220) (698)
Net Cash Provided By
Operating Activities (121) 259 (1,740)
CASH FLOWS FROM FINANCING ACTIVITIES
Initial partner contributions - - 2,000
Net Cash Used In
Financing Activities - - 2,000
NET INCREASE IN CASH (121) 259 260
CASH
Beginning of period 381 1,872
End of period $260 $2,131 $260
NON-CASH INVESTING ACTIVITIES
Reimbursable syndication costs
paid by and owed to affiliate $89,045 $10,551 $193,764
The accompanying notes are an integral part of the financial statements.
F-6
PROVIDENCE SELECT FUND, LIMITED PARTNERSHIP
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2006 AND 2005 AND DECEMBER 31, 2005
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Providence Select Fund, Limited Partnership (the Fund) was formed on May
16, 2003 under the laws of the State of Delaware. The Fund expects to engage
in high risk, speculative and hedge trading of futures and forward contracts,
options on futures and forward contracts, and other instruments selected by
the commodity trading advisors (CTA's). However, the Fund will not commence
business until at least $1,030,000 worth of partnership interests are sold.
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. The initial CTA is expected to be NuWave
Investment Corp., which will have 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 (Futures), which is controlled by Michael
Pacult and his wife.
The Partnership is in the development stage and its efforts through
September 30, 2006 have been principally devoted to organizational
activities.
Regulation - The Fund is a registrant (effective September 12, 2005) with
the Securities and Exchange Commission (SEC) pursuant to the Securities and
Exchange Act of 1934 (the Act). The Fund is subject to the regulations of
the SEC and the reporting requirements of the Act. The Fund is also 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 Expenses and Organizational Costs - White Oak has incurred
$193,764 and $104,719 in offering costs through September 30, 2006 and
December 31, 2005 respectively. The Fund has agreed to reimburse White Oak
for all offering expenses incurred up to the end of the twelfth month of
operations after the twelfth month following the commencement of business.
The commencement of business is contingent upon the sale of at least
$1,030,000 of partnership interests. All costs after the commencement of
business will be paid directly by the Fund. The organization costs for the
Fund will be expensed as incurred by the general partner, White Oak, and are
expected to be immaterial.
Registration Costs - Costs incurred for the initial filings with Securities
and Exchange Commission, Commodity Futures Trading Commission, National
Futures Association (the "NFA") and the states where the offering is expected
to be made are accumulated, deferred and charged against the gross proceeds
of offering as part of the offering expenses to be reimbursed to the General
Partner after the twelfth month of operation following commencement of
business. Registration costs incurred after the commencement of business, if
any, will be charged to expense as incurred.
F-7
PROVIDENCE SELECT FUND, LIMITED PARTNERSHIP
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2006 AND 2005 AND DECEMBER 31, 2005
1 NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue Recognition - Forward contracts, futures and other investments are
recorded on the trade date and will be reflected in the statement of
operations at the difference between the original contract amount and the
market value on the last business day of the reporting period.
Market value of forward contracts, futures and other investments is based
upon exchange or other applicable closing quotations related to the specific
positions.
Use of Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates.
Income Taxes - The Fund is not required to provide a provision for income
taxes. Income tax attributes that arise from its operations are passed
directly to the individual partners. The Fund may be subject to state and
local taxes in jurisdictions in which it operates.
Statement of Cash Flows - For purposes of the Statement of Cash Flows, the
Fund will consider only money market funds to be cash equivalents. Net cash
provided by operating activities includes no cash payments for interest or
income taxes through September 30, 2006. There were no cash equivalents as
of September 30, 2006 or December 31, 2005.
2. 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 $1,000 in cash for deposit to
the capital of the Fund for a non-trading General Partnership interest in the
Partnership.
F-8
PROVIDENCE SELECT FUND, LIMITED PARTNERSHIP
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2006 AND 2005 AND DECEMBER 31, 2005
2 GENERAL PARTNER DUTIES (CONTINUED)
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.
3. 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 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 business 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. 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 fee after the twelfth month.
F-9
PROVIDENCE SELECT FUND, LIMITED PARTNERSHIP
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2006 AND 2005 AND DECEMBER 31, 2005
4. FEES
The Fund will be charged the following fees on a monthly basis as of the
commencement of trading.
A monthly management fee of 2% (annual rate) of the Fund's net assets
allocated to the CTA to trade will be paid to the CTA.
The Fund will pay the Corporate General Partner a fixed brokerage
commission of 6%, from which the Corporate General Partner will pay the round
turn commissions to the introducing broker and the futures commission
merchant for trades made on U.S. markets. Trades made on foreign markets, if
any, will be charged to the Fund.
A quarterly incentive fee of 20% of "new trading profits" will be paid to
each CTA and a 3% quarterly incentive fee will be paid to the Corporate
General Partner. "New trading profits" includes all income earned by a CTA
and expense allocated to his activity. In the event that trading produces a
loss for a 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 one CTA to be paid an incentive fee during a quarter or a
year when the Fund experienced a loss.
After the Fund commences trading, the Fund will pay the selling agents a 3%
continuing service fee per year on the investment in the Fund.
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's and general partner to 6% if
the total incentive fees are decreased to 15%.
5. RELATED PARTY TRANSACTIONS
The sole shareholder of White Oak has made an initial limited partner
capital contribution in the Fund of $1,000. He is also the sole shareholder
of Ashley Capital Management, Inc. (the general partner of another commodity
fund) and a 50% shareholder of Futures Investment Company (the principal
selling agent), which along with the shareholder, have temporarily funded the
syndication costs incurred by the Fund to date. In Accordance with Financial
Accounting Standards Board Interpretation No. 46(R), Consolidation of
Variable Interest Entities, a variable interest entity relationship exists
between White Oak and the Fund.
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-10
PROVIDENCE SELECT FUND, LIMITED PARTNERSHIP
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2006 AND 2005 AND DECEMBER 31, 2005
6. CONCENTRATIONS
The Fund will maintain all of its initial subscription deposits with a
commercial financial institution. In the event of the financial
institution's insolvency, recovery of Fund deposits may be limited to account
insurance or other protection afforded deposits by the institution.
7. SUBSEQUENT EVENTS
Effective October 2006, we changed the auditor of the Fund from Frank L.
Sassetti & Co., 6611 West North Avenue, Oak Park, Illinois 60302 to the CPA
firm of Jordan, Patke & Associates, Ltd., 300 Village Green Drive, Suite 210,
Lincolnshire, Illinois 60069.
F-11
*******************************************************************************
WHITE OAK FINANCIAL SERVICES, INC. AND SUBSIDIARY
(A Development Stage Company)
INDEX TO FINANCIAL STATEMENTS
DECEMBER 31, 2005, 2004, AND 2003
Page
Report Of Independent Registered Public Accounting Firm F-2
Financial Statements
Balance Sheets F-3
Statements of Income and Retained Earnings F-4
Statements of Cash Flows F-5
Notes to Financial Statements F-6 - F-9
Purchase of units in the partnership will not acquire
or otherwise have any interest in this Company.
F-1
Frank L. Sassetti & Co.
Certified Public Accountants
To The Shareholders
White Oak Financial Services, Inc.
Fremont, Indiana
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have audited the accompanying consolidated
balance sheets of WHITE OAK FINANCIAL SERVICES, INC. AND SUBSIDIARY (A
Development Stage Company and an S Corporation) as of December 31, 2005 and
2004, and the related consolidated statements of income and retained earnings
and cash flows for the years ended December 31, 2005 and 2004, the period
from April 21, 2003 (date of inception) through December 31, 2003 and the
period from April 21, 2003 (date of inception) through December 31, 2005.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits 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 Fund 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 on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements
referred to above present fairly, in all material respects, the consolidated
financial position of WHITE OAK FINANCIAL SERVICES, INC. AND SUBSIDIARY as of
December 31, 2005 and 2004, and the consolidated results of their operations
and their cash flows for the years ended December 31, 2005 and 2004, the
period from April 21, 2003 through December 31, 2003 and the cumulative
period from April 21, 2003 through December 31, 2005, are in conformity with
accounting principles generally accepted in the United States.
/s/ Frank L. Sassetti & Co.
March 22, 2006
Oak Park, Illinois
6611 W. North Avenue * Oak Park, Illinois 60302
* Phone (708) 386-1433 * Fax (708) 386-0139
Purchase of units in the partnership will not acquire
or otherwise have any interest in this Company.
F-2
WHITE OAK FINANCIAL SERVICES, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2005 AND 2004
2005 2004
ASSETS
Cash $1,865 $3,365
Reimbursable syndication costs 105,776 80,466
Prepaid operating costs and other 577 128
$108,218 $83,959
LIABILITIES AND STOCKHOLDER'S/PARTNER'S EQUITY
LIABILITIES
Accounts payable $- $974
Advances from stockholder 69,985 69,985
Due to affiliate 36,233 11,000
106,218 81,959
STOCKHOLDER'S/PARTNER'S EQUITY
Capital stock 1,000 1,000
Limited partners (1 unit)
Initial capital contribution 1,000 1,000
Total Stockholder's and
Partner's Equity 2,000 2,000
$108,218 $83,959
Purchase of units in the partnership will not acquire
or otherwise have any interest in this Company.
The accompanying notes are an integral part of the financial statements.
F-3
WHITE OAK FINANCIAL SERVICES, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004, THE PERIOD FROM
APRIL 21, 2003 (DATE OF INCEPTION) TO DECEMBER 31, 2003 AND THE CUMULATIVE
PERIOD FROM APRIL 21, 2003 (DATE OF INCEPTION) TO DECEMBER 31, 2005
April 21, 2003 April 21, 2003
Year ended December 31, to December to December
2005 2004 31, 2003 31, 2005
REVENUES $- $- $- $-
EXPENSES - - - -
NET INCOME - - - -
RETAINED EARNINGS
Beginning of period - - - -
End of period $- $- $- $-
Purchase of units in the partnership will not acquire
or otherwise have any interest in this Company.
The accompanying notes are an integral part of the financial statements.
F-4
WHITE OAK FINANCIAL SERVICES, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004, THE PERIOD FROM
APRIL 21, 2003 (DATE OF INCEPTION) TO DECEMBER 31, 2003 AND THE CUMULATIVE
PERIOD FROM APRIL 21, 2003 (DATE OF INCEPTION) TO DECEMBER 31, 2005
April 21, 2003 April 21, 2003
Year ended December 31, to December to December
2005 2004 31, 2003 31, 2005
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income $- $- $- $-
Adjustments to reconcile net income to
net cash used in operating activities-
Changes in assets and liabilities-
Reimbursable syndication costs (25,310) (15,899) (64,567) (105,776)
Prepaid operating costs (449) (105) (23) (577)
Accounts payable (974) 974 - -
Net Cash Used In
Operating Activities (26,733) (15,030) (64,590) (106,353)
CASH FLOWS FROM FINANCING
ACTIVITIES
Sale of capital stock and
limited partnership interest - - 2,000 2,000
Advances from stockholder and affiliate 25,233 14,600 66,385 106,218
Net Cash Provided by
Financing Activities 25,233 14,600 68,385 108,218
NET (DECREASE) INCREASE IN CASH (1,500) (430) 3,795 1,865
Cash at beginning of period 3,365 3,795 - -
Cash at end of period $1,865 $3,365 $3,795 $1,865
Purchase of units in the partnership will not acquire
or otherwise have any interest in this Company.
The accompanying notes are an integral part of the financial statements.
F-5
WHITE OAK FINANCIAL SERVICES, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005, 2004 AND 2003
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
White Oak Financial Services, Inc. (the "General Partner") was formed on
April 21, 2003, primarily to act as general partner of the Providence Select
Fund, Limited Partnership (the "Fund"), its 50% owned subsidiary,
collectively referred to as (the "Company").
The responsibilities of the General Partner, in addition to the selection
of trading advisors and other investment activity of the Fund, include
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 number 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 Fund was formed on May 16, 2003 under the laws of the State of
Delaware. The Fund expects to engage in high risk, speculative and hedge
trading of futures and forward contracts, options on futures and forward
contracts, and other instruments selected by the commodity trading advisors
(CTA's). However, the Fund will not commence business until at least
$1,030,000 worth of partnership interests are sold. The maximum offering is
$50,000,000. White Oak Financial Services, Inc. and Michael Pacult are the
General Partners and commodity pool operators (CPO's) of the Fund. The
initial CTA is expected to be NuWave Investment Corp., which will have 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 (Futures),
which is controlled by Michael Pacult and his wife.
Regulation - The Fund is a registrant (effective September 12, 2005) with
the Securities and Exchange Commission (SEC) pursuant to the Securities and
Exchange Act of 1934 (the Act). The Fund is subject to the regulations of the
SEC and the reporting requirements of the Act. The Fund will 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 Expenses and Organizational Costs - After the twelfth month of
operation following the commencement of business, the Fund will reimburse the
General Partner for all offering expenses incurred up to that time. If the
offering is continued beyond the twelfth month, offering costs will be paid
by the Fund. Organizational costs of the Company, which are expected to be
immaterial, are charged to expense as incurred.
Purchase of units in the partnership will not acquire
or otherwise have any interest in this Company.
F-6
WHITE OAK FINANCIAL SERVICES, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005, 2004 AND 2003
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Registration Costs - Costs incurred for the initial filings with the
Securities and Exchange Commission, the National Association of Securities
Dealers, Inc. and the states where the offering is expected to be made are
accumulated, deferred and charged against the gross proceeds of offering as
part of the offering expenses to be reimbursed to the General Partner after
the twelfth month of operation following the commencement of business.
Recurring registration costs, if any, will be charged to expense as incurred.
Revenue Recognition - After the commencement of trading by the Fund, the
General Partner will earn fixed brokerage commissions (from which it will pay
commissions to the introducing broker and the futures commission merchant for
trades made on U.S. markets) and incentive fees on "new trading profits".
The Fund will invest in forward contracts, futures and other investments
which are recorded on the trade date and will be reflected in the statement
of operations at the difference between the original contract amount and the
market value on the last business day of the reporting period.
Market value of forward contracts, futures and other investments is based
upon exchange or other applicable closing quotations related to the specific
positions.
Use of Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates.
Principles of Consolidation - In accordance with FIN 46(R), Consolidation
of Variable Interest Entities, the General Partner has consolidated the
accounts of the Fund. All significant intercompany accounts and transactions
have been eliminated. In addition, to date, the Fund has no revenue and has
incurred no expenses.
Statement of Cash Flows - For purposes of the Statement of Cash Flows, the
Company will consider cash, money market accounts and U.S. Treasury Bills to
be cash equivalents. Net cash provided by operating activities includes no
cash payments for interest nor income taxes through December 31, 2005. There
were no cash equivalents at December 31, 2005 or 2004.
Income tax status- For Federal income tax purposes, the General Partner
elected S-Corporation status and therefore pays no federal income taxes,
since income or losses are passed through to the respective shareholder.
The Fund is not required to provide a provision for income taxes. Income
tax attributes that arise from its operations are passed directly to the
individual partners. The Fund may be subject to state and local taxes in
jurisdictions in which it operates.
Purchase of units in the partnership will not acquire
or otherwise have any interest in this Company.
F-7
WHITE OAK FINANCIAL SERVICES, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005, 2004 AND 2003
2. RELATED PARTY TRANSACTIONS
The Company's sole stockholder has made an initial limited partner capital
contribution in the Fund of $1,000. He is also a joint owner of Futures
Investment Company, which is the selling agent for the Fund. As of December
31, 2005 and 2004, the sole stockholder has personally advanced the Company
$69,985.
The Company's sole stockholder is also the sole stockholder of Ashley
Capital Management, Inc. ("Ashley"), Belmont Capital Management, Inc.
("Belmont"), TriView Capital Management, Inc. ("TriView), and Evergreen
Capital Management, Inc. ("Evergreen"). Ashley, Belmont, TriView and
Evergreen serve as the general partners and commodity pool operators of other
commodity funds under the supervision of Mr. Pacult. Ashley has advanced the
Company $36,233 and $11,000 as of December 31, 2005 and 2004, respectively.
3. THE LIMITED PARTNERSHIP AGREEMENT
The Limited Partnership Agreement of the Fund 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
Fund'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 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 business 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. 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 fee after the twelfth month.
Purchase of units in the partnership will not acquire
or otherwise have any interest in this Company.
F-8
WHITE OAK FINANCIAL SERVICES, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005, 2004 AND 2003
4. FEES
The Fund will be charged the following fees on a monthly basis as of the
commencement of trading.
A monthly management fee of 2% (annual rate) of the Fund's net assets
allocated to each CTA to trade will be paid to each CTA.
The Fund will pay the Corporate General Partner a fixed brokerage
commission of 6%, from which the Corporate General Partner will pay the round
turn commissions to the introducing broker and the futures commission
merchant for trades made on U.S. markets.
A quarterly incentive fee of 20% of "new trading profits" will be paid to
each CTA and a 3% quarterly incentive fee will be paid to the Corporate
General Partner. "New trading profits" includes all income earned by a CTA
and expense allocated to his activity. In the event that trading produces a
loss for a CTA, no incentive fees will be paid to either party and all losses
will be carried over to the following months until profits from trading
exceed the loss.
After the Fund commences trading, the Fund will pay the selling agents
(including Futures) a 3% continuing service fee per year on the investment in
the Fund.
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's and general partner to 6% if
the total incentive fees are decreased to 15%.
5. CONCENTRATIONS
The Fund will maintain all of its subscription deposits with a commercial
financial institution. In the event of the financial institution's
insolvency, recovery of Fund deposits may be limited to account insurance or
other protection afforded deposits.
Purchase of units in the partnership will not acquire
or otherwise have any interest in this Company.
F-9
*******************************************************************************
Part II
Statement of Additional Information
Providence Select Fund, Limited Partnership
This Statement of Additional Information is the second part of a two-part
document and should be read in conjunction with Part I of Providence Select
Fund's disclosure document dated November __, 2006, both of which are
combined in this single prospectus.
Table of Contents
Table of Contents 1
Summary of the Fund 3
Trading Advisor Overview 4
Advisor Performance 5
Correlation Comparison 6
Fund And Offering Details 8
The Opportunity 9
Why Providence Select Fund? 9
Investment Factors 10
Value of Diversification - Managed Futures Industry 10
Managed Futures vs. Stocks During Draw-Downs 13
The Futures, Forward, Option and Swap Markets 14
Advantages of Managed Futures Fund Investments 16
Important Disclosures 17
Appendix I - Commodity Terms And Definitions; State Regulatory Glossary
Appendix II - Privacy Statement
Exhibit A - Limited Partnership Agreement
Exhibit B - Request For Redemption
Exhibit C - Suitability Information
Exhibit D - Subscription Agreement And Power Of Attorney
Exhibit E - Depository Agreement
Exhibit F - Investment Advisory Contract
The date of this Statement of Additional Information is November __, 2006
Providence Select Fund, LP
* Highly successful trading advisor with 20 years experience
* 5 year trading program track record
* Virtually no historical correlation to stocks and bonds
* Profit potential (and risk of loss) in both rising and falling markets
* Participation in a wide variety of global markets
* Monthly liquidity
THE OFFERING OF UNITS IN PROVIDENCE SELECT FUND, LP (THE "FUND") CAN ONLY BE
MADE IN CONJUNCTION WITH PART I OF THIS PROSPECTUS, WHICH CONTAINS IMPORTANT
INFORMATION REGARDING CERTAIN RISKS ASSOCIATED WITH THE FUND AND SHOULD BE
READ CAREFULLY AND RETAINED BY ANYONE CONSIDERING INVESTMENT IN THE FUND. THE
UNITS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION NOR HAS THE SECURITIES EXCHANGE COMMISSION, THE COMMODITY FUTURES
TRADING COMMISSION, OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE. AN INVESTMENT IN THE FUND IS SPECULATIVE AND INVOLVES
A HIGH DEGREE OF RISK.
Summary of the Fund
Fund Objectives
Providence Select Fund, L.P. allows investors to participate in a wide range
of markets within a single investment. With access to an array of market
sectors and investment opportunities, an investment in the Fund may encompass
everything from stock index futures to commodity futures. Providence also
provides investors with the potential for above average rates of return, as
well as an important diversification from stocks, bonds and mutual funds
through professionally managed futures investment. Markets traded by the Fund
include global interest rates, foreign currencies, metals, energy products,
global equity indices and agricultural commodities.
Professional Management
The trader selected by the General Partner to trade on behalf of the Fund
NuWave Investment Corporation. The principal of
NuWave has nearly 20 years experience in professional money management and is
well known for excellence in the managed futures industry.
Portfolio Diversification
The ability of futures trading advisors to trade in a market by going either
long or short creates profit potential in both rising and falling markets.
The strategy of the Fund acts independently of economic prosperity, interest
rates or currency stability. Futures trading advisors can perform as well in
a bear market as in a bull market. Of course, where there is profit
potential, there is also risk of loss. The correlation between the
performance of managed futures funds and stocks and bonds has historically
been very low. Thus, managed futures funds provide vital diversification for
suitable investors.
Disciplined, Multi-Strategy Trading Approach
The trading program used for the Fund represents a unique blend of strategies
with access to global market sectors. This custom blend, and low correlation
of the Advisor's strategies to each other, creates an opportunity for
investors interested in diversifying their portfolios across multiple sectors
using complimentary trading styles.
Limited Risk
An investor in the Fund has limited liability and is liable for principal and
profits only.
Liquidity
Investors in the Fund can generally withdraw their capital at the net asset
value as of the end of any month, with five business days advance written
notice. Please note, there are redemption charges in the first year.
Administrative Convenience
The Fund's General Partner sends each investor a comprehensive monthly
statement showing the results of the Fund's previous month's trading. The
General Partner provides audited reports for the Fund and a year-end
statement containing all the information necessary for income tax
preparation. Investors may call their financial advisor, or the General
Partner, for intra-month updates if desired.
The General Partner
The Fund's General Partner is White Oak Financial Services, Inc., whose
principal is Mr. Michael Pacult, a pioneer in the field of managed futures in
the United States since 1980. The General Partner of the Fund encourages you
to read the accompanying prospectus for a more detailed description of the
advantages and risks associated with an investment in the Fund.
Principal Selling Agent
The Fund is offered through select Broker Dealers and Futures Investment
Company, all of which are registered with the National Association of
Securities Dealers. Futures Investment Company, through its affiliate
relationship with White Oak Financial Services, Inc., is the principal
selling agent for the Fund. Futures Investment Company is also a member of
SIPC, and registered with the SEC, NFA and CFTC.
Trading Advisor Overview
Fund Advantage
One of the major advantages of the Providence Select Fund, L.P. is that the
Fund allows access to the trading advisor at the substantially lower minimum
investment requirement of $25,000. To invest with this advisor separately,
through an individually managed account, would require a substantially higher
minimum investment.
The Advisor trades their Combined Futures Portfolio (2X) on behalf of the
Fund. This portfolio combines each of the Advisor's three programs, Alpha,
Pattern Recognition and Beta. Each program exhibits a substantial degree of
non-correlation with one another as well as with other traditional strategies
in any investment arena.
NuWave Combined Futures Portfolio (2X)
Program Started Trading June, 2001
Jun. 2001 - Sep 2006 Total Months Traded: 64
Performance Total Rate of Return 146.43%
Annualized Rate of Return 18.42%
Risk Worst Peak-to-Valley Drawdown* -13.81%
Standard Deviation** 16.17%
Statistics Sharpe Ratio*** 1.02
Alpha Program
* Technical, systematic trading program
* Trades a long-term time frame
* Trades a broad and diverse group of domestic and international futures and
currency markets
* Nearly 65% of market exposure is derived from international stock, bond
and currency markets
* Remaining 35% of market exposure includes various commodity markets
Pattern Recognition Program
* Technical, systematic trading program
* Trades the world's 35 most liquid futures markets
* Attempts to identify the "trend" patterns in order to capture repetitive
profit opportunities in various markets
* Nearly 65% of market exposure is derived from international stock, bond
and currency markets
* Remaining 35% of market exposure includes various commodity markets
Beta Program
* Technical, systematic trading program
* Trades a short-term time frame
* Takes advantage of short-term volatility and the random nature of short-
term price movements
* Nearly 65% of market exposure is derived from international stock, bond
and currency markets
* Remaining 35% of market exposure includes various commodity markets
* Worst Peak-to-Valley Drawdown is the greatest cumulative percentage decline
in month end net asset value of the program due to losses sustained by an
account during any period in which the initial month-end net asset value of
an account is not equaled or exceeded by a subsequent month-end net asset
value of the account and includes the time period in which it occurred.
** Standard Deviation shows the annualized performance volatility by
quantifying the amount of dispersion you can expect performances to fall
around the average or mean return.
*** Sharpe Ratio is a risk-adjusted measure used to determine reward per unit
of risk. The higher the ratio, the better the fund's historical risk-adjusted
performance. The measure uses a compounded annual return minus the available
annual risk free rate in 90-day T-Bill returns divided by annualized standard
deviation.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. TRADING IN THE FUTURES,
FORWARD, OPTION AND SWAP MARKETS IS SPECULATIVE, INVOLVES SUBSTANTIAL RISK,
AND IS NOT SUITABLE FOR ALL INVESTORS.
THE ABOVE THREE TABLES WERE PREPARED BY THE FUND BASED ON ACTUAL TRADING
RESULTS FROM THE TRADING ADVISOR. TRADING ADVISOR PERFORMANCE IS NOT
NECESSARILY INDICATIVE OF PERFORMANCE OF THE FUND BECAUSE OPERATING AND OTHER
EXPENSES OF THE FUND WOULD DIMINISH THE ABOVE STATED ADVISOR PERFORMANCE.
Advisor Performance
Monthly Compounded Rate of Return (%)
The performance information below represents the Advisor's Combine Futures
Portfolio (2X), the program selected by
the General Partner to trade on behalf of the Fund.
June 2001 - September 2006
Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.
AROR
2006 2.84 -3.38 0.84 2.97 0.97 -1.07 -1.41 2.80 2.00
6.54
2005 -2.67 -0.72 1.06 -4.47 4.01 4.21 4.41 6.28 3.00 -6.50 5.22 2.83
16.92
2004 4.68 5.03 -0.94 -4.33 -0.26 1.91 -2.93 0.29 2.42 4.47 10.54 2.69
25.24
2003 9.70 10.98 -6.51 -3.09 2.12 -2.17 0.42 4.59 -3.89 8.63 2.07 1.27
24.88
2002 -2.33 -2.82 -5.70 -3.70 1.39 7.49 8.74 4.61 9.76 -2.87 -8.77 15.46
20.00
2001 2.13 0.89 0.95 -1.31 -0.10 -0.31 3.08
5.39
THIS POOL HAS NOT COMMENCED TRADING AND DOES NOT HAVE ANY PERFORMANCE
HISTORY.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
Value of Initial $10,000 Investment Performance vs. Benchmarks
June 2001 - September 2006 June 2001 - September 2006
The S&P 500, NASDAQ, and MSCI World indices are unmanaged and are generally
representative of certain portions of the U.S. and global equity markets.
These indices are shown for illustrative purposes only and are not indicative
of any fund's performance. An investor cannot invest directly in an index.
Moreover, indices do not reflect commissions or fees which might be charged
to a similar fund and which might materially affect the performance data
presented.
THE ABOVE TABLE AND TWO GRAPHS WERE PREPARED BY THE FUND. ADVISOR
PERFORMANCE IS NOT NECESSARILY INDICATIVE OF PERFORMANCE OF THE FUND BECAUSE
OPERATING AND OTHER EXPENSES OF THE FUND WOULD DIMINISH THE ABOVE STATED
ADVISOR PERFORMANCE. AN INVESTMENT IN PROVIDENCE SELECT FUND, L.P. INVOLVES
SUBSTANTIAL RISK AND MAY RESULT IN THE COMPLETE LOSS OF PRINCIPAL INVESTED.
THE FORGOING PERFORMANCE RESULTS SHOWN REPRESENT THE HISTORICAL PERFORMANCE
OF THE ADVISOR PROGRAM SELECTED TO TRADE ON BEHALF OF THE FUND.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. TRADING IN THE FUTURES,
FORWARD, OPTION AND SWAP MARKETS IS SPECULATIVE, INVOLVES SUBSTANTIAL RISK,
AND IS NOT SUITABLE FOR ALL INVESTORS.
Correlation Comparison
Performance Through Diversification
The value of diversification can be seen by looking at the correlation
comparison of the performance of the Advisor versus benchmark stock market
indices.
Since June 2001, not only has the Advisor outperformed the major indices but
also had negative correlation to such indices. In general, this attribute
will allow investors to potentially reduce the risk and improve the
performance in their portfolios through diversification.
Annual Rates of Return
June 2001 - September 2006
NuWave (2X) S&P 500 NASDAQ CISDM CTA
2001 5.39% -13.04% -21.05% 2.72%
2002 20.00% -23.36% -31.52% 13.40%
2003 24.88% 26.39% 50.00% 11.07%
2004 25.24% 8.99% 8.60% 3.83%
2005 16.92% 3.02% 1.39% 2.44%
2006 6.54% 7.04% %5.65 1.64%
Value of Initial $10,000 Investment vs. Stocks
June 2001 - September 2006
$10,000 invested June, 2001 in NuWave would be worth $24,638.39
$10,000 invested June, 2001 in S&P 500 would be worth $10,644.36
$10,000 invested June, 2001 in NASDAQ would be worth $ 11,043.72
$10,000 invested June, 2001 in CISDM CTA would be worth $13,986.98
Total Value ($) Annual ROR
NuWave (2X) 24,638.39 18.42%
S&P 500 10,644.36 1.18%
NASDAQ 11,043.72 1.88%
CISDM CTA 13,986.98 6.49%
Correlation Comparison
Start Date June, 2001
Jun. 2001 - Sep. 2006
Total Months: 64 NuWave (2X) S&P 500 NASDAQ CISDM CTA
Performance
Total Rate of Return 146.38% 6.44% 10.44% 39.87%
Annualized Rate of
Return 18.42% 1.18% 1.88% 6.49%
Risk
Worst Peak-to-
Valley Drawdown* -13.81% -35.08% -45.76% -8.75%
Standard Deviation** 16.17% 13.25% 22.12% 8.38%
Statistics
Sharpe Ratio*** 1.02 -0.06 -0.01 0.54
Correlation to NuWave 1.00 -0.20 -0.09 0.65
* Worst Peak-to-Valley Drawdown is the greatest cumulative percentage decline
in month end net asset value of the program due to losses sustained by an
account during any period in which the initial month-end net asset value of
an account is not equaled or exceeded by a subsequent month-end net asset
value of the account and includes the time period in which it occurred.
** Standard Deviation shows the annualized performance volatility by
quantifying the amount of dispersion you can expect performances to fall
around the average or mean return.
*** Sharpe Ratio is a risk-adjusted measure used to determine reward per unit
of risk. The higher the ratio, the better the fund's historical risk-adjusted
performance. The measure uses a compounded annual return minus the available
annual risk free rate in 90-day T-Bill returns divided by annualized standard
deviation.
THE ABOVE TABLES WERE PREPARED BY THE FUND. ADVISOR PERFORMANCE IS NOT
NECESSARILY INDICATIVE OF PERFORMANCE OF THE FUND BECAUSE OPERATING AND OTHER
EXPENSES OF THE FUND WOULD DIMINISH THE ABOVE STATED ADVISOR PERFORMANCE. AN
INVESTMENT IN PROVIDENCE SELECT FUND, L.P. INVOLVES SUBSTANTIAL RISK AND MAY
RESULT IN THE COMPLETE LOSS OF PRINCIPAL INVESTED. THE FORGOING PERFORMANCE
RESULTS SHOWN REPRESENT THE HISTORICAL PERFORMANCE OF THE ADVISOR PROGRAM
SELECTED TO TRADE ON BEHALF OF THE FUND.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. TRADING IN THE FUTURES,
FORWARD, OPTION AND SWAP MARKETS IS SPECULATIVE, INVOLVES SUBSTANTIAL RISK,
AND IS NOT SUITABLE FOR ALL INVESTORS.
Fund And Offering Details
The Fund
Investment Goal Medium to Long-Term Capital Appreciation
General Partner White Oak Financial Services, Inc.
Trading Advisors NuWave Investment Corporation
Clearing Broker Man Financial Inc.
The Offering
Minimum Investment $25,000
Increment Amount $1,000
Subscription Fee None
Subscription Price Net Asset Value
Subscription Notice Subscriptions Available Monthly with 5 Business Days
Notice
Subscription Procedure Subscribers Must Complete, Execute and Deliver to
Their Selling Agents the Subscription Agreement and
Power of Attorney Signature Page attached to this
Prospectus as Exhibit D.
Redemption Notice Liquidity Available Monthly with Five Business Days
Notice
Investor Liability Limited to the Amount of Capital Invested
Investor Suitability Net Worth of $150,000 -or-
Income of $45,000 and Net Worth of $45,000
Plus Specific State Requirements
Please Refer to the Prospectus
for Additional Information
Fees and Expenses
Continuing Service Fee 3% Annually
General Partner
Compensation Fixed Brokerage Commission of 6% Annually
Incentive Fee of up to 3% of New Profit Quarterly
Trading Advisor
Compensation Management Fee of up to 2.5% Annually
Incentive Fee of 20% New Profit Quarterly
Accounting & Legal Estimated $27,000 Annually
Redemption Fee 0-4 Months - 3%; 4-8 Months - 2%;
8-12 Months - 1%; Thereafter - 0%
The Opportunity
* Professionally managed futures funds offer access to global markets, along
with the potential to profit from rising or falling markets.
* Professionally managed futures funds add an important component to a
diversified growth portfolio.
* Providence Select Fund, L.P. offers a simple and effective way to use the
services of a successful futures trading advisor with a long-term track
record.
* An individual investor seeking to utilize the services of the Fund's
trader through a direct account would need to meet a substantially higher
minimum investment requirement.
How to Subscribe
* After reviewing the Prospectus, please complete and sign the items in the
Subscription Agreement attached as Exhibit D.
* Forward the Subscription Agreement and a check made payable to "Star Bank
for the acct. of Providence" to your broker or investment advisor.
The Fund is open to qualified investors and the current minimum investment is
$25,000. New investments are entered into the Fund at the end of the month in
which they are received and must be received on the 5th business day prior to
the end of the month.
WHY PROVIDENCE SELECT FUND?
WHY A MANAGED FUTURES FUND?
Managed futures investments are intended to generate long-term capital growth
by providing global portfolio diversification. This diversification can be
utilized by investing in the Fund. A primary reason to invest in a managed
futures (alternative investment) product, such as Providence Select Fund, is
to provide a fully diversified portfolio of investments that has the
potential to improve returns while protecting against risk. This is possible
because managed futures (alternative investment) products historically have
not been correlated to traditional markets, such as stocks and bonds.
The Providence Select Fund employs a professional commodity trading advisor,
NuWave Investment Corp., that trades as many as 70 futures markets worldwide
using proprietary trading systems. The trading advisor has consistently
produced positive returns, even during down markets, due to diversified
trades and the ability to spot trends, while insuring strict risk controls
are always in place.
WHY NOW?
The recent fluctuation in world markets has proven that long-only equity
portfolios cannot make money during downward cycles. For continued portfolio
performance, a fund that hedges its trades is the only way to limit losses
and insure gains in any economic environment.
HISTORICAL NON CORRELATED PERFORMANCE
Historically, managed futures investments have had very little correlation to
the stock and bond markets. While there is no guarantee of positive
performance in a managed futures component of a portfolio, the non-
correlation characteristic of managed futures can improve risk adjusted
returns in a diversified investment portfolio. Having the ability to go long
and short gives managed futures the ability to profit from up or down
markets. In other words, profit or loss in managed future funds is not
dependent on economic cycles.
INVESTMENT FACTORS
THE ADVANTAGES OF NON-CORRELATION AND DIVERSIFICATION OF YOUR PORTFOLIO
The Nobel Prize for Economics in 1990 was awarded to Dr. Harry Markowitz for
demonstrating that the total return can increase, and/or risk can be reduced,
when portfolios have positively performing asset categories that are
essentially non-correlated. Even many seemingly diverse portfolios may
actually be quite correlated. For instance, over time, alternative investment
classes such as real estate and international stocks and bonds may correlate
closely with domestic equities as the global economy expands and contracts.
Historically, alternative investments such as managed futures funds have had
very little correlation to the stock and bond markets. White Oak Financial
Services, Inc. believes that the performance of the Fund should also exhibit
a substantial degree of non-correlation (not, however, necessarily negative
correlation) with the performance of traditional equity and debt portfolio
components, in part because of the ease of selling futures short. This
feature of futures -- being able to be long or short a futures position with
similar ease - means that profit and loss from futures trading is not
dependent upon economic or geopolitical prosperity or stability.
However, non-correlation will not provide any diversification advantages
unless the non-correlated assets are outperforming other portfolio assets,
and there is no guarantee that the Fund will outperform other sectors of an
investor's portfolio (or not produce losses). Additionally, although adding
managed futures funds to a portfolio may provide diversification, managed
futures funds are not a hedging mechanism and there is no guarantee that
managed futures funds will appreciate during periods of inflation or stock
and bond market declines.
Non-correlated performance should not be confused with negatively correlated
performance. Non-correlation means only that the Fund's performance will
likely have no relation to the performance of equity and debt instruments,
reflecting White Oak's belief that factors that affect equity and debt prices
may affect the Fund differently and that certain factors which affect the
former may not affect the latter. The net asset value per unit may decline or
increase more or less than equity and debt instruments during both rising and
falling markets. White Oak has no expectation that the Fund's performance
will be negatively correlated to the general debt and equity markets, i.e.,
likely to be profitable when the latter are unprofitable or vice versa.
VALUE OF DIVERSIFICATION - MANAGED FUTURES INDUSTRY
Money Under Management in Managed Futures
Money Under Management in Managed Futures is updated on a quarterly basis and
is usually ready by month end of the month following the quarter. Money
Under Management during the 4th quarter 2004 was $131.9 billion, a 12.06%
increase from the previous quarter. This represents a 52.49% increase in
assets since the beginning of 2004.
This chart was prepared by the Fund and shows industry growth since 1980
using data obtained from Barclay Trading Group, Ltd. See the glossary in
Appendix I of this Statement of Additional Information for information
integral to this chart. This chart reflects the managed futures industry as
a whole and is not indicative of the Fund in particular.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
MARKET DIVERSIFICATION
The Fund's CTA uses proprietary systems designed to ensure minimal
correlation to traditional investments. The spectrum of traded instruments
globally consists of up to 70 futures markets in both commodity and financial
futures. Fundamental to the Fund's selection of CTAs is low correlation
between the different instruments they trade and high liquidity for order
execution.
This chart was prepared by the Fund. See the glossary in Appendix I of this
Statement of Additional Information for information integral to this chart.
This chart reflects the managed futures industry as a whole and is not
indicative of the Fund in particular.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
HISTORICAL CORRELATION
The chart below shows the historical correlation of the monthly returns of
the NASDAQ Composite Index, Europe, Australasia, Far East (EAFE) Index with
the S&P 500 Index than managed futures investments, as represented by the
CISDM Fund/Pool Qualified Universe Index. This low correlation shows that
managed futures have a tendency to behave somewhat independently from stocks.
Historical Correlation Of Monthly Returns
With The S&P 500 Index
January 1980* - August 2006
* CISDM data was not available prior to 1980.
This chart was prepared by the Fund. See the glossary in Appendix I of this
Statement of Additional Information for information integral to this chart.
This chart reflects the managed futures industry as a whole and is not
indicative of the Fund in particular.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
RISK PERSPECTIVE
The proper evaluation of any investment must include an assessment of the
risk which must be taken to achieve the prospective return. Another measure
of risk, in addition to standard deviation, is historical worst-case decline,
or largest draw-down. In other words, if you had purchased an investment at a
month-end peak in performance and then subsequently sold at the lowest month-
end price thereafter, the worst-case decline would be the largest percentage
loss experienced. The chart below shows the worst-case cumulative monthly
decline in the Lehman Brothers Government Bond Index, CISDM Fund/Pool
Qualified Universe Index, S&P 500 Index, EAFE Index and NASDAQ Composite
Index since 1980. The CISDM Fund/Pool Qualified Universe Index experienced a
smaller peak to valley decline than three of the other indices. This does not
imply that managed futures are necessarily safer than the benchmarks
compared; it is merely intended to put risk in a historical perspective.
Worst-Case Declines
1980* - 2006
[Amounts In Percents]
* CISDM data was not available prior to 1980.
This chart was prepared by the Fund. See the glossary in Appendix I of this
Statement of Additional Information for information integral to this chart.
This chart reflects the managed futures industry as a whole and is not
indicative of the Fund in particular.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
MANAGED FUTURES VS. STOCKS DURING DRAW-DOWNS
The following charts show the comparison between the performance of managed
futures and stocks during the five worst declines for each since 1980. These
charts demonstrate the historical non-correlation between these two asset
classes over the stated time periods. The managed futures portion is
represented by the CISDM Fund/Pool Qualified Universe Index and the stocks
portion is represented by the S&P 500 Index.
Managed Futures vs. Stocks During Stock Market Drawdowns.
(January, 1980* - March, 2006)
Source: Stocks: S&P 500 Index,
Managed Futures: CISDM Trading Advisor Qualified Universe Index (MAR)
* CISDM data was not available prior to 1980.
This chart was prepared by the Fund. See the glossary in Appendix I of this
Statement of Additional Information for information integral to this chart.
This chart reflects the managed futures industry as a whole and is not
indicative of the Fund in particular.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
THE FUTURES, FORWARD, OPTION AND SWAP MARKETS
FUTURES CONTRACTS
Futures contracts are standardized agreements traded on commodity exchanges
that call for the future delivery of the commodity or financial instrument at
a specified time and place. A futures trader that enters into a contract to
take delivery of the underlying commodity is "long" the contract, or has
"bought" the contract. A trader that is obligated to make delivery is "short"
the contract or has "sold" the contract. Actual delivery on the contract
rarely occurs. Futures traders usually offset (liquidate) their contract
obligations by entering into equal but offsetting futures positions. For
example, a trader who is long one September Treasury bond contract on the
Chicago Board of Trade can offset the obligation by entering into a short
position in a September Treasury bond contract on that exchange. Futures
positions that have not yet been liquidated are known as "open" contracts or
positions.
Futures contracts are traded on a wide variety of commodities, including
agricultural products, metals, energies, livestock products, government
securities, currencies and stock market indices. Options on futures contracts
are also traded on U.S. and foreign commodity exchanges. The Fund
concentrates its futures trading in financial instruments, such as interest
rate, foreign exchange and stock index contracts, and metal and energy
contracts.
FORWARD CONTRACTS
Currencies and other commodities may be purchased or sold for future delivery
or cash settlement through banks or dealers pursuant to forward, option or
swap contracts. Currencies also can be traded pursuant to futures contracts
on organized futures exchanges; however, the Fund will use the dealer market
in foreign exchange contracts for most of the Fund's trading in currencies.
Such dealers will act as "principals" in these transactions and will include
their profit in the price quoted on the contracts. Unlike futures contracts,
foreign exchange contracts are not standardized. In addition, the forward
market is largely unregulated. Forward contracts are not "cleared" or
guaranteed by a third party. There also is no daily settlement of unrealized
gains or losses on open foreign exchange contracts as there is with futures
contracts on U.S. exchanges.
OPTION CONTRACTS
An option on a futures contract or on a physical commodity or currency gives
the buyer of the option the right to take a position of a specified amount at
a specified price in a specific underlying instrument (the "striking,"
"strike" or "exercise price"). The buyer of a "call" option acquires the
right to take a long position (i.e., the obligation to take delivery of a
specified amount at a specified price in a specific underlying instrument).
The buyer of a "put" option acquires the right to take a short position
(i.e., the obligation to make delivery of a specified amount at a specified
price in a specific underlying instrument).
The purchase price of an option is referred to as its "premium." The seller
(or "writer") of an option is obligated to take a position at a specified
price opposite to the option buyer if the option is exercised. Thus, the
seller of a call option must stand ready to sell (take a short position in)
the underlying instrument at the striking price if the buyer should exercise
the option. The seller of a put option, on the other hand, must stand ready
to buy (take a long position in) the underlying instrument at the striking
price if the buyer should exercise the option.
A call option is said to be "in the money" if the striking price is below
current market levels, and "out of the money" if the striking price is above
current market levels. Conversely, a put option is said to be "in the money"
if the striking price is above current market levels, and "out of the money"
if the striking price is below current market levels.
Options have limited lifespans. An option that is out of the money and not
offset by the time it expires becomes worthless. Options usually trade at a
premium above their intrinsic value (i.e., the difference between the market
price for the underlying instrument and the striking price), because the
option trader is speculating on (or hedging against) future movements in the
price of the underlying instrument. As an option nears its expiration date,
the market value and intrinsic value typically move into parity. The
difference between an option's intrinsic value and market value is referred
to as the "time value" of the option.
SWAP TRANSACTIONS
The Fund periodically enters into transactions in the forward or other
markets which could be characterized as swap transactions and which may
involve interest rates, currencies, securities interests, commodities and
other items. A swap transaction is an individually negotiated, non-
standardized agreement between two parties to exchange cash flows measured by
different interest rates, exchange rates, or prices, with payments calculated
by reference to a principal ("notional") amount or quantity. Transactions in
these markets present risks similar to those in the futures, forward and
options markets:
(1) the swap markets are generally not regulated by any United States or
foreign governmental authorities;
(2) there are generally no limitations on daily price moves in swap
transactions;
(3) speculative position limits are not applicable to swap transactions,
although the counterparties with which the Fund may deal may limit the size
or duration of positions available as a consequence of credit considerations;
(4) participants in the swap markets are not required to make continuous
markets in swaps contracts; and
(5) the swap markets are "principal markets," in which performance with
respect to a swap contract is the responsibility only of the counterparty
with which the trader has entered into a contract (or its guarantor, if any),
and not of any exchange or clearinghouse. As a result, the Fund will be
subject to the risk of the inability of or refusal to perform with respect to
such contracts on the part of the counterparties with which the Fund trades.
The CFTC has adopted Part 35 to its Rules which provides non-exclusive safe
harbor treatment from regulations under the Commodity Exchange Act as amended
for swap transactions which meet specified criteria, over which the CFTC will
not exercise its jurisdiction and regulate as futures or commodity option
transactions. In addition, on December 21, 2000, the Commodity Futures
Modernization Act of 2000 amended the Commodity Exchange Act so that it does
not apply to any agreement, contract, or transaction in a commodity, other
than an agricultural commodity (including swap transactions), if the
agreement, contract, or transaction is entered into only between eligible
contract participants (which includes commodity pools meeting certain
capitalization requirements), is subject to individual negotiation by the
parties, and is not executed or traded on a trading facility. It is expected
that the Fund will engage only in swap transactions for which exemptive/safe
harbor relief is available to it under the CFTC policy statements or
regulations, or which are otherwise excluded from the CFTC's jurisdiction. If
the CTA were restricted in its ability to trade in the swap markets, the
activities of the Fund, to the extent that its CTA trades in such markets on
behalf of the Fund, might be materially affected.
REGULATION
The U.S. futures markets are regulated under the Commodity Exchange Act,
which is administered by the CFTC, a federal agency created in 1974. The CFTC
licenses and regulates commodity exchanges, commodity pool operators,
commodity trading advisors and clearing firms which are referred to in the
futures industry as "futures commission merchants." The Fund is licensed by
the CFTC as a commodity pool operator. Futures professionals are also
regulated by the NFA, a self-regulatory organization for the futures industry
that supervises the dealings between futures professionals and their
customers. If its pertinent CFTC licenses or NFA memberships were to lapse,
be suspended or be revoked, the Fund would be unable to act as the Fund's
commodity pool operator.
The CFTC has adopted disclosure, reporting and recordkeeping requirements for
commodity pool operators and disclosure and recordkeeping requirements for
commodity trading advisors. The reporting rules require pool operators to
furnish to the participants in their pools a monthly statement of account,
showing the pool's income or loss and change in net asset value, and an
annual financial report, audited by an independent certified public
accountant.
The CFTC and the exchanges have pervasive powers over the futures markets,
including the emergency power to suspend trading and order trading for
liquidation of existing positions only. The exercise of such powers could
adversely affect the Fund's trading.
The CFTC does not regulate forward contracts. Federal and state banking
authorities also do not regulate forward trading or forward dealers. Trading
in foreign currency forward contracts may be less liquid and the Fund's
trading results may be adversely affected.
MARGIN
The Fund will use margin in its trading. In order to establish and maintain a
futures position, a trader must make a type of good-faith deposit with its
broker, known as "margin," of approximately 2%-10% of contract value. Minimum
margins are established for each futures contract by the exchange on which
the contract is traded. The exchanges alter their margin requirements from
time to time, sometimes significantly. For their protection, futures brokers
may require higher margins from their customers than the exchange minimums.
Margin also is deposited in connection with forward contracts, but is not
required by any applicable regulation.
There are two types of margin. "Initial" margin is the amount a trader is
required to deposit with its broker to open a futures position. The other
type of margin is "maintenance" margin. When the contract value of a trader's
futures position falls below a certain percentage, typically about 75%, of
its value when the trader established the position, the trader is required to
deposit additional margin in an amount equal to the loss in value.
ADVANTAGES OF MANAGED FUTURES FUND INVESTMENTS
Both the futures, forward, option and swap markets and funds investing in
those markets offer many structural advantages that make managed futures an
efficient way to participate in global markets. The Fund believes that this
investment should be considered as a medium- to long-term investment and
should not be purchased with the intent to redeem the investment within the
first three years.
PROFIT POTENTIAL
Futures and related contracts can easily be leveraged, which magnifies the
potential profit or loss.
INTEREST CREDIT
Unlike some other alternative investment funds, the Fund does not borrow
money in order to obtain leverage, so the Fund does not incur any interest
expense. Rather, the Fund's margin deposits are maintained in cash and cash
equivalents, such as U.S. Treasury bills.
GLOBAL DIVERSIFICATION WITHIN A SINGLE INVESTMENT
Futures and related contracts can be traded in many countries, which makes it
possible to diversify risk around the world. This diversification is
available both geographically and across market sectors. For example, an
investor can trade interest rates, stock indices and currencies in several
countries around the world, as well as energy and metals. While the Fund
itself trades across a diverse selection of global markets, an investment in
the Fund is not a substitute for overall portfolio diversification.
ABILITY TO PROFIT OR LOSE IN A RISING OR FALLING MARKET ENVIRONMENT
The Fund can establish short positions and thereby profit from declining
markets as easily as it can establish long positions. This potential to make
or lose money, whether markets are rising or falling around the world, makes
managed futures particularly attractive to sophisticated investors. Of
course, if markets go higher while the Fund has a short position, the Fund
will lose money until the short position is exited and vice versa.
PROFESSIONAL TRADING
White Oak's approach includes the following elements:
- - Disciplined Money Management. The CTA selected by White Oak generally
allocates a portion of portfolio equity to any single market position.
However, no guarantee is provided that losses will be limited to these
percentages.
- - Balanced Risk. The Fund's capital is allocated to as many as 70 markets 24
hours a day. Among the factors considered for determining the portfolio mix
are market volatility, liquidity and trending characteristics.
- - Capital Management. When proprietary risk/reward indicators reach
predetermined levels, the Fund may increase or decrease commitments in
certain markets in an attempt to reduce performance volatility.
- - Multiple Systems. While the Fund's approach is to find emerging trends and
follow them to conclusion, no one system is right all of the time. The CTA
utilizes a multi-system trading strategy on behalf of the Fund that divides
capital among different trading systems in an attempt to reduce performance
volatility and manage risk.
CONVENIENCE
Through the Fund, investors can participate in global markets and
opportunities without needing to master complex trading strategies and
monitor multiple international markets.
LIQUIDITY
In most cases, the underlying markets have sufficient liquidity. Some markets
trade 24 hours a day when global markets are open. While there can be cases
where there may be no buyer or seller for a particular contract, the Fund
tries to select markets for investment based upon, among other things, their
perceived liquidity. However, unexpected market illiquidity has caused major
losses in recent years in such sectors as emerging markets and mortgage-
backed securities. There can be no assurance that the same will not happen to
the Fund at any time or from time to time.
Important Disclosures
Providence Select Fund, LP is a registered commodity pool and is not subject
to the same regulatory requirements as a mutual fund, including mutual fund
requirements to provide certain daily standardized pricing and evaluation
information to investors. The following should be noted:
* The Fund is a speculative investment and involves a high degree of risk.
An investor could lose a substantial portion of his/her investment.
* An investment in the Fund is not suitable for all investors.
* The Fund may be leveraged and the Fund's performance can be volatile.
* A substantial portion of the Fund's trades may be executed on foreign
exchanges, which could mean higher risk.
* An investment in the Fund may be illiquid (monthly redemptions are
available subject to market disruption) and there are significant
restrictions on transferring interests in the Fund. There is no secondary
market for an investor's investment in the Fund and none is expected to
develop.
* The Fund's fees and expenses - which may be substantial regardless of any
positive return - are deducted from profits, and returns to clients will be
net of fees.
* Diversification does not assure a profit or provide a guarantee against
loss in a declining market.
This summary is not a complete list of the risks and other important
disclosures involved in investing in the Fund and is subject to the more
complete disclosures contained in the Fund's Prospectus and other offering
documents, which should be reviewed carefully.
General Partner:
White Oak Financial Services, Inc.
P.O. Box C
Fremont, IN 46737
(260) 833-1306
THE OFFERING OF UNITS IN PROVIDENCE SELECT FUND, LP (THE "FUND") CAN ONLY BE
MADE IN CONJUNCTION WITH PART I OF THIS PROSPECTUS, WHICH CONTAINS IMPORTANT
INFORMATION REGARDING CERTAIN RISKS ASSOCIATED WITH THE FUND AND SHOULD BE
READ CAREFULLY AND RETAINED BY ANYONE CONSIDERING INVESTMENT IN THE FUND. THE
UNITS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION NOR HAS THE SECURITIES EXCHANGE COMMISSION, THE COMMODITY FUTURES
TRADING COMMISSION, OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE. AN INVESTMENT IN THE FUND IS SPECULATIVE AND INVOLVES
A HIGH DEGREE OF RISK.
*******************************************************************************
APPENDIX I
Commodity Terms And Definitions
Identification of the parties and knowledge of various terms and concepts
relating to trading in futures and forward contracts and this offering are
necessary for a potential investor to identify the risks of investment in the
Fund.
1256 Contract. See Taxation - Section 1256 Contract.
Additional Sellers. See definition of Selling Agent.
Associated Persons. The persons registered pursuant to the Commodity
Exchange Act with the futures commission merchant, the introducing broker,
the selling agent, additional sellers, or the introducing broker who are
eligible to service the Fund, the partners and to receive continuing service
fees.
Average Price System. The method approved by the Commodity Futures Trading
Commission to permit the commodity trading advisor to place positions sold or
purchased in a block to the numerous accounts managed by the advisor. See
The Commodity Trading Advisor in the main body of the prospectus.
Best Efforts. The term to describe that the party is liable only in the
event they intentionally fail or are grossly negligent in the performance of
the task described.
Broker. See definitions of Futures Commission Merchant and Introducing
Broker.
Capital means cash invested in the Fund by any partner and placed at risk for
the business of the Fund.
Commodity Futures trading Commission (CFTC). Commodity Futures Trading
Commission, Three Lafayette Centre,
1155 21st Street, NW, Washington, D.C., 20581. An independent regulatory
commission of the United States government empowered to regulate commodity
futures transactions under the Commodity Exchange Act.
Commodity. Goods, wares, merchandise, produce, currencies, and stock indices
that are traded on and off United States and foreign commercial exchanges.
Traded commodities on U. S. Exchanges are sold according to uniform
established grade standards, in convenient predetermined lots and quantities
such as bushels, pounds or bales, are fungible and, with a few exceptions,
are storable over periods of time.
Commodity Broker. See definitions of Futures Commission Merchant and
Introducing Broker.
Commodity Exchange Act. The statute providing the regulatory scheme for
trading in commodity futures and options contracts in the United States under
the administration of the Commodity Futures Trading Commission which will
provide the opportunity for reparations and other redress for claims.
Commodity Pool Operator (CPO). White Oak Financial Services, Inc., 5914 N.
300 West, P. O. Box C, Fremont, IN 46737, (260) 833-1306; and, Mr. Michael
Pacult, 5914 N. 300 West, P.O. Box C, Fremont, IN 46737. A person that
raises capital through the sale of interests in an investment trust,
partnership, corporation, syndicate or similar form of enterprise, and uses
that capital to invest either entirely or partially in futures contracts.
Commodity Trading Advisor (CTA). A person or entity that renders advice
about commodities or about the trading of commodities, as part of a regular
business, for profit. Particularly, those who will be responsible for the
analysis and placement of trades for the Fund.
Continuing Service Fee. A percentage of the Capital of the partnership paid
to the selling agents who will pay their individual associated persons who
work for them who have either sold the partnership interests to the partners
or are providing services to the general partner or the other partners. The
partnership will pay these fees to the principal selling agent, Futures
Investment Company, which will pay a share of these fees to those that sell
the Units.
Daily Price Limit. The maximum permitted movement in a single direction
(imposed by an exchange and approved by the CFTC) in the price of a commodity
futures contract for a given commodity that can occur on a commodity exchange
on a given day in relation to the previous day's settlement price, which is
subject to change, from time to time, by the exchange (with CFTC approval).
Depository Agent and Depository Account. A segregated account held in the
name of the corporate general partner at Star Financial Bank, 2004 N. Wayne
St., Angola, IN 46703 that will hold all the subscription proceeds until such
time as either the minimum is sold, the subscription is accepted or the
offering is terminated and all subscriptions returned by the Bank directly to
the subscriber without deduction for any expenses or fees.
Exchange for Physicals (EFP). A practice whereby positions in futures
contracts may be initiated or liquidated by first executing the transaction
in the appropriate cash market and then arbitraging the position into the
futures market (simultaneously buying the cash position and selling the
futures position, or vice versa).
Fixed Brokerage Commission. The percentage of equity charged to clear the
round turn trades entered for the Fund account at the futures
commission Merchant. The entity charging the fixed commission takes the risk
that the number of trades entered will not exceed the costs on a round turn
basis in exchange for the retention in the difference between the round turn
costs and the percentage charged. The percentage is usually expressed at an
annual rate but paid monthly.
Form K-1. The section of the Federal Income Tax Return filed by the Fund
which identifies the amount of investment in the Fund, the gains and losses
for the tax year, and the amount of such gains and losses reportable by a
partner on the partner's tax return.
Fully Committed Position. Each commodity trading advisor has an objective
percentage of equity to be placed at risk. In addition, the CFTC places
limits upon the number of positions a single commodity trading advisor may
have in commodities. When either the objective percentage of equity is
placed at risk or the commodity trading advisor reaches the limit in number
of positions, the account or accounts have a fully committed position.
Futures Commission Merchant (FCMs). The person that solicits or accepts
orders for the purchase or sale of any commodity for future delivery subject
to the rules of any contract market and in connection with such solicitation
or acceptance of orders, accepts money or other assets to margin, guarantee,
or secure any trades or contracts that result from such orders for a
commission. The corporate general partner is responsible for the negotiation
and payment of the commission to the futures commission Merchant.
Futures Contract. A contract providing for (1) the delivery or receipt at a
future date of a specified amount and grade of a traded Commodity at a
specified price and delivery point, or (2) cash settlement of the change in
the value of the contract. The terms of these contracts are standardized for
each commodity traded on each exchange and vary only with respect to price
and delivery months. A futures contract should be distinguished from the
actual physical commodity, which is termed a cash commodity. Trading in
futures contracts involves trading in contracts for future delivery of
commodities and not the buying and selling of particular physical lots of
commodities. A contract to buy or sell may be satisfied either by making or
taking delivery of the commodity and payment or acceptance of the entire
purchase price therefore, or by offsetting the contractual obligation with a
countervailing contract on the same exchange prior to delivery.
Futures Investment Company. The principal selling agent, 5914 N. 300 West,
P.O. Box C, Fremont, IN 46737 Mr. Michael Pacult, one of the general partners
and the principal of White Oak Financial Services, Inc., the other general
partner, is a 50% shareholder and one of the principals of Futures Investment
Company. His spouse holds the other 50% and is also a principal.
General Partner. White Oak Financial Services, Inc., 5914 N. 300 West, P. O.
Box C, Fremont, IN 46737, (260) 833-1306; and, Mr. Michael Pacult, 5914 N.
300 West, P.O. Box C, Fremont, IN 46737. They manage the fund.
Gross Profits. The income or loss from all sources, including interest
income and profit and loss from non-trading activities, if any.
Initial Closing. When the minimum offering amount has been raised and
depository account funds are released to the Fund for commencement of
trading.
Introducing Broker (IB). Mt. Kemble Futures, 1099 Mt Kemble Ave, Morristown
NJ 07960. An entity that shares the brokerage commissions and is responsible
for introducing trades to the Man Financial, Inc., futures commission
merchant.
Limited Partner. Persons who have invested and admitted as Partners without
management authority pursuant to the Fund agreement.
Margin. A good faith deposit with a broker to assure fulfillment of the
terms of a futures contract. Does not limit or define the amount of the risk
or loss.
Margin Call. A demand for additional monies to hold positions taken to
maintain a customer's account in compliance with the requirements of a
particular commodity exchange or a futures commission merchant.
Minimum Offering/Maximum Offering. The Minimum is the amount required to be
invested before trading will commence, and the Maximum is the amount the
general partner establishes as the amount that will terminate this offering.
The general partner my elect to register additional partnership interests or
terminate the offering at anytime.
National Association of Securities Dealers (NASD). The self-regulatory
organization responsible for the legal and fair operation of broker dealers,
such as the selling agent and such other matters within the authority granted
to it by the SEC pursuant to the Securities Act of 1933.
National Futures Association (NFA). The self regulatory organization that is
responsible for the legal and fair operation of commodity pool operators,
such as the general partner of the Fund, commodity trading advisors, such as
the trader for the Fund, introducing brokers, such as the introducing broker
for the Fund, for futures commission merchants, such as the clearing broker
of the Fund, and such other matters within the authority granted to it by the
CFTC pursuant to the Commodity Exchange Act.
Net Assets or Net Asset Value means the total assets, including all cash and
cash equivalents (valued at cost plus accrued interest and earned discount),
less total liabilities, of the Fund (each determined on the basis of
generally accepted accounting principles, consistently applied under the
accrual method of accounting or as required by applicable laws, regulations
and rules including those of any authorized self regulatory organization).
See Exhibit A, The Limited Partnership Agreement, 1.2(e).
Net Unit Value. The net assets of the Fund divided by the total number of
units of partnership interests outstanding.
Net Gains. The net profit from all sources.
New Net Profit. The amount of income earned from trading, less the trading
losses and brokerage commissions and fees paid to clear the trades which are
incurred or accrued during the then current accounting period. See Charges
to the Fund.
Net Worth. The excess of total assets over total liabilities as determined
by generally accepted accounting principles. Net worth for a prospective
investor shall be exclusive of home, home furnishings and automobiles.
North American Securities Administrators Association, Inc. (NASAA). The
association of securities administrators of the fifty United States that
establish guidelines and procedures for the review of the sale of securities
within their State. NASAA has established guidelines for the review of
commodity pools, such as the Fund.
Offering Expenses. The expenses required to register units with the
Securities and Exchange Commission, including the preparation of the Form S-1
and the filing with various State securities agencies and the printing of a
Prospectus. North American Securities Administrator Association Guidelines
for Commodity Pools define offering and organizational expenses to include
selling commissions and redemption fees as well; and, for purposes of
limitation, the total expenses cannot exceed 15% of capital raised pursuant
to the offering. The offering expenses do not include the first year's
accounting, legal and other operating costs.
Option Contract. An option contract gives the purchaser the right (as
opposed to the obligation) to acquire (call) or sell (put) a given quantity
of a commodity or a futures contract for a specified period of time at a
specified price to the seller of the option contract. The seller has
unlimited risk of loss while the loss to a buyer of an option is limited to
the amount paid (premium) for the option.
Organizational Expenses. The costs to form the partnership and qualify it to
do business that will be repaid by the Fund to the General Partner after the
twelfth month after the commencement of trading.
Partners. All general partners and all limited partners in the Fund.
Partnership or Limited Partnership or Commodity Pool or Pool or Fund. The
Providence Select Fund, Limited Partnership, evidenced by Exhibit A to this
Prospectus, 101 N. Fairfield Drive, Dover, DE 19901, (800) 331-1532.
Position Limits. The Commodity Futures Trading Commission has established
maximum positions that can be taken in some, but not in all commodity
markets, to prevent the corner or control of the price or supply of those
commodities. These maximums are is called position limits.
Principal. Mr. Michael Pacult, one of the general partners and the principal
of the corporate general partner. Mr. Pacult is also a principal of the
principal selling agent, Futures Investment Company.
Round-turn Trade. The initial purchase or sale of a futures or forward
contract and the subsequent offsetting sale or purchase of such contract.
Round-turn Commission. The brokerage cost for the open and close of a trade
in a single contract defined by the exchange or other entity as to contract
size and duration of position.
Redemption. The right of a partner to tender its partnership interests to
the Fund for surrender at the net unit value. See the Limited Partnership
Agreement attached as Exhibit A.
Scale in Positions. In some situations, the positions desired to be taken on
behalf of the Fund and other accounts under management will be too large to
be executed at one time. The trading advisor intends to take positions at
different prices, at different times and allocate those positions on a
ratable basis in accordance with rules established by the Commodity Futures
Trading Commission. This procedure is defined as to scale in positions. The
same definition and rules apply when the trading advisor elects to exit a
position.
Securities and Exchange Commission (SEC). The United States regulatory
authority that supervises the sale of securities, including the Units to be
sold to the public by the Fund.
Selling Agent. The National Association of Securities Dealers member broker
dealer, Futures Investment Company, 5914 N. 300 West, P.O. Box C, Fremont, IN
46737, and any other selling agents selected by it and the general partner to
offer the partnership interests for sale. See Plan for Sale of Partnership
Interests.
Taxation - Section 1256 Contract is defined to mean: (1) any regulated
futures contract (RFC); (2) any foreign currency contract; (3) any non-equity
option; and (4) any dealer equity option.
The term RFC means a futures contract whether it is traded on or subject to
the rules of a national securities exchange which is registered with the
Securities and Exchange Commission, a domestic board of trade designated as a
contract market by the Commodity Futures Trading Commission or any other
board of trade, exchange or other market designated by the Secretary of
Treasury (a qualified board of exchange) and which is marked-to-market to
determine the amount of margin which must be deposited or may be withdrawn.
A "foreign currency contract" is a contract which requires delivery of, or
the settlement of, which depends upon the value of foreign currency which is
currency in which positions are also entered at arm's length at a price
determined by reference to the price in the interbank market. (The Secretary
of Treasury is authorized to issue regulations excluding certain currency
forward contracts from marked-to-market treatment.) A non-equity option means
an option which is treated on a qualified board or exchange and the value of
which is not determined directly or indirectly by reference to any stock (or
group of stocks) or stock index unless there is in effect a designation by
the Commodity Futures Trading Commission of a contract market for a contract
bond or such group of stocks or stock index. A dealer equity option means,
with respect to an options dealer, only a listed option which is an equity
option, is purchased or granted by such options dealer in the normal course
of his activity of dealing in options, and is listed on the qualified board
or exchange on which such options dealer is registered. See Federal Income
Tax Aspects.
Trading Advisor. See Commodity Trading Advisor.
Taking Positions Ahead of the Fund. The allocation of trades by other than
legally accepted methods by the commodity trading advisor or other trader
which favors parties who took the position unfairly.
Trading Matrix. The dollar value used by a commodity trading advisor to
define the number of positions to be taken by the accounts under management.
Some commodity trading advisors have different trading matrices for different
sized accounts. For example, they may trade all accounts over one million in
size differently than accounts under one million.
Unit. The term used to describe the initial $1,000 value and subsequent Net
Asset Value of general and limited partner interests of the Fund.
Unrealized Profit Or Loss. The profit or loss that would be realized on an
open position if it were closed at the current settlement price or the most
recent appropriate quotation as supplied by the broker or bank through which
the transaction is effected.
Underwriter. This term is not applicable to this offering. All sales of
partnership interests will be on a best efforts basis. The price of the
units will not be guaranteed, supported or underwritten in any way. See
Selling Agent.
State Regulatory Glossary
The following definitions are supplied by the State securities
administrators responsible for the review of public futures fund (commodity
pool) offerings made to residents of their respective States. They belong to
the North American Securities Administrators Association, Inc. that publish
"Guidelines for the Registration of Commodity Pool Programs", such as the
Fund, which contain these definitions. The following definitions are from
the Guidelines; however, the general partner has made additions to, but no
deletions from, some of these definitions to make them more relevant to the
consideration of an investment in the Fund.
Administrator-The official or agency administering the security laws of
a State. This will usually be the State of residence of the Fund or the
domicile of the broker or brokerage firm which makes the offer or the
residence of the potential investor.
Advisor-Any person who, for any consideration, engages in the business
of advising others, either directly or indirectly, as to the value, purchase,
or sale of commodity contracts or commodity options. This definition applies
to the commodity trading advisors and, when it provides such advice, to the
general partner.
Affiliate-An Affiliate of a Person means: (a) any Person directly or
indirectly owning, controlling or holding with power to vote 10% or more of
the outstanding voting securities of such Person; (b) any Person 10% or more
of whose outstanding voting securities are directly or indirectly owned,
controlled or held with power to vote, by such Person; (c) any Person,
directly or indirectly, controlling, controlled by, or under common control
of such Person; (d) any officer, director or partner of such Person; or (e)
if such Person is an officer, director or partner, any Person for which such
Person acts in any such capacity. See "Conflicts". This applies to the fact
that Mr. Michael Pacult one of the general partners, is the sole shareholder
and principal of the other general partner and also owns 50% of the
outstanding voting shares and is a principal in the affiliated selling agent.
Capital Contributions-The total investment in a Program by a
Participant or by all Participants, as the case may be. The purchase price
for the partnership interests.
Commodity Broker-Any Person who engages in the business of effecting
transactions in commodity contracts for the account of others or for his own
account. See Futures Commission Merchant and Introducing Broker.
Commodity Contract-A contract or option thereon providing for the
delivery or receipt at a future date of a specified amount and grade of a
traded commodity at a specified price and delivery point.
Cross Reference Sheet-A compilation of the Guideline sections,
referenced to the page of the prospectus, Program agreement, or other
exhibits, and justification of any deviation from the Guidelines. This sheet
is used by the State Administrator to review this prospectus.
Net Assets-The total assets, less total liabilities, of the Program
determined on the basis of generally accepted accounting principles. Net
Assets shall include any unrealized profits or losses on open positions, and
any fee or expense including Net Asset fees accruing to the Program.
Net Asset Value Per Program Interest-The Net Assets divided by the
number of Program Interests outstanding.
Net Worth-The excess of total assets over total liabilities are
determined by generally accepted accounting principles. Net Worth shall be
determined exclusive of home, home furnishings and automobiles.
New Trading Profits-The excess, if any, of Net Assets at the end of the
period over Net Assets at the end of the highest previous period or Net
Assets at the date trading commences, whichever is higher, and as further
adjusted to eliminate the effect on Net Assets resulting from new Capital
Contributions, redemptions, or capital distributions, if any, made during the
period decreased by interest or other income, not directly related to trading
activity, earned on Program assets during the period, whether the assets are
held separately or in a margin account. See New Net Profit.
Organizational and Offering Expenses-All expenses incurred by the
Program in connection with and in preparing a Program for registration and
subsequently offering and distributing it to the public, including, but not
limited to, total underwriting and brokerage discounts and commissions
(including fees of the underwriter's attorneys), expenses for printing,
engraving, mailing, salaries of employees while engaged in sales activity,
charges of transfer agents, registrars, trustees, escrow holders,
depositories, experts, expenses of qualification of the sale of its Program
Interest under Federal and State law, including taxes and fees, accountants'
and attorneys' fees.
Participant-The holder of a Program Interest. A Partner in the Fund.
Person-Any natural Person, partnership, corporation, association or
other legal entity.
Pit Brokerage Fee-Pit Brokerage Fee shall include floor brokerage,
clearing fees, National Futures Association fees, and exchange fees. The
general partner will pay these fees from the fixed brokerage commissions.
Program-A limited partnership, joint venture, corporation, trust or
other entity formed and operated for the purpose of investing in Commodity
Contracts. The Fund.
Program Broker-A Commodity Broker that effects trades in Commodity
Contracts for the account of a Program. See the Futures Commission Merchant
and Introducing Broker.
Program Interest-A limited partnership interest or other security
representing ownership in a program. The units in the Fund. See Exhibit A,
the Limited Partnership Agreement.
Pyramiding-A method of using all or a part of an unrealized profit in a
Commodity Contract position to provide margin for any additional Commodity
Contracts of the same or related commodities.
Sponsor-Any Person directly or indirectly instrumental in organizing a
Program or any Person who will manage or participate in the management of a
Program, including a Commodity Broker who pays any portion of the
Organizational Expenses of the Program, and the general partner(s) and any
other Person who regularly performs or selects the Persons who perform
services for the Program. Sponsor does not include wholly independent third
parties such as attorneys, accountants, and underwriters whose only
compensation is for professional services rendered in connection with the
offering of the partnership interests. The term Sponsor shall be deemed to
include its Affiliates.
Valuation Date-The date as of which the Net Assets of the Program are
determined. For the Fund, this will be after the close of business on the
last business day of each month.
Valuation Period-A regular period of time between Valuation Dates. For
the Fund, this will be the close of business for each calendar month and each
calendar year.
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APPENDIX II
PRIVACY STATEMENT
PROVIDENCE SELECT FUND, LP
505 Brookfield Drive
Dover, Delaware 19901
Telephone: (800) 331-1532
Providence Select Fund, LP, is committed to safeguarding the confidential
information of its partners. We hold all personal information provided to us
in the strictest confidence. These records include all personal information
that we collect from you. We have never disclosed information to
nonaffiliated third parties, except to our selling agents or as directed by
you or required by law and we do not anticipate any change in these
procedures in the future. If we were to change this disclosure policy, we
would not take such action without your written permission.
A full statement of our privacy policy with respect to personal information
about you is as follows:
* We limit employee and independent contractor representatives of ours
access to information in your file to only to those persons who have a
business or professional reason for knowing.
* We limit the delivery of your information to only those nonaffiliated
parties who directly service your account such as selling agents, trustees
and clearing brokers or as directed by you or as required by law. As
examples, Federal regulations permit us to share a limited amount of
information about you with a clearing brokerage firm in order to execute
securities transactions on your behalf and we have implied permission from
you to discuss your financial situation with our selling agents and your
accountant or other professional.
* We use our best efforts to maintain a secure office and computer
environment to ensure that your information is not placed at unreasonable
risk.
* The categories of nonpublic personal information that we collect from a
prospect, partner, client and independent third parties depend upon the scope
of the client engagement. It will include information about your personal
finances, information about your health to the extent that it is needed for
the planning process, information about transactions between you and third
parties, and information from consumer reporting agencies.
* For unaffiliated third parties that require access to your personal
information, including financial service companies, consultants, and
auditors, we also require strict confidentiality in our agreements with them
and expect them to keep this information private. Federal and State
regulators also may review firm records as permitted under law.
* Personally identifiable information about you will be maintained during
the time you are a partner or client, and for the required time thereafter
that such records are required to be maintained by Federal and State
securities laws. After this required period of record retention, all such
information is expected to be destroyed.
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EXHIBIT A TO PROVIDENCE SELECT FUND DISCLOSURE DOCUMENT
AGREEMENT OF LIMITED PARTNERSHIP OF
PROVIDENCE SELECT FUND, LIMITED PARTNERSHIP
ARTICLE I.
FORMATION, NAME, POWER OF ATTORNEY AND CONSIDERATION
1.1 THIS LIMITED PARTNERSHIP AGREEMENT, (the "LP Agreement") was entered
into on May 16, 2003 and was amended by the First Amendment dated July 29,
2003 and is hereby amended and restated to combine, supercede and fully
restate the LP Agreement as of September 1, 2003 into this single document to
include all of the terms of the LP Agreement and the First Amendment. This
fully restated partnership agreement is to be hereafter referred to as the
"LP Agreement". The LP Agreement, as hereby amended and fully restated,
forms and defines the terms of operation of a limited partnership named
PROVIDENCE SELECT FUND, LIMITED PARTNERSHIP (the "Partnership" or "Fund")
among White Oak Financial Services, Incorporated, a Delaware corporation (the
"Corporate GP"), and Michael Pacult (the "Other GP-Pacult"), collectively
called "general partner", and Michael P. Pacult (the "Initial LP"), as the
initial limited partner. In the event of conflicts between this agreement
and either the LP Agreement of May 16, 2003 or the First Amendment of July
29, 2003, this Agreement will control. A Certificate of Limited Partnership
was filed pursuant to the Uniform Limited Partnership Act of the State of
Delaware, USA, (the "Act") to form and declare the effective date of the
Partnership to be May 16, 2003. No change is made to the effective date of
the Partnership and all acts previously taken by the general partner are
ratified and approved.
1.2 POWER OF ATTORNEY. As a condition precedent to admission to the
Partnership, every Partner will be required to grant a power of attorney to
authorize the Corporate GP to admit that Partner and all future Partners it
chooses to the Partnership and to grant the Corporate GP the authority and
power to take all actions required or deemed necessary to carry out the
purposes of the Partnership. The Other GP-Pacult, by his signature below,
grants the Corporate GP a Power of Attorney and sole authority and power to
take all actions required or deemed necessary to carry out the purposes of
the Partnership.
WITNESSETH:
1.3 IN CONSIDERATION of one thousand dollars ($1,000) paid to the
Partnership by the Corporate GP and the Initial LP and other good and
valuable consideration, this Partnership was formed and henceforth will be
operated on the following terms and conditions:
ARTICLE II
PRINCIPAL OFFICE, REGISTERED AGETN and TAX MATTERS PARTNER
2.1 PRINCIPAL OFFICE. The principal office of the Partnership is: 505
Brookfield Drive, Dover, DE 19901, or such other place as the Corporate GP
may designate, in its sole discretion, from time to time;
2.2 REGISTERED AGENT. The Registered Agent for the Partnership is
Corporate Systems, Inc., 505 Brookfield Dr., Dover, Kent County, DE 19901;
and
2.3 TAX MATTERS PARTNER. The Tax Matters Partner for the Partnership is
the Corporate GP, 5914 N. 300 West, P. O. Box C, Fremont, IN 46737.
ARTICLE III
BUSINESS AND PURPOSE OF THE PARTNERSHIP
3.1 BUSINESS PURPOSE. The Partnership's business purpose is to increase
Capital through the high risk, speculative and hedge trading of forward
contracts, futures, options on futures and other investments selected by one
or more managers ("Commodity Trading Advisors or CTAs or other qualified
persons") retained by the Corporate GP on behalf of the Partnership.
3.2 PARTNERSHIP POWERS. The Partnership, through the Corporate GP, is
authorized to do any and all things incident or connected with or in
furtherance of its business purpose that is authorized pursuant to the Act
including, but not limited to:
(a) admit additional Partners on terms determined solely by the Corporate
GP;
(b) trade, buy, sell or otherwise acquire, hold or dispose of all forms of
investments (including tangibles and intangibles, foreign currencies,
mortgage-backed securities, money market instruments, stock and futures
options, and any other securities or items which are now, or may hereafter
be, the subject of barter or stock or futures trading), commodity futures,
and forward contracts and any rights pertaining thereto;
(c) invest and trade, on margin or otherwise, in capital stocks, bonds,
debentures, trust receipts and other obligations, instruments or evidences of
indebtedness, gold, silver, cattle, corn, wheat, soybeans, or any other asset
for which a trading market is maintained or otherwise paid for by cash or
otherwise including, but not limited to, the right to sell short and to cover
such short sales;
(d) possess, sell, exchange, discount, transfer, mortgage, pledge, deal in,
maintain multiple accounts for, and to exercise all rights, powers,
privileges and other rights, incidental to ownership of the assets held by
the Partnership;
(e) borrow or raise monies and, from time to time without limit as to
amount;
(f) to open margin and other forms of leveraged accounts;
(g) to issue, accept, endorse and execute promissory notes, draft bills of
exchange, warrants, bonds, debentures and other negotiable or non-negotiable
instruments and evidences of indebtedness, and to secure the payment of any
thereof and the interest thereon by mortgage or pledge, conveyance or
assignment in trust of the whole or any part of the property of the
Partnership, whether at the time owned or thereafter acquired, and to sell,
pledge of otherwise dispose of such instruments issued by the Partnership for
its purposes; form and own one or more corporations to engage in such
businesses as the Corporate GP shall deem advisable;
(h) lend any of its properties or funds, either with or without security in
furtherance of the objects and purposes of the Partnership as the Corporate
GP shall deem advisable and consent;
(i) rent or own and maintain one or more offices staffed as the Corporate
GP shall determine and to do such other acts attendant thereto as may be
necessary or desirable;
(j) establish or waive the sales commission to acquire investment Capital
as the Corporate GP, in its sole discretion, from time to time, may
determine; and
(k) enter, make and perform all contracts, surety and guarantees as may be
necessary or advisable or incidental to the carrying out of the foregoing
objects and purposes.
3.3 EXERCISE OF POWERS. The Partnership shall carry on its activities
through the exercise of judgment by the Corporate GP and/or the Investment
and/or Commodity Trading Advisors and consultants and brokers selected by the
Corporate GP.
3.4 FEES AND COMMISSIONS TO THE CORPORATE GP. The Corporate GP may charge
the Partnership brokerage commissions and serve as an investment or trading
advisor to the Partnership for management fees, incentive fee, reimbursement
of costs and other remuneration at the same rates charged either by
independent third parties for similar services to other partnerships or by
the Corporate GP to others for the same service. The Other GP-Pacult shall
not receive any compensation from the Partnership for serving as an Other GP.
3.5 TRADING ADVISOR(S). The Corporate GP shall be solely responsible for
the selection, retention and dismissal, from time to time, of one or more
Commodity Trading Advisor(s) ("CTA"). The CTA or CTAs selected will
determine the markets to be traded, time the purchase and sale (including
short sales, hedge positions, and option purchases and sales) and otherwise
manage the trades made by the Partnership.
3.6 MANAGEMENT. The Partnership's management is as follows:
(a) POOL OPERATOR NAME AND PRINCIPALS. The Corporate GP and Other GP-
Pacult are identified in the captions of this LP Agreement. They and any
other general partners of the Partnership must qualify as commodity pool
operators pursuant to the Commodity Exchange Act (the "CEAct") as a condition
precedent to, and during, their appointment as GPs pursuant to the terms of
this LP Agreement.
(b) COMMODITY TRADING ADVISOR. The Corporate GP will select one or more
independent CTAs to trade the assets of the Partnership. All CTAs selected
must have a current disclosure document filed and on public record with the
National Futures Association (the "NFA") pursuant to the CEAct. The
Corporate GP will rely upon the track record and other information supplied
by the CTA in its selection of the CTA. The CTA will have no ownership in
the Partnership and its compensation will be subject to the terms of this LP
Agreement and also as described in the Offering Documents that are used to
offer Limited Partnership interests ("Units") for sale to prospective
partners. The CTA will enter trades on behalf of the Partnership directly
with the futures commission merchant ("FCM") without the prior knowledge or
approval by the Corporate GP of the methods used by the CTA to select the
trades, the number of contracts, or the margin required by the FCM for the
Partnership to deposit to enter and hold the positions taken. The
Partnership is expected to use from 10% to 40% of the Net Asset Value on
deposit with the FCM, from time to time, for margin to hold positions taken
by the CTA for the account of the Partnership. Margin is merely security to
the FCM for the positions taken by the Partnership and does not define or
otherwise limit the profit or (loss) that can be incurred from any or all of
the positions taken. It is possible for the Partnership to be required to
pay margin calls (addition deposits to the FCM) to continue to hold positions
or to pay overdrafts created by losses on closed out positions.
(c) INTRODUCING BROKER AND FUTURES COMMISSION MERCHANT. The Corporate GP
will also select an Affiliated or independent Introducing Broker ("IB") to
introduce and service the Partnership account(s) with the Futures Commission
Merchant (the "FCM") and to handle communications with the limited partners
("LPs"). The Corporate GP will be paid fixed brokerage commissions for
domestic trades plus actual commissions charged for trades made on foreign
exchanges and forward markets, if any, and will be responsible for payment of
all Pit Brokerage and other clearing expenses and brokerage commission to the
IB and the FCM. The FCM will hold the Partnership equity assigned by the
Corporate GP for trading and will accept and clear the trades entered by the
CTA. The trades will be made by the CTA directly to the FCM pursuant to a
power of attorney granted by the Corporate GP on behalf of the Partnership to
authorize the CTA to enter trades on behalf of the Partnership.
3.7 QUALIFICATION TO SELL UNITS. The Corporate GP, on behalf of the
Partnership, shall have the authority, but not the obligation, to cause the
Partnership Offering Documents and any other documents deemed necessary or
desirable to be filed, and such amendments thereto as the Corporate GP deems
advisable, with the appropriate Federal and state regulatory agencies,
including the United States Securities and Exchange Commission and the
Commodity Futures Trading Commission and the commission of securities under
the securities laws of the various states and any other jurisdiction
desirable or proper to qualify the Units for sale pursuant to public or
private offerings. Each of the Partners hereby acknowledge that the power of
attorney granted to the Corporate GP extends to preparations of such
documents, filings and payment of the attendant fees and further consent,
confirm and ratify all action taken and things done by the Corporate GP with
respect to such preparation, filings and payment of fees attendant to such
public and private offerings. The Corporate GP may make such other
arrangements, including sales outside the United States, for the public and
private sale of Units as it, in its sole judgment, deems appropriate.
ARTICLE IV
TERM, DISSOLUTION. LIQUIDATION AND FISCAL YEAR
4.1 TERM OF PARTNERSHIP. The Partnership shall commence on May 16, 2003,
and shall continue until dissolved or terminated pursuant to the terms of
this Article IV or extended as provided by law.
4.2 DISSOLUTION. The Partnership shall be dissolved and shall terminate
and wind-up its affairs, upon the first to occur of the following:
(a) the affirmative vote of a Majority in Interest of the Partners adopting
an amendment to this Agreement providing for the dissolution of the
Partnership; or
(b) the Redemption by the Partners of substantially all of the Capital of
the Partnership; or
(c) the sale, exchange, forfeiture or other disposition of all or
substantially all the properties of the Partnership out of the ordinary
course of business; or
(d) the resignation of the Corporate GP after one hundred twenty days
notice to the other Partners, of the bankruptcy, insolvency or dissolution,
of the Partnership General Partners, without a successor, promptly after any
such event, but in no event beyond one hundred twenty (120) days after the
effective date of such event; or
(e) at 11:59 p.m. on the day that is twenty-one (21) years from the
effective date of this Agreement; or
(f) any event which legally dissolves the Partnership.
4.3 EFFECT OF LIMITED PARTNER STATUS. The death, legal disability,
bankruptcy, insolvency, dissolution, or withdrawal of any Limited Partner
shall not result in the dissolution or termination of the Partnership, and
such Limited Partner, his estate, custodian or personal representative shall
have no right to withdraw or value such Limited Partner's interest in the
Partnership except as provided in Article XIV, Redemption. Each Limited
Partner (any assignee thereof) expressly agrees that the provisions of the
Act, as amended, titled "Powers of Legal Representative or Successor of
Deceased, Incompetent, Dissolved or Terminated Partner", shall not apply to
his interest in the Partnership and expressly waives any rights and benefits
under that provision. Each Limited Partner (and any assignee of such
Partner's interest) expressly agrees that in the event of his death, that he
waives on behalf of himself and his estate, and he directs the legal
representative of his estate and any person interested therein to waive the
furnishing of any inventory, accounting or appraisal of the assets and any
right to an audit or examination of the books of the Partnership.
4.4 EFFECT OF CORPORATE PARTNER TRANSFER OF STOCK. The Corporate GP may
assign, sell, or otherwise dispose of all or any portion of its shares of
common stock without any legal effect upon the operation of the Partnership
and no Limited Partner may object to any such transfer.
4.5 LIQUIDATION. Upon the termination and dissolution of the Partnership,
the Corporate GP (or in the event the dissolution is caused by the
dissolution or the cessation to exist as a legal entity of the Corporate GP,
voluntary withdrawal, bankruptcy or insolvency, such person as the Majority
in Interest of the Partners may select) shall act as liquidating trustee and
shall take full charge of the Partnership assets and liabilities. Thereafter,
the business and affairs of the Partnership shall be wound up and all assets
shall be liquidated as promptly as is consistent with obtaining the fair
value thereof, and the proceeds shall be applied and distributed in the
following order: (i) to the expenses of liquidation and termination and to
creditors, including the Corporate GP, in order or priority as provided by
law, and (ii) to the Partners pro rata in accordance with his or its Capital
account, less any amount owed by such Partner to the Partnership.
4.6 RETURN OF CAPITAL CONTRIBUTION SOLELY OUT OF ASSETS. A Partner shall
look solely to the properties and assets of the Partnership for the return of
his Capital Contribution, and if the properties and assets of the Partnership
remaining after the payment or discharge of the debts and liabilities of the
Partnership are insufficient to return his Capital Contribution, he shall
have no recourse against the Corporate GP or any Other GP or any Limited
Partner for that purpose.
4.7 NO PRIORITY. In the event of dissolution or liquidation or other
voluntary or involuntary wind-up of the affairs of the Partnership, no
limited partner shall have priority over any other limited partner in regard
to the return of their Capital contributed to the Partnership.
4.8 FISCAL YEAR. The Corporate GP shall establish the Partnership Fiscal
year, from time to time. The Corporate GP established the initial partial
year to commence on May 16, 2003 and each year, thereafter, to commence on
January 1 and for the initial year and all years, thereafter, to end on
December 31.
ARTICLE V
DEFINITIONS
Certain terms used in this Agreement shall have the following special
meanings:
5.1 The term Affiliate means (1) any person controlled by or under common
control with another person, (2) a person owning or controlling 10% or more
of the outstanding voting securities of such other person, (3) any officer or
director of such other person, and (4) if such other person is an officer or
director, any other company for which such person acts as an officer or
director.
5.2 When referring to the assets of the Partnership:
(a) the term Capital means cash invested in the Partnership by any Partner
and placed at risk for the business of the Partnership;
(b) the term Capital Contribution means, with respect to any Partner, the
individual deposits made to Capital contributed to the Partnership by a
Partner;
(c) the term Capital Subscription means the amount such Partner agrees to
pay for the Unit or Units in the Partnership subject to acceptance by the
Corporate GP;
(d) the term Initial Capital means the sum of all Capital Subscriptions
received by the Corporate GP prior to commencement of trading;
(e) the term Net Assets or Net Asset Value means the total assets,
including all cash and cash equivalents (valued at cost plus accrued interest
and earned discount), less total liabilities, of the Partnership (each
determined on the basis of generally accepted accounting principles,
consistently applied under the accrual method of accounting or as required by
applicable laws, regulations and rules including those of any authorized self
regulatory organization), specifically:
(i) Net Asset Value includes any unrealized profit or loss on open security
and commodity positions subject to reserves for loss established, from time
to time, by the Corporate GP;
(ii) All open stock, option, and commodity positions are calculated on the
then current market value, which shall be based upon the settlement price for
that particular position on the date with respect to which Net Asset Value is
being determined; provided, however, that if a position could not be
liquidated on such day due to the operation of the daily limits or other
rules of the exchange upon which that position is traded or otherwise, the
settlement price on the first subsequent day on which the position could be
liquidated shall be the basis for determining the market value of such
position for such day. As used herein, "settlement price" includes, but is
not limited to: (1) in the case of a futures contract, the settlement price
on the commodity exchange on which such futures contract is traded; and (2)
in the case of a foreign currency forward contract which is not traded on a
commodity exchange, the average between the lowest offered price and the
highest bid price, at the close of business on the day Net Asset Value is
being determined, established by the bank or broker through which such
forward contract was acquired or is then currently traded;
(iii) Brokerage commissions to close security and commodity positions, if
charged on a round-turn basis, are accrued in full at the time the position
is initiated (i.e., on a round-turn basis) as a liability of the Partnership;
(iv) Management fees are accrued as an expense and paid on the last business
day of each month;
(v) Incentive fees are accrued as an expense of the Partnership and paid on
the last business day of each calendar quarter;
(vi) Interest earned on all Partnership accounts is accrued and paid
monthly;
(vii) The amount of any distribution made by the Partnership is a liability
of the Partnership from the day when the distribution is declared by the
Corporate GP or as provided in this Agreement and the amount of any
redemption is a liability of the Partnership upon acceptance by the Corporate
GP and not the date of receipt of the redemption request from any Partner;
and
(viii) Syndication Costs incurred in organizing and all present and
future costs to increase or maintain the qualification of the Units available
for sale and the cost to present the initial and future offering of Units for
sale shall be capitalized when incurred and amortized and paid from Capital
or Monthly Profit as required by applicable law.
(f) The term Valuation Date means the date used to value the Net Assets of
the Partnership selected by the Corporate GP which shall be no less often
than immediately after the close of business on the last business day of each
month;
(g) the terms Profit or (Loss) Attributable to Units means the product of
A) the number of Units divided into B) an amount equal to the Net Profit or
(Loss) determined as follows: (1) the net of profits and losses realized on
all trades closed out, plus (2) the net of any unrealized profits and losses
an open positions as of the end of the period, less (3) the net of any
unrealized profits and losses on open positions as of the end of the
preceding period, minus, (4) the Expenses attributable to Units. Profit and
(Loss) shall include interest earned on all Partnership assets including
realized and unrealized capital gains or losses on U.S. Treasury bills and on
any other securities;
(h) the term Management Fee means up to six percent (6%) annually of the
Net Assets of the Partnership as established, from time to time, by the
Corporate GP computed on the close of business on the last day of each month
and payable to the Corporate GP and upon the Capital assigned to each
independent Commodity Trading Advisor, (the "CTA") or both, without regard to
the income or loss of the Partnership for that period; upon the commencement
of trading, the Corporate GP will not be paid a management fee on the Net
Assets of the Partnership and the CTA will be paid a Management Fee based on
the rate of trading assigned by the CTA and approved by the GP of up to two
and one half percent (2.5%) on the Net Assets assigned to the CTA and on
deposit in the Partnership's account at the FCM to trade; management fees to
the Corporate GP, should such fee be charged at some time in the future,
shall be in addition to any income earned on its general partner interest in
the Partnership.
(i) the term Incentive Fee means a percentage of the New Net Profits
accrued and paid to the Corporate GP, or its Affiliates, or the CTA, or to
both, of up to a total of fifteen percent (15%) annually of New Net Profit
earned from inception of trading, through the date of the computation as
established, from time to time, by the Corporate GP; the Corporate GP has the
right to both reduce the Incentive Fee below fifteen percent (15%) and to
increase the Incentive Fee to a maximum of twenty-seven percent (27%),
provided that in the case of an increase in Incentive Fee of over fifteen
percent (15%) the Management Fee is correspondingly lowered by one percent
(1%) for each two percent (2%) increase in Incentive Fee; i.e., at the
maximum of a twenty-seven percent (27%) Incentive Fee, the Management Fee
would be zero (0%); upon the commencement of trading, the Corporate GP has
established the Incentive Fees on New Net Profits to be computed and paid
quarterly of up to twenty-three percent (23%) with up to three percent (3%)
to the Corporate GP and twenty percent (20%) to the CTA; should the Corporate
GP select multiple CTA's to trade for the Partnership, it is possible for one
CTA to be paid an Incentive Fee while the Partnership suffers a Net Loss from
all trading; in that event, the Corporate GP would be paid no Incentive Fee;
Incentive Fees to the Corporate GP shall be in addition to any income earned
on its general partner interest in the Partnership.
(j) the term Gross Profit or (Loss) means the income or loss from all
sources, including interest income and profit and loss from non-trading
activities, if any.
(k) the term New Net Profit or Loss means the amount of income earned from
inception of trading by the Partnership in the case of the Corporate GP and
by each CTA, less the trading losses and brokerage commissions and fees.; in
the case of multiple CTA's, the New Net Profit or Loss applies to the results
achieved by each CTA without regard to the results achieved by any other CTA
or any non-trading asset or investment;
(l) the term Net Profit or Loss means net profit or loss from all sources.
(m) the term Unit shall mean a partnership interest in the Partnership
requiring an initial Capital Contribution of one thousand dollars ($1,000),
less a sales commission, or the Net Asset Value of the initial Unit, as
adjusted to reflect increases and decreases caused by receipt, accrual, and
payment of profit, Expenses, losses, bonuses, and fees, from time to time.
5.3 When referring to costs and expenses of the Partnership to be allocated
and charged pursuant to this Agreement:
(a) the term Expenses shall mean costs allocated, incurred, paid, accrued,
or reserved, including the fixed or round turn commissions, which are, in the
opinion of the Corporate GP, required, necessary or desirable to establish,
manage, continue and promote the business of the Partnership including, but
not limited to, all deferred organization costs, brokerage commissions, and
all management and incentive fees payable to the Corporate GP or to
independent investment and Commodity Trading Advisor by the Partnership as
negotiated and determined by the Corporate GP on behalf of the Partnership on
a basis consistently applied in accordance with generally accepted accounting
principals under the accrual method of accounting or as required by
applicable laws, regulations and rules including those of any authorized self
regulatory organization with proper jurisdiction over the business of the
Partnership; provided, however, Expenses shall not include salaries, rent,
travel, expenses and other items of Corporate GP overhead. In addition, if
extraordinary expenses are incurred, the Corporate GP shall include in the
Partnership's next regular report to the auditors a discussion of the
circumstances or events which resulted in the extraordinary expenses;
(b) the term Net Unit Value shall mean the Net Asset Value, divided, from
time to time, by the total number of Units outstanding;
(c) the term Offering Period means the period of time established, from
time to time, by the Corporate GP in which the Partnership will offer Units
for sale at the Net Asset Value and admit new Partners pursuant to the terms
of this LP Agreement; and,
(d) the term Syndication Costs means the promotion and syndication costs of
the Partnership and the costs of the offering of Units, and to establish the
initial business relationships on behalf of the Partnership, including all
legal and printing costs to prepare the Offering Documents, registrations and
filing fees, web design and promotion, contract negotiation, and travel
incurred which are deemed necessary or desirable by the Corporate GP and the
professionals selected, to form the Partnership and become ready to sell
Units and engage in business.
(e) the term Pit Brokerage Fee means floor brokerage, clearing fees,
National Futures Association fees, and exchange fees.
5.4 Offering Documents means the disclosure document, memorandum, offering
circular, prospectus and registration statement, together with the exhibits,
Federal and state forms, and any subsequent continuations thereof, which
describes this Partnership to persons selected by the Corporate GP including,
but not limited to, potential purchasers of Units, or the Partners or to any
government or self regulatory agency or to persons selected by the Corporate
GP to participate in the affairs or provide services to the Partnership.
5.5 When referring to this LP Agreement and the Partners of the
Partnership:
(a) the term Act refers to the Uniform Limited Partnership Act of the State
of Delaware, USA, as amended, from time to time.
(b) the term CEAct refers to the United States Commodity Exchange Act, 7 U.
S. C. Sec 1, et seq., as amended, from time to time.
(c) the term LP Agreement refers to this agreement as amended, from time to
time;
(d) The term Commodity Pool Operator refers to the GPs of the Partnership
as that term is defined by the CEAct;
(e) the term CTA refers to Commodity Trading Advisor (sic investment
manager) as that term is defined by the CEAct;
(f) the term Corporate GP refers to White Oak Financial Services,
Incorporated, a Delaware corporation, with its principal office at 5914 N.
300 West, P.O. Box C, Fremont, IN 46737 (260) 833-1306;
(g) the term FCM refers to the Futures Commission Broker or Brokers, as
that term is defined by the CEAct, selected, from time to time, by the
Corporate GP and is the entity or entities that hold the Partnership equity
made available for trading and accept the trades directed to be made by the
CTAs;
(h) the term GP refers to all general partners of the Partnership;
(i) the term GP Interest refers to any non-trading Capital contributed to
the Partnership by any GP;
(j) the term IB refers to the Introducing Broker or Brokers, as that term
is defined by the CEAct, selected, from time to time, by the Corporate GP
and is the entity or entities that are responsible for the Partnership's
relationship with the FCMs and for continuing service to the Partners;
(k) the term Initial LP refers to Michael P. Pacult, a signatory to this LP
Agreement;
(l) the term Additional LP refers to any limited partner other than Michael
P. Pacult admitted to this Partnership pursuant to the terms of this LP
Agreement;
(m) the term Limited Partners refers to the Initial LP and all Additional
LPs in the Partnership;
(n) the term Majority in Interest refers to that number of Partners who
collectively hold over 50% of all of the outstanding Partnership interests
held by all Partners in the Partnership; provided, however, the GP Interests
cannot be considered to determine a Majority in Interest or otherwise vote or
consent on the question of removal of the Corporate GP or any other matters
specifically limited in this LP Agreement. In addition, see the rights,
duties and limitations of the actions that can be taken by the Corporate GP
and the Limited Partners specifically provided in this LP Agreement;
(o) the term Other GP refers to any GP other than White Oak Financial
Services, Incorporated admitted to serve as a general partner of the
Partnership pursuant to the terms of this LP Agreement; and
(p) the term Partners refers to the Corporate GP, all Other GPs, the
Initial LP and all of the Additional LPs.
ARTICLE VI
CAPITAL CONTRIBUTIONS AND USE OF CAPITAL
6.1 CAPITAL CONTRIBUTIONS OF PARTNERS.
(a) Each Additional LP is required to deliver to the Partnership an
executed Subscription Agreement and Power of Attorney for review and
acceptance by the Corporate GP on behalf of the Partnership and a wire
transfer or check in the amount of his Capital Subscription and sales
commission, if any, to the Partnership.
(b) The Subscription shall be deposited to the Capital Account for the
Partnership.
(c) Upon the commencement of trading, the Capital Account for the
Partnership shall be allocated to the Limited Partners and shall be expressed
in both United States dollars invested and number of Units held.
(d) A Partner shall contribute $1,000 per Unit prior to the commencement of
trading and, after trading commences, contribute an amount equal to the Net
Asset Value of a Unit calculated as of the end of the last business day of
the month in which the subscription is made, plus the sales commission, if
any, on the Valuation Date. The Corporate GP will have five (5) days from
date of deposit of the subscription amount to review and accept or deny
acceptance of the Partner's subscription. The Additional LP will have five
(5) business days from the date of his subscription to rescind his
subscription, after which time, the subscription will be irrevocable, subject
to any applicable law which may extend the Partner's rescission period.
(e) The Corporate GP has contributed $1,000 in cash for deposit to the
Capital of the Partnership for a non-trading General Partnership interest in
the Partnership. Prior to the commencement of trading, and for so long as
the Partnership is registered to sell its securities or is seeking to become
registered to sell its securities in a state which requires the general
partner to maintain a minimum investment in the Partnership, and for so long
as there remains a partner from such a state that has not redeemed all its
Units, either the Corporate GP, the Other GP - Pacult or any Other GP will
make and maintain a capital contribution to the Partnership equal to the
greater of 1% of all capital contributions to the Partnership or $25,000. In
the event the Partnership determines not to seek registration in states
requiring such minimum investment, or to terminate its registration in such
states and, if there are no extant investments in the Partnership from
partners from such states, the Corporate GP, Other GP-Pacult or Other GP may
reduce or terminate its investment in the Partnership.
(f) In addition to its deposit to its General Partnership account, the
Corporate GP and its Affiliates and any Other GP may, but are not obligated,
purchase Units with the same rights and obligations as other Limited
Partners.
(g) All subscriptions for Units made pursuant to the offering of the Units
must be on the form included in the Offering Documents or otherwise approved
by the Corporate GP and must include the power of attorney to the Corporate
GP.
(h) The Corporate GP maintains an depository account to continuously accept
prospective Partners' subscriptions until the minimum is sold or the end of
the then current month, as applicable, and the Partner is admitted to the
Partnership.
6.2 USE OF CAPITAL ACCOUNTS.
(a) The Partnership shall use the funds subscribed to pay sales
commissions, and its Capital allocated to Units to pay Expenses, Organization
Costs and to otherwise make the payments required to be made by the
Partnership to engage in active trading and to pay the management fees and,
from profits, the incentive fees and allocation of profits and (losses) to
Partner's Capital Accounts.
(b) All interest earned from investments of Capital shall be allocated to
the Partner's in the Partnership; provided, however, the Partnership shall
not be obligated to pay interest on any Capital invested in the Partnership.
ARTICLE VII
ALLOCATION OF PROFITS, (LOSSES) AND TAX ELECTIONS
7.1 CAPITAL ACCOUNTS. A Capital account shall be established for each
Partner. All GP Interests shall be segregated from the LP accounts engaged
in active trading.
7.2 ALLOCATION OF PROFITS AND LOSSES
The Capital account established for each LP shall include, as the initial
balance thereof, each LPs' initial contribution to Capital of the Partnership
expressed in total dollars and Units purchased. As of the close of business
each month, allocations shall be made as follows:
(a) The Incentive Fee. The incentive fees upon New Net Profit at the rate
established, from time to time, by the Corporate GP shall be paid accrued an
allocated to Capital accounts monthly for Redemption, tax and all other
purposes; provided, however, no incentive fee will be earned and paid the
Corporate GP or any CTA unless the Partnership produced New Net Profit for
the then current quarter;
(b) The Profit (Loss) Attributable to Units shall be added to (subtracted
from) the Capital accounts of the Partners. Items of income, gain or loss,
accrued, reserved, and paid Expenses shall be added to (subtracted from) the
Capital account of each Partner in accordance with the ratio that account
bears to the sum of all of the Partners' accounts.
(c) All determinations and elections on behalf of the Partnership for
Federal Income Tax purposes shall be made by the Corporate GP, in its sole
discretion.
ARTICLE VIII
RIGHTS, OBLIGATIONS AND LIMITATIONS UPON THE PARTNERSHIP
8.1 GENERAL PROHIBITIONS. The Partnership shall not:
(a) borrow from or loan to any person, except that the this prohibition
will not prohibit any indebtedness to a Partner or an Affiliate with respect
to the Registration or offering of Units for sale or initiation and
maintenance of margin or collateral or other security to hold the
Partnership's trading positions.
(b) commingle its assets with those of any other person, except to the
extent permitted under the Securities and Exchange Act of 1934 or the CEAct
and the rules and regulations promulgated thereunder.
(c) permit undisclosed rebates or give-ups to be received by the Corporate
GP or any Affiliate of the Corporate GP, or permit the Corporate GP or any
Affiliate of the Corporate GP to engage in reciprocal business arrangements
that would circumvent the foregoing prohibition except that this prohibition
will not prevent the Corporate GP or an Affiliate to provide goods or
services, including brokerage, pursuant to the terms of this LP Agreement.
(d) engage in the pyramiding of its positions (i.e., the use of unrealized
profits on existing positions to provide margins for additional positions in
the same or a related stock or commodity); provided, however, that there may
be taken into account the Partnership's open trade equity on existing
positions in determining whether to acquire additional unrelated stock or
commodity positions.
(e) margins of all open positions in all stocks and commodities combined
that would exceed 250% of the partnership's Net Asset Value at the time such
position is under consideration to be initiated.
(f) permit churning of the Partnership's trading account for the purpose of
generating brokerage commissions to any person.
(g) directly or indirectly pay or award any finder's fees, commissions or
other compensation to any persons engaged by a potential limited partner for
independent investment advice as an inducement to such advisor to advise the
potential limited partner to purchase Units in the Partnership without the
knowledge of such potential limited partner.
(h) hold any of the Partnership assets outside the United States. The
Partnership funds committed to trading will be on deposit with and under the
control of one or more FCMs and traded by one or more CTAs regulated pursuant
to the CEAct, as may be amended, from time to time. Partnership funds not
used to trade will be held in investments that are bonds or other instruments
of the United States or in cash deposits in regulated United States banks and
other United States financial institutions selected by the Corporate GP.
(i) allow the Corporate GP to directly or indirectly pay or award any
commissions or other compensation to any person, including the Corporate GP,
if they are engaged to sell or give investment advice to a potential Partner;
provided, however, this provision shall not prohibit the payment to a
registered broker-dealer or other properly licensed person up to a ten
percent (10%) sales commission for selling and/or continuing compensation to
service the Partnership accounts.
(j) allow any GP to receive a management fee if it receives, directly or
indirectly, any portion of the brokerage commissions.
(k) allow any CTA, to be paid a management fee if it provides investment
advice to potential investors or is engaged in the sale of investments in the
Partnership or shares or participates, directly or indirectly, in any
commodity brokerage commissions generated by the Partnership.
8.2 FEES AND EXPENSES.
(a) The Partnership shall pay all Organization Costs and offering Expenses
incurred in the creation of the Partnership and sale of Units. The foregoing
expenses may be paid directly by the Partnership or may be reimbursed by the
Partnership to the Corporate GP or an Affiliate of the Corporate GP.
Notwithstanding the foregoing, in no event will reimbursement by the
Partnership to the Corporate GP for Organization Costs and offering Expenses
charged to the Partnership exceed an amount equal to fifteen percent (15%) of
the gross proceeds from the sale of Units. Organization Costs and Offering
Expenses shall mean those Expenses incurred in connection with the formation,
qualification and Registration of the Partnership and in distributing and
processing the Units under applicable Federal and state law, sales
commissions, and any other expenses such as: (i) registration fees, filing
fees and taxes; (ii) the costs of qualifying, printing, amending,
supplementing, mailing and distributing the Registration Statement and
Prospectus; (iii) the costs of qualifying, printing, amending, supplementing,
mailing and distributing sales materials by web design, promotion, and other
means used in connection with the Units; (iv) salaries of officers and
employees of the Corporate GP and any Affiliate of the Corporate GP while
directly engaged in distributing and processing the Units and establishing
its records; (v) rent, travel, remuneration of personnel, telegraph,
telephone and other expenses in connection with the offering of the Units;
(vi) accounting, auditing, and legal fees incurred in connection therewith;
and (vii) any extraordinary expenses related thereto. Organization Costs and
Offering Expenses do not include salaries, rent, travel, expenses and other
items of Corporate GP overhead.
(b) All operating expenses of the Partnership shall be billed directly to
and paid by the Partnership.
(c) The Corporate GP or any Affiliate of the Corporate GP may be reimbursed
for the actual costs of any Expense including, but not limited to, legal,
accounting and auditing services used for or by the Partnership, as well as
printing and filing fees and extraordinary expenses incurred for or by the
Partnership; provided, however, certain limitations contained in this LP
Agreement restrict the Partnership's purchase of certain insurance coverage
and the assumption of the defense of certain claims.
(d) A management fee of one half of one percent (1/2 of 1%) per month [six
percent (6%) per year] of the Net Asset Value of the Partnership, computed
and paid to the Corporate GP and/or Affiliated or non-affiliated independent
investment or trading advisor on the close of business on the last day of
each month and an incentive fee, paid quarterly, of up to fifteen percent
(15%) of the New Net Profit, or less earned upon Capital, and prorated to
consider the date of deposit of such Capital to the Partnership each year;
provided, however, for each percentage point (1%) of reduction in management
fee, the incentive fee may be increased by two percent (2%); i.e., upon
reduction of the management fee to zero (0), the incentive fee may be
increased to twenty-seven percent (27%); and
(e) Each Partnership trading sub-account established by the Corporate GP
and assigned to a different CTA shall be considered separately for purposes
of incentive fee. The incentive fee will be non-refundable; i.e., in the
event that the Partnership earns substantial New Net Profit during the first
quarter of any year and pays the applicable incentive fee and, thereafter,
suffers losses, the Corporate GP and all CTAs previously paid an incentive
fee will not refund any of the incentive fee paid for the prior quarter or
quarters. However, the Partnership will not pay or accrue to the Corporate
GP or any CTA any further incentive fee until such time as the New Net
Profit, when added to Net Asset Value, after additions, deductions of
Redemptions and distributions, exceeds the highest Net Asset Value achieved
by the Partnership, in regard to the Corporate GP, or the Net Asset Value for
the account assigned to each CTA; i.e., incentive fees will only be earned
and paid or accrued upon New Net Profit.
ARTICLE IX
RIGHTS, POWERS, LIMITATIONS AND OBLIGATIONS OF THE GPs
9.1 POWERS TO THE CORPORATE GP. The Corporate GP shall have full,
exclusive and complete discretion in the management and control of the
affairs of the Partnership to the best of its ability and shall use its best
efforts to carry out the purposes of the Partnership set forth in the
Agreement. In connection therewith, it shall have all powers of a Corporate
GP under the Act, including, without limitation, the power to:
(a) enter, execute and maintain contracts, agreements and any or all other
instruments, and to do and perform all such things, as may be required or
desirable in furtherance of Partnership purposes or necessary or appropriate
to the conduct of Partnership activities including, but not limited to,
contracts with third parties for:
(i) brokerage services on behalf of the Partnership (which brokerage
services may be performed by the Corporate GP or an Affiliate of the
Corporate GP), specifically, Futures Investment Company, or any successor to
its business, an Affiliated futures commission merchant of the Corporate GP
may clear the trades and an Affiliated GP, futures commission merchant, or IB
may pay trailing commissions to its associated persons, including Affiliates
of the Corporate GP and the Corporate GP;
(ii) trading advisory services relating to the purchase and sale of all
stocks, options, commodity futures contracts, commodity options and contracts
for forward delivery of foreign currencies on behalf of the Partnership
(which advisory services may be performed by the Corporate GP or an Affiliate
of the Corporate GP); and
(iii) rent, salaries, computer, accounting, legal and other services
attendant to the maintenance of the Partnership.
(b) open and maintain bank accounts on behalf of the Partnership with banks
and money market funds.
(c) deposit, withdraw, pay, retain and distribute the Partnership's funds
in any manner consistent with the provisions of this Agreement.
(d) supervise the preparation and filing of all documentation required by
law including, but not limited to, Registration Statements to be filed with
Federal and state agencies.
(e) pay or authorize the payment of distributions to the Partners and pay
Expenses of the Partnership.
(f) invest or direct the investment of funds of the Partnership not
involving the purchases or sale of stocks, futures contracts, options, and
contracts for forward delivery of foreign currencies.
(g) purchase, at the expense of the Partnership, liability and other
insurance to protect the Partnership's proprieties and business.
(h) borrow money from banks and other lenders for Partnership purposes, and
may pledge any or all of the Partnership's assets for such loans. No bank or
other lender to which application is made for a loan by the lender to which
application is made for a loan by the Corporate GP shall be required to
inquire as to the purposes for which such loan is sought and, as between the
Partnership and such bank or other lender, it shall be conclusively presumed
that the proceeds of such loan are to be and will be used for the purposes
authorized under this Agreement.
(i) confess judgment for and against the Partnership and control any
matters affecting the rights and obligations of the Partnership, including
the employment of attorneys, in the conduct of litigation and otherwise incur
legal expenses and costs of consultation, settlement of claims, and
litigation against or on behalf of the Partnership.
9.2 LOANS BY GPs. No GP or Affiliates will be required to advance or loan
funds to the Partnership. In the event any GP makes any advance or loan to
the Partnership, the GP will not receive interest in excess of its interest
costs, nor will the GP receive interest in excess of the amounts which would
be charged the Partnership (without reference to the GP's financial abilities
or guarantees) by unrelated banks on comparable loans for the same purpose
and the GP shall not receive points or other financing charges or other loan
related fees regardless of the amount.
9.3 ACTIVITIES OF GPs. Any GP may, notwithstanding the obligations imposed
by this LP Agreement, engage in whatever other activities they may choose,
whether the same be competitive with the Partnership or otherwise, without
having or incurring any obligation or conflict of interest in such activities
with the Partnership or to any party hereto. The GPs are specifically
authorized to deal with other partnerships and to acquire interests in
positions and trading without having to offer participation in those other
entities to the Partnership or the other Partners. Neither this Agreement
nor any activities undertaken pursuant hereto shall prevent any Partner,
including the Corporate GP and its Affiliates and their officers, directors
and employees, from engaging in the trading contemplated by this Partnership,
individually, jointly with others, or as a part of any other association to
which any of them are or may become parties, in the same trades as the
Partnership, or require any of them to permit the Partnership, the Corporate
GP or any other Partner to participate in any of the foregoing. As a
material part of the consideration for each party's admission as a Partner,
each Partner hereby waives, relinquishes and renounces any such right or
claim of conflict of interest and participation in other activities from all
other Partners.
9.4 NO PRIOR EXPERIENCE BY CORPORATE GP. The Corporate GP is a Delaware
corporation that was formed on April 21, 2003, and it does not have any prior
business experience.
9.5 GP TRADES CONFIDENTIAL. The future trading results of the Corporate
GP, any Other GP and their Affiliates and principals will be confidential and
not disclosed to the other Partners. Any GP, their Affiliates and principals
may take positions that are the same or different from positions taken by the
Partnership. Nothing in this Section, or elsewhere in this LP Agreement,
shall permit the any GP, Affiliate, or principal to violate its fiduciary or
legal obligations to the Partnership.
9.6 LIMITAIONS ON EXERCISE OF GP POWERS:
(a) Without diminishment of the right of the Corporate GP or any Affiliate
to compensation for services provided to the Partnership, no GP shall:
(i) sell, or otherwise dispose of, any of the Partnership's assets to the
Corporate GP or its Affiliates;
(ii) allocate any portion of its indirect expenses including, but not
limited to, salaries, rent, travel expenses and such other items generally
falling under the category of Corporate GP overhead expense to the
Partnership;
(iii) cause or permit the Partnership to enter any agreement with the
Corporate GP or an Affiliate which is not in the best interest of and for the
benefit of the Partnership or which would be in contravention of the
Corporate GP's fiduciary obligations to the Partnership or pursuant to which
the Corporate GP or any Affiliate:
(A) would provide or sell any services, equipment, or supplies at rates
other than those charged to others; or
(B) would receive from the Partnership, Units of Partnership interest in
consideration for services rendered.
(b) Compensation to any party, including the Corporate GP and any CTA
selected to trade for the Partnership may not exceed the most stringent
limitations in effect during the period Units are offered for sale imposed by
the North American Securities Administrators Association ("NASAA"). In the
event the compensation exceeds such limitations, the Corporate GP will
promptly reimburse the Partnership for such excess.
(c) Without concurrence of a Majority in Interest or receipt of Redemptions
equal to all or substantially all of the Partnership assets, no GP, including
the Corporate GP, may:
(i) Amend this Agreement except for those amendments that are specifically
authorized by this Agreement or do not adversely affect the rights of the
Limited Partners.
(ii) Voluntarily withdraw as a GP.
(iii) Appoint a substitute Corporate GP or Additional GP or allow any
substitute Corporate GP or Additional GP to resign; provided, however, one or
more Additional GPs may be appointed or may resign without obtaining the
consent of a Majority in Interest if the addition of such person is
necessary, or becomes no longer necessary, to preserve the tax status of the
Partnership as a partnership and not as a corporation or comply with NASAA
guidelines or any other law, regulations or rule or interpretation thereof by
any regulator authorized to qualify the Partnership interests for sale and
such additional GP has no authority to manage or control the Partnership.
(iv) Sell all or substantially all of the Partnership assets other than in
the ordinary course of business.
(v) Cause the merger or other reorganization of the Partnership.
(vi) Dissolve the Partnership other than because of an event, which by law,
requires such dissolution.
9.7 OBLIGATIONS OF CORPORATE GP. The Corporate GP shall:
(a) Devote such of its time to the business and affairs of the Partnership
as it shall, in its discretion exercised in good faith, determine to be
necessary to conduct the business and affairs of the Partnership for the
benefit of the Partnership and the Limited Partners.
(b) Execute, file, record and/or publish all certificates, statements and
other documents and do any and all other things as may be appropriate for the
formation, qualification and operation of the Partnership and for the conduct
of its business in all appropriate jurisdictions including, but not limited
to, the compliance, at its expense, with all laws related to its
qualification to serve as the commodity pool operator of the Fund.
(c) Use its best efforts to maintain the status of the Partnership as a
partnership for United States Federal income tax purposes.
(d) Employ brokers, attorneys, accountants, consultants, and administrative
personnel who may be Affiliated with the Corporate GP to perform Partnership
business at the expense of the Partnership.
(e) Advance the Organization and initial Offering Expenses subject to
reimbursement by the Partnership for such expenses immediately upon the
Initial Closing and on each subsequent closing subject to any limitations
imposed by law.
(f) Employ only independent CTAs that are registered pursuant to the
Commodity Exchange Act to conduct trading and to otherwise establish and
monitor the trading policies of the Partnership; and the activities of the
partnership's trading advisor(s) in carrying out those policies.
(g) Have fiduciary responsibility for the safekeeping and use of all funds
and assets of the Partnership, whether or not in the Corporate GP's immediate
possession or control, and the Corporate GP will not employ or permit others
to employ such funds or assets in any manner except for the benefit of the
Partnership.
(h) Maintain a current list of the name, address, and number of Units owned
by each Limited Partner at the Corporate GP's principal office. Such list
shall be disclosed to any Partner or their representative at reasonable
times, upon request, either in person or by mail, upon payment, in advance,
of the reasonable cost of reproduction and mailing. The Partners and their
representatives shall be permitted access to all other records of the
Partnership, after adequate notice, at any reasonable time, at the offices of
the Partnership. The Corporate GP shall maintain and preserve such records
for a period of not less than six (6) years from the date they are generated.
9.8 COMPENSATION TO THE CORPORATE GP. The Corporate GP may establish its
compensation, from time to time, for its services; provided, however, such
charges shall be:
(a) No more than:
(i) A sales commission and/or continuing service fee of up to ten percent
(10%);
(ii) A management fee of one half of one percent (1/2 of 1%) per month [six
percent (6%) per year] of the Net Asset Value of the Partnership, computed
and paid to the Corporate GP and/or non-affiliated independent investment or
trading advisor on the close of business on the last day of each month and an
incentive fee, paid quarterly, of up to fifteen percent (15%) of the New Net
Profit, or less earned upon Capital, and prorated to consider the date of
deposit of such Capital to the Partnership each year; provided, however, for
each percentage point (1%) of reduction in management fee, the incentive fee
may be increased by two percent (2%); i.e., upon reduction of the management
fee to zero (0), the incentive fee may be increased to twenty-seven percent
(27%); and
(iii) Fixed and/or round turn brokerage commissions provided they are
reasonable. Brokerage commissions will be presumed to be reasonable if they
are either eighty percent (80%) of the published retail rate plus Pit
Brokerage Fees or fourteen percent (14%) including Pit Brokerage Fees of the
average annual Net Assets of the Partnership.
(b) Reasonable when compared with similar services to similar partnerships.
ARTICLE X
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
10.1 LIMITATION OF LIABILITY. No Limited Partner shall be personally liable
for any of the debts of the Partnership or any of the losses thereof.
However, the amount committed by him to the Capital of the Partnership and
his interest in Partnership assets shall be subject to liability for
Partnership debts and obligations. Limited Partners may be liable to repay
any wrongful distribution of profits to them and may be liable for
distributions (with interest thereon) considered to be a return of Capital if
necessary to satisfy creditors of the Partnership.
10.2 NO MANAGEMENT RIGHTS. No Limited Partner shall take part in the
management of the business of the Partnership or transact any business for
the Partnership. No Limited Partner, as such, shall have the power to sign
for or to bind the Partnership.
10.3 CERTAIN RIGHTS. Provided the following, does not either (i) subject
the Limited Partners to unlimited liability or (ii) subject the Partnership
to be taxable as a Corporation for purposes of Federal Income tax laws, the
Partners, by a vote of a Majority in Interest, without the necessity for
concurrence by the Corporate GP, the Other GP-Pacult or any other GP, shall
have the following rights in addition to those granted elsewhere in this
Agreement:
(a) Amend the Partnership Agreement; provided, however, any amendment which
modifies the compensation or distributions to the Corporate GP or which
affects the duties of the Corporate GP requires the consent of the Corporate
GP.
(b) The Corporate GP and any Additional GP may be removed and a new
Corporate GP or Additional GP elected in accordance with the terms of this LP
Agreement.
(c) Cancel any contract for services with the Corporate GP or any
Additional GP, without penalty, upon 60 days written notice; provided,
however, the maximum period of any contract between the Corporate GP and any
Additional GP with the Partnership is one year; and, provided further, should
any amendment to this LP Agreement attempt to modify the compensation or
distributions to which the Corporate GP and any Additional GP is entitled or
which affects the duties of the Corporate GP or any Additional GP, such
amendment will become effective only upon the consent of such GP.
(d) The right to approve, prior to sale, the sale or distribution, outside
the ordinary course of business, of all or substantially all of the assets of
the Partnership.
(e) Dissolve the Partnership.
(f) Any material changes in the Partnership's basic investment policies
including, but not limited to, the speculation and trade in commodity
futures, forward futures contracts, and options upon those contracts both
within and without the United States or the structure of the Partnership as a
limited partnership requires prior written notification of a meeting which
identifies the purpose of the meeting and the approval by a vote of the
Majority in Interest of the Partners.
10.4 CORPORATE GP ACTION WITHOUT LIMITED PARTNER APPROVAL. Notwithstanding
anything in this Agreement to the contrary, the Corporate GP may amend this
Agreement without any vote, consent, approval, authorization or other action
of any other Partner and without notice to any other Partner to:
(a) add to the representations, duties or obligations of the Corporate GP
or its Affiliates or any Additional GP or surrender any right or power
granted to the Corporate GP or its Affiliates or any Additional GP in this LP
Agreement for the benefit of the Limited Partners;
(b) cure any ambiguity, correct or supplement any provision in this
Agreement which may be inconsistent with any other provision in this
Agreement, or make any other provisions with respect to matters or questions
arising under this LP Agreement which will not be inconsistent with the
intent of this LP Agreement;
(c) delete or add any provision of this LP Agreement required to be so
deleted or added by the staff of the Securities and Exchange Commission, or
by a state securities law administrator or similar such official, which
addition or deletion is deemed by such official to be for the benefit or
protection of the Limited Partner or does not have a material adverse effect
on the Limited Partners generally or the Partnership;
(d) reflect the withdrawal, expulsion, addition or substitution of
Partners;
(e) reflect the proposal, promulgation or amendment of Regulations under
Code section 704, or otherwise, to preserve the uniformity of interest in the
Partnership issued or sold from time to time, if, in the opinion of the
Corporate GP, the amendment does not have a material adverse effect on the
Limited Partners generally;
(f) elect for the Partnership to be bound by any successor statute to the
Act, if, in the opinion of the Corporate GP, the amendment does not have a
material adverse effect on the Limited Partners generally;
(g) conform this Agreement to changes in the Act or interpretations thereof
which, in the exclusive desecration of the Corporate GP, it believe
appropriate, necessary or desirable, if, in the Corporate GP's reasonable
opinion, such amendment does not have a materially adverse effect on the
Limited Partners generally or the Partnership;
(h) change the name of the Partnership;
(i) conform the provisions of this Agreement to any applicable requirements
of Federal of state law which, in the exclusive discretion of the Corporate
GP, it believes appropriate, necessary or desirable, if, in the Corporate
GP's reasonable opinion, such amendment does not have a material adverse
effect on the Limited Partners generally or the Partnership; and
(j) make any change which, in the exclusive discretion of the Corporate GP,
is advisable to qualify or to continue the qualification of the Partnership
as a limited partnership or a partnership in which the Limited Partners have
limited liability under the laws of any state or that is necessary or
advisable, in the exclusive discretion of the Corporate GP, so that the
Partnership will not be treated as an association taxable as a corporation
for Federal income tax purposes.
10.5 EXPULSION OF LIMITED PARTNERS. Anything herein to the contrary
notwithstanding,
(a) If, at any time, the Corporate GP determines that any Limited Partner
has an ownership percentage of ten percent (10%) or more, the Partnership, in
the Corporate GP's exclusive discretion, may cause Redemption by that Limited
Partner of the number of Units necessary or advisable to reduce that Limited
Partner's ownership percentage to less than ten percent (10%). The
Redemption shall be effective as of the next Valuation Date or such other
Valuation Date, at the discretion of the Corporate GP.
(b) The Corporate GP has the right, in its sole discretion, to raise or
lower the minimum investment in the Partnership required for the admission or
retention of Units in the Partnership by a Partner; however such minimum
investment may not be lowered below $5,000. In the event the Corporate GP
does raise the minimum investment in the Partnership to an amount in excess
of any Partners Capital account, the Partnership shall provide notice to the
Partner of such event and allow the Partner 30 days to raise the Capital
account for that Partner to such raised amount, or more. In the event the
Partner does not so raise his Capital account to such minimum amount within
30 days, the Partner shall be deemed to have elected to withdraw from the
Partnership and all of his Units shall be Redeemed at the next Redemption
date as provided in this LP Agreement.
(c) Notwithstanding the foregoing, the Corporate GP, at its sole
discretion, may expel any Partner at anytime for any reason, by causing the
Redemption of that Partner's Units as of the next Valuation Date, or such
other Valuation Date as the Corporate GP may determine.
10.6 NOTIFICATION. Notice shall be sent to each Partner within seven
business days from the date of:
(a) any decline in the Net Unit Value to less than 50% of the Net Asset
Value on the last Valuation Date;
(b) any material change in contracts with the Corporate GP, any Additional
GP, any FCM, IB or CTA or any of their Affiliates including, but not limited
to, any addition or deletion of CTAs or any modification in connection with
the method of calculating the incentive fees;
(c) any other material change that affects the operation of the Partnership
or is a reportable event to the SEC or CFTC or any State Securities
Administrator or any self regulatory organization.
10.7 NOTIFICATION CONTENTS.
(a) a material change related to brokerage commissions shall not be made
until notice is given and the Partners, after such notice, have had the
opportunity for 30 days to Redeem pursuant to the terms of this LP Agreement;
(b) in addition, in regard to all other changes, the required notification
shall describe the change in detail, include a description of the Partners'
Redemption rights pursuant to the LP Agreement and voting rights, if
applicable, and a description of any material effect such changes may have on
the interests of the Partners.
10.8 EXERCISE OF RIGHTS. Upon receipt of a written request, executed by ten
percent (10%) or more of the holders of Units for a vote upon and to take
action with respect to any rights of the Partners under this LP, the
Corporate GP shall call a meeting of all Partners of the Partnership as
provided in Section 13.5 hereof to vote on the specific matters raised in the
request.
10.9 EXAMINATION OF BOOKS AND RECORDS. A Limited Partner shall have the
right to examine the books and records of the Partnership at all reasonable
times, including the right to have such examination conducted at his sole
expense by any reasonable number of representatives. Notwithstanding the
foregoing, the Corporate GP may keep and withhold the names of the other
Partners, specific trading methods used by the CTA, and other designed
confidential and trade secret information from the Partners.
ARTICLE XI
ASSIGNMENT OF LIMITED PARTNERSHIP UNITS;
ADMISSION OF LIMITED PARTNERS
11.1 RESTRICTION ON ASSIGNMENT. A Partner may not assign or transfer some
or all of his Units in the Partnership without the written consent of the
Corporate GP; provided, however, that in no event may an assignment be made
or permitted until after six months from the date of purchase of such
assigned or transferred Units(s) by said Partner; and, provided, further,
that full Units must be assigned and the assignor, if he is not assigning all
of his Units, will retain more than $5,000 in value of Units in the
Partnership. No transfers may be made where, after the transfer or
assignment, either the transferee/assignee or transferor/assignor would hold
less than $5,000 in value of Units in the Partnership, except transfers or
assignments by gift, inheritance, intrafamily transfers, family dissolutions
and transfers to Affiliates. Any such assignment shall be subject to all
applicable securities, commodity, and tax laws and the regulations
promulgated under each such law. The Corporate GP shall review any proposed
assignment and shall withhold its consent in the event it determines, in its
sole discretion, that such assignment could have an adverse effect on the
business activities or the legal or tax status of the Partnership. If the
Corporate GP withholds consent to a proposed transfer of Units in order to
preserve the tax status of the Partnership, or the characterization or
treatment of Partnership income or loss, the Corporate GP shall provide an
opinion of counsel to support the restriction on the transfer of Units Upon
advice of counsel, the Corporate GP shall eliminate or modify any
restrictions on transfer or assignment at such time as the restriction is no
longer in place.
11.2 DOCUMENTATION OF ASSIGNMENT. The Corporate GP shall furnish to the
assigning Limited partner a proper form to duly effect such assignment. The
Corporate GP shall not be required to recognize any assignment and shall not
be liable to the assignee for any distributions made to the assigning Limited
Partner until the Corporate GP has received such form of assignment, properly
executed with signature guaranteed, together with the Certificate of
Ownership originally issued to the Limited Partner (or an indemnity bond in
lieu therefore) and such evidence of authority as the Corporate GP may
reasonably request and the Corporate GP shall have accepted such assignment.
ARTICLE XII
ACCOUNTING RECORDS, REPORTS AND DISTRIBUTIONS
12.1 DISTRIBUTIONS. Each Partner will have a Capital account, and its
initial balance will be the amount the Partner paid for the Partner's Units.
The Net Assets of the Partnership will be determined monthly, and any
increase or decrease from the end of the preceding month will be added to or
subtracted from the accounts of the Partners in the ratio that each account
bears to all accounts. Distributions from profits or Capital will be made
solely at the discretion of the Corporate GP.
12.2 BOOKS OF ACCOUNT. Proper books of account shall be kept and there
shall be entered therein all transactions, matters and things relating to the
Partnership's business as required by applicable law and the regulations
promulgated thereunder and as are usually entered into books of account kept
by persons engaged in business of like character. The books of account shall
be kept at the principal office of the Corporate GP and each Limited Partner
(or any duly constituted agent of a Limited Partner) shall have, at all times
during reasonable business hours, free access, subject to rules of
confidentiality established by the Corporate GP, the right to inspect and
copy the same. Such books of account shall be kept on an accrual basis. A
Capital account shall be established and maintained from each Partner, as set
forth above.
(a) Each Partner shall be furnished as of the end of each Fiscal Year with
(1) annual financial statements, audited by a certified public accountant,
within 90 days from the end of such year; together with such other reports
(in such detail) as are required to be given to Partners by applicable law,
specifically, annual and periodic reports will be supplied by the Corporate
GP to the other Partners in conformance with the provisions of CFTC
regulations for Reporting to Pool Participants, 17 C.F.R. Section 4.22, as
amended, from time to time, and, (2) any other reports or information which
the Corporate GP, in its sole discretion, determines to be necessary or
appropriate.
(b) Appropriate tax information (adequate to enable each Partner to
complete and file his Federal tax return) shall be delivered to such Partner
no later than March 31 following the end of each Calendar Year.
12.3 CALCULATION OF NET ASSET VALUE. The GP shall calculate an estimated or
provisional daily Net Asset Value. At the close of each month, the Net Asset
Value for such month shall be calculated and reports delivered to Partners as
of the last day of each month by the 20th of the following month. Upon
request, the Corporate GP shall make available to any Partner the Net Unit
Value.
12.4 MAINTENANCE OF RECORDS. The Corporate GP shall maintain and retain all
records as required by law and/or the NASAA Guidelines including, but not
limited to, (1) all books of account required by this Article; and, (2) a
record of the information obtained to indicate that a Partner meets the
applicable investor suitability standards.
12.5 TAX RETURNS. The Corporate GP shall cause tax returns for the
Partnership to be prepared and timely filed with the appropriate authorities.
The Corporate GP shall cause the Partnership to pay any taxes payable by the
Partnership; provided, however, that the Corporate GP shall not be required
to cause the Partnership to pay any tax so long as the Corporate GP or the
Partnership shall be in good faith and by appropriate means contesting the
applicability, validity or amount thereof and such contest shall not
materially endanger any right or interest of the Partnership.
12.6 TAX ELECTIONS. The Corporate GP shall from time to time, make such tax
elections or allocations deemed necessary or desirable to carry out the
business of the Partnership or the purposes of this Agreement. The Corporate
GP is authorized by this LP Agreement to perform all duties imposed by
Sections 6221 through 6232 of the Internal Revenue Code on the Corporate GP
as "tax matters partner" of the Partnership, including, but not limited to,
the following: (i) the power to conduct all audits and other administrative
proceedings with respect to Partnership tax items; (ii) the power to extend
the statute of limitations for all Limited Partners with respect to
Partnership tax items; (iii) the power to file a petition with an appropriate
Federal court for a review of a final Partnership administrative adjustment;
and, (iv) a power of attorney to enter a settlement with the Internal Revenue
Service on behalf of, and binding upon, those Limited Partners that hold than
a 1% interest in the Partnership at the time of the settlement unless any
said Limited Partner shall have notified the Internal Revenue Service and the
Corporate GP by certified mail, return receipt requested, served within 30
days of service of the notice upon said Limited Partner of the existence of
the IRS claim against the Partnership by the Corporate GP, that the Corporate
GP is not authorized to act on such Limited Partner's behalf.
ARTICLE XIII
AMENDMENTS
13.1 RESTRICTION ON AMENDMENTS. No amendment to this Agreement shall be
effective or binding upon the Partners unless the same shall have been
approved by a Majority in Interest of the Partners; provided, however, the
Corporate GP may adopt amendments without such approval which are, in the
sole judgment of the Corporate GP, deemed necessary or desirable to maintain
the business or limited partnership or other favorable tax status of the
Partnership, or permit a Public Offering of the Units pursuant to any Federal
or state law, regulation, rule or guideline or to maintain the Partnership
and the Corporate GP and its principals and any Partner in compliance with
the laws, regulations, rules and guidelines which govern or are applicable to
the business, including the requirements of any self regulatory organization,
or to substitute or add or withdraw persons as Limited Partners; provided,
however, no such change may be made to the investment strategy or limited
liability of the Limited Partners.
13.2 ADMISSION OF ADDITIONAL PARTNERS. At any time, the Corporate GP may,
in its sole discretion and subject to applicable law, admit additional
Partners. Each newly admitted Partner must contribute cash equal to the Net
Unit Value of the Partnership for each Unit to be acquired. The terms of any
additional offering may be different from the terms of the initial offering.
All expenses of any such additional offering shall be borne by the either the
Partnership or the subscribers thereto, as determined in the sole discretion
of the Corporate GP. Pursuant to Article VI, the Corporate GP may consent to
and admit any assignee of Units as a substituted Partner. There is no
maximum aggregate amount of Units which may be offered and sold by the
Partnership or on the amount of contributions which may be received by the
Partnership.
13.3 TERMINATION OF OFFERINGS; ADDITIONAL OFFERINGS. Notwithstanding
anything stated herein to the contrary, the Corporate GP may from time to
time, in its sole discretion, limit the number of Units to be offered,
terminate any offering of Units, or register additional Units and/or make
additional public or private offerings of Units. No Limited Partner shall
have any preemptive, preferential or other rights with respect to the
issuance or sale of any additional Units. No Limited Partner shall have the
right to consent to the admission of any additional Limited Partners.
13.4 NOTICE OF RESTRICTED TRANSFER. There is no obligation upon the
Partnership to issue certificates of ownership. However, should the
Corporate GP elect to cause the Partnership to issue certificates of
ownership, each certificate of Limited Partnership shall be subject to and
contain the following notice:
THE LIMITED PARTNER MUST DETERMINE IF THE PARTNERSHIP INTERESTS REPRESENTED
BY THIS LIMITED PARTNERSHIP AGREEMENT MAY BE TRANSFERRED IN ACCORDANCE WITH
APPLICABLE FEDERAL AND STATE LAWS AND REFERENCE MUST BE MADE TO THE OFFERING
DOCUMENTATION, LIMITED PARTNERSHIP AGREEMENT, AND LEGAL COUNSEL CHOSEN BY THE
INVESTOR TO DETERMINE THE RIGHT OF THE INVESTOR TO RESELL THE UNITS EVIDENCED
HEREBY. THESE LIMITED PARTNERSHIP INTERESTS SHALL NOT BE TRANSFERABLE BY THE
REGISTERED HOLDER EXCEPT BY CONSENT OF THE CORPORATE GP AND AS OTHERWISE
PROVIDED IN THE PARTNERSHIP AGREEMENT AND UPON THE ISSUANCE OF A FAVORABLE
OPINION OF COUNSEL FOR THE LIMITED PARTNERSHIP, AND/OR SUBMISSION TO THE
LIMITED PARTNERSHIP OF SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO THE
LIMITED PARTNERSHIP, THAT SUCH TRANSFER WILL NOT BE IN VIOLATION OF THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY RULE OR REGULATION
PROMULGATED THEREUNDER, APPLICABLE STATE SECURITIES LAWS. OR CAUSE THE
PARTNERSHIP TO BE TAXED AS A CORPORATION.
13.5 MEETINGS OF PARTNERS. The Corporate GP may call a meeting for any
purpose at the cost of the Partnership. A meeting of Partners may be also
called by ten percent (10%) of the other Partners by written request that
details the purpose of such meeting. The cost of distribution of the Notice
of Meeting and Request to all Partners of any such meeting will be borne by
the Fund. The Corporate GP shall, within fifteen (15) days thereafter,
provide written notice to all Partners, either in person or by first class,
certified mail, of the purpose of the meeting, specify a reasonable time,
place, and date, which shall be not less than thirty (30) or more than sixty
(60) days, thereafter. An Amendment shall be adopted and binding upon all
parties hereto if a Majority in Interest of the Partners votes for the
adoption of such amendment. Partners may vote in person or by written proxy
delivered to any such meeting. Meetings of Partners may also be held by
conference telephone where all Partners can hear one another.
13.6 RIGHT OF CORPORATE GP TO RESIGN. The Other GP-Pacult may submit his
resignation as Other GP at any time for any reason without consent of the
Corporate GP or any other Partner upon one hundred twenty (120) days prior
written notice to the other Partners. The Corporate GP may resign or assign
any portion of its interest in the Partnership at anytime to a third party
and become a Limited Partner with respect to the balance of its interest in
the Partnership, if any, if it provides one hundred twenty (120) days prior
written notice to all other Partners of its intention to resign and states in
such notice the name of the intended assignee who is to become substitute GP
and the information reasonably appropriate to enable the Partners to decide
whether or not to approve the substitution or, in the alternative, provide
notice that the partners must elect a successor GP. In the event of the
voluntary withdrawal by the Corporate GP, the Corporate GP shall pay the
Partnership's legal fees, recording fees and all other expenses incurred as a
result of its withdrawal. Upon resignation, the Corporate GP shall be paid
the items identified in Section 13.7 below and be relieved of all
responsibility for the future operation of the Partnership.
13.7 AMENDMENT INVOLVING SUCCESSOR CORPORATE GP. Should a resignation or an
amendment to the Agreement provide for a change in the Corporate GP upon the
conditions provided in this Agreement, the election and admission of a person
or persons as a successor or successors to the Corporate GP, shall require
the following conditions: the Corporate GP shall retire and withdraw as
Corporate GP and the Partnership business shall be continued by the successor
GP or GPs, and such amendment shall expressly provide that on or before the
effective date of removal.
(a) The Corporate GP shall be permitted to Redeem 100% of its Units as of
the Valuation Date following its removal or resignation in cash equal to the
Net Asset Value of such Corporate GP's interest in the Partnership.
(b) The Partnership shall pay to the removed or resigned Corporate GP an
amount equal to the Appraised Value of such Corporate GP's assets to be
transferred to the successor GP to enable the successor to continue the
business of the Partnership. The Appraised Value of the withdrawing
Corporate GP's interest in the Partnership shall equal such Corporate GP's
interest in the sum of (1) the Expenses advanced by the Corporate GP to the
Partnership, (2) all cash items, (3) all prepaid expenses and accounts
receivable less a reasonable discount for doubtful accounts, and (4) the Net
Book Value of all other assets, unless the withdrawing Corporate GP or the
successor Corporate GP believes that the net book value of an asset does not
fairly represent its fair market value in which event such Corporate GP shall
cause, at its expense, an independent appraisal to be made by a person
selected by a Majority in Interest of the Partners to determine its value.
(c) The successor Corporate GP and the Partnership shall indemnify the
former Corporate GP for all future activities of the Fund.
ARTICLE XIV
REDEMPTION
14.1 REDEMPTION. A Partner (including any approved assignee who becomes a
Limited Partner) may request to withdraw any part or all of his Capital
Contribution and undistributed profits, if any, in the Partnership by
submission of a request to the General Partner (such request for withdrawal
is called a "Redemption"). Redemption shall be at the Net Asset Value per
Unit determined at the close of business on the last day of the period
established, from time to time, by the Corporate GP for Redemptions subject
to the limitations provided in 14.2 below. Such Redemptions shall be no less
often than quarterly; provided, however, Redemption may be deferred until
after the lapse of twelve months from the date of initial purchase of the
Units and, provided further, that the Partner maintain an investment in the
Partnership of $5,000 or more.
14.2 REDEMPTION PROCEDURES. Redemption shall be after all liabilities,
contingent, accrued, reserved in amounts determined by the Corporate GP have
been deducted and there remains property of the Partnership sufficient to pay
the Net Unit Value as defined in Paragraph 1.3(b). As used herein, "request
for Redemption" shall mean a letter mailed or delivered by a Partner and
received by the Corporate GP prior to the effective date for which Redemption
is requested. Upon Redemption, a Partner shall receive, on or before the
last day of the following month, an amount equal to the Net Unit Value
redeemed as of the date for which the request for Redemption became
effective, less accrued expenses and any amount owed by such Partner to the
Partnership. All Redemption requests shall be subject to the following:
(a) If redemption requests received from limited partners exceed funds
available, redemptions will be allocated on a prorated basis for the then
current redemption period and paid as a preference in future redemptions
periods as cash becomes available.
(b) The Corporate GP in its sole discretion may, upon notice to the
Partners, declare additional Redemption dates and may cause the Partnership
to redeem fractions of Units and, prior to registration of Units for public
sale, redeem Units held by Partners who do not hold the required minimum
amount of Units established, from time to time, by the Corporate GP.
(c) The general partner may impose a redemption fee during the first year
of investment not to exceed 3%. The amount of any cash distributions and
amounts paid upon Redemption of Units as of the end of such month shall be
subtracted from the Capital account of such Partner.
14.3 SPECIAL REDEMPTION.
(a) In the event the Net Unit Value falls to less than fifty percent (50%)
of the Net Asset Value established by the greater of the initial offering
price of one thousand dollars ($1,000), less commissions and other charges,
or such higher value earned after payment of the incentive fee for the
addition of profits, the Corporate GP shall immediately suspend all trading,
provide immediate notice, in accordance with the terms of this Agreement, to
all Partners of the reduction in Net Asset Value, and afford all Partners the
opportunity for fifteen (15) days after the date of such notice to Redeem
their Units in accordance with the provisions of Section 14.1 and 14.2,
above. No trading shall commence until after such fifteen (15) day period.
(b) Until such time as the Corporate GP elects to qualify the Partnership
Units for public sale, the Corporate GP will establish, from time to time,
the minimum amount that each Limited Partner will be required to contribute
to Capital of the Partnership. Upon receipt of notice from the Corporate GP
of such minimum (which will be equally applicable to all Limited Partners),
each Limited Partner will be required to contribute sufficient Capital to
equal or exceed such minimum, The failure to contribute such Capital within
ten days after receipt of said notice from the Corporate GP shall be deemed a
request by the Limited Partner for redemption of 100% of his interest in the
Partnership and termination as a Partner. Upon election by the Corporate GP
and qualification of the Partnership Units for public sale, there will be no
further right of the Corporate GP to give notice of an increase in the
minimum amount that all Limited Partners will be required to contribute to
Capital of the Partnership. Except for the increase in the minimum amount
that all Limited Partners, in the sole discretion of the Corporate GP, shall
be required to contribute to Capital or suffer redemption, there will be no
required contribution or assessments of the Limited Partners.
ARTICLE XV
NATURE OF PARTNER'S LIABILITIES FOR CLAIMS
15.1 PROSECUTION OF CLAIMS. The Corporate GP shall arrange to prosecute,
defend, settle or compromise actions at law or in equity or with any party at
the expense of the Partnership as such may be necessary or desirable to
enforce, protect, or maintain Partnership interests.
15.2 SATISFACTION OF CLAIMS. The Corporate GP shall satisfy any claims
against, errors asserted, or other liability of the Partnership and any
judgment, decree, decision or settlement, first out of any insurance proceeds
available therefore, next, out of Partnership assets and income, and finally
out of the assets and income of the Corporate GP and any Other GP.
15.3 CORPORATE GP DECISION. The decisions made by the Corporate GP in regard
to the prosecution or settlement of claims, errors, and other liabilities,
will be final unless contested and put to a vote of Partners pursuant to this
LP Agreement, in which case a vote of a Majority in Interest will determine
the course of action.
15.4 EXONERATION, INDEMNIFICATION, AND NO ANTICIPATION OF PAYMENTS. The GP
shall not be liable to the Partnership or the Partners for any error in
judgment or any mistake of law or fact or any act done in good faith or any
failure to comply with its obligations hereunder except for breach of
fiduciary obligation owed to the Partnership or negligence or wrongful action
on its part in the management of Partnership affairs or violation of Federal
or state securities laws in connection with the offering of Units for sale.
In addition:
(a) The GP will be indemnified for liabilities and expenses arising from
any threatened, pending or completed action or suit in which it or any
affiliate is a party or is threatened to be made a party by reason of the
fact that it is or was the GP of the Partnership (other than an action by the
Partnership or a Partner against the GP which is finally resolved in favor of
the Partnership or Partner). The Partnership will indemnify the GP and its
affiliates against expenses, including attorney's fees, judgments and amounts
paid in settlement of an action, suit or proceeding if it has acted in good
faith and in a manner it reasonably believed to be in or not opposed to the
best interest of the Partnership, and provided that its conduct did not
constitute negligence, misconduct, or a breach of fiduciary obligations in
the performance of its duty to the Partnership or a violation of the
securities laws. The termination of any action, suit or proceeding by
judgment, order or settlement against the Partnership shall not of itself
create a presumption that the GP or any affiliate did not act in good faith
and not in the best interest of the Partnership.
No indemnification shall be available in respect of any allegation of a
violation of the Federal or state securities laws by or against the GP, any
broker/dealer or any other party unless (i) there has been a successful
adjudication on the merits of each count involving alleged securities law
violation as to the GP or broker/dealer or such other party; (ii) a court of
competent jurisdiction approves a settlement of the claims against the GP or
any broker/dealer or any other party and finds, specifically, that the
indemnification of the settlement and related costs should be made after the
court of law has been made aware (x) that the Securities and Exchange
Commission opposes such indemnification and (y) of the position of any
applicable state securities regulatory authority where the Partnership
Interests were offered or sold as to indemnification for violations of
securities laws.
Notwithstanding any provision of this Agreement to the contrary, the
Partnership shall not advance the expenses or pay for any insurance to pay
for the costs of the defense or any liability which is prohibited from being
indemnified pursuant to NASAA Guideline II.F. However, the Partnership may
advance the GP's or any of its Affiliates' legal expenses and other costs
incurred as a result of any legal action which alleges a breach of the
Federal or state securities laws only if the following conditions are
satisfied: (i) the legal action relates to acts or omissions with respect to
the performance of duties or services on behalf of the Partnership; (ii) the
legal action is initiated by a third party who is not a Limited Partner, or
the legal action is initiated by a Limited Partner and an independent
arbitration panel, administrative law judge, or court of competent
jurisdiction specifically approves such advancement; and, (iii) the GP or its
Affiliates undertake to repay the advanced funds to the Partnership, together
with the applicable legal rate of interest thereon, in cases which such party
is not entitled to indemnification under NASAA Guideline II.F.
(b) The indemnification of a GP shall be limited to and recoverable only
out of the assets of the Partnership. Notwithstanding the foregoing, the
Partnership's indemnification of the GP shall be limited to the amount of
such loss, liability or damage which is not otherwise compensated for by
insurance carried for the benefit of the Partnership. Additionally, the
Partnership may not incur the cost of that portion of liability insurance
which insures the GP for any liability as to which the GP is prohibited from
being indemnified under this Agreement.
(c) Any change in the requirements imposed by the Securities and Exchange
Commission and the state securities administrators in regard to
indemnification shall cause a corresponding change in the right of the GP to
indemnification.
(d) The indemnification of the GP provided in this Article shall extend to
any employee, agent, attorney, certified public accountant, or Affiliate of
the Partnership and the GP.
(e) The Partnership shall indemnify, to the extent of the Partnership
assets, each Partner against any claims of liability asserted against a
Partner solely because he is a Partner in the Partnership.
(f) In the event the Partnership or any Partner is made a party to any
claim, dispute or litigation or otherwise incurs any loss or expense, as a
result of or in connection with any Partner's activities unrelated to the
Partnership business or as a result of an unfounded claim against the
Partnership or any other Partner brought as a result of alleged actions by
said Partner, the Partner which was responsible for the allegations which
caused such loss or expense shall indemnify and reimburse the Partnership and
all other Partners for all loss and expense incurred, including attorneys'
fees and costs.
(g) No creditor of a Partner shall have a right to vote Units. Nor may any
Partner or creditor of a Partner anticipate any principal or income from the
Fund prior to the approval of a Redemption Request or the payment of a
distribution from the Fund.
(h) The GP may rely upon the written opinion of legal counsel selected by
the Partnership as to the taking of any action or refrain from any action on
behalf of the Partnership without incurring any liability to the Partnership
or any Partner.
ARTICLE XVI
CONFLICTS OF INTEREST, HIGH RISK, AND SPECULATIVE INVESTMENT
16.1 CONFLICTS OF INTEREST. Significant actual and potential conflicts of
interest exist in the structure and operation of the Partnership. The
Corporate GP has used its best efforts to identify and describe all existing
and potential conflicts of interest that may be present in this LP Agreement.
The Corporate GP intends to assert that all Partners have, by subscribing to
the Partnership, consented to the existence of such existing and potential
conflicts of interest as are described in this LP Agreement in the event of
any claim or other proceeding by any Partner is brought against the Corporate
GP, and its Principals, any Other GPs and their Principals, any CTAs and
their Principals, any FCMs and their Principals, any IB and their Principals
or any Affiliate of any of them that alleges that such conflicts violated any
duty owed to said Partner.
(a) MANAGEMENT OF OTHER EQUITY AND FOR THEIR OWN ACCOUNTS BY THE GPs, THE
CTAs, AND THEIR PRINCIPALS. The right of any GP, in any capacity, to manage
and the actual management by the CTA of accounts they or their Affiliates own
or control and other commodity accounts and pools, presents existing and
potential conflicts of interest. There is no limitation upon the right of
the any GP and their principals, the CTA, or any of their Affiliates to
engage in trading commodities for their own account. Having said that, the
Corporate GP will provide and obtain representations from all Other GPs and
persons who perform services for the Partnership and their Affiliates that no
prior orders known in advance to be placed by the Partnership will be entered
for their personal accounts. The Partnership's CTA will be effecting trades
for its own accounts and for others (including other commodity pools in
competition with this Pool) on a discretionary basis. It is possible that
positions taken by the CTA for other accounts may be taken ahead of or
opposite positions taken on behalf of the Partnership. The Corporate GP and
any Other GP, should they form other commodity pools, and the CTA, may have
financial incentives to favor other accounts over the Partnership. In the
event the Corporate GP, or any Other GP or the CTA, or any of their
principals trade for their own account, such trading records shall not be
made available for inspection. The Corporate GP does not presently intend to
engage in trading for its own account; however, the CTA reserves the right to
trade for its own account. And no representation can be made regarding the
trading by any Other GP to be admitted to the Partnership in the futures.
Any trading for their personal accounts by the Corporate GP, any Other GP,
and any Commodity Trading Advisor selected to trade for the Partnership or
any of their principals could present a conflict of interest in regard to
position limits, timing of the taking of positions or other similar
conflicts. The result to the Partnership would be a reduction in the
potential for profit should the entry or exit of positions be at unfavorable
prices by virtue of position limits or entry of other trades in front of the
Partnership trades by any GP or CTA responsible for the management of the
Partnership.
(b) POSSIBLE RETENTION OF VOTING CONTROL BY THE CORPORATE GP. There is no
limit upon the value of interests in the Partnership the Corporate GP and its
principal and Affiliates may purchase. It will be possible for them to vote,
individually or as a block, to create a conflict with the best interests of
the Partnership and the other Partners.
(c) CORPORATE GP TO REMAIN AGAINST POSSIBLE BEST INTEREST OF PARTNERSHIP.
As the Corporate GP has a financial interest in the operation of the
Partnership in the form of an incentive fee, it is unlikely that the
Corporate GP would voluntarily resign, even if such resignation would be in
the best interest of the Partnership and the other Partners
(d) FEES AND CHARGES TO THE PARTNERSHIP PAID TO CORPORATE GP NOT
NEGOTIATED. The incentive fees, if any, paid to the Corporate GP and the
amount of the fixed brokerage commissions payable to the Corporate GP by the
Partnership have not been negotiated at arm's length. And, the Corporate GP
has a conflict of interest in the definition of the risks to be assumed by
the CTA by virtue of the incentive fee to be paid to the Corporate GP. The
Corporate GP could allow the CTA selected to take trades that are other
improvident to improve the chance of profit rather than protect the best
interests of the Partnership. The arrangements between the Corporate GP and
the Partnership with respect to the payment of the commissions are believed
by the Corporate GP to be fair to the Partnership.
(e) CORPORATE GP COULD WITHHOLD APPROVAL OF REDEMPTIONS. The Corporate GP
has an incentive to withhold distributions and to withhold approval of
Redemptions because the Corporate GP receives an incentive fee on profits
that depend, in part, on the amount of equity available to the trading
advisor to trade.
(f) HIGH RISK TRADING BY THE GP and CTA, or BOTH, TO GENERATE INCENTIVE
FEES. As a general rule, the greater the risk assumed, the greater the
potential for profit. Because the Corporate GP and the CTA are compensated
by the Partnership by an incentive fee based on the New Net Profit earned by
the Partnership it is possible for the Corporate GP to fail to supervise and
for the CTA, independently, to select trades which normally would be too
risky for the Partnership in the attempt to earn the incentive fees.
(g) THE CORPORATE GP TO RETAIN A SHARE OF THE COMMISSIONS. The Partnership
will pay a fixed brokerage commission to the Corporate GP, and retains the
difference between that amount and the round turn commissions it pays to the
FCM. The Corporate GP has an incentive to select CTAs that trade less
frequently to increase the share of profits earned by the Corporate GP from
the commissions charged to the Partnership. This risk is offset by the
payment of an incentive fee based upon the New Net Profit to the Corporate
GP.
16.2 NO RESOLUTION OF CONFLICTS PROCEDURES. As is typical in many
partnerships, the Corporate GP has not established formal procedures, and
none are anticipated in the future, to resolve the actual and potential
conflicts of interest that are present the structure of the Partnership or
that may arise in the future. It will be extremely difficult, if not
impossible, for the Corporate GP to assure that these and future potential
conflicts will not, in fact, result in adverse consequences to the
Partnership or the LPs. The foregoing list of risk factors and potential
conflicts of interest is complete as of the date of this Prospectus, however,
additional risks and conflicts may occur which are not presently foreseen by
the Corporate GP. Investors are not to construe the risks identified in this
LP Agreement as legal or tax advice. Before determining to invest in the
Units, potential limited partners should read this entire LP Agreement as
well as the Partnership's offering documents including, but not limited to,
the subscription agreement, and consult with their own personal legal, tax,
and other professional advisors as to the legal, tax, and economic aspects of
a purchase of Units and the suitability of such purchase for them.
16.3 INTERESTS OF NAMED EXPERTS AND COUNSEL. The Corporate GP has or will
employ legal counsel to prepare Offering Documents, provide explanations of
the tax consequences of an investment in the Partnership and opine upon the
legality of the issuance of the Units. No law firm selected nor its
principals, nor any accountant or other expert employed by the Corporate GP
to render advice in connection with the preparation of the Offering Documents
or any other documents attendant thereto, have any present interest or future
expectation of ownership in the Partnership or its Corporate GP or the
Underwriter or the CTAs or the IB or the FCM. A substantial portion of the
legal fees for preparation of the offering documents is contingent upon the
sale of the Minimum and the Maximum of the Units to be offered for sale. No
other experts will be retained prior to commencement of trading.
ARTICLE XVII
POWER OF ATTORNEY
17.1 POWER OF ATTORNEY EXECUTED CONCURRENTLY. Concurrent with the written
acceptance and adoption of the provisions of this Agreement, each Partner
shall execute and deliver to the Corporate GP, a Power of Attorney (paragraph
5 of the Subscription Agreement). Said Power of Attorney irrevocably
constitutes and appoints the Corporate GP as a true and lawful attorney-in-
fact and agent for such Partner with full power and authority to act in his
name and on his behalf in the execution, acknowledgment and filing of
documents, which will include, but shall not be limited to, the following:
(a) Any certificates and other instruments, including but not limited to, a
Certificate of Limited partnership and amendments thereto and a certificate
of doing business under an assumed name, which the Corporate GP deems
appropriate to qualify or continue the Partnership as a limited partnership
in the jurisdictions in which the Partnership may conduct business, so long
as such qualifications and continuations are in accordance with the terms of
this Agreement or any amendment hereto, or which may be required to be filed
by the Partnership or the Partners under the laws of any jurisdiction;
(b) Any other instrument which may be required to be filed by the
Partnership under Federal or any state laws or by any governmental agency or
which the Corporate GP deems advisable to file; and
(c) Any documents required to effect the continuation of the Partnership,
the admission of the signer of the Power as a Limited Partner or of others as
additional or substituted Partners or Limited Partners, or the dissolution
and termination of the Partnership, provided such continuation, admission,
dissolution or termination is pursuant to the terms of this Agreement.
17.2 EFFECT OF POWER OF ATTORNEY. The Power of Attorney concurrently
granted by each Partner to the Corporate GP is a special Power of Attorney
coupled with an interest, is irrevocable, and shall survive the death or
legal incapacity of the Partner; and may be exercised by the Corporate GP for
each Partner by a facsimile signature of one of its officers or by listing
all of the Partners executing any instrument with a single signature of one
of its officers acting as attorney-in-fact for all of them; and shall survive
the delivery of an assignment by a Partner of the whole or any portion of his
interest in the Partnership; except that where the assignee thereof has been
approved by the Corporate GP for admission to the Partnership as a
substituted partner, the Power of Attorney shall survive the delivery of such
assignment for the sole purpose of enabling the Corporate GP to execute,
acknowledge and file an instrument necessary to effect such substitution.
17.3 FURTHER ASSURANCES. Upon request, each Limited Partner agrees to
execute and deliver to the Partnership, within thirty (30) days after receipt
of a written request from the Corporate GP, a separate form of power of
attorney granting the same powers described above; and such other further
statements of interest, holdings, designations, powers of attorney and other
instruments as the Corporate GP deems necessary or desirable.
ARTICLE XVIII
MISCELLANEOUS PROVISIONS
18.1 NOTICES. Notices, requests, reports, payments or other communications
required to be given or made hereunder shall be in writing and shall be
deemed to be delivered when properly addressed and posted by United States
registered or certified mail or delivered by independent courier which
provides an record of receipt, postage or delivery fees prepaid, properly
addressed to the party being given such notice at its last known address.
Addresses shown on the Schedule of Limited Partners records of the
Partnership shall be considered the last known address of each said party
unless the Corporate GP is otherwise notified in writing.
18.2 NATURE OF INTEREST OF PARTNERS. The interest of each Partner in the
Partnership is personal property. No Partner may anticipate the distribution
or redemption of principal or income from the Partnership and no assignment
to secure the position of a lender or any other creditor or trustee appointed
for the benefit of creditors of a Partner shall be valid without the express
written consent of the Corporate GP.
18.3 GOVERNING LAW AND PRESUMPTION OF GOOD FAITH. This Agreement shall be
construed in accordance with and governed in all respects by the laws of the
State of Delaware. All Partners agree to consent to the jurisdiction and to
bring all actions for claims related to the Partnership and the sale of the
Units in the Federal or state courts for the State and County of the
principal office of the Partnership as it is established, from time to time,
by the Corporate GP. Currently, the principal office of the Partnership is
located in Steuben County, Indiana. All actions of the Corporate GP in
furtherance of partnership business are presumed to be in good faith.
18.4 SUCCESSORS IN INTEREST. This Agreement shall be binding on and inure
to the benefit of he parties hereto and, to the extent permitted by this
Agreement, their respective heirs, executors, administrators, personal
representatives, successors and assigns.
18.5 INTEGRATION. This Agreement constitutes the entire agreement among the
parties pertaining to the subject matter hereof and supersedes all prior and
contemporaneous written and verbal agreements and the understandings of such
parties in connection herewith. Any amendment or supplement made to this LP
Agreement must be in writing.
18.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts. In such event, each counterpart shall constitute an original
and all such counterparts shall constitute one agreement. The addition of
Limited Partners pursuant to the power of attorney granted to the Corporate
GP shall not be deemed amendments to alter the rights of the other Partners
under this Agreement.
18.7 SEVERABILITY. Any provision of this Agreement, which is invalid,
illegal, or unenforceable in any respect in any jurisdiction, shall be, as to
such jurisdiction, ineffective to the extent of such invalidity, illegality
or unenforceability. The remaining provisions hereof in such jurisdiction
shall be and remain effective. Any such invalidity, illegality or
unenforceability in any jurisdiction shall not invalidate or in any way
effect the validity, legality or enforceability of such provision or the
remainder of this Agreement in any other jurisdiction.
18.8 NO WAIVER. The failure of any Partner to seek redress for violation of
or to insist upon the strict performance of any covenant or condition of this
agreement shall not prevent a subsequent act, which would have originally
constituted a violation, from having the effect of an original violation.
18.9 HEADINGS. The headings in this Agreement are inserted for convenience
and identification only and are in no way intended to describe, interpret,
define or limit the scope, extent or intent of this Agreement or any
provision hereof.
18.10 RIGHTS AND REMEDIES CUMULATIVE. This rights and remedies provided by
this Agreement are cumulative and the use of any one right or remedy by any
Partner shall not preclude or waive his right to use addition to any other
rights such Partner may have by law, statute, ordinance or otherwise.
18.11 WAIVER OF RIGHT TO PARTITION. Each of the Partners irrevocably waives,
during the term of the Partnership, any right that it may have to maintain
any action for partition with respect to the property and assets of the
Partnership.
18.12 WAIVER OF CREDITORS. No creditor who makes a non-recourse loan to the
Partnership shall have or acquire at any time as a result of making the loan,
any direct or indirect interest in the profits, Capital, or property of the
Partnership other than as a secured creditor.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement the day and year first above written.
Corporate GP:
WHITE OAK FINANCIAL SERVICES, INCORPORATED
By: _____________________________
Michael P. Pacult, President
Other GP:
By: _____________________________
Michael P. Pacult, Other GP
Initial Limited Partner:
By: _____________________________
Michael P. Pacult, Limited Partner
*******************************************************************************
EXHIBIT B TO PROVIDENCE SELECT FUND DISCLOSURE DOCUMENT
PROVIDENCE SELECT FUND, LIMITED PARTNERSHIP
REQUEST FOR REDEMPTION
To: White Oak Financial Services, Inc.
General Partner ____________________________
5914 N. 300 West Our Social Security Number or
P. O. Drawer C Taxpayer ID Number
Fremont, IN 46737
Dear General Partner:
The undersigned hereby requests redemption ("Redemption"), as defined
in and subject to all the terms and conditions disclosed in the Offering
Circular (the "Prospectus") delivered to the undersigned at the time of our
purchase of limited partnership interests (the "Units") in Providence Select
Fund, Limited Partnership, (the "Fund"), of _______________Units (insert the
number of Units to be Redeemed). This Redemption request must be received by
you no later than ten (10) business days prior to the last business day of
the month in which the Redemption is to occur. Once this Redemption request
is approved and accepted by you as General Partner, it will be paid at the
Net Asset Value per Unit, as described in the Prospectus, as of the close of
business at the end of the month following such approval. The undersigned may
be charged a redemption fee of no more than 3% if this Redemption request is
made within the first four months of investment, 2% during the second four
months, 1% during the third four months, and none after the twelfth month of
investment.
The undersigned hereby represents and warrants that the undersigned is
the true, lawful and beneficial owner of the Units to which this Request is
made with full power and authority to request Redemption of such Units.
Such Units are not subject to any pledge or otherwise encumbered.
United States Taxable Limited Partners Only - Under penalty of perjury,
the undersigned hereby certifies that the Social Security Number or Taxpayer
ID Number indicated on this Request for Redemption is the undersigned's true,
cared and complete Social Security Number or Taxpayer ID Number and that the
undersigned is not subject to backup withholding under the provisions of
section 3406(a)(1)(C) of the Internal Revenue Code.
Non United States Limited Partners Only - Under penalty of perjury, the
undersigned hereby certifies that (a) the undersigned is not a citizen or
resident of the United States or (b) (in the case of an investor which is not
an individual) the investor is not a United States corporation, partnership,
estate or trust.
SIGNATURE(S) MUST BE IDENTICAL TO NAME(S) IN WHICH UNITS ARE REGISTERED
Please forward a fund check for the Redemption proceeds to the undersigned
at:
_____________________________________________________________________________
Name Street City, State and Zip Code
Entity Limited Partner Individual Limited Partners(s)
________________________________ _______________________________
(Name of Entity) (Signature of Limited Partner)
By:
________________________________ ________________________________
(Authorized corporate officer, partner, (Signature of Limited Partner)
custodian or trustee)
________________________________
(Title)
*******************************************************************************
PROVIDENCE SELECT FUND, LIMITED PARTNERSHIP
SUBSCRIPTION REQUIREMENTS
By executing the Subscription Agreement and Power of Attorney for
Providence Select Fund Limited Partnership (the "Fund"), each purchaser
("Purchaser") of Limited Partnership Interests (the "Units") in the
Partnership irrevocably subscribes for Units at a price equal to the Net
Asset Value per Unit as of the end of the month in which the subscription is
accepted as described in the Partnership's Offering Circular dated Nov __,
2006 (the "Prospectus"). The minimum subscription is $25,000, however, it
may be lowered to not less than $5,000 by the General Partner; additional
Units may be purchased in multiples of $1,000. Subscriptions must be
accompanied by a check in the full amount of the subscription and made
payable to "Star Bank for the acct. of Providence". Purchaser is also
delivering to the Selling Agent an executed Subscription Agreement and Power
of Attorney (Exhibit D to the Prospectus). Upon acceptance of Purchaser's
Subscription Agreement and Power of Attorney Purchaser agrees to contribute
Purchaser's subscription to the Fund and to be bound by the terms of the
Fund's Limited Partnership Agreement, attached as Exhibit A to the
Prospectus, as amended from time to time pursuant to its terms. Thereafter,
upon the sale of a minimum of one million thirty thousand ($1,030,000) of
Units, the General Partner will direct the release of the funds from the
depository account and the commencement of trading by the Fund. Purchaser
agrees to reimburse the Fund and its general partner for any expense or loss,
including legal fees and court costs, incurred as a result of the
cancellation of Purchaser's Units due to a failure of Purchaser to deliver
good funds in the amount of the subscription price. By execution of the
Subscription Agreement and Power of Attorney, pursuant to the terms of the
offering, Purchaser shall have executed the Limited Partnership Agreement.
As an inducement to the General Partner to accept this subscription,
Purchaser (for the Purchaser and, if Purchaser is an entity, on behalf of and
with respect to each of Purchaser's shareholders, partners or beneficiaries),
by executing and delivering Purchaser's Subscription Agreement and Power of
Attorney, represents and warrants to the General Partner, the Commodity
Broker and the Selling Agent who solicited Purchaser's subscription and the
Fund, as follows:
(a) Purchaser is of legal age to execute the Subscription Agreement and
Power of Attorney and is legally competent to do so. Purchaser acknowledges
that Purchaser has received a copy of the Prospectus, including the Limited
Partnership Agreement, prior to subscribing for Units.
(b) All information that Purchaser has heretofore furnished to the General
Partner or that is set forth in the Subscription Agreement and Power of
Attorney submitted by Purchaser is correct and complete as of the date of
such Subscription Agreement and Power of Attorney, and if there should be any
change in such information prior to acceptance of Purchaser's subscription,
Purchaser will immediately furnish such revised or corrected information to
the General Partner.
(c) Unless (d) or (e) below is applicable, Purchaser's subscription is made
with Purchaser's funds for Purchaser's own account and not as trustee,
custodian or nominee for another.
(d) The subscription, if made as custodian for a minor, is a gift Purchaser
has made to such minor and is not made with such minor's funds or, if not a
gift, the representations as to net worth and annual income set forth below
apply only to such minor.
(e) If Purchaser is subscribing in a representative capacity, Purchaser has
full power and authority to purchase the Units and enter and be bound by the
Subscription Agreement and Power of Attorney on behalf of the entity for
which he is purchasing the Units, and such entity has full right and power to
purchase such Units and enter and be bound by the Subscription Agreement and
Power of Attorney and become a Limited Partner pursuant to the Limited
Partnership Agreement which is attached to the Prospectus as Exhibit A.
(f) Purchaser either is not required to be registered with the Commodity
Futures Trading Commission ("CFTC") or to be a member of the National Futures
Association ("NFA") or if required to be so registered is duly registered
with the CFTC and is a member in good standing of the NFA.
(g) If the undersigned is acting on behalf of an "employee benefit plan," as
defined in and subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or a "plan" as defined in and subject to Section
4975 of the Internal Revenue Code of 1986, as amended (the "Code") (a
"Plan"), the individual signing this Subscription Agreement and Power of
Attorney on behalf of the undersigned hereby further represents and warrants
as, or on behalf of, the Plan responsible for purchasing units (the "Plan
Fiduciary") that: (a) the Plan Fiduciary has considered an investment in the
Fund for such plan in light of the risks relating thereto; (b) the Plan
Fiduciary has determined that, in view of such considerations, the investment
in the Fund is consistent with the Plan Fiduciary's responsibilities under
ERISA; (c) the Plan's investment in the Fund does not violate and is not
otherwise inconsistent with the terms of any legal document constituting the
Plan or any trust agreement thereunder; (d) the Plan's investment in the Fund
has been duly authorized and approved by all necessary parties; (e) none of
the General Partner, the Fund's advisors, the Fund's cash manager, the Fund's
futures brokers, any selling agent, any of their respective affiliates or any
of their respective agents or employees: (i) has investment discretion with
respect to the investment of assets of the Plan used to purchase units; (ii)
has authority or responsibility to or regularly gives investment advice with
respect to the assets of the Plan used to purchase units for a fee and
pursuant to an agreement or understanding that such advice will serve as a
primary basis for investment decisions with respect to the Plan and that such
advice will be based on the particular investment needs of the Plan; or (iii)
is an employer maintaining or contributing to the Plan; and (f) the Plan
Fiduciary (i) is authorized to make, and is responsible for, the decision to
invest in the Fund, including the determination that such investment is
consistent with the requirement imposed by Section 404 of ERISA that Plan
investments be diversified so as to minimize the risks of large losses, (ii)
is independent of the General Partner, the Fund's advisors, the Fund's cash
manager, the Fund's futures brokers, any selling agent, each of their
respective affiliates, and (iii) is qualified to make such investment
decision. The undersigned will, at the request of the General Partner,
furnish the General Partner with such information as the General Partner may
reasonably require to establish that the purchase of the units by the Plan
does not violate any provision of ERISA or the Code, including without
limitation, those provisions relating to "prohibited transactions" by
"parties in interest" or "disqualified persons" as defined therein.
(h) If the undersigned is acting on behalf of a trust (the "Subscriber
Trust"), the individual signing the Subscription Agreement and Power of
Attorney on behalf of the Subscriber Trust hereby further represents and
warrants that an investment in the Trust is permitted under the trust
agreement of the Subscriber Trust, and that the undersigned is authorized to
act on behalf of the Subscriber Trust under the trust agreement thereof.
(i) Purchaser represents and warrants that purchaser has (i) a net worth of
at least $150,000 (exclusive of home, furnishings and automobiles) or (ii) an
annual gross income of at least $45,000 and a net worth (similarly
calculated) of at least $45,000. Residents of the following states must meet
the requirements set forth below (net worth in all cases is exclusive of
home, furnishings and automobiles). In addition, purchaser may not invest
more than 10% of his net worth (exclusive of home, furnishings and
automobiles) in the Fund.
State Suitability Requirements
1. Alaska-Net worth of at least $225,000 or a net worth of at least
$60,000 and annual taxable income of at least $60,000.
2. Arizona-Net worth of at least $225,000 or a net worth of at least
$60,000 and annual taxable income of at least $60,000.
3. California-Net worth of at least $225,000 or a net worth of at least
$60,000 and annual taxable income of at least $60,000.
4. Iowa-Net worth of at least $500,000 or a net worth of at least $250,000
and an annual taxable income of at least $100,000.
5. Kansas--Net worth of at least $225,000 or a net worth of at least
$60,000 and an annual gross income of at least $60,000. It is recommended by
the Office of the Kansas Securities Commissioner that Kansas investors not
invest, in the aggregate, more than 10% of their liquid net worth in this and
similar direct participation investments. Liquid net worth is defined as that
portion of net worth which consists of cash, cash equivalents and readily
marketable securities.
6. Maine-Net worth of at least $200,000 or a net worth of at least $50,000
and an annual taxable income of at least $50,000.
7. Massachusetts-Net worth of at least $225,000 or a net worth of at least
$60,000 and annual taxable income of at least $60,000.
8. Michigan-Net worth of at least $225,000 or a net worth of at least
$60,000 and taxable income during the preceding year of at least $60,000.
9. Minnesota-Minnesota investors are deemed not to (i) represent that they
are legally competent to execute the Subscription Agreement and Power of
Attorney and (ii) make the representation in respect of risk tolerance in the
Subscription Agreement.
10. Mississippi-Net worth of at least $225,000 or a net worth of at least
$60,000 and annual taxable income of at least $60,000.
11. Missouri-Net worth of at least $225,000 or a net worth of at least
$60,000 and annual taxable income of at least $60,000.
12. Nebraska-Net worth of at least $225,000 or a net worth of at least
$60,000 and annual taxable income of at least $60,000.
13. New Hampshire-Net worth of at least $250,000 or a net worth of at least
$125,000 and an annual taxable income of at least $50,000.
14. North Carolina-Net worth of at least $225,000 or a net worth of at
least $60,000 and annual taxable income of at least $60,000.
15. Pennsylvania-Net worth of at least $175,000 or a net worth of at least
$100,000 and an annual income of at least $50,000.
16. South Carolina-Net worth of at least $100,000 or a net income in the
preceding year some portion of which was subject to maximum federal and State
income tax.
17. South Dakota-Net worth of at least $225,000 or a net worth of at least
$60,000 and annual taxable income of at least $60,000.
18. Tennessee-Net worth of at least $250,000 or a net worth of at least
$65,000 and annual taxable income of at least $65,000.
19. Texas-Net worth of at least $225,000 or a net worth of at least $60,000
and annual taxable income of at least $60,000.
In the case of sales to fiduciary accounts, the net worth and income
standards may be met by the beneficiary, the fiduciary account, or, if the
donor or grantor is the fiduciary, by the donor or grantor who supplies the
funds to purchase the partnership interests.
The foregoing suitability standards are regulatory minimums only. Merely
because you meet such requirements does not necessarily mean that a high
risk, speculative and illiquid investment such as one in the Fund is, in
fact, suitable for you.
*******************************************************************************
EXHIBIT D TO PROVIDENCE SELECT FUND DISCLOSURE DOCUMENT
PROVIDENCE SELECT FUND, LIMITED PARTNERSHIP
UNITS OF LIMITED PARTNERSHIP INTEREST
SUBSCRIPTION INSTRUCTIONS
Any person considering subscribing for
Units should carefully read and review the Prospectus.
The Units are speculative and involve a high degree of risk. No person
may invest more than 10% of his or her liquid net worth (exclusive of home,
furnishings and automobiles) in the Partnership. No entity-and, in
particular, no ERISA plan-may invest more than 10% of its liquid net worth
(readily marketable securities) in the Partnership. If a purchaser is
allowed to purchase less than $25,000 in Units, then the purchaser must have
a minimum annual gross income of $45,000 and a minimum net worth of $45,000
or, in the alternative, a minimum net worth of $150,000.
A Subscription Agreement and Power of Attorney Signature Page (the
"Signature Page") is attached to these Subscription Instructions and the
following Subscription Agreement and Power of Attorney. The Signature Page is
the document which you must execute if you wish to subscribe for Units. One
copy of such Signature Page should be retained by you for your records and
the others delivered to your Registered Representative.
FILL IN ALL OF THE INFORMATION ON THE ATTACHED SIGNATURE PAGE, USING
BLACK INK ONLY, AS FOLLOWS
Item 1 - Enter the dollar amount of the purchase.
Items 2 - 7 - Enter the Social Security Number or Taxpayer ID
Number and check the appropriate box to indicate the type of individual
ownership desired or of the entity that is subscribing. In the case of joint
ownership, either Social Security Number may be used.
The Signature Page is self-explanatory for most ownership types; however,
the following specific instructions are provided for certain of the ownership
types identified on the Signature Page:
Trusts-Enter the trust's name on Line 3 and the trustee's name on Line 4,
followed by "Ttee." If applicable, use Line 7 also for the custodian's name.
Be sure to furnish the Taxpayer ID Number of the trust.
Custodian Under Uniform Gifts to Minors Act-Complete Line 3 with the name of
minor followed by "UGMA." On Line 7, enter the custodian's name followed by
"Custodian." Be sure to furnish the minor's Social Security Number.
Partnership or Corporation-The partnership's or corporation's name is
required on Line 4. Enter a partner's or officer's name on Line 4. Be sure to
furnish the Taxpayer ID Number of the partnership or corporation. A
subscriber who is not an individual must provide a copy of documents
evidencing the authority of such entity to invest in the Partnership.
Item 8 - The investor(s) must execute the Subscription Agreement
and Power of Attorney Signature Page and review the representations relating
to backup withholding tax or non-resident alien status underneath the
signature and telephone number lines in Item 8.
Item 9 - Registered Representative must complete.
The Selling Agent's copy of the Subscription Agreement and Power of Attorney
Signature Page may be required to be retained in the Branch Office.
PROVIDENCE SELECT FUND, LIMITED PARTNERSHIP
UNITS OF LIMITED PARTNERSHIP INTEREST
BY EXECUTING THIS SUBSCRIPTION AGREEMENT AND POWER OF ATTORNEY
SUBSCRIBERS ARE NOT WAIVING ANY RIGHTS UNDER THE
SECURITIES ACT OF 1933 OR THE SECURITIES
EXCHANGE ACT OF 1934
SUBSCRIPTION AGREEMENT AND
POWER OF ATTORNEY
White Oak Financial Services, Inc.
General Partner ____________________________
5914 N. 300 West, P. O. Drawer C Social Security Number or
Fremont, IN 46737 Taxpayer ID Number
Dear General Partner:
1. Subscription For Units. I hereby subscribe for the number of Limited
Partnership Units ("Units") in Providence Select Fund, Limited Partnership
(the "Fund") set forth below (minimum $25,000) in the Subscription Agreement
and Power of Attorney Signature Page, at a price per Unit as set forth in the
Fund disclosure document dated November __, 2006, (the "Prospectus"). I have
completed and executed a Subscription Agreement and Power of Attorney
Signature Page in the form attached hereto as Exhibit "D", and delivered the
executed Subscription Documents to the Sales Agent and executed a check made
payable to "Star Bank for the acct. of Providence" to be delivered by the
Sales Agent to the Depository Agent within 24 hours after receipt for deposit
to the Depository Account. The General Partner may, in its sole and absolute
discretion, accept or reject this subscription, in whole or in part. If this
subscription is accepted, I understand subscribers will earn additional Units
in lieu of interest earned on the undersigned's subscription during any
period of time, if any, such subscription is held in the depository account.
If this subscription is rejected, all funds remitted by the undersigned will
be returned, together with any interest earned from the depository account,
if any.
2. Power of Attorney. In connection with my acceptance of an Interest in the
Partnership, I do hereby irrevocably constitute and appoint the General
Partner, and its successors and assigns, as my true and lawful Attorney-in-
Fact, with full power of substitution, in my name, place and stead, to (i)
file, prosecute, defend, settle or compromise litigation, claims or
arbitration on behalf of the Partnership; and, (ii) make, execute, sign,
acknowledge, swear to, deliver, record and file any documents or instruments
which may be considered necessary or desirable by the General Partner to
carry out fully the provisions of the Limited Partnership Agreement of the
Partnership, which is attached as Exhibit A to the Prospectus, including,
without limitation, the execution of the said Agreement itself and by
effecting all amendments permitted by the terms thereof. The Power of
Attorney granted hereby shall be deemed to be coupled with an interest and
shall be irrevocable and shall survive, and shall not be affected by, my
subsequent death, incapacity, disability, insolvency or dissolution or any
delivery by me of an assignment of the whole or any portion of my interest in
the Partnership.
3. Irrevocability; Governing Law. You may revoke your subscription for five
business days after you send it to us (the "Revocation Period"). After the
lapse of five business days from submission, your subscription will be
irrevocable. The Units offered to you are subject to prior sale. I hereby
acknowledge and agree that after the Revocation Period I am not entitled to
cancel, terminate or revoke this subscription or any of my agreements
hereunder and that this subscription and such agreements shall survive my
death or disability. This Subscription Agreement and Power of Attorney shall
be governed by and interpreted in accordance with the laws of the State of
Delaware.
4. Representations and Warranties. By executing the Subscription Agreement
and Power of Attorney, you (for yourself and any co-subscriber, and, if you
are signing on behalf of an entity, on behalf of and with respect to that
entity and its shareholders, partners, beneficiaries or members), represent
and warrant to general partner and the Fund as follows (As used below, the
terms "you and your" refer to you and your co-subscriber, if any, or if you
are signing on behalf of an entity, that entity):
(Please initial each item to provide your acknowledgement or representation)
______1. I have received a copy of the Prospectus dated November __, 2006,
including the Agreement of Limited Partnership.
______2. If an individual subscriber, I am of legal age to execute the
Subscription Agreement and am legally competent to do so.
______3. I satisfy the applicable financial suitability and minimum
investment requirements in the Prospectus and Exhibit C, including the "State
Suitability Requirements" for residents of the state in which I reside that
appear under that caption.
______4. Unless representation (5) or (6) below is applicable, my
subscription is made with my funds for my own account and not as trustee,
custodian, or nominee for another.
______5. If I am subscribing as a custodian for a minor, either (a) the
subscription is a gift I have made to that minor and is not made with that
minor's funds, in which case the representations as to net worth and annual
income below apply only to myself, acting as custodian, or (b) if the
subscription is not a gift, the representations as to net worth, and annual
income below apply only to that minor.
______6. If I am subscribing as a trustee or custodian of an employee
benefit plan, or of an IRA, at the direction of the beneficiary of that plan
or IRA, all representations in the Subscription Agreement apply only to the
beneficiary of that plan or IRA.
______7 I understand that my investment is not transferable and is illiquid
except for limited redemption provisions, as set forth in the Prospectus and
the Agreement of Limited Partnership.
______8 This investment represents 10% or less of my total net worth.
______9 I believe I have provided for my retirement and the support of those
who are dependent on me without the need for return of my investment in this
Fund.
______10 I have not omitted any information in the documents supplied to my
broker or sales agent that would prevent them from determining my suitability
for this investment.
5. Additional Disclosures:
The trade of futures and options on futures involves substantial risk,
including the loss of your investment.
The general partner and the sales agent shall make every reasonable effort to
determine that the purchase of units of partnership interest is a suitable
and appropriate investment for you, on the basis of the information regarding
your financial situation and investment objectives obtained from the
suitability questionnaire and subscription agreement (Exhibit D) signed and
delivered by you in connection with your subscription for units. On the
basis of the information provided by you, the general partner and the sales
agent shall make every reasonable effort to ascertain that you:
(a) meet the minimum income and net worth standards established for the
Fund;
(b) can reasonably benefit from an investment in the Fund based on your
overall investment objectives and portfolio structure;
(c) are able to bear the economic risks of an investment in the Fund based
on your overall financial situation; and
(d) have an understanding of:
(i) the fundamental risks of an investment in the Fund;
(ii) the risk that you may lose your entire investment;
(iii) the restrictions on the liquidity and transferability of the units;
(iv) the background and qualification of the general partner and the
Fund's commodity trading advisor; and
(v) the tax consequences of an investment in the Fund.
PROVIDENCE SELECT FUND, LIMITED PARTNERSHIP
Units of Limited Partnership Interests
Subscription Agreement and Power of Attorney
Signature Page
The investor named below, by execution and delivery of this Subscription
Agreement
and Power of Attorney, by payment of the purchase price for Limited Partnership
Interests (the "Units") in Providence Select Fund, Limited Partnership (the
"Partnership"), and by either enclosing a check payable to "Star Bank for the
acct. of Providence", or by instructing their brokerage firm to debit their
customer securities account in the amount set forth below, hereby subscribes
for the purchase of Units, at a price per Unit as set forth in the Prospectus.
The named investor further, by signature below, acknowledges (i) receipt of the
Prospectus of the Partnership dated November__, 2006; (ii) that such Prospectus
includes the Partnership's Limited Partnership Agreement, the Subscription
Requirements, and the Subscription Agreement and Power of Attorney set forth
therein, the terms of which govern the investment in the Units being subscribed
for hereby; (iii) that this subscription may be revoked within five business
days after submission; and, (iv) after the lapse of five business days from
submission, this subscription will be irrevocable. Investor understands that
if the account is titled "for the benefit of" ("FBO"), that the named entity
will custody the Units, purchase, hold and redeem Units in the investor's
account, and will receive copies of Partnership application forms and
statements
for the benefit of the investor. By my signature below, I represent that I
satisfy the requirements relating to net worth and annual income as set forth
in Exhibit C to the Prospectus.
1) Account # ____________________________.
Total $ Amount __________________ (minimum of $25,000, unless lowered to
less than $25,000 but not less than $5,000 by the General Partner; $1,000
minimum for investors making an additional investment)
[ ] Check here if investor's securities account is to be debited.
2) Social Security Number _____-___-_____
Taxpayer ID # _____-___-_____
Taxable Investors (check one):
O Individual Ownership
O Trust other than a Grantor or Revocable Trust
O Joint Tenants with Right of Survivorship
O Estate
O UGMA/UTMA (Minor)
O Tenants in Common
O Community Property
O Partnership
O Corporation
O Grantor or Other Revocable Trust
Non-Taxable Investors (check one):
O IRA
O Profit Sharing
O IRA Rollover
O Defined Benefit
O Pension
O Other (specify)
O SEP
3) Investor's Name _________________________________________________________
4) _________________________________________________________________________
Additional Information (for Estates, Trusts, Partnerships and Corporations)
5) Resident Address of Investor
_________________________________________________________________________
Street (P.O. Box not acceptable) City State Zip Code
6) Mailing Address(if different)
_________________________________________________________________________
Street City State Zip Code
7) Custodian Name and Mailing Address
_________________________________________________________________________
Name Street City State Zip Code
Signature(s) - do not sign without familiarizing yourself with the
information in the Prospectus, including: (i) the fundamental risks and
financial hazards of this investment, including the risk of losing your
entire investment; (ii) that the Partnership is the first client account to
trade in the Providence Select Fund portfolio; (iii) the Partnership's
substantial charges; (iv) the Partnership's highly leveraged trading
activities; (v) the lack of liquidity of the Units; (vi) the existence of
actual and potential conflicts of interest in the structure and operation of
the Partnership; (vii) that Limited Partners may not take part in the
management of the Partnership; (viii) the tax consequences of the
Partnership; and (ix) the redemption fee of 3% that will be charged during
the first four months of investment, 2% during the second four months, 1%
during the third four months, and none thereafter.
8) INVESTOR(S) MUST SIGN
X_________________________________________________________
Signature of Investor Date Telephone No.
X_________________________________________________________
Signature of Joint Investor (if any) Date
Investor must sign individually, or pursuant to a power of attorney;
provided, however, that such power of attorney has not been granted to a
registered representative of a Selling Agent.
Executing and delivering this Subscription Agreement and Power of Attorney
shall in no respect be deemed to constitute a waiver of any rights under the
Securities Act of 1933 or under the Securities Exchange Act of 1934.
UNITED STATES INVESTORS ONLY
I have checked the following box if I am subject to backup withholding under
the provisions of Section 3406(a)(1)(C) of the Internal Revenue Code: 0.
Under the penalties of perjury, by signature above I hereby certify that the
Social Security Number or Taxpayer ID Number set forth in Item 2 above is my
true, correct and complete Social Security Number of Taxpayer ID Number and
that the information given in the immediately preceding sentence is true,
correct and complete.
NON-UNITED STATES INVESTORS ONLY
Under the penalties of perjury, by signature above, I hereby certify that (a)
I am not a citizen or resident of the United States or (b) (in the case of an
investor which is not an individual) the investor is not a United States
corporation, partnership, estate or trust: 0.
9) REGISTERED REPRESENTATIVE MUST SIGN
I hereby certify that I have informed the investor of all pertinent facts
relating to the: risks; tax consequences; liquidity and marketability;
management; and control of the Managing Owner with respect to an investment
in the Units, as set forth in the Prospectus. I have also informed the
investor of the unlikelihood of a public trading market developing for the
Units. I do not have discretionary authority over the account of the
investor.
I have reasonable grounds to believe, based on information obtained from the
investor concerning his/her investment objectives, other investments,
financial situation and needs and any other information known by me, that an
investment in the Partnership is suitable for such investor in light of
his/her financial position, net worth and other suitability characteristics.
The Registered Representative MUST sign below in order to substantiate
compliance with Article III, Section 34 of the NASD's Rules of Fair Practice.
X__________________________________________________________
Registered Representative Signature Date
X__________________________________________________________
Office Manager Signature Date
(if required by Selling Agent procedures)
10) REGISTERED REPRESENTATIVE
Name:
Selling Agent:
Reg. Rep. No.:
Branch Office:
Address:
City, State, Zip:
Tel. Number:
Facsimile:
Email:
11) PRINCIPAL SELLING AGENT
Futures Investment Company, 5914 N. 300 West, Fremont, IN 46737,
(260) 833-1306
*******************************************************************************
EXHIBIT E TO PROVIDENCE SELECT FUND DISCLOSURE DOCUMENT
DEPOSITORY AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into as of the ___ day
of December, 2004, is by and among Providence Select Fund, Limited
Partnership, (the "Fund"), White Oak Financial Services, Inc., 5914 N. 300
West, P. O. Box, C, Fremont, IN 46737, (the "General Partner"); Futures
Investment Company, an Illinois corporation, 5914 N. 300 West, P. O. Box, C,
Fremont, IN 46737 (the "Selling Agent"), and Star Financial Bank, 2004 N.
Wayne St., Angola, IN 46703, a bank unaffiliated with the Fund, General
Partner or Selling Agent and otherwise within the definition of Section
3(a)(6) of the 1934 Act (the "Depository").
1. Account Opened. The General Partner establishes and the Depository
accepts and opens an account that will be invested in short term bank
certificates of deposit that comply with SEC Rule 15c2-4 titled
"Star Bank for the acct. of Providence" to
clear proceeds of sale of limited partnership interests (the "Units") in a
best efforts minimum/maximum offering of the Fund promptly delivered by the
Selling Agent from subscribers at an initial offering price of one thousand
dollars ($1,000) to be held in said bank account subject to the terms of this
Agreement until a total face amount of one million thirty thousand dollars
($1,030,000) of Units (the "Minimum") are sold and, thereafter to continue to
accept proceeds of sale from subscribers sold at the Net Asset Value per Unit
computed after the close of business on the last business day of each month
and transferred to the Fund as of the open on the first business day of each
month. The Selling Agent shall direct all subscribers to make their checks
to "Star Bank for the acct. of Providence." Any instrument not so made out
shall be promptly returned to the subscriber, with notice to the Selling
Agent. The Selling Agent will supply Depository with a list of the
subscribers to identify their name, address and amount of subscription. The
Selling Agent will be solely responsible for the allocation of interest
earned among the subscribers.
2. Sale of Minimum Required. The Selling Agent shall promptly transmit
all checks and wire transfers for the purchase of Units directly to the
Depository. At the time of delivery of the proceeds to the Depository, the
Selling Agent shall provide the Depository with the name and address of the
subscriber for the Units. Should the Minimum not be sold within twelve
months from the effective date of the Offering established by the Securities
and Exchange Commission (the "Offering Period") or should the offering
terminate for any reason prior to the Offering Period, the Depository shall
promptly return the proceeds to each subscriber plus interest as allocated by
the General Partner without deduction for costs or expenses from the amounts
paid to the subscribers, and the Depository shall notify the General Partner
and the Selling Agent of its distribution of the funds. The proceeds
returned to each subscriber shall be free and clear of any and all claims of
the Fund or any of its creditors. The General Partner is solely responsible
for the allocation of the interest earned to the subscribers. Upon the
receipt of deposits that total $1,030,000 to the account before the lapse of
or termination of the Offering Period, the Depository shall deliver the
proceeds plus interest by check or account transfer to the Fund and at the
end of each month thereafter, the Depository shall deliver all proceeds plus
interest by check or account transfer to the Fund. In no event will the
proceeds be released to the Fund until the Minimum is received by the
Depository in collected funds. For purposes of this Agreement, the term
"collected funds" shall mean all funds received by the Depository which have
cleared normal banking channels and are in the form of cash.
3. No Creditor's Rights. The Selling Agent and the General Partner,
individually and on behalf of the Fund agree that they are not entitled to
any funds in the Depository account prior to the sale of the Minimum and no
amounts deposited in the Depository Account shall become the property of or
be subject to the debts of the Selling Agent, General Partner, Fund or any
other entity or person.
4. Collection Procedure. The Depository is hereby authorized to forward
each check for collection and, upon collection of the proceeds of each check,
deposit the collected proceeds in the account. As an alternative, the
Depository may telephone the bank on which the check is drawn to confirm that
the check has been paid. Any check returned unpaid shall be returned by Star
Bank to the subscriber with notice to the Selling Agent. If the Fund rejects
any subscription for which the Depository has already collected funds, the
Depository shall promptly issue a refund check to the rejected subscriber. If
the General Partner rejects any subscription for which the Depository has not
yet collected funds but has submitted the subscriber's check for collection,
the Depository shall promptly issue a check in the amount of the subscriber's
check to the rejected subscriber after the Depository has cleared such funds.
If the Depository has not yet submitted a rejected subscriber's check for
collection, the Depository shall promptly remit the subscriber's check
directly to the subscriber.
5. Depository Liability Limited. Depository shall have no liability
under, or duty to inquire into, the terms and provisions of any other
document or instrument utilized in connection with the Offering, and it is
agreed that the duties of Depository are purely ministerial in nature, and
that Depository shall incur no liability whatsoever under this Agreement,
except for acts or omissions of the Depository involving or constituting
willful misconduct, fraud, gross negligence or bad faith.
6. Depository May Resign. Depository may, at any time, resign hereunder
by giving written notice of its intent to resign to the other parties hereto,
at their respective addresses set forth above, at least ten (10) days prior
to the date specified for such resignation to take effect, and upon the
effective date of such resignation the proceeds, including all accrued
interest, shall be delivered by Depository to the person designated in
writing by the Selling Agent and the General Partner or a court of competent
jurisdiction, whereupon all of Depository's obligations hereunder shall cease
and terminate. Notwithstanding the foregoing, nothing in this paragraph
releases Depository or relieves it of any of its obligations that existed
prior to the effective date of Depository's resignation including, without
limitation, liability for willful misconduct, fraud, gross negligence or bad
faith. Notwithstanding the foregoing, nothing in this paragraph releases the
Selling Agent or the General Partner of their obligations under the
Securities and Exchange Act including, but not limited to, Rules 15c2-4 and
10b-9.
7. Depository Indemnification. The Selling Agent and the General Partner
agree to indemnify, defend and hold Depository harmless from and against any
and all loss, damage, tax, liability and expense that may be incurred by
Depository and arising out of or in connection with its acceptance of
appointment as depository hereunder, including reasonable attorneys' fees and
other legal costs and expenses of defending itself against any claim or
liability in connection with its performance hereunder, except in the case of
willful misconduct, fraud, gross negligence or bad faith on the part of
Depository. Depository may consult with and rely on its attorneys with
respect to any dispute not assumed or defended by the Selling Agent and the
General Partner and this indemnification shall include all reasonable and
necessary attorneys' fees of Depository in connection with such consultation.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
WHITE OAK FINANCIAL SERVICES, INC. STAR FINANCIAL BANK
By: ______________________________ By: __________________________
Mr. Michael Pacult Thad Wright
President Vice President
FUTURES INVESTMENT COMPANY PROVIDENCE SELECT FUND, L.P.
By: White Oak Financial Services, Inc.
By: ______________________________ By: ____________________________
Mr. Michael Pacult Mr. Michael Pacult
President President
*******************************************************************************
EXHIBIT F TO PROVIDENCE SELECT FUND DISCLOSURE DOCUMENT
INVESTMENT ADVISORY CONTRACT
NUWAVE INVESTMENT CORP.
THIS AGREEMENT is made and entered as of this ____ day of _____________,
2006, between Providence Select Fund, Limited Partnership, (the "Fund") and
NuWave Investment Corp., a New Jersey corporation (the "CTA").
WITNESSETH:
In consideration of the deposit by the Fund of equity to Man Financial,
Inc. (the "FCM") in the name of the Fund (this account and any other
accounts, which may be assigned to the CTA in the future are collectively
hereinafter called the "Account") and the grant of the power of attorney on
the standard form of the FCM to the CTA to permit the CTA to enter trades for
the Fund in the Account and payment of management fees to and the opportunity
to earn incentive fees by the CTA, the parties hereto agree as follows:
1. White Oak Financial Services, Inc., the Fund general partner and
commodity pool operator (the "CPO") shall determine the amount the Fund shall
initially deposit in the Account with the FCM, which the CTA agrees to manage
pursuant to the terms of this Agreement. Subsequent deposits and
accumulation of profits in the Account, less withdrawals and losses, shall
also be subject to this Agreement. At its sole discretion, the Fund may add
or withdraw funds at any time from the Account by written request to the FCM
with a copy to the CTA.
2. The CTA will cause futures contracts, and when deemed advisable,
options on futures and forward contracts, to be bought and sold on behalf of
the Fund in the Account. The CTA will have the sole authority to issue all
necessary instructions to the FCM to effect trading for the Fund's Account.
All such transactions shall be for the account and risk of the Fund. The CTA
agrees to use its best efforts to exit all futures trades prior to delivery
of any commodity that requires storage or other costs.
3. The CTA's services are not rendered exclusively for the Fund and the
Fund agrees that the CTA is free to continue to provide and offer similar
services to others. The CPO may change or add another FCM for the Account
assigned to the CTA at any time upon written direction to the FCM and the
CTA, and the FCM and the CTA agree to effect the transfer and sign the forms
necessary to complete such change or addition, provided such transfer does
not conflict with any prior agreements the CTA has with the FCM.
4. The CTA will use its best efforts to obtain an equity run from the
FCM before the opening of business the next trading day. Unless authorized
in writing by the CPO, the CTA will use only the equity in the Account
assigned to the CTA by the CPO for margins to hold the positions taken by the
CTA. No equity in the Account assigned to the CTA will be commingled or
margined, for any purpose, with any other account at the FCM. The CPO, upon
written instruction to the FCM, may terminate, for any reason, the power of
attorney and suspend the trading authority of the CTA to enter trades with
the FCM. In the event of a termination of the power of attorney, the CTA
agrees that the FCM shall accept no further instructions from the CTA but
shall place the Account upon liquidation only to be handled in written
instructions from the CPO to the FCM.
5. The Fund agrees to execute, from time to time, the Acknowledgment of
Receipt of Disclosure Document from the CTA. By signing, the Fund agrees
that it has received and understands and the CTA represents that it has
supplied the most recent copy of the CTA's Risk Disclosure Document. The
CTA will promptly review the Fund offering documents submitted by the Fund to
it, from time to time, and will furnish its consent, in the form requested by
the Fund, to the filing of forms and offering documents with the Federal and
State security and commodity regulators.
6. The Fund will pay the CTA an annual management fee, payable monthly,
based on the rate of trading assigned by the CTA and approved by the CPO of
up to two and one half percent (2.5%). The CTA will be paid an incentive
fee of twenty percent (20%), of the New Net Profit earned each calendar
quarter. The Fund accountant will calculate the fee subject to approval
by the CTA, and the fee shall not be deducted from the Account, but will
be paid upon submission of an invoice by the CTA to the CPO of the Fund.
Once approved by the CPO, the incentive fee will be paid promptly from the
Fund account selected by the CPO. Interest on cash and cash equivalents
such as T-Bills and money market account shall not be included as profits
for incentive fee purposes.
7. The Fund and the CTA agree that they have or will properly execute all
necessary forms for opening the Account with the FCM; provided, however, any
disputes between the Fund and the CTA will be submitted to arbitration before
a single arbitrator selected by the American Arbitration Association, not the
National Futures Association, and only upon written agreement of the parties
at the time such dispute arises. The terms of this Agreement will supersede,
and in the event of conflicts with any other agreement, the terms of this
Agreement shall control. This Agreement will be governed by the laws of the
State of Illinois and any dispute concerning arbitration will be resolved by
a Federal or State court of competent jurisdiction located in Chicago,
Illinois.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement the day and year first above written.
Providence Select Fund, Limited Partnership NuWave Investment Corp.
By: White Oak Financial Services, Inc.
General Partner
________________________________ ________________________________
Michael Pacult Troy Buckner
President Principal
*******************************************************************************
Dealer Prospectus Delivery Obligation
Until one year from the date of this prospectus, all dealers that effect
transactions in these securities, whether or not participating in this
offering, may be required to deliver a prospectus. This is in addition to
the dealers' obligation, if any, to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.
[The balance of this page has been intentionally left blank.]
*******************************************************************************
FORM S-1
Registration No. 333-119635
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
(a) The Selling Agreement between Futures Investment Company and the
Registrant contains an indemnification from the General Partner to the
effect that the disclosures in the Prospectus and this Amendment are in
compliance with Rule 10b5 and otherwise true and complete. This
indemnification speaks from the date of the first offering of the Units
through the end of the applicable statute of limitations. The
Partnership has assumed no responsibility for any indemnification to
Futures Investment Company and the General Partner is prohibited by the
Partnership Agreement from receiving indemnification for breach of any
securities laws or for reimbursement for insurance for coverage for any
such claims. See Section 15.4 of the Partnership Agreement.
(b) There are no indemnification agreements which are not contained in
the Limited Partnership Agreement attached as Exhibit A, the Selling
Agreement or the Clearing Agreement.
(c) The following reflects all expenses in connection with the
issuance and distribution of the securities to be registered, other
than underwriting discounts and commissions:
Expense Cost
Registration fees $ 17,386
Federal taxes 0
States taxes and fees 7,000
Trustees' and transfer agents' fees 0
Costs of printing and engraving 6,768
Legal 33,000
Accounting 22,000
Engineering 0
Additional Offering Expenses 3,812
$ 90,996
Item 15. Recent Sales of Unregistered Securities. None within three
years.
Item 16. Exhibits and Financial Statement Schedules.
The following documents (unless indicated) are filed herewith and made
a part of this Registration Statement:
(a) Exhibits.
Exhibit
Number Description of Document
1.01 Selling Agreement dated August 11, 2004 between the Partnership
and Futures Investment Company, the Selling Agent
2.01 None
3.01 Articles of Incorporation of the General Partner
3.02 By-Laws of the General Partner
3.03 Board Resolution of General Partner to authorize formation of
Delaware Limited Partnership
3.04 Agreement of Limited Partnership of the Registrant (included as
Exhibit A to the Prospectus)
3.05 Certificate of Limited Partnership of the Registrant
4.01 Agreement of Limited Partnership of the Registrant (included as
Exhibit A to the Prospectus)
5.01 Opinion of The Scott Law Firm, P.A. with respect to the
legality of the Partnership Units
6.01 Not Applicable
7.01 Not Applicable
8.01 Opinion of The Scott Law Firm, P.A. with respect to Federal
income tax consequences
9.01 None
10.01 Form of Advisory Agreement between the Partnership and the
Commodity Trading Advisor (included as Exhibit F to the Prospectus)
10.02 Form of Subscription Agreement and Power of Attorney (included
as Exhibit D to the Prospectus)
10.03 Depository Agreement among Depository, Underwriter, and the
Partnership (included as Exhibit E to the Prospectus)
11.01 Not Applicable - start-up business
12.01 Not Applicable
13.01 Not Required
14.01 None
15.01 None
16.01 Not Applicable
17.01 Not Required
18.01 Not Required
19.01 Not Required
20.01 Not Required
21.01 None
22.01 Not Required
23.01 Consent of Frank L. Sassetti & Co., Certified Public
Accountants
23.02 Consent of The Scott Law Firm, P.A., Legal & Tax Counsel
23.03 Consent of Jordan Patke & Associates Ltd.
24.01 None
25.01 None
26.01 None
27.01 Not Applicable
28.01 Not Applicable
(b) Financial Statement Schedules.
No Financial Schedules are required to be filed herewith.
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represents a fundamental: change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) That the registrant is not a foreign private issuer.
(5) That, for the purpose of determining liability under the
Securities Act of 1933:
(i) Each prospectus filed by the registrant pursuant to Rule
424(b)(3)shall be deemed to be part of the registration statement as of the
date the filed prospectus was deemed part of and included in the registration
statement; and each prospectus required to be filed pursuant to Rule
424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance
on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i),
(vii), or (x) for the purpose of providing the information required by
section 10(a) of the Securities Act of 1933 shall be deemed to be part of and
included in the registration statement as of the earlier of the date such
form of prospectus is first used after effectiveness or the date of the first
contract of sale of securities in the offering described in the prospectus.
As provided in Rule 430B, for liability purposes of the issuer and any person
that is at that date an underwriter, such date shall be deemed to be a new
effective date of the registration statement relating to the securities in
the registration statement to which that prospectus relates, and the offering
of such securities at that time shall be deemed to be the initial bona fide
offering thereof. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made in
a document incorporated or deemed incorporated by reference into the
registration statement or prospectus that is part of the registration
statement will, as to a purchaser with a time of contract of sale prior to
such effective date, supersede or modify any statement that was made in the
registration statement or prospectus that was part of the registration
statement or made in any such document immediately prior to such effective
date; or
(ii) Each prospectus filed pursuant to Rule 424(b) as part of a
registration statement relating to an offering, other than registration
statements relying on Rule 430B or other than prospectuses filed in reliance
on Rule 430A, shall be deemed to be part of and included in the registration
statement as of the date it is first used after effectiveness. Provided,
however, that no statement made in a registration statement or prospectus
that is part of the registration statement or made in a document incorporated
or deemed incorporated by reference into the registration statement or
prospectus that is part of the registration statement will, as to a purchaser
with a time of contract of sale prior to such first use, supersede or modify
any statement that was made in the registration statement or prospectus that
was part of the registration statement or made in any such document
immediately prior to such date of first use.
(6) That, for the purpose of determining liability of the registrant under
the Securities Act of 1933 to any purchaser in the initial distribution of
the securities: The undersigned registrant undertakes that in a primary
offering of securities of the undersigned registrant pursuant to this
registration statement, regardless of the underwriting method used to sell
the securities to the purchaser, if the securities are offered or sold to
such purchaser by means of any of the following communications, the
undersigned registrant will be a seller to the purchaser and will be
considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant
relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on
behalf of the undersigned registrant or used or referred to by the
undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the
offering containing material information about the undersigned registrant or
its securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the
undersigned registrant to the purchaser.
(b) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A, if any pre-effective
amendment was used, and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4), or 497(h) under the Securities
Act shall be deemed to be part of this registration statement as of the time
it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) The General Partner has provided an indemnification to Futures
Investment Company, the best efforts selling agent. The Partnership (issuer)
has not made any indemnification to Futures Investment Company.
Insofar as indemnification for liabilities under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of the Registrant including, but not limited to, the General Partner pursuant
to the provisions described in Item 14 above, or otherwise, the Registrant
had been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any such
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
*******************************************************************************
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, in the City of
Fremont in the State of Indiana on this 22nd day of November, 2006, Mr. Michael
Pacult, the individual general partner of the Registrant, signed this
Registration Statement; and White Oak Financial Services, Inc., the corporate
general partner of the Registrant, has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized.
WHITE OAK FINANCIAL SERVICES, INC. PROVIDENCE SELECT FUND, LP
BY WHITE OAK FINANCIAL SERVICES, INC.
GENERAL PARTNER
By: /s/ Michael Pacult By: /s/ Michael Pacult
MR. MICHAEL PACULT MR. MICHAEL PACULT
PRESIDENT PRESIDENT
PROVIDENCE SELECT FUND, L.P.
BY MR. MICHAEL PACULT
GENERAL PARTNER
By: /s/ Michael Pacult By: /s/ Michael Pacult
MR. MICHAEL PACULT MR. MICHAEL PACULT
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following person on behalf of White
Oak Financial Services, Inc., General Partner of the Registrant in the
capacities and on the date indicated.
/s/ Michael Pacult
MR. MICHAEL PACULT
PRESIDENT
Date: November 22, 2006
(Being the principal executive officer, the principal financial and
accounting officer and the sole director of White Oak Financial Services,
Inc., General Partner of the Partnership)