Item 5 – Fees and Compensation
Fees charged to clients for investment advisory services are fully set forth in the investment advisory
agreement executed by the client at the commencement of the advisory relationship. Paradigm generally
charges advisory fees based on a percentage of assets under management, including in certain instances
cash. The Adviser’s standard annual fee schedule for retail and institutional accounts is 1.0% on all assets.
Nothing precludes the Adviser from charging a higher or lower fee based upon negotiations with the client.
Fees and account minimums for all services are negotiable based upon certain criteria (i.e. anticipated
future earning capacity, anticipated future additional assets, dollar amount of assets to be managed, related
accounts, account composition, negotiations with client, competitive considerations, etc.). Discounts, not
generally available to Paradigm’s advisory clients, will be offered to principals, directors, officers and/or
employees (collectively, “Employees”) of Paradigm and/or its affiliates and family members of Employees.
Unless the investment advisory agreement provides otherwise, advisory fees shall be calculated through
the last day of the quarter and paid in arrears within 30 days after the last business day of such quarter,
based upon the average month-end value of the managed assets for such quarter, as calculated by the
Adviser based on values generally obtained from third-party pricing sources. In the absence of such
information, the fair value will be reasonably determined by the Adviser on the payable date of each such
stated period.
Fees will be debited directly from the account, unless other arrangements are made for payment of fees.
The client shall be provided with quarterly statements detailing the activity of the managed assets from the
Adviser and/or their designated custodian.
The Adviser and any client may discontinue the advisory relationship and terminate the investment advisory
agreement upon written notice to the other party. If the advisory relationship is terminated prior to the end
of the quarterly period, the quarterly fee shall be pro-rated and paid through the termination date.
Client assets invested in money market funds, ETFs or other mutual funds managed by independent
managers, including funds at custodian banks, broker-dealers or other custodians, would be subject to
management fees charged by the manager of these funds which are in addition to management fees
charged by the Adviser.
As stated first in Item 4, the Adviser also renders investment advice to pooled investment vehicles such as
investment partnerships, and affiliates, or related persons, of the Adviser act as general partner to these
vehicles. In these arrangements, the general partner will participate in a pro-rata share of the profits of the
partnership. The Adviser’s advisory fee and performance-based compensation would be waived, in whole
or in part, under certain circumstances, including for investors in the investment partnerships who are
Employees and members of their immediate families. Investors in these private funds will be ultimately
responsible for all costs and expenses which are identified in the relevant fund’s governing documents and
which are charged to and paid by the relevant fund. Generally, such costs and expenses will include but
may not be limited to custodian charges, research/brokerage and related charges and expenses, audits,
trustee fees, filing fees, and legal fees. A separate private placement memorandum for each private fund
is furnished to investors.
In addition to Paradigm’s advisory fees, clients are also responsible for brokerage and other transaction
costs imposed by broker-dealers which effect transactions for the client's account(s). Please refer to the
"Brokerage Practices" section (Item 12) of this Form ADV for additional information on brokerage.
Additionally, a client for which Paradigm provides separate account services will have responsibility for
payment of their custodian’s fees. Such fees would be the subject of agreement between the client and
their chosen custodian.
Shareholders of investment companies managed by Paradigm Funds Advisor LLC, an affiliate of the
Adviser, are indirectly charged an annualized advisory fee. This fee is accrued daily by the fund’s custodian
based on the average daily net assets of the respective investment company and paid monthly.
Cash and Margin Holdings:
Unless agreed otherwise, any and all account asset classes, including cash positions, are included in the
firm’s advisory fee calculation. At certain times our advisory fee may exceed the money market yield for
cash assets.
Unless agreed otherwise, any accounts with utilized margin are billed on the higher-margin value. This
presents a potential conflict because we earn a higher fee and have a disincentive to advise clients to
reduce or eliminate the margin balance.