FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2009
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 333-108629
Providence Select Fund, Limited Partnership
(Exact name of registrant as specified in its charter)
Delaware 20-0069251
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
505 Brookfield Drive, Dover, DE 19901
(Address of principal executive offices, including zip code)
(800) 331-1532
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec 232.405
of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files).
Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
definition of large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [X] Smaller Reporting Company[ ]
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Act).
Yes [ ] No [X]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) f the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [ ] No [ ] Not applicable.
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. Not Applicable
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Part 1 - FINANCIAL INFORMATION
Item 1. Financial Statements.
The reviewed financial statements for the Registrant for the nine months ended
September 30, 2009 are attached hereto and made a part hereof.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
General Information
The Registrant (the "Fund") was granted an effective date by the Securities
and Exchange Commission on September 12, 2005. On March 2, 2007, the Fund
commenced business after admission of 46 limited partners, with total
subscriptions of $1,088,370. The Fund, pursuant to the terms of the Limited
Partnership Agreement, is engaged in the business of speculative and high risk
trading of commodity futures and options markets through the services of the
commodity trading advisor its management has selected.
Description of Fund Business
The Fund grants one or more commodity trading advisors ("CTA") a power of
attorney that is terminable at the will of either party to trade the equity
assigned to each CTA by Fund management. From inception to June 2, 2008,
NuWave Investment Corp. was the sole commodity trading advisor of the Fund,
after which time a power of attorney was granted to Clarke Capital Management,
Inc. to serve as sole trading advisor. The General Partner has reserved the
right to add and delete CTAs and reallocate equity assigned as it shall
determine, in its sole discretion, without prior notice to the partners
(investors). The CTA has discretion to select the trades and does not
disclose the methods it uses to make those determinations in its disclosure
documents or to the Fund or to Fund management. There is no promise or
expectation of a fixed or any other return to the investors. The investors
must look solely to trading profits for a return their investment as the
interest income is expected to be less than the fixed expenses to operate the
Fund.
Assets
The general partner has sole authority to determine the percentage of our
assets that will be held on deposit with the futures commission merchant, used
for other investments, and held in bank accounts to pay current obligations.
As of the date of this Report, the partnership maintains approximately 55% of
its assets in a Treasury Direct Account maintained with the United States
Department of the Treasury, and it also retains the right to invest in cash
management funds that invest in U.S. Treasuries and have high liquidity.
Funds maintained with the Department of Treasury and any cash management funds
are in the name of the partnership and not commingled with those of any other
entity. The general partner also maintains approximately 41% of our net
assets with the futures commission merchant ("FCM") for margin for trading by
the trading advisor. Approximately 3% of the previous month's net assets is
retained in our bank accounts to pay expenses and redemptions. The Fund
assets at the FCM consist of cash used as margin to secure futures (formerly
called commodity) trades entered on its behalf by the commodity trading
advisors it selects. The Fund deposits its cash with one or more FCMs
(brokers) that hold and allocate the cash to use as margin to secure the
trades made. The futures held in the Fund accounts are valued at the market
price on the close of business each day by the FCM that holds the Fund equity
made available for trading.
The Capital accounts of the Partners are immediately responsible for all
profit and losses incurred by trading and payment and accrual of the expenses
of offering partnership interests for sale and the operation of the
partnership. During the six months ended June 30, 2008, until the removal of
NuWave on June 2, 2008, the fixed costs of operation included a management fee
of a percentage based on the rate of trading assigned by NuWave and approved
by the General Partner of up to 3.25% annually and a quarterly incentive fee
of 20% paid to the commodity trading advisor, a quarterly incentive fee of up
to 0.5% paid to the general partner, fixed annual brokerage commissions of 6%,
an annual continuing service fee of 3%, and accounting, legal and other
operating expenses that must be paid before the limited partners may earn a
profit on their investment. With the removal of NuWave, all fees to NuWave
were eliminated, and the decision was made to change the Fund's fee structure
such that the General Partner's incentive fee would be eliminated, Clarke
would be paid a quarterly incentive fee of 25%, the annual brokerage
commission to the General Partner would be increased to 7%, and the annual
continuing service fee to the selling agents would be increased to 4%.
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The Fund has not in the past and does not intend in the future to borrow from
third parties. Its trades are entered pursuant to a margin agreement with the
futures commission merchant which obligates the fund to the actual loss, if
any, without reference or limit by the amount of cash posted to secure the
trade. The limited partners are not personally liable for the debts of the
Fund, including any trading losses. By its post effective amendment to its
registration statement on Form S-1 that became effective April 30, 2009, the
Fund updated its prospectus to include up-to-date performance and financials.
The Registrant will offer, in the future, Units for sale to the public until
the balance, as of the date of this Report of $45,963,619 in face amount of
registered Units is sold. As of the date of this Report, of the $50,000,000
in Units registered, $4,036,381 has been sold and, upon redemption by the
holder, will not be resold. Capital available will be dependent upon the
marketing and sales effort put in place by Fund management to sell the
registered limited partnership interests. Absent the registration of
additional Units, the Fund will be capitalized at $50,000,000 subject to
redemption of Units by the holders as they request, which are expected to be
honored by the General Partner.
An Investment in the Fund Depends upon Redemption of Fund Units
The Fund Units are not traded and they have no market value. Liquidity of an
investment in the Fund depends upon the credit worthiness of the exchanges,
brokers, and third parties of off exchange traded futures that hold Fund
equity or have a lien against Fund assets for payment of debts incurred.
Those parties must honor their obligations to the Fund for the Fund to be able
to obtain the return of its cash from the futures commission merchant that
holds the Fund account.
The commodity trading advisor selects the markets and the off exchange
instruments to be traded. The General Partner selects the futures commission
merchants to hold the Fund assets. Both the commodity trading advisor and the
general partner believe all parties who hold Fund assets or are otherwise
obligated to pay value to the Fund are credit worthy. Margin is an amount to
secure the entry of a trade and is not a limit of the profit or loss to be
gained from the trade. The general partner intends to allocate nearly all of
the Fund equity to be used as margin to enter trades. Although it is
customary for the commodity trading advisor to use 40% or less of the equity
available as margin, there is no limit imposed by the Fund upon the amount of
equity the advisors may commit to margin. It is possible for the Fund to
suffer losses in excess of the margin it posts to secure the trades made.
To have the purchase price or appreciation, if any, of the Units, paid to
them, partners must use the redemption feature of the Partnership.
Distributions, although possible in the sole discretion of the general
partner, are not expected to be made. There is no current market for the
Units sold, none is expected to develop and the partnership agreement limits
the ability of a limited partner to transfer the Units.
Results of Operations
The Fund is subject to ongoing offering and operating expenses; however,
profits or losses are primarily generated by the commodity trading advisor by
methods that are proprietary to it. These results are not to be construed as
an expectation of similar profits in the future.
The Limited Partnership Agreement grants solely to the General Partner the
right to select the trading advisor or advisors and to otherwise manage the
operation of the Fund. The CTA selected is responsible for the selection of
trades. See the Registration Statement, incorporated by reference herein, for
an explanation of the operation of the Fund.
The following comparison between the nine month periods ended September 30,
2009 and September 30, 2008 should be read taking into consideration that (i)
the Fund did not commence business until March 2, 2007 and, therefore, had no
expectation of profit generation prior to that; and, (ii) calculations of
profits and losses, including calculation of the net asset value (NAV) and NAV
per Unit, are calculated both for financial reporting purposes, in which the
offering expenses were expensed as incurred during the two periods, and for
subscription and redemption purposes, in which the offering expenses incurred
prior to the commencement of business were deferred until after the twelfth
month following the commencement of business. As of March 4, 2008, these
expenses were amortized on a straight-line basis over the subsequent twenty
four months. See Note 1 to the financial statements herein.
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Discussion for Financial Reporting Purposes
The Fund's realized and unrealized trading gains (losses) before commissions
were $(111,703) [$(72.63) per Unit] and $120,222 [$33.72] per Unit] for the
nine months ended September 30, 2009 and September 30, 2008, respectively.
The Fund's results after payment and accrual of expenses for the nine months
ended September 30, 2009 and September 30, 2008 were profits (losses) of
$(293,763) [$(169.95) per Unit] and $(357,208) [$(114.63) per Unit],
respectively. The NAV per Unit as of September 30, 2009 and September 30,
2008 were $572.36 and $714.04, respectively. The changes in NAV and NAV per
Unit include the results of the intervening quarters of 2009.
Discussion for Subscription and Redemption Purposes
The Fund's realized and unrealized trading gains (losses) before commissions
were $(111,703) [$(72.63) per Unit] and $120,222 [$33.72 per Unit] for the
nine months ended September 30, 2009 and September 30, 2008, respectively.
The Fund's results after payment and accrual of expenses for the nine months
ended September 30, 2009 and September 30, 2008 were profits (losses) of
$(396,780) [$(207.34) per Unit] and $(436,959) [$(119.20) per Unit],
respectively. The net asset value ("NAV") per Unit as of September 30, 2009,
was $607.81, a decrease of 22.45% from the September 30, 2008 NAV per Unit of
$783.74. The changes in NAV and NAV per Unit include the results of the
intervening quarters of 2009.
Discussion for all Purposes
The above-described performance was primarily due to the trading of the
commodity trading advisor that has traded for the Fund via its proprietary
methods. If a large movement occurs in a sector that a trading advisor
trades, such as agriculture, financials, metals or softs, it does not
necessarily mean that the trading advisor will engage in trades that capture
such moves. Accordingly, market movements and conditions are not necessarily
correlated with Fund performance. Past performance is not necessarily
indicative of future results.
Net additions (withdrawals) for the nine months ended September 30, 2009 and
September 30, 2008 were $(417,731) and $(709,981), respectively.
Interest income is earned on the Fund's assets, either through investment in
short term cash instruments or through its deposits with the clearing broker.
Interest income to the Fund varies monthly according to interest rates,
trading performance, subscriptions and redemptions. Interest income for the
nine months ended September 30, 2009 was $1,122, a 96.79% decrease over the
interest income for the nine months ended September 30, 2008 of $34,901. The
decrease in interest income for the comparative nine month periods was
primarily due to significantly reduced short term interest rates and
redemptions that lowered the investment funds available.
Brokerage commissions are calculated on the Fund's equity allocated to trading
as of the end of each month and, therefore, vary according to monthly trading
performance, subscriptions and redemptions. See Note 5 to the financial
statements herein for the current and historical brokerage fee amounts.
Commissions for the nine months ended September 30, 2009 were $67,820, a
53.92% decrease over the commissions for the nine months ended September 30,
2008 of $147,170. The decrease in commissions for the comparative nine month
periods was primarily due to redemptions that lowered the funds invested.
Continuing service fees are calculated on net asset value of the Units sold by
the selling agents as of the end of each month and, therefore, vary according
to monthly trading performance, subscriptions and redemptions. See Note 5 to
the financial statements herein for the current and historical continuing
service fee amounts. Such fees for the nine months ended September 30, 2009
were $38,663 a 47.86% decrease over such fees for nine months ended September
30, 2008 of $74,156. The decrease in continuing service fees for the
comparative nine month periods was primarily due to redemptions.
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Pursuant to the Trading Advisory Agreement, the Fund paid a management fee to
the prior trading advisor until it was removed in June 2008, which was
calculated on the value of the Fund equity allocated to the advisor as of the
end of each month, and therefore, was affected by monthly trading performance,
subscriptions and redemptions. No management fee is paid to the current
trading advisor. See Note 5 to the financial statements herein for the
current and historical management fee amounts. Management fees for the nine
months ended September 30, 2009 were $0, a 100.00% decrease over the
management fee for the nine months ended September 30, 2008 of $46,073. The
decrease in management fee for the comparative nine month periods was
primarily due to the elimination of the management fee in June 2008.
Pursuant to the Trading Advisory Agreement, the Fund pays a quarterly
incentive fee to the trading advisor. It also paid the General Partner an
incentive fee until the change in trading advisors. See Note 5 to the
financial statements herein for the current and historical incentive fees.
Incentive fees during the nine months ended September 30, 2009 and September
30, 2008 were $0 and $158,087, respectively. The amounts are directly related
to the trading performance of the trading advisor.
Operating expenses include accounting, audit, tax, and legal fees, as well as
regulatory costs and printing and postage costs related to reports sent to
limited partners. Operating expenses during the nine months ended September
30, 2009 and September 30, 2008 were $76,699 and $86,845, respectively. The
decrease over the comparative nine month periods was primarily due to reduced
state registration fees from the prior period.
Inflation has had no material impact on the operations or on the financial
condition of the Fund from inception through September, 2009.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The business of the Fund is speculative and involves a high degree of risk of
loss. See the Fund's Registration Statement and prospectus contained therein,
incorporated herein, for a full description of the risks attendant to Fund
business.
Item 4T. Controls and Procedures
Disclosure Controls and Procedures
The Registrant has adopted procedures in connection with the operation of its
business including, but not limited to, the review of account statements sent
to the General Partner before the open of business each day that disclose the
positions held overnight in the Fund accounts, the margin to hold those
positions, and the amount of profit or loss on each position, and the net
balance of equity available in each account. The Fund brokerage account
statements and financial books and records accounts are prepared by an
independent CPA Firm and then are reviewed each quarter and audited each year
by a different independent CPA firm.
The General Partner of the Fund, under the actions of its sole principal,
Michael Pacult, has evaluated the effectiveness of the design and operation of
its disclosure controls and procedures (as defined in the Securities Exchange
Act of 1934 Rules 13a-15(e) or 15d-15(e)) with respect to the Fund as of the
end of the period covered by this Report. Based on their evaluation, Mr.
Pacult has concluded that these disclosure controls and procedures are
effective.
Changes in Internal Control over Financial Reporting
There were no changes in the General Partner's internal control over financial
reporting during the quarter ended September 30, 2009 that have materially
affected, or are reasonably likely to materially affect, internal control over
financial reporting applicable to the Fund.
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
There have been no legal proceedings against the Fund, its General Partner,
the CTA, the IB or any of their Affiliates, directors or officers. The FCM,
MF Global Inc. ("MFG"), (MFG was formerly known as Man Financial Inc. ("MFI")
until the change of name to MFG was effected on July 19, 2007), has had the
following described reportable events. Neither the Fund nor the General
Partner is a party to any of these events and they are included in reliance
upon a report supplied by MFG without verification by the General Partner.
MFG has represented to the General Partner that that none of the events it has
reported below will not now, or at any time in the future, interfere with its
performance as the FCM for the Fund's account.
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MF Global Inc. ("MFG") is registered under the Commodity Exchange Act, as
amended, as a futures commission merchant and a commodity pool operator, and
is a member of the National Futures Association in such capacities. In
addition, MFG is registered with the Financial Industry Regulatory Authority
as a broker-dealer. MFG was formerly known as Man Financial Inc. ("MFI")
until the change of name to MFG was effected on July 19, 2007. MFG is a
member of all major U.S. futures exchanges and most major U.S. securities
exchanges. MFG's main office is located at 717 Fifth Avenue, 9th Floor, New
York, New York 10022-8101. MFG's telephone number at such location is (212)
589-6200.
At any given time, MFG is involved in numerous legal actions and
administrative proceedings, which in the aggregate, are not, as of the date of
this report, expected to have a material effect upon its condition, financial
or otherwise, or to the services it will render to the Fund. There have been
no administrative, civil or criminal proceedings pending, on appeal or
concluded against MFG or its principals within the five years preceding the
date of this report that MFI would deem material for purposes of Part 4 of the
Regulations of the Commodity Futures Trading Commission, except as follows:
In May, 2006, MFI was sued by the Receiver for Philadelphia Alternate Asset
Fund ("PAAF") and associated entities for common law negligence, common law
fraud, violations of the Commodity Exchange Act and RICO violations (the
"Litigation"). In December, 2007, without admitting any liability of any
party to the Litigation to any other party to the Litigation, the Litigation
was settled with MFI agreeing to pay $69 million, plus $6 million of legal
expenses, to the Receiver, in exchange for releases from all applicable
parties and the dismissal of the Litigation with prejudice. In a related
action, MFI settled a CFTC administrative proceeding (In the Matter of MF
Global, f/k/a Man Financial Inc., and Thomas Gilmartin) brought by the CFTC
against MFI and one of its employees for failure to supervise and
recordkeeping violations. Without admitting or denying the allegations, MFI
agreed to pay a civil monetary penalty of $2 million and accepted a cease and
desist order. MFI has informed the CPO, the CTA and the Selling Agent that
the settlements referenced above will not materially affect MFG or its ability
to perform as a clearing broker.
On February 20, 2007, MFI also settled a CFTC administrative proceeding (In
the Matter of Steven M. Camp and Man Financial Inc., CFTC Docket No. 07-04) in
which MFI was alleged to have failed to supervise one of its former associated
persons ("AP") who was charged with fraudulently soliciting customers to open
accounts at MFI. The CFTC alleged that the former AP misrepresented the
profitability of a web-based trading system and of a purported trading system
to be traded by a commodity trading advisor. Without admitting or denying the
allegation, MFI agreed to pay restitution to customers amounting to
$196,900.44 and a civil monetary penalty of $120,000. MFI also agreed to a
cease and desist order and to strengthen its supervisory system for overseeing
sales solicitations by employees in connection with accounts to be traded
under letters of direction in favor of third party system providers.
On March 6, 2008, and thereafter, 5 virtually identical proposed class action
securities suits were filed against MFG's parent, MF Global Ltd. ("MF
Global"), certain of its officers and directors, and Man Group plc. These
suits have now been consolidated into a single action. The complaints seek to
hold defendants liable under Secs 11, 12, and 15 of the Securities Act of 1933
by alleging that the registration statement and prospectus issued in
connection with MF Global's initial public offering in July 2007, were
materially false and misleading to the extent that representations were made
regarding MF Global's risk management policies, procedures and systems. The
allegations are based upon MF Global's disclosure of $141.5 million in trading
losses incurred in a single day by an AP in his personal trading account,
which losses MFG was responsible to pay as an exchange clearing member.
In connection with the incident involving the trading losses referenced above,
the CFTC issued a formal order of investigation naming MFG and the AP. The
CFTC, in coordination with the Chicago Mercantile Exchange ("CME"), has been
collecting documentation and taking depositions of MFG employees. This
investigation is ongoing and it is not yet certain what actions the CFTC
and/or the CME might take. MF Global has established an accrual of $10.0
million to cover potential CFTC civil monetary penalties in this matter and
the two CFTC matters referred to below. This is MFG's best estimate at this
time and there is no assurance that the $10.0 million accrual will be
sufficient for these purposes or that the CFTC will not require remedial
measures. No accrual has been made for the CME matter.
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In May 2007, MFG and two of its employees received what is commonly referred
to as a "Wells notice" from the staff of the Division of Enforcement of the
CFTC. The notice relates to two trades MFG executed in 2004 for a customer and
reported to NYMEX. The notice indicates that the Division of Enforcement is
considering recommending to the CFTC that a civil proceeding be commenced
against MFG and the two employees, in which the CFTC would assert that MFG and
the two employees violated Section 9(a)(4) of the Commodity Exchange Act,
which generally prohibits any person from willfully making any false,
fictitious, or fraudulent statements or representations, or making or using
any false writing or document knowing the same to contain any false,
fictitious, or fraudulent statement to a board of trade. The Division of
Enforcement staff contends that MFG and the individuals presented or
participated in the submission of information to NYMEX that falsely
represented the dates on which the trades in question occurred. MFG and the
individuals dispute these contentions. It is not yet certain what action the
CFTC will take, but see the reference to a $10.0 million accrual above.
On August 28, 2009, BMO instituted suit against MFG and our former broker,
Joseph Saab (as well as a firm named Optionable, Inc. and five of its
principals or employees), in the United States District Court for the Southern
District of New York. In its complaint, BMO asserts various claims against
all defendants for their alleged misrepresentation of price quotes to BMO's
Market Risk Department ("MRD") as independent quotes when defendants knew, or
should have known, that David Lee, BMO's trader, created the quotes which, in
circular fashion, were passed on to BMO through our broker, thereby enabling
Lee substantially to overvalue his book at BMO. BMO further alleges that MFG
and Saab knew that Lee was fraudulently misrepresenting prices in his options
natural gas book and aided and abetted his ability to do so by our actions in
sending price indications to the BMO MRD, and substantially assisted Lee's
breach of his fiduciary duties to BMO as its employee. The facts underlying
this action also relate to the on-going CFTC natural gas price information
investigation described above in "CFTC Natural Gas Price Information
Investigation." The Complaint seeks to hold all defendants jointly and
severally liable and, although it does not specify an exact damage claim, it
claims CAD 680.0 million (approximately $635.9 million) as a pre-tax loss for
BMO in its natural gas trading, and claims that it would not have paid
brokerage commissions to us (and Optionable), would not have continued Lee and
his supervisor as employees at substantial salaries and bonuses, and would not
have incurred substantial legal costs and expenses to deal with the Lee
mispricing. This litigation is in its very earliest stages. No provision for
losses has been recorded in connection with this matter.
Additionally, MFG is currently cooperating in an investigation conducted by a
New York County Grand Jury in conjunction with the U.S. Attorneys Office in
the Southern District of New York, with which the CFTC and the SEC are also
involved. The investigation centers around trading by a market making energy
trader at Bank of Montreal (BMO) who allegedly mismarked his book. An MFG
broker did business with the BMO trader, and used bid and offer prices for
forward OTC trades the BMO trader sent to him as a basis for prices which the
MFG broker disseminated to MFG's customers, including BMO, as price
indications that reflected a consensus. MFG has been told that neither MFG nor
the broker are targets of the Grand Jury investigation. In connection with
this investigation, MFG has been served by the CFTC with a Wells notice in
anticipation of civil charges against the broker under the anti-fraud
provisions of CFTC Regulation 33.10 and MFG with derivative liability for the
broker's actions. It is not yet certain what action the CFTC may take against
MFG or the broker, but see the reference to a $10.0 million accrual above.
In or about October 2003, the Company uncovered an apparent fraudulent scheme
conducted by third parties unrelated to the Company that may have victimized a
number or its clients. CCPM, a German Introducing Broker, introduced to the
Company all the clients that may have been victimized. An agent of CCPM,
Michael Woertche (and his confederates), apparently engaged in a Ponzi scheme
in which allegedly unauthorized transfers from and trading in accounts
maintained at the Company were utilized to siphon money out of these accounts,
on some occasions shortly after they were established. The Company was
involved in two arbitration proceedings relating to these CCPM introduced
accounts. The first arbitration involved claims made by two claimants before
a NFA panel. The second arbitration involves claims made by four claimants
before a FINRA panel. The claims in both arbitrations are based on
allegations that the Company and an employee assisted CCPM in engaging in, or
recklessly or negligently failed to prevent, unauthorized transfers from, and
trading in, accounts maintained by the Company. Damages sought in the NFA
arbitration proceeding were approximately $1,700,000 in compensatory damages,
unspecified punitive damages and attorney's fees in addition to the rescission
of certain deposit agreements.
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The NFA arbitration was settled for $200,000 as to one claimant and a net of
$240,000 as to the second claimant during fiscal 2008. Damages sought in the
FINRA proceeding were approximately $6,000,000 in compensatory damages and
$12,000,000 in punitive damages. During the year ended March 31, 2009, the
FINRA arbitration was settled for an aggregate of $800,000.
MFG was named as a co-defendant in an action filed in Florida State Court by
Eagletech Communications Inc. ("Eagletech") and three of its alleged
shareholders against 21 defendants, including banks, broker-dealers and
clearing brokers, as well as "100 John Doe defendants or their nominee
entities". The complaint alleges that the defendants engaged in a criminal
conspiracy designed to manipulate the publicly traded share price of Eagletech
stock. Plaintiffs seek unspecified compensatory and special damages, alleging
that "Man Group PLC d/b/a Man Financial Inc" participated in the conspiracy by
acting as a clearing broker for a broker-dealer that traded in Eagletech
stock. The complaint asserts claims under RICO, the Florida Securities and
Investor Protection Act, the Florida Civil Remedies for Criminal Practices Act
and a related negligence claim. On May 9, 2007, defendants filed a notice
removing the State Court action to Federal Court pursuant to 28 U.S.C.
Sec 1441(a). On October 2, 2007, Plaintiffs filed a first amended complaint in
the Federal Court action asserting additional claims against Man Financial Inc
under Florida common law, including civil conspiracy, conversion and trespass
to chattels. On February 26, 2008, the financial institution defendants,
including MF Global Inc., filed a motion to dismiss seeking dismissal of all
claims asserted in the amended complaint on the ground that the claims are
barred by the Private Securities Litigation Reform Act ("PSLRA") and preempted
by the federal securities laws. On June 27, 2008, the Court partially granted
the motion, holding that the federal RICO claims are barred by the PSLRA and
dismissing the RICO claims with prejudice. The Court declined to exercise
supplemental jurisdiction over the state law claims and remanded those claims
to the Florida State Court. On July 25, 2008, plaintiffs filed a notice of
appeal of the Court's June 27, 2008 decision to the United States Court of
Appeals for the Eleventh Circuit but subsequently withdrew its appeal. MFG is
unsure of whether plaintiffs will pursue the State Court action. Since the
case is in its earliest stages, it is difficult to determine exposure, if any.
MFG intends to vigorously defend this matter. No provision for losses has been
recorded in connection with this litigation.
In December 2007, the Company, along with four other futures commission
merchants ("FCMs"), were named as defendants in an action filed in the United
States District Court in Corpus Christi, Texas by 47 individuals who were
investors in a commodity pool (RAM I LLC) operated by Renaissance Asset
Management LLC. The complaint alleges that MFG and the other defendants
violated the Commodity Exchange Act and alleges claims of negligence, common
law fraud, violation of a Texas statute relating to securities fraud and
breach of fiduciary duty for allegedly failing to conduct due diligence on the
commodity pool operator and commodity trading advisor, having accepted
executed trades directed by the commodity trading advisor, which was engaged
in a fraudulent scheme with respect to the commodity pool, and having
permitted the improper allocation of trades among accounts. The plaintiffs
claim damages of $32.0 million, plus exemplary damages, from all defendants.
All of the FCM defendants moved to dismiss the complaint for failure to state
a claim upon which relief may be granted. Following an initial pre-trial
conference, the court granted plaintiffs leave to file an amended complaint.
On May 9, 2008, plaintiffs filed an amended complaint in which plaintiffs
abandoned all claims except a claim alleging that the FCM defendants aided and
abetted violations of the Commodity Exchange Act. Plaintiffs now seek $17.0
million in claimed damages plus exemplary damages from all defendants. MFG
filed a motion to dismiss the amended complaint which was granted by the court
and appealed by the plaintiffs. The case is at its earliest stages so it is
not possible to determine our exposure, if any. In any event, MFG intends to
vigorously defend this matter. No provision for losses has been recorded in
connection with this litigation.
The Liquidation Trustee ("Trustee") for Sentinel Management Group, Inc.
("Sentinel") sued the Company in June 2009 on the theory that our withdrawal
of $50.2 million within 90 days of the filing of Sentinel's bankruptcy
petition on August 17, 2007 is a voidable preference under Section 547 of the
Bankruptcy Code and, therefore, recoverable by the Trustee, along with
interest and costs. MFG believes there are substantial defenses available to
us and MFG intends to resist the Trustee's attempt to recover those funds from
us. In addition, to the extent the Trustee recovered any funds from us, MFG
would be able to assert an offsetting claim in that amount against the assets
available in Sentinel's bankruptcy case. The matter is in its early stages and
litigation has just commenced. No provision for losses has been recorded in
connection with this claim.
8
<page>
In May 2009, investors in a venture set up by Nicholas Cosmo sued Bank of
America and MFG, among others, in the United States District Court for the
Eastern District of New York, alleging that MFG, among others, aided and
abetted Cosmo and related entities in a Ponzi scheme in which investors lost
$400 million. MFG has made a motion to dismiss which is currently pending
before the court. The litigation is in its earliest stages. MFG believes we
have meritorious defenses and intend to vigorously defend this matter. No
provision for losses has been recorded in connection with this matter.
In the late spring of 2009, the Company was sued in Oklahoma State Court by
customers who were substantial investors with Mark Trimble and/or Phidippides
Capital Management. Trimble and Phidippides may have been engaged in a Ponzi
scheme. Plaintiffs allege that MFG "materially aided and abetted" Trimble's
and Phidippides' violations of the anti-fraud provisions of the Oklahoma
securities laws and they are seeking damages "in excess of" $0.01 million
each. MFG made a motion to dismiss which was granted by the court. Plaintiffs
have appealed. MFG believes we have meritorious defenses and intend to
vigorously defend this matter. No provision for losses has been recorded in
connection with this matter.
The Company and MF Global Market Services LLC ("Market Services") are
currently involved in litigation with a former customer of Market Services,
Morgan Fuel & Heating Co., Inc. ("Morgan Fuel") and its principals, Anthony
Bottini, Jr., Brian Bottini and Mark Bottini (the "Bottinis"). The litigations
arise out of trading losses incurred by Morgan Fuel in over-the-counter
derivative swap transactions, which were unconditionally guaranteed by the
Bottini principals.
MF Global Market Services LLC v. Anthony Bottini, Jr., Brian Bottini and Mark
Bottini, FINRA No. 08-03673. On October 6, 2008, Market Services commenced an
arbitration against the Bottinis before the Financial Industry Regulatory
Authority ("FINRA") to recover $8.3 million, which is the amount of the debt
owed to Market Services by Morgan Fuel after the liquidation of the swap
transactions. Each of the Bottinis executed a guaranty in favor of Market
Services personally and unconditionally guaranteeing payment of the
obligations of Morgan Fuel upon written demand by Market Services. Market
Services asserted a claim of breach of contract based upon the Bottinis'
failure to honor the guarantees.
Morgan Fuel v. MFG and Market Services, FINRA No. 08-03879. On October 21,
2008, Morgan Fuel commenced a separate arbitration proceeding before FINRA
against MFG and Market Services. Morgan Fuel claims that MFG and Market
Services caused Morgan Fuel to incur approximately $14.2 million in trading
losses. Morgan Fuel seeks recovery of $5.9 million in margin payments that it
allegedly made to Market Services and a declaration that it has no
responsibility to pay Market Services for the remaining $8.3 million in
trading losses. Morgan Fuel contends that MFG and Market Services should not
have allowed Morgan Fuel to enter into, or maintain, the swap transactions.
The Supreme Court of New York for the County of New York has temporarily
stayed the arbitration commenced by Morgan Fuel on the ground that there is no
agreement to arbitrate. The motion for a permanent stay was denied and MFG has
appealed that decision.
The Bottinis asserted a third-party claim against Morgan Fuel, which in turn
asserted a fourth-party claim against MFG, Market Services and Steven Bellino
(an MFG employee) in the arbitration proceeding commenced by Market Services.
A motion to stay the fourth-party was also denied and MFG has appealed that
decision as well.
It is difficult at this stage to determine exposure, if any. In any event, MFG
intends to vigorously defend this matter. No provision for losses has been
recorded in connection with this matter.
On December 12, 2008, MFG settled three CME Group disciplinary actions
involving allegations that on a number of occasions in 2006 and 2007, MFG
employees engaged in impermissible pre-execution communications in connection
with trades executed on the e-cbot electronic trading platform, withheld
customer orders that were executable in the market for the purpose of
soliciting, and brokering contra-orders and crossed orders on the e-cbot
trading platform without allowing for the minimum required exposure period
between the entry of the orders. MFG was also charged with failing to properly
supervise its employees in connection with these trades. Without admitting or
denying any wrongdoing, MFG consented to an order of a CME Business Conduct
Committee Panel which found that MFG violated legacy CBOT Rule 504.00 and
Regulations 480.10 and 9B.13 and 9B.13(c) and ordered MFG to pay a $400,000
fine, cease and desist from similar conduct and, in consultation with CME
Market regulation Staff, enhance its training practices and supervisory
procedures regarding electronic trading practices.
9
<page>
MFG acts only as clearing broker for the Fund's futures accounts and as such
is paid commissions for executing and clearing trades. MFG has not passed
upon the adequacy or accuracy of the Fund's prospectus or this report and will
not act in any supervisory capacity with respect to the CPO or the CTA, as the
case may be, nor participate in the management of the CPO or of the Fund or of
the CTA. Therefore, investors should not rely on MFG in deciding whether or
not to participate in the Fund.
MFG has represented to the General Partner that that none of the events it has
reported will not now, or at any time in the future, interfere with its
performance as the FCM for the Fund's account. The Fund is not aware of any
threatened or potential claims or legal proceedings to which the Fund is a
party or to which any of its assets are subject.
Item 1A. Risk Factors
There have been no material changes from risk factors as previously disclosed
in the Fund's 2008 Form 10-K. The risks of the Fund are (1) described fully
in its prospectus filed with its registration statement on Form S-1, which is
incorporated herein by reference (2) described in summary in Part I of this
Form 10-Q, which is incorporated herein by reference.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
(a) None
(b) None
Item 6. Exhibits
31.1 Certification of Principal Executive Officer and Principal Financial
Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
10
<page>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Form 10-Q for the
period ended September 30, 2009, to be signed on its behalf by the
undersigned, thereunto duly authorized.
Registrant: Providence Select Fund, Limited Partnership
By White Oak Financial Services, Incorporated
Its General Partner
By: /s/ Michael Pacult
Mr. Michael Pacult
Sole Director, Sole Shareholder,
President, and Treasurer of the General Partner
Date: November 16, 2009
11
<page>
PROVIDENCE SELECT FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
QUARTERLY REPORT
September 30, 2009
GENERAL PARTNER:
White Oak Financial Services, Inc.
% Corporate Systems, Inc.
505 Brookfield Drive
Dover, Kent County, Delaware 19901
<page>
Index to the Financial Statements
Page
Report of Independent Registered Public Accounting Firm F-2
Statements of Assets and Liabilities F-3
Schedule of Investments - Cash and Securities - September 30, 2009 F-4
Schedule of Investments - Futures Contracts - September 30, 2009 F-5
Schedule of Investments - Cash and Securities - December 31, 2008 F-6
Statements of Operations F-7
Statements of Changes in Net Assets F-8
Statements of Cash Flows F-9
Notes to the Financial Statements F-10 - F-17
Affirmation of the Commodity Pool Operator F-18
F-1
<page>
Patke & Associates, Ltd.
Certified Public Accountants
Report of Independent Registered Public Accounting Firm
To the Partners of
Providence Select Fund, Limited Partnership
Dover, Delaware
We have reviewed the accompanying statements of assets and liabilities of
Providence Select Fund, Limited Partnership, as of September 30, 2009 and the
related statements of operations for the three and nine months ended September
30, 2009 and 2008, and the statements of changes in net assets and cash flows
for the nine months ended September, 2009 and 2008. These financial
statements are the responsibility of the Partnership's management.
We conducted our review in accordance with the standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with the
standards of the Public Company Accounting Oversight Board (United States),
the objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to such interim financial statements for them to be in
conformity with accounting principles generally accepted in the United States
of America.
We have previously audited, in accordance with the auditing standards of the
Public Accounting Oversight Board (United States), the statement of assets and
liabilities of Providence Select Fund, Limited Partnership as of December 31,
2008 and the related statements of operations, changes in net assets and cash
flows for the year then ended (not presented herein); and in our report dated
March 30, 2009, we expressed an unqualified opinion on those financial
statements. In our opinion, the information set forth in the accompanying
statement of assets and liabilities as of December 31, 2008 is fairly stated,
in all material respects, in relation to the statement of assets and
liabilities from which it has been derived.
/s/ Patke & Associates, Ltd.
Patke & Associates, Ltd.
Lincolnshire, Illinois
November 12, 2009
300 Village Green Drive, Suite 210 * Lincolnshire, Illinois 60069
Phone: (847) 913-5400 * Fax: (847) 913-5435
F-2
<page>
Providence Select Fund, Limited Partnership
(A Delaware Limited Partnership)
Statements of Assets and Liabilities
<table>
<s> <c> <c>
September 30, December 31,
2009 2008
(A Review)
Assets
Investments
Equity in broker trading accounts
Cash and cash equivalents at broker $372,498 $489,774
Net unrealized gain on open futures contracts 13,180 -
Total equity in broker trading accounts 385,678 489,774
U.S. Treasury Bills (cost $499,702 and $998,736) 499,943 999,803
Cash 30,255 11,826
Interest receivable - 12
Money market fund 1,503 166,464
Prepaid continuing service fee 3,608 -
Other prepaid expenses 25,209 -
Total assets 946,196 1,667,879
Liabilities
Accrued expenses 23,067 18,426
Accrued commissions payable to related parties 5,308 10,292
Accounts payable - 2,479
Accrued incentive and management fees - 7,367
Total liabilities 28,375 38,564
Net assets $917,821 $1,629,315
Analysis of net assets
Limited partners $895,093 $1,599,838
General partner 22,728 29,477
Net assets (equivalent to $572.36 and $742.31 per unit) $917,821 $1,629,315
Partnership units outstanding
Limited partners units outstanding 1,563.87 2,155.21
General partner units outstanding 39.71 39.71
Total partnership units outstanding 1,603.58 2,194.92
</table>
The accompanying notes are an integral part of the financial statements
F-3
<page>
Providence Select Fund, Limited Partnership
(A Delaware Limited Partnership)
Schedule of Investments - Cash and Securities
September 30, 2009
(A Review)
<table>
<s> <c> <c> <c> <c> <c> <c>
Fair Value Percent
Description Maturity Date Cost Face Value Local Currency U.S. Dollars of Net Assets
United States Treasury Bill October 2009 $499,702 $500,000 499,943 $499,943
Total United States Treasury Bills $499,943 54.47%
Cash and cash equivalents in trading accounts:
United States Markets 366,016 $366,016
Total cash and cash equivalents in trading
accounts denominated in U.S. Dollars 366,016 39.88%
Cash denominated in foreign currency:
British Pounds Market (GBP) 1 2
Euro Dollar Market (EUR) 4,430 6,480
Total cash denominated in foreign currency 6,482 0.71%
Total cash and cash equivalents in trading accounts $372,498 40.59%
Money market fund (1503.01 shares at $1 per share) 1,503 $1,503 0.16%
</table>
The accompanying notes are an integral part of the financial statements
F-4
<page>
Providence Select Fund, Limited Partnership
(A Delaware Limited Partnership)
Schedule of Investments - Futures Contracts
September 30, 2009
(A Review)
<table>
<s> <c> <c> <c> <c> <c>
Fair Value Percent
Description Expiration Date Contracts Local Currency USD of Net Assets
Net unrealized gain (loss) on open futures contracts:
United States commodity futures held short:
Dec 09 CME Lean Hogs (USD) December 2009 1 (360) $(360) (0.04)%
Dec 09 CME Lean Hogs (USD) December 2009 1 (280) (280) (0.03)%
Dec 09 CME Cattle (USD) December 2009 1 (310) (310) (0.03)%
Dec 09 IMM B-Pounds (USD) December 2009 1 369 369 0.04 %
Total United States commodity futures positions held short (581) (0.06)%
United States commodity futures held long:
Dec 09 CBT T-Bonds (USD) December 2009 1 938 938 0.10 %
Dec 09 CBT T-Note 10Y (USD) December 2009 1 703 703 0.08 %
Dec 09 CBT T-Note 5Y (USD) December 2009 1 500 500 0.05 %
Dec 09 CBT T-Note 5Y (USD) December 2009 1 437 437 0.05 %
Dec 09 CMX Gold (USD) December 2009 1 1,080 1,080 0.12 %
Dec 09 IMM Euro FX (USD) December 2009 1 2,075 2,075 0.23 %
Dec 09 IMM JYEN (USD) December 2009 1 3,800 3,800 0.41 %
Dec 09 IMM JYEN (USD) December 2009 1 2,813 2,813 0.31 %
Total United States commodity futures positions held long 12,346 1.35 %
Euro commodity futures positions held long:
Mar 10 LIF 3M Euribor (EUR) March 2010 1 (163) (238) (0.03)%
Dec 09 Eurx Eurobobl (EUR) December 2009 1 380 556 0.06 %
Dec 09 Eurx Eurobobl (EUR) December 2009 1 140 205 0.02 %
Dec 09 Eurx E-Bund (EUR) December 2009 1 250 366 0.04 %
Dec 09 Eurx E-Bund (EUR) December 2009 1 360 526 0.06 %
Total European commodity futures positions held long 1,415 0.15 %
Net commodity futures positions $13,180 1.44 %
</table>
The accompanying notes are an integral part of the financial statements
F-5
<page>
Providence Select Fund, Limited Partnership
(A Delaware Limited Partnership)
Schedule of Investments - Cash and Securities
December 31, 2008
<table>
<s> <c> <c> <c> <c> <c> <c>
Fair Value Percent
Description Maturity Date Cost Face Value Local Currency U.S. Dollars of Net Assets
United States Treasury Bill
Total United States Treasury Bills January 2009 998,736 1,000,000 999,803 $999,803 61.36%
Cash and cash equivalents in trading accounts:
United States Markets 489,774 $489,774 30.06%
Total cash denominated in U.S. Dollars 489,774 30.06%
Total cash and cash equivalents in trading accounts $489,774 30.06%
Money market fund (166,464 shares at $1 per share) 166,464 $166,464 10.22%
</table>
The accompanying notes are an integral part of the financial statements
F-6
<page>
Providence Select Fund, Limited Partnership
(A Delaware Limited Partnership)
Statements of Operations
(A Review)
<table>
<s> <c> <c> <c> <c>
Three Months Ended September 30, Nine Months Ended September 30,
2009 2008 2009 2008
Investment income
Interest income $298 $9,687 $1,122 $34,901
Total investment income 298 9,687 1,122 34,901
Expenses
Commission expense 18,468 47,476 67,820 147,170
Management fees - - - 46,073
Continuing service fee 12,208 25,405 38,663 74,156
Incentive fees - - - 158,087
Professional accounting and legal fees 17,153 21,509 57,798 52,149
Other operating and administrative expenses 4,372 8,962 18,901 34,696
52,201 103,352 183,182 512,331
Net investment (loss) (51,903) (93,665) (182,060) (477,430)
Realized and unrealized gain (loss) from investments and foreign currency
Net realized gain (loss) from:
Investments (59,766) (108,682) (101,341) 682,767
Foreign currency transactions (3,603) (50,463) (23,542) (514,685)
Net realized gain (loss) from investments and foreign
currency transactions (63,369) (159,145) (124,883) 168,082
Net increase (decrease) in unrealized appreciation (depreciation) on:
Investments 7,544 (51,903) 11,764 (17,218)
Foreign currency transactions 1,926 (6,433) 1,416 (30,642)
Net increase in unrealized appreciation (depreciation) on investments and
foreign currency transactions 9,470 (58,336) 13,180 (47,860)
Net gain (loss) on investments and foreign currency (53,899) (217,481) (111,703) 120,222
Net (decrease) in net assets resulting from operations $(105,802) $(311,146) $(293,763) $(357,208)
Net income (loss) per unit for a single unit outstanding during the period
Limited partnership unit (63.59) (102.83) (169.95) (114.63)
General partnership unit (63.59) (102.83) (169.95) (114.63)
</table>
The accompanying notes are an integral part of the financial statements
F-7
<page>
Providence Select Fund, Limited Partnership
(A Delaware Limited Partnership)
Statements of Changes in Net Assets
(A Review)
<table>
<s> <c> <c> <c>
Partners' Capital
General Limited Total
Net assets at December 31, 2007 $29,302 $3,031,282 $3,060,584
Increase (decrease) in net assets from operations:
Net investment (loss) (6,612) (470,818) (477,430)
Net realized gain from investments and foreign currency transactions 2,328 165,754 168,082
Net (decrease) in unrealized (depreciation) on
investments and foreign currency transactions (663) (47,197) (47,860)
Net (decrease) in net assets resulting from operations (4,947) (352,261) (357,208)
Subscriptions 4,000 191,109 195,109
Redemptions - (905,090) (905,090)
Net assets at September 30, 2008 $28,355 $1,965,040 $1,993,395
Net assets at December 31, 2008 $29,477 $1,599,838 $1,629,315
(Decrease) in net assets from operations:
Net investment (loss) (4,509) (177,551) (182,060)
Net realized (loss) from investments and foreign currency transactions (2,474) (122,409) (124,883)
Net (decrease) in unrealized (depreciation) on
investments and foreign currency transactions 234 12,946 13,180
Net (decrease) in net assets resulting from operations (6,749) (287,014) (293,763)
Subscriptions - 173,012 173,012
Redemptions - (590,743) (590,743)
Net assets at September 30, 2009 $22,728 $895,093 $917,821
</table>
The accompanying notes are an integral part of the financial statements
F-8
<page>
Providence Select Fund, Limited Partnership
(A Delaware Limited Partnership)
Statements of Cash Flows
(A Review)
<table>
<s> <c> <c>
Nine Months Ended September 30,
2009 2008
Cash Flows from Operating Activities
Net (decrease) in net assets resulting from operations $(293,763) $(357,208)
Adjustments to reconcile net increase (decrease) in net assets from operations
to net cash provided by (used in) operating activities:
Changes in operating assets and liabilities:
Unrealized (appreciation) depreciation on investments (13,180) 47,860
Decrease in interest receivable 12 6,716
(Increase) decrease in prepaid continuing service fee (3,608) 44,779
(Increase) in other prepaid expenses (25,209) -
(Decrease) in accrued management and incentive fees (7,367) (18,685)
(Decrease) in accounts payable (2,479) (14,574)
Increase (decrease) in accrued expenses 4,641 (1,160)
Net cash (used in) operating activities (340,953) (292,272)
Cash Flows from Financing Activities
(Decrease) in due to related parties (4,984) (251,423)
Proceeds from sale of units, net of sales commissions 173,012 -
Partner redemptions (590,743) (216,914)
Net cash (used in) financing activities (422,715) (468,337)
Net (decrease) in cash and cash equivalents (763,668) (760,609)
Cash and cash equivalents at the beginning of the period 1,667,867 3,302,395
Cash and cash equivalents at the end of the period $904,199 $2,541,786
End of period cash and cash equivalents consist of:
Cash and cash equivalents at broker $372,498 $537,687
U.S. Treasury Bills 499,943 1,998,553
Cash 30,255 4,538
Money market fund 1,503 1,008
Total cash and cash equivalents $904,199 $2,541,786
</table>
The accompanying notes are an integral part of the financial statements
F-9
<page>
Providence Select Fund, Limited Partnership
(A Delaware Limited Partnership)
Notes to the Financial Statements
September 30, 2009
(A Review)
1. Nature of the Business
Providence Select Fund, Limited Partnership (the Fund) was formed on May 16,
2003 under the Delaware Uniform Limited Partnership Act. The Fund is engaged
in high risk, speculative and hedge trading of futures and forward contracts,
options on futures and forward contracts, and other instruments selected by
registered commodity trading advisors (CTA's). On March 2, 2007, the Fund
commenced business after admission of 46 limited partners, with total
subscriptions of $1,088,370. The maximum offering is $50,000,000. White Oak
Financial Services, Inc. (White Oak) and Michael Pacult are the General
Partners and commodity pool operators (CPO's) of the Fund. From inception
through June 2, 2008, the Fund's CTA was NuWave Investment Corp. From June 2,
2008 forward, the Fund's CTA has been Clarke Capital Management, Inc. The CTA
has the authority to trade as much of the Fund's equity as is allocated to it
by the General Partner. The selling agent is Futures Investment Company (FIC),
which is controlled by Michael Pacult and his wife.
2. Significant Accounting Polices
FASB 168 "Accounting Standards Codification" - On July 1, 2009, the
Financial Accounting Standards Board ("FASB") officially released the FASB
Accounting Standards Codification (the "Codification" or "ASC"). Pursuant to
FASB Statement No. 168, The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles, will be effective for
interim and annual periods ending after September 15, 2009. The Fund adopted
FASB 168 on July 1, 2009.
The Codification does not change accounting principles generally accepted in
the United States of America ("U.S. GAAP"), but is a major restructuring of
how accounting and reporting standards that constitute how U.S. GAAP are
organized. That is, the Codification will be the single source of
authoritative non governmental U.S. GAAP. The organizational changes are
expected to make U.S. GAAP easier to research by simplifying user access to
all authoritative guidance. As a result, content will reside in new locations
within the Codification which means referencing to specific guidance will
change.
Regulation - The Fund is a registrant (effective September 12, 2005) with
the Securities and Exchange Commission (SEC) pursuant to the Securities Act of
1933 (the Act). The Fund is subject to the regulations of the SEC and the
reporting requirements of the Securities and Exchange Act of 1934. The Fund is
also be subject to the regulations of the Commodities Futures Trading
Commission (CFTC), an agency of the U.S. government which regulates most
aspects of the commodity futures industry, the rules of the National Futures
Association and the requirements of various commodity exchanges where the Fund
executes transactions. Additionally, the Fund will be subject to the
requirements of futures commission merchants and interbank market makers
through which the Fund trades.
Offering Costs and Organizational Expenses - For financial reporting
purposes in conformity with U.S. GAAP, on the Fund's initial effective date,
September 12, 2005, the Fund deducted from Limited Partners' capital the total
initial offering costs of $79,876 as of that date and began expensing all
subsequent offering costs. The commencement of business was contingent upon
the sale of at least $1,030,000 of partnership interests. Organizational and
operating costs are expensed as incurred for U.S. GAAP purposes. For all
other purposes, including determining the Net Asset Value per Unit for
subscription and redemption purposes, the Fund capitalized all offering and
organizational costs until after the twelfth month following the commencement
of business. The Fund has agreed to reimburse White Oak and other affiliated
companies for all expenses incurred up to the commencement of business, which
was March 2, 2007, until after the twelfth month following the commencement of
business. On March 4, 2008, during the thirteenth month following the
commencement of business, White Oak and its affiliates were reimbursed for all
such expenses, which totaled $274,715, and which are being amortized by the
Fund on a straight-line basis at $11,446 per month for twenty four months
commencing March 4, 2008. Any partner in the Fund during this twenty four
month period will be exposed to this per month charge on a pro rata basis.
Consequently, as of September 30, 2009 and December 31 2008, the Net Asset
Value and Net Asset Value per Unit for financial reporting purposes and for
all other purposes are as follows:
<table>
<s> <c> <c> <c> <c>
Balance Per Unit Calculation
September 30, December 31, September 30, December 31,
2009 2008 2009 2008
Net Asset Value for financial reporting purposes $917,821 $1,629,315 $572.36 $742.31
Adjustment for initial offering costs 56,857 79,876 35.45 36.39
Adjustment for other offering costs and organizational expenses - 80,000 - 36.45
Net Asset Value for all other purposes $974,678 $1,789,191 $607.81 $815.15
Number of units 1,603.58 2,194.92
</table>
Registration Costs - Costs incurred for the initial filings with Securities
and Exchange Commission, National Association of Securities Dealers, Inc. and
the states where the offering is expected to be made are included in the
offering expenses and, accordingly, are accounted for as described above under
"Offering Costs and Organizational Expenses".
F-10
<page>
Providence Select Fund, Limited Partnership
(A Delaware Limited Partnership)
Notes to the Financial Statements
September 30, 2009
(A Review)
2. Significant Accounting Polices, Continued
Revenue Recognition - Commodity futures contracts are recorded on the trade
date and are reflected in the balance sheet at the difference between the
original contract amount and the market value on the last business day of the
reporting period.
Market value of commodity futures contracts is based upon exchange or other
applicable market best available closing quotations.
Interest income is recognized when it is earned.
Use of Accounting Estimates - The preparation of financial statements in
conformity with U.S. GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the reporting
period. Actual results could differ from these estimates.
Income Taxes - The Fund prepares calendar year U.S. and applicable state tax
information tax returns and reports to the partners their allocable shares of
the Fund's income, expenses and trading gains or losses. No provision for
income taxes has been made in the accompanying financial statements as each
partner is individually responsible for reporting income or loss based on such
partner's respective share of the Fund's income and expenses as reported for
income tax purposes.
Management has continued to evaluate the application of ASC 740-10-25,
"Income Taxes-Overall-Recognition" to the Fund and has determined that ASC
740-10-25 does not have a material impact on the Fund's financial statements.
The Fund files federal and state tax returns. The 2005 through 2008 tax years
generally remain subject to examination for the U.S. federal and most state
tax authorities.
Statement of Cash Flows - For purposes of the Statement of Cash Flows, the
Fund considers cash at broker, cash, U.S. Treasury Bills and money market
funds to be cash equivalents. Net cash provided by operating activities
include no cash payments for interest or income taxes for the periods ended
September 30, 2009 and 2008.
Foreign Currency - Investment securities and other assets and liabilities
denominated in foreign currencies are translated into U.S. dollar amounts at
the date of valuation. Purchases and sales of investment securities and
income and expense items denominated in foreign currencies are translated into
U.S. dollar amounts on the respective dates of such transactions.
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
Reported net realized foreign exchange gains or losses arise from sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
fund's books and the U.S. dollar equivalent of the amounts actually received
or paid. Net unrealized foreign exchange gains and losses arise from changes
in the fair values of assets and liabilities, other than investments in
securities at fiscal period end, resulting from changes in exchange rates.
Fair Value Measurement and Disclosures - The Fund adopted the provisions of
ASC 820 - "Fair Value Measurement and Disclosures", as of January 1, 2008.
ASC 820 provides guidance for determining fair value and requires increased
disclosure regarding the inputs to valuation techniques used to measure fair
value. ASC 820 clarifies the definition of fair value as the price that would
be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.
ASC 820 establishes a fair value hierarchy which prioritizes the inputs to
valuation techniques used to measure fair value into three broad levels. The
fair value hierarchy gives the highest priority to unadjusted quoted prices in
active markets for identical assets or liabilities (Level 1 measurements) and
the lowest priority to unobservable inputs (Level 3 measurements).
Level 1 inputs are unadjusted quoted prices in active markets for identical
assets or liabilities that the Fund has the ability to access at the
measurement date.
Level 2 inputs are inputs other than quoted prices included in Level 1 that
are observable for the asset or liability, either directly or indirectly.
Level 3 inputs are unobservable inputs for an asset or liability, including
the Fund's own assumptions used in determining the fair value of investments.
Unobservable inputs shall be used to measure fair value to the extent that
observable inputs are not available, thereby allowing for situations in which
there is little, if any, market activity for the asset or liability at the
measurement date. As of and for the period ended September 30, 2009 and year
ended December 31, 2008, the Fund did not have any Level 3 assets or
liabilities.
The following table sets forth by level within the fair value hierarchy the
Fund's investments accounted for at fair value on a recurring basis as of
September 30, 2009 and December 31, 2008.
<table>
<s> <c> <c> <c> <c>
Fair Value at September 30, 2009
Description Level 1 Level 2 Level 3 Total
Money market funds $1,503 $1,503 $- $1,503
U.S. Treasury Bills - 499,943 - 499,943
Exchange traded - futures contracts 13,180 - - 13,180
Total $14,683 $499,943 $- $514,626
Fair Value at December 31, 2008
Description Level 1 Level 2 Level 3 Total
Money market funds $166,464 $1,503 $- $166,464
U.S. Treasury Bills - 999,803 - 999,803
Total $166,464 $999,803 $- $1,166,267
</table>
F-11
<page>
Providence Select Fund, Limited Partnership
(A Delaware Limited Partnership)
Notes to the Financial Statements
September 30, 2009
(A Review)
3. General Partner Duties
The responsibilities of the General Partner, in addition to directing the
trading and investment activity of the Fund, including suspending all trading,
includes executing and filing all necessary legal documents, statements and
certificates of the Fund, retaining independent public accountants to audit
the Fund, employing attorneys to represent the Fund, reviewing the brokerage
commission rates to determine reasonableness, maintaining the tax status of
the Fund as a limited partnership, maintaining a current list of the names,
addresses and numbers of units owned by each Limited Partner and taking such
other actions as deemed necessary or desirable to manage the business of the
Partnership.
The Corporate General Partner has contributed $38,050 in cash for deposit to
the capital of the Fund for a General Partnership interest in the Partnership.
If the net unit value of the partnership falls to less than 50% of the
greater of the original $1,000 selling price, less commissions and other
charges or such higher value earned through trading, then the General Partner
will immediately suspend all trading, provide all limited partners with notice
of the reduction in net unit value and give all limited partners the
opportunity, for fifteen days after such notice, to redeem partnership
interests. No trading shall commence until after the lapse of such fifteen
day period.
4. The Limited Partnership Agreement
The Limited Partnership Agreement provides, among other things, that-
Capital Account - A capital account shall be established for each partner.
The initial balance of each partner's capital account shall be the amount of
the initial contributions to the partnership.
Monthly Allocations - Any increase or decrease in the Partnership's net
asset value as of the end of a month shall be credited or charged to the
capital account of each Partner in the ratio that the balance of each account
bears to the total balance of all accounts.
Any distribution from profits or partners' capital will be made solely at
the discretion of the General Partner.
Federal Income Tax Allocations - As of the end of each fiscal year, the
Partnership's realized capital gain or loss and ordinary income or loss shall
be allocated among the Partners, after having given effect to the fees and
expenses of the Fund.
Subscriptions - Investors must submit subscription agreements and funds at
least five business days prior to month end. Subscriptions must be accepted or
rejected by the general partner within five business days. The investor also
has five business days to withdraw his subscription. Funds are deposited into
an interest bearing subscription account and will be transferred to the Fund's
account after the minimum to commence business has been raised and,
thereafter, on the first business day of the month after the subscription is
accepted. Interest earned on the subscription funds will accrue to the
account of the investor.
Redemptions - A limited partner may request any or all of his investment be
redeemed at the net asset value as of the end of a month. Unless this
requirement is waived, the written request must be received by the general
partner no less than ten days prior to a month end. Redemptions will
generally be paid within twenty days of the effective month end. However, in
various circumstances due to liquidity, etc. the general partner may be unable
to comply with the request on a timely basis. For partners admitted after
July 31, 2008, there will be a redemption fee commencing from the date of
purchase of units of 4% during the first three months, 3% during the second
three months, 2% during the third three months, 1% during the fourth three
months and no redemption fees for redemption requests received in the
thirteenth month or later. For partners admitted prior, there will be a
redemption fee commencing from the date of purchase of units of 3% during the
first four months, 2% during the second four months, 1% during the third four
months and no redemption fees for redemption requests received in the
thirteenth month or later.
F-12
<page>
Providence Select Fund, Limited Partnership
(A Delaware Limited Partnership)
Notes to the Financial Statements
September 30, 2009
(A Review)
5. Fees
A monthly management fee is paid to the CTA based on the rate of trading
assigned by the CTA and approved by the General Partner of up to 3.25% (annual
rate) of the Fund's net assets allocated to the CTA to trade.
The Fund pays the Corporate General Partner a fixed brokerage commission of
6% on total Fund net assets, from which the Corporate General Partner pays the
round turn commissions to the futures commission merchant.
A quarterly incentive fee of 20% of "new trading profits" is paid to the CTA
and a 2.5% quarterly incentive fee is 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 the
CTA, no incentive fees will be paid and all losses will be carried over to the
following months until profits from trading exceed the loss. It is possible
for the CTA to be paid an incentive fee during a quarter or a year when the
Fund experienced a loss.
The Fund pays the selling agents a 3% continuing service fee based on the
initial investment the first year. Each year thereafter, for so long as the
investment remains in the Fund, the Fund pays this fee at 1/4% monthly based
on the net asset value of the investment.
On June 2, 2008, the Fund changed trading advisors from NuWave to Clarke.
The Fund also made the decision to change the fees as follows:
A 25% quarterly incentive fee of new trading profits is paid to the CTA and
no management fee is paid to it.
Brokerage commissions of 7% annually on total Fund net assets are paid to
the Corporate General Partner, and no incentive fee is paid to it.
A 4% continuing service fee to the selling agents based on the initial
investment the first year. Each year thereafter, for so long as the
investment remains in the Fund, the Fund pays this fee at 1/3% monthly based
on the net asset value of the investment.
The General Partner has reserved the right to change the management fee and
the incentive fee at its sole discretion. The total incentive fees may be
increased to 27% if the management fee is eliminated. The Fund may also
increase the management fees paid to the CTA and general partner to 6% of
total net assets if the total incentive fees are decreased to 15%.
6. Related Party Transactions
ASC 460, Guarantees, 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-13
<page>
Providence Select Fund, Limited Partnership
(A Delaware Limited Partnership)
Notes to the Financial Statements
September 30, 2009
(A Review)
6. Related Party Transactions, Continued
"Commissions: The Fund has an agreement to pay commissions to White Oak
Financial Services, Inc. The related party is 100% owned by Michael Pacult,
the Fund's CPO. Commissions payable to White Oak Financial Service, Inc. at
September 30, 2009 and December 31, 2008 were $5,308 and $10,292,
respectively.
"
Incentive fees: Prior to June 2, 2008, White Oak Financial Services, Inc.
received a quarterly incentive fee (see footnote 5) of new trading profits.
There were no incentive fees due at September 30, 2009 or December 31, 2008.
Continuing service fee: The Fund pays Futures Investment Company a
continuing service fee. Continuing service fees prepaid to Futures Investment
Company amounted to $3,608 and $0 at September 30, 2009 and December 31, 2008,
respectively.
Commissions and fees included in expenses:
Nine Months Ended September 30,
2009 2008
White Oak Financial Services, Inc. - commissions $62,782 $136,203
$-
White Oak Financial Services, Inc. - incentive fee $- $2,677
Futures Investment Company -continuing service fee $13,411 $9,573
7. Partnership Unit Transactions
As of September 30, 2009 and 2008 partnership units were valued at $572.36
and $714.04 per unit respectively for financial reporting purposes.
Transactions in partnership units were as follows:
<table>
<s> <c> <c> <c> <c>
Units Amount
2009 2008 2009 2008
Limited Partner Units
Subscriptions 233.03 210.67 $173,012 $191,109
Redemptions (824.37) (1,116.66) (590,743) (905,090)
Net (loss) for the period ended 9/30 - - (287,014) (352,261)
Total (591.34) (905.99) (704,745) (1,066,242)
General Partner Units
Subscriptions - 4.35 - 4,000
Redemptions - - - -
Net (loss) for the period ended 9/30 - - (6,749) (4,947)
Total - 4.35 (6,749) (947)
Total Units
Subscriptions 233.03 215.02 173,012 195,109
Redemptions (824.37) (1,116.66) (590,743) (905,090)
Net (loss) for the period ended 9/30 - - (293,763) (357,208)
Total (591.34) (901.64) $(711,494) $(1,067,189)
</table>
F-14
<page>
Providence Select Fund, Limited Partnership
(A Delaware Limited Partnership)
Notes to the Financial Statements
September 30, 2009
(A Review)
8. Trading Activities and Related Risks
The Fund is engaged in speculative trading of U.S. and foreign futures
contracts in commodities. The Fund is exposed to both market risk, the risk
arising from changes in market value of the contracts, and credit risk, the
risk of failure by another party to perform according to the terms of a
contract.
A certain portion of cash in trading accounts are pledged as collateral for
commodities trading on margin. Additional deposits may be necessary for any
loss on contract value. The Commodity Exchange Act requires a broker to
segregate all customer transactions and assets from such broker's proprietary
activities.
Each U.S. commodity exchange, with the approval of the CFTC and the futures
commission merchant, establish minimum margin requirements for each traded
contract. The futures commission merchant may increase the margin
requirements above these minimums for any or all contracts. In general, the
amount of required margin should never fall below 10% of the Net Asset Value.
The cash deposited in trading accounts at September 30, 2009 and December 31,
2008 was $372,498 and $489,774, respectively, which equals approximately
40.59% and 30.06% of Net Asset Value, respectively.
Trading in futures contracts involves entering into contractual commitments
to purchase or sell a particular commodity at a specified date and price. The
gross or face amount of the contract, which is typically many times that of
the Fund's net assets being traded, significantly exceeds the Fund's future
cash requirements since the Fund intends to close out its open positions prior
to settlement. As a result, the Fund is generally subject only to the risk of
loss arising from the change in the value of the contracts. The market risk is
limited to the gross or face amount of the contracts held of approximately
$2,072,285 on long positions at September 30, 2009 and $0 on long positions at
December 31, 2008. However, when the Fund enters into a contractual commitment
to sell commodities, it must make delivery of the underlying commodity at the
contract price and then repurchase the contract at prevailing market prices or
settle in cash. Since the repurchase price to which a commodity can rise is
unlimited, entering into commitments to sell commodities exposes the Fund to
unlimited potential risk.
Market risk is influenced by a wide variety of factors including government
programs and policies, political and economic events, the level and volatility
of interest rates, foreign currency exchange rates, the diversification
effects among the derivative instruments the Fund holds and the liquidity and
inherent volatility of the markets in which the Fund trades.
The net unrealized gains on open commodity futures contracts for reporting
purposes on September 30, 2009 and December 31, 2008 were $13,180 and $0,
respectively.
Open contracts generally mature within three months of September 30, 2009.
However, the latest maturity for open futures contracts is in March 2010.
However the Fund intends to close all contracts prior to maturity.
In March 2008, the FASB issued ASC 815 "Derivatives and Hedging". ASC 815
provides for disclosures about derivative instruments and hedging activities.
ASC 815 is intended to improve financial reporting about derivative
instruments and hedging activities by requiring enhanced disclosures to enable
investors to better understand how those instruments and activities are
accounted for, how and why they are used, and their effects on a Fund's
financial position, financial performance and cash flows. ASC 815 is
effective for financial statements issued for fiscal years beginning after
November 15, 2008, and interim periods within those fiscal years.
The Fund adopted the provisions of ASC 815 effective January 1, 2009.
The following tables disclose the fair values of derivative and hedging
activities in the Statement of Assets and Liabilities and the Statement of
Operations.
<table>
<s> <c> <c> <c> <c> <c>
Derivative instruments
Statement of Assets and Liabilities
Statement of Assets and Asset Derivatives at September Liability Derivatives at
Liabilities Location 30, 2009 Fair Value September 30, 2009 Fair Value Net
Derivatives not designated as hedge Commodity contracts Net unrealized gain (loss)
instruments under ASC 815 on open futures contracts $14,368 $(1,188) $13,180
Derivative instruments
Statement of Operations
Line Item in the Statement Three Months Ended Nine Months Ended
of Operations September 30, 2009 September 30, 2009
Derivatives not designated as hedge Commodity contracts Net realized (loss) from $(63,369) $(124,883)
instruments under ASC 815 investments and foreign
currency transactions
Net unrealized appreciation $9,470 $13,180
from investments and foreign
currency
</table>
The Fund has established procedures to actively monitor market risk and
minimize credit risk although there can be no assurance that it will succeed.
The basic market risk control procedures consist of continuously monitoring
open positions, diversification of the portfolio and maintenance of a
desirable margin-to-equity ratio. The Fund seeks to minimize credit risk
primarily by depositing and maintaining its assets at financial institutions
and brokers which it believes to be creditworthy.
F-15
<page>
Providence Select Fund, Limited Partnership
(A Delaware Limited Partnership)
Notes to the Financial Statements
September 30, 2009
(A Review)
9. Derivative Financial Instruments and Fair Value of Financial Instruments
A derivative financial instrument is a financial agreement whose value is
linked to, or derived from, the performance of an underlying asset. The
underlying asset can be currencies, commodities, interest rates, stocks, or
any combination. Changes in the underlying asset indirectly affect the value
of the derivative. As the instruments are recognized at fair value, those
changes directly affect reported income.
All investment holdings are recorded in the statement of assets and
liabilities at their net asset value (fair value) at the reporting date.
Financial instruments (including derivatives) used for trading purposes are
recorded in the statement of assets and liabilities at fair value at the
reporting date. Realized and unrealized changes in fair values are recognized
in net investment gain (loss) in the period in which the changes occur.
Interest income arising from trading instruments is included in the statement
of operations as part of interest income.
Notional amounts are equivalent to the aggregate face value of the
derivative financial instruments. Notional amounts do not represent the
amounts exchanged by the parties to derivatives and do not measure the Fund's
exposure to credit or market risks. The amounts exchanged are based on the
notional amounts and other terms of the derivatives.
10. Financial Instruments with Off-Balance Sheet Credit and Market Risk
All financial instruments are subject to market risk, the risk that future
changes in market conditions may make an instrument less valuable or more
onerous. As the instruments are recognized at fair market value, those
changes directly affect reported income.
Included in the definition of financial instruments are securities,
restricted securities and derivative financial instruments. Theoretically,
the investments owned by the Fund directly are exposed to a market risk (loss)
equal to the notional value of the financial instruments purchased and
substantial liability on certain financial instruments purchased short.
Generally, financial instruments can be closed. However, if the market is not
liquid, it could prevent the timely close-out of any unfavorable positions or
require the Fund to hold those positions to maturity, regardless of the
changes in their value or the trading advisor's investment strategies.
Credit risk represents the accounting loss that would be recognized at the
reporting date if counterparties failed to perform as contracted.
Concentrations of credit risk (whether on or off balance sheet) that arise
from financial instruments exist for groups of counterparties when they have
similar economic characteristics that would cause their ability to meet
contractual obligations to be similarly affected by changes in economic or
other conditions.
11. Indemnifications
In the normal course of business, the Fund enters into contracts and
agreements that contain a variety of representations and warranties and which
provide general indemnifications. The Fund's maximum exposure under these
arrangements is unknown, as this would involve future claims that may be made
against the Fund that have not yet occurred. The Fund expects the risk of any
future obligation under these indemnifications to be remote.
12. Subsequent Events
In 2009, the Fund adopted ASC 855 "Subsequent Events" (ASC 855). The
objective of ASC 855 is to establish general standards of accounting for and
disclosure of events that occur after the balance sheet date but before
financial statements are issued or available to be issued. The General Partner
evaluated subsequent events through November 12, 2009. There were no
subsequent events to disclose.
F-16
<page>
Providence Select Fund, Limited Partnership
(A Delaware Limited Partnership)
Notes to the Financial Statements
September 30, 2009
(A Review)
13. Financial Highlights
<table>
<s> <c> <c> <c> <c>
Three Months Ended September 30, Nine Months Ended September 30,
2009 2008 2009 2008
Performance per Unit (1)
Net unit value, beginning of period $635.95 $816.87 $742.31 $828.67
Net realized and unrealized gain (loss) on
commodity transactions (33.49) (62.35) (72.63) 33.72
Investment and other income 0.17 2.81 0.58 9.60
Expenses (30.27) (43.29) (97.90) (157.95)
Net (decrease) for the period (63.59) (102.83) (169.95) (114.63)
Net unit value at the end of the period $572.36 $714.04 $572.36 $714.04
Net assets, end of the period ($000) $918 $1,993 $918 $1,993
Total return (2) (10.00)% (12.59)% (22.89)% (13.83)%
Number of units outstanding at the end of the period 1,603.58 2,791.73 1,603.58 2,791.73
Ratio to average net assets (3)
Investment and other income 0.12 % 1.32 % 0.12 % 1.47 %
Expenses (20.94)% (14.28)% (19.63)% (21.47)%
</table>
Total return is calculated based on the change in value of a unit during the
period. An individual partner's total return and ratios may vary from the
above total returns and ratios based on the timing of additions and
redemptions.
(1) Investments and other income and expenses and net realized and
unrealized gains and losses on commodity transactions are calculated based on
a single unit outstanding during the period.
(2) Not Annualized
(3) Annualized
F-17
<page>
Providence Select Fund, Limited Partnership
Affirmation of the Commodity Pool Operator
For the Nine Months Ended September 30, 2009 and 2008
*****************************************************************************
To the best of the knowledge and belief of the undersigned, the information
contained in this report is accurate and complete.
/s/ Michael Pacult
Michael Pacult
President, White Oak Financial Services, Inc.
General Partner
Providence Select Fund, Limited Partnership
F-18
<page>