UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-21233
PARADIGM FUNDS
(Exact name of registrant as specified in charter)
Nine Elk Street, Albany, NY 12207-1002
(Address of principal executive offices) (Zip code)
Robert A. Benton
Nine Elk Street, Albany, NY 12207-1002
(Name and address of agent for service)
Registrant's telephone number, including area code: (518) 431-3500
Date of fiscal year end: December 31
Date of reporting period: June 30, 2008
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Reports to Stockholders.
Paradigm Funds
Paradigm Value Fund
Paradigm Opportunity Fund
Paradigm Select Fund
Paradigm Capital Appreciation Fund
Paradigm Intrinsic Value Fund
Paradigm Small Cap Growth Fund
For Investors Seeking Long-Term Capital Appreciation
SEMI-ANNUAL REPORT
June 30, 2008
Table of Contents
PARADIGM FUNDS
Letter to Shareholders
2
Sector Allocation
7
Performance Information
10
Schedules of Investments
13
Statements of Assets and Liabilities
28
Statements of Operations
28
Statements of Changes in Net Assets
31
Financial Highlights
34
NOTES TO FINANCIAL STATEMENTS
37
DISCLOSURE OF EXPENSES
43
ADDITIONAL INFORMATION
46
2008 Semi-Annual Report 1
Letter to Shareholders
June 30, 2008
Market and Economic Overview
The stock market remained volatile with a downward bias in the first half of 2008. Recession fears, panic in the credit markets, and record oil prices placed significant pressure on the financial markets. For the first six months of the year, the large cap S&P 500 Index declined 11.9%, while the small cap Russell 2000 Index dropped 9.4%.
Looking closer at the credit markets, a chain of several negative events caused a material sell-off in financial-related stocks as well as a ripple effect across several industries. In February, the municipal bond, auction rate securities, and Agency mortgage-backed securities markets seized. The Fed responded by creating a $200 billion loan facility for Agency collateral to alleviate funding concerns. In March, the failure of Bear Stearns appeared to symbolize the peak of the credit market panic. The Fed's orchestrated sale of Bear Stearns to JP Morgan, decision to allow primary dealers to borrow funds from the Fed, and aggressive interest rate cuts sent the markets higher from March 17 to mid-May, almost back to even for the year. Over this same period of time, oil prices surged to a peak above $147 in July. As the momentum of interest rate cuts, tax rebate checks, and the Fed's rescue efforts subsided, reality set b ack in for the stock market. Record oil prices, inflationary concerns, deepening credit market issues, housing market deterioration, labor market weakness, and recession concerns sent the stock market back to new lows by mid-July.
We believe, the issues in the U.S. housing and credit markets and their after shocks clearly will play out over a period of years, not months. However, as time passes, the losses are being quantified and it is becoming more apparent where the risks are concentrated. With regard to energy prices, the market forces of supply and demand will ultimately rule the day. In our opinion, consumers and businesses adjust their behavior over the long-term, not a matter of months. However, consumers have already adjusted their driving habits and the shift in market share to fuel efficient cars has been dramatic.
While the current economic and market environment clearly has not been for the faint of heart, periods of uncertainty, risk aversion, and highly negative sentiment have provided significant opportunities for disciplined investors. Over the past 80 years, U.S. small cap stocks have returned close to 13% per year on an absolute basis and 10% adjusted for inflation. These strong returns are amplified coming out of periods of market and economic contractions. As we mentioned in the annual letter, we do not know how long this downturn will last. But we are value investors with a long-term investment horizon and remain focused on our disciplined, bottom-up stock selection process.
In closing, we would like to thank all of our shareholders for their continued trust and confidence.
Paradigm Value Fund
Portfolio Performance
The Paradigm Value Fund (the "Fund") declined 9.26% in the first half of 2008 compared to a 9.84% drop for its benchmark, the Russell 2000 Value Index. Over the past year, the Fund has declined 12.99% vs. a 21.63% drop for the benchmark. Since inception (1/1/03), the Fund has generated a return of 21.26% compared to 12.14% for the Russell 2000 Value Index.
2008 Semi-Annual Report 2
Portfolio Overview
The Fund clearly has been impacted by the challenging market environment over the past year. Our focus on risk management and stock selection has led to an out performance of 8.6% compared to the benchmark, the Russell 2000 Value Index, and illustrates our strategy to outperform in all market environments.
Similar to the rest of the market, Energy was the Fund's best performing sector and largest contributor to overall returns in the first half of 2008. Two of the Fund's strong 2007 performers, Whiting Petroleum and Atwood Oceanics, continue to generate strong returns given the surge in oil prices and solid company execution.
Consumer Staples was another bright spot driven by strong stock selection. Corn Products International, a corn refiner and provider of ingredients including high fructose corn syrup, rallied to record highs as they exceeded earnings expectations. The stock appreciated further on the heels of Bunge offering to acquire the company in an all-stock deal. Flowers Foods, a producer of bakery products, has navigated the difficult commodity environment superbly while posting record revenue, margins, and earnings.
Industrials have been a long-term driver of Fund performance and stock selection remained solid, driven by our transportation holdings. Kansas City Southern, a railroad operator, has benefited from favorable rail industry dynamics and offers compelling future growth potential from the port at Lazaro Cardenas in Mexico. Pacer International, a non-asset based North American logistics and intermodal services provider, was another top performer. Better than expected rail brokerage volumes and benefits from the timing of fuel surcharges drove results ahead of expectations and the stock higher.
Lastly, the decision to significantly underweight the Financials sector positively impacted performance. As discussed in detail in our review of the markets and economy, the credit crisis has created a high level of risk in the financial sector. While valuations contracted during the sell-off over the past year, the continued deterioration in fundamentals has kept us on the sidelines and cautious.
The Fund's most challenging sector in the first half of 2008 was the Materials sector. The surge in commodity prices positively impacted several industries in the Materials sector. However, the portfolio had limited exposure to these areas. Our performance in Materials was hurt by RTI International, a supplier of titanium products to the aerospace and industrial markets. While the company is well positioned long-term given the increased use of titanium in the aerospace market, short-term profits are being pressured by reduced demand due to the push out of the Boeing 787 at the same time RTI is expanding capacity to meet demand next decade from Boeing, Airbus, and Lockheed.
Paradigm Select Fund
Portfolio Performance
The Paradigm Select Fund (the "Fund") declined 9.96% in the first half of 2008 compared to an 8.11% decline for its smid cap benchmark, the Russell 2500 Index. Over the past year, the Fund has declined 13.06% vs. a 14.28% drop for the benchmark. Since inception (1/1/05), the Fund has generated a return of 7.69% compared to 4.59% for the Russell 2500 Index.
Portfolio Overview
The Energy sector was by far the best performing market sector in the first half of 2008 and the best performing sector in the Fund led by Whiting Petroleum, Plains Exploration, and Denbury Resources, all top 10 performers.
2008 Semi-Annual Report 3
The Fund's Financials sector had the largest positive impact compared to the index given our decision to underweight this sector. Also, eight of the Fund's eleven holdings during the period outperformed the index sector.
The Industrials sector also contributed positively to relative return driven by strong stock selection. Three top ten overall contributors were in this sector, Kansas City Southern, Robbins & Myers and Woodward Governor.
The Consumer Staples sector was also a bright spot driven by stock selection led by Flower's Foods.
The Consumer Discretionary sector was troubling during the first half of the year. Poor stock selection led to five of the Fund's seven holdings underperforming the index sector, four of which were top 10 detractors. These included Tempur Pedic; Goodyear Tire & Rubber; Jackson Hewitt; and Interactive Data Corp. We have exited Tempur Pedic and Jackson Hewitt given concerns related to long-term profitability impairment in their markets. We continue to hold Goodyear and Interactive Data given their strong competitive positions and expectations their markets will improve in the future.
The Materials sector was likewise a detractor from relative returns in the first half of 2008 due to stock selection. RTI International Metals was the second largest detracting stock overall for the Fund.
Paradigm Opportunity Fund
Portfolio Performance
The Paradigm Opportunity Fund (the "Fund") declined 13.25% in the first half of 2008 compared to a 9.37% drop for its benchmark, the Russell 2000 Index. Over the past year, the Fund has declined 22.56% vs. a 16.19% drop for the benchmark. Since inception (1/1/05), the Fund has generated a return of 1.67% compared to 2.87% for the Russell 2000 Index.
Portfolio Overview
The Fund's Financials sector had the largest positive impact compared to the index. Our decision to underweight the sector combined with stock selection both contributed to the positive relative performance. All three Fund holdings in this sector outperformed the index sector including the one of the top five contributors overall, Cash America International.
The Consumer Staples sector was another bright spot due to strong stock selection. Both of the Fund's holdings in this sector (Corn Products International and BJ's Wholesale Club) handily outperformed the index sector.
An underweight in the best performing market sector, Energy, detracted from returns despite the Fund matching the index sector's 45% return. Unit Corp, a natural gas exploration & production company and land driller, was the top overall performer in the Fund.
Industrials were also a detracting sector, due to underperformance. The Fund's sector declined 17.60%, compared to a decline of 4.00% for the index sector, detracting 1.31% from relative return. Deluxe Corp was the ninth largest detractor overall. Six of the Fund's nine holdings underperformed the index sector during the year to date period ended June 30, 2008.
2008 Semi-Annual Report 4
Paradigm Capital Appreciation Fund
Portfolio Performance
The Paradigm Capital Appreciation Fund (the "Fund") declined 10.63% in the first half of 2008 compared to a 7.57% decline for its mid cap benchmark, the Russell Mid Cap Index. The Fund's underperformance of the benchmark was due entirely to sector allocations within the Fund, almost singularly within the Energy sector. Over the past year, the Fund has declined 22.94% vs. a 11.19% drop for the benchmark. Since inception (1/1/07), the Fund's annualized return is a decline 9.93% vs. a decline of 1.61% for the Russell Mid Cap Index.
Portfolio Overview
The Fund's Health Care sector had the largest positive impact compared to the index. Strong stock selection led to an appreciation of 0.95% in a sector that declined 12.34% in the index. This led to a relative contribution of 1.93%. Two of our positions drove this outperformance: Universal Health Services contributed 0.64% via a 24.80% return and Psychiatric Solutions contributed 0.61% via a 23.50% return.
Information technology was also a strong relative sector. Stock selection added 0.73% to relative return as our holdings decline of 5.83% outperformed the index sector decline of 10.49%. Our position in Brocade Communications contributed 0.26% via a 12.26% return.
An outperformance of 25% in the Utilities sector added a relative contribution of 0.62%. The Fund held one position in Utilities, Dynegy Inc., which returned 19.75% and contributed 0.49% to total return.
The Financials sector was the largest detractor from relative returns in the first half of 2008. Stock selection detracted 1.62% as the Fund's holdings declined 26.17%, our worst sector overall, compared to the index sector decline of 18.74%. Five of the 10 largest overall detractors were in this sector. The detractors included Legg Mason Inc. (0.99% detraction via a 39.95% decline) and CIT Group (0.95% detraction via a 47.47% decline).
Consumer Staples was also a troubling sector as all three holdings underperformed the index sector. Our sector declined 16.98% compared to a decline of 10.19% for the index sector. The largest detractor held was Dean Foods, which detracted 0.56% from a 24.13% decline.
Paradigm Intrinsic Value Fund
Portfolio Performance
The Paradigm Intrinsic Value Fund (the "Fund") declined 5.05% in the first half of 2008 compared to a 11.91% decline for its large cap benchmark, the S&P 500 Index, and a 11.05% decline for the its all cap secondary benchmark, the Russell 3000 Index. The Fund's out performance of the benchmark was due mostly to sector allocations within the Fund, though without the consideration of cash in an up market, stock selection becomes the driving force. This is the since inception period as well.
Portfolio Overview
Very strong stock selection in the Financials sector led to a 21.77% outperformance in the Fund's largest sector and a 3.30% contribution to relative return. The Fund's sector
2008 Semi-Annual Report 5
declined 5.33% compared to a decline of 27.09% in the Russell 3000 Index, the worst performing market sector. All nine holdings outperformed the index sector, with Quanta Holdings contributing the most at 0.61% from a 60.32% return. HSBC Holdings PLC contributed an additional 0.40% from a 10.45% return.
Industrials contributed the second largest amount to relative return, also due to stock selection. The Fund's sector appreciated 1.23% compared to a decline of 11.94% for the index sector, contributing 1.31% to relative return. The Fund's top contributing stock overall, Pacer International, contributed 0.63% to total return via a 33.67% appreciation.
The Materials sector was the largest negative contributor to relative returns in the first half of 2008. Poor stock selection detracted 1.58% as the Fund's holdings declined 31.66% compared to the index sector appreciation of 2.32%, a 33.99% underperformance. The Fund's small total sector position of 3.9% limited the total detraction of this sector. RTI International Metals was the fifth largest detracting stock for the Fund, detracting 0.75% due to a decline of 42.64%.
The Health Care sector was also troubling in the first half of 2008 as the Fund's holdings declined 41.31%, the worst performing Fund sector. This underperformance of 29%, led to a relative detraction of 1.19%, however, a small 2.26% weight of the sector within the portfolio limited the overall detraction. UnitedHealth Group, the third largest overall detractor, declined 31.82% and detracted 0.86% from total return. WellPoint Inc., the fourth largest overall detractor, declined 46.52% and detracted 0.83% from total return.
2008 Semi-Annual Report 6
Paradigm Funds (Unaudited)
PARADIGM VALUE FUND
Sector Allocation (Unaudited)
(As a Percentage of Common Stock Held)
PARADIGM SELECT FUND
Sector Allocation (Unaudited)
(As a Percentage of Common Stock Held)
2008 Semi-Annual Report 7
Paradigm Funds (Unaudited)
PARADIGM OPPORTUNITY FUND
Sector Allocation (Unaudited)
(As a Percentage of Common Stock Held)
PARADIGM CAPITAL APPRECIATION FUND
Sector Allocation (Unaudited)
(As a Percentage of Common Stock Held)
2008 Semi-Annual Report 8
Paradigm Funds (Unaudited)
PARADIGM INTRINSIC VALUE FUND
Sector Allocation (Unaudited)
(As a Percentage of Common Stock Held)
PARADIGM SMALL CAP GROWTH FUND
Sector Allocation (Unaudited)
(As a Percentage of Common Stock Held)
2008 Semi-Annual Report 9
Paradigm Value Fund (Unaudited)
PERFORMANCE INFORMATION
Average Annual Rate of Return (%) for The Periods Ended June 30, 2008
June 30, 2008 NAV $44.71
Since
1 Year(A) 5 Years(A) Inception(A)
Paradigm Value Fund
(12.99)%
18.55%
21.26%
Russell 2000® Value Index(B)
(21.63)%
10.02%
12.14%
(A) 1 Year, 5 Year and Since Inception returns include change in share prices and in each case includes reinvestment of any dividends and capital gain distributions. The inception date of the Paradigm Value Fund was January 1, 2003.
(B) The Russell 2000® Value Index (whose composition is different from the Fund) is an unmanaged index of small-capitalization stocks with lower price-to-book ratios and lower forecasted growth values than the total population of small-capitalization stocks.
For purposes of the accompanying table, it is assumed that all dividends and distributions were reinvested.
Paradigm Select Fund (Unaudited)
PERFORMANCE INFORMATION
Average Annual Rate of Return (%) for The Periods Ended June 30, 2008
June 30, 2008 NAV $25.13
Since
1 Year(A)
3 Year(A)
Inception(A)
Paradigm Select Fund
(13.06)%
7.03%
7.69%
Russell 2500® Index (B)
(14.28)%
4.94%
4.59%
(A) 1 Year, 3 Year and Since Inception returns include change in share prices and in each case includes reinvestment of any dividends and capital gain distributions. The inception date of the Paradigm Select Fund was January 1, 2005.
(B) The Russell 2500® Index (whose composition is different from the Fund) measures the performance of the small to mid-cap segment of the U.S. equity universe, commonly referred to as "mid" cap. The Russell 2500 Index is a subset of the Russell 3000® Index. It includes approximately 2,500 of the smallest securities based on a combination of their market cap and current index membership.
For purposes of the accompanying table, it is assumed that all dividends and distributions were reinvested.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. RETURNS DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAT THE PERFORMANCE DATA QUOTED. TO OBTAIN PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH END, PLEASE CALL 1-800-239-0732 OR VISIT OUR WEBSITE AT WWW.PARADIGM-FUNDS.COM.
2008 Semi-Annual Report 10
Paradigm Opportunity Fund (Unaudited)
PERFORMANCE INFORMATION
Average Annual Rate of Return (%) for The Periods Ended June 30, 2008
June 30, 2008 NAV $19.90
Since
1 Year(A)
3 Year(A)
Inception(A)
Paradigm Opportunity Fund (22.56)% 1.59% 1.67%
Russell 2000® Index(B)
(16.19)% 3.79% 2.87%
(A) 1 Year, 3 Year and Since Inception returns include change in share prices and in each case includes reinvestment of any dividends and capital gain distributions. The inception date of the Paradigm Opportunity Fund was January 1, 2005.
(B) The Russell 2000® Index (whose composition is different from the Fund) consists of the smallest 2,000 companies in the Russell 3000 Index (which represents approximately 98% of the investable U.S. equity market). The Index is an unmanaged index generally considered as the premier of small capitalization stocks.
For purposes of the accompanying table, it is assumed that all dividends and distributions were reinvested.
Paradigm Capital Appreciation Fund (Unaudited)
PERFORMANCE INFORMATION
Average Annual Rate of Return (%) for The Periods Ended June 30, 2008
June 30, 2008 NAV $17.07
Since
1 Year(A)
Inception(A)
Paradigm Capital Appreciation Fund
(22.94)% (9.93)%
Russell MidCap® Index(B)
(11.19)%
(1.61)%
(A) 1 Year and Since Inception returns include change in share prices and in each case includes reinvestment of any dividends and capital gain distributions. The inception date of the Paradigm Capital Appreciation Fund was January 1, 2007.
(B) The Russell MidCap® Index (whose composition is different from the Fund) is an unmanaged index which measures the performance of the 800 smallest companies in the Russell 1000 Index, representing approximately 26% of the total market capitalization of the Russell 1000 Index.
For purposes of the graph and the accompanying table, it is assumed that all dividends and distributions were reinvested.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. RETURNS DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAT THE PERFORMANCE DATA QUOTED. TO OBTAIN PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH END, PLEASE CALL 1-800-239-0732 OR VISIT OUR WEBSITE AT WWW.PARADIGM-FUNDS.COM.
2008 Semi-Annual Report 11
Paradigm Intrinsic Value Fund (Unaudited)
PERFORMANCE INFORMATION
Average Annual Rate of Return (%) for The Period Ended June 30, 2008
June 30, 2008 NAV $18.99
Since
Inception(A)
Paradigm Intrinsic Value Fund
(5.05)%
S&P 500® Index(B)
(11.91)%
Russell 3000® Index(C)
(11.05)%
(A) Since Inception returns include change in share prices and in each case includes reinvestment of any dividends and capital gain distributions. The inception date of the Paradigm Intrinsic Value Fund was January 1, 2008.
(B) The S&P 500® Index is a managed index which measures the performance of 500 companies chosen by Standard & Poor’s to represent the large cap U.S. equity market.
(C) The Russell 3000® Index measures the performance of the largest 3,000 companies in the U.S. equity market.
For purposes of the accompanying table, it is assumed that all dividends and distributions were reinvested.
Paradigm Small Cap Growth Fund (Unaudited)
PERFORMANCE INFORMATION
Average Annual Rate of Return (%) for The Period Ended June 30, 2008
June 30, 2008 NAV $19.56
Since
Inception(A)
Paradigm Small Cap Growth Fund
(2.20)%
Russell 2000® Growth Index(B)
(8.93)%
(A) Since Inception returns include change in share prices and in each case includes reinvestment of any dividends and capital gain distributions. The inception date of the Paradigm Small Cap Growth Fund was January 1, 2008.
(B) The Russell 2000® Growth Index is an unmanaged index which measures the performance of growth oriented portion of the smallest 2000 stocks in the Russell 3000 Index.
For purposes of the graph and the accompanying table, it is assumed that all dividends and distributions were reinvested.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. RETURNS DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAT THE PERFORMANCE DATA QUOTED. TO OBTAIN PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH END, PLEASE CALL 1-800-239-0732 OR VISIT OUR WEBSITE AT WWW.PARADIGM-FUNDS.COM.
2008 Semi-Annual Report 12
Paradigm Value Fund |
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Schedule of Investments | ||||
June 30, 2008 (Unaudited) | ||||
Shares/Principal Amount |
| Market Value | % of Net Assets | |
COMMON STOCKS | ||||
Adhesives & Sealants | ||||
26,000 | HB Fuller Co. | $ 583,440 | 0.50% | |
Apparel & Other Finished Products of Fabrics & Similar Materials | ||||
48,800 | Volcom Inc. * | 1,167,784 | 1.00% | |
Ball & Roller Bearings | ||||
74,600 | NN Inc. | 1,039,924 | 0.89% | |
Blankbooks, Looseleaf Binders & Bookbinding & Related Work | ||||
53,400 | Deluxe Corp. | 951,588 | 0.81% | |
Canned, Frozen & Preserved Fruit, Veg & Food Specialties | ||||
48,500 | Corn Products International Inc. | 2,381,835 | 2.04% | |
Carpets & Rugs | ||||
73,300 | Interface Inc. | 918,449 | 0.79% | |
Chemical & Allied Products | ||||
45,600 | Arch Chemicals Inc. | 1,511,640 | ||
108,500 | Innospec Inc. | 2,041,970 | ||
3,553,610 | 3.04% | |||
Computer Services Software & Services | ||||
46,950 | Aspen Technology Inc. * | 624,435 | 0.53% | |
Crude Petroleum & Natural Gas | ||||
22,200 | Swift Energy Co. * | 1,466,532 | ||
28,600 | Whiting Petroleum Corp. * | 3,033,888 | ||
4,500,420 | 3.85% | |||
Deep Sea Foreign Transportation of Freight | ||||
16,500 | Seacor Holdings Inc. * | 1,476,915 | 1.26% | |
Drilling Oil & Gas Wells | ||||
23,600 | Atwood Oceanics Inc. * | 2,934,424 | 2.51% | |
Electric Services | ||||
64,000 | Portland General Electric Co. | 1,441,280 | 1.23% | |
Electrical Industrial Apparatus | ||||
51,200 | Woodward Governor Co. | 1,825,792 | 1.56% | |
Electronic Components, NEC | ||||
266,150 | Spectrum Control Inc. * | 2,182,430 | 1.87% | |
Fire, Marine & Casualty Insurance | ||||
53,200 | Harleysville Group Inc. | 1,799,756 | 1.54% | |
Food and Kindred Products | ||||
65,750 | Flowers Foods Inc. | 1,863,355 | 1.59% | |
Games, Toys & Children's Vehicles (No Dolls & Bicycles) | ||||
67,300 | JAKKS Pacific Inc. * | 1,470,505 | 1.26% | |
Greeting Cards | ||||
62,435 | CSS Industries Inc. | 1,512,176 | 1.29% | |
Hospital & Medical Service Plans | ||||
86,000 | Molina Healthcare Inc. * | 2,093,240 | 1.79% | |
Household Furniture | ||||
43,200 | Tempur Pedic International Inc. | 337,392 | 0.29% | |
In Vitro & In Vivo Diagnostic Substances | ||||
177,000 | Trinity Biotech plc * ** | 683,220 | 0.58% | |
Industrial Instruments For Measurement, Display and Control | ||||
12,000 | K-Tron International Inc. * | 1,555,200 | 1.33% | |
Industrial Organic Chemicals | ||||
81,900 | Sensient Technologies Corp. | 2,306,304 | 1.97% | |
Life Insurance | ||||
8,100 | National Western Life Insurance Co. | 1,769,850 | 1.51% | |
*Non-Income Producing Securities.
**ADR - American Depository Receipt.
The accompanying notes are an integral part of these
financial statements.
2008 Semi-Annual Report 13
Paradigm Value Fund |
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Schedule of Investments | ||||
June 30, 2008 (Unaudited) | ||||
Shares/Principal Amount |
| Market Value | % of Net Assets | |
COMMON STOCKS | ||||
Men's & Boy's Furnishings, Work Clothing & Allied Garments | ||||
61,300 | Silgan Holdings Inc. | $ 2,244,806 | 1.92% | |
Metal Cans | ||||
43,000 | Silgan Holdings Inc. | 2,181,820 | 1.87% | |
Miscellaneous Industrial & Commercial Machinery & Equipment | ||||
48,200 | Curtiss-Wright Corp. | 2,156,468 | 1.84% | |
Miscellaneous Chemical Products | ||||
66,700 | WD-40 Co. | 1,950,975 | 1.67% | |
Motor Vehicle Parts & Accessories | ||||
57,600 | Superior Industries International Inc. | 972,288 | 0.83% | |
Orthopedic, Prosthetic & Surgical Appliances & Supplies | ||||
59,100 | Steris Corp. | 1,699,716 | 1.45% | |
Pharmaceutical Preparations | ||||
87,900 | Alpharma Inc. * | 1,980,387 | ||
114,300 | K V Pharmaceutical Co. Class A * | 2,209,419 | ||
4,189,806 | 3.59% | |||
Railroads, Line-Haul Operating | ||||
60,400 | Kansas City Southern * | 2,656,996 | 2.27% | |
Retail - Auto Dealers & Gasoline Stations | ||||
80,600 | Penske Automotive Group, Inc. | 1,188,044 | 1.02% | |
Retail - Shoe Stores | ||||
61,000 | Genesco Inc. * | 1,883,070 | 1.61% | |
Retail - Women's Clothing Stores | ||||
99,800 | AnnTaylor Stores Corp. * | 2,391,208 | 2.05% | |
Rolling, Drawing & Extruding of Nonferrous Metals | ||||
32,200 | RTI International Metals Inc. * | 1,146,964 | 0.98% | |
Savings Institution, Federally Chartered | ||||
100,000 | United Financial Bancorp | 1,117,000 | ||
173,000 | Westfield Financial Inc. | 1,565,650 | ||
2,682,650 | 2.29% | |||
Services - Automotive Repair, Service & Parking | ||||
31,600 | Cabot Microelectronics Corp. * | 1,047,540 | ||
78,900 | Verigy, Ltd. * | 1,791,819 | ||
2,839,359 | 2.43% | |||
Services - Business Services | ||||
80,100 | Fair Isaac Corp. | 1,663,677 | ||
143,100 | Premiere Global Services, Inc. * | 2,086,398 | ||
3,750,075 | 3.21% | |||
Services - Computer Programming Services | ||||
234,900 | Ness Technologies Inc. * ** | 2,377,188 | 2.03% | |
Services - Hospitals | ||||
63,100 | Magellan Health Services Inc. * | 2,336,593 | ||
149,400 | Rehabcare Group Inc. * | 2,394,882 | ||
4,731,475 | 4.06% | |||
Services - Prepackaged Software | ||||
175,800 | Compuware Corp. * | 1,677,132 | ||
219,500 | Epicor Software Corp. * | 1,516,745 | ||
82,700 | Sybase, Inc. * | 2,433,034 | ||
5,626,911 | 4.82% | |||
Special Industry Machinery, NEC | ||||
54,200 | Varian Semiconductor Equipment Associates Inc. * | 1,887,244 | 1.61% | |
*Non-Income Producing Securities.
**ADR - American Depository Receipt.
The accompanying notes are an integral part of these
financial statements.
2008 Semi-Annual Report 14
Paradigm Value Fund |
|
|
| |
Schedule of Investments | ||||
June 30, 2008 (Unaudited) | ||||
Shares/Principal Amount |
| Market Value | % of Net Assets | |
COMMON STOCKS | ||||
Sporting & Athletic Goods, NEC | ||||
165,400 | Callaway Golf Co. | $ 1,956,682 | ||
375,400 | Cybex International Inc. * | 1,287,622 | ||
3,244,304 | 2.78% | |||
Surgical & Medical Instruments & Apparatus | ||||
157,700 | Cantel Medical Corp. * | 1,595,924 | 1.37% | |
Telephone Communications | ||||
110,000 | iBasis Inc. | 360,800 | 0.31% | |
Trucking (No Local) | ||||
35,000 | Arkansas Best Corp. | 1,282,400 | 1.10% | |
Water Transportation | ||||
213,500 | Horizon Lines, Inc. | 2,124,325 | 1.82% | |
Water, Sewer, Pipeline, Comm & Power Line Construction | ||||
17,250 | Preformed Line Products Co. | 695,347 | 0.59% | |
Wholesale - Durable Goods | ||||
56,700 | School Specialty, Inc. * | 1,685,691 | 1.44% | |
Wholesale - Machinery, Equipment & Supplies | ||||
99,500 | Kaman Corp. | 2,264,620 | 1.94% | |
Total for Common Stock (Cost $100,361,016) | $ 102,783,798 | 87.93% | ||
REAL ESTATE INVESTMENT TRUSTS | ||||
245,200 | Anworth Mortgage Asset Corp. | 1,596,252 | ||
293,600 | MFA Mortgage Investments Inc. | 1,914,272 | ||
(Cost $4,611,898) | 3,510,524 | 3.00% | ||
CASH EQUIVALENTS | ||||
10,901,121 | SEI Daily Income Treasury Government CL B 1.97% *** | 10,901,121 | 9.33% | |
(Cost $10,901,121) | ||||
Total Investment Securities | 117,195,443 | 100.26% | ||
(Cost $115,874,035) | ||||
Liabilities In Excess of Other Assets | (298,290) | -0.26% | ||
| ||||
Net Assets | $ 116,897,153 | 100.00% |
*Non-Income Producing Securities.
***Variable Rate Security; the rate shown was the rate at
June 30, 2008.
The accompanying notes are an integral part of these
financial statements.
2008 Semi-Annual Report 15
Paradigm Select Fund |
|
|
| |
Schedule of Investments | ||||
June 30, 2008 (Unaudited) | ||||
Shares/Principal Amount |
| Market Value | % of Net Assets | |
COMMON STOCKS | ||||
Adhesives & Sealants | ||||
1,100 | HB Fuller Co. | $ 24,684 | 0.50% | |
Biological Products, (No Diagnostic Substances) | ||||
2,300 | Invitrogen Corp. * | 90,298 | 1.84% | |
Blankbooks, Looseleaf Binders & Bookbinding & Related Work | ||||
2,200 | Deluxe Corp. | 39,204 | 0.80% | |
Canned, Fruits, Vegetables, Preserves, Jams & Jellies | ||||
1,600 | The J. M. Smucker Company | 65,024 | 1.32% | |
Carpets & Rugs | ||||
3,000 | Interface Inc. | 37,590 | 0.77% | |
Chemical & Allied Products | ||||
1,200 | Innospec Inc. | 22,584 | 0.46% | |
Communications Equipment | ||||
3,800 | Checkpoint Systems Inc. * | 79,344 | 1.62% | |
Crude Petroleum & Natural Gas | ||||
2,400 | Denbury Resources Inc. * | 87,600 | ||
2,100 | Plains Exploration & Production Company * | 153,237 | ||
1,100 | Whiting Petroleum Corp. * | 116,688 | ||
357,525 | 7.29% | |||
Electric & Other Services Combined | ||||
4,700 | CMS Energy Corp. | 70,030 | 1.43% | |
Electric Services | ||||
7,600 | Dynegy Inc. * | 64,980 | ||
1,600 | Energy East Corp. | 39,552 | ||
3,300 | Portland General Electric Co. | 74,316 | ||
178,848 | 3.65% | |||
Electrical Industrial Apparatus | ||||
2,300 | Woodward Governor Co. | 82,018 | 1.67% | |
Electronic Components & Accessories | ||||
5,500 | AVX Corp. | 62,205 | 1.27% | |
Fabricated Rubber Products | ||||
1,000 | Carlisle Companies Inc. | 29,000 | ||
1,800 | West Pharmaceutical Services, Inc. | 77,904 | ||
106,904 | 2.18% | |||
Fire, Marine & Casualty Insurance | ||||
261 | Alleghany Inc. * | 86,665 | ||
3,500 | American Financial Group Inc. | 93,625 | ||
3,000 | Harleysville Group Inc. | 101,490 | ||
281,780 | 5.75% | |||
Food & Kindred Products | ||||
2,775 | Flowers Foods Inc. | 78,643 | 1.60% | |
Guided Missiles & Space Vehicles & Parts | ||||
800 | Alliant Techsystems Inc. * | 81,344 | 1.66% | |
Household Furniture | ||||
2,200 | Tempur Pedic International Inc. | 17,182 | 0.35% | |
Insurance Agents, Brokers & Service | ||||
3,100 | Arthur J Gallagher & Co. | 74,710 | 1.52% | |
Laboratory Analytical Instruments | ||||
2,748 | PerkinElmer Inc. | 76,532 | 1.56% | |
Meat Packing Plants | ||||
2,300 | Hormel Foods Corp. | 79,603 | 1.62% | |
Men's & Boy's Furnishings, Work Clothing & Allied Garments | ||||
2,480 | Phillips-Van Heusen Corp. | 90,818 | 1.85% | |
*Non-Income Producing Securities.
The accompanying notes are an integral part of these
financial statements.
2008 Semi-Annual Report 16
Paradigm Select Fund |
|
|
| |
Schedule of Investments | ||||
June 30, 2008 (Unaudited) | ||||
Shares/Principal Amount |
| Market Value | % of Net Assets | |
COMMON STOCKS | ||||
Miscellaneous Furniture & Fixtures | ||||
1,500 | Hillenbrand Industries Inc. | $ 32,100 | 0.65% | |
Miscellaneous Industrial & Commercial Machinery & Equipment | ||||
2,400 | Curtiss-Wright Corp. | 107,376 | 2.19% | |
Motor Vehicles Parts & Accessories | ||||
1,900 | CLARCOR Inc. | 66,690 | 1.36% | |
National Commercial Banks | ||||
2,400 | FirstMerit Corp. | 39,144 | 0.80% | |
Orthopedic, Prosthetic & Surgical Appliances & Supplies | ||||
2,700 | Steris Corp. | 77,652 | 1.58% | |
Pharmaceutical Preparations | ||||
4,300 | K V Pharmaceutical Co. Class A * | 83,119 | 1.69% | |
Plastics Products | ||||
2,000 | AptarGroup Inc. | 83,900 | 1.71% | |
Pumps & Pumping Equipment | ||||
2,100 | Robbins & Myers Inc. | 104,727 | 2.13% | |
Radiotelephone Communications | ||||
1,900 | Telephone & Data Systems Inc. | 83,790 | 1.71% | |
Railroad, Line-Haul Operating | ||||
2,448 | Kansas City Southern * | 107,687 | 2.19% | |
Retail - Auto Dealers & Gasoline Stations | ||||
3,900 | Penske Automotive Group, Inc. | 57,486 | 1.17% | |
Retail - Retail Stores | ||||
3,200 | Petsmart Inc. | 63,840 | 1.30% | |
Retail - Women's Clothing Stores | ||||
4,100 | AnnTaylor Stores Corp. * | 98,236 | 2.00% | |
Rolling, Drawing & Extruding of Nonferrous Metals | ||||
1,300 | RTI International Metals Inc. * | 46,306 | 0.94% | |
Security & Commodity Brokers, Dealers, Exchanges & Services | ||||
3,400 | Interactive Data Corporation | 85,442 | 1.74% | |
Semiconductors & Related Devices | ||||
1,800 | Cabot Microelectronics Corp. * | 59,670 | ||
3,200 | Verigy, Ltd. * ** | 72,672 | ||
132,342 | 2.70% | |||
Services - Business Services | ||||
3,400 | Fair Isaac Corp. | 70,618 | ||
6,100 | Premiere Global Services Inc. * | 88,938 | ||
159,556 | 3.25% | |||
Services - Computer Integrated Systems Design | ||||
5,100 | Convergys Corp. * | 75,786 | 1.54% | |
Services - Hospitals | ||||
2,400 | Magellan Health Services Inc. * | 88,872 | 1.81% | |
Services - Misc Health & Allied Services, NEC | ||||
3,100 | Lincare Holdings Inc. * | 88,040 | 1.79% | |
Services - Motion Picture Theaters | ||||
5,100 | Regal Entertainment Group | 77,928 | 1.59% | |
Services - Prepackaged Software | ||||
7,600 | Compuware Corp. * | 72,504 | ||
4,100 | Epicor Software Corp. * | 28,331 | ||
3,700 | Sybase, Inc. * | 108,854 | ||
209,689 | 4.27% | |||
*Non-Income Producing Securities.
**ADR - American Depository Receipt.
The accompanying notes are an integral part of these
financial statements.
2008 Semi-Annual Report 17
Paradigm Select Fund |
|
|
| |
Schedule of Investments | ||||
June 30, 2008 (Unaudited) | ||||
Shares/Principal Amount |
| Market Value | % of Net Assets | |
COMMON STOCKS | ||||
Soap, Detergents, Cleaning Preparations, Perfumes, Cosmetics | ||||
1,300 | Church & Dwight Co., Inc. | $ 73,255 | 1.49% | |
Special Industry Machinery (No Metalworking Machinery) | ||||
2,300 | Pentair Inc. | 80,546 | 1.64% | |
Special Industry Machinery | ||||
2,400 | Varian Semiconductor Equipment Associates Inc. * | 83,568 | 1.70% | |
Sporting & Athletic Goods, NEC | ||||
5,400 | Callaway Golf Co. | 63,882 | 1.30% | |
State Commercial Banks | ||||
2,100 | Wilmington Trust Corporation | 55,524 | 1.13% | |
Tires & Inner Tubes | ||||
3,600 | Goodyear Tire & Rubber Co. * | 64,188 | 1.31% | |
Water Transportation | ||||
1,700 | Alexander & Baldwin Inc. | 77,435 | 1.58% | |
Wholesale - Electronic Parts & Equipment | ||||
2,900 | Avnet Inc. * | 79,112 | 1.62% | |
Total for Common Stock (Cost $4,256,653) | $ 4,544,088 | 92.59% | ||
REAL ESTATE INVESTMENT TRUSTS | ||||
13,800 | Anworth Mortgage Asset Corp. | 89,838 | ||
12,800 | MFA Mortgage Investments Inc. | 83,456 | ||
(Cost $201,091) | 173,294 | 3.53% | ||
CASH EQUIVALENTS | ||||
199,759 | SEI Daily Income Treasury Government CL B 1.97% *** | 199,759 | 4.07% | |
(Cost $199,759) | ||||
Total Investment Securities | 4,917,141 | 100.19% | ||
(Cost $4,657,503) | ||||
Liabilities in Excess of Other Assets | (9,255) | -0.19% | ||
| ||||
Net Assets | $ 4,907,886 | 100.00% |
*Non-Income Producing Securities.
***Variable Rate Security; the rate shown was the rate at
June 30, 2008.
The accompanying notes are an integral part of these
financial statements.
2008 Semi-Annual Report 18
Paradigm Opportunity Fund |
|
|
| |
Schedule of Investments | ||||
June 30, 2008 (Unaudited) | ||||
Shares/Principal Amount |
| Market Value | % of Net Assets | |
COMMON STOCKS | ||||
Aircraft Parts & Auxiliary Equipment | ||||
5,900 | LMI Aerospace Inc. * | $ 103,663 | 2.94% | |
Apparel & Other Finished Products of Fabrics & Similar Materials | ||||
4,200 | Volcom Inc. * | 100,506 | 2.85% | |
Carpets & Rugs | ||||
5,500 | Interface Inc. | 68,915 | 1.96% | |
Communications Equipment | ||||
5,200 | Checkpoint Systems Inc. * | 108,576 | 3.08% | |
Computer Services Software | ||||
8,000 | Aspen Technology Inc. * | 106,400 | 3.02% | |
Electronic Components, NEC | ||||
17,400 | Spectrum Control Inc. * | 142,680 | 4.05% | |
Games, Toys & Children's Vehicles (No Dolls & Bicycles) | ||||
4,700 | JAKKS Pacific Inc. * | 102,695 | 2.91% | |
Hospital & Medical Service Plans | ||||
4,400 | Molina Healthcare Inc. * | 107,096 | 3.04% | |
In Vitro & In Vivo Diagnostic Substances | ||||
17,200 | Trinity Biotech plc * ** | 66,392 | 1.88% | |
Miscellaneous Electrical Machinery, Equipment & Supplies | ||||
14,300 | GSI Group Inc. * | 110,968 | 3.15% | |
Orthopedic, Prosthetic & Surgical Appliances & Supplies | ||||
3,700 | Steris Corp. | 106,412 | 3.02% | |
Pharmaceutical Preparations | ||||
8,100 | K V Pharmaceutical Co. * | 156,573 | 4.44% | |
Retail - Auto Dealers & Gasoline Stations | ||||
7,200 | Penske Automotive Group, Inc. | 106,128 | 3.01% | |
Retail - Women's Clothing Stores | ||||
4,600 | AnnTaylor Stores Corp. * | 110,216 | 3.13% | |
Semiconductors & Related Devices | ||||
4,800 | Verigy, Ltd. * ** | 109,008 | 3.09% | |
Services - Business Services | ||||
7,300 | Premiere Global Services Inc. * | 106,434 | 3.02% | |
Services - Computer Integrated Systems Design | ||||
9,800 | Radiant Systems Inc. * | 105,154 | 2.98% | |
Services - Computer Programming Services | ||||
5,700 | JDA Software Group Inc. * | 103,170 | ||
10,500 | Ness Technologies Inc. * ** | 106,260 | ||
209,430 | 5.94% | |||
Services - Hospitals | ||||
2,800 | Magellan Health Services Inc. * | 103,684 | ||
6,700 | Rehabcare Group Inc. * | 107,401 | ||
211,085 | 5.99% | |||
Services - Motion Picture Theaters | ||||
7,500 | Regal Entertainment Group | 114,600 | 3.25% | |
Service - Prepackaged Software | ||||
11,700 | Compuware Corp. * | 111,618 | ||
14,600 | Epicor Software Corp. * | 100,886 | ||
6,100 | Parametric Technology Corp. * | 101,687 | ||
3,400 | Sybase, Inc. * | 100,028 | ||
414,219 | 11.76% |
*Non-Income Producing Securities.
**ADR - American Depository Receipt.
The accompanying notes are an integral part of these
financial statements.
2008 Semi-Annual Report 19
Paradigm Opportunity Fund |
|
|
| |
Schedule of Investments | ||||
June 30, 2008 (Unaudited) | ||||
Shares/Principal Amount |
| Market Value | % of Net Assets | |
COMMON STOCKS | ||||
Sporting & Athletic Goods, NEC | ||||
9,200 | Callaway Golf Co. | $ 108,836 | ||
30,700 | Cybex International Inc. * | 105,301 | ||
214,137 | 6.08% | |||
Surgical & Medical Instruments & Apparatus | ||||
8,500 | AngioDynamics Inc. * | 115,770 | ||
10,100 | Cantel Medical Corp. * | 102,212 | ||
217,982 | 6.20% | |||
Wholesale - Machinery, Equipment & Supplies | ||||
4,800 | Kaman Corp. | 109,248 | 3.11% | |
Total for Common Stock (Cost $3,542,673) | $ 3,308,517 | 93.90% | ||
CASH EQUIVALENTS | ||||
217,547 | SEI Daily Income Treasury Government CL B 1.97% *** | 217,547 | 6.18% | |
(Cost $217,547) | ||||
Total Investment Securities | 3,526,064 | 100.08% | ||
(Cost $3,760,220) | ||||
Liabilities In Excess of Other Assets | (2,718) | -0.08% | ||
| ||||
Net Assets | $ 3,523,346 | 100.00% |
*Non-Income Producing Securities.
***Variable Rate Security; the rate shown was the rate at
June 30, 2008.
The accompanying notes are an integral part of these
financial statements.
2008 Semi-Annual Report 20
Paradigm Capital Appreciation Fund |
| |||
Schedule of Investments | ||||
June 30, 2008 (Unaudited) | ||||
Shares/Principal Amount |
| Market Value | % of Net Assets | |
COMMON STOCKS | ||||
Ball & Roller Bearings | ||||
2,150 | Timken Co. | $ 70,821 | 3.75% | |
Beverages | ||||
2,650 | Constellation Brands Inc. * | 52,629 | 2.78% | |
Biological Products, (No Diagnostic Substances) | ||||
1,700 | Invitrogen Corp. * | 66,742 | 3.53% | |
Computer Communications Equipment | ||||
6,275 | Brocade Communications Systems Inc. * | 51,706 | 2.74% | |
Crude Petroleum & Natural Gas | ||||
2,325 | Denbury Resources Inc. * | 84,863 | 4.49% | |
Drilling Oil & Gas Wells | ||||
1,400 | Helmerich & Payne Inc. | 100,828 | 5.34% | |
Electric Lighting & Wiring Equipment | ||||
1,450 | Hubbell Inc. Class B | 57,812 | 3.06% | |
Electric Services | ||||
7,600 | Dynegy Inc. * | 64,980 | 3.44% | |
Electronic Components & Accessories | ||||
5,175 | Vishay Intertechnology Inc. * | 45,902 | 2.43% | |
Finance Services | ||||
2,033 | Metavante Technologies, Inc. * | 45,986 | 2.43% | |
Fire, Marine & Casualty Insurance | ||||
�� 625 | Everest Re Group Ltd. | 49,819 | ||
1,950 | HCC Insurance Holdings Inc. | 41,223 | ||
91,042 | 4.82% | |||
Ice Cream & Frozen Desserts | ||||
2,000 | Dean Foods Co. * | 39,240 | 2.08% | |
Instruments For Meas & Testing of Electricity & Elec Signals | ||||
3,750 | Teradyne Inc. * | 41,513 | 2.20% | |
Investment Advice | ||||
725 | Legg Mason Inc. | 31,588 | 1.67% | |
Land Subdividers & Developers (No Cemeteries) | ||||
2,325 | The St. Joe Company | 79,794 | 4.22% | |
Measuring & Controlling Devices | ||||
900 | Rockwell Automation Inc. | 39,357 | 2.08% | |
Meat Packing Plants | ||||
1,450 | Hormel Foods Corp. | 50,185 | 2.66% | |
Mining Machinery & Equipment (No Oil & Gas Field Mach & Equipment) | ||||
975 | Joy Global, Inc. | 73,934 | 3.91% | |
Motor Vehicles & Passenger Car Bodies | ||||
1,125 | Oshkosh Truck Corp. | 23,276 | 1.23% | |
Operative Builders | ||||
2,175 | Toll Brothers Inc. * | 40,738 | 2.16% | |
Paints, Varnishes, Lacquers, Enamels & Allied Products | ||||
2,775 | RPM International Inc. | 57,165 | 3.02% | |
Pharmaceutical Preparations | ||||
850 | Cephalon Inc. * | 56,686 | 3.00% | |
Radiotelephone Communications | ||||
1,200 | Telephone & Data Systems Inc. | 52,920 | 2.80% | |
Retail - Miscellaneous Shopping Goods Stores | ||||
4,600 | Office Depot, Inc. * | 50,324 | 2.66% | |
Services - Computer Integrated Systems Design | ||||
1,175 | Computer Sciences Corp. * | 55,037 | 2.91% |
*Non-Income Producing Securities.
The accompanying notes are an integral part of these
financial statements.
2008 Semi-Annual Report 21
Paradigm Capital Appreciation Fund |
| |||
Schedule of Investments | ||||
June 30, 2008 (Unaudited) | ||||
Shares/Principal Amount |
| Market Value | % of Net Assets | |
COMMON STOCKS | ||||
Services - General Medical & Surgical Hospitals | ||||
1,050 | Universal Health Services Inc. | $ 66,381 | 3.51% | |
Services - Misc Health & Allied Services, NEC | ||||
1,575 | Lincare Holdings Inc. * | 44,730 | 2.37% | |
Services - Specialty Outpatient Facilities, NEC | ||||
1,700 | Psychiatric Solutions, Inc. * | 64,328 | 3.40% | |
State Commercial Banks | ||||
2,225 | Associated Banc-Corp | 42,920 | ||
1,975 | Wilmington Trust Corp. | 52,219 | ||
95,139 | 5.03% | |||
Surgical & Medical Instruments & Apparatus | ||||
900 | Teleflex Inc. | 50,031 | 2.64% | |
Telephone & Telegraph Apparatus | ||||
2,525 | Polycom, Inc. * | 61,509 | 3.25% | |
Wholesale - Drugs, Proprietaries & Druggists' Sundries | ||||
975 | Amerisourcebergen Corp. | 38,990 | 2.07% | |
Wholesale - Misc Durable Goods | ||||
2,375 | Pool Corp | 42,180 | 2.24% | |
Total for Common Stock (Cost $2,031,509) | $ 1,888,356 | 99.92% | ||
CASH EQUIVALENTS | ||||
21,899 | SEI Daily Income Treasury Government CL B 1.97% ** | 21,899 | 1.16% | |
(Cost $21,899) | ||||
Total Investment Securities | 1,910,255 | 101.08% | ||
(Cost $2,053,408) | ||||
Liabilities In Excess of Other Assets | (20,391) | -1.08% | ||
| ||||
Net Assets | $ 1,889,864 | 100.00% |
*Non-Income Producing Securities.
**Variable Rate Security; the rate shown was the rate at
June 30, 2008.
The accompanying notes are an integral part of these
financial statements.
2008 Semi-Annual Report 22
Paradigm Intrinsic Value Fund |
|
| ||
Schedule of Investments | ||||
June 30, 2008 (Unaudited) | ||||
Shares/Principal Amount |
| Market Value | % of Net Assets | |
COMMON STOCKS | ||||
Beverages | ||||
655 | Dr Pepper Snapple Group, Inc. * | $ 13,742 | ||
595 | Pepsico, Inc. | 37,836 | ||
51,578 | 2.42% | |||
Bottled & Canned Soft Drinks & Carbonated Waters | ||||
878 | Cadbury Schweppes plc ** | 44,181 | 2.08% | |
Chemicals & Allied Products | ||||
2,895 | Innospec Inc. | 54,484 | 2.56% | |
Crude Petroleum & Natural Gas | ||||
215 | Apache Corp. | 29,885 | ||
455 | EnCana Corp. | 41,373 | ||
510 | Plains Exploration & Production Company * | 37,215 | ||
108,473 | 5.10% | |||
Fire, Marine & Casualty Insurance | ||||
2,300 | American Financial Group Inc. | 61,525 | ||
11 | Berkshire Hathaway Inc. Class B * | 44,132 | ||
105,657 | 4.96% | |||
Food and Kindred Products | ||||
555 | Nestle SA ** | 62,771 | 2.95% | |
Guided Missiles & Space Vehicles & Parts | ||||
405 | Alliant Techsystems Inc. * | 41,180 | 1.94% | |
Insurance Agents, Brokers & Service | ||||
2,360 | Marsh & McLennan Companies, Inc. | 62,658 | 2.94% | |
Leather & Leather Products | ||||
2,375 | Coach Inc. * | 68,590 | 3.22% | |
Men's & Boys' Furnishings, Work Clothing, and Allied Garments | ||||
1,715 | Phillips-Van Heusen Corp. | 62,803 | 2.95% | |
Misccellaneous Industrial & Commercial Machinery & Equipment | ||||
1,545 | Curtiss-Wright Corp. | 69,123 | 3.25% | |
Miscellaneous Fabricated Metal Products | ||||
945 | Parker Hannifin Corporation | 67,397 | 3.17% | |
Miscellaneous Metal Ores | ||||
�� 1,120 | Cameco Corp. | 48,014 | 2.26% | |
Newspapers: Publishing or Publishing and Printing | ||||
3,270 | News Corp. Class A | 49,181 | 2.31% | |
Petroleum Refining | ||||
375 | ConocoPhillips | 35,396 | 1.66% | |
Railroads, Line-Haul Operating | ||||
820 | Canadian National Railway Company | 39,426 | 1.85% | |
Retail - Women's Clothing Stores | ||||
1,810 | AnnTaylor Stores Corp.* | 43,368 | 2.04% | |
Rolling Drawing & Extruding of Nonferrous Metals | ||||
540 | RTI International Metals Inc. * | 19,235 | 0.90% | |
Semiconductors & Related Devices | ||||
1,755 | Applied Materials Inc. | 33,503 | 1.57% | |
Services - Business Services | ||||
1,770 | Fair Isaac Corp. | 36,763 | 1.73% | |
Services - Hospitals | ||||
1,015 | Magellan Health Services Inc. * | 37,585 | 1.77% | |
Service - Prepackaged Software | ||||
5,355 | Compuware Corp. * | 51,087 | 2.40% | |
Ship & Boat Building & Repairing | ||||
945 | General Dynamics Corp. | 79,569 | 3.74% | |
*Non-Income Producing Securities.
**ADR - American Depository Receipt.
The accompanying notes are an integral part of these
financial statements.
2008 Semi-Annual Report 23
Paradigm Intrinsic Value Fund |
|
| ||
Schedule of Investments | ||||
June 30, 2008 (Unaudited) | ||||
Shares/Principal Amount |
| Market Value | % of Net Assets | |
COMMON STOCKS | ||||
Special Industry Machinery, NEC | ||||
790 | Cymer Inc. * | $ 21,235 | ||
1,100 | Varian Semiconductor Equipment Associates Inc. * | 38,302 | ||
59,537 | 2.80% | |||
Tires & Inner Tubes | ||||
2,300 | Goodyear Tire & Rubber Co. * | 41,009 | 1.93% | |
Transportation Services | ||||
585 | GATX Corp. | 25,933 | 1.22% | |
Water Transportation | ||||
5,610 | Horizon Lines, Inc. | 55,820 | 2.62% | |
Wholesale - Electronic Parts & Equipment, NEC | ||||
1,930 | Avnet Inc. * | 52,650 | 2.47% | |
Total for Common Stock (Cost $1,591,779) | $ 1,506,971 | 70.81% | ||
REAL ESTATE INVESTMENT TRUSTS | ||||
9,500 | Anworth Mortgage Asset Corp. | 61,845 | ||
9,565 | MFA Mortgage Investments Inc. | 62,364 | ||
Total for Real Estate Investment Trusts (Cost - $136,096) | 124,209 | 5.84% | ||
CASH EQUIVALENTS | ||||
427,391 | SEI Daily Income Treasury Government CL B 1.97% *** | 427,391 | 20.08% | |
(Cost $427,391) | ||||
Total Investment Securities | 2,058,571 | 96.73% | ||
(Cost $2,155,266) | ||||
Other Assets In Excess of Liabilities | 69,495 | 3.27% | ||
| ||||
Net Assets | $ 2,128,066 | 100.00% |
*Non-Income Producing Securities.
***Variable Rate Security; the rate shown was the rate at
June 30, 2008.
The accompanying notes are an integral part of these
financial statements.
2008 Semi-Annual Report 24
Paradigm Small Cap Growth Fund | ||||
Schedule of Investments | ||||
June 30, 2008 (Unaudited) | ||||
Shares/Principal Amount | Market Value | % of Net Assets | ||
COMMON STOCKS | ||||
Agricultural Chemicals | ||||
15 | Terra Industries Inc. * | $ 740 | 2.31% | |
Apparel & Other Finished Products of Fabrics & Similar Material | ||||
35 | G-III Apparel Group, Ltd. * | 432 | ||
5 | Gymboree Corp. * | 200 | ||
632 | 1.98% | |||
Beverages | ||||
16 | Compania Cervecerias Unidas S.A. | 467 | 1.46% | |
Biological Products, (No Diagnostic Substances) | ||||
15 | Acorda Therapeutics, Inc. * | 493 | ||
7 | Imclone Systems Inc. * | 283 | ||
20 | ZymoGenetics, Inc.* | 168 | ||
944 | 2.95% | |||
Bituminous Coal & Lignite Surface Mining | ||||
11 | Alpha Natural Resources Inc. * | 1,147 | 3.58% | |
Bottled & Canned Soft Drinks Carbonated Waters | ||||
7 | National Beverage Corp. * | 51 | 0.16% | |
Crude Petroleum & Natural Gas | ||||
20 | ATP Oil & Gas Corp. * | 789 | ||
16 | Cimarex Energy Co. | 1,115 | ||
15 | Comstock Resources, Inc. * | 1,266 | ||
5 | Stone Energy Corp. * | 330 | ||
5 | Swift Energy Co. * | 330 | ||
3,830 | 11.97% | |||
Deep Sea Foreign Transportation | ||||
5 | Eagle Bulk Shipping Inc. | 148 | 0.46% | |
Electrical Industrial Apparatus | ||||
10 | GrafTech International Ltd. * | 268 | 0.84% | |
Fire, Marine & Casualty Insurance | ||||
36 | Flagstone Reinsurance Holdings Ltd. | 424 | 1.33% | |
General Building Contractors - Nonresidential Buildings | ||||
10 | Perini Corp. * | 331 | 1.03% | |
Industrial Instruments For Measurement, Display and Control | ||||
6 | Esterline Technologies Corp. * | 296 | 0.93% | |
Laboratory Analytical Instruments | ||||
3 | Illumina Inc. * | 261 | 0.82% | |
Malt Beverages | ||||
7 | Boston Beer Co. Inc. * | 285 | 0.89% | |
Men's & Boys' Furnishings, Work Clothing, and Allied Garments | ||||
20 | Phillips-Van Heusen Corp. | 732 | 2.29% | |
Mineral Royalty Traders | ||||
15 | Royal Gold Inc. | 470 | 1.47% | |
Miscellaneous Industrial & Commercial Machinery & Equipment | ||||
13 | Moog Inc. Class A * | 484 | 1.51% | |
Miscellaneous Manufacturing Industries | ||||
47 | PokerTek, Inc. * | 173 | ||
25 | Shuffle Master Inc. * | 124 | ||
297 | 0.93% | |||
Miscellaneous Metal Ores | ||||
46 | Polymet Mining Corp. * | 179 | 0.56% | |
Natural Gas Transmission | ||||
9 | Williams Partners L.P. | 296 | 0.93% | |
*Non-Income Producing Securities.
The accompanying notes are an integral part of these
financial statements.
2008 Semi-Annual Report 25
Paradigm Small Cap Growth Fund |
|
| ||
Schedule of Investments | ||||
June 30, 2008 (Unaudited) | ||||
Shares/Principal Amount |
| Market Value | % of Net Assets | |
COMMON STOCKS | ||||
Orthopedic, Prosthetic & Surgical Appliances | ||||
7 | Edwards Lifesciences Corp. * | $ 434 | ||
30 | Hansen Medical, Inc. * | 502 | ||
2 | Intuitive Surgical, Inc. * | 539 | ||
1,475 | 4.61% | |||
Petroleum Refining | ||||
3 | Alon USA Energy Inc. | 36 | 0.11% | |
Pharmaceutical Preparations | ||||
13 | BioMarin Pharmaceutical Inc. * | 377 | 1.18% | |
Prefabricated Metal Buildings & Components | ||||
10 | NCI Building Systems Inc. * | 367 | 1.15% | |
Refrigeration & Service Industry Machinery | ||||
26 | TurboChef Technologies Inc. * | 124 | 0.39% | |
Retail - Catalog & Mail-Order Houses | ||||
25 | Affinity Media International Corp. * | 148 | 0.46% | |
Retail - Eating Places | ||||
5 | Buffalo Wild Wings Inc. * | 124 | 0.39% | |
Retail - Family Clothing Stores | ||||
5 | The Childrens Place Retail Stores, Inc. * | 180 | 0.56% | |
Search, Detection, Navigation, Guidance, Aeronautical Systems | ||||
10 | FLIR Systems Inc. * | 406 | 1.27% | |
Semiconductors & Related Devices | ||||
95 | Cirrus Logic Inc. * | 528 | ||
15 | Hittite Microwave Corporation * | 534 | ||
1,062 | 3.32% | |||
Services - Business Services, NEC | ||||
15 | DG FastChannel, Inc. * | 259 | ||
15 | HMS Holdings Corp. * | 322 | ||
581 | 1.82% | |||
Services - Commercial Physical & Biological Research | ||||
5 | Charles River Laboratories International Inc. * | 320 | 1.00% | |
Services - Computer Integrated Systems | ||||
65 | Macrovision Solutions Corp. * | 972 | 3.04% | |
Services - Computer Programming Services | ||||
121 | Entrust Inc. * | 356 | 1.11% | |
Services - Equipment Rental & Leasing | ||||
9 | Entrust Inc. * | 154 | 0.48% | |
Services - Management Consulting | ||||
3 | FTI Consulting, Inc. * | 205 | ||
5 | inVentiv Health, Inc. * | 139 | ||
344 | 1.08% | |||
Services - Motion Picture & Video Tape Production | ||||
121 | Lions Gate Entertainment Corp. * | 1,254 | 3.92% | |
Services - Prepackaged Software | ||||
6 | Ansys, Inc. * | 283 | ||
10 | THQ Inc. * | 202 | ||
39 | Ultimate Software Group Inc. * | 1,390 | ||
1,875 | 5.86% | |||
Surgical & Medical Instruments & Apparatus | ||||
26 | NuVasive, Inc. * | 1,161 | 3.63% | |
Telephone Communications (No Radio Telephone) | ||||
20 | NTELOS Holdings Corp. | 507 | 1.58% |
*Non-Income Producing Securities.
The accompanying notes are an integral part of these
financial statements.
2008 Semi-Annual Report 26
Paradigm Small Cap Growth Fund |
|
| ||
Schedule of Investments | ||||
June 30, 2008 (Unaudited) | ||||
Shares/Principal Amount |
| Market Value | % of Net Assets | |
COMMON STOCKS | ||||
Television Broadcasting Stations | ||||
5 | Central European Media Enterprises Ltd. * ** | $ 453 | 1.42% | |
Water Supply | ||||
20 | American Water Works Company, Inc. * | 444 | 1.38% | |
Water Transportation | ||||
5 | Knightsbridge Tankers Limited ** | 161 | 0.50% | |
Wholesale-Farm Product Raw Materials | ||||
33 | SunOpta Inc. * | 171 | 0.52% | |
Women's, Misses', Children's & Infants' Undergarments | ||||
15 | Guess? Inc. | 562 | 1.75% | |
Total for Common Stock (Cost $24,471) | $ 25,896 | 80.93% | ||
CASH EQUIVALENTS | ||||
6,128 | SEI Daily Income Treasury Government CL B 1.97% *** | 6,128 | 19.15% | |
(Cost $6,128) | ||||
Total Investment Securities | 32,024 | 100.08% | ||
(Cost $30,599) | ||||
Liabilities In Excess of Other Assets | (25) | -0.08% | ||
| ||||
Net Assets | $ 31,999 | 100.00% |
*Non-Income Producing Securities.
**ADR - American Depository Receipt.
***Variable Rate Security; the rate shown was the rate at
June 30, 2008.
The accompanying notes are an integral part of these
financial statements.
2008 Semi-Annual Report 27
Paradigm Funds |
|
|
|
Statement of Assets and Liabilities (Unaudited) | Value | Select | |
June 30, 2008 | Fund | Fund | |
Assets: | |||
Investment Securities at Market Value | $ 117,195,443 | $ 4,917,141 | |
Receivable for Securities Sold | 40,600 | 21,220 | |
Receivable for Fund Shares Sold | 150,909 | - | |
Dividend Receivable | 64,799 | 2,294 | |
Interest Receivable | 16,727 | 319 | |
Total Assets | 117,468,478 | 4,940,974 | |
Liabilities: | |||
Payable for Securities Purchased | 200,288 | 2,597 | |
Payable for Fund Shares Redeemed | 166,132 | 23,320 | |
Payable to Advisor | 204,905 | 7,171 | |
Total Liabilities | 571,325 | 33,088 | |
Net Assets | $ 116,897,153 | $ 4,907,886 | |
Net Assets Consist of: | |||
Paid In Capital | $ 118,614,296 | $ 4,485,323 | |
Accumulated Net Investment Income (Loss) | 490,478 | (3,536) | |
Accumulated Undistributed Realized Gain (Loss) on Investments - Net | (3,529,029) | 166,461 | |
Unrealized Appreciation in Value of Investments Securities - Net | 1,321,408 | 259,638 | |
Net Assets | $ 116,897,153 | $ 4,907,886 | |
Net Asset Value and Offering Price (Note 2) | $ 44.71 | $ 25.13 | |
Investments at Identified Cost | $ 115,874,035 | $ 4,657,503 | |
Shares Outstanding (Unlimited number of shares authorized) | 2,614,831 | 195,287 | |
Statement of Operations (Unaudited) | |||
For the six months ended June 30, 2008 | |||
Investment Income: | |||
Dividends | $ 1,504,894 | $ 54,806 | |
Interest | 132,694 | 4,006 | |
Total Investment Income | 1,637,588 | 58,812 | |
Expenses: | |||
Investment Advisor Fees | 1,144,758 | 62,348 | |
Interest Expense | 2,352 | - | |
Total Expenses | 1,147,110 | 62,348 | |
Net Expenses | 1,147,110 | 62,348 | |
Net Investment Income (Loss) | 490,478 | (3,536) | |
Realized and Unrealized Gain (Loss) on Investments: | |||
Net Realized Gain (Loss) on Investments | (3,655,650) | 173,897 | |
Net Change in Unrealized Appreciation (Depreciation) on Investments | (7,964,450) | (1,063,846) | |
Net Realized and Unrealized Gain (Loss) on Investments | (11,620,100) | (889,949) | |
Net Decrease in Net Assets from Operations | $ (11,129,622) | $ (893,485) |
The accompanying notes are an integral part of these
financial statements.
2008 Semi-Annual Report 28
Paradigm Funds |
|
| ||
Capital | ||||
Statement of Assets and Liabilities (Unaudited) | Opportunity | Appreciation | ||
June 30, 2008 | Fund | Fund | ||
Assets: | ||||
Investment Securities at Market Value | $ 3,526,064 | $ 1,910,255 | ||
Receivable for Securities Sold | - | 21,251 | ||
Dividend Receivable | 1,827 | 896 | ||
Interest Receivable | 272 | 40 | ||
Total Assets | 3,528,163 | 1,932,442 | ||
Liabilities: | ||||
Payable for Securities Purchased | - | 39,432 | ||
Payable for Fund Shares Redeemed | - | 1,093 | ||
Payable to Advisor | 4,817 | 2,053 | ||
Total Liabilities | 4,817 | 42,578 | ||
Net Assets | $ 3,523,346 | $ 1,889,864 | ||
Net Assets Consist of: | ||||
Paid In Capital | $ 3,992,922 | $ 2,659,726 | ||
Accumulated Net Investment Income (Loss) | (12,150) | (1,269) | ||
Accumulated Undistributed Realized Gain (Loss) on Investments - Net | (223,270) | (625,440) | ||
Unrealized Appreciation (Depreciation) in Value of Investments Securities - Net | (234,156) | (143,153) | ||
Net Assets | $ 3,523,346 | $ 1,889,864 | ||
Net Asset Value and Offering Price (Note 2) | $ 19.90 | $ 17.07 | ||
Investments at Identified Cost | $ 3,760,220 | $ 2,053,408 | ||
Shares Outstanding (Unlimited number of shares authorized) | 177,091 | 110,696 | ||
Statement of Operations (Unaudited) | ||||
For the six months ended June 30, 2008 | ||||
Investment Income: | ||||
Dividends | $ 18,703 | $ 15,416 | ||
Interest | 3,339 | 512 | ||
Total Investment Income | 22,042 | 15,928 | ||
Expenses: | ||||
Investment Advisor Fees | 45,589 | 20,063 | ||
Total Expenses | 45,589 | 20,063 | ||
Less: Expenses Waived | (11,397) | (2,866) | ||
Net Expenses | 34,192 | 17,197 | ||
Net Investment Income (Loss) | (12,150) | (1,269) | ||
Realized and Unrealized Gain (Loss) on Investments: | ||||
Net Realized Gain (Loss) on Investments | (221,324) | (614,012) | ||
Net Change in Unrealized Appreciation (Depreciation) on Investments | (438,717) | 188,769 | ||
Net Realized and Unrealized Gain (Loss) on Investments | (660,041) | (425,243) | ||
Net Decrease in Net Assets from Operations | $ (672,191) | $ (426,512) |
The accompanying notes are an integral part of these
financial statements.
2008 Semi-Annual Report 29
Paradigm Funds |
|
| ||
Intrinsic | Small Cap | |||
Statement of Assets and Liabilities (Unaudited) | Value | Growth | ||
June 30, 2008 | Fund | Fund | ||
Assets: | ||||
Investment Securities at Market Value | $ 2,058,571 | $ 32,024 | ||
Receivable for Fund Shares Sold | ||||
Receivable for Securities Sold | 70,768 | - | ||
Dividend Receivable | 517 | 5 | ||
Interest Receivable | 487 | 12 | ||
Total Assets | 2,130,343 | 32,041 | ||
Liabilities: | ||||
Payable to Advisor | 2,277 | 42 | ||
Total Liabilities | 2,277 | 42 | ||
Net Assets | $ 2,128,066 | $ 31,999 | ||
Net Assets Consist of: | ||||
Paid In Capital | $ 2,254,862 | $ 32,382 | ||
Accumulated Net Investment Income (Loss) | 23,088 | (15) | ||
Accumulated Undistributed Realized Gain (Loss) on Investments - Net | (53,189) | (1,793) | ||
Unrealized Appreciation (Depreciation) in Value of Investments Securities - Net | (96,695) | 1,425 | ||
Net Assets | $ 2,128,066 | $ 31,999 | ||
Net Asset Value and Offering Price (Note 2) | $ 18.99 | $ 19.56 | ||
Investments at Identified Cost | $ 2,155,266 | $ 30,599 | ||
Shares Outstanding (Unlimited number of shares authorized) | 112,036 | 1,636 | ||
Statement of Operations (Unaudited) | ||||
For the six months ended June 30, 2008 | ||||
Investment Income: | ||||
Dividends (Foreign taxes and fees withheld $221, $6, respectively) | $ 25,772 | $ 39 | ||
Interest | 7,449 | 154 | ||
Total Investment Income | 33,221 | 193 | ||
Expenses: | ||||
Investment Advisor Fees | 10,133 | 208 | ||
Total Expenses | 10,133 | 208 | ||
Net Expenses | 10,133 | 208 | ||
Net Investment Income (Loss) | 23,088 | (15) | ||
Realized and Unrealized Gain (Loss) on Investments: | ||||
Net Realized Gain (Loss) on Investments | (53,189) | (1,793) | ||
Net Change in Unrealized Appreciation (Depreciation) on Investments | (96,695) | 1,425 | ||
Net Realized and Unrealized Gain (Loss) on Investments | (149,884) | (368) | ||
Net Decrease in Net Assets from Operations | $ (126,796) | $ (383) |
The accompanying notes are an integral part of these
financial statements
2008 Semi-Annual Report 30
Paradigm Funds |
|
|
|
|
|
|
|
|
Statements of Changes in Net Assets | Value Fund | Select Fund | ||||||
(Unaudited) | (Unaudited) | |||||||
1/1/2008 | 1/1/2007 | 1/1/2008 | 1/1/2007 | |||||
to | to | to | to | |||||
6/30/2008 | 12/31/2007 | 6/30/2008 | 12/31/2007 | |||||
From Operations: | ||||||||
Net Investment Income (Loss) | $ 490,478 | $ (785,187) | $ (3,536) | $ (25,547) | ||||
Net Realized Gain (Loss) on Investments and Short Positions | (3,655,650) | 4,153,214 | 173,897 | 17,379 | ||||
Change in Net Unrealized Appreciation (Depreciation) | (7,964,450) | (459,174) | (1,063,846) | 565,965 | ||||
Increase (Decrease) in Net Assets from Operations | (11,129,622) | 2,908,853 | (893,485) | 557,797 | ||||
From Distributions to Shareholders: | ||||||||
Net Investment Income | - | - | - | - | ||||
Net Realized Gain (Loss) from Security Transactions | - | (3,925,744) | - | (17,970) | ||||
Total Distributions to Shareholders | - | (3,925,744) | - | (17,970) | ||||
From Capital Share Transactions: | ||||||||
Proceeds From Sale of Shares | 33,637,789 | 100,524,715 | 170,708 | 5,370,689 | ||||
Proceeds from Redemption Fees (Note 2) | 28,013 | 27,242 | - | - | ||||
Shares Issued on Reinvestment of Dividends | - | 3,867,545 | - | 17,970 | ||||
Cost of Shares Redeemed | (21,885,564) | (43,898,992) | (5,478,380) | (1,493,447) | ||||
Net Increase (Decrease) from Shareholder Activity | 11,780,238 | 60,520,510 | (5,307,672) | 3,895,212 | ||||
Net Increase (Decrease) in Net Assets | 650,616 | 59,503,619 | (6,201,157) | 4,435,039 | ||||
Net Assets at Beginning of Period | 116,246,537 | 56,742,918 | 11,109,043 | 6,674,004 | ||||
Net Assets at End of Period | $116,897,153 | $116,246,537 | $4,907,886 | $11,109,043 | ||||
Accumulated Undistributed Net Investment Income/(Loss) | $ 490,478 | $ - | $ (3,536) | $ - | ||||
Share Transactions: | ||||||||
Issued | 734,071 | 1,967,239 | 6,458 | 199,502 | ||||
Reinvested | - | 78,195 | - | 638 | ||||
Redeemed | (478,459) | (854,854) | (209,165) | (54,151) | ||||
Net Increase (Decrease) in Shares | 255,612 | 1,190,580 | (202,707) | 145,989 | ||||
Shares Outstanding Beginning of Period | 2,359,219 | 1,168,639 | 397,994 | 252,005 | ||||
Shares Outstanding End of Period | 2,614,831 | 2,359,219 | 195,287 | 397,994 |
The accompanying notes are an integral part of these
financial statements.
2008 Semi-Annual Report 31
Paradigm Funds |
|
|
|
|
|
|
|
Statements of Changes in Net Assets | Opportunity Fund | Capital Appreciation | |||||
(Unaudited) | (Unaudited) | ||||||
1/1/2008 | 1/1/2007 | 1/1/2008 | 1/1/2007* | ||||
to | to | to | to | ||||
6/30/2008 | 12/31/2007 | 6/30/2008 | 12/31/2007 | ||||
From Operations: | |||||||
Net Investment Income (Loss) | $ (12,150) | $ (9,582) | $ (1,269) | $ 7,439 | |||
Net Realized Gain (Loss) on Investments | (221,324) | 167,757 | (614,012) | (11,428) | |||
Change in Net Unrealized Appreciation (Depreciation) | (438,717) | (204,857) | 188,769 | (331,922) | |||
Increase (Decrease) in Net Assets from Operations | (672,191) | (46,682) | (426,512) | (335,911) | |||
From Distributions to Shareholders: | |||||||
Net Investment Income | - | - | - | (7,433) | |||
Net Realized Gain (Loss) from Security Transactions | - | (166,837) | - | - | |||
Total Distributions to Shareholders | - | (166,837) | - | (7,433) | |||
From Capital Share Transactions: | |||||||
Proceeds From Sale of Shares | 25,626 | 2,073,387 | 19,776 | 4,857,053 | |||
Proceeds from Redemption Fees (Note 2) | - | - | - | - | |||
Shares Issued on Reinvestment of Dividends | - | 166,837 | - | 7,401 | |||
Cost of Shares Redeemed | (1,442,669) | (132,952) | (2,014,334) | (210,176) | |||
Net Increase (Decrease) from Shareholder Activity | (1,417,043) | 2,107,272 | (1,994,558) | 4,654,278 | |||
Net Increase (Decrease) in Net Assets | (2,089,234) | 1,893,753 | (2,421,070) | 4,310,934 | |||
Net Assets at Beginning of Period | 5,612,580 | 3,718,827 | 4,310,934 | - | |||
Net Assets at End of Period | $ 3,523,346 | $ 5,612,580 | $ 1,889,864 | $ 4,310,934 | |||
Accumulated Undistributed Net Investment Income/(Loss) | $ (12,150) | $ - | $ (1,269) | $ - | |||
Share Transactions: | |||||||
Issued | 1,227 | 82,592 | 1,133 | 235,472 | |||
Reinvested | - | 7,238 | - | 386 | |||
Redeemed | (68,852) | (5,324) | (116,096) | (10,199) | |||
Net Increase (Decrease) in Shares | (67,625) | 84,506 | (114,963) | 225,659 | |||
Shares Outstanding Beginning of Period | 244,716 | 160,210 | 225,659 | - | |||
Shares Outstanding End of Period | 177,091 | 244,716 | 110,696 | 225,659 |
*Commencement of operations.
The accompanying notes are an integral part of these
financial statements.
2008 Semi-Annual Report 32
Paradigm Funds |
|
|
|
|
|
|
|
Statements of Changes in Net Assets | Intrinsic Value Fund | Small Cap Growth Fund | |||||
(Unaudited) | (Unaudited) | ||||||
1/1/2008* | 1/1/2008* | ||||||
to | to | ||||||
6/30/2008 | 6/30/2008 | ||||||
From Operations: | |||||||
Net Investment Income (Loss) | $ 23,088 | $ (15) | |||||
Net Realized Gain (Loss) on Investments | (53,189) | (1,793) | |||||
Change in Net Unrealized Appreciation (Depreciation) | (96,695) | 1,425 | |||||
Increase (Decrease) in Net Assets from Operations | (126,796) | (383) | |||||
From Distributions to Shareholders: | |||||||
Net Investment Income | - | - | |||||
Net Realized Gain from Security Transactions | - | - | |||||
Total Distributions to Shareholders | - | - | |||||
From Capital Share Transactions: | |||||||
Proceeds From Sale of Shares | 2,271,297 | 32,382 | |||||
Proceeds from Redemption Fees (Note 2) | - | - | |||||
Shares Issued on Reinvestment of Dividends | - | - | |||||
Cost of Shares Redeemed | (16,435) | - | |||||
Net Increase from Shareholder Activity | 2,254,862 | 32,382 | |||||
Net Increase in Net Assets | 2,128,066 | 31,999 | |||||
Net Assets at Beginning of Period | - | - | |||||
Net Assets at End of Period | $ 2,128,066 | $ 31,999 | |||||
Accumulated Undistributed Net Investment Income/(Loss) | $ 23,088 | $ (15) | |||||
Share Transactions: | |||||||
Issued | 112,862 | 1,636 | |||||
Reinvested | - | ||||||
Redeemed | (826) | - | |||||
Net Increase in Shares | 112,036 | 1,636 | |||||
Shares Outstanding Beginning of Period | - | - | |||||
Shares Outstanding End of Period | 112,036 | 1,636 |
*Commencement of operations.
The accompanying notes are an integral part of these
financial statements.
2008 Semi-Annual Report 33
Paradigm Value Fund |
|
|
|
|
|
|
|
|
|
| ||
Financial Highlights - Paradigm Value Fund | ||||||||||||
(Unaudited) | ||||||||||||
Selected data for a share outstanding | 1/1/2008 | 1/1/2007 | 1/1/2006 | 1/1/2005 | 1/1/2004 | 1/1/2003* | ||||||
throughout the period: | to | to | to | to | to | to | ||||||
6/30/2008 | 12/31/2007 | 12/31/2006 | 12/31/2005 | 12/31/2004 | 12/31/2003 | |||||||
Net Asset Value - Beginning of Period | $ 49.27 | $ 48.55 | $ 42.90 | $ 37.51 | $ 28.83 | $ 20.00 | ||||||
Net Investment Loss (a) | 0.19 | (0.40) | (0.47) | (0.40) | (0.44) | (0.33) | ||||||
Net Gains on Securities (realized and unrealized) | (4.76) | 2.84 | 8.69 | 7.75 | 9.69 | 12.52 | ||||||
Total from Investment Operations | (4.57) | 2.44 | 8.22 | 7.35 | 9.25 | 12.19 | ||||||
Distributions (From Net Investment Income) | - | - | - | - | - | - | ||||||
Distributions (From Capital Gains) | - | (1.73) | (2.58) | (1.96) | (0.57) | (3.36) | ||||||
Total Distributions | - | (1.73) | (2.58) | (1.96) | (0.57) | (3.36) | ||||||
Proceeds from Redemption Fee (Note 2) | 0.01 | 0.01 | 0.01 | - | - | - | ||||||
Net Asset Value - End of Period | $ 44.71 | $ 49.27 | $ 48.55 | $ 42.90 | $ 37.51 | $ 28.83 | ||||||
Total Return (b) | (9.26)% | *** | 5.03% | 19.19% | 19.61% | 32.09% | 60.89% | |||||
Ratios/Supplemental Data | ||||||||||||
Net Assets - End of Period (Thousands) | $116,897 | $116,247 | $ 56,743 | $ 24,002 | $ 14,528 | $ 4,213 | ||||||
Ratio of Expenses to Average Net Assets, | ||||||||||||
Excluding Dividends on Securities Sold Short | ||||||||||||
and Interest Expense | 1.99% | ** | 2.00% | 2.00% | 2.00% | 1.99% | 2.00% | |||||
Ratio of Dividend Expense on Securities Sold Short | ||||||||||||
and Interest Expense to Average Net Assets | 0.00% | ** | 0.02% | 0.02% | 0.06% | 0.04% | - | |||||
Ratio of Expenses to Average Net Assets | 1.99% | ** | 2.02% | 2.02% | 2.06% | 2.03% | 2.00% | |||||
Ratio of Net Investment Loss to Average Net Assets | 0.85% | ** | -0.78% | -1.02% | -0.98% | -1.34% | -1.28% | |||||
Portfolio Turnover Rate | 37.69% | 59.75% | 69.95% | 67.39% | 91.66% | 138.81% |
Paradigm Select Fund |
|
|
|
|
|
|
|
|
Financial Highlights - Paradigm Select Fund | ||||||||
(Unaudited) | ||||||||
Selected data for a share outstanding throughout the period: | 1/1/2008 | 1/1/2007 | 1/1/2006 | 1/1/2005* | ||||
to | to | to | to | |||||
6/30/2008 | 12/31/2007 | 12/31/2006 | 12/31/2005 | |||||
Net Asset Value - Beginning of Period | $ 27.91 | $ 26.48 | $ 22.33 | $ 20.00 | ||||
Net Investment Loss (a) | (0.01) | (0.06) | (0.08) | (0.08) | ||||
Net Gains on Securities (realized and unrealized) | (2.77) | 1.54 | 4.92 | 2.49 | ||||
Total from Investment Operations | (2.78) | 1.48 | 4.84 | 2.41 | ||||
Distributions (From Net Investment Income) | - | - | - | - | ||||
Distributions (From Capital Gains) | - | (0.05) | (0.69) | (0.08) | ||||
Total Distributions | - | (0.05) | (0.69) | (0.08) | ||||
Proceeds from Redemption Fee (Note 2) | - | - | - | - | ||||
Net Asset Value - End of Period | $ 25.13 | $ 27.91 | $ 26.48 | $ 22.33 | ||||
Total Return (b) | (9.96)% | *** | 5.57% | 21.67% | 12.06% | |||
Ratios/Supplemental Data | ||||||||
Net Assets - End of Period (Thousands) | $ 4,908 | $ 11,109 | $ 6,674 | $ 2,521 | ||||
Ratio of Expenses to Average Net Assets | 1.50% | ** | 1.50% | 1.50% | 1.50% | |||
Ratio of Net Investment Loss to Average Net Assets | -0.09% | ** | -0.23% | -0.30% | -0.36% | |||
Portfolio Turnover Rate | 24.97% | 64.68% | 72.15% | 68.56% | ||||
* Commencement of operations. ** Annualized. *** Not Annualized. | ||||||||
(a) Per share amount calculated using the average shares method. | ||||||||
(b) Total return in the above table represents the rate that the investor would have earned or lost on an investment in the | ||||||||
fund assuming reinvestment of dividends. Returns do not reflect the deduction of taxes a shareholder would pay on Fund | ||||||||
distributions or redemption of Fund shares. |
The accompanying notes are an integral part of these
financial statements.
2008 Semi-Annual Report 34
Paradigm Opportunity Fund |
|
|
|
|
|
|
|
Financial Highlights - Paradigm Opportunity Fund | |||||||
(Unaudited) | |||||||
Selected data for a share outstanding throughout the period: | 1/1/2008 | 1/1/2007 | 1/1/2006 | 1/1/2005* | |||
to | to | to | to | ||||
6/30/2008 | 12/31/2007 | 12/31/2006 | 12/31/2005 | ||||
Net Asset Value - Beginning of Period | $ 22.94 | $ 23.21 | $ 21.33 | $ 20.00 | |||
Net Investment Income (Loss) (a) | (0.06) | (0.04) | (0.04) | 0.04 | |||
Net Gains (Loss) on Securities (realized and unrealized) | (2.98) | 0.47 | 2.47 | 1.49 | |||
Total from Investment Operations | (3.04) | 0.43 | 2.43 | 1.53 | |||
Distributions (From Net Investment Income) | - | - | - | (0.02) | |||
Distributions (From Capital Gains) | - | (0.70) | (0.55) | (0.18) | |||
Total Distributions | - | (0.70) | (0.55) | (0.20) | |||
Proceeds from Redemption Fee (Note 2) | - | - | - | - | |||
Net Asset Value - End of Period | $ 19.90 | $ 22.94 | $ 23.21 | $ 21.33 | |||
Total Return (b) | (13.25)% | *** | 1.85% | 11.39% | 7.65% | ||
Ratios/Supplemental Data | |||||||
Net Assets - End of Period (Thousands) | $ 3,523 | $ 5,613 | $ 3,719 | $ 3,289 | |||
Before Reimbursement | |||||||
Ratio of Expenses to Average Net Assets | 2.00% | ** | 2.00% | 2.00% | 2.00% | ||
Ratio of Net Investment Loss to Average Net Assets | -1.03% | ** | -0.67% | -0.68% | -0.11% | ||
After Reimbursement | |||||||
Ratio of Expenses to Average Net Assets (c) | 1.50% | ** | 1.50% | 1.50% | 1.69% | ||
Ratio of Net Investment Income (Loss) to Average Net Assets (c) | -0.53% | ** | -0.17% | -0.18% | 0.21% | ||
Portfolio Turnover Rate | 107.04% | 169.26% | 122.62% | 129.06% |
Paradigm Capital Appreciation Fund |
|
|
|
Financial Highlights - Paradigm Capital Appreciation Fund | |||
(Unaudited) | |||
Selected data for a share outstanding throughout the period: | 1/1/2008 | 1/1/2007* | |
to | to | ||
6/30/2008 | 12/31/2007 | ||
Net Asset Value - Beginning of Period | $ 19.10 | $ 20.00 | |
Net Investment Income (Loss) (a) | (0.01) | 0.04 | |
Net Gains (Loss) on Securities (realized and unrealized) | (2.02) | (0.91) | |
Total from Investment Operations | (2.03) | (0.87) | |
Distributions (From Net Investment Income) | - | (0.03) | |
Distributions (From Capital Gains) | - | - | |
Total Distributions | - | (0.03) | |
Proceeds from Redemption Fee (Note 2) | - | - | |
Net Asset Value - End of Period | $ 17.07 | $ 19.10 | |
Total Return (b) | (10.63)% | *** | (4.34)% |
Ratios/Supplemental Data | |||
Net Assets - End of Period (Thousands) | $ 1,890 | $ 4,311 | |
Before Reimbursement | |||
Ratio of Expenses to Average Net Assets | 1.40% | ** | 1.40% |
Ratio of Net Investment Loss to Average Net Assets | -0.29% | ** | -0.03% |
After Reimbursement | |||
Ratio of Expenses to Average Net Assets (c) | 1.20% | ** | 1.20% |
Ratio of Net Investment Income (Loss) to Average Net Assets (c) | -0.09% | ** | 0.17% |
Portfolio Turnover Rate | 20.17% | 82.42% | |
* Commencement of operations. ** Annualized. *** Not Annualized. | |||
(a) Per share amount calculated using the average shares method. | |||
(b) Total return in the above table represents the rate that the investor would have earned or lost on an investment in the | |||
Fund assuming reinvestment of dividends. Returns do not reflect the deduction of taxes a shareholder would pay on | |||
Fund distributions or redemption of Fund shares. | |||
(c) Such percentages reflect an expense waiver by the Advisor. |
The accompanying notes are an integral part of these
financial statements.
2008 Semi-Annual Report 35
Paradigm Intrinsic Value Fund |
|
|
Financial Highlights - Paradigm Capital Appreciation Fund | ||
(Unaudited) | ||
Selected data for a share outstanding throughout the period: | 1/1/2008* | |
to | ||
6/30/2008 | ||
Net Asset Value - Beginning of Period | $ 20.00 | |
Net Investment Income (Loss) (a) | (1.53) | |
Net Gains (Loss) on Securities (realized and unrealized) | 0.52 | |
Total from Investment Operations | (1.01) | |
Distributions (From Net Investment Income) | - | |
Distributions (From Capital Gains) | - | |
Total Distributions | - | |
Proceeds from Redemption Fee (Note 2) | - | |
Net Asset Value - End of Period | $ 18.99 | |
Total Return (b) | (5.05)% | *** |
Ratios/Supplemental Data | ||
Net Assets - End of Period (Thousands) | $ 2,128 | |
Ratio of Expenses to Average Net Assets | 1.25% | ** |
Ratio of Net Investment Income to Average Net Assets | 2.85% | ** |
Portfolio Turnover Rate | 49.83% |
Paradigm Small Cap Growth Fund |
|
|
Financial Highlights - Paradigm Capital Appreciation Fund | ||
(Unaudited) | ||
Selected data for a share outstanding throughout the period: | 1/1/2008* | |
to | ||
6/30/2008 | ||
Net Asset Value - Beginning of Period | $ 20.00 | |
Net Investment Income (Loss) (a) | (0.01) | |
Net Gains (Loss) on Securities (realized and unrealized) | (0.43) | |
Total from Investment Operations | (0.44) | |
Distributions (From Net Investment Income) | - | |
Distributions (From Capital Gains) | - | |
Total Distributions | - | |
Proceeds from Redemption Fee (Note 2) | - | |
Net Asset Value - End of Period | $ 19.56 | |
Total Return (b) | (2.20)% | *** |
Ratios/Supplemental Data | ||
Net Assets - End of Period (Thousands) | $ 32 | |
Ratio of Expenses to Average Net Assets | 1.50% | ** |
Ratio of Net Investment Loss to Average Net Assets | -0.11% | ** |
Portfolio Turnover Rate | 86.51% |
* Commencement of operations. ** Annualized. *** Not Annualized. | |||
(a) Per share amount calculated using the average shares method. | |||
(b) Total return in the above table represents the rate that the investor would have earned or lost on an investment in the | |||
fund assuming reinvestment of dividends. Returns do not reflect the deduction of taxes a shareholder would pay on Fund | |||
distributions or redemption of Fund shares. |
The accompanying notes are an integral part of these
financial statements.
2008 Semi-Annual Report 36
NOTES TO FINANCIAL STATEMENTS
PARADIGM FUNDS
June 30, 2008
(Unaudited)
1.) ORGANIZATION
The Paradigm Funds (the "Trust”) is an open-end management investment company organized in Ohio as a business trust on September 13, 2002 that may offer shares of beneficial interest in a number of separate series, each series representing a distinct fund with its own investment objectives and policies. The Paradigm Value Fund (“Value”) commenced operations on January 1, 2003. The Paradigm Value Fund's investment objective is long-term capital appreciation. The Paradigm Opportunity Fund (“Opportunity”) and Paradigm Select Fund (“Select”) both commenced operations on January 1, 2005 with long-term capital appreciation as their objective. The Paradigm Capital Appreciation Fund (“Capital Appreciation”) commenced operations on January 1, 2007. The Paradigm Capital Appreciation Fund's investment objective is long-term capital appreciation. The Paradigm Intrinsic Value Fund (“Intrinsic Value”) a nd Paradigm Small Cap Growth Fund (“Small Cap Growth”) both commenced operations on January 1, 2008 with long-term capital appreciation as their objective. The Advisor to Value, Opportunity, Select, Capital Appreciation, Intrinsic Value and Small Cap Growth (collectively the “Funds”) is Paradigm Funds Advisor LLC (the “Advisor”).
2.) SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION: Securities that are traded on any exchange, including the NASDAQ, are generally valued by a pricing service at the last quoted sale price. Lacking a last sale price, an equity security is valued at its last bid price except when, in the Advisor's opinion, the last bid price does not accurately reflect the current value of the security. All other securities for which over-the-counter market quotations are readily available are valued at their last bid price. When market quotations are not readily available, when the Advisor determines the last bid price does not accurately reflect the current value or when restricted securities are being valued, such securities are valued as determined in good faith by the Advisor, in conformity with guidelines adopted by and subject to review of the Board of Trustees of the Trust.
Fixed income securities generally are valued on the basis of prices furnished by a pricing service when the Advisor believes such prices accurately reflect the fair market value of such securities. A pricing service utilizes electronic data processing techniques based on yield spreads relating to securities with similar characteristics to determine prices for normal institutional-size trading units of debt securities without regard to sale or bid prices. If the Advisor decides that a price provided by the pricing service does not accurately reflect the fair market value of the securities, or when prices are not readily available from a pricing service or when restricted or illiquid securities are being valued, securities are valued at fair value as determined in good faith by the Advisor, in conformity with guidelines adopted by and subject to review of the Board of Trustees. Short term investments in fixed income securities with maturi ties of less than 60 days when acquired, or which subsequently are within 60 days of maturity, are valued by using the amortized cost method of valuation, which the Board of Trustees has determined will represent fair value.
In accordance with the Trust's good faith pricing guidelines, the Advisor is required to consider all appropriate factors relevant to the value of securities for which it has determined other pricing sources are not available or reliable as described above. No single standard for determining fair value controls, since fair value depends upon the circumstances of each individual case. As a general principle, the current fair value of an issue of securities being valued by the Advisor would appear to be the amount which the owner might reasonably expect to receive for them upon their current sale. Methods which are in accord with this principle may, for example, be based on (i) a multiple of earnings; (ii) a discount from market of a similar freely traded security (including a derivative security or a basket of securities traded on other markets, exchanges or among dealers); or (iii) yield to maturity with respect to debt issues, or a com bination of these and other methods.
In September 2006, FASB issued Statement on Financial Accounting Standards (SFAS) No. 157 "Fair Value Measurements." This standard establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires additional disclosure about fair value measurements. SFAS No. 157 applies to fair value measurements already required or permitted by existing standards. In accordance with SFAS No. 157, fair value is defined as the price that would be received by the Fund upon selling an asset or paid by the Fund to transfer a liability in an orderly transaction between market participants at the measurement date. In the absence of a principal market for the asset or liability, the assumption is that the transaction occurs on the most advantageous market for the asset or liability. SFAS No. 157 established a three-tier fair value hierarchy that prioritizes the assumptions, also known as "inp uts", to valuation techniques used by market participants to measure fair value. The term "inputs" refers broadly to the assumptions that market participants
2008 Semi-Annual Report 37
Notes to the Financial Statements (Unaudited) - continued
would use in pricing the asset or liability, including assumptions about risk, for example, the risk inherent in a particular valuation technique used to measure fair value (such as a pricing model) and/or the risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The valuation techniques used to measure fair value should maximize the use of observable inputs and minimize the use of unobservable inputs. The three-tier hierarchy of inputs is summarized in three levels with the highest priority given to Level 1 and the lowest priority given to Level 3: Level 1 - quoted prices in active markets for identical securities, Level 2 - other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) and Level 3 - significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments). The following is a summary of the inputs used as of June 30, 2008 in valuing the Funds’ assets carried at fair value:
Value Select Opportunity
Investments Investments Investments
Valuation Inputs
in Securities in Securities in Securities
Level 1- Quoted Prices $117,195,443 $4,917,141 $3,526,064
Level 2- Significant Other Observable Inputs
- - -
Level 3- Significant Unobservable Inputs
- - -
Total
$117,195,443 $4,917,141 $3,526,064
Capital Small Cap
Appreciation Intrinsic Value Growth
Investments Investments Investments
Valuation Inputs in Securities in Securities in Securities
Level 1- Quoted Prices
$1,910,255 $2,058,571 $ 32,024
Level 2- Significant Other Observable Inputs - - -
Level 3- Significant Unobservable Inputs - - -
Total $1,910,255 $2,058,571 $ 32,024
In March 2008, the Financial Accounting Standards Board issued the Statement of Financial Accounting Standards No.161, "Disclosures about Derivative Instruments and Hedging Activities" ("SFAS 161"). SFAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. SFAS 161 requires enhanced disclosures about the Funds’ derivative and hedging activities, including how such activities are accounted for and their effect on the Funds’ financial position, performance and cash flows. Management is currently evaluating the impact the adoption of SFAS 161 will have on the Funds’ financial statements and related disclosures.
SECURITY TRANSACTIONS AND OTHER: Security transactions are recorded based on a trade date. Dividend income is recognized on the ex-dividend date. Interest income is recognized on an accrual basis. The Funds use the specific identification basis in computing gain or loss on sale of investment securities. Discounts and premiums on fixed income securities purchased are amortized over the lives of the respective securities. Withholding taxes on foreign dividends have been provided for in accordance with the Funds’ understanding of the applicable country’s tax rules and rates.
SHARE VALUATION: The net asset value (the “NAV”) is generally calculated as of the close of trading on the New York Stock Exchange (normally 4:00 p.m. Eastern time) every day the Exchange is open. The NAV for each Fund is calculated by taking the total value of the Fund’s assets, subtracting its liabilities, and then dividing by the total number of shares outstanding, rounded to the nearest cent. The offering price and redemption price per share is equal to the net asset value per share, except that shares of each Fund are subject to a redemption fee of 2% if redeemed within 90 days of purchase. During six month period ended June 30, 2008 proceeds from redemption fees were $28,013, $0, $0, $0, $0 and $0 for the Value, Select, Opportunity, Capital Appreciation, Intrinsic Value and Small Cap Growth Funds, respectively.
INCOME TAXES: The Funds’ policy is to continue to comply with the requirements of Subchapter M of the Internal Revenue Code that are applicable to regulated investment companies and to distribute all of their taxable income to their shareholders. Therefore, no federal income tax provision is required.
The Funds adopted the provisions of Financial Accounting Standards Board Interpretation No. 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes, on June 29, 2007. The implementation of FIN 48 resulted in no material liability for unrecognized tax benefits and no material change to the
2008 Semi-Annual Report 38
Notes to the Financial Statements (Unaudited) - continued
beginning net asset value of the Funds.
As of and during the period ended June 30, 2008, the Funds did not have a liability for any unrecognized tax benefits. The Funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the statement of operations. During the period, the Funds did not incur any interest or penalties.
The Funds are not subject to examination by U.S. federal and state tax authorities for tax years before 2004.
ESTIMATES: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.
DISTRIBUTIONS TO SHAREHOLDERS: Distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. The treatment for financial reporting purposes of distributions made to shareholders during the year from net investment income or net realized capital gains may differ from their ultimate treatment for federal income tax purposes. These differences are caused primarily by differences in the timing of recognition of certain components of income, expense or realized capital gain for federal income tax purposes. Where such differences are permanent in nature, they are reclassified in the components of the net assets based on their ultimate characterization for federal income tax purposes. Any such reclassification will have no effect on net assets, results of operations or net asset values per share of any Fund.
3.) INVESTMENT ADVISORY AGREEMENTS
Each of the Funds has an investment advisory agreement (collectively the "Management Agreements") with the Advisor. Under the terms of the Management Agreements, the Advisor manages the investment portfolios of the Funds, subject to policies adopted by the Trust’s Board of Trustees. Under the Management Agreements, the Advisor, at its own expense and without reimbursement from the Trust, furnishes office space and all necessary office facilities, equipment and executive personnel necessary for managing the assets of the Funds. The Advisor also pays the salaries and fees of all of its officers and employees that serve as officers and trustees of the Trust. For its services and payment of certain Fund expenses as described below, the Advisor receives an annual investment management fee of 2.00% of Value Fund's average daily net assets up to $100 million and 1.75% of such assets in excess of $100 million; 2.00% of the averag e daily net assets from Opportunity; 1.50% of the average daily net assets from both Select and Small Cap Growth; 1.40% of the average daily net assets from Capital Appreciation and 1.25% of the average daily net assets from Intrinsic Value. As a result of the above calculation, for the six month period ended June 30, 2008, the Advisor earned management fees totaling $1,144,758, $62,348, $45,589 (before the waiver described below), $20,063 (before the waiver described below), $10,133 and $208 for the Value, Select, Opportunity, Capital Appreciation, Intrinsic Value and Small Cap Growth Funds, respectively. At June 30, 2008, $204,905, $7,171, $4,817, $2,053, $2,277 and $42 was due to the Advisor from the Value, Select, Opportunity, Capital Appreciation, Intrinsic Value and Small Cap Growth Funds, respectively. The Advisor has contractually agreed to waive management fees and/or reimburse Opportunity and Capital Appreciation to the extent necessary to maintain total annual operating expenses of those Funds (excluding brokerage fees and commissions, interest and other borrowing expenses, taxes, extraordinary expenses and indirect costs of investing in acquired funds) at 1.50% and 1.20%, respectively, of daily net assets through May 1, 2009. A total of $11,397 and $2,866 was waived for the six month period ended June 30, 2008 for the Opportunity and Capital Appreciation Funds, respectively. The Advisor pays all operating expenses of the Funds with the exception of taxes, brokerage fees and commissions, borrowing costs (such as (a) interest and (b) dividend expenses on securities sold short) and extraordinary expenses as defined under accounting principles generally accepted in the United States of America and indirect costs of investing in acquired funds.
Certain officers and a shareholder of the Advisor are also officers and/or a Trustee of the Trust. These individuals may receive benefits from the Advisor resulting from management fees paid to the Advisor from the Funds.
The Trustees who are not interested persons of the Funds were paid $2,000 for each of the two meetings for the six month period ended June 30, 2008 for the Trust. Under the Management Agreements, the Advisor pays these fees.
4.) APPROVAL AND RENEWAL OF INVESTMENT ADVISORY AGREEMENTS (Unaudited)
On December 3, 2007 the Board of Trustees considered the approval of the Management Agreement for Intrinsic Value and Small Cap Growth. In approving the Management Agreements, the Board of Trustees received material from the Advisor (the "Report") addressing the following factors: (i) the
2008 Semi-Annual Report 39
Notes to the Financial Statements (Unaudited) - continued
investment performance of the Advisor; (ii) the nature, extent and quality of the services to be provided by the Advisor to the Funds; (iii) the cost of the services to be provided and the profits to be realized by the Advisor and its affiliates from the relationship with the Funds; (iv) the extent to which economies of scale will be realized as the Funds grow; and (v) whether the fee levels reflect these economies of scale to the benefit of the shareholders.
The Board discussed the background and investment management experience of the Advisor's professional staff. They reviewed with the Board the historical performance of other portfolios managed by the Advisor, and the growth of assets of the preceding year. As for the nature, extent and quality of the services provided by the Advisor, the Trustees analyzed the Advisor's experience and capabilities. The representatives of the Advisor reviewed and discussed with the Board the Advisor's ADV, and the Code of Ethics certifications. They summarized the information provided to the Board regarding matters such as the Advisor's financial condition and investment personnel of the Advisor. Furthermore, they reviewed the Advisor's financial information and discussed the firm's ability to meet its obligations under the Agreements. The Board concluded that the nature and extent of the services to be provided by the Advisor were consistent with their expectations, and that the quality of services provided to the other series of the Trust, particularly those provided by the portfolio managers, were consistent with their expectations. The Trustees also concluded that the Advisor has the resources to provide quality advisory services to the Funds.
As to the costs of the services to be provided, the Board reviewed the fees under the Agreements compared to each Fund’s a group of funds of similar size, style and objective (the “Peer Group”), which consisted of smaller size funds. The Report indicated that the Small Cap Growth Fund's expense ratio was lower than its Peer Group's average. The Report also indicated that the Intrinsic Value Fund's expense ratio was lower than its Peer Group's average. The Report also included information regarding fees charged to other clients of the Advisor. Based on this information, the Board concluded that each Fund’s advisory fees were reasonable. The Board also reviewed a projected profit and loss analysis prepared by the Advisor. The Trustees concluded that the Advisor's Agreements with the Funds would not be overly profitable, and that an in depth discussion regarding economies of scale would be premature ba sed on the fact that the Funds were new. It was the consensus of the Trustees, including the independent Trustees, that approval of the Management Agreement would be in the best interest of the Funds and the shareholders. Accordingly, the Board approved the Management Agreements for an initial two year period.
On February 13, 2008 the Board of Trustees considered the continuance of the Management Agreements for Value, Select, Opportunity and Capital Appreciation. In renewing the Management Agreements, the Board of Trustees received material from the Advisor (the "Report") addressing the following factors: (i) the investment performance of the Funds and the Advisor; (ii) the nature, extent and quality of the services provided by the Advisor to the Funds; (iii) the cost of the services to be provided and the profits to be realized by the Advisor and its affiliates from the relationship with the Funds; (iv) the extent to which economies of scale will be realized as the Funds grow; and (v) whether the fee levels reflect these economies of scale to the benefit of shareholders.
As to the performance of the Funds, the Report included information regarding the performance of each Fund compared to a group of funds of similar size, style and objective where fees and expenses had not been completely waived by the advisers to the funds (the "Peer Group"), as well as a larger group of funds categorized by Morningstar. All performance data was through the period ended December 31, 2007. The report also included comparative performance information for major indexes and other accounts managed by the Advisor. The Trustees noted that Value continued to perform well in relation to its benchmark and its Peer Group. In regards to Select and Opportunity, the Trustees noted that the Funds also continued to perform well, outperforming their benchmarks and their Peer Groups. The Trustees also discussed Capital Appreciation performance. It was noted that the Fund under-performed its index. The Trustees concl uded that the Value, Select, and Opportunity Funds' performance was either consistent with or above performance expectations. As for the Capital Appreciation Fund, the Trustees concluded that the Fund's performance was acceptable given the short operating history of the Fund and the negative impact of stock volatility over the short term.
As for the nature, extent and quality of the services provided by the Advisor, the Trustees analyzed the Advisor's experience and capabilities. The representatives of the Advisor reviewed and discussed with the Board the Advisor's ADV, and the Code of Ethics certifications. They summarized the information provided to the Board regarding matters such as the Advisor's financial condition and investment personnel of the Advisor. They also discussed the portfolio managers' backgrounds and investment management experience. Furthermore, they reviewed the Advisor's financial information and discussed the firm's ability to meet its obligations under the Agreements. The Board concluded that the nature and extent of the services provided by the Advisor were consistent with their expectations, and that the quality of services, particularly those provided by the portfolio managers, was exceptional. The
2008 Semi-Annual Report 40
Notes to the Financial Statements (Unaudited) - continued
Trustees also concluded that the Advisor has the resources to provide quality advisory services to the Funds.
As to the costs of the services to be provided, the Board reviewed the fees under the Agreements compared to the Peer Groups. The Value Fund's expense ratio was found to be higher than its Peer Group's average expense ratio, but within the range of its Peer Group. The report indicated that the Select Fund's, Opportunity Fund's, and Capital Appreciation Fund's expense ratios were lower than their Peer Group's average expense ratios. The Report also included information regarding fees charged to other clients of the Advisor. The Trustees concluded that the advisory fees were reasonable. The Trustees also reviewed a profit and loss analysis prepared by the Advisor that disclosed the direct and indirect expenses paid by the Advisor on behalf of each Fund, and the total revenue derived by the Advisor from the Funds. The Trustees noted that the Advisor did not utilize the affiliated broker and received no soft dollar benefits. &nb sp;The Trustees concluded that the Advisor was not overly profitable. Management noted that they anticipate breakpoints for the Value Fund in the future, but that a discussion regarding economies of scale would be premature based on the current size of the other Funds. It was the consensus of the Trustees, including the independent Trustees, that renewal of the Management Agreements would be in the best interests of the Funds and their shareholders. Accordingly, the Board approved the continuation of the Management Agreements for an additional year.
5.) INVESTMENTS
For the six month period ended June 30, 2008, purchases and sales of investment securities other than U.S. Government obligations and short-term investments were as follows:
Capital
Value Select Opportunity Appreciation
Purchases $49,116,751
$2,005,137 $4,613,295 $577,113
Sales
$39,865,782
$7,190,588
$6,096,783 $2,462,545
Intrinsic Value Small Cap Growth
Purchases $2,348,016
$40,829
Sales
$566,952
$14,565
There were no purchases or sales of U.S. Government obligations.
For federal income tax purposes, at June 30, 2008 the cost of securities on a tax basis and the composition of gross unrealized appreciation (the excess of value over tax cost) and depreciation (the excess of tax cost over value) were as follows:
Capital
Value Select Opportunity Appreciation
Cost of Investments $115,874,035 $4,657,503 $3,760,220 $2,053,408
Gross Unrealized Appreciation $13,594,705 $763,512 $97,896 $203,091
Gross Unrealized Depreciation ($12,273,297)
($503,874)
($332,052) ($346,244)
Net Unrealized Appreciation
(Depreciation) on Investments
$1,321,408 $259,638
($234,156) ($143,153)
Intrinsic Value Small Cap Growth
Cost of Investments $2,155,266
$30,599
Gross Unrealized Appreciation $66,434 $3,121
Gross Unrealized Depreciation ($163,129)
($1,696)
Net Unrealized Appreciation
(Depreciation) on Investments ($96,695) $1,425
6.) CAPITAL SHARES
At June 30, 2008, the Trust was authorized to issue an unlimited number of shares of beneficial interest. The following are the shares issued and paid in capital outstanding for the Funds at June 30, 2008:
Value Select Opportunity
Shares Issued and Outstanding
2,614,831 195,287 177,091
Paid in Capital
$118,614,296 $4,485,323 $3,992,922
Capital Appreciation Intrinsic Value Small Cap Growth
Shares Issued and Outstanding
110,696
112,036 1,636
Paid in Capital
$2,659,726 $2,254,862 $32,382
7.) CONTROL OWNERSHIP
The beneficial ownership, either directly or indirectly, of more than 25% of the voting shares of a fund
2008 Semi-Annual Report 41
Notes to the Financial Statements (Unaudited) - continued
creates a presumption of control of the fund, under section 2(a)(9) of the Investment Company Act of 1940, as amended. At June 30, 2008, Charles Schwab & Co., Inc. and National Financial Services, LLC both held through omnibus accounts, in aggregate, 42.07% and 26.54%, respectively, of the Value Fund, and therefore each may be deemed to control the Fund. Michael J. Rosenthal held, in aggregate, 34.86% of the Select Fund, and therefore may be deemed to control the Fund. Candace King Weir held, in aggregate, 87.77% of the Opportunity Fund, and therefore may be deemed to control the Fund. Also, Candace King Weir held, in aggregate, 79.81% of the Capital Appreciation Fund, and therefore may be deemed to control the Fund. Candace King Weir and Charles Schwab & Co., Inc., for the benefit of its customers, held, in aggregate, 66.94% and 30.02%, respectively, of the Intrinsic Value Fund, and therefore each may be deemed to c ontrol the Fund.
8.) DISTRIBUTIONS TO SHAREHOLDERS
The tax character of distributions paid during the period ended June 30, 2008 and the fiscal year ended December 31, 2007 were as follows:
Six Month Period
Fiscal Year Ended
Ended June 30, 2008 December 31, 2007
PARADIGM VALUE FUND
Ordinary Income
$ -
$ -
Short-term Capital Gain
-
-
Long-term Capital Gain
-
3,925,744
$ -
$ 3,925,744
PARADIGM SELECT FUND
Ordinary Income
$ -
$ -
Short-term Capital Gain
-
-
Long-term Capital Gain
-
17,970
$ -
$ 17,970
PARADIGM OPPORTUNITY FUND
Ordinary Income
$ -
$ -
Short-term Capital Gain
-
-
Long-term Capital Gain
-
166,837
$ -
$ 166,837
PARADIGM CAPITAL APPRECIATION FUND
Ordinary Income
$ -
$ 7,433
Short-term Capital Gain
-
-
Long-term Capital Gain
-
-
$ -
$ 7,433
PARADIGM INTRINSIC VALUE FUND (Inception date January 1, 2008)
Ordinary Income
$ -
Short-term Capital Gain
-
Long-term Capital Gain
-
$ -
PARADIGM SMALL CAP GROWTH FUND (Inception date January 1, 2008)
Ordinary Income
$ -
Short-term Capital Gain
-
Long-term Capital Gain
-
$ -
2008 Semi-Annual Report 42
DISCLOSURE OF EXPENSES
(Unaudited)
Shareholders of the Paradigm Funds (the “Funds”) incur ongoing costs. The ongoing costs associated with the Paradigm Value Fund include management fees and interest expense. The ongoing costs associated with the Paradigm Opportunity Fund, Paradigm Select Fund, Paradigm Capital Appreciation Fund, Paradigm Intrinsic Value Fund and Paradigm Small Cap Growth Fund consist solely of management fees. Although the Funds charge no sales loads or transaction fees, you will be assessed fees for outgoing wire transfers, returned checks and stop payment orders at prevailing rates charged by Mutual Shareholder Services, LLC, the Funds’ transfer agent. IRA accounts will be charged an $8.00 annual maintenance fee. The following example is intended to help you understand your ongoing costs of investing in the Funds and to compare these costs with similar costs of investing in other mutual funds. The examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period from January 1, 2008 to June 30, 2008.
The first line of the table below provides information about actual account values and actual expenses. In order to estimate the expenses a shareholder paid during the period covered by this report, shareholders can divide their account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6) and then multiply the result by the number in the first line under the heading entitled "Expenses Paid During the Period."
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Funds’ actual expense ratios and an assumed rate of return of 5% per year before expenses, which is not the Funds’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses paid by a shareholder for the period. Shareholders may use this information to compare the ongoing costs of investing in the Funds and other funds. In order to do so, compare these 5% hypothetical examples with the 5% hypothetical examples that appear in other funds' shareholder reports.
PARADIGM VALUE FUND
Expenses Paid
Beginning Ending During the Period*
Account Value Account Value January 1, 2008
January 1, 2008 June 30, 2008 to June 30, 2008
Actual $1,000.00 $907.45 $9.44
Hypothetical $1,000.00 $1,014.97 $9.97
(5% annual return
before expenses)
* Expenses are equal to the Fund’s annualized expense ratio of 1.99%, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
PARADIGM SELECT FUND
Expenses Paid
Beginning Ending During the Period*
Account Value Account Value January 1, 2008
January 1, 2008 June 30, 2008 to June 30, 2008
Actual $1,000.00 $900.39 $7.09
Hypothetical $1,000.00 $1,017.40 $7.52
(5% annual return
before expenses)
* Expenses are equal to the Fund’s annualized expense ratio of 1.50%, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
2008 Semi-Annual Report 43
Disclosure of Expenses (Unaudited) - continued
PARADIGM OPPORTUNITY FUND
Expenses Paid
Beginning Ending During the Period*
Account Value Account Value January 1, 2008
January 1, 2008 June 30, 2008 to June 30, 2008
Actual $1,000.00 $867.48 $9.29
Hypothetical $1,000.00 $1,014.92 $10.02
(5% annual return
before expenses)
* Expenses are equal to the Fund’s annualized expense ratio of 1.50%, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
PARADIGM CAPITAL APPRECIATION FUND
Expenses Paid
Beginning Ending During the Period*
Account Value Account Value January 1, 2008
January 1, 2008 June 30, 2008 to June 30, 2008
Actual $1,000.00 �� $893.72 $6.59
Hypothetical $1,000.00 $1,017.90 $7.02
(5% annual return
before expenses)
* Expenses are equal to the Fund’s annualized expense ratio of 1.20%, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
PARADIGM INTRINSIC VALUE FUND
Expenses Paid
Beginning Ending During the Period*
Account Value Account Value January 1, 2008
January 1, 2008 June 30, 2008 to June 30, 2008
Actual $1,000.00 $949.50 $6.03
* Expenses are equal to the Fund’s annualized expense ratio of 1.25%, multiplied by the average account value over the period, multiplied by 181/366 (to reflect the partial period).
Expenses Paid
Beginning Ending During the Period
Account Value Account Value January 1, 2008
January 1, 2008 June 30, 2008 to June 30, 2008**
Hypothetical** $1,000.00 $1,018.65 $6.27
(5% annual return
before expenses)
** The hypothetical example is calculated assuming that the Fund had been in operation for the full six month period from January 1, 2008 to June 30, 2008. As a result, expenses shown in this row are equal to the Fund’s annualized expense ratio of 1.25%, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
2008 Semi-Annual Report 44
Disclosure of Expenses (Unaudited) - continued
PARADIGM SMALL CAP GROWTH FUND
Expenses Paid
Beginning Ending During the Period*
Account Value Account Value January 1, 2008
January 1, 2008 June 30, 2008 to June 30, 2008
Actual $1,000.00 $978.00 $7.34
* Expenses are equal to the Fund’s annualized expense ratio of 1.50%, multiplied by the average account value over the period, multiplied by 181/366 (to reflect the partial period).
Expenses Paid
Beginning Ending During the Period
Account Value Account Value January 1, 2008
January 1, 2008 June 30, 2008 to June 30, 2008**
Hypothetical** $1,000.00 $1,017.40 $7.52
(5% annual return
before expenses)
** The hypothetical example is calculated assuming that the Fund had been in operation for the full six month period from January 1, 2008 to June 30, 2008. As a result, expenses shown in this row are equal to the Fund’s annualized expense ratio of 1.50%, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
2008 Semi-Annual Report 45
ADDITIONAL INFORMATION
June 30, 2008
(Unaudited)
AVAILABILITY OF QUARTERLY SCHEDULE OF INVESTMENTS
The Funds file their complete schedules of portfolio holdings with the Securities and Exchange Commission ("SEC") for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the SEC's Web site at http://www.sec.gov. The Funds’ Forms N-Q may also be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
PROXY VOTING GUIDELINES
Paradigm Funds Advisor LLC, the Funds’ Advisor, is responsible for exercising the voting rights associated with the securities held by the Funds. A description of the policies and procedures used by the Advisor in fulfilling this responsibility is available without charge on the Funds’ web site at www.paradigm-funds.com. It is also included in the Funds’ Statement of Additional Information, which is available on the Securities and Exchange Commission’s web site at http://www.sec.gov.
Information regarding how the Funds voted proxies, Form N-PX, relating to portfolio securities during the most recent 12-month period ended June 30 is available without charge, upon request, by calling our toll free number (1-800-239-0732). This information is also available on the Securities and Exchange Commission’s web site at http://www.sec.gov.
ADDITIONAL INFORMATION
You will find more information about the Funds at www.paradigm-funds.com. For shareholder inquiries, please call toll-free in the U.S. at 1-800-239-0732.
2008 Semi-Annual Report 46
Board of Trustees
Carl A. Florio
Lewis Golub
Candace King Weir
Anthony Mashuta
William P. Phelan
Investment Advisor
Paradigm Funds Advisor LLC
Nine Elk Street
Albany, NY 12207-1002
Counsel
Thompson Hine LLP
312 Walnut Street, 14th Floor
Cincinnati, OH 45202
Custodian
U.S. Bank, NA
425 Walnut Street
P.O. Box 1118
Cincinnati, OH 45201
Dividend Paying Agent,
Shareholders' Servicing Agent,
Transfer Agent
Mutual Shareholder Services
8000 Town Centre Dr., Suite 400
Broadview Hts., OH 44147
Fund Administrator
Premier Fund Solutions, Inc.
480 N. Magnolia Avenue, Suite 103
El Cajon, CA 92020
Independent Registered Public Accounting Firm
Cohen Fund Audit Services, Ltd.
800 Westpoint Pkwy., Suite 1100
Westlake, OH 44145-1524
This report is provided for the general information of the shareholders of the Paradigm Funds. This report is not intended for distribution to prospective investors in the Funds, unless preceded or accompanied by an effective prospectus.
Item 2. Code of Ethics. Not applicable.
Item 3. Audit Committee Financial Expert. Not applicable.
Item 4. Principal Accountant Fees and Services. Not applicable.
Item 5. Audit Committee of Listed Companies. Not applicable.
Item 6. Schedule of Investments. Not applicable. Schedule filed with Item 1.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Funds. Not applicable.
Item 8. Portfolio Managers of Closed End Funds. Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers. Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
The registrant has not adopted procedures by which shareholders may recommend nominees to the registrant’s board of trustees.
Item 11. Controls and Procedures.
(a)
The Registrant’s president and chief financial officer concluded that the disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”)) were effective as of a date within 90 days of the filing date of this report, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the Act.
(b)
There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the registrant’s second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12. Exhibits.
(a)(1)
Code of Ethics. Not applicable.
(a)(2)
Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.
(b) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Paradigm Funds
By: /s/ Candace King Weir
Candace King Weir
President
Date: 9 - 5 - 08
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: /s/ Candace King Weir
Candace King Weir
President
Date: 9 - 5 - 08
By: /s/ Robert A. Benton
Robert A. Benton
Chief Financial Officer
Date: 9 - 5 - 2008