PARADIGM Funds Trust, et al. – ‘485APOS’ on 3/1/07

On:  Thursday, 3/1/07, at 4:32pm ET   ·   Accession #:  950152-7-1681   ·   File #s:  811-21811, 333-128613

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Document/Exhibit                   Description                      Pages   Size 

 1: 485APOS     Paradigm Funds Trust 485APOS                         121    549K 
 2: EX-99.R.4   Miscellaneous Exhibit                                  2      9K 

485APOS   —   Paradigm Funds Trust 485APOS
Document Table of Contents

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 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 1, 2007

SECURITIES ACT FILE NO. 333-128613
 INVESTMENT COMPANY ACT FILE NO. 811-21811
 -------------------------------------------------------------

 U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

--------------------------------------------

FORM N-2/A

             REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933         |_|
                           PRE-EFFECTIVE AMENDMENT NO.                       |_|
                         POST-EFFECTIVE AMENDMENT NO. 1                      |X|

AND/OR

REGISTRATION STATEMENT UNDER THE
                         INVESTMENT COMPANY ACT OF 1940                      |_|
                                 AMENDMENT NO. 4                             |X|

--------------------------------------------

PARADIGM FUNDS TRUST
(Exact name of Registrant as specified in charter)

650 Fifth Avenue, 17th Floor
New York, NY 10019
(Address of Principal Executive Offices)

 Registrants Telephone Number, including Area Code: (212) 271-3388

 Ronald E. Wilhelm
Chief Compliance Officer
PARADIGM FUNDS TRUST
650 Fifth Avenue, 17th Floor
New York, NY 10019

                    (Name and address of agent for service) PLEASE SEND COPIES
OF ALL COMMUNICATIONS TO:                   

                                                        [Enlarge/Download Table]
                                                                                           
              BARRY BREEN, ESQ.                           MARC X. LOPRESTI, ESQ.           
Tannenbaum Helpern Syracuse & Hirschtritt LLP  Lederer, Nojima, Tagliaferro & LoPresti, LLP
              900 Third Avenue,                           45 Broadway, Suite 2200          
          New York, New York 10022                       New York, New York 10006          

--------------------------------------------

It is proposed that this filing will become effective when declared effective   
pursuant to Section 8(c)                                                        

If appropriate, check the following box:                                        

This post-effective amendment designates a new effective date for a previous    
registration statement:                                                         

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|_|   Immediately upon filing                                       
|_|   On [ ] pursuant to paragraph (b)                              
|X|   60 days after filing pursuant to paragraph (a)                
|_|   On ______ pursuant to paragraph (a) of Rule 486               

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES  
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE 
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT  
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE        
SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME        
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING        
PURSUANT TO SECTION 8(A), MAY DETERMINE.                                        

================================================================================

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                                                        [Enlarge/Download Table]

                                            CROSS-REFERENCE SHEET                                             
--------------------------------------------------------------------------------------------------------------
Item                                                                                                          
Number                                                     Location In Registration Statement (Caption)       
--------------------------------------------------------------------------------------------------------------
                                                    PART A                                                    
--------------------------------------------------------------------------------------------------------------
                                                                                                              
     1.    Outside Front Cover                             Outside Front Cover Page                           
     2.    Cover Pages; Other Offering Information         Inside Front and Outside Back Cover Page           
     3.    Fee Table and Synopsis                          Fees and Expenses; Fund Expenses                   
     4.    Financial Highlights                            Not Applicable                                     
     5.    Plan of Distribution                            The Offering - Shares of the Fund                  
     6.    Selling Members                                 Not Required                                       
     7.    Use of Proceeds                                 Use of Proceeds                                    
     8.    General Description of the Registrant           General Description of the Fund; Investment        
                                                           Objectives and Goals; Investment Strategies and    
                                                           Selection of Underlying Funds; Overview of the     
                                                           Investment Process; Risk Factors                   
     9.    Management                                      Fund Manager; Board of Trustees                    
    10.    Capital Stock, Long-Term Debt, and              Redemptions and Repurchases of Shares; Taxes       
           Other Securities                                                                                   
    11.    Defaults and Arrears on Senior Securities       Not Applicable                                     
    12.    Legal Proceedings                               Not Applicable                                     
    13.    Table of Contents of the Statement of           Table of Contents of SAI                           
           Additional Information                                                                             
--------------------------------------------------------------------------------------------------------------
                                                    PART B                                                    
--------------------------------------------------------------------------------------------------------------
    14.    Cover Page                                      Cover Page (SAI)                                   
    15.    Table of Contents                               Table of Contents of SAI                           
    16.    General Information and History                 General Description of the Trust                   
    17.    Investment Objectives and Policies              Investment Goals and Objectives; Overview of the   
                                                           Investment Process; Investment Strategies and      
                                                           Selection of Underlying Funds                      
    18.    Management                                      Management of the Funds                            
    19.    Control Persons and Principal Holders of        Not Applicable                                     
           Securities                                                                                         
    20.    Investment Advisory and Other Services          Control Persons                                    
    21.    Portfolio Managers                              Conflicts of Interest; Compensation of the Trustees
    22.    Tax Status                                      Taxes                                              
    23.    Financial Statements                            Not Applicable                                     
--------------------------------------------------------------------------------------------------------------
                                                    PART C                                                    
--------------------------------------------------------------------------------------------------------------
           Information required to be included in Part C is set forth under the                               
           appropriate Item, so numbered, in Part C to this Registration                                      
           Statement.                                                                                         

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 DATED APRIL [ ], 2007

PROSPECTUS

PARADIGM ADVANTAGE SERIES,
A SERIES OF PARADIGM FUNDS TRUST, A DELAWARE STATUTORY TRUST

UNITS OF BENEFICIAL INTEREST

PARADIGM Advantage Series (the "Fund") is a series of PARADIGM Funds Trust, a   
newly formed Delaware statutory trust registered under the Investment Company   
Act of 1940, as amended (the "Investment Company Act"), as a non-diversified,   
closed-end management investment company. The Fund's investment objective is to 
generate long-term capital appreciation with lower volatility than the broad    
equity markets. The Fund intends to achieve its objective by investing all or   
substantially all of its assets in PARADIGM Multi Strategy Fund I, LLC (the     
"Portfolio"), a recently formed Delaware limited liability company registered   
under the Investment Company Act as a non-diversified, closed-end management    
investment company. The Portfolio has the same investment objective as the Fund.
The Portfolio seeks to accomplish this objective by allocating its assets among 
a diverse group of skill-based portfolio managers that specialize in absolute   
return strategies. The Portfolio will invest in approximately 25 to 35          
investment funds (the "Underlying Funds"), typically referred to as hedge funds,
managed by third-party managers who employ a variety of absolute return         
investment strategies in pursuit of attractive risk-adjusted investments        
consistent with the preservation of capital. The actual number of Underlying    
Funds may vary and may change materially over time as determined by the         
Investment Advisor (as defined below) in its sole discretion.                   

Allocation of assets among a professionally selected cross-section of hedge     
funds that invest in a variety of financial markets and utilize a broad range or
alternative investment strategies has the potential to reduce the volatility of 
investment returns from that which might be associated with a direct investment 
with any single investment manager.                                             

Unregistered investment funds typically provide greater flexibility than        
traditional investment funds (i.e. registered investment companies) as to the   
type of securities that may be owned, the types of trading strategies that may  
be employed, and, in some cases, the amount of leverage that may be used. The   
Underlying Funds utilized by the Portfolio may invest and trade in a wide range 
of securities, financial instruments and markets and may pursue a variety of    
investment strategies. These investments may include, but are not limited to,   
U.S. and foreign equity and fixed income securities. The investment programs of 
the Underlying Funds may also involve the use of a variety of sophisticated     
investment techniques for both hedging and non-hedging purposes, including:     
short sales of securities; use of leverage; and transactions in derivative      
securities and other financial instruments such as swaps, stock options, index  
options, future contracts and options on futures.                               

The flexibility of the Underlying Funds in implementing alternative investment  
strategies combined with the diversification of the Portfolio's assets among 25 
to 35 different Underlying Funds may result in lower volatility as opposed to   
investing with a single investment manger. Ultimately, the reduction in         
volatility in the Portfolio's investments will allow the Portfolio to achieve   
its investment objective of long-term capital appreciation while preserving the 
capital of the investments in the Fund.                                         

The Fund cannot guarantee that its investment objective will be achieved or that
the Portfolio's design and risk monitoring strategies will be successful.       
Investing in the Fund involves a high degree of risk. See "RISK FACTORS."       

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This prospectus (the "Prospectus") applies to the offering of units of the Fund 
("Shares"). The Fund is designed for transaction-oriented financial advisors and
retail high net worth investors allocating through financial intermediaries     
including but not limited to wirehouses, regional broker-dealers and small      
broker-dealers. Investments in the Fund may be made only by "Eligible Investors"
as defined herein. See "INVESTOR QUALIFICATIONS." The Shares are offered as of  
the first day of each calendar month, in each case subject to any applicable    
sales charge and other fees, as described herein. The minimum initial investment
in the Fund by any investor is $25,000. However, the Fund, in its sole          
discretion, may accept investments below this minimum. Pending the closing of   
the initial public offering or any subsequent offering, funds received from     
prospective investors will be invested in high quality, short-term securities or
placed in an interest-bearing account. On the date of any closing, the funds    
with respect to each investor whose investment is accepted, including any       
interest earned by such investor, will be invested in the Fund on behalf of such
investor. See "THE OFFERING - SHARES OF THE FUND."                              

The Portfolio, or its affiliates, may pay from their own resources additional   
compensation to brokers or dealers in connection with the sale and distribution 
of the Shares or the servicing of investors. The Fund may pay compensation to   
intermediaries for the purpose of promoting the sale of the Shares of the Fund, 
maintaining balances of Fund Shares, and/or for sub-accounting, administrative, 
or shareholder processing services. Such payments will be made quarterly. The   
amount of these payments is determined from time to time by PARADIGM Funds Trust
and may be different for different intermediaries.                              

No person who is admitted as a member of the Fund ("Shareholder") will have the 
right to require the Fund to redeem its Shares. The board of trustees of        
PARADIGM Funds Trust ("Board of Trustees") may, from time to time and in their  
sole discretion, cause the Fund to offer to repurchase Shares from Shareholders 
pursuant to written tenders by Shareholders at times and on terms and conditions
as the Board of Trustees establish. See "REDEMPTIONS AND REPURCHASES OF SHARES."
This Prospectus is not an offer to sell the Shares and is not soliciting an     
offer to buy the Shares in any state or jurisdiction where offer or sale is not 
permitted.                                                                      

If you purchase Shares in the Fund, you will become bound by the terms and      
conditions of the Agreement and Declaration of Trust of the Fund (the "Trust    
Agreement"). A copy of the Trust Agreement is attached as Appendix B to this    
Prospectus.                                                                     

The Shares will not be listed on any securities exchange and it is not          
anticipated that a secondary market for the Shares will develop. The Shares are 
subject to substantial restrictions on transferability and resale and may not be
transferred or resold except as permitted under the Trust Agreement. Although   
the Fund may offer to repurchase Shares from time to time, Shares will not be   
redeemable at a Shareholder's option nor will they be exchangeable for Shares or
units of any other fund. As a result, an investor may not be able to sell or    
otherwise liquidate his or her Shares. Shares are appropriate only for those    
investors who can tolerate a high degree of risk and do not require a liquid    
investment and for whom an investment in the Fund does not constitute a complete
investment program.                                                             

This Prospectus concisely provides information that you should know about the   
Fund before investing. You are advised to read this Prospectus carefully and to 
retain it for future reference. Additional information about the Fund, including
the Fund's statement of additional information (the "SAI"), dated April [ ],    
2007, has been filed with the SEC. You can request a copy of the SAI without    
charge by writing to the Fund, 650 Fifth Avenue, 17th Floor, New York, NY 10019,
or by calling the Fund at (212) 271-3388. The SAI is incorporated by reference  
into this Prospectus in its entirety. You can obtain the SAI, and other         
information about the Fund, on the SEC's website (http://www.sec.gov). The      
address of the SEC's internet site is provided solely for the information of    
prospective investors and is not intended to be an active link.                 

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Neither the SEC nor any state securities commission has determined whether this 
Prospectus is truthful or complete, nor have they made, nor will they make, any 
determination as to whether anyone should buy these securities. Any             
representation to the contrary is a criminal offense.                           

You should not construe the contents of this Prospectus as legal, tax or        
financial advice. You should consult with your own professional advisors as to  
legal, tax, financial, or other matters relevant to the suitability of an       
investment in the Fund.                                                         

You should rely only on the information contained in this Prospectus and the    
SAI. The Fund has not authorized anyone to provide you with different           
information. You should not assume that the information provided by this        
Prospectus is accurate as of any date other than the date on the front of this  
Prospectus.                                                                     

The date of this Prospectus is April [ ], 2007.                                 

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 TABLE OF CONTENTS

                                                                            Page

GENERAL DESCRIPTION OF THE FUND...........................................     2
USE OF PROCEEDS...........................................................     3
FEES AND EXPENSES.........................................................     3
INVESTMENT ADVISOR........................................................     5
FUND MANAGER..............................................................     5
BOARD OF TRUSTEES.........................................................     7
INVESTMENT OBJECTIVE AND GOALS............................................     7
INVESTMENT STRATEGIES AND SELECTION OF UNDERLYING FUNDS...................     8
OVERVIEW OF THE INVESTMENT PROCESS........................................    10
POTENTIAL BENEFITS OF INVESTING IN THE FUND...............................    12
RISK FACTORS..............................................................    12
INVESTMENT RESTRICTIONS...................................................    19
THE OFFERING - SHARES OF THE FUND.........................................    21
INVESTOR QUALIFICATIONS...................................................    21
RESTRICTIONS ON TRANSFERS.................................................    22
REDEMPTIONS AND REPURCHASES OF SHARES.....................................    22
NET ASSSET VALUATION......................................................    23
ORGANIZATION AND DESCRIPTION OF SHARES....................................    25
DISTRIBUTIONS.............................................................    25
MANAGEMENT FEE............................................................    26
FUND EXPENSES.............................................................    26
PRIOR PERFORMANCE OF SIMILAR FUND.........................................    26
PAST PERFORMANCE OF THE INITIAL 25 UNDERLYING FUNDS.......................    28
INDEMNIFICATION...........................................................    29
TAXES.....................................................................    29
ERISA PLANS AND OTHER TAX QUALIFIED PLANS.................................    30
PERIODIC REPORTS..........................................................    30
CUSTODIAN AND DIVIDEND PAYING AGENT.......................................    30
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.............................    31
LEGAL COUNSEL.............................................................    31
ADMINISTRATOR AND TRANSFER AGENT..........................................    31
ADDITIONAL INFORMATION....................................................    31

 i

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 PARADIGM ADVANTAGE SERIES

UNITS OF BENEFICIAL INTEREST

GENERAL DESCRIPTION OF THE FUND                                                 

PARADIGM Advantage Series (the "Fund") is a series of PARADIGM Funds Trust, a   
newly-formed Delaware statutory trust that is a non-diversified, closed-end     
management investment company registered under the Investment Company Act of    
1940, as amended (the "Investment Company Act"). This prospectus applies to the 
offering of units in the Fund ("Shares"). The Fund's Shares are registered under
the Securities Act of 1933, as amended but are subject to substantial limits on 
transferability and resale.                                                     

The Fund is designed for transaction-oriented financial advisors and retail high
net worth investors allocating through financial intermediaries including but   
not limited to wirehouses, regional broker-dealers and small broker-dealers.    

The Fund generally invests all of its assets in PARADIGM Multi Strategy Fund I, 
LLC (the "Portfolio"), under a master/feeder structure. Units of beneficial     
interest of the Portfolio are herein referred to as "Units." In addition, and as
described more fully below in "Risk Factors - Tax Liability and Borrowings", the
Fund may periodically make short-term investments in U.S. Government securities.

The Fund's and the Portfolio's investment objective is to generate long-term    
capital appreciation with lower volatility than the broad equity markets. The   
Fund attempts to achieve this objective by investing all or substantially all of
its net investable assets in the Portfolio. The Portfolio seeks to accomplish   
this objective by allocating its assets among a diverse group of skill-based    
portfolio managers that specialize in absolute return strategies. The Portfolio 
will invest in approximately 25 to 35 investment funds (the "Underlying Funds"),
typically referred to as hedge funds, managed by third-party managers who employ
a variety of absolute return investment strategies in pursuit of attractive     
risk-adjusted investments consistent with the preservation of capital. The      
actual number of Underlying Funds may vary and may change materially over time  
as determined by the Investment Advisor (as defined below) in its sole          
discretion.                                                                     

Allocation of assets among a professionally selected cross-section of hedge     
funds that invest in a variety of financial markets and utilize a broad range or
alternative investment strategies has the potential to reduce the volatility of 
investment returns from that which might be associated with a direct investment 
with any single investment manager.                                             

Unregistered investment funds typically provide greater flexibility than        
traditional investment funds (i.e. registered investment companies) as to the   
type of securities that may be owned, the types of trading strategies that may  
be employed, and in some cases, the amount of leverage that may be used. The    
Underlying Funds utilized by the Portfolio may invest and trade in a wide range 
of securities, financial instruments and markets and may pursue a variety of    
investment strategies. These investments may include, but are not limited to,   
U.S. and foreign equity and fixed income securities. The investment programs of 
the Underlying Funds may also involve the use of a variety of sophisticated     
investment techniques for both hedging and non-hedging purposes, including:     
short sales of securities; use of leverage; and transactions in derivative      
securities and other financial instruments such as swaps, stock options, index  
options, future contracts and options on futures.                               

 2

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The flexibility of the Underlying Funds in implementing alternative investment  
strategies combined with the diversification of the Portfolio's assets among 25 
to 35 different Underlying Funds may result in lower volatility as opposed to   
investing with a single investment manger. Ultimately, the reduction in         
volatility in the Portfolio's investments will allow the Portfolio to achieve   
its investment objective of long-term capital appreciation while preserving the 
capital of the investments in the Fund.                                         

USE OF PROCEEDS                                                                 

The proceeds from the sale of the Shares, not including the amount of any sales 
charges and the Fund's fees and expenses, will be invested by the Fund in the   
Portfolio as soon as practicable after receipt of such proceeds by the Fund. The
Fund expects that such proceeds will be invested by the Portfolio in accordance 
with the Fund's and the Portfolio's investment objective and strategies as soon 
as practicable after receipt of such proceeds by the Portfolio, consistent with 
market conditions and the availability of suitable investments. Such proceeds   
will be invested together with any interest earned on the proceeds prior to the 
closing of the applicable offering. Delays in investing the Portfolio's assets  
may occur because certain investment funds selected by the Investment Advisor   
may provide infrequent opportunities to purchase their securities.              

Pending the investment of the proceeds of any offering or any other available   
funds pursuant to the Fund's and the Portfolio's investment objective and       
strategies, a portion of such amounts, which may include a substantial portion  
of the proceeds of an offering, may be invested in short-term debt securities or
money market funds. In addition, subject to applicable law, each of the Fund or 
the Portfolio may maintain a portion of its assets in cash or such short-term   
securities or money market funds to meet operational needs, for temporary       
defensive purposes or to maintain liquidity. The Fund may be prevented from     
achieving its objective during any period in which the Portfolio's assets are   
not substantially invested in accordance with its principal investment          
strategies.                                                                     

FEES AND EXPENSES                                                               

The following table illustrates the expenses and fees that the Fund expects to  
incur and that Shareholders can expect to bear, either directly or indirectly   
through the Fund's investment in the Portfolio.                                 

Shareholder Transaction Expenses                                                

     Sales load (as a percentage of offering price)                    [2.00]%
     Unit Repurchase Fees                                                 None
     Dividend Reinvestment and Cash Purchase Plan Fees                    None

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Annual Expenses (As a Percentage of Net Assets Attributable to Units)(1)        

      Management Fee(2)                                                  [1.25]%
      Distribution and/or Service (12b-1) Fees                           [0.75]%
      Shareholder Servicing Fee                                          [0.25]%
      Other Expenses                                                      [   ]%
      Total Annual Fund Operating Expenses                                [   ]%
      Underlying Portfolio Expenses(3)                                    [   ]%
      Portfolio's Underlying Acquired Fund Fees and Expenses(4)           [   ]%
                                                                        ------

      Total Annual Fund Operating And Indirect Expenses-Gross             [   ]%
      Expense Reimbursements                                              [   ]%
                                                                        ------

      Total Annual Expenses-Net(5)                                        [   ]%

----------                                                                      
(1)   The table summarizes the aggregate expenses of the Fund and the Portfolio 
    and is designed to help investors understand the costs and expenses they
    will bear, directly or indirectly, by investing in the Fund. The Expense
 Table is based on estimated annual average net assets of $25,000,000.

(2)   The Fund does not pay the Portfolio Manager a Management Fee directly, but
  the Fund's Shareholders bear an indirect share of this fee through the
    Fund's investment in the Portfolio. For its provision of services to the
     Portfolio, the Investment Advisor receives a monthly Management Fee equal
to 1/12th of 1.25% of the net asset value of each of the Portfolio's
Units.                                                              

(3)   The Fund's shareholders indirectly bear the expenses of the Portfolio. The
     Portfolio's Investment Advisor has contractually agreed to waive fees and
reimburse expenses in order to keep "Total Annual Expenses" of the  
Portfolio from exceeding [ ]%.                                      

(4)   "Portfolio's Underlying Acquired Fund Fees and Expenses" reflects the     
aggregate amount of the total Fund operating expenses of acquired   
  investment company securities and related transaction fees paid by the
Fund.                                                               

(5)   The annual fees and expenses of the Fund will be capped at [ ]%.          

Example:                                                                        

You would pay the following expenses (including a Management Fee) on a $1,000   
investment, assuming a 5% annual return:                                        

1 Year                $    [   ]
3 Years               $    [   ]
5 Years               $    [   ]
10 Years              $    [   ]

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The example does not present actual expenses and should not be considered a     
representation of future expenses. Actual expenses may be greater or lesser than
those shown. The Fund's organizational and offering expenses are not reflected  
in the example. Moreover, the Fund's actual rate of return may be greater or    
lesser than the hypothetical 5% return shown in the example. The dollar amounts 
could be higher or lower as a result of the management fee.                     

IN ADDITION TO THE DIRECT AND INDIRECT EXPENSES SET FORTH ABOVE, SHAREHOLDERS   
WILL BEAR AN INDIRECT SHARE OF THE FEES AND EXPENSES FOR EACH OF THE UNDERLYING 
FUNDS IN WHICH THE PORTFOLIO INVESTS.                                           

INVESTMENT ADVISOR AND FUND MANAGER                                             

PARADIGM Global Advisors, LLC will serve as investment advisor ("Investment     
Advisor") to the Fund, and currently serves as Investment Advisor to the        
Portfolio. Each of the Fund and the Portfolio has entered into an investment    
advisory agreement ("Investment Advisory Agreement") with the Manager of the    
Fund and the Portfolio, Provident Asset Management LLC ("Provident"), and a     
sub-advisory agreement ("Sub-Advisory Agreement") with the Investment Advisor,  
under which the Investment Advisor is responsible for the day-to-day investment 
activities of the Fund and the Portfolio, respectively.                         

Investment Advisor                                                              

The Investment Advisor is registered as an investment adviser with the          
Securities and Exchange Commission (the "SEC") under the Investment Advisers Act
of 1940, as amended, as a commodity trading advisor and commodity pool operator 
under the U.S. Commodity Exchange Act, as amended, and is also a member of the  
U.S. National Futures Association. The principal business address of the        
Investment Advisor is 650 Fifth Avenue, 17th Floor, New York, NY 10019.         

The personnel of the Investment Advisor who will initially have primary         
investment responsibility for each of the Fund and the Portfolio (the           
"Investment Team") are:                                                         

Dr. James Park serves as a consultant to the Investment Advisor and 
chairman of the investment committee and provides advice about the  
strategic growth and client relationships for the PARADIGM group of 
entities. Dr. Park holds a PhD in Financial Economics from Columbia 
Business School (October 1995); a J.D. from Harvard and Columbia Law
Schools (1987); and a B.S. in economics with honors from The Wharton
    School of Finance, University of Pennsylvania (1984). From 1991 to 1998,
   Dr. Park was a professor of Finance at Long Island University, where he
      founded the Center for Financial Markets Research. Dr. Park also taught at
  Columbia Business School and West Point Military Academy. Dr. Park has
  authored and presented numerous studies and articles on the investment
performance of hedge funds and trading advisors.                    

    Markus Karr is a Managing Director of Asset Allocation of the Investment
   Advisor and has over ten years investment experience. Mr. Karr received
     his B.S. in computer science and engineering from Massachusetts Institute
     of Technology in June 1989, where he concentrated his studies on modeling
      and simulation design. Mr. Karr was a registered Commodity Trading Advisor
from 1995 to 2002.                                                  

Nikolay Fedorovskiy is a Senior Research Analyst of the Investment  
  Advisor. Mr. Fedorovskiy received his Ph.D. in mathematics from Moscow
   State University with high algebra and computer modeling as his majors.
  Mr. Fedorovskiy has 8 years of experience in practical programming and
  engineering in Russia's Institute of Electric Power Research, where he
   worked on creating programming language for the description of semantic
networks. Mr. Fedorovskiy joined the Investment Advisor in 2000 as a
     senior research analyst and is responsible for development and support of
     a secure online statistical reporting system for the Investment Advisor's
asset allocation team.                                              

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Ronald E. Wilhelm is the Chief Compliance and Risk Management Officer and       
Director of Operations of the Investment Advisor. Mr. Wilhelm joined the        
Investment Advisor in December 2005 from EOS Fund Services LLC where he was     
served from June 2003 as a founding Managing Director and provided third-party  
global fund management, operations and administration services and compliance   
oversight to a select group of investment management firms, mutual fund         
companies, endowments and foundations. He also served as a founding Managing    
Director of EOS Compliance Services LLC where he provided outsourced compliance 
programs for and consulting services to registered investment advisers, mutual  
fund companies, hedge funds and hedge funds of funds with combined assets of $15
billion. In that capacity, Mr. Wilhelm acted as named Chief Compliance Officer  
to Investure, LLC, a registered investment adviser (with assets under management
exceeding $2 billion) operating domestic and offshore hedge funds of funds and  
private equity funds. From 1998 through May 2003, he managed the operations,    
compliance oversight, documentation and closing processes for the distressed    
bank loan trading and sales desk of the Fixed Income Division of Morgan         
Stanley's New York office. Mr. Wilhelm was associated with the law firms of     
Parker Chapin Flattau & Klimpl, LLP in New York from 1994 to 1997 and Jones Day 
in Paris, France and Cleveland, Ohio from 1986 to 1993. His practice experience 
primarily included general corporate and business law, mergers and acquisitions,
international corporate law, securities law, finance and banking, and compliance
and regulatory issues. Mr. Wilhelm attended Brigham Young University where he   
obtained the degrees of B.A. summa cum laude, French and International Relations
in 1982; M.A., International Relations in 1983; and J.D. cum laude in 1986.     

Fund Manager                                                                    

The Fund and the Portfolio are both managed by Provident. Provident is          
registered with the SEC as a Registered Investment Advisor (RIA). As Manager of 
the Fund and the Portfolio, Provident is responsible for (1) the asset growth   
program and marketing strategies for the Fund and the Portfolio and (2)         
supervision of the investment activities of the Investment Advisor, pursuant to 
an investment advisory agreement between Provident and each of the Fund and the 
Portfolio.                                                                      

Provident is the dedicated asset management arm of the Provident Group. Formed  
in July 2002, Provident focuses exclusively on structuring and managing         
alternative asset management products for institutional and other accredited    
investors. As of August 31, 2006, Provident had a total of $144 million in      
assets under management. Provident is owned by the Provident Group Limited      
("PGL") and Grahams St. Group, LLC ("GSG").                                     

Provident Group is a New York based investment bank founded in 1998 by Steve    
Carlson, its CEO. Provident Group's experienced team of corporate finance and   
fixed income professionals provide investment banking and alternative fixed     
income asset management services to a global network of financial and strategic 
investors. Provident Group's investment banking unit provides corporate finance 
and strategic advisory services with a focus on capital raises through          
alternative asset products (mezzanine, Structured Finance and Private Equity) to
companies operating throughout the Americas.                                    

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GSG owns 50% of Provident.(1) Brian P. Mathis is the sole member of GSG and a   
Managing Partner of Provident. PGL owns 50% of Provident. Steven J. Carlson,    
Pavlos Mavrides Matos, James B. Roper and Mark J. Bishop are shareholders of    
PGL.                                                                            

BOARD OF TRUSTEES                                                               

The Board of Trustees of the Fund (the "Board") has overall responsibility for  
the management and supervision of the operations of the Fund. The Board of      
Directors of the Portfolio (the "Portfolio's Board of Directors") has overall   
responsibility for management and supervision of the operations of the          
Portfolio. The Fund and the Portfolio have the same board members. The initial  
Trustees serving on the Board have been elected by the organizational Trustee of
the Fund. In the event of any vacancy in the position of a Trustee, the         
remaining Trustees may appoint an individual to serve in such capacity, so long 
as immediately thereafter at least two-thirds (2/3) of the Trustees then serving
have been elected by the Shareholders. The Board may call a meeting of          
Shareholders to fill any vacancy in the position of a Trustee, and will do so   
within 60 days after any date on which Trustees who were elected by the         
Shareholders cease to constitute a majority of the Trustees then serving on the 
Board.                                                                          

INVESTMENT OBJECTIVE AND GOALS                                                  

The Fund's investment objective is to generate long-term capital appreciation   
with lower volatility than the broad equity markets. Rather than invest in      
securities or Underlying Funds directly, the Fund seeks to achieve its          
investment objective by using the "master fund/feeder fund" structure. Under    
that structure, the Fund and other investment companies with the same investment
objective invest their assets in another investment company (the Portfolio)     
having the same investment objective and substantially the same investment      
policies as the Fund.                                                           

The Portfolio seeks to accomplish this objective by allocating its assets among 
a diverse group of skill-based portfolio managers that specialize in absolute   
return strategies. The Portfolio will invest in approximately 25 to 35          
Underlying Funds managed by third-party managers who employ a variety of        
absolute return investment strategies in pursuit of attractive risk-adjusted    
investments consistent with the preservation of capital. The actual number of   
Underlying Funds may vary and may change materially over time as determined by  
the Investment Advisor in its sole discretion.                                  

The Investment Advisor is not required to follow fixed guidelines with respect  
to the Underlying Funds selected and the allocation of the Portfolio's assets.  
However, so long as such amount is within applicable ownership limitations set  
forth in the Investment Company Act, the Portfolio's assets will be allocated in
a manner so that no more than 15% of the Portfolio's net asset value will be    
invested in any one Underlying Fund. The Investment Advisor may also invest the 
Portfolio's assets in cash, U.S. government securities and repurchase           
agreements.                                                                     

The investment objectives of the Fund and the Portfolio are non-fundamental.    
Thus, either the Fund or the Portfolio may change its investment objective      
without a vote of the Fund's Shareholders or the Portfolio's members,           
respectively. Furthermore, except as otherwise indicated, the Fund's and the    
Portfolio's investment policies and restrictions are not fundamental and may be 
changed without a vote of the Fund's Shareholders or the Portfolio's members,   
respectively.                                                                   

THE FUND'S INVESTMENT PROGRAM IS SPECULATIVE AND ENTAILS SUBSTANTIAL RISKS.     
MARKET RISKS ARE INHERENT IN ALL SECURITIES TO VARYING DEGREES. NO ASSURANCE CAN
BE GIVEN THAT THE FUND'S OR THE PORTFOLIO'S INVESTMENT OBJECTIVE WILL BE        
REALIZED.                                                                       

----------                                                                      
(1) [The transaction with GSG is expected to close in September 2006.]          

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INVESTMENT STRATEGIES AND SELECTION OF UNDERLYING FUNDS                         

The Investment Advisor believes that a disciplined due diligence and monitoring 
process is critical in identifying hedge funds capable of generating the returns
required to meet the Fund's and the Portfolio's investment objective.           

The Investment Advisor intends to allocate the Portfolio's capital to Underlying
Funds that employ a variety of investment strategies, including those that seek 
to capitalize on inefficiencies and pricing anomalies in securities and other   
financial instruments. The Investment Advisor will select Underlying Funds that 
follow other investment strategies if it believes that such investments are     
consistent with the Fund's and the Portfolio's investment objective.            

Underlying Funds in which the Portfolio will invest may include limited         
partnerships, limited liability companies and similar entities managed by a     
single investment manager. Certain Underlying Funds in which the Portfolio will 
invest may be registered investment companies, including open-end registered    
investment companies (commonly referred to as "mutual funds"), closed-end       
investment companies and unit investment trusts (including "exchange-traded     
funds"), although it is anticipated that the Underlying Funds generally will not
be registered investment companies. The Portfolio's ability to invest in        
registered investment companies (including, without limitation, mutual funds,   
exchanged-trade funds and certain money market funds) will be limited by the    
Investment Company Act, which provides certain restrictions on the amount of    
securities of a registered investment company that another registered investment
company may acquire. Underlying Funds that are not registered as investment     
companies under the Investment Company Act typically provide greater flexibility
than mutual funds or exchange-traded funds with respect to the types of         
securities that may be owned, the types of trading strategies employed, and, in 
some cases, the amount of leverage that can be used. It is the understanding of 
the Fund and the Portfolio that the Underlying Funds that are not registered    
under the Investment Company Act are generally relying upon exemptions under    
Section 3(c)(1) and 3(c)(7) of the Investment Company Act.                      

The investment managers of the initial 25 Underlying Funds are all domestic     
entities that are either registered or are currently in the process of          
registering under the Investment Advisors Act of 1940. None of the investment   
managers of the initial 25 Underlying Funds are affiliated with the Investment  
Advisor.                                                                        

The Investment Advisor may invest a portion of the Portfolio's assets in        
Underlying Funds, including other "fund of funds," managed by the Investment    
Adviser or its affiliates. Such investments will only be made, if at all, upon  
the Portfolio obtaining any necessary exemptive relief or assurance from the    
SEC. There can be no assurance that the SEC will issue such an exemptive order  
or assurance if the Portfolio elects to seek either.                            

Set forth below are descriptions of certain of the investment strategies        
utilized by investment managers in the equity long/short, event driven, and     
relative value trading sectors. Other strategies may be employed as well. There 
can be no assurance that the investment managers will succeed in any of these   
strategies.                                                                     

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Equity Long/Short Strategies                                                    

Equity long/short hedge funds make long and short equity investments, often     
based on the investment manager's assessment of fundamental value compared to   
market price. It is expected that the investment managers will employ a wide    
range of styles. For example, investment managers may (i) focus on companies    
within specific industries; (ii) focus on companies only in certain countries or
regions; or (iii) employ a more diversified approach, allocating assets to      
opportunities across investing styles, industry sectors and geographic regions. 

Event Driven Strategies                                                         

Event driven strategies seek to identify security price changes resulting from  
corporate events such as restructurings, mergers, takeovers, spinoffs and other 
special situations. Corporate event arbitrageurs generally choose their         
investments based on their perceptions of the likelihood that the event or      
transaction will occur, the amount of time that the process will take and the   
perceived ratio of return to risk. Strategies that may be utilized in the event 
driven sector include merger arbitrate, high yield/distressed securities, and   
special situations, each of which is described in greater detail below.         

Merger Arbitrage. Merger arbitrageurs seek to capture the price spread between  
current market prices and the value of securities upon successful completion of 
a takeover or merger transaction. The availability of spreads reflects the      
unwillingness of other market participants to take on transaction-based risk,   
i.e., the risk that the transaction will not be completed and the price of the  
company being acquired will fall. Merger arbitrageurs evaluate this risk and    
seek to create portfolios that reduce specific event risk.                      

High Yield/Distressed Securities. High yield/distressed securities strategies   
invest in debt or equity securities of firms in or near bankruptcy. Investment  
managers differ in terms of the level of the capital structure in which they    
invest, the stage of the restructuring process at which they invest, and the    
degree to which they become actively involved in negotiating the terms of the   
restructuring.                                                                  

Special Situations. Special situations such as spin-offs and corporate          
reorganizations and restructurings offer additional opportunities for event     
driven managers. Often these strategies are employed alongside merger arbitrage 
or distressed investing. An investment manager's ability to evaluate the effect 
of the impact and timing of the event and to take on the associated event risk  
is the source of the returns. Investment managers differ in the degree to which 
they hedge the equity market risk of their portfolios.                          

Relative Value Strategies                                                       

Relative value strategies seek to profit from the mispricing of financial       
instruments, capturing spreads between related securities that deviate from     
their fair value or historical norms. Directional and market exposure is        
generally held to a minimum or completely hedged. Strategies that may be        
utilized in the relative value sector include convertible arbitrage, equity     
arbitrage, and fixed-income arbitrage, each of which is described in greater    
detail below.                                                                   

Convertible Arbitrage. Convertible bond arbitrage strategies consist of buying  
convertible bonds and shorting an appropriate number of shares of the issuer's  
common stock. The stock short sale is intended to hedge the stock price risk    
arising from the equity conversion feature of the convertible bond. Due to the  
bond features of convertibles, credit and interest rate risk may also be hedge. 

Equity Arbitrage. Equity arbitrage strategies try to avoid market direction     
influences and seek to generate returns primarily from stock selection.         
Investment managers construct long and short baskets of equity securities they  
determine to be mispriced relative to each other, typically with similar        
characteristics. Portfolios are generally designed to exhibit zero or low beta  
to equity markets. Beta measures the degree to which an asset's price changes   
when a reference asset's price changes. For example, a beta greater than one    
suggests that for every 1% change in the reference asset's price, the asset will
move greater than 1%.                                                           

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Fixed-Income Arbitrage. Fixed-income arbitrage strategies seek to exploit       
pricing anomalies that might exist across fixed-income securities and their     
related derivatives. Although some fixed-income strategies are based on         
macroeconomic considerations, the strategies are primarily quantitative in      
nature, and financial modeling is an integral component. Opportunities in       
fixed-income instruments to baskets of securities are found when securities     
deviate from historical relationships or fair value as determined by the        
investment manager. These relationships can be temporarily distorted by         
exogenous shocks to fixed-income supply and demand or by structural change in   
the fixed-income market.                                                        

Multi-Strategy. Multi-strategy investment managers invest across a range of     
strategies. The investment managers tend to be more opportunistic in targeting  
specific relative value strategies during differing market environments. In     
addition, these Investment Managers may have exposure that have traditionally   
been described as being within the event driven sector, such as merger          
arbitrage, high yield/distressed securities and other special situations.       

OVERVIEW OF THE INVESTMENT PROCESS                                              

The Investment Adviser will employ a dynamic investment process which includes  
investment manager selection, portfolio design and ongoing risk analysis and    
monitoring. The Investment Advisor has over [14] years of experience in         
constructing diversified portfolios by selecting, allocating among, and         
monitoring absolute return-oriented or "skill-based" investment managers. The   
Investment Advisor has also developed proprietary computer systems, operating   
capabilities, proprietary hedge fund indices and "cluster analysis" to assist   
them in identifying and monitoring underlying hedge fund managers. SYSTEMPASS, a
proprietary database in development since 1991, is the backbone of the manager  
selection and monitoring process. SYSTEMPASS contains 16,500 hedge fund manager 
track records as well as automated methods for the selection and monitoring or  
managers.                                                                       

The Investment Advisor seeks to identify investment managers to which it may    
allocate Portfolio assets through investments in Underlying Funds that they     
manage or as subadvisers. The investment manager selection process includes a   
review by the Investment Advisor's team of professionals, which may include     
representatives of its investment manager selection, risk and quantitative      
analysis, compliance, tax, legal, finance and operations areas.                 

The Investment Advisor believes that a systematic due diligence and monitoring  
process is crucial in the identification and selection of superior investment   
managers capable of generating the returns required to meet the Portfolio's     
objective. The Investment Advisor's approach to advisor allocation relies on a  
well-researched, unique theoretical foundation that supports and guides every   
function within its portfolio management services. The Investment Advisor       
believes its manager selection process is unique in several important respects. 
[The Investment Advisor has developed a sophisticated and proprietary           
quantitative analysis methodology that incorporates statistical measurement     
processes known as HEDGE FUND ALPHA, HEDGE FUND BETA and PARK RATIO, which are  
all patent pending.] In simple terms, this process provides a ranking of the    
universe of available advisors and/or underlying hedge fund managers that acts  
as an initial screening. This ranking rewards uniqueness of an advisor's returns
with respect to its peer group (often referred to as "alpha"), thus leading to  
low inter-advisor correlations. The ranking also normalizes for advisor         
volatility, which favors those advisors that can provide the highest return for 
the least risk.                                                                 

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The Investment Advisor screens the universe of available advisors to determine  
that the advisors selected derive profits by processing information rather than 
depending upon market direction. The Investment Advisor views the advisors it   
selects as a distinct asset class because they perform a clearly discernible    
function (information processing); exhibit unique, definable fundamental        
characteristics (no reliance on market direction to generate returns); and      
generate performance that provides evidence of their uniqueness (low or no      
correlation to the performance of the overall stock or bond markets). By        
allocating to advisors that fall into this asset class, the Investment Advisor  
portfolios provide an INFORMATION PROCESSING PREMIUM (similar to a risk or      
liquidity premium) that does not depend upon market direction.                  

The Investment Advisor also is unique because it does not rank investment       
managers based on return and Sharpe ratio. Despite its popularity and widespread
use, the Investment Advisor research shows that Sharpe ratio has several flaws  
that do not contribute to building a superior portfolio. Sharpe ratio is a      
comparison statistic that compares the performance of two managers at a time.   
Sharpe ratio and other comparison statistics answer the question, "Which manager
is the best?" However, these statistics do not give any insight into the more   
meaningful question of which combination of managers contribute to an optimal   
portfolio of managers that outperforms the passive benchmark. The Investment    
Advisor uses portfolio measurements such as HEDGE FUND ALPHA, HEDGE FUND BETA   
and PARK RATIO because they have a basis in portfolio theory and have been      
proven (both statistically and in real-time fund management) to select the      
managers that contribute to an optimal portfolio.                               

In making its selections and in addition to the screenings and analyses         
described above, the Investment Advisor also conducts a rigorous, qualitative   
due diligence review. Through its extensive interview process, the Investment   
Advisor evaluates such subjective (or non-quantitative) factors as the character
of each potential advisor's trading method, reputation, overall performance,    
markets and instruments traded, fee structure, redemption provisions, amount of 
funds under management and past and current business relationships.             

In pursuing the Fund's allocation strategy, the Investment Advisor recognizes   
that many of the most successful advisors reach a limit of funds under          
management beyond which they are unwilling to accept new investment and that all
successful advisors begin to place more and more limitations on investments as  
the amount of assets under management increases. The Investment Advisor         
therefore has established investment positions and relationships with advisors  
that should enhance the Portfolio's ability to access advisors that would       
otherwise limit or restrict investment into their programs.                     

While the advisor selections ultimately will be made on the basis of the        
Investment Advisor's subjective assessments of the available advisors, the      
Investment Advisor also considers statistical data regarding the degrees of     
correlation among the advisors' records. The Investment Advisor will evaluate,  
on an ongoing basis, the desirability of reallocating the Portfolio's assets    
among the advisors, allocating existing or new assets to or among additional    
advisors and the desirability of retaining additional or replacement advisors   
based on its evaluation of which available advisors have the best prospects for 
profitability and other factors. The Investment Advisor will follow no fixed    
policies in allocating and reallocating the Portfolio's assets and will in all  
cases be guided to its subjective judgment.                                     

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In determining the relative allocations of capital to each investment manager,  
the Investment Advisor considers the risk and return characteristics of each of 
the investment managers, including the average expected volatility of returns,  
drawdown patterns and liquidity and leverage characteristics. In addition, the  
Investment Advisor considers how each investment manager's returns are expected 
to correlate to the other investment managers in the portfolio. It is expected  
that allocations will vary significantly over time as returns for different     
investment managers vary. The Investment Advisor also may adjust allocations    
from time to time when it deems it appropriate to do so. In addition, it is     
expected that individual allocations will grow larger or smaller as each        
investment manager's performance varies over time.                              

The identity and number of the investment managers and Underlying Funds may     
change materially over time. The Investment Advisor may withdraw from or invest 
in different Underlying Funds without prior notice to or the consent of the     
Portfolio or the members of the Portfolio, including the Fund and its           
Shareholders.                                                                   

The Investment Advisor may invest a substantial portion of the Portfolio's      
assets with investment managers who may have limited track records and          
Underlying Funds with limited operating histories. In such cases, the investment
managers or individual members of their management teams generally will have    
had, in the Investment Advisor's opinion, significant relevant experience       
trading in the strategies that such investment managers are expected to utilize.
However, the Fund is not able to ensure Shareholders that each of the investment
managers, even those with longer track records, will perform as expected or not 
undertake actions that would not be in the best interest of the Fund or the     
Shareholders.                                                                   

POTENTIAL BENEFITS OF INVESTING IN THE FUND                                     

An investment in the Fund enables investors to invest in investment managers    
whose services generally are not available to the investing public, whose       
investment funds may be closed from time to time to new investors or who        
otherwise may place stringent restrictions on the number and type of persons    
whose money they will manage. An investment in the Fund also enables investors  
to invest with a number of investment managers without incurring the high       
minimum investment requirements that investment managers typically would impose 
on investors.                                                                   

In addition to benefiting from investment manager's individual investment       
strategies, the Fund as a whole should achieve the benefits of exposure to a    
number of different investment styles and investment managers. By investing     
through multiple investment managers, the Fund may reduce the volatility        
inherent in a direct investment with a single investment manager.               

RISK FACTORS                                                                    

An investment in the Fund involves significant risks that should be carefully   
considered prior to investment and should only be considered by persons         
financially able to maintain their investment and who can afford a loss of a    
substantial part or all of such investment.                                     

Risks Associated With The Fund                                                  

Reliance on the Investment Advisor. The likelihood that Shareholders will       
realize income or gain from investing in the Fund will depend on the investment 
performance of the Portfolio. The likelihood that the Portfolio will realize    
income or gain from its investments will depend on the selection and monitoring 
of Underlying Funds by the Investment Advisor and the acumen and expertise of   
its primary portfolio manager, the Managing Director of Asset Allocation, Markus
Karr. If Mr. Karr were to cease working for the Investment Advisor, the         
Investment Advisor may not be able to hire a qualified replacement, or may      
require an extended period of time to do so.                                    

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Investment Advisor. The Investment Advisor and certain of its investment        
professionals also carry on substantial investment activities for other funds   
and client accounts (collectively, "Other Accounts"). As a result, the          
Investment Advisor and the Management Team may have conflicts of interest in    
allocating their time and activity between the management of the Fund and the   
management of Other Accounts. The Investment Advisor and its staff will devote  
only so much time to the management of the Fund as in their judgment is         
necessary and appropriate. In addition, the Investment Advisor may charge the   
Other Accounts fees that are lower than those charged by the Fund.              

Master/Feeder Structure. The Portfolio may accept investments from other        
investors (including other feeder funds), in addition to the Fund. Because each 
feeder fund can set its own transaction minimums, feeder-specific expenses, and 
other conditions, one feeder fund could offer access to the Portfolio on more   
attractive terms, or could experience better performance, than another feeder   
fund. Smaller feeder funds may be harmed by the actions of larger feeder funds. 
For example, a larger feeder fund will have more voting power than the Fund over
the operations of the Portfolio. If other feeder funds tender for a significant 
portion of their shares in a repurchase offer, the assets of the Portfolio will 
decrease. This could cause the Fund's expense ratio to increase to the extent   
contributions to the Portfolio do not offset the cash outflows. The returns     
experienced by investors in a feeder fund, direct investors in the master fund, 
and other feeder funds that invest in the master fund may differ. Moreover,     
redemption or repurchase of the shares of the master fund by direct investors   
and other feeder funds may alter the master fund's holdings, which could        
adversely affect that Fund.                                                     

Limited Liquidity for Shareholders. The Fund is a closed-end investment company 
designed primarily for long-term investors. Units of the Fund will not be traded
on any securities exchange or other market. With very limited exceptions, Shares
are not transferable and liquidity will be provided only through limited        
quarterly repurchase offers. Furthermore, such limited liquidity for Fund       
shareholders will generally be subject to or controlled by decisions made by the
Portfolio's Board of Directors.                                                 

Limited Ability to Examine or Verify the Valuations Provided by the Underlying  
Funds. Generally, the Portfolio, its Investment Advisor and the Administrator   
will not have sufficient information in order to be able to confirm or review   
the accuracy of the valuations provided by the investment managers of the       
Underlying Funds. The investment managers' information could be inaccurate due  
to fraudulent activity, misevaluation or inadvertent error. In any case, the    
Portfolio may not discover errors for a significant period of time. Even if the 
Investment Advisor elects to cause the Portfolio to redeem or sell its interest 
in such Underlying Fund, the Portfolio may be unable to redeem or sell interests
in such Underlying Fund quickly, and could therefore be obligated to continue to
hold such interests for an extended period of time. In such a case, such        
interests would continue to be valued without the benefit of the investment     
manager's valuations, and the Board of Directors may, in its discretion,        
determine to discount the value of the interests or value them at zero.         

Shareholders should be aware that situations involving uncertainties as to the  
valuations by investment managers could have a material adverse effect on the   
Portfolio and the Fund if the investment manager's, the Investment Advisor's or 
the Portfolio's judgments regarding valuations should be incorrect. Persons who 
are willing to assume such risks should not make an investment in the Fund.     

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Limited Operating History. While the Investment Advisor has been in the business
of managing fund of funds strategies since 1991, the Fund has a relatively short
operating history on which you might evaluate its performance. There can be no  
assurance that the Fund's investment objective will be realized or that the     
Fund's investment strategy will prove successful. No assurance can be given that
the Fund's investments in the Portfolio will generate any income or appreciate  
in value.                                                                       

Tax Liability and Borrowings. The Fund intends to qualify each year as a        
"regulated investment company" ("RIC") under Subchapter M of the Internal       
Revenue Code of 1986, as amended (the "Code"). In order to qualify as such, the 
Fund must, among other things, (a) distribute with respect to each taxable year 
at least 90% of the sum of the Fund's taxable net investment income, its net    
tax-exempt income, and the excess, if any of net short-term capital gains over  
net long-term capital losses for such year (the "Distribution Test"), and (b)   
diversify its holdings so that, at the end of each fiscal quarter (i) at least  
50% of the market value of the Fund's total assets is represented by cash and   
cash items, U.S. Government securities, securities of other regulated investment
companies, and other securities, limited in respect of any one issuer to a value
not greater than 5% of the value of the Fund's total assets and 10% of the      
outstanding voting securities of such issuer, and (ii) not more than 25% of the 
value of its total assets is invested in the securities (other than those of the
U.S. Government or other regulated investment companies) of any one issuer or of
two or more issuers which the Fund controls and which are engaged in the same,  
similar or related trades or businesses ((i) and (ii) together, the             
"Diversification Test"). By so qualifying, the Fund will not be subject to      
federal income taxes to the extent that its net investment income, net realized 
short-term capital gains and net realized long-term capital gains are           
distributed in a timely manner to Shareholders. [There can be no guarantee that 
the Underlying Funds' investments will satisfy the Diversification Test.]       

The Fund may make short-term investments in U.S. Government securities prior to 
the end of each fiscal quarter in an amount such that the Fund's total assets   
will meet the Diversification Test, and then sell such U.S. Government          
securities immediately following the end of each such fiscal quarter. The Fund  
expects that it will enter into a line of credit in order to make the quarterly 
purchases of U.S. Government securities. The Investment Company Act provides    
that the value of the investment company's total indebtedness may not exceed    
one-third of the value of its total assets, including indebtedness (the "Asset  
Coverage Requirement"). This borrowing and any other borrowing of the Fund would
be subject to the Asset Coverage Requirement. In the event that the asset       
coverage declines to less than the Asset Coverage Requirement, the Fund may be  
required to sell a portion of its investments at a time when it may be          
disadvantageous to do so. Money borrowed under this line of credit will be      
subject to interest costs that may or may not be recovered by appreciation of or
income from the securities purchased. The Fund also may be required to maintain 
minimum average balances in connection with such borrowing or to pay a          
commitment or other fee to maintain a line of credit, either of which           
requirements would increase the cost of borrowing over the stated interest rate.
In the event that the Fund incurs debt to fund repurchases of Shares, the Asset 
Coverage Requirement and the foregoing risks would be applicable to such        
borrowing, except that since the proceeds from the borrowing will be used for   
repurchases of Shares, no securities will be purchased with such proceeds to    
offset the expenses of the borrowing.                                           

Risk of Failure of RIC Qualification. If the Fund fails to qualify as a RIC that
is accorded special tax treatment in any taxable year, the Fund will be subject 
to tax on its taxable income at corporate rates, and all distributions from     
earnings and profits, including any distributions of net long-term capital      
gains, would be taxable to Shareholders as ordinary income. If the Fund fails to
meet the Diversification Test as of its first fiscal quarter end, the Fund will 
not be able to qualify at a later date. In addition, if the Fund should fail to 
meet the Diversification Test as of any other fiscal quarter end, the Fund may  
be required to recognize unrealized gains, pay substantial taxes and interest   
and make substantial distributions before requalifying as a regulated investment
company that is accorded special tax treatment. The Fund must receive timely and
accurate information from the Portfolio, which in turn must receive timely and  
accurate information from the Underlying Funds, in order for the Fund to satisfy
the Distribution Test. Although the Fund intends to estimate the amount of      
distributions it needs to make to satisfy the Distribution Test in any taxable  
year if the Underlying Funds delay providing such information to the Portfolio  
or provides inaccurate information, the Fund may not satisfy the Distribution   
Test and thus may fail to qualify as a regulated investment company in that     
taxable year.                                                                   

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Also, a regulated investment company that qualifies for special tax treatment   
under the Code but fails to distribute a sufficient amount of its ordinary      
income and net capital gain income is subject to a 4% excise tax on such        
undistributed amounts. The Fund generally must receive information on a timely  
basis from the Portfolio, which in turn must receive timely and accurate        
information from the Underlying Funds, to make sufficient distributions to avoid
the imposition of this 4% excise tax. Although the Fund intends to estimate the 
amount of distributions it must made to avoid the excise tax, if the Portfolio  
delays providing this information to the Fund, or the Underlying Funds delay    
providing this information to the Portfolio, or if there are differences between
the taxable year of the Fund and that of the Portfolio or the Underlying Funds, 
the Fund may not be able to make distributions sufficient to avoid the          
imposition of the excise tax.                                                   

Risks Associated With The Portfolio                                             

Illiquidity of Portfolio's Holdings. The Portfolio intends to invest            
substantially all of its available capital in securities of private investment  
partnerships. These investments will generally be restricted securities that are
subject to substantial holding periods or are not traded in public markets at   
all, so that the Portfolio may not be able to resell some of its securities     
holdings for extended periods, which may be several years.                      

Investment Advisor and Manager. The Investment Advisor, the Manager and certain 
of their investment professionals also carry on substantial investment          
activities for other accounts (collectively, "Other Accounts"). As a result, the
Investment Advisor, the Manager and Mr. Karr may have conflicts of interest in  
allocating their time and activity between the management of the Portfolio and  
the management of Other Accounts. The Investment Advisor, the Manager and their 
respective staffs will devote only so much time to the management of the        
Portfolio as in their judgment is necessary and appropriate.                    

There may be circumstances where the Investment Advisor, the Manager or the     
portfolio manager invests a larger percentage of one or more of the Other       
Accounts' respective assets than the Portfolio's assets. The Investment Advisor 
and the Manager also may consider participation by its Other Accounts in        
investment opportunities that the Investment Advisor and the Manager do not     
intend to invest, or which are contrary to investments made, on behalf of the   
Portfolio, or vice versa. In addition, the Investment Advisor and the Manager   
may charge the Other Accounts fees that are lower than those the Portfolio      
charges.                                                                        

Underlying Fund Selection and Monitoring. The Investment Advisor employs a      
detailed analysis for the screening and monitoring of the Underlying Funds so   
that the Investment Advisor can monitor leverage levels, positions concentration
and adherence to stated strategies. However, the Investment Advisor does not    
have access to nor control over the daily investment holdings of any of the     
Underlying Funds. As a result, there can be no assurance that the manager of any
Underlying Fund will conform its conduct to the Underlying Fund's stated        
strategies                                                                      

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Limited Liquidity for Members. The Portfolio is a closed-end investment company 
designed primarily for long-term investors. Units of an Underlying Fund will not
be traded on any securities exchange or other market. With very limited         
exceptions, Units are not transferable and liquidity will be provided only      
through limited quarterly repurchase offers.                                    

Limited Operating History. While the Investment Advisor has been in the business
of managing fund of funds strategies since 1991, the Portfolio has relatively   
little operating history on which you might evaluate its performance. There can 
be no assurance that the Portfolio's investment objective will be realized or   
that the Portfolio's investment strategy will prove successful. No assurance can
be given that the Portfolio's investment portfolio will generate any income or  
appreciate in value.                                                            

Special Risks of the Portfolio's Fund of Funds Structure. The Underlying Funds  
may not be registered as investment companies under the Investment Company Act  
and, therefore, the Fund and the Portfolio will not have the protections of the 
Investment Company Act with regard to these investments. Each Underlying Fund   
will pay any performance-based allocations or fees for which it is obligated    
irrespective of the performance of the other Underlying Funds and the Portfolio 
generally. Accordingly, an Underlying Fund with positive performance may be     
entitled to receive a performance allocation or fee from the Portfolio, and thus
indirectly from the Fund and its Shareholders, even if the Fund's and the       
Portfolio's overall investment return is negative.                              

Risks Associated With The Underlying Funds                                      

Investment Funds not Registered. The Fund is registered as an investment company
under the Investment Company Act. The Investment Company Act is designed to     
afford various protections to investors in pooled investment vehicles. For      
example, the Investment Company Act imposes limits on the amount of leverage    
that a registered investment company can assume, restricts layering of costs and
fees, restricts transactions with affiliated persons, and requires that the     
investment company's operations be supervised by a board of directors, a        
majority of whose members are independent of management. The Fund is itself     
subject to these restrictions. However, the underlying portfolio companies in   
which the Portfolio invests are not subject to the provisions of the Investment 
Company Act. In addition, although the SEC has adopted new rules that will      
require most of the investment managers of the Underlying Funds to register as  
investment advisers under the Investment Advisers Act of 1940, as amended (the  
"Advisers Act"), there is expected to be a significant period of time before    
such registrations are complete. As an investor in the Underlying Funds managed 
by investment managers that are not registered as investment advisers, the Fund 
will not have the benefit of certain of the protections of the Advisers Act.    

The Underlying Funds generally are exempted from regulation under the Investment
Company Act because they permit investment only by investors who meet very high 
thresholds of investment experience and sophistication, as measured by net      
worth. The Fund's investment qualification thresholds are considerably lower, As
a result, the Fund provides an avenue for investing in Underlying Funds that    
would not otherwise be available to certain investors. This means that investors
who would not otherwise qualify to invest in largely unregulated vehicles will  
have the opportunity to make such an investment.                                

In addition, the Underlying Funds typically do not maintain their securities and
other assets in the custody of a bank or a member of a securities exchange, as  
generally required of registered investment companies, in accordance with       
certain SEC rules. A registered investment company which places its securities  
in the custody of a member of a securities exchange is required to have a       
written custodian agreement, which provides that securities held in custody will
be at all times individually segregated from the securities of any other person 
and marked to clearly identify such securities as the property of such          
investment company and which contains other provisions designed to protect the  
assets of such investment company. It is anticipated that the Underlying Funds  
in which the Fund will invest generally will maintain custody of their assets   
with brokerage firms which do not separately segregate such customer assets as  
would be required in the case of registered investment companies. Under the     
provisions of the Securities Investor Protection Act of 1970, as amended, the   
bankruptcy of any such brokerage firm could have a greater adverse effect on the
Fund than would be the case if custody of assets were maintained in accordance  
with the requirements applicable to registered investment companies. There is   
also a risk that an investment manager could convert assets committed to it by  
the Fund to its own use or that a custodian could convert assets committed to it
by an investment manager to its own use. There can be no assurance that the     
investment managers or the entities they manage will comply with all applicable 
laws and that assets entrusted to the investment managers will be protected.    

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Prospective investors should understand that the Fund is an appropriate         
investment only for investors who can tolerate a high degree of risk, including 
lesser regulatory protections in connection with the Fund's investments in      
Underlying Funds than might normally be available through investments in        
registered investment company vehicles.                                         

Valuation of the Fund's Interests in Investment Funds. The valuation of the     
Fund's investments in the Underlying Funds is ordinarily determined based upon  
valuations provided by the investment managers of such Underlying Funds. Certain
securities in which the Underlying Funds invest may not have a readily          
ascertainable market price and will be valued by the investment managers. In    
this regard, an investment manager may face a conflict of interest in valuing   
the securities as their value will affect the investment manager's compensation.
Valuations of the securities may be subjective and could prove in hindsight to  
have been wrong, and at times by significant amounts. The Portfolio will        
establish a committee approved by the Board of Directors of the Portfolio to    
oversee the valuation of the Fund's investments (the "Fair Value Pricing        
Committee"), which will be comprised of at least one member of the Board of     
Directors as well as various officers and representatives of the Portfolio's    
service providers. The members of the Fair Value Pricing Committee may face     
conflicts of interest in overseeing the valuation of the Portfolio's            
investments, as the value of the Portfolio's investments will affect the        
Investment Advisor's compensation. Although prior to investing in any Underlying
Fund, the Investment Advisor will conduct a due diligence review of the         
valuation methodology utilized by such investment fund, no assurances can be    
given that the Investment Advisor will be given access to necessary aspects of  
the Underlying Fund's systems, that such due diligence review will ascertain    
whether accurate valuations will be provided by such Underlying Funds to the    
Investment Advisor, that the Underlying Funds will comply with their own        
internal policies or procedures for keeping records or making valuations, or    
that the Underlying Funds' policies and procedures and systems will not change  
without notice to the Fund. Moreover, neither the Fair Value Pricing Committee  
nor the Investment Advisor will generally have sufficient information in order  
to be able to confirm or review the accuracy of valuations provided by          
investment managers. In addition, the net asset values or other valuation       
information received by the Fair Value Pricing Committee from an Underlying Fund
are typically estimated, and may be subject to later adjustment or revision by  
the Underlying Fund. Any such adjustment or revision will result in either an   
increase or decrease in the net asset value of the Fund at the time that the    
Fund is provided with information regarding the adjustment.                     

If an investment manager's valuations are consistently delayed or inaccurate,   
the Investment Advisor will consider whether the Underlying Fund continues to be
an appropriate investment for the Fund. However, the Investment Advisor may     
elect in its sole discretion to have the Fund retain its investment in the      
Underlying Fund. The investment manager's information could be inaccurate due to
fraudulent activity, misevaluation or inadvertent error. In any case, the Fund  
may not uncover errors for a significant period of time. Even if the Investment 
Advisor elects to cause the Fund to redeem or sell its interests in such an     
Underlying Fund, the Fund may be unable to redeem or sell interests in such an  
Underlying Fund quickly, and could therefore be obligated to continue to hold   
such interests for an extended period of time. In such a case, such interests   
would continue to be valued without the benefit of the investment manager's     
valuation, and the Fair Value Pricing Committee may, in its sole discretion,    
determine to discount the value of the interests or value them at zero.         

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Shareholders should be aware that situations involving uncertainties as to the  
valuations by investment managers could have a material adverse effect on the   
Fund if the investment manager's, the Investment Advisor's or the Fund's        
judgments regarding valuations should prove incorrect. Persons who are unwilling
to assume such risks should not make an investment in the Fund.                 

Market Risks. The profitability of a significant portion of the Portfolio's     
investment program will depend to a great extent on the correct assessment of   
the future course of price movements of securities and other instruments. There 
can be no assurance that managers of the Underlying Funds will be able to       
accurately predict these price movements.                                       

Small Cap Securities. The Underlying Funds may invest in companies with modest  
capitalization. While small companies can provide greater growth potential than 
larger, more mature companies, investing in the securities of such companies    
also involves greater risk, potential price volatility and trading costs. These 
companies often involve higher risks because they lack the management           
experience, financial resources, product diversification, markets, distribution 
channels and competitive strengths of larger companies. In addition, the        
frequency and volume of their trading is substantially less than is typical of  
larger companies. Therefore, the securities of smaller companies may be subject 
to wider price fluctuations.                                                    

Leverage; Borrowing. The Underlying Funds are authorized to borrow money to meet
repurchase requests and for cash management purposes. While borrowings are      
outstanding for these purposes, the Underlying Funds will be permitted to       
reinvest the proceeds of the sale of securities or new sales of Units and, thus,
may employ leverage. To the extent that the Underlying Funds use leverage, the  
value of their net assets will tend to increase or decrease at a greater rate   
than if no leverage were employed. If an Underlying Fund's investments decline  
in value, the loss will be magnified if the Underlying Fund has borrowed money  
to make its investment. In addition, an Underlying Fund's performance may be    
adversely affected if it is not able to repay borrowings or if it is forced to  
sell investments at disadvantageous times in order to repay borrowings.         

Hedging Strategies. The Underlying Funds may engage in short sales, the use of  
derivatives, trading in index futures and index options, and the use of leverage
and other strategies from time to time in order to "hedge" or offset investment 
risk. Successful use of these instruments depends on the manager of the         
Underlying Fund's ability to predict movements in the overall securities and    
currency markets, which requires different skills than predicting changes in the
prices of individual securities. In adverse circumstances the use of derivatives
may result in sudden and severe losses to the Underlying Funds employing these  
strategies.                                                                     

Foreign Investments. An Underlying Fund may invest in foreign securities that   
are generally denominated in foreign currencies, and American Depository        
Receipts ("ADRs") traded on U.S. securities exchanges. Such investing involves  
certain considerations comprising both risk and opportunity not typically       
associated with investing in U.S. companies. These considerations include       
fluctuation in exchange rates of foreign currencies, less public information    
about issuers of securities, less governmental supervision of foreign issuers,  
lack of uniform accounting, auditing and financial reporting standards, the     
possible expropriation of assets or confiscatory taxation by a host government, 
the possible imposition of foreign taxes, and political risks associated with   
the countries in which foreign issuers are located.                             

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Restricted Securities. An Underlying Fund may invest in restricted securities   
that are not traded in public markets. Restricted securities generally are      
difficult or impossible to sell at prices comparable to the market prices of    
similar securities that are publicly traded. No assurance can be given that any 
such restricted securities will be eligible for resale or otherwise to be traded
on a public market even if a public market for the securities were to develop.  

Performance Fees. Most of the Underlying Funds will pay a performance based fee.
In certain cases, managers may be paid a fee based on appreciation during the   
specific measuring period without taking into account losses occurring in prior 
measuring periods, although the Investment Manager anticipates that managers who
charge such fees will take into account prior losses. These fee arrangements may
create an incentive for such managers to make investments that are riskier or   
more speculative than if a performance based fee were not paid.                 

Portfolio Turnover. The Underlying Funds are expected to have higher portfolio  
turnover than many other investment funds. The Underlying Funds will incur      
brokerage commissions and other transaction costs that generally will be higher 
than those incurred by investment funds with lower portfolio turnover rates. In 
addition, a high portfolio turnover will result in special tax considerations.  
See "Taxes" in the Fund's Statement of Additional Information.                  

For additional information regarding Risk Factors, please see the Fund's        
Statement of Additional Information.                                            

INVESTMENT RESTRICTIONS                                                         

The Fund has adopted certain non-fundamental investment restrictions, which     
cannot be changed without the vote of a majority of the Fund's outstanding      
voting securities. Under the Investment Company Act, the vote of a majority of  
the outstanding voting securities means the vote, at an annual or a special     
meeting of the security holders of the Fund duly called, of (i) 67% or more of  
the voting securities present at the meeting, if the holders of more than 50% of
the outstanding voting securities of the Fund are present or represented by     
proxy or of (ii) more than 50% of the outstanding voting securities of the Fund,
whichever is less. As a matter of fundamental policy, the Fund may not:         

1.    invest more than 15% of its net assets in any one security, except that   
 all or substantially all of the assets of the Fund may be invested in
      another registered investment company having the same investment objective
and substantially similar investment policies as the Fund.          

2.    invest 25% or more of the value of its total assets in the securities     
    (other than U.S. Government securities) of issuers engaged in any single
  industry. This restriction does not apply to the Fund's investments in
      another registered investment company having the same investment objective
and substantially similar investment policies as the Fund.          

3.    issue senior securities representing stock, except to the extent permitted
      by the Investment Company Act. In addition, the Fund will not issue senior
      securities representing indebtedness, except that: (a) the Fund may borrow
money from banks, brokers and other lenders, to finance portfolio   
   transactions and engage in other transactions involving the issuance by
the Fund or the Portfolio of "senior securities" representing       
    indebtedness, and (b) the Fund may borrow money from banks for temporary
  or emergency purposes or in connection with repurchases of, or tenders
for, Shares.                                                        

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4.    underwrite securities of other issuers, except insofar as the Fund may be 
 deemed an underwriter under the Securities Act in connection with the
 disposition of portfolio securities received pursuant to an "in kind"
distribution.                                                       

5.    make loans of money or securities to other persons, except through        
     purchasing fixed-income securities or entering into repurchase agreements
in a manner consistent with the Fund's investment policies.         

6.    purchase or sell commodities or commodity contracts; however, this        
      restriction shall not apply to the Fund to the extent that it is deemed to
purchase or sell commodities or commodity contracts through its     
investments in another registered investment company having the same
     investment objective and substantially similar investment policies as the
Fund.                                                               

7.    purchase or sell real estate or interests therein; however, this          
      restriction shall not apply to the Fund to the extent that it is deemed to
     purchase or sell real estate or interests therein through its investments
in another registered investment company having the same investment 
objective and substantially similar investment policies as the Fund.

The Portfolio has adopted substantially the same fundamental investment         
restrictions as the foregoing investment restrictions adopted by the Fund. As a 
matter of fundamental policy, the Portfolio may not:                            

1.    invest more than 15% of its net assets in any one Underlying Fund.        

2.    invest 25% or more of the value of its total assets in the securities     
    (other than U.S. Government securities) of issuers engaged in any single
    industry. This restriction does not apply to the Portfolio's investments
in Underlying Funds.                                                

3.    issue senior securities representing stock, except to the extent permitted
    by the Investment Company Act. In addition, the Portfolio will not issue
senior securities representing indebtedness, except that: (a) the   
Portfolio may borrow money from banks, brokers and other lenders, to
     finance portfolio transactions and engage in other transactions involving
the issuance by the Fund or the Portfolio of "senior securities"    
  representing indebtedness, and (b) the Portfolio may borrow money from
banks for temporary or emergency purposes or in connection with     
repurchases of, or tenders for, Units.                              

4.    underwrite securities of other issuers, except insofar as the Portfolio   
    may be deemed an underwriter under the Securities Act in connection with
the disposition of its portfolio securities.                        

5.    make loans of money or securities to other persons, except through        
purchasing fixed-income securities, lending portfolio securities or 
entering into repurchase agreements in a manner consistent with the 
Portfolio's investment policies.                                    

6.    purchase or sell commodities or commodity contracts, except, subject to   
      the Investment Advisor's registration with the CFTC, that it may invest in
     commodity pools and other entities that purchase and sell commodities and
commodity contracts; however, this restriction shall not apply to   
Portfolio to the extent that it may purchase or sell commodities or 
commodity contracts through Underlying Funds.                       

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7.    purchase or sell real estate or interests therein, except that it may     
   invest in securities of issuers engaged in the real estate industry and
 may invest in securities secured by real estate or interests therein;
    however, this restriction shall not apply to the Portfolio to the extent
 that it may purchase or sell real estate or interests therein through
Underlying Funds.                                                   

THE OFFERING - SHARES OF THE FUND                                               

Subsequent to its initial public offering, the Fund continues to sell its shares
on a monthly basis through brokers, dealers and certain financial institutions  
that have entered into selling agreements with the Fund ("Selling Agents").     
Shares are generally offered for purchase as of the first day of each calendar  
month. However, Shares may be offered more or less frequently as determined by  
the Board in its sole discretion. See "Plan of Distribution" in the SAI. The    
minimum initial investment in the Fund by any investor is $25,000. The Fund may 
accept orders for any lesser amount. The purchase price for Shares is based on  
the net asset value per Share as of the date such Shares are purchased.         

Except as otherwise permitted by the Board, initial and subsequent purchases of 
Shares will be payable in cash. Each initial or subsequent purchase of Shares   
will be payable in one installment which will generally be due prior to the     
proposed acceptance of the purchase. A prospective investor must submit a       
completed investor certification before the acceptance date set by the Fund. The
Fund reserves the right, in its sole discretion, to reject any subscription to  
purchase Shares in the Fund at any time. Although the Fund may, in its sole     
discretion, elect to except a subscription prior to receipt of cleared funds, an
investor will not become a Shareholder until cleared funds have been received.  

Pending the closing of the monthly offering, funds received from prospective    
investors will be placed in an interest bearing account with the Fund. On the   
date of any closing, the balance in the account with respect to each investor   
whose investment is accepted, including any interest earned by such investor,   
will be invested in the Fund on behalf of such investor.                        

In connection with the sale of Shares, the Investment Advisor (or one of its    
affiliates) may make one-time payments from its own resources to the Fund or    
Selling Agents of up to 1% of the value of the Shares sold by them. In addition,
the Investment Advisor (or one of its affiliates) may make ongoing payments to  
Selling Agents from its own resources in an amount up to 1% per annum of the    
aggregate value of the Shares held by Shareholders that are customers of those  
Selling Agents (less the amount of any investor servicing fees paid to them by  
the Fund). These payments will not be an obligation of the Fund or the          
Shareholders.                                                                   

INVESTOR QUALIFICATIONS                                                         

Each prospective investor in the Fund will be required to certify that it is a  
U.S. person for federal income tax purposes and a "qualified client" within the 
meaning of Rule 205-3 under the Advisers Act. A "qualified client" is, among    
other categories, (i) a natural person or company (other than an investment     
company) that represents that it has a net worth (together, in the case of a    
natural person, with assets held jointly with a spouse) of more than $1,500,000;
(ii) a person who has at least $750,000 under the Investment Advisor's or its   
affiliates' management, including any amount invested in the Fund; (iii) a      
person who is a "qualified purchaser" as defined by the Investment Company Act  
and the rules thereunder; and (iv) certain knowledgeable employees who          
participate in the Investment Advisor's activities. Investors who meet such     
qualifications are referred to in this Prospectus at "Eligible Investors." The  
qualifications required to invest in the Fund will appear in an investor        
certification that mush be completed by each prospective investor. The investor 
certification is contained in Appendix A of this Prospectus. Existing           
Shareholders who wish to purchase additional Shares will be required to qualify 
as "Eligible Investors" and to complete an additional investor certification    
prior to the additional purchase.                                               

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RESTRICTIONS ON TRANSFERS                                                       

With very limited exceptions, Shares are not transferable. Shareholders will    
have no right to require the Fund to permit a transfer of their Shares. See     
"Redemptions, Repurchases of Shares and Transfers" in the SAI for additional    
information.                                                                    

REDEMPTIONS AND REPURCHASES OF SHARES                                           

No Right of Redemption. No Shareholder or other person holding a Share will have
the right to require the Fund to redeem that Share or portion thereof. There is 
no public market for Shares, and none is expected to develop. Consequently,     
investors may not be able to liquidate their investment other than as a result  
of repurchases of Shares by the Fund, as described below and more fully in the  
Statement of Additional Information.                                            

Repurchases of Shares. The Board of Trustees may, from time to time and in their
sole discretion, cause the Fund to offer to repurchase Shares from Shareholders 
pursuant to written tenders by Shareholders at times and on terms and conditions
as they establish. However, because all or substantially all of the Fund's      
assets will be invested in the Portfolio, the Fund will generally find it       
necessary to liquidate a portion of its Portfolio Units in order to satisfy     
repurchase requests. Because Portfolio Units may not be transferred, the Fund   
may withdraw a portion of its Portfolio Units only pursuant to repurchase offers
by the Portfolio. Therefore, the Fund does not expect to conduct a repurchase   
offer for Shares unless the Portfolio contemporaneously conducts a repurchase   
offer for Portfolio Units. In determining whether the Fund should offer to      
repurchase Shares, the Board of Trustees will consider the recommendation of the
Investment Advisor and the Manager. The Investment Advisor and the Manager each 
expects that generally it will recommend to the Board of Trustees that the Fund 
offer to repurchase Shares from Shareholders four times each year, effective    
March 31, June 30, September 30 and December 31. The Fund's Board of Trustees   
will recommend the repurchase of Shares from Shareholders of the Fund only if   
the Portfolio makes an offer to repurchase. The Fund does not expect to make a  
repurchase offer that is larger than the portion of the Portfolio's             
corresponding repurchase offer expected to be available for acceptance by the   
Fund. Consequently, the Fund will conduct repurchase offers on a schedule and in
amounts that will depend on the Portfolio's repurchase offers.                  

Subject to the considerations described above, the aggregate value of Shares to 
be repurchased at any time will be determined by the Board of Trustees in its   
sole discretion, and such amount may be a percentage of the value of the Fund's 
outstanding Shares. Therefore, the Fund may determine not to conduct a          
repurchase offer at a time that the Portfolio conducts a repurchase offer. The  
Fund may also elect to repurchase less than the full amount that a Shareholder  
requests to be repurchased. If a repurchase offer is oversubscribed by a        
Shareholder, the Fund will repurchase only a pro rate portion of the Shares     
tendered by each Shareholder.                                                   

As discussed above, in determining whether the Portfolio should offer to        
repurchase Units from its members pursuant to written requests, the Portfolio   
Board of Directors will consider the recommendation of the Investment Advisor   
and the Manager. The Portfolio Board of Directors or the Board also will        
consider the following factors, among others, in determining whether to         
repurchase Units or Shares, as applicable, and the amount of Units or Shares to 
be repurchased:                                                                 

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o     Whether any Shareholders of the applicable Fund have requested to tender  
shares in such Fund or portions thereof to the Fund;                

o     The liquidity and working capital requirements of the applicable Fund;    

o     The relative economies of scale of the repurchase requests with respect to
the size of the applicable Fund;                                    

o     The past practice of the applicable Fund in repurchasing shares in such   
Fund;                                                               

o     The condition of the securities markets and the economy generally, as well
    as political, national or international developments or current affairs;

o     The anticipated tax consequence of any proposed repurchases of interests  
in the applicable Fund; and                                         

o     In the case of the Portfolio Board of Directors, the Portfolio's          
   investment plans, the liquidity of its assets (including fees and costs
 associated with withdrawing from Underlying Funds and/or disposing of
    assets allocated to Subadvisers), and the availability of information as
to the value of its interests in Underlying Funds.                  

NET ASSET VALUATION                                                             

The Fund will repurchase Shares or portions thereof from Shareholders pursuant  
to written tenders (received by the Board at least thirty (35) days prior to the
applicable repurchase date) on terms and conditions that the Board determines to
be fair to the Fund and to all Shareholders or persons holding Shares acquired  
from Shareholders, or to one or more classes of Shareholders, as applicable. The
value of a Shareholder's Share (or the portion thereof) that is being           
repurchased is equal to the value of the Share as of the Valuation Date (as     
defined below), after giving effect to all allocations that are made as of such 
date. When the Board determines that the Fund shall repurchase Shares or        
portions thereof, notice will be provided to Shareholders describing the terms  
thereof, containing information Shareholders should consider in deciding whether
to participate in the repurchase opportunity and containing information on how  
to participate. Shareholders who are deciding whether to tender their Shares or 
portions thereof during the period that a repurchase offer is open may ascertain
the approximate net asset value of their Shares by contacting the Investment    
Advisor prior to the date upon which such Shareholder must decide whether to    
participate in the repurchase opportunity. Under the repurchase procedures      
described below, Shareholders will have to decide whether to tender their Shares
for repurchase without the benefit of having current information regarding the  
value of the Shares as of a date proximate to the Valuation Date. In addition,  
there will be a substantial period of time between the date as of which         
Shareholders must tender their Shares and the date they can expect to receive   
payment for their Shares from the Fund.                                         

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Repurchases of Shares or portions thereof from Shareholders by the Fund may be  
made at the discretion of the Fund, and may be paid in cash or by the           
distribution of securities in-kind or partly in cash and partly in-kind.        
However, the Fund does not expect to distribute securities in-kind except in the
unlikely event that making a cash payment would result in a material adverse    
effect on the Fund or on Shareholders not tendering Shares for repurchase.      
Repurchases will be effective after receipt and acceptance by the Fund of all   
eligible written tenders of Shares or portions thereof from Shareholders. Any   
in-kind distribution of securities may consist of marketable or non-marketable  
securities (valued in accordance with the Declaration of Trust), which will be  
distributed to all tendering Shareholders on a PRO RATA basis. The Fund does not
impose any charges in connection with repurchases of Shares or portions thereof.

Due to liquidity restraints associated with the Portfolio's investments in      
Underlying Funds and the fact that the Fund may have to effect withdrawals from 
the Portfolio to pay for Shares being repurchased, each Fund presently expects  
to employ the following repurchase procedures:                                  

(a)   Shareholders choosing to tender Shares (or portions thereof) for          
    repurchase must do so by the date specified in the notice describing the
terms of the offer (the "Expiration Date") which generally will be  
thirty-five (35) days before the date as of which Shares are to be  
  repurchased. The Shares (or portions thereof) will be valued as of the
    date on which Shares are to be repurchased (the "Valuation Date"), which
 is generally expected to be either March 31, June 30, September 30 or
December 31;                                                        

(b)   Promptly after the Expiration Date, the Fund will give to each Shareholder
  whose Shares (or portions thereof) have been accepted for repurchase a
   promissory note (the "Promissory Note") entitling the Shareholder to be
      paid an amount equal to the value, determined as of the Valuation Date, of
 the repurchased Share (or portions thereof). The determination of the
   value of Shares as of the Valuation Date is subject to adjustment based
upon the results of the next annual audit of the Fund's financial   
statements.                                                         

(c)   The Promissory Note, which will be non-interest bearing and               
   non-transferable, is expected to contain terms providing for payment at
two separate times.                                                 

      The first payment (the "Initial Payment") will be in an amount equal to at
   least 90% of the estimated value of the repurchased Shares (or portions
      thereof), determined as of the Valuation Date. The Initial Payment will be
   made as of the later of (a) within 30 days after the Valuation Date, or
(b) if the Fund has requested withdrawals of its capital from any   
 Underlying Funds in order to fund the repurchase of Shares, within 10
   business days after the Fund has received at least 90% of the aggregate
amount withdrawn by the Fund from such Underlying Funds.            

     The second and final payment (the "Contingent Payment") is expected to be
in an amount equal to the excess, if any, of (a) the value of the   
    repurchased Shares (or portions thereof), determined as of the Valuation
Date and based upon the results of the annual audit of the Fund's   
     financial statements for the year in which the Valuation Date falls, over
   (b) the Initial Payment. It is anticipated that the annual audit of the
      Fund's financial statements will be completed within 60 days after the end
   of each fiscal year of the Fund and that the Contingent Payment will be
made promptly after the completion of the audit.                    

(d)   Although the amounts required to be paid by the Fund under the Promissory 
   Note will generally be paid in cash, the Fund may under certain limited
    circumstances noted above pay all or a portion of the amounts due by the
in-kind distribution of marketable or non-marketable securities.    

The foregoing procedures may be amended by the Board from time to time and will 
be effective upon notification to the Shareholders.                             

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Repurchases of Shares by the Fund are subject to certain regulatory requirements
imposed by SEC rules. The Fund believed that the repurchase procedures described
above comply with these requirements. However, if modification of the Fund's    
repurchase procedures is deemed necessary to comply with regulatory             
requirements, the Board will adopt revised procedures designed to provide       
Shareholders substantially the same liquidity for Shares as would be available  
under the procedures described above.                                           

DISTRIBUTION AND SHAREHOLDER SERVICING PLAN                                     

The Fund may pay distribution and servicing fees to broker-dealers and certain  
financial advisers and intermediaries which serve as Servicing Agents providing 
ongoing investor services and account maintenance services to shareholders. Such
services may include, but shall not be limited to, the provision of personal,   
continuing services to their customers who are investors in the Fund,           
establishment of investor accounts, communicating periodically with the Fund and
providing shareholders with information about the Fund, the Fund's repurchase   
offers, handling correspondence from investors about their accounts including   
transaction confirmations, maintaining account records, and providing such other
services as the Fund may request from time to time. [In consideration for such  
services, the Fund will pay the Servicing Agent a quarterly Servicing Fee based 
on the month-end net assets of the Fund over the course of the applicable       
quarter. The combined Distribution Fee and Servicing Fee will equal [ ]% (on an 
annualized basis) of the Fund's average net assets as of each month-end, is     
accrued monthly and payable quarterly in arrears, and is paid out of the Fund's 
assets. The Fund paid $[__] in Servicing Fees in 2006. The Investment Adviser or
its affiliates also may pay a fee out of their own resources to the Servicing   
Agents.]                                                                        

ORGANIZATION AND DESCRIPTION OF SHARES                                          

The Fund is a series of PARADIGM Funds Trust. PARADIGM Funds Trust is organized 
as a statutory trust established under Delaware law pursuant to a Declaration of
Trust dated October 14, 2005, and is registered under the Investment Company    
Act. The Trustees of the Fund are responsible for the overall management and    
supervision of its affairs. The Fund currently has one class of shares of       
beneficial interest that may be issued in an unlimited number by the Trustees.  
There are no annual meetings of Shareholders, but special meetings may be held  
as required by law to elect or remove Trustees and consider certain other       
matters. Because the Fund invests in the Portfolio, it may be asked to vote on  
certain Portfolio matters (such as changes in certain Portfolio investment      
restrictions). When necessary, the Fund will hold a meeting of its Shareholders 
to consider the Portfolio matter and then vote its interest in the Portfolio in 
proportion to the votes cast by its Shareholders. The Fund can withdraw from the
Portfolio at any time. Shareholders are entitled to one vote for each full Share
held. Fractional Shares may be voted proportionately. Each Share participates   
ratably with all other outstanding Shares in the Fund's profits and losses and  
has the redemption rights described above. No conversion or preemptive rights   
exist in connection with any Shares. All Shares, when duly issued, will be fully
paid and nonassessable.                                                         

DISTRIBUTIONS                                                                   

The Fund intends to declare daily and distribute annually substantially all of  
its net investment income. Net capital gains, if any, will be distributed at    
least annually.                                                                 

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MANAGEMENT FEE                                                                  

The Fund will not pay a Management Fee directly to the Manager or the Investment
Advisor. The Fund will pay its proportionate share of the Portfolio's Management
Fee. Pursuant to its Investment Advisory Agreement with the Portfolio, the      
Manager is entitled to receive a monthly management fee (the "Management Fee")  
of which a sub-advisory fee is paid to the Investment Advisor. The Management   
Fee is equal to 1/12th of 1.25% of the net asset value of each of the Portfolios
Units as of the first day of each calendar month.                               

For purposes of determining the Management Fee, net assets of the Portfolio will
be determined by taking into account net realized gain or loss and the net      
change in unrealized appreciation or depreciation of net assets as reported by  
the sponsors of the Underlying Funds. The overall fees payable by the           
Shareholders, including their proportionate share of the Portfolio's Management 
Fee, may be higher than those paid by other registered investment companies but 
may be lower than those paid by many private investment funds with similar      
investment policies.                                                            

FUND EXPENSES                                                                   

Organizational and operating expenses of the Fund will be paid by the Fund, and 
therefore, indirectly by its Shareholders. The Fund will also bear certain      
ongoing offering costs associated with any periodic offering of Fund interests. 

PRIOR PERFORMANCE OF SIMILAR FUND                                               

The table that follows presents prior performance data for PARADIGM Multi       
Strategy Fund ("PMSF"), a multi-manager, multi-strategy fund of hedge funds     
which is managed by the Investment Advisor with investment objectives, policies 
and strategies substantially similar to that of the Portfolio except that PMSF  
allocates its assets among 44 investment managers and the Portfolio will        
initially only invest in 25 Underlying Funds. The information presented below is
based on actual performance data provided by the Investment Advisor. PMSF IS A  
LIMITED LIABILITY COMPANY THAT IS TREATED AS A PARTNERSHIP FOR FEDERAL INCOME   
TAX PURPOSES. PMSF IS NOT REGISTERED UNDER THE INVESTMENT COMPANY ACT. AS A     
NON-REGISTERED ENTITY, PMSF IS NOT SUBJECT TO THE INVESTMENT RESTRICTIONS AND   
THE REGULATORY REQUIREMENTS OF THE INVESTMENT COMPANY ACT. THE TABLE DOES NOT   
REFLECT THE INVESTMENT PERFORMANCE OF THE FUND OR THE PORTFOLIO AND SHOULD NOT  
BE CONSIDERED AS AN INDICATION OF FUTURE PERFORMANCE OF THE FUND OR THE         
PORTFOLIO OR AS A SUBSTITUTE FOR THE FUND'S OR THE PORTFOLIO'S PERFORMANCE. IN  
ADDITION, FUTURE INVESTMENTS IN THE FUND AND THE PORTFOLIO WILL BE MADE UNDER   
DIFFERENT ECONOMIC CONDITIONS AND IN DIFFERENT ECONOMIC CYCLES WHICH WILL RESULT
IN DIFFERENCES AMONG THE FUTURE PERFORMANCE OF THE FUND AND THE PORTFOLIO AND   
THE PAST PERFORMANCE OF PMSF. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE        
RESULTS.                                                                        

In addition, for comparison purposes, the table set forth below presents past   
performance data for HFRI Fund of Funds Composite Index ("HFRI Index"). The HFRI
Index is a composite of funds selected from the over 1800 fund of funds that are
tracked by Hedge Fund Research, Inc. The following sub-indices are components of
the HFRI Index:                                                                 

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HFRI Fund of Funds Conservative Index                                           

This index consists of funds that primarily invest in funds that generally (i)  
engage in more "conservative" strategies such as Equity Market Neutral, Fixed   
Income Arbitrage, and Convertible Arbitrage and (ii) exhibit a lower historical 
annual standard deviation than the HFRI Index. A fund in the HFRI Fund of Funds 
Conservative Index shows generally consistent performance regardless of market  
conditions.                                                                     

HFRI Fund of Funds Diversified Index                                            

This index consists of funds that primarily invest in funds that generally (i)  
invest in a variety of strategies among multiple managers, (ii) have a          
historical annual return and/or a standard deviation generally similar to the   
HFRI Index and (iii) demonstrates generally close performance and returns       
distribution correlation to the HFRI Index. A fund in the HFRI Fund of Funds    
Diversified Index tends to show minimal loss in down markets while achieving    
superior returns in up markets.                                                 

HFRI Fund of Funds Market Defensive Index                                       

This index consists of funds that primarily invest in funds that generally (i)  
engage in short-biased strategies such as short selling and managed futures and 
(ii) show a negative correlation to the general market benchmarks (S&P). A fund 
in the Fund of Funds Market Defensive Index exhibits higher returns during down 
markets than during up markets.                                                 

HFRI Fund of Funds Strategic Index                                              

This index consists of funds that primarily invest in funds that generally (i)  
seek superior returns by primarily investing in funds that generally engage in  
more opportunistic strategies such as Emerging Markets, Sector specific, and    
Equity Hedge and (ii) exhibit a greater dispersion of returns and higher        
volatility compared to the HFRI Index. A fund in the HFRI Fund of Funds         
Strategic Index tends to outperform the HFRI Index in up markets and            
underperform the index in down markets.                                         

To the extent expense waivers or reimbursements were in effect during the period
indicated below, actual returns would have been lower had such expense waivers  
or reimbursements not been in effect. The performance shown below is net of     
expenses. The information should not be considered a prediction of the future   
performance of the Portfolio. The actual performance of the Portfolio may be    
higher or lower than that shown. Past performance of PMSF is no guarantee of    
future results of the Portfolio. Paradigm's accounts are not subject to certain 
investment limitations, diversification requirements, and other restrictions    
imposed by the 1940 Act and the Internal Revenue Code which, if applicable, may 
have adversely affected performance.                                            

PARADIGM'S RETURNS
--------------------------------------------------------------------------------
                                                    PMSF          HFRI Index
                                                 ----------       ----------
  1 Year Trailing as of December 2006             5.76%           10.42%
  3 Years Trailing as of December 2006           14.03%           26.84%
  5 Years Trailing as of December 2006           21.98%           43.01%

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PAST PERFORMANCE OF THE UNDERLYING FUNDS                                        

The table that follows presents past performance data for each of the twenty    
Underlying Funds among whom the Investment Advisor allocates its assets. The    
information presented below is based on actual performance data provided by the 
Investment Advisor. The information should not be considered a prediction of the
future performance of the Portfolio. The actual performance of the Portfolio may
be higher or lower than that shown. The performance shown below does not include
expenses of the individual Underlying Funds, and if it did, performance returns 
would have been lower. Past performance of the Underlying Funds is no guarantee 
of future results of the Portfolio.                                             

                                                        [Enlarge/Download Table]

------------------------------------------------- ------------------ -------------- ------------- -------------
                                                                                       3 Year                  
                                                                        1 Year        Trailing       5 Year    
                                                                       Trailing        as of        Trailing   
                                                   Fund Inception        as of        December        as of    
                Underlying Fund                         Date         December 2006      2006      December 2006
------------------------------------------------- ------------------ -------------- ------------- -------------
                                                                                                               
Agamas Continuum Fund LP                                     Apr-05         12.21%            NA           NA  
------------------------------------------------- ------------------ -------------- ------------- -------------
Apex Guotai Junan Greater China Fund LLC                     May-04         11.56%            NA           NA  
------------------------------------------------- ------------------ -------------- ------------- -------------
Battenkill Market Neutral Fund LP                            Feb-04          5.25%            NA           NA  
------------------------------------------------- ------------------ -------------- ------------- -------------
Bear Stearns High Grade Credit LP                            Oct-03         10.43%        41.33%           NA  
------------------------------------------------- ------------------ -------------- ------------- -------------
Bennelong Asia Pacific Multi Strategy Equity                                                                   
Fund LP                                                      Mar-05          7.46%            NA           NA  
------------------------------------------------- ------------------ -------------- ------------- -------------
Brookville Credit Opportunities LP                           Mar-03         10.97%        20.87%           NA  
------------------------------------------------- ------------------ -------------- ------------- -------------
Cypress Management LP                                        Apr-95         10.69%        46.55%       81.50%  
------------------------------------------------- ------------------ -------------- ------------- -------------
Davidson Kempner Partners LP                                 Jan-90         18.61%        40.81%       65.63%  
------------------------------------------------- ------------------ -------------- ------------- -------------
Litchfield Capital Partners, LP                              Nov-02         14.72%        47.90%           NA  
------------------------------------------------- ------------------ -------------- ------------- -------------
Maple Leaf Macro Volatility Fund LLC                         Jan-04         12.53%        42.63%           NA  
------------------------------------------------- ------------------ -------------- ------------- -------------
Mercury Real Estate Securities Fund LP                       Jun-04         13.83%            NA           NA  
------------------------------------------------- ------------------ -------------- ------------- -------------
MPC Pilgrim Fund B                                           Oct-00          6.61%        25.65%       52.03%  
------------------------------------------------- ------------------ -------------- ------------- -------------
Osprey Opportunity Fund, LP                                  Oct-00          2.71%        13.21%       36.49%  
------------------------------------------------- ------------------ -------------- ------------- -------------
Parmenides Fund LP                                           Jun-03          5.93%        26.94%           NA  
------------------------------------------------- ------------------ -------------- ------------- -------------
Providence MBS Opportunities Fund, LP                        Mar-04         -4.67%            NA           NA  
------------------------------------------------- ------------------ -------------- ------------- -------------
SAC Multi-Strategy Fund LP                                   Dec-05         19.07%            NA           NA  
------------------------------------------------- ------------------ -------------- ------------- -------------
Thruway Partners, LP                                         Apr-98          8.49%        42.58%       74.63%  
------------------------------------------------- ------------------ -------------- ------------- -------------
Ventus LP                                                    Nov-01         18.03%        25.25%       56.89%  
------------------------------------------------- ------------------ -------------- ------------- -------------
Vicis Fund                                                   Aug-01         13.78%        32.39%       55.77%  
------------------------------------------------- ------------------ -------------- ------------- -------------

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INDEMNIFICATION                                                                 

The Fund has agreed to indemnify and hold harmless the Investment Advisor, the  
Manager and each of their directors, managing members and officers, and each    
person, if any, who controls the Investment Advisor or the Manager, against any 
loss, etc., based upon an assertion that the registration statement, prospectus,
Shareholder reports or other information filed or made public by the Fund (as   
from time to time amended) included an untrue statement of a material fact or   
omitted to state a material fact required to be stated or necessary in order to 
make the statements made not misleading. However, the Fund will not indemnify   
the Investment Advisor or the Manager or hold them harmless to the extent that  
the statements or omission was made in reliance upon, and in conformity with,   
information furnished to the Fund by or on behalf of the Investment Advisor or  
the Manager. The indemnification provisions in the Investment Advisory Agreement
and the Sub-Advisory Agreement will be limited by applicable state and federal  
laws.                                                                           

TAXES                                                                           

The following discussion is only a summary of certain of the tax considerations 
generally applicable to investments in the Fund and is not intended to provide  
tax or other financial advice to anyone. Prospective investors should consult   
their own tax advisers with specific reference to their own situation as it     
relates to an investment in the Fund.                                           

The Fund will be treated as a corporation for federal income tax purposes. As   
noted above, the Fund intends to qualify as a regulated investment company      
eligible for special tax treatment under Subchapter M of the Code. Accordingly, 
the Fund's tax reporting to Shareholders will be made on the IRS Form 1099      
instead of Schedule K-1. If the Fund qualifies for special tax treatment, it    
will not be subject to federal income tax on income and gains distributed in a  
timely manner to its Shareholders. To qualify for the special treatment accorded
regulated investment companies and their shareholders, the Fund must satisfy    
certain diversification and distribution requirements (as described above in    
"Risk Factors Associated With the Fund -- Tax Liability and Borrowings"). The   
Fund intends to diversify its holdings so that at the end of each fiscal        
quarter, the Fund meets the diversification requirements. To satisfy the        
distribution requirements, the Fund intends to distribute with respect to each  
taxable year substantially all of its net investment income, net tax-exempt     
income and the excess, if any, of net short-term capital gains over net         
long-term capital losses for such year. Income dividends and short-term capital 
gain distributions are taxable to a Shareholder (unless such Shareholder is not 
subject to tax on its income) as ordinary income. Long-term capital gain        
distributions from the Fund are taxable to a Shareholder (unless such           
Shareholder is not subject to tax on its income) as long-term capital gains     
regardless of how long a Shareholder has owned Shares of the Fund. Distributions
are taxable to a Shareholder of the Fund (unless such Shareholder is not subject
to tax on its income) even if they are paid from income or gains earned by the  
Fund prior to the Shareholder's investment (and thus were included in the price 
paid by the Shareholder). Dividends and capital gain distributions will         
automatically be reinvested in additional Shares of the Fund on the record date 
thereof unless a Shareholder has elected to receive cash. Distributions are     
taxable as described above regardless of whether they are distributed in cash or
additional Shares. An investment in the Fund may in some circumstances result in
liability for Federal alternative minimum tax for Shareholders. Based on the    
Fund's structure, it is not anticipated that distributions to Shareholders will 
constitute unrelated business taxable income ("UBTI").                          

From time to time the Fund may offer to repurchase Shares. A Shareholder who    
tenders all Shares held, or Shares considered to be held under certain          
attribution rules of the Code, will be treated as having sold its Shares and    
generally will realize a capital gain or loss. If a Shareholder tenders fewer   
than all of its Shares, the Shareholder may be treated as having received a     
taxable dividend upon the tender of its Shares. In this case, there is a remote 
risk that non-tendering Shareholders will be treated as having received taxable 
distributions from the Fund. Likewise, if the Fund redeems some but not all of  
the Shares held by a Shareholder and the Shareholder is treated as having       
received a taxable dividend upon such redemption, there is a remote risk that   
the non-redeeming Shareholders will be treated as having received taxable       
distributions from the Fund. To the extent that the Fund recognizes net gains on
the liquidation of its investments to meet such tenders of Shares, the Fund will
be required to make additional distributions to its Shareholders.               

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The Fund's transfer agent will send each Shareholder and the Internal Revenue   
Service (the "IRS") an annual statement detailing federal tax information,      
including information about dividends and distributions paid to the Shareholder 
during the preceding year. This information will be based on information then   
available to the Fund, but could be revised based upon additional or revised    
information that subsequently becomes available to the Fund. If the Fund revises
annual tax statements sent to its Shareholders, Shareholders may be required to 
amend their tax returns to reflect the revised information.                     

The foregoing discussion summarizes certain U.S. federal income tax             
considerations for general information only. Before investing, prospective      
investors should consult their own tax advisers regarding the specific federal  
tax consequences of an investment in the Fund, as well as the effects of state, 
local and foreign tax law and proposed law changes.                             

ERISA PLANS AND OTHER TAX QUALIFIED PLANS                                       

Investors subject to the Employee Retirement Income Security Act of 1974, as    
amended ("ERISA"), and other tax-qualified plans, including individual          
retirement accounts ("IRAs"), Keogh plans and other plans subject to the Code's 
prohibited transaction rules may purchase Shares in the Fund. Because the Fund  
is registered as an investment company under the Investment Company Act, the    
underlying assets of the Fund should not be considered to be "plan assets" of   
any plan investing in the Fund for purposes of ERISA's fiduciary duties or the  
prohibited transaction provisions under either the Code or ERISA. Accordingly,  
neither the Investment Advisor nor any of its affiliates will be fiduciaries    
with respect to the plans investing in the Fund based solely on the Investment  
Advisor's management of the Fund's assets. Nevertheless, investment in the Fund 
by an ERISA plan or a tax-qualified plan requires special consideration.        
Trustees and administrators of such entities are urged to review carefully the  
ERISA Considerations section of the Statement of Additional Information.        

PERIODIC REPORTS                                                                

The Fund will provide quarterly unaudited and annual audited statements. Because
the Underlying Funds may not provide annual reports to the Portfolio on a timely
basis, the Fund's annual audited report may be delayed and the Shareholders may 
need to seek extensions of the deadline to file their tax returns.              

CUSTODIAN AND DIVIDEND PAYING AGENT                                             

J.P. Morgan Trust Company, N.A. (the "Custodian") serves as the primary         
custodian of the Fund's and the Portfolio's assets, and may maintain custody of 
the Fund's and the Portfolio's assets with domestic and foreign subcustodians   
(which may be banks, trust companies, securities depositories and clearing      
agencies) selected by the Investment Advisor. Assets of the Fund and the        
Portfolio are not held by the Investment Advisor or commingled with the assets  
of other accounts other than to the extent that securities are held in the name 
of a custodian in a securities depository, clearing agency or omnibus customer  
account of such custodian. The Custodian's principal business address is 2220   
Chemsearch Blvd., Suite 150, Irving, Texas 75062.                               

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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                                   

Briggs, Bunting & Dougherty, LLP ("Briggs") serves as the independent registered
public accounting firm of the Fund. Its principal business address is Two Penn  
Center Plaza, Philadelphia, Pennsylvania 19102. Briggs provides audit services, 
tax return preparation and assistance, and consultation in connection with      
certain SEC filings.                                                            

LEGAL COUNSEL                                                                   

Tannenbaum Helpern Syracuse & Hirschtritt LLP acts as legal counsel to the Fund 
and the Fund's Independent Trustees. Its principal business address is 900 Third
Avenue, New York, New York 10022.                                               

ADMINISTRATOR AND TRANSFER AGENT                                                

BISYS Fund Services Ohio, Inc. (the "Administrator") a Delaware corporation,    
serves as the administrator and transfer agent for the Fund and the Portfolio.  
The Administrator provides general administration related services, including   
those relating to valuation of the Fund's and the Portfolio's assets. The       
Administrator is located at 3435 Stelzer Road, Columbus, Ohio 43219.            

ADDITIONAL INFORMATION                                                          

This Prospectus does not contain all of the information set forth in the        
Registration Statement that the Fund has filed with the SEC. The complete       
Registration Statement may be obtained from the SEC upon payment of the fee     
prescribed by its rules and regulations and at the SEC's website (www.sec.gov)  
for no charge.                                                                  

Statements contained in this Prospectus as to the contents of any contract or   
other documents referred to are not necessarily complete, and, in each instance,
reference is made to the copy of such contract or other document filed as an    
exhibit to the Registration Statement of which this Prospectus forms a part,    
each such statement being qualified in all respects by such reference.          

More detailed information about the Fund is available in the SAI which is       
available at no additional charge and may be obtained by calling: (212) 271-3388
or writing: PARADIGM Funds Trust, 650 Fifth Avenue, 17th Floor, New York, New   
York 10019.                                                                     

PRIVACY POLICY & PRACTICES                                                      

The Funds recognize and respect the privacy concerns and expectations of our    
customers.(2)                                                                   

We provide this notice to you so that you will know what kinds of information we
collect about our customers and the circumstances in which that information may 
be disclosed to third parties who are not affiliated with the Funds.            

----------                                                                      
(2) For purposes of this notice, the terms "customer" or "customers" includes   
individuals who provide nonpublic personal information to the Funds, but do not 
invest in the Funds' shares.                                                    

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Collection of Customer Information.                                             

We collect nonpublic personal information about our customers from the following
sources:                                                                        

      o     Account Applications and other forms, which may include a customer's
      name, address, social security number, and information about a
customer's investment goals and risk tolerance;         

   o     Account History, including information about the transactions and
balances in a customer's accounts; and                  

      o     Correspondence, written, telephonic or electronic between a customer
and the Funds or service providers to the Funds.        

Disclosure of Customer Information.                                             

We may disclose all of the information described above to certain third parties 
who are not affiliated with the Funds under one or more of these circumstances: 

    o     As Authorized -- if you request or authorize the disclosure of the
information.                                            

o     As Permitted by Law -- for example, sharing information with  
            companies who maintain or service customer accounts for the Funds is
      permitted and is essential for us to provide shareholders with
    necessary or useful services with respect to their accounts.

o     Under Joint Agreements -- we may also share information with  
           companies that perform marketing services on our behalf or to other
            financial institutions with whom we have joint marketing agreements.

Security of Customer Information.                                               

We require service providers to the Funds:                                      

o     To maintain policies and procedures designed to assure only   
        appropriate access to, and use of information about customers of
Funds; and                                              

 o     To maintain physical, electronic and procedural safeguards that
  comply with federal standards to guard non public personal
information of customers of the Funds.                  

We will adhere to the policies and practices described in this notice regardless
of whether you are a current or former shareholder of Funds.                    

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 DATED APRIL [ ], 2007

PROSPECTUS

PARADIGM INSTITUTIONAL SERIES,
A SERIES OF PARADIGM FUNDS TRUST, A DELAWARE STATUTORY TRUST

UNITS OF BENEFICIAL INTEREST

PARADIGM Institutional Series (the "Fund") is a series of PARADIGM Funds Trust, 
a newly formed Delaware statutory trust registered under the Investment Company 
Act of 1940, as amended (the "Investment Company Act"), as a non-diversified,   
closed-end management investment company. The Fund's investment objective is to 
generate long-term capital appreciation with lower volatility than the broad    
equity markets. The Fund intends to achieve its objective by investing all or   
substantially all of its assets in PARADIGM Multi Strategy Fund I, LLC (the     
"Portfolio"), a recently formed Delaware limited liability company registered   
under the Investment Company Act as a non-diversified, closed-end management    
investment company. The Portfolio has the same investment objective as the Fund.
The Portfolio seeks to accomplish this objective by allocating its assets among 
a diverse group of skill-based portfolio managers that specialize in absolute   
return strategies. The Portfolio will invest in approximately 25 to 35          
investment funds (the "Underlying Funds"), typically referred to as hedge funds,
managed by third-party managers who employ a variety of absolute return         
investment strategies in pursuit of attractive risk-adjusted investments        
consistent with the preservation of capital. The actual number of Underlying    
Funds may vary and may change materially over time as determined by the         
Investment Advisor (as defined below) in its sole discretion.                   

Allocation of assets among a professionally selected cross-section of hedge     
funds that invest in a variety of financial markets and utilize a broad range or
alternative investment strategies has the potential to reduce the volatility of 
investment returns from that which might be associated with a direct investment 
with any single investment manager.                                             

Unregistered investment funds typically provide greater flexibility than        
traditional investment funds (i.e. registered investment companies) as to the   
type of securities that may be owned, the types of trading strategies that may  
be employed, and, in some cases, the amount of leverage that may be used. The   
Underlying Funds utilized by the Portfolio may invest and trade in a wide range 
of securities, financial instruments and markets and may pursue a variety of    
investment strategies. These investments may include, but are not limited to,   
U.S. and foreign equity and fixed income securities. The investment programs of 
the Underlying Funds may also involve the use of a variety of sophisticated     
investment techniques for both hedging and non-hedging purposes, including:     
short sales of securities; use of leverage; and transactions in derivative      
securities and other financial instruments such as swaps, stock options, index  
options, future contracts and options on futures.                               

The flexibility of the Underlying Funds in implementing alternative investment  
strategies combined with the diversification of the Portfolio's assets among 25 
to 35 different Underlying Funds may result in lower volatility as opposed to   
investing with a single investment manger. Ultimately, the reduction in         
volatility in the Portfolio's investments will allow the Portfolio to achieve   
its investment objective of long-term capital appreciation while preserving the 
capital of the investments in the Fund.                                         

The Fund cannot guarantee that its investment objective will be achieved or that
the Portfolio's design and risk monitoring strategies will be successful.       
Investing in the Fund involves a high degree of risk. See "RISK FACTORS."       

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This prospectus (the "Prospectus") applies to the offering of units of the Fund 
("Shares"). The Fund is designed for institutional investors including but not  
limited to public pensions, endowments and foundations. Investments in the Fund 
may be made only by "Eligible Investors" as defined herein. See "INVESTOR       
QUALIFICATIONS." The Shares are offered as of the first day of each calendar    
month, in each case subject to any applicable sales charge and other fees, as   
described herein. The minimum initial investment in the Fund by any investor is 
$25,000. However, the Fund, in its sole discretion, may accept investments below
this minimum. Pending the closing of the monthly offering, funds received from  
prospective investors will be invested in high quality, short-term securities or
placed in an interest-bearing account. On the date of any closing, the funds    
with respect to each investor whose investment is accepted, including any       
interest earned by such investor, will be invested in the Fund on behalf of such
investor. See "THE OFFERING - SHARES OF THE FUND."                              

The Portfolio, or its affiliates, may pay from their own resources additional   
compensation to brokers or dealers in connection with the sale and distribution 
of the Shares or the servicing of investors. The Fund may pay compensation to   
intermediaries for the purpose of promoting the sale of the Shares of the Fund, 
maintaining balances of Fund Shares, and/or for sub-accounting, administrative, 
or shareholder processing services. Such payments will be made quarterly. The   
amount of these payments is determined from time to time by PARADIGM Funds Trust
and may be different for different intermediaries.                              

No person who is admitted as a member of the Fund ("Shareholder") will have the 
right to require the Fund to redeem its Shares. The board of trustees of        
PARADIGM Funds Trust (the "Board of Trustees") may, from time to time and in    
their sole discretion, cause the Fund to offer to repurchase Shares from        
Shareholders pursuant to written tenders by Shareholders at times and on terms  
and conditions as the Board of Trustees establish. See "REDEMPTIONS AND         
REPURCHASES OF SHARES." This Prospectus is not an offer to sell the Shares and  
is not soliciting an offer to buy the Shares in any state or jurisdiction where 
offer or sale is not permitted.                                                 

If you purchase Shares in the Fund, you will become bound by the terms and      
conditions of the Agreement and Declaration of Trust of the Fund (the "Trust    
Agreement"). A copy of the Trust Agreement is attached as Appendix B to this    
Prospectus.                                                                     

The Shares will not be listed on any securities exchange and it is not          
anticipated that a secondary market for the Shares will develop. The Shares are 
subject to substantial restrictions on transferability and resale and may not be
transferred or resold except as permitted under the Trust Agreement. Although   
the Fund may offer to repurchase Shares from time to time, Shares will not be   
redeemable at a Shareholder's option nor will they be exchangeable for Shares or
units of any other fund. As a result, an investor may not be able to sell or    
otherwise liquidate his or her Shares. Shares are appropriate only for those    
investors who can tolerate a high degree of risk and do not require a liquid    
investment and for whom an investment in the Fund does not constitute a complete
investment program.                                                             

This Prospectus concisely provides information that you should know about the   
Fund before investing. You are advised to read this Prospectus carefully and to 
retain it for future reference. Additional information about the Fund, including
the Fund's statement of additional information (the "SAI"), dated April [ ],    
2007, has been filed with the SEC. You can request a copy of the SAI without    
charge by writing to the Fund, 650 Fifth Avenue, 17th Floor, New York, NY 10019,
or by calling the Fund at (212) 271-3388. The SAI is incorporated by reference  
into this Prospectus in its entirety. You can obtain the SAI, and other         
information about the Fund, on the SEC's website (http://www.sec.gov). The      
address of the SEC's internet site is provided solely for the information of    
prospective investors and is not intended to be an active link.                 

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Neither the SEC nor any state securities commission has determined whether this 
Prospectus is truthful or complete, nor have they made, nor will they make, any 
determination as to whether anyone should buy these securities. Any             
representation to the contrary is a criminal offense.                           

You should not construe the contents of this Prospectus as legal, tax or        
financial advice. You should consult with your own professional advisors as to  
legal, tax, financial, or other matters relevant to the suitability of an       
investment in the Fund.                                                         

You should rely only on the information contained in this Prospectus and the    
SAI. The Fund has not authorized anyone to provide you with different           
information. You should not assume that the information provided by this        
Prospectus is accurate as of any date other than the date on the front of this  
Prospectus.                                                                     

The date of this Prospectus is April [ ], 2007.                                 

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 TABLE OF CONTENTS

                                                                            Page

GENERAL DESCRIPTION OF THE FUND...........................................     2
USE OF PROCEEDS...........................................................     3
FEES AND EXPENSES.........................................................     3
INVESTMENT ADVISOR........................................................     5
FUND MANAGER..............................................................     5
BOARD OF TRUSTEES.........................................................     7
INVESTMENT OBJECTIVE AND GOALS............................................     7
INVESTMENT STRATEGIES AND SELECTION OF UNDERLYING FUNDS...................     8
OVERVIEW OF THE INVESTMENT PROCESS........................................    10
POTENTIAL BENEFITS OF INVESTING IN THE FUND...............................    12
RISK FACTORS..............................................................    12
INVESTMENT RESTRICTIONS...................................................    20
THE OFFERING ' SHARES OF THE FUND.........................................    21
INVESTOR QUALIFICATIONS...................................................    22
RESTRICTIONS ON TRANSFERS.................................................    22
REDEMPTIONS AND REPURCHASES OF SHARES.....................................    23
NET ASSET VALUATION.......................................................    25
ORGANIZATION AND DESCRIPTION OF SHARES....................................    25
DISTRIBUTIONS.............................................................    25
MANAGEMENT FEE............................................................    25
FUND EXPENSES.............................................................    26
PRIOR PERFORMANCE OF SIMILAR FUND.........................................    26
PAST PERFORMANCE OF THE INITIAL 25 UNDERLYING FUNDS.......................    27
INDEMNIFICATION...........................................................    29
TAXES.....................................................................    29
ERISA PLANS AND OTHER TAX QUALIFIED PLANS.................................    30
PERIODIC REPORTS..........................................................    30
CUSTODIAN AND DIVIDEND PAYING AGENT.......................................    31
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.............................    31
LEGAL COUNSEL.............................................................    31
ADMINISTRATOR AND TRANSFER AGENT..........................................    31
ADDITIONAL INFORMATION....................................................    31

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 PARADIGM INSTITUTIONAL SERIES

UNITS OF BENEFICIAL INTEREST

GENERAL DESCRIPTION OF THE FUND                                                 

PARADIGM Institutional Series (the "Fund") is a series of PARADIGM Funds Trust, 
a newly-formed Delaware statutory trust that is a non-diversified, closed-end   
management investment company registered under the Investment Company Act of    
1940, as amended (the "Investment Company Act"). This prospectus applies to the 
offering of units in the Fund ("Shares"). The Fund's Shares are registered under
the Securities Act of 1933, as amended, but are subject to substantial limits on
transferability and resale.                                                     

The Fund is designed for institutional investors including but not limited to   
public pensions, endowments and foundations.                                    

The Fund generally invests all of its assets in PARADIGM Multi Strategy Fund I, 
LLC (the "Portfolio"), under a master/feeder structure. Units of beneficial     
interest of the Portfolio are herein referred to as "Units." In addition, and as
described more fully below in "Risk Factors - Tax Liability and Borrowings", the
Fund may periodically make short-term investments in U.S. Government securities.

The Fund's and the Portfolio's investment objective is to generate long-term    
capital appreciation with lower volatility than the broad equity markets. The   
Fund attempts to achieve this objective by investing all or substantially all of
its net investable assets in the Portfolio. The Portfolio seeks to accomplish   
this objective by allocating its assets among a diverse group of skill-based    
portfolio managers that specialize in absolute return strategies. The Portfolio 
will invest in approximately 25 to 35 investment funds (the "Underlying Funds"),
typically referred to as hedge funds, managed by third-party managers who employ
a variety of absolute return investment strategies in pursuit of attractive     
risk-adjusted investments consistent with the preservation of capital. The      
actual number of Underlying Funds may vary and may change materially over time  
as determined by the Investment Advisor (as defined below) in its sole          
discretion.                                                                     

Allocation of assets among a professionally selected cross-section of hedge     
funds that invest in a variety of financial markets and utilize a broad range or
alternative investment strategies has the potential to reduce the volatility of 
investment returns from that which might be associated with a direct investment 
with any single investment manager.                                             

Unregistered investment funds typically provide greater flexibility than        
traditional investment funds (i.e. registered investment companies) as to the   
type of securities that may be owned, the types of trading strategies that may  
be employed, and in some cases, the amount of leverage that may be used. The    
Underlying Funds utilized by the Portfolio may invest and trade in a wide range 
of securities, financial instruments and markets and may pursue a variety of    
investment strategies. These investments may include, but are not limited to,   
U.S. and foreign equity and fixed income securities. The investment programs of 
the Underlying Funds may also involve the use of a variety of sophisticated     
investment techniques for both hedging and non-hedging purposes, including:     
short sales of securities; use of leverage; and transactions in derivative      
securities and other financial instruments such as swaps, stock options, index  
options, future contracts and options on futures.                               

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The flexibility of the Underlying Funds in implementing alternative investment  
strategies combined with the diversification of the Portfolio's assets among 25 
to 35 different Underlying Funds may result in lower volatility as opposed to   
investing with a single investment manger. Ultimately, the reduction in         
volatility in the Portfolio's investments will allow the Portfolio to achieve   
its investment objective of long-term capital appreciation while preserving the 
capital of the investments in the Fund.                                         

USE OF PROCEEDS                                                                 

The proceeds from the sale of the Shares, not including the amount of any sales 
charges and the Fund's fees and expenses, will be invested by the Fund in the   
Portfolio as soon as practicable after receipt of such proceeds by the Fund. The
Fund expects that such proceeds will be invested by the Portfolio in accordance 
with the Fund's and the Portfolio's investment objective and strategies as soon 
as practicable after receipt of such proceeds by the Portfolio, consistent with 
market conditions and the availability of suitable investments. Such proceeds   
will be invested together with any interest earned on the proceeds prior to the 
closing of the applicable offering. Delays in investing the Portfolio's assets  
may occur because certain investment funds selected by the Investment Advisor   
may provide infrequent opportunities to purchase their securities.              

Pending the investment of the proceeds of any offering or any other available   
funds pursuant to the Fund's and the Portfolio's investment objective and       
strategies, a portion of such amounts, which may include a substantial portion  
of the proceeds of an offering, may be invested in short-term debt securities or
money market funds. In addition, subject to applicable law, each of the Fund or 
the Portfolio may maintain a portion of its assets in cash or such short-term   
securities or money market funds to meet operational needs, for temporary       
defensive purposes or to maintain liquidity. The Fund may be prevented from     
achieving its objective during any period in which the Portfolio's assets are   
not substantially invested in accordance with its principal investment          
strategies.                                                                     

FEES AND EXPENSES                                                               

The following table illustrates the expenses and fees that the Fund expects to  
incur and that Shareholders can expect to bear, either directly or indirectly   
through the Fund's investment in the Portfolio.                                 

Shareholder Transaction Expenses                                                

      Sales load (as a percentage of offering price)                        None
      Unit Repurchase Fees                                                  None
      Dividend Reinvestment and Cash Purchase Plan Fees                     None

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Annual Expenses (As a Percentage of Net Assets Attributable to Units)(1)        

       Management Fee(2)                                                   1.25%
       Distribution and/or Service (12b-1) Fees                            0.00%
       Shareholder Servicing Fee                                           0.00%
       Other Expenses                                                     [   ]%
       Total Annual Fund Operating Expenses                               [   ]%
       Underlying Portfolio Expenses(3)                                   [   ]%
       Portfolio's Underlying Acquired Fund Fees and Expenses(4)          [   ]%
                                                                        ----
       Total Annual Fund Operating And Indirect Expenses-Gross            [   ]%
       Expense Reimbursements                                             [   ]%
                                                                        ----

       Total Annual Expenses-Net(5)                                       [   ]%

----------                                                                      
(1)   The table summarizes the aggregate expenses of the Fund and the Portfolio 
    and is designed to help investors understand the costs and expenses they
    will bear, directly or indirectly, by investing in the Fund. The Expense
     Table is based on estimated annual average net assets of $50,000,000. The
annual fees and expenses will be capped at [ ]%.                    

(2)   The Fund does not pay the Portfolio Manager a Management Fee directly, but
  the Fund's Shareholders bear an indirect share of this fee through the
    Fund's investment in the Portfolio. For its provision of services to the
     Portfolio, the Investment Advisor receives a monthly Management Fee equal
to 1/12th of 1.25% of the net asset value of each of the Portfolio's
Units.                                                              

(3)   The Fund's shareholders indirectly bear the expenses of the Portfolio. The
     Portfolio's Investment Advisor has contractually agreed to waive fees and
reimburse expenses in order to keep "Total Annual Expenses" of the  
Portfolio from exceeding [1.75]%.                                   

(4)   "Portfolio's Underlying Acquired Fund Fees and Expenses" reflects the     
aggregate amount of the total Fund operating expenses of acquired   
  investment company securities and related transaction fees paid by the
Fund.                                                               

(5)   The annual fees and expenses will be capped at [1.75]%.                   

Example:                                                                        

You would pay the following expenses (including a Management Fee) on a $1,000   
investment, assuming a 5% annual return:                                        

1 Year                $     [18]
3 Years               $     [55]
5 Years               $     [  ]
10 Years              $     [  ]

The example does not present actual expenses and should not be considered a     
representation of future expenses. Actual expenses may be greater or lesser than
those shown. The Fund's organizational and offering expenses are not reflected  
in the example. Moreover, the Fund's actual rate of return may be greater or    
lesser than the hypothetical 5% return shown in the example. The dollar amounts 
could be higher or lower as a result of the Management Fee.                     

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IN ADDITION TO THE DIRECT AND INDIRECT EXPENSES SET FORTH ABOVE, SHAREHOLDERS   
WILL BEAR AN INDIRECT SHARE OF THE FEES AND EXPENSES FOR EACH OF THE UNDERLYING 
FUNDS IN WHICH THE PORTFOLIO INVESTS.                                           

INVESTMENT ADVISOR AND FUND MANAGER                                             

PARADIGM Global Advisors, LLC will serve as investment advisor ("Investment     
Advisor") to the Fund, and currently serves as Investment Advisor to the        
Portfolio. Each of the Fund and the Portfolio has entered into an investment    
advisory agreement ("Investment Advisory Agreement") with the Manager of the    
Fund and the Portfolio, Provident Asset Management, LLC ("Provident" or         
"Manager"), and a sub-advisory agreement ("Sub-Advisory Agreement") with the    
Investment Advisor, under which the Investment Advisor is responsible for the   
day-to-day investment activities of the Fund and the Portfolio, respectively.   

Investment Advisor                                                              

The Investment Advisor is registered as an investment adviser with the          
Securities and Exchange Commission (the "SEC") under the Investment Advisers Act
of 1940, as amended, as a commodity trading advisor and commodity pool operator 
under the U.S. Commodity Exchange Act, as amended, and is also a member of the  
U.S. National Futures Association. The principal business address of the        
Investment Advisor is 650 Fifth Avenue, 17th Floor, New York, NY 10019.         

The personnel of the Investment Advisor who will initially have primary         
investment responsibility for each of the Fund and the Portfolio (the           
"Investment Team") are:                                                         

Dr. James Park serves as a consultant to the Investment Advisor and 
chairman of the investment committee and provides advice about the  
strategic growth and client relationships for the PARADIGM group of 
entities. Dr. Park holds a PhD in Financial Economics from Columbia 
Business School (October 1995); a J.D. from Harvard and Columbia Law
Schools (1987); and a B.S. in economics with honors from The Wharton
    School of Finance, University of Pennsylvania (1984). From 1991 to 1998,
   Dr. Park was a professor of Finance at Long Island University, where he
      founded the Center for Financial Markets Research. Dr. Park also taught at
  Columbia Business School and West Point Military Academy. Dr. Park has
  authored and presented numerous studies and articles on the investment
performance of hedge funds and trading advisors.                    

    Markus Karr is a Managing Director of Asset Allocation of the Investment
   Advisor and has over ten years investment experience. Mr. Karr received
     his B.S. in computer science and engineering from Massachusetts Institute
     of Technology in June 1989, where he concentrated his studies on modeling
      and simulation design. Mr. Karr was a registered Commodity Trading Advisor
from 1995 to 2002.                                                  

Nikolay Fedorovskiy is a Senior Research Analyst of the Investment  
  Advisor. Mr. Fedorovskiy received his Ph.D. in mathematics from Moscow
   State University with high algebra and computer modeling as his majors.
  Mr. Fedorovskiy has 8 years of experience in practical programming and
  engineering in Russia's Institute of Electric Power Research, where he
   worked on creating programming language for the description of semantic
networks. Mr. Fedorovskiy joined the Investment Advisor in 2000 as a
     senior research analyst and is responsible for development and support of
     a secure online statistical reporting system for the Investment Advisor's
asset allocation team.                                              

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Ronald E. Wilhelm is the Chief Compliance and Risk Management Officer and       
Director of Operations of the Investment Advisor. Mr. Wilhelm joined the        
Investment Advisor in December 2005 from EOS Fund Services LLC where he was     
served from June 2003 as a founding Managing Director and provided third-party  
global fund management, operations and administration services and compliance   
oversight to a select group of investment management firms, mutual fund         
companies, endowments and foundations. He also served as a founding Managing    
Director of EOS Compliance Services LLC where he provided outsourced compliance 
programs for and consulting services to registered investment advisers, mutual  
fund companies, hedge funds and hedge funds of funds with combined assets of $15
billion. In that capacity, Mr. Wilhelm acted as named Chief Compliance Officer  
to Investure, LLC, a registered investment adviser (with assets under management
exceeding $2 billion) operating domestic and offshore hedge funds of funds and  
private equity funds. From 1998 through May 2003, he managed the operations,    
compliance oversight, documentation and closing processes for the distressed    
bank loan trading and sales desk of the Fixed Income Division of Morgan         
Stanley's New York office. Mr. Wilhelm was associated with the law firms of     
Parker Chapin Flattau & Klimpl, LLP in New York from 1994 to 1997 and Jones Day 
in Paris, France and Cleveland, Ohio from 1986 to 1993. His practice experience 
primarily included general corporate and business law, mergers and acquisitions,
international corporate law, securities law, finance and banking, and compliance
and regulatory issues. Mr. Wilhelm attended Brigham Young University where he   
obtained the degrees of B.A. summa cum laude, French and International Relations
in1982; M.A., International Relations in 1983; and J.D. cum laude in 1986.      

Fund Manager                                                                    

The Fund and the Portfolio are both managed by Provident. Provident is          
registered with the SEC as a Registered Investment Advisor (RIA). As Manager of 
the Fund and the Portfolio, Provident is responsible for (1) the asset growth   
program and marketing strategies for the Fund and the Portfolio and (2)         
supervision of the investment activities of the Investment Advisor, pursuant to 
an investment advisory agreement between Provident and each of the Fund and the 
Portfolio.                                                                      

Provident is the dedicated asset management arm of the Provident Group. Formed  
in July 2002, Provident focuses exclusively on structuring and managing         
alternative asset management products for institutional and other accredited    
investors. As of August 31, 2006, Provident had a total of $144 million in      
assets under management. Provident is owned by the Provident Group Limited      
("PGL") and Grahams St. Group, LLC ("GSG").                                     

Provident Group is a New York based investment bank founded in 1998 by Steve    
Carlson, its CEO. Provident Group's experienced team of corporate finance and   
fixed income professionals provide investment banking and alternative fixed     
income asset management services to a global network of financial and strategic 
investors. Provident Group's investment banking unit provides corporate finance 
and strategic advisory services with a focus on capital raises through          
alternative asset products (mezzanine, Structured Finance and Private Equity) to
companies operating throughout the Americas.                                    

GSG owns 50% of Provident.(1) Brian P. Mathis is the sole member of GSG and a   
Managing Partner of Provident. PGL owns 50% of Provident. Steven J. Carlson,    
Pavlos Mavrides Matos, James B. Roper and Mark J. Bishop are shareholders of    
PGL.                                                                            

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BOARD OF TRUSTEES                                                               

The Board of Trustees of the Fund (the "Board") has overall responsibility for  
the management and supervision of the operations of the Fund. The Board of      
Directors of the Portfolio (the "Portfolio's Board of Directors") has overall   
responsibility for management and supervision of the operations of the          
Portfolio. The Fund and the Portfolio have the same board members. The initial  
Trustees serving on the Board have been elected by the organizational Trustee of
the Fund. In the event of any vacancy in the position of a Trustee, the         
remaining Trustees may appoint an individual to serve in such capacity, so long 
as immediately thereafter at least two-thirds (2/3) of the Trustees then serving
have been elected by the Shareholders. The Board may call a meeting of          
Shareholders to fill any vacancy in the position of a Trustee, and will do so   
within 60 days after any date on which Trustees who were elected by the         
Shareholders cease to constitute a majority of the Trustees then serving on the 
Board.                                                                          

INVESTMENT OBJECTIVE AND GOALS                                                  

The Fund's investment objective is to generate long-term capital appreciation   
with lower volatility than the broad equity markets. Rather than invest in      
securities or Underlying Funds directly, the Fund seeks to achieve its          
investment objective by using the "master fund/feeder fund" structure. Under    
that structure, the Fund and other investment companies with the same investment
objective invest their assets in another investment company (the Portfolio)     
having the same investment objective and substantially the same investment      
policies as the Fund.                                                           

The Portfolio seeks to accomplish this objective by allocating its assets among 
a diverse group of skill-based portfolio managers that specialize in absolute   
return strategies. The Portfolio will invest in approximately 25 to 35          
Underlying Funds managed by third-party managers who employ a variety of        
absolute return investment strategies in pursuit of attractive risk-adjusted    
investments consistent with the preservation of capital. The actual number of   
Underlying Funds may vary and may change materially over time as determined by  
the Investment Advisor in its sole discretion.                                  

The Investment Advisor is not required to follow fixed guidelines with respect  
to the Underlying Funds selected and the allocation of the Portfolio's assets.  
However, so long as such amount is within applicable ownership limitations set  
forth in the Investment Company Act, the Portfolio's assets will be allocated in
a manner so that no more than 15% of the Portfolio's net asset value will be    
invested in any one Underlying Fund. The Investment Advisor may also invest the 
Portfolio's assets in cash, U.S. government securities and repurchase           
agreements.                                                                     

The investment objectives of the Fund and the Portfolio are non-fundamental.    
Thus, either the Fund or the Portfolio may change its investment objective      
without a vote of the Fund's Shareholders or the Portfolio's members,           
respectively. Furthermore, except as otherwise indicated, the Fund's and the    
Portfolio's investment policies and restrictions are not fundamental and may be 
changed without a vote of the Fund's Shareholders or the Portfolio's members,   
respectively.                                                                   

THE FUND'S INVESTMENT PROGRAM IS SPECULATIVE AND ENTAILS SUBSTANTIAL RISKS.     
MARKET RISKS ARE INHERENT IN ALL SECURITIES TO VARYING DEGREES. NO ASSURANCE CAN
BE GIVEN THAT THE FUND'S OR THE PORTFOLIO'S INVESTMENT OBJECTIVE WILL BE        
REALIZED.                                                                       

----------                                                                      
(1) [The transaction with GSG is expected to close in September 2006.]          

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INVESTMENT STRATEGIES AND SELECTION OF UNDERLYING FUNDS                         

The Investment Advisor believes that a disciplined due diligence and monitoring 
process is critical in identifying hedge funds capable of generating the returns
required to meet the Fund's and the Portfolio's investment objective.           

The Investment Advisor intends to allocate the Portfolio's capital to Underlying
Funds that employ a variety of investment strategies, including those that seek 
to capitalize on inefficiencies and pricing anomalies in securities and other   
financial instruments. The Investment Advisor will select Underlying Funds that 
follow other investment strategies if it believes that such investments are     
consistent with the Fund's and the Portfolio's investment objective.            

Underlying Funds in which the Portfolio will invest may include limited         
partnerships, limited liability companies and similar entities managed by a     
single investment manager. Certain Underlying Funds in which the Portfolio will 
invest may be registered investment companies, including open-end registered    
investment companies (commonly referred to as "mutual funds"), closed-end       
investment companies and unit investment trusts (including "exchange-traded     
funds"), although it is anticipated that the Underlying Funds generally will not
be registered investment companies. The Portfolio's ability to invest in        
registered investment companies (including, without limitation, mutual funds,   
exchanged-trade funds and certain money market funds) will be limited by the    
Investment Company Act, which provides certain restrictions on the amount of    
securities of a registered investment company that another registered investment
company may acquire. Underlying Funds that are not registered as investment     
companies under the Investment Company Act typically provide greater flexibility
than mutual funds or exchange-traded funds with respect to the types of         
securities that may be owned, the types of trading strategies employed, and, in 
some cases, the amount of leverage that can be used. It is the understanding of 
the Fund and the Portfolio that the Underlying Funds that are not registered    
under the Investment Company Act are generally relying upon exemptions under    
Section 3(c)(1) and 3(c)(7) of the Investment Company Act.                      

The investment managers of the initial 25 Underlying Funds are all domestic     
entities that are either registered or are currently in the process of          
registering under the Investment Advisors Act of 1940. None of the investment   
managers of the initial 25 Underlying Funds are affiliated with the Investment  
Advisor.                                                                        

The Investment Advisor may invest a portion of the Portfolio's assets in        
Underlying Funds, including other "fund of funds," managed by the Investment    
Advisor or its affiliates. Such investments will only be made, if at all, upon  
the Portfolio obtaining any necessary exemptive relief or assurance from the    
SEC. There can be no assurance that the SEC will issue such an exemptive order  
or assurance if the Portfolio elects to seek either.                            

Set forth below are descriptions of certain of the investment strategies        
utilized by investment managers in the equity long/short, event driven, and     
relative value trading sectors. Other strategies may be employed as well. There 
can be no assurance that the investment managers will succeed in any of these   
strategies.                                                                     

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Equity Long/Short Strategies                                                    

Equity long/short hedge funds make long and short equity investments, often     
based on the investment manager's assessment of fundamental value compared to   
market price. It is expected that the investment managers will employ a wide    
range of styles. For example, investment managers may (i) focus on companies    
within specific industries; (ii) focus on companies only in certain countries or
regions; or (iii) employ a more diversified approach, allocating assets to      
opportunities across investing styles, industry sectors and geographic regions. 

Event Driven Strategies                                                         

Event driven strategies seek to identify security price changes resulting from  
corporate events such as restructurings, mergers, takeovers, spinoffs and other 
special situations. Corporate event arbitrageurs generally choose their         
investments based on their perceptions of the likelihood that the event or      
transaction will occur, the amount of time that the process will take and the   
perceived ratio of return to risk. Strategies that may be utilized in the event 
driven sector include merger arbitrate, high yield/distressed securities, and   
special situations, each of which is described in greater detail below.         

Merger Arbitrage. Merger arbitrageurs seek to capture the price spread between  
current market prices and the value of securities upon successful completion of 
a takeover or merger transaction. The availability of spreads reflects the      
unwillingness of other market participants to take on transaction-based risk,   
i.e., the risk that the transaction will not be completed and the price of the  
company being acquired will fall. Merger arbitrageurs evaluate this risk and    
seek to create portfolios that reduce specific event risk. High Yield/Distressed
Securities.                                                                     

High yield/distressed securities strategies invest in debt or equity securities 
of firms in or near bankruptcy. Investment managers differ in terms of the level
of the capital structure in which they invest, the stage of the restructuring   
process at which they invest, and the degree to which they become actively      
involved in negotiating the terms of the restructuring.                         

Special Situations. Special situations such as spin-offs and corporate          
reorganizations and restructurings offer additional opportunities for event     
driven managers. Often these strategies are employed alongside merger arbitrage 
or distressed investing. An investment manager's ability to evaluate the effect 
of the impact and timing of the event and to take on the associated event risk  
is the source of the returns. Investment managers differ in the degree to which 
they hedge the equity market risk of their portfolios.                          

Relative Value Strategies                                                       

Relative value strategies seek to profit from the mispricing of financial       
instruments, capturing spreads between related securities that deviate from     
their fair value or historical norms. Directional and market exposure is        
generally held to a minimum or completely hedged. Strategies that may be        
utilized in the relative value sector include convertible arbitrage, equity     
arbitrage, and fixed-income arbitrage, each of which is described in greater    
detail below.                                                                   

Convertible Arbitrage. Convertible bond arbitrage strategies consist of buying  
convertible bonds and shorting an appropriate number of shares of the issuer's  
common stock. The stock short sale is intended to hedge the stock price risk    
arising from the equity conversion feature of the convertible bond. Due to the  
bond features of convertibles, credit and interest rate risk may also be hedge. 

Equity Arbitrage. Equity arbitrage strategies try to avoid market direction     
influences and seek to generate returns primarily from stock selection.         
Investment managers construct long and short baskets of equity securities they  
determine to be mispriced relative to each other, typically with similar        
characteristics. Portfolios are generally designed to exhibit zero or low beta  
to equity markets. Beta measures the degree to which an asset's price changes   
when a reference asset's price changes. For example, a beta greater than one    
suggests that for every 1% change in the reference asset's price, the asset will
move greater than 1%.                                                           

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Fixed-Income Arbitrage. Fixed-income arbitrage strategies seek to exploit       
pricing anomalies that might exist across fixed-income securities and their     
related derivatives. Although some fixed-income strategies are based on         
macroeconomic considerations, the strategies are primarily quantitative in      
nature, and financial modeling is an integral component. Opportunities in       
fixed-income instruments to baskets of securities are found when securities     
deviate from historical relationships or fair value as determined by the        
investment manager. These relationships can be temporarily distorted by         
exogenous shocks to fixed-income supply and demand or by structural change in   
the fixed-income market.                                                        

Multi-Strategy. Multi-strategy investment managers invest across a range of     
strategies. The investment managers tend to be more opportunistic in targeting  
specific relative value strategies during differing market environments. In     
addition, these Investment Managers may have exposure that have traditionally   
been described as being within the event driven sector, such as merger          
arbitrage, high yield/distressed securities and other special situations.       

OVERVIEW OF THE INVESTMENT PROCESS                                              

The Investment Advisor will employ a dynamic investment process which includes  
investment manager selection, portfolio design and ongoing risk analysis and    
monitoring. The Investment Advisor has over [14] years of experience in         
constructing diversified portfolios by selecting, allocating among, and         
monitoring absolute return-oriented or "skill-based" investment managers. The   
Investment Advisor has also developed proprietary computer systems, operating   
capabilities, proprietary hedge fund indices and "cluster analysis" to assist   
them in identifying and monitoring underlying hedge fund managers. SYSTEMPASS, a
proprietary database in development since 1991 is the backbone of the manager   
selection and monitoring process. SYSTEMPASS contains approximately 16,500 hedge
fund manager track records as well as automated methods for the selection and   
monitoring or managers.                                                         

The Investment Advisor seeks to identify investment managers to which it may    
allocate Portfolio assets through investments in Underlying Funds that they     
manage or as subadvisers. The investment manager selection process includes a   
review by the Investment Advisor's team of professionals, which may include     
representatives of its investment manager selection, risk and quantitative      
analysis, compliance, tax, legal, finance and operations areas.                 

The Investment Advisor believes that a systematic due diligence and monitoring  
process is crucial in the identification and selection of superior investment   
managers capable of generating the returns required to meet the Portfolio's     
objective. The Investment Advisor's approach to advisor allocation relies on a  
well-researched, unique theoretical foundation that supports and guides every   
function within its portfolio management services. The Investment Advisor       
believes its manager selection process is unique in several important respects. 
[The Investment Advisor has developed a sophisticated and proprietary           
quantitative analysis methodology that incorporates statistical measurement     
processes known as HEDGE FUND ALPHA, HEDGE FUND BETA and PARK RATIO, which are  
all patent pending.] In simple terms, this process provides a ranking of the    
universe of available advisors and/or underlying hedge fund managers that acts  
as an initial screening. This ranking rewards uniqueness of an advisor's returns
with respect to its peer group (often referred to as "alpha"), thus leading to  
low inter-advisor correlations. The ranking also normalizes for advisor         
volatility, which favors those advisors that can provide the highest return for 
the least risk.                                                                 

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The Investment Advisor screens the universe of available advisors to determine  
that the advisors selected derive profits by processing information rather than 
depending upon market direction. The Investment Advisor views the advisors it   
selects as a distinct asset class because they perform a clearly discernible    
function (information processing); exhibit unique, definable fundamental        
characteristics (no reliance on market direction to generate returns); and      
generate performance that provides evidence of their uniqueness (low or no      
correlation to the performance of the overall stock or bond markets). By        
allocating to advisors that fall into this asset class, the Investment Advisor  
portfolios provide an INFORMATION PROCESSING PREMIUM (similar to a risk or      
liquidity premium) that does not depend upon market direction.                  

The Investment Advisor also is unique because it does not rank investment       
managers based on return and Sharpe ratio. Despite its popularity and widespread
use, the Investment Advisor research shows that Sharpe ratio has several flaws  
that do not contribute to building a superior portfolio. Sharpe ratio is a      
comparison statistic that compares the performance of two managers at a time.   
Sharpe ratio and other comparison statistics answer the question, "Which manager
is the best?" However, these statistics do not give any insight into the more   
meaningful question of which combination of managers contribute to an optimal   
portfolio of managers that outperforms the passive benchmark. The Investment    
Advisor uses portfolio measurements such as HEDGE FUND ALPHA, HEDGE FUND BETA   
and PARK RATIO because they have a basis in portfolio theory and have been      
proven (both statistically and in real-time fund management) to select the      
managers that contribute to an optimal portfolio.                               

In making its selections and in addition to the screenings and analyses         
described above, the Investment Advisor also conducts a rigorous, qualitative   
due diligence review. Through its extensive interview process, the Investment   
Advisor evaluates such subjective (or non-quantitative) factors as the character
of each potential advisor's trading method, reputation, overall performance,    
markets and instruments traded, fee structure, redemption provisions, amount of 
funds under management and past and current business relationships.             

In pursuing the Fund's allocation strategy, the Investment Advisor recognizes   
that many of the most successful advisors reach a limit of funds under          
management beyond which they are unwilling to accept new investment and that all
successful advisors begin to place more and more limitations on investments as  
the amount of assets under management increases. The Investment Advisor         
therefore has established investment positions and relationships with advisors  
that should enhance the Portfolio's ability to access advisors that would       
otherwise limit or restrict investment into their programs.                     

While the advisor selections ultimately will be made on the basis of the        
Investment Advisor's subjective assessments of the available advisors, the      
Investment Advisor also considers statistical data regarding the degrees of     
correlation among the advisors' records. The Investment Advisor will evaluate,  
on an ongoing basis, the desirability of reallocating the Portfolio's assets    
among the advisors, allocating existing or new assets to or among additional    
advisors and the desirability of retaining additional or replacement advisors   
based on its evaluation of which available advisors have the best prospects for 
profitability and other factors. The Investment Advisor will follow no fixed    
policies in allocating and reallocating the Portfolio's assets and will in all  
cases be guided to its subjective judgment.                                     

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In determining the relative allocations of capital to each investment manager,  
the Investment Advisor considers the risk and return characteristics of each of 
the investment managers, including the average expected volatility of returns,  
drawdown patterns and liquidity and leverage characteristics. In addition, the  
Investment Advisor considers how each investment manager's returns are expected 
to correlate to the other investment managers in the portfolio. It is expected  
that allocations will vary significantly over time as returns for different     
investment managers vary. The Investment Advisor also may adjust allocations    
from time to time when it deems it appropriate to do so. In addition, it is     
expected that individual allocations will grow larger or smaller as each        
investment manager's performance varies over time.                              

The identity and number of the investment managers and Underlying Funds may     
change materially over time. The Investment Advisor may withdraw from or invest 
in different Underlying Funds without prior notice to or the consent of the     
Portfolio or the members of the Portfolio, including the Fund and its           
Shareholders.                                                                   

The Investment Advisor may invest a substantial portion of the Portfolio's      
assets with investment managers who may have limited track records and          
Underlying Funds with limited operating histories. In such cases, the investment
managers or individual members of their management teams generally will have    
had, in the Investment Advisor's opinion, significant relevant experience       
trading in the strategies that such investment managers are expected to utilize.
However, the Fund is not able to ensure Shareholders that each of the investment
managers, even those with longer track records, will perform as expected or not 
undertake actions that would not be in the best interest of the Fund or the     
Shareholders.                                                                   

POTENTIAL BENEFITS OF INVESTING IN THE FUND                                     

An investment in the Fund enables investors to invest in investment managers    
whose services generally are not available to the investing public, whose       
investment funds may be closed from time to time to new investors or who        
otherwise may place stringent restrictions on the number and type of persons    
whose money they will manage. An investment in the Fund also enables investors  
to invest with a number of investment managers without incurring the high       
minimum investment requirements that investment managers typically would impose 
on investors.                                                                   

In addition to benefiting from investment manager's individual investment       
strategies, the Fund as a whole should achieve the benefits of exposure to a    
number of different investment styles and investment managers. By investing     
through multiple investment managers, the Fund may reduce the volatility        
inherent in a direct investment with a single investment manager.               

RISK FACTORS                                                                    

An investment in the Fund involves significant risks that should be carefully   
considered prior to investment and should only be considered by persons         
financially able to maintain their investment and who can afford a loss of a    
substantial part or all of such investment.                                     

Risks Associated With The Fund                                                  

Reliance on the Investment Advisor. The likelihood that Shareholders will       
realize income or gain from investing in the Fund will depend on the investment 
performance of the Portfolio. The likelihood that the Portfolio will realize    
income or gain from its investments will depend on the selection and monitoring 
of Underlying Funds by the Investment Advisor and the acumen and expertise of   
its primary portfolio manager, the Managing Director of Asset Allocation, Markus
Karr. If Mr. Karr were to cease working for the Investment Advisor, the         
Investment Advisor may not be able to hire a qualified replacement, or may      
require an extended period of time to do so.                                    

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Investment Advisor. The Investment Advisor and certain of its investment        
professionals also carry on substantial investment activities for other funds   
and client accounts (collectively, "Other Accounts"). As a result, the          
Investment Advisor and Mr. Karr may have conflicts of interest in allocating    
their time and activity between the management of the Fund and the management of
Other Accounts. The Investment Advisor and its staff will devote only so much   
time to the management of the Fund as in their judgment is necessary and        
appropriate. In addition, the Investment Advisor may charge the Other Accounts  
fees that are lower than those charged by the Fund.                             

Master/Feeder Structure. The Portfolio may accept investments from other        
investors (including other feeder funds), in addition to the Fund. Because each 
feeder fund can set its own transaction minimums, feeder-specific expenses, and 
other conditions, one feeder fund could offer access to the Portfolio on more   
attractive terms, or could experience better performance, than another feeder   
fund. Smaller feeder funds may be harmed by the actions of larger feeder funds. 
For example, a larger feeder fund will have more voting power than the Fund over
the operations of the Portfolio. If other feeder funds tender for a significant 
portion of their shares in a repurchase offer, the assets of the Portfolio will 
decrease. This could cause the Fund's expense ratio to increase to the extent   
contributions to the Portfolio do not offset the cash outflows. The returns     
experienced by investors in a feeder fund, direct investors in the master fund, 
and other feeder funds that invest in the master fund may differ. Moreover,     
redemption or repurchase of the shares of the master fund by direct investors   
and other feeder funds may alter the master fund's holdings, which could        
adversely affect that Fund.                                                     

Limited Liquidity For Shareholders. The Fund is a closed-end investment company 
designed primarily for long-term investors. Units of the Fund will not be traded
on any securities exchange or other market. With very limited exceptions, Shares
are not transferable and liquidity will be provided only through limited        
quarterly repurchase offers. Furthermore, such limited liquidity for Fund       
shareholders will generally be subject to or controlled by decisions made by the
Portfolio's Board of Directors.                                                 

Limited Ability to Examine or Verify the Valuations Provided By the Underlying  
Funds. Generally, the Portfolio, its Investment Advisor and the Administrator   
will not have sufficient information in order to be able to confirm or review   
the accuracy of the valuations provided by the investment managers of the       
Underlying Funds. The investment managers' information could be inaccurate due  
to fraudulent activity, misevaluation or inadvertent error. In any case, the    
Portfolio may not discover errors for a significant period of time. Even if the 
Investment Advisor elects to cause the Portfolio to redeem or sell its interest 
in such Underlying Fund, the Portfolio may be unable to redeem or sell interests
in such Underlying Fund quickly, and could therefore be obligated to continue to
hold such interests for an extended period of time. In such a case, such        
interests would continue to be valued without the benefit of the investment     
manager's valuations, and the Board of Directors may, in its discretion,        
determine to discount the value of the interests or value them at zero.         

Shareholders should be aware that situations involving uncertainties as to the  
valuations by investment managers could have a material adverse effect on the   
Portfolio and the Fund if the investment manager's, the Investment Advisor's or 
the Portfolio's judgments regarding valuations should be incorrect. Persons who 
are willing to assume such risks should not make an investment in the Fund.     

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Limited Operating History. While the Investment Advisor has been in the business
of managing fund of funds strategies since 1991, the Fund has a relatively short
operating history on which you might evaluate its performance. There can be no  
assurance that the Fund's investment objective will be realized or that the     
Fund's investment strategy will prove successful. No assurance can be given that
the Fund's investments in the Portfolio will generate any income or appreciate  
in value.                                                                       

Tax Liability and Borrowings. The Fund intends to qualify each year as a        
"regulated investment company" ("RIC") under Subchapter M of the Internal       
Revenue Code of 1986, as amended (the "Code"). In order to qualify as such, the 
Fund must, among other things, (a) distribute with respect to each taxable year 
at least 90% of the sum of the Fund's taxable net investment income, its net    
tax-exempt income, and the excess, if any of net short-term capital gains over  
net long-term capital losses for such year (the "Distribution Test"), and (b)   
diversify its holdings so that, at the end of each fiscal quarter (i) at least  
50% of the market value of the Fund's total assets is represented by cash and   
cash items, U.S. Government securities, securities of other regulated investment
companies, and other securities, limited in respect of any one issuer to a value
not greater than 5% of the value of the Fund's total assets and 10% of the      
outstanding voting securities of such issuer, and (ii) not more than 25% of the 
value of its total assets is invested in the securities (other than those of the
U.S. Government or other regulated investment companies) of any one issuer or of
two or more issuers which the Fund controls and which are engaged in the same,  
similar or related trades or businesses ((i) and (ii) together, the             
"Diversification Test"). By so qualifying, the Fund will not be subject to      
federal income taxes to the extent that its net investment income, net realized 
short-term capital gains and net realized long-term capital gains are           
distributed in a timely manner to Shareholders. [There can be no guarantee that 
the Underlying Funds' investments will satisfy the Diversification Test.]       

The Fund may make short-term investments in U.S. Government securities prior to 
the end of each fiscal quarter in an amount such that the Fund's total assets   
will meet the Diversification Test, and then sell such U.S. Government          
securities immediately following the end of each such fiscal quarter. The Fund  
expects that it will enter into a line of credit in order to make the quarterly 
purchases of U.S. Government securities. The Investment Company Act provides    
that the value of the investment company's total indebtedness may not exceed    
one-third of the value of its total assets, including indebtedness (the "Asset  
Coverage Requirement"). This borrowing and any other borrowing of the Fund would
be subject to the Asset Coverage Requirement. In the event that the asset       
coverage declines to less than the Asset Coverage Requirement, the Fund may be  
required to sell a portion of its investments at a time when it may be          
disadvantageous to do so. Money borrowed under this line of credit will be      
subject to interest costs that may or may not be recovered by appreciation of or
income from the securities purchased. The Fund also may be required to maintain 
minimum average balances in connection with such borrowing or to pay a          
commitment or other fee to maintain a line of credit, either of which           
requirements would increase the cost of borrowing over the stated interest rate.
In the event that the Fund incurs debt to fund repurchases of Shares, the Asset 
Coverage Requirement and the foregoing risks would be applicable to such        
borrowing, except that since the proceeds from the borrowing will be used for   
repurchases of Shares, no securities will be purchased with such proceeds to    
offset the expenses of the borrowing.                                           

Risk of Failure of RIC Qualification. If the Fund fails to qualify as a RIC that
is accorded special tax treatment in any taxable year, the Fund will be subject 
to tax on its taxable income at corporate rates, and all distributions from     
earnings and profits, including any distributions of net long-term capital      
gains, would be taxable to Shareholders as ordinary income. If the Fund fails to
meet the Diversification Test as of its first fiscal quarter end, the Fund will 
not be able to qualify at a later date. In addition, if the Fund should fail to 
meet the Diversification Test as of any other fiscal quarter end, the Fund may  
be required to recognize unrealized gains, pay substantial taxes and interest   
and make substantial distributions before requalifying as a regulated investment
company that is accorded special tax treatment. The Fund must receive timely and
accurate information from the Portfolio, which in turn must receive timely and  
accurate information from theUnderlying Funds, in order for the Fund to satisfy 
the Distribution Test. Although the Fund intends to estimate the amount of      
distributions it needs to make to satisfy the Distribution Test in any taxable  
year if the Underlying Funds delay providing such information to the Portfolio  
or provides inaccurate information, the Fund may not satisfy the Distribution   
Test and thus may fail to qualify as a regulated investment company in that     
taxable year.                                                                   

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Also, a regulated investment company that qualifies for special tax treatment   
under the Code but fails to distribute a sufficient amount of its ordinary      
income and net capital gain income is subject to a 4% excise tax on such        
undistributed amounts. The Fund generally must receive information on a timely  
basis from the Portfolio, which in turn must receive timely and accurate        
information from the Underlying Funds, to make sufficient distributions to avoid
the imposition of this 4% excise tax. Although the Fund intends to estimate the 
amount of distributions it must made to avoid the excise tax, if the Portfolio  
delays providing this information to the Fund, or the Underlying Funds delay    
providing this information to the Portfolio, or if there are differences between
the taxable year of the Fund and that of the Portfolio or the Underlying Funds, 
the Fund may not be able to make distributions sufficient to avoid the          
imposition of the excise tax.                                                   

Risks Associated With The Portfolio                                             

Illiquidity of Portfolio's Holdings. The Portfolio intends to invest            
substantially all of its available capital in securities of private investment  
partnerships. These investments will generally be restricted securities that are
subject to substantial holding periods or are not traded in public markets at   
all, so that the Portfolio may not be able to resell some of its securities     
holdings for extended periods, which may be several years.                      

Investment Advisor and Manager. The Investment Advisor, the Manager and certain 
of their investment professionals also carry on substantial investment          
activities for other accounts (collectively, "Other Accounts"). As a result, the
Investment Advisor, the Manager and Mr. Karr may have conflicts of interest in  
allocating their time and activity between the management of the Portfolio and  
the management of Other Accounts. The Investment Advisor, the Manager and their 
respective staffs will devote only so much time to the management of the        
Portfolio as in their judgment is necessary and appropriate.                    

There may be circumstances where the Investment Advisor, the Manager or the     
portfolio manager invests a larger percentage of one or more of the Other       
Accounts' respective assets than the Portfolio's assets. The Investment Advisor 
and the Manager also may consider participation by its Other Accounts in        
investment opportunities that the Investment Advisor and the Manager do not     
intend to invest, or which are contrary to investments made, on behalf of the   
Portfolio, or vice versa. In addition, the Investment Advisor and the Manager   
may charge the Other Accounts fees that are lower than those the Portfolio      
charges.                                                                        

Underlying Fund Selection and Monitoring. The Investment Advisor employs a      
detailed analysis for the screening and monitoring of the Underlying Funds so   
that the Investment Advisor can monitor leverage levels, positions concentration
and adherence to stated strategies. However, the Investment Advisor does not    
have access to nor control over the daily investment holdings of any of the     
Underlying Funds. As a result, there can be no assurance that the manager of any
Underlying Fund will conform its conduct to the Underlying Fund's stated        
strategies.                                                                     

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Limited Liquidity for Members. The Portfolio is a closed-end investment company 
designed primarily for long-term investors. Units of an Underlying Fund will not
be traded on any securities exchange or other market. With very limited         
exceptions, Units are not transferable and liquidity will be provided only      
through limited quarterly repurchase offers.                                    

Limited Operating History. While the Investment Advisor has been in the business
of managing fund of fund strategies since 1991, the Portfolio has relatively    
little operating history on which you might evaluate its performance. There can 
be no assurance that the Portfolio's investment objective will be realized or   
that the Portfolio's investment strategy will prove successful. No assurance can
be given that the Portfolio's investment portfolio will generate any income or  
appreciate in value.                                                            

Special Risks of the Portfolio's Fund of Funds Structure. The Underlying Funds  
may not be registered as investment companies under the Investment Company Act  
and, therefore, the Fund and the Portfolio will not have the protections of the 
Investment Company Act with regard to these investments. Each Underlying Fund   
will pay any performance-based allocations or fees for which it is obligated    
irrespective of the performance of the other Underlying Funds and the Portfolio 
generally. Accordingly, an Underlying Fund with positive performance may be     
entitled to receive a performance allocation or fee from the Portfolio, and thus
indirectly from the Fund and its Shareholders, even if the Fund's and the       
Portfolio's overall investment return is negative.                              

Risks Associated With The Underlying Funds                                      

Investment Funds not Registered. The Fund is registered as an investment company
under the Investment Company Act. The Investment Company Act is designed to     
afford various protections to investors in pooled investment vehicles. For      
example, the Investment Company Act imposes limits on the amount of leverage    
that a registered investment company can assume, restricts layering of costs and
fees, restricts transactions with affiliated persons, and requires that the     
investment company's operations be supervised by a board of directors, a        
majority of whose members are independent of management. The Fund is itself     
subject to these restrictions. However, the underlying portfolio companies in   
which the Portfolio invests are not subject to the provisions of the Investment 
Company Act. In addition, although the SEC has adopted new rules that will      
require most of the investment managers of the Underlying Funds to register as  
investment advisers under the Investment Advisers Act of 1940, as amended (the  
"Advisers Act"), there is expected to be a significant period of time before    
such registrations are complete. As an investor in the Underlying Funds managed 
by investment managers that are not registered as investment advisers, the Fund 
will not have the benefit of certain of the protections of the Advisers Act.    

The Underlying Funds generally are exempted from regulation under the Investment
Company Act because they permit investment only by investors who meet very high 
thresholds of investment experience and sophistication, as measured by net      
worth. The Fund's investment qualification thresholds are considerably lower, As
a result, the Fund provides an avenue for investing in Underlying Funds that    
would not otherwise be available to certain investors. This means that investors
who would not otherwise qualify to invest in largely unregulated vehicles will  
have the opportunity to make such an investment.                                

In addition, the Underlying Funds typically do not maintain their securities and
other assets in the custody of a bank or a member of a securities exchange, as  
generally required of registered investment companies, in accordance with       
certain SEC rules. A registered investment company which places its securities  
in the custody of a member of a securities exchange is required to have a       
written custodian agreement, which provides that securities held in custody will
be at all times individually segregated from the securities of any other person 
and marked to clearly identify such securities as the property of such          
investment company and which contains other provisions designed to protect the  
assets of such investment company. It is anticipated that the Underlying Funds  
in which the Fund will invest generally will maintain custody of their assets   
with brokerage firms which do not separately segregate such customer assets as  
would be required in the case of registered investment companies. Under the     
provisions of the Securities Investor Protection Act of 1970, as amended, the   
bankruptcy of any such brokerage firm could have a greater adverse effect on the
Fund than would be the case if custody of assets were maintained in accordance  
with the requirements applicable to registered investment companies. There is   
also a risk that an investment manager could convert assets committed to it by  
the Fund to its own use or that a custodian could convert assets committed to it
by an investment manager to its own use. There can be no assurance that the     
investment managers or the entities they manage will comply with all applicable 
laws and that assets entrusted to the investment managers will be protected.    

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Prospective investors should understand that the Fund is an appropriate         
investment only for investors who can tolerate a high degree of risk, including 
lesser regulatory protections in connection with the Fund's investments in      
Underlying Funds than might normally be available through investments in        
registered investment company vehicles.                                         

Valuation of the Fund's Interests in Investment Funds. The valuation of the     
Fund's investments in the Underlying Funds is ordinarily determined based upon  
valuations provided by the investment managers of such Underlying Funds. Certain
securities in which the Underlying Funds invest may not have a readily          
ascertainable market price and will be valued by the investment managers. In    
this regard, an investment manager may face a conflict of interest in valuing   
the securities as their value will affect the investment manager's compensation.
Valuations of the securities may be subjective and could prove in hindsight to  
have been wrong, and at times by significant amounts. The Portfolio will        
establish a committee approved by the Board of Directors of the Portfolio to    
oversee the valuation of the Fund's investments (the "Fair Value Pricing        
Committee"), which will be comprised of at least one member of the Board of     
Directors as well as various officers and representatives of the Portfolio's    
service providers. The members of the Fair Value Pricing Committee may face     
conflicts of interest in overseeing the valuation of the Portfolio's            
investments, as the value of the Portfolio's investments will affect the        
Investment Advisor's compensation. Although prior to investing in any Underlying
Fund, the Investment Advisor will conduct a due diligence review of the         
valuation methodology utilized by such investment fund, no assurances can be    
given that the Investment Advisor will be given access to necessary aspects of  
the Underlying Fund's systems, that such due diligence review will ascertain    
whether accurate valuations will be provided by such Underlying Funds to the    
Investment Advisor, that the Underlying Funds will comply with their own        
internal policies or procedures for keeping records or making valuations, or    
that the Underlying Funds' policies and procedures and systems will not change  
without notice to the Fund. Moreover, neither the Fair Value Pricing Committee  
nor the Investment Advisor will generally have sufficient information in order  
to be able to confirm or review the accuracy of valuations provided by          
investment managers. In addition, the net asset values or other valuation       
information received by the Fair Value Pricing Committee from an Underlying Fund
are typically estimated, and may be subject to later adjustment or revision by  
the Underlying Fund. Any such adjustment or revision will result in either an   
increase or decrease in the net asset value of the Fund at the time that the    
Fund is provided with information regarding the adjustment.                     

If an investment manager's valuations are consistently delayed or inaccurate,   
the Investment Advisor will consider whether the Underlying Fund continues to be
an appropriate investment for the Fund. However, the Investment Advisor may     
elect in its sole discretion to have the Fund retain its investment in the      
Underlying Fund. The investment manager's information could be inaccurate due to
fraudulent activity, misevaluation or inadvertent error. In any case, the Fund  
may not uncover errors for a significant period of time. Even if the Investment 
Advisor elects to cause the Fund to redeem or sell its interests in such an     
Underlying Fund, the Fund may be unable to redeem or sell interests in such an  
Underlying Fund quickly, and could therefore be obligated to continue to hold   
such interests for an extended period of time. In such a case, such interests   
would continue to be valued without the benefit of the investment manager's     
valuation, and the Fair Value Pricing Committee may, in its sole discretion,    
determine to discount the value of the interests or value them at zero.         

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Shareholders should be aware that situations involving uncertainties as to the  
valuations by investment managers could have a material adverse effect on the   
Fund if the investment manager's, the Investment Advisor's or the Fund's        
judgments regarding valuations should prove incorrect. Persons who are unwilling
to assume such risks should not make an investment in the Fund.                 

Market Risks. The profitability of a significant portion of the Portfolio's     
investment program will depend to a great extent on the correct assessment of   
the future course of price movements of securities and other instruments. There 
can be no assurance that managers of the Underlying Funds will be able to       
accurately predict these price movements.                                       

Small Cap Securities. The Underlying Funds may invest in companies with modest  
capitalization. While small companies can provide greater growth potential than 
larger, more mature companies, investing in the securities of such companies    
also involves greater risk, potential price volatility and trading costs. These 
companies often involve higher risks because they lack the management           
experience, financial resources, product diversification, markets, distribution 
channels and competitive strengths of larger companies. In addition, the        
frequency and volume of their trading is substantially less than is typical of  
larger companies. Therefore, the securities of smaller companies may be subject 
to wider price fluctuations.                                                    

Leverage; Borrowing. The Underlying Funds are authorized to borrow money to meet
repurchase requests and for cash management purposes. While borrowings are      
outstanding for these purposes, the Underlying Funds will be permitted to       
reinvest the proceeds of the sale of securities or new sales of Units and, thus,
may employ leverage. To the extent that the Underlying Funds use leverage, the  
value of their net assets will tend to increase or decrease at a greater rate   
than if no leverage were employed. If an Underlying Fund's investments decline  
in value, the loss will be magnified if the Underlying Fund has borrowed money  
to make its investment. In addition, an Underlying Fund's performance may be    
adversely affected if it is not able to repay borrowings or if it is forced to  
sell investments at disadvantageous times in order to repay borrowings.         

Hedging Strategies. The Underlying Funds may engage in short sales, the use of  
derivatives, trading in index futures and index options, and the use of leverage
and other strategies from time to time in order to "hedge" or offset investment 
risk. Successful use of these instruments depends on the manager of the         
Underlying Fund's ability to predict movements in the overall securities and    
currency markets, which requires different skills than predicting changes in the
prices of individual securities. In adverse circumstances the use of derivatives
may result in sudden and severe losses to the Underlying Funds employing these  
strategies.                                                                     

Foreign Investments. An Underlying Fund may invest in foreign securities that   
are generally denominated in foreign currencies, and American Depository        
Receipts ("ADRs") traded on U.S. securities exchanges. Such investing involves  
certain considerations comprising both risk and opportunity not typically       
associated with investing in U.S. companies. These considerations include       
fluctuation in exchange rates of foreign currencies, less public information    
about issuers of securities, less governmental supervision of foreign issuers,  
lack of uniform accounting, auditing and financial reporting standards, the     
possible expropriation of assets or confiscatory taxation by a host government, 
the possible imposition of foreign taxes, and political risks associated with   
the countries in which foreign issuers are located.                             

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Restricted Securities. An Underlying Fund may invest in restricted securities   
that are not traded in public markets. Restricted securities generally are      
difficult or impossible to sell at prices comparable to the market prices of    
similar securities that are publicly traded. No assurance can be given that any 
such restricted securities will be eligible for resale or otherwise to be traded
on a public market even if a public market for the securities were to develop.  

Performance Fees. Most of the Underlying Funds will pay a performance based fee.
In certain cases, managers may be paid a fee based on appreciation during the   
specific measuring period without taking into account losses occurring in prior 
measuring periods, although the Investment Manager anticipates that managers who
charge such fees will take into account prior losses. These fee arrangements may
create an incentive for such managers to make investments that are riskier or   
more speculative than if a performance based fee were not paid.                 

Portfolio Turnover. The Underlying Funds are expected to have higher portfolio  
turnover than many other investment funds. The Underlying Funds will incur      
brokerage commissions and other transaction costs that generally will be higher 
than those incurred by investment funds with lower portfolio turnover rates. In 
addition, a high portfolio turnover will result in special tax considerations.  
See "Taxes" in the Fund's Statement of Additional Information.                  

For additional information regarding Risk Factors, please see the Fund's        
Statement of Additional Information.                                            

INVESTMENT RESTRICTIONS                                                         

The Fund has adopted certain non-fundamental investment restrictions, which     
cannot be changed without the vote of a majority of the Fund's outstanding      
voting securities. Under the Investment Company Act, the vote of a majority of  
the outstanding voting securities means the vote, at an annual or a special     
meeting of the security holders of the Fund duly called, of (i) 67% or more of  
the voting securities present at the meeting, if the holders of more than 50% of
the outstanding voting securities of the Fund are present or represented by     
proxy or of (ii) more than 50% of the outstanding voting securities of the Fund,
whichever is less. As a matter of fundamental policy, the Fund may not:         

1.    invest more than 15% of its net assets in any one security, except that   
 all or substantially all of the assets of the Fund may be invested in
      another registered investment company having the same investment objective
and substantially similar investment policies as the Fund.          

2.    invest 25% or more of the value of its total assets in the securities     
    (other than U.S. Government securities) of issuers engaged in any single
  industry. This restriction does not apply to the Fund's investments in
      another registered investment company having the same investment objective
and substantially similar investment policies as the Fund.          

3.    issue senior securities representing stock, except to the extent permitted
      by the Investment Company Act. In addition, the Fund will not issue senior
      securities representing indebtedness, except that: (a) the Fund may borrow
money from banks, brokers and other lenders, to finance portfolio   
   transactions and engage in other transactions involving the issuance by
the Fund or the Portfolio of "senior securities" representing       
    indebtedness, and (b) the Fund may borrow money from banks for temporary
  or emergency purposes or in connection with repurchases of, or tenders
for, Shares.                                                        

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4.    underwrite securities of other issuers, except insofar as the Fund may be 
 deemed an underwriter under the Securities Act in connection with the
 disposition of portfolio securities received pursuant to an "in kind"
distribution.                                                       

5.    make loans of money or securities to other persons, except through        
     purchasing fixed-income securities or entering into repurchase agreements
in a manner consistent with the Fund's investment policies.         

6.    purchase or sell commodities or commodity contracts; however, this        
      restriction shall not apply to the Fund to the extent that it is deemed to
purchase or sell commodities or commodity contracts through its     
investments in another registered investment company having the same
     investment objective and substantially similar investment policies as the
Fund.                                                               

7.    purchase or sell real estate or interests therein; however, this          
      restriction shall not apply to the Fund to the extent that it is deemed to
     purchase or sell real estate or interests therein through its investments
in another registered investment company having the same investment 
objective and substantially similar investment policies as the Fund.

The Portfolio has adopted substantially the same fundamental investment         
restrictions as the foregoing investment restrictions adopted by the Fund. As a 
matter of fundamental policy, the Portfolio may not:                            

1.    invest more than 15% of its net assets in any one Underlying Fund.        

2.    invest 25% or more of the value of its total assets in the securities     
    (other than U.S. Government securities) of issuers engaged in any single
    industry. This restriction does not apply to the Portfolio's investments
in Underlying Funds.                                                

3.    issue senior securities representing stock, except to the extent permitted
    by the Investment Company Act. In addition, the Portfolio will not issue
senior securities representing indebtedness, except that: (a) the   
Portfolio may borrow money from banks, brokers and other lenders, to
     finance portfolio transactions and engage in other transactions involving
the issuance by the Fund or the Portfolio of "senior securities"    
  representing indebtedness, and (b) the Portfolio may borrow money from
banks for temporary or emergency purposes or in connection with     
repurchases of, or tenders for, Units.                              

4.    underwrite securities of other issuers, except insofar as the Portfolio   
    may be deemed an underwriter under the Securities Act in connection with
the disposition of its portfolio securities.                        

5.    make loans of money or securities to other persons, except through        
purchasing fixed-income securities, lending portfolio securities or 
entering into repurchase agreements in a manner consistent with the 
Portfolio's investment policies.                                    

6.    purchase or sell commodities or commodity contracts, except, subject to   
      the Investment Advisor's registration with the CFTC, that it may invest in
     commodity pools and other entities that purchase and sell commodities and
commodity contracts; however, this restriction shall not apply to   
Portfolio to the extent that it may purchase or sell commodities or 
commodity contracts through Underlying Funds.                       

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7.    purchase or sell real estate or interests therein, except that it may     
   invest in securities of issuers engaged in the real estate industry and
 may invest in securities secured by real estate or interests therein;
    however, this restriction shall not apply to the Portfolio to the extent
 that it may purchase or sell real estate or interests therein through
Underlying Funds.                                                   

THE OFFERING - SHARES OF THE FUND                                               

Subsequent to its initial public offering, the Fund continutes to sell its      
Shares on a monthly basis through brokers, dealers and certain financial        
institutions that have entered into selling agreements with the Fund ("Selling  
Agents"). Shares are generally offered for purchase as of the first day of each 
calendar month. However, Shares may be offered more or less frequently as       
determined by the Board in its sole discretion. See "Plan of Distribution" in   
the SAI. The minimum initial investment in the Fund by any investor is $25,000. 
The Fund may accept orders for any lesser amount. The purchase price for Shares 
is based on the net asset value per Share as of the date such Shares are        
purchased.                                                                      

Except as otherwise permitted by the Board, initial and subsequent purchases of 
Shares will be payable in cash. Each initial or subsequent purchase of Shares   
will be payable in one installment which will generally be due prior to the     
proposed acceptance of the purchase. A prospective investor must submit a       
completed investor certification before the acceptance date set by the Fund. The
Fund reserves the right, in its sole discretion, to reject any subscription to  
purchase Shares in the Fund at any time. Although the Fund may, in its sole     
discretion, elect to except a subscription prior to receipt of cleared funds, an
investor will not become a Shareholder until cleared funds have been received.  

Pending the closing of the monthly offering, funds received from prospective    
investors will be placed in an interest bearing account with the Fund. On the   
date of any closing, the balance in the account with respect to each investor   
whose investment is accepted, including any interest earned by such investor,   
will be invested in the Fund on behalf of such investor.                        

In connection with the sale of Shares, the Investment Advisor (or one of its    
affiliates) may make one-time payments from its own resources to the Fund or    
Selling Agents of up to 1% of the value of the Shares sold by them. In addition,
the Investment Advisor (or one of its affiliates) may make ongoing payments to  
Selling Agents from its own resources in an amount up to 1% per annum of the    
aggregate value of the Shares held by Shareholders that are customers of those  
Selling Agents (less the amount of any investor servicing fees paid to them by  
the Fund). These payments will not be an obligation of the Fund or the          
Shareholders.                                                                   

INVESTOR QUALIFICATIONS                                                         

Each prospective investor in the Fund will be required to certify that it is a  
U.S. person for federal income tax purposes and a "qualified client" within the 
meaning of Rule 205-3 under the Advisers Act. A "qualified client" is, among    
other categories, (i) a natural person or company (other than an investment     
company) that represents that it has a net worth (together, in the case of a    
natural person, with assets held jointly with a spouse) of more than $1,500,000;
(ii) a person who has at least $750,000 under the Investment Advisor's or its   
affiliates' management, including any amount invested in the Fund; (iii) a      
person who is a "qualified purchaser" as defined by the Investment Company Act  
and the rules thereunder; and (iv) certain knowledgeable employees who          
participate in the Investment Advisor's activities. Investors who meet such     
qualifications are referred to in this Prospectus at "Eligible Investors." The  
qualifications required to invest in the Fund will appear in an investor        
certification that mush be completed by each prospective investor. The investor 
certification is contained in Appendix A of this Prospectus. Existing           
Shareholders who wish to purchase additional Shares will be required to qualify 
as "Eligible Investors" and to complete an additional investor certification    
prior to the additional purchase.                                               

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RESTRICTIONS ON TRANSFERS                                                       

With very limited exceptions, Shares are not transferable. Shareholders will    
have no right to require the Fund to permit a transfer of their Shares. See     
"Redemptions, Repurchases of Shares and Transfers" in the SAI for additional    
information.                                                                    

REDEMPTIONS AND REPURCHASES OF SHARES                                           

No Right of Redemption. No Shareholder or other person holding a Share will have
the right to require the Fund to redeem that Share or portion thereof. There is 
no public market for Shares, and none is expected to develop. Consequently,     
investors may not be able to liquidate their investment other than as a result  
of repurchases of Shares by the Fund, as described below and more fully in the  
Statement of Additional Information.                                            

Repurchases of Shares. The Board of Trustees may, from time to time and in their
sole discretion, cause the Fund to offer to repurchase Shares from Shareholders 
pursuant to written tenders by Shareholders at times and on terms and conditions
as they establish. However, because all or substantially all of the Fund's      
assets will be invested in the Portfolio, the Fund will generally find it       
necessary to liquidate a portion of its Portfolio Units in order to satisfy     
repurchase requests. Because Portfolio Units may not be transferred, the Fund   
may withdraw a portion of its Portfolio Units only pursuant to repurchase offers
by the Portfolio. Therefore, the Fund does not expect to conduct a repurchase   
offer for Shares unless the Portfolio contemporaneously conducts a repurchase   
offer for Portfolio Units. In determining whether the Fund should offer to      
repurchase Shares, the Board of Trustees will consider the recommendation of the
Investment Advisor and the Manager. The Investment Advisor and the Manager each 
expects that generally it will recommend to the Board of Trustees that the Fund 
offer to repurchase Shares from Shareholders four times each year, effective    
March 31, June 30, September 30 and December 31. The Fund's Board of Trustees   
will recommend the repurchase of Shares from Shareholders of the Fund only if   
the Portfolio makes an offer to repurchase. The Fund does not expect to make a  
repurchase offer that is larger than the portion of the Portfolio's             
corresponding repurchase offer expected to be available for acceptance by the   
Fund. Consequently, the Fund will conduct repurchase offers on a schedule and in
amounts that will depend on the Portfolio's repurchase offers.                  

Subject to the considerations described above, the aggregate value of Shares to 
be repurchased at any time will be determined by the Board of Trustees in its   
sole discretion, and such amount may be a percentage of the value of the Fund's 
outstanding Shares. Therefore, the Fund may determine not to conduct a          
repurchase offer at a time that the Portfolio conducts a repurchase offer. The  
Fund may also elect to repurchase less than the full amount that a Shareholder  
requests to be repurchased. If a repurchase offer is oversubscribed by a        
Shareholder, the Fund will repurchase only a pro rate portion of the Shares     
tendered by each Shareholder.                                                   

As discussed above, in determining whether the Portfolio should offer to        
repurchase Units from its members pursuant to written requests, the Portfolio   
Board of Directors will consider the recommendation of the Investment Advisor   
and the Manager. The Portfolio Board of Directors or the Board of Trustees also 
will consider the following factors, among others, in determining whether to    
repurchase Units or Shares, as applicable, and the amount of Units or Shares to 
be repurchased:                                                                 

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o     Whether any Shareholders of the applicable Fund have requested to tender  
shares in such Fund or portions thereof to the Fund;                

o     The liquidity and working capital requirements of the applicable Fund;    

o     The relative economies of scale of the repurchase requests with respect to
the size of the applicable Fund;                                    

o     The past practice of the applicable Fund in repurchasing shares in such   
Fund;                                                               

o     The condition of the securities markets and the economy generally, as well
    as political, national or international developments or current affairs;

o     The anticipated tax consequence of any proposed repurchases of interests  
in the applicable Fund; and                                         

o     In the case of the Portfolio Board of Directors, the Portfolio's          
   investment plans, the liquidity of its assets (including fees and costs
 associated with withdrawing from Underlying Funds and/or disposing of
    assets allocated to Subadvisers), and the availability of information as
to the value of its interests in Underlying Funds.                  

NET ASSET VALUATION                                                             

The Fund will repurchase Shares or portions thereof from Shareholders pursuant  
to written tenders (received by the Board at least thirty-five (35) days prior  
to the applicable repurchase date) on terms and conditions that the Board       
determines to be fair to the Fund and to all Shareholders or persons holding    
Shares acquired from Shareholders, or to one or more classes of Shareholders, as
applicable. The value of a Shareholder's Share (or the portion thereof) that is 
being repurchased is equal to the value of the Share as of the Valuation Date   
(as defined below), after giving effect to all allocations that are made as of  
such date. When the Board determines that the Fund shall repurchase Shares or   
portions thereof, notice will be provided to Shareholders describing the terms  
thereof, containing information Shareholders should consider in deciding whether
to participate in the repurchase opportunity and containing information on how  
to participate. Shareholders who are deciding whether to tender their Shares or 
portions thereof during the period that a repurchase offer is open may ascertain
the approximate net asset value of their Shares by contacting the Investment    
Advisor prior to the date upon which such Shareholder must decide whether to    
participate in the repurchase opportunity. Under the repurchase procedures      
described below, Shareholders will have to decide whether to tender their Shares
for repurchase without the benefit of having current information regarding the  
value of the Shares as of a date proximate to the Valuation Date. In addition,  
there will be a substantial period of time between the date as of which         
Shareholders must tender their Shares and the date they can expect to receive   
payment for their Shares from the Fund.                                         

Repurchases of Shares or portions thereof from Shareholders by the Fund may be  
made at the discretion of the Fund, and may be paid in cash or by the           
distribution of securities in-kind or partly in cash and partly in-kind.        
However, the Fund does not expect to distribute securities in-kind except in the
unlikely event that making a cash payment would result in a material adverse    
effect on the Fund or on Shareholders not tendering Shares for repurchase.      
Repurchases will be effective after receipt and acceptance by the Fund of all   
eligible written tenders of Shares or portions thereof from Shareholders. Any   
in-kind distribution of securities may consist of marketable or non-marketable  
securities (valued in accordance with the Declaration of Trust), which will be  
distributed to all tendering Shareholders on a PRO RATA basis. The Fund does not
impose any charges in connection with repurchases of Shares or portions thereof.

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Due to liquidity restraints associated with the Portfolio's investments in      
Underlying Funds and the fact that the Fund may have to effect withdrawals from 
the Portfolio to pay for Shares being repurchased, each Fund presently expects  
to employ the following repurchase procedures:                                  

(a)   Shareholders choosing to tender Shares (or portions thereof) for          
    repurchase must do so by the date specified in the notice describing the
terms of the offer (the "Expiration Date") which generally will be  
thirty-five (35) days before the date as of which Shares are to be  
  repurchased. The Shares (or portions thereof) will be valued as of the
    date on which Shares are to be repurchased (the "Valuation Date"), which
 is generally expected to be either March 31, June 30, September 30 or
December 31;                                                        

(b)   Promptly after the Expiration Date, the Fund will give to each Shareholder
  whose Shares (or portions thereof) have been accepted for repurchase a
   promissory note (the "Promissory Note") entitling the Shareholder to be
      paid an amount equal to the value, determined as of the Valuation Date, of
 the repurchased Share (or portions thereof). The determination of the
   value of Shares as of the Valuation Date is subject to adjustment based
upon the results of the next annual audit of the Fund's financial   
statements.                                                         

(c)   The Promissory Note, which will be non-interest bearing and               
   non-transferable, is expected to contain terms providing for payment at
two separate times.                                                 

      The first payment (the "Initial Payment") will be in an amount equal to at
   least 90% of the estimated value of the repurchased Shares (or portions
      thereof), determined as of the Valuation Date. The Initial Payment will be
   made as of the later of (a) within 30 days after the Valuation Date, or
(b) if the Fund has requested withdrawals of its capital from any   
 Underlying Funds in order to fund the repurchase of Shares, within 10
   business days after the Fund has received at least 90% of the aggregate
amount withdrawn by the Fund from such Underlying Funds.            

     The second and final payment (the "Contingent Payment") is expected to be
in an amount equal to the excess, if any, of (a) the value of the   
    repurchased Shares (or portions thereof), determined as of the Valuation
Date and based upon the results of the annual audit of the Fund's   
     financial statements for the year in which the Valuation Date falls, over
   (b) the Initial Payment. It is anticipated that the annual audit of the
      Fund's financial statements will be completed within 60 days after the end
   of each fiscal year of the Fund and that the Contingent Payment will be
made promptly after the completion of the audit.                    

(d)   Although the amounts required to be paid by the Fund under the Promissory 
   Note will generally be paid in cash, the Fund may under certain limited
    circumstances noted above pay all or a portion of the amounts due by the
in-kind distribution of marketable or non-marketable securities.    

The foregoing procedures may be amended by the Board from time to time and will 
be effective upon notification to the Shareholders.                             

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Repurchases of Shares by the Fund are subject to certain regulatory requirements
imposed by SEC rules. The Fund believes that the repurchase procedures described
above comply with these requirements. However, if modification of the Fund's    
repurchase procedures is deemed necessary to comply with regulatory             
requirements, the Board will adopt revised procedures designed to provide       
Shareholders substantially the same liquidity for Shares as would be available  
under the procedures described above.                                           

ORGANIZATION AND DESCRIPTION OF SHARES                                          

The Fund is a series of PARADIGM Funds Trust. PARADIGM Funds Trust is organized 
as a statutory trust established under Delaware law pursuant to a Declaration of
Trust dated October 14, 2005 and is registered under the Investment Company Act.
The Trustees of the Fund are responsible for the overall management and         
supervision of its affairs. The Fund currently has one class of shares of       
beneficial interest that may be issued in an unlimited number by the Trustees.  
There are no annual meetings of Shareholders, but special meetings may be held  
as required by law to elect or remove Trustees and consider certain other       
matters. Because the Fund invests in the Portfolio, it may be asked to vote on  
certain Portfolio matters (such as changes in certain Portfolio investment      
restrictions). When necessary, the Fund will hold a meeting of its Shareholders 
to consider the Portfolio matter and then vote its interest in the Portfolio in 
proportion to the votes cast by its Shareholders. The Fund can withdraw from the
Portfolio at any time. Shareholders are entitled to one vote for each full Share
held. Fractional Shares may be voted proportionately. Each Share participates   
ratably with all other outstanding Shares in the Fund's profits and losses and  
has the redemption rights described above. No conversion or preemptive rights   
exist in connection with any Shares. All Shares, when duly issued, will be fully
paid and nonassessable.                                                         

DISTRIBUTIONS                                                                   

The Fund intends to declare daily and distribute annually substantially all of  
its net investment income. Net capital gains, if any, will be distributed at    
least annually.                                                                 

MANAGEMENT FEE                                                                  

The Fund will not pay a Management Fee directly to the Manager or the Investment
Advisor. The Fund will pay its proportionate share of the Portfolio's Management
Fee. Pursuant to its Investment Advisory Agreement with the Portfolio, the      
Manager is entitled to receive a monthly management fee (the "Management Fee")  
of which a sub-advisory fee is paid to the Investment Advisor. The Management   
Fee is equal to 1/12th of 1.25% of the net asset value of each of the           
Portfolio's Units as of the first day of each calendar month.                   

For purposes of determining the Management Fee, net assets of the Portfolio will
be determined by taking into account net realized gain or loss and the net      
change in unrealized appreciation or depreciation of net assets as reported by  
the sponsors of the Underlying Funds. The overall fees payable by the           
Shareholders, including their proportionate share of the Portfolio's Management 
Fee, may be higher than those paid by other registered investment companies but 
may be lower than those paid by many private investment funds with similar      
investment policies.                                                            

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FUND EXPENSES                                                                   

Organizational and operating expenses of the Fund will be paid by the Fund, and 
therefore, indirectly by its Shareholders. The Fund will also bear certain      
ongoing offering costs associated with any periodic offering of Fund interests. 

PRIOR PERFORMANCE OF SIMILAR FUND                                               

The table that follows presents prior performance data for PARADIGM Multi       
Strategy Fund ("PMSF"), a multi-manager, multi-strategy fund of hedge funds     
which is managed by the Investment Advisor with investment objectives, policies 
and strategies substantially similar to that of the Portfolio except that PMSF  
allocates its assets among 44 investment managers and the Portfolio will        
initially only invest in 25 Underlying Funds. The information presented below is
based on actual performance data provided by the Investment Advisor. PMSF IS A  
LIMITED LIABILITY COMPANY THAT IS TREATED AS A PARTNERSHIP FOR FEDERAL INCOME   
TAX PURPOSES. PMSF IS NOT REGISTERED UNDER THE INVESTMENT COMPANY ACT. AS A     
NON-REGISTERED ENTITY, PMSF IS NOT SUBJECT TO THE INVESTMENT RESTRICTIONS AND   
THE REGULATORY REQUIREMENTS OF THE INVESTMENT COMPANY ACT. THE TABLE DOES NOT   
REFLECT THE INVESTMENT PERFORMANCE OF THE FUND OR THE PORTFOLIO AND SHOULD NOT  
BE CONSIDERED AS AN INDICATION OF FUTURE PERFORMANCE OF THE FUND OR THE         
PORTFOLIO OR AS A SUBSTITUTE FOR THE FUND'S OR THE PORTFOLIO'S PERFORMANCE. IN  
ADDITION, FUTURE INVESTMENTS IN THE FUND AND THE PORTFOLIO WILL BE MADE UNDER   
DIFFERENT ECONOMIC CONDITIONS AND IN DIFFERENT ECONOMIC CYCLES WHICH WILL RESULT
IN DIFFERENCES AMONG THE FUTURE PERFORMANCE OF THE FUND AND THE PORTFOLIO AND   
THE PAST PERFORMANCE OF PMSF. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE        
RESULTS.                                                                        

In addition, for comparison purposes, the table set forth below presents past   
performance data for HFRI Fund of Funds Composite Index ("HFRI Index"). The HFRI
Index is a composite of funds selected from the over 1800 fund of funds that are
tracked by Hedge Fund Research, Inc. The following sub-indicies are components  
of the HFRI Index:                                                              

HFRI Fund of Funds Conservative Index                                           

This index consists of funds that primarily invest in funds that generally (i)  
engage in more "conservative" strategies such as Equity Market Neutral, Fixed   
Income Arbitrage, and Convertible Arbitrage and (ii) exhibit a lower historical 
annual standard deviation than the HFRI Index. A fund in the HFRI Fund of Funds 
Conservative Index shows generally consistent performance regardless of market  
conditions.                                                                     

HFRI Fund of Funds Diversified Index                                            

This index consists of funds that primarily invest in funds that generally (i)  
invest in a variety of strategies among multiple managers, (ii) have a          
historical annual return and/or a standard deviation generally similar to the   
HFRI Index and (iii) demonstrates generally close performance and returns       
distribution correlation to the HFRI Index. A fund in the HFRI Fund of Funds    
Diversified Index tends to show minimal loss in down markets while achieving    
superior returns in up markets.                                                 

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HFRI Fund of Funds Market Defensive Index                                       

This index consists of funds that primarily invest in funds that generally (i)  
engage in short-biased strategies such as short selling and managed futures and 
(ii) show a negative correlation to the general market benchmarks (S&P). A fund 
in the Fund of Funds Market Defensive Index exhibits higher returns during down 
markets than during up markets.                                                 

HFRI Fund of Funds Strategic Index                                              

This index consists of funds that primarily invest in funds that generally (i)  
seek superior returns by primarily investing in funds that generally engage in  
more opportunistic strategies such as Emerging Markets, Sector specific, and    
Equity Hedge and (ii) exhibit a greater dispersion of returns and higher        
volatility compared to the HFRI Index. A fund in the HFRI Fund of Funds         
Strategic Index tends to outperform the HFRI Index in up markets and            
underperform the index in down markets.                                         

To the extent expense waivers or reimbursements were in effect during the period
indicated below, actual returns would have been lower had such expense waivers  
or reimbursements not been in effect. The performance shown below is net of     
expenses. The information should not be considered a prediction of the future   
performance of the Portfolio. The actual performance of the Portfolio may be    
higher or lower than that shown. Past performance of PMSF is no guarantee of    
future results of the Portfolio. Paradigm's accounts are not subject to certain 
investment limitations, diversification requirements, and other restrictions    
imposed by the 1940 Act and the Internal Revenue Code which, if applicable, may 
have adversely affected performance.                                            

PARADIGM'S RETURNS
--------------------------------------------------------------------------------
                                                    PMSF          HFRI Index
                                                 ----------       ----------
   1 Year Trailing as of December 2006             5.76%            10.42%
   3 Years Trailing as of December 2006           14.03%            26.84%
   5 Years Trailing as of December 2006           21.98%            43.01%

PAST PERFORMANCE OF THE UNDERLYING FUNDS                                        

The table that follows presents past performance data for each of the twenty    
Underlying Funds among whom the Investment Advisor allocates its assets. The    
information presented below is based on actual performance data provided by the 
Investment Advisor. The information should not be considered a prediction of the
future performance of the Portfolio. The actual performance of the Portfolio may
be higher or lower than that shown. The performance shown below does not include
expenses of the individual Underlying Funds, and if it did, performance returns 
would have been lower. Past performance of the Underlying Funds is no guarantee 
of future results of the Portfolio.                                             

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                                                        [Enlarge/Download Table]

------------------------------------------------- ------------------ -------------- ------------- -------------
                                                                                       3 Year                  
                                                                        1 Year        Trailing       5 Year    
                                                                       Trailing        as of        Trailing   
                                                   Fund Inception        as of        December        as of    
                Underlying Fund                         Date         December 2006      2006      December 2006
------------------------------------------------- ------------------ -------------- ------------- -------------
                                                                                                               
Agamas Continuum Fund LP                                     Apr-05         12.21%            NA           NA  
------------------------------------------------- ------------------ -------------- ------------- -------------
Apex Guotai Junan Greater China Fund LLC                     May-04         11.56%            NA           NA  
------------------------------------------------- ------------------ -------------- ------------- -------------
Battenkill Market Neutral Fund LP                            Feb-04          5.25%            NA           NA  
------------------------------------------------- ------------------ -------------- ------------- -------------
Bear Stearns High Grade Credit LP                            Oct-03         10.43%        41.33%           NA  
------------------------------------------------- ------------------ -------------- ------------- -------------
Bennelong Asia Pacific Multi Strategy Equity                                                                   
Fund LP                                                      Mar-05          7.46%            NA           NA  
------------------------------------------------- ------------------ -------------- ------------- -------------
Brookville Credit Opportunities LP                           Mar-03         10.97%        20.87%           NA  
------------------------------------------------- ------------------ -------------- ------------- -------------
Cypress Management LP                                        Apr-95         10.69%        46.55%       81.50%  
------------------------------------------------- ------------------ -------------- ------------- -------------
Davidson Kempner Partners LP                                 Jan-90         18.61%        40.81%       65.63%  
------------------------------------------------- ------------------ -------------- ------------- -------------
Litchfield Capital Partners, LP                              Nov-02         14.72%        47.90%           NA  
------------------------------------------------- ------------------ -------------- ------------- -------------
Maple Leaf Macro Volatility Fund LLC                         Jan-04         12.53%        42.63%           NA  
------------------------------------------------- ------------------ -------------- ------------- -------------
Mercury Real Estate Securities Fund LP                       Jun-04         13.83%            NA           NA  
------------------------------------------------- ------------------ -------------- ------------- -------------
MPC Pilgrim Fund B                                           Oct-00          6.61%        25.65%       52.03%  
------------------------------------------------- ------------------ -------------- ------------- -------------
Osprey Opportunity Fund, LP                                  Oct-00          2.71%        13.21%       36.49%  
------------------------------------------------- ------------------ -------------- ------------- -------------
Parmenides Fund LP                                           Jun-03          5.93%        26.94%           NA  
------------------------------------------------- ------------------ -------------- ------------- -------------
Providence MBS Opportunities Fund, LP                        Mar-04         -4.67%            NA           NA  
------------------------------------------------- ------------------ -------------- ------------- -------------
SAC Multi-Strategy Fund LP                                   Dec-05         19.07%            NA           NA  
------------------------------------------------- ------------------ -------------- ------------- -------------
Thruway Partners, LP                                         Apr-98          8.49%        42.58%       74.63%  
------------------------------------------------- ------------------ -------------- ------------- -------------
Ventus LP                                                    Nov-01         18.03%        25.25%       56.89%  
------------------------------------------------- ------------------ -------------- ------------- -------------
Vicis Fund                                                   Aug-01         13.78%        32.39%       55.77%  
------------------------------------------------- ------------------ -------------- ------------- -------------

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INDEMNIFICATION                                                                 

The Fund has agreed to indemnify and hold harmless the Investment Advisor, the  
Manager and each of their directors, managing members and officers, and each    
person, if any, who controls the Investment Advisor or the Manager, against any 
loss, etc., based upon an assertion that the registration statement, prospectus,
Shareholder reports or other information filed or made public by the Fund (as   
from time to time amended) included an untrue statement of a material fact or   
omitted to state a material fact required to be stated or necessary in order to 
make the statements made not misleading. However, the Fund will not indemnify   
the Investment Advisor or the Manager or hold them harmless to the extent that  
the statement or omission was made in reliance upon, and in conformity with,    
information furnished to the Fund by or on behalf of the Investment Advisor or  
the Manager. The indemnification provisions in the Investment Advisory Agreement
and Sub-Advisory Agreement will be limited by applicable state and federal laws.

TAXES                                                                           

The following discussion is only a summary of certain of the tax considerations 
generally applicable to investments in the Fund and is not intended to provide  
tax or other financial advice to anyone. Prospective investors should consult   
their own tax advisers with specific reference to their own situation as it     
relates to an investment in the Fund.                                           

The Fund will be treated as a corporation for federal income tax purposes. As   
noted above, the Fund intends to qualify as a regulated investment company      
eligible for special tax treatment under Subchapter M of the Code. Accordingly, 
the Fund's tax reporting to Shareholders will be made on the IRS Form 1099      
instead of Schedule K-1. If the Fund qualifies for special tax treatment, it    
will not be subject to federal income tax on income and gains distributed in a  
timely manner to its Shareholders. To qualify for the special treatment accorded
regulated investment companies and their shareholders, the Fund must satisfy    
certain diversification and distribution requirements (as described above in    
"Risk Factors Associated With the Fund -- Tax Liability and Borrowings"). The   
Fund intends to diversify its holdings so that at the end of each fiscal        
quarter, the Fund meets the diversification requirements. To satisfy the        
distribution requirements, the Fund intends to distribute with respect to each  
taxable year substantially all of its net investment income, net tax-exempt     
income and the excess, if any, of net short-term capital gains over net         
long-term capital losses for such year. Income dividends and short-term capital 
gain distributions are taxable to a Shareholder (unless such Shareholder is not 
subject to tax on its income) as ordinary income. Long-term capital gain        
distributions from the Fund are taxable to a Shareholder (unless such           
Shareholder is not subject to tax on its income) as long-term capital gains     
regardless of how long a Shareholder has owned Shares of the Fund. Distributions
are taxable to a Shareholder of the Fund (unless such Shareholder is not subject
to tax on its income) even if they are paid from income or gains earned by the  
Fund prior to the Shareholder's investment (and thus were included in the price 
paid by the Shareholder). Dividends and capital gain distributions will         
automatically be reinvested in additional Shares of the Fund on the record date 
thereof unless a Shareholder has elected to receive cash. Distributions are     
taxable as described above regardless of whether they are distributed in cash or
additional Shares. An investment in the Fund may in some circumstances result in
liability for Federal alternative minimum tax for Shareholders. Based on the    
Fund's structure, it is not anticipated that distributions to Shareholders will 
constitute unrelated business taxable income ("UBTI").                          

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From time to time the Fund may offer to repurchase Shares. A Shareholder who    
tenders all Shares held, or Shares considered to be held under certain          
attribution rules of the Code, will be treated as having sold its Shares and    
generally will realize a capital gain or loss. If a Shareholder tenders fewer   
than all of its Shares, the Shareholder may be treated as having received a     
taxable dividend upon the tender of its Shares. In this case, there is a remote 
risk that non-tendering Shareholders will be treated as having received taxable 
distributions from the Fund. Likewise, if the Fund redeems some but not all of  
the Shares held by a Shareholder and the Shareholder is treated as having       
received a taxable dividend upon such redemption, there is a remote risk that   
the non-redeeming Shareholders will be treated as having received taxable       
distributions from the Fund. To the extent that the Fund recognizes net gains on
the liquidation of its investments to meet such tenders of Shares, the Fund will
be required to make additional distributions to its Shareholders.               

The Fund's transfer agent will send each Shareholder and the Internal Revenue   
Service (the "IRS") an annual statement detailing federal tax information,      
including information about dividends and distributions paid to the Shareholder 
during the preceding year. This information will be based on information then   
available to the Fund, but could be revised based upon additional or revised    
information that subsequently becomes available to the Fund. If the Fund revises
annual tax statements sent to its Shareholders, Shareholders may be required to 
amend their tax returns to reflect the revised information.                     

The foregoing discussion summarizes certain U.S. federal income tax             
considerations for general information only. Before investing, prospective      
investors should consult their own tax advisers regarding the specific federal  
tax consequences of an investment in the Fund, as well as the effects of state, 
local and foreign tax law and proposed law changes.                             

ERISA PLANS AND OTHER TAX QUALIFIED PLANS                                       

Investors subject to the Employee Retirement Income Security Act of 1974, as    
amended ("ERISA"), and other tax-qualified plans, including individual          
retirement accounts ("IRAs"), Keogh plans and other plans subject to the Code's 
prohibited transaction rules may purchase Shares in the Fund. Because the Fund  
is registered as an investment company under the Investment Company Act, the    
underlying assets of the Fund should not be considered to be "plan assets" of   
any plan investing in the Fund for purposes of ERISA's fiduciary duties or the  
prohibited transaction provisions under either the Code or ERISA. Accordingly,  
neither the Investment Advisor nor any of its affiliates will be fiduciaries    
with respect to the plans investing in the Fund based solely on the Investment  
Advisor's management of the Fund's assets. Nevertheless, investment in the Fund 
by an ERISA plan or a tax-qualified plan requires special consideration.        
Trustees and administrators of such entities are urged to review carefully the  
ERISA Considerations section of the Statement of Additional Information.        

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PERIODIC REPORTS                                                                

The Fund will provide quarterly unaudited and annual audited statements. Because
the Underlying Funds may not provide annual reports to the Portfolio on a timely
basis, the Fund's annual audited report may be delayed and the Shareholders may 
need to seek extensions of the deadline to file their tax returns.              

CUSTODIAN AND DIVIDEND PAYING AGENT                                             

J.P. Morgan Trust Company, N.A. (the "Custodian") serves as the primary         
custodian of the Fund's and the Portfolio's assets, and may maintain custody of 
the Fund's and the Portfolio's assets with domestic and foreign subcustodians   
(which may be banks, trust companies, securities depositories and clearing      
agencies) selected by the Investment Advisor. Assets of the Fund and the        
Portfolio are not held by the Investment Advisor or commingled with the assets  
of other accounts other than to the extent that securities are held in the name 
of a custodian in a securities depository, clearing agency or omnibus customer  
account of such custodian. The Custodian's principal business address is 2220   
Chemsearch Blvd., Suite 150, Irving, Texas 75062.                               

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                                   

Briggs, Bunting & Dougherty LLP ("Briggs") serves as the independent registered 
public accounting firm of the Fund. Its principal business address is Two Penn  
Center Plaza, Philadelphia, Pennsylvania 19102. Briggs provides audit services, 
tax return preparation and assistance, and consultation in connection with      
certain SEC filings.                                                            

LEGAL COUNSEL                                                                   

Tannenbaum Helpern Syracuse & Hirschtritt LLP acts as legal counsel to the Fund 
and the Fund's Independent Trustees. Its principal business address is 900 Third
Avenue, New York, New York 10022.                                               

ADMINISTRATOR AND TRANSFER AGENT                                                

BISYS Fund Services Ohio, Inc. (the "Administrator"), a Delaware corporation,   
serves as the administrator and transfer agent for the Fund and the Portfolio.  
The Administrator provides general administration related services, including   
those relating to valuation of the Fund's and the Portfolio's assets. The       
Administrator is located at 3435 Stelzer Road, Columbus, Ohio 43219.            

ADDITIONAL INFORMATION                                                          

This Prospectus does not contain all of the information set forth in the        
Registration Statement that the Fund has filed with the SEC. The complete       
Registration Statement may be obtained from the SEC upon payment of the fee     
prescribed by its rules and regulations and at the SEC's website (www.sec.gov)  
for no charges.                                                                 

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Statements contained in this Prospectus as to the contents of any contract or   
other documents referred to are not necessarily complete, and, in each instance,
reference is made to the copy of such contract or other document filed as an    
exhibit to the Registration Statement of which this Prospectus forms a part,    
each such statement being qualified in all respects by such reference.          

More detailed information about the Fund is available in the SAI which is       
available at no additional charge and may be obtained by calling: (212) 271-3388
or writing: PARADIGM Funds Trust, 650 Fifth Avenue, 17th Floor, New York, New   
York 10019.                                                                     

PRIVACY POLICY & PRACTICES                                                      

The Funds recognize and respect the privacy concerns and expectations of our    
customers.(2)                                                                   

We provide this notice to you so that you will know what kinds of information we
collect about our customers and the circumstances in which that information may 
be disclosed to third parties who are not affiliated with the Funds.            

Collection of Customer Information.                                             
We collect nonpublic personal information about our customers from the following
sources:                                                                        

      o     Account Applications and other forms, which may include a customer's
      name, address, social security number, and information about a
customer's investment goals and risk tolerance;         

   o     Account History, including information about the transactions and
balances in a customer's accounts; and                  

      o     Correspondence, written, telephonic or electronic between a customer
and the Funds or service providers to the Funds.        

Disclosure of Customer Information.                                             

We may disclose all of the information described above to certain third parties 
who are not affiliated with the Funds under one or more of these circumstances: 

    o     As Authorized -- if you request or authorize the disclosure of the
information.                                            

o     As Permitted by Law -- for example, sharing information with  
            companies who maintain or service customer accounts for the Funds is
      permitted and is essential for us to provide shareholders with
    necessary or useful services with respect to their accounts.

o     Under Joint Agreements -- we may also share information with  
           companies that perform marketing services on our behalf or to other
            financial institutions with whom we have joint marketing agreements.

Security of Customer Information.                                               

We require service providers to the Funds:                                      

o     To maintain policies and procedures designed to assure only   
        appropriate access to, and use of information about customers of
Funds; and                                              

 o     To maintain physical, electronic and procedural safeguards that
  comply with federal standards to guard non public personal
information of customers of the Funds.                  

We will adhere to the policies and practices described in this notice regardless
of whether you are a current or former shareholder of Funds                     

----------                                                                      
(2) For purposes of this notice, the terms "customer" or "customers" includes   
individuals who provide nonpublic personal information to the Funds, but do not 
invest in the Funds' shares.                                                    

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 STATEMENT OF ADDITIONAL INFORMATION

PARADIGM FUNDS TRUST
650 FIFTH AVENUE, 17TH FLOOR
NEW YORK, NEW YORK 10019
(212) 271-3388

 PARADIGM GLOBAL ADVISORS, LLC
650 FIFTH AVENUE, 17TH FLOOR
NEW YORK, NEW YORK 10019

 PROVIDENT ASSET MANAGEMENT, LLC
654 MADISON AVENUE, SUITE 1009
NEW YORK, NEW YORK 10021

 April [ ], 2007

This Statement of Additional Information ("SAI") relates to shares of the       
following portfolios (the "Funds") of PARADIGM Funds Trust (the "Trust"):       

PARADIGM Advantage Series                                                       
PARADIGM Institutional Series                                                   

This SAI is not a prospectus. It should be read in conjunction with each Fund's 
Prospectus, dated April [ ], 2007. Copies of a Fund's Prospectus may be obtained
by contacting the Trust at the telephone number or address set forth above. The 
information in this SAI is not complete and may be changed.                     

This SAI is not an offer to sell Shares and is not soliciting an offer to buy   
Shares in any state where the offer or sale is not permitted.                   

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 TABLE OF CONTENTS

GENERAL DESCRIPTION OF THE TRUST                                               1
INVESTMENT STRATEGIES AND SELECTION OF UNDERLYING FUNDS                        1
OVERVIEW OF THE INVESTMENT PROCESS                                             3
CONTROL PERSONS                                                                5
INVESTMENT RESTRICTIONS                                                        5
RISK FACTORS                                                                   7
FEES AND EXPENSES                                                             14
SHARES OF THE FUNDS                                                           14
DISTRIBUTION                                                                  14
USE OF PROCEEDS                                                               15
REDEMPTIONS, REPURCHASES OF SHARES AND TRANSFERS                              15
MANAGEMENT OF THE FUNDS                                                       17
COMPENSATION OF THE TRUSTEES                                                  20
COMPENSATION OF THE INVESTMENT TEAM AND MANAGER                                 
                                                                              21
CONFLICT OF INTEREST                                                          24
CODE OF ETHICS                                                                25
BROKERAGE PRACTICES OF THE PORTFOLIO                                          25
VOTING                                                                        25
PROXY VOTING POLICY AND PROCEDURES                                            25
TAXES                                                                         26
ERISA CONSIDERATIONS                                                          30
DESCRIPTION OF SHARES                                                         31
LIMITATION OF TRUSTEES' LIABILITY                                             31
OTHER SERVICE PROVIDERS                                                       31
AUDITORS AND LEGAL COUNSEL                                                    32
FISCAL YEAR                                                                   32
APPENDIX A: PROXY VOTING POLICY AND PROCEDURES                                  

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GENERAL DESCRIPTION OF THE TRUST                                                

PARADIGM Funds Trust (the "Trust"), located at 650 Fifth Avenue, 17th Floor, New
York, New York, was established as a Delaware statutory trust under the laws of 
the state of Delaware on September 22, 2005. The Trust is a closed-end,         
non-diversified investment company that is registered under the Investment      
Company Act of 1940, as amended (the "Investment Company Act"). The Trust is    
permitted to offer separate series, and all payments received by the Trust for  
units of beneficial interest ("Shares") of any series belong to that series.    
Each Fund has its own assets and liabilities.                                   

Currently, the Trust offers Shares of the following Funds: PARADIGM Advantage   
Series and PARADIGM Institutional Series (collectively, the "Funds"). The Funds 
generally invest all of their assets in PARADIGM Multi Strategy Fund I, LLC (the
"Portfolio") under a master/feeder structure. PARADIGM Global Advisors, LLC (the
"Investment Advisor") serves as the Investment Advisor for each Fund and the    
Portfolio. The Investment Advisor invests the Portfolio's assets in a "fund of  
funds" investment style whereby it will invest in other unregistered investment 
funds (i.e., hedge funds, referred to herein as "Underlying Funds") that employ 
various investment styles. Provident Asset Management, LLC ("Provident" or      
"Manager") serves as the Manager for each Fund and the Portfolio. As Manager of 
the Fund and the Portfolio, Provident is responsible for (1) the asset growth   
program and marketing strategies for the Fund and the Portfolio and (2)         
supervision of the investment activities of the Investment Advisor.             

INVESTMENT STRATEGIES AND SELECTION OF UNDERLYING FUNDS                         

Each Fund's investment objective and principal investment strategy, and the     
investment objective and principal investment strategy of the Portfolio, are    
described in the Portfolio's Private Placement Memorandum (the "PPM").          

The Investment Advisor believes that a disciplined due diligence and monitoring 
process is critical in identifying hedge funds capable of generating the returns
required to meet the Fund's and the Portfolio's investment objective.           

The Investment Advisor intends to allocate the Portfolio's capital to Underlying
Funds that employ a variety of investment strategies, including those that seek 
to capitalize on inefficiencies and pricing anomalies in securities and other   
financial instruments. The Investment Advisor will select Underlying Funds that 
follow other investment strategies if it believes that such investments are     
consistent with the Fund's and the Portfolio's investment objective.            

Underlying Funds in which the Portfolio will invest may include limited         
partnerships, limited liability companies and similar entities managed by a     
single investment manager. Certain Underlying Funds in which the Portfolio will 
invest may be registered investment companies, including open-end registered    
investment companies (commonly referred to as "mutual funds"), closed-end       
investment companies and unit investment trusts (including "exchange-traded     
funds"), although it is anticipated that the Underlying Funds generally will not
be registered investment companies. The Portfolio's ability to invest in        
registered investment companies (including, without limitation, mutual funds,   
exchanged-trade funds and certain money market funds) will be limited by the    
Investment Company Act, which provides certain restrictions on the amount of    
securities of a registered investment company that another registered investment
company may acquire. Underlying Funds that are not registered as investment     
companies under the Investment Company Act typically provide greater flexibility
than mutual funds or exchange-traded funds with respect to the types of         
securities that may be owned, the types of trading strategies employed, and, in 
some cases, the amount of leverage that can be used. It is the understanding of 
the Fund and the Portfolio that the Underlying Funds that are not registered    
under the Investment Company Act are generally relying upon exemptions under    
Section 3(c)(1) and 3(c)(7) of the Investment Company Act.                      

The investment managers of the initial 25 Underlying Funds are all domestic     
entities that are either registered or are currently in the process of          
registering under the Investment Advisors Act of 1940. None of the investment   
managers of the initial 25 Underlying Funds are affiliated with the Investment  
Advisor.                                                                        

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The Investment Advisor may invest a portion of the Portfolio's assets in        
Underlying Funds, including other "fund of funds," managed by the Investment    
Advisor or its affiliates. Such investments will only be made, if at all, upon  
the Portfolio obtaining any necessary exemptive relief or assurance from the    
SEC. There can be no assurance that the SEC will issue such an exemptive order  
or assurance if the Portfolio elects to seek either.                            

Following are descriptions of certain of the investment strategies utilized by  
investment managers in the equity long/short, event driven, and relative value  
trading sectors. Other strategies may be employed as well. There can be no      
assurance that the investment managers will succeed in any of these strategies. 

Equity Long/Short Strategies                                                    

Equity long/short hedge funds make long and short equity investments, often     
based on the investment manager's assessment of fundamental value compared to   
market price. It is expected that the investment managers will employ a wide    
range of styles. For example, investment managers may (i) focus on companies    
within specific industries; (ii) focus on companies only in certain countries or
regions; or (iii) employ a more diversified approach, allocating assets to      
opportunities across investing styles, industry sectors and geographic regions. 

Event Driven Strategies                                                         

Event driven strategies seek to identify security price changes resulting from  
corporate events such as restructurings, mergers, takeovers, spinoffs and other 
special situations. Corporate event arbitrageurs generally choose their         
investments based on their perceptions of the likelihood that the event or      
transaction will occur, the amount of time that the process will take and the   
perceived ratio of return to risk. Strategies that may be utilized in the event 
driven sector include merger arbitrate, high yield/distressed securities, and   
special situations, each of which is described in greater detail below.         

Merger Arbitrage. Merger arbitrageurs seek to capture the price spread between  
current market prices and the value of securities upon successful completion of 
a takeover or merger transaction. The availability of spreads reflects the      
unwillingness of other market participants to take on transaction-based risk,   
i.e., the risk that the transaction will not be completed and the price of the  
company being acquired will fall. Merger arbitrageurs evaluate this risk and    
seek to create portfolios that reduce specific event risk.                      

High Yield/Distressed Securities. High yield/distressed securities strategies   
invest in debt or equity securities of firms in or near bankruptcy. Investment  
managers differ in terms of the level of the capital structure in which they    
invest, the stage of the restructuring process at which they invest, and the    
degree to which they become actively involved in negotiating the terms of the   
restructuring.                                                                  

Special Situations. Special situations such as spin-offs and corporate          
reorganizations and restructurings offer additional opportunities for event     
driven managers. Often these strategies are employed alongside merger arbitrage 
or distressed investing. An investment manager's ability to evaluate the effect 
of the impact and timing of the event and to take on the associated event risk  
is the source of the returns. Investment managers differ in the degree to which 
they hedge the equity market risk of their portfolios.                          

Relative Value Strategies                                                       

Relative value strategies seek to profit from the mispricing of financial       
instruments, capturing spreads between related securities that deviate from     
their fair value or historical norms. Directional and market exposure is        
generally held to a minimum or completely hedged. Strategies that may be        
utilized in the relative value sector include convertible arbitrage, equity     
arbitrage, and fixed-income arbitrage, each of which is described in greater    
detail below.                                                                   

Convertible Arbitrage. Convertible bond arbitrage strategies consist of buying  
convertible bonds and shorting an appropriate number of shares of the issuer's  
common stock. The stock short sale is intended to hedge the stock price risk    
arising from the equity conversion feature of the convertible bond. Due to the  
bond features of convertibles, credit and interest rate risk may also be hedge. 

Equity Arbitrage. Equity arbitrage strategies try to avoid market direction     
influences and seek to generate returns primarily from stock selection.         
Investment managers construct long and short baskets of equity securities they  
determine to be mispriced relative to each other, typically with similar        
characteristics. Portfolios are generally designed to exhibit zero or low beta  
to equity markets. Beta measures the degree to which an asset's price changes   
when a reference asset's price changes. For example, a beta greater than one    
suggests that for every 1% change in the reference asset's price, the asset will
move greater than 1%.                                                           

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Fixed-Income Arbitrage. Fixed-income arbitrage strategies seek to exploit       
pricing anomalies that might exist across fixed-income securities and their     
related derivatives. Although some fixed-income strategies are based on         
macroeconomic considerations, the strategies are primarily quantitative in      
nature, and financial modeling is an integral component. Opportunities in       
fixed-income instruments to baskets of securities are found when securities     
deviate from historical relationships or fair value as determined by the        
investment manager. These relationships can be temporarily distorted by         
exogenous shocks to fixed-income supply and demand or by structural change in   
the fixed-income market.                                                        

Multi-Strategy. Multi-strategy investment managers invest across a range of     
strategies. The investment managers tend to be more opportunistic in targeting  
specific relative value strategies during differing market environments. In     
addition, these Investment Managers may have exposure that have traditionally   
been described as being within the event driven sector, such as merger          
arbitrate, high yield/distressed securities and other special situations.       

OVERVIEW OF THE INVESTMENT PROCESS                                              

The Investment Advisor will employ a dynamic investment process which includes  
investment manager selection, portfolio design and ongoing risk analysis and    
monitoring. The Investment Advisor has over 14 years of experience in           
constructing diversified portfolios by selecting, allocating among, and         
monitoring absolute return-oriented or "skill-based" investment managers. The   
Investment Advisor has also developed proprietary computer systems, operating   
capabilities, proprietary hedge fund indices and "cluster analysis" to assist   
them in identifying and monitoring underlying hedge fund managers. SYSTEMPASS, a
proprietary database in development since 1991 is the backbone of the manager   
selection and monitoring process. SYSTEMPASS contains approximately 16,500 hedge
fund manager track records as well as automated methods for the selection and   
monitoring or managers.                                                         

The Investment Advisor seeks to identify investment managers to which it may    
allocate Portfolio assets through investments in Underlying Funds that they     
manage or as subadvisers. The investment manager selection process includes a   
review by the Investment Advisor's team of professionals, which may include     
representatives of its investment manager selection, risk and quantitative      
analysis, compliance, tax, legal, finance and operations areas.                 

The Investment Advisor believes that a systematic due diligence and monitoring  
process is crucial in the identification and selection of superior investment   
managers capable of generating the returns required to meet the Portfolio's     
objective. The Investment Advisor's approach to advisor allocation relies on a  
well-researched, unique theoretical foundation that supports and guides every   
function within its portfolio management services. The Investment Advisor       
believes its manager selection process is unique in several important respects. 
The Investment Advisor has developed a sophisticated and proprietary            
quantitative analysis methodology that incorporates statistical measurement     
processes known as HEDGE FUND ALPHA, HEDGE FUND BETA and PARK RATIO, which are  
all patent pending. In simple terms, this process provides a ranking of the     
universe of available advisors and/or underlying hedge fund managers that acts  
as an initial screening. This ranking rewards uniqueness of an advisor's returns
with respect to its peer group (often referred to as "alpha"), thus leading to  
low inter-advisor correlations. The ranking also normalizes for advisor         
volatility, which favors those advisors that can provide the highest return for 
the least risk.                                                                 

The Investment Advisor screens the universe of available advisors to determine  
that the advisors selected derive profits by processing information rather than 
depending upon market direction. The Investment Advisor views the advisors it   
selects as a distinct asset class because they perform a clearly discernible    
function (information processing); exhibit unique, definable fundamental        
characteristics (no reliance on market direction to generate returns); and      
generate performance that provides evidence of their uniqueness (low or no      
correlation to the performance of the overall stock or bond markets). By        
allocating to advisors that fall into this asset class, the Investment Advisor  
portfolios provide an INFORMATION PROCESSING PREMIUM (similar to a risk or      
liquidity premium) that does not depend upon market direction.                  

The Investment Advisor also is unique because it does not rank investment       
managers based on return and Sharpe ratio. Despite its popularity and widespread
use, the Investment Advisor research shows that Sharpe ratio has several flaws  
that do not contribute to building a superior portfolio. Sharpe ratio is a      
comparison statistic that compares the performance of two managers at a time.   
Sharpe ratio and other comparison statistics answer the question, "Which manager
is the best?" However, these statistics do not give any insight into the more   
meaningful question of which combination of managers contribute to an optimal   
portfolio of managers that outperforms the passive benchmark. The Investment    
Advisor uses portfolio measurements such as HEDGE FUND ALPHA, HEDGE FUND BETA   
and PARK RATIO (all patent pending) because they have a basis in portfolio      
theory and have been proven (both statistically and in real-time fund           
management) to select the managers that contribute to an optimal portfolio.     

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In making its selections and in addition to the screenings and analyses         
described above, the Investment Advisor also conducts a rigorous, qualitative   
due diligence review. Through its extensive interview process, the Investment   
Advisor evaluates such subjective (or non-quantitative) factors as the character
of each potential advisor's trading method, reputation, overall performance,    
markets and instruments traded, fee structure, redemption provisions, amount of 
funds under management and past and current business relationships.             

In pursuing the Fund's allocation strategy, the Investment Advisor recognizes   
that many of the most successful advisors reach a limit of funds under          
management beyond which they are unwilling to accept new investment and that all
successful advisors begin to place more and more limitations on investments as  
the amount of assets under management increases. The Investment Advisor         
therefore has established investment positions and relationships with advisors  
that should enhance the Portfolio's ability to access advisors that would       
otherwise limit or restrict investment into their programs.                     

While the advisor selections ultimately will be made on the basis of the        
Investment Advisor's subjective assessments of the available advisors, the      
Investment Advisor also considers statistical data regarding the degrees of     
correlation among the advisors' records. The Investment Advisor will evaluate,  
on an ongoing basis, the desirability of reallocating the Portfolio's assets    
among the advisors, allocating existing or new assets to or among additional    
advisors and the desirability of retaining additional or replacement advisors   
based on its evaluation of which available advisors have the best prospects for 
profitability and other factors. The Investment Advisor will follow no fixed    
policies in allocating and reallocating the Portfolio's assets and will in all  
cases be guided to its subjective judgment.                                     

In determining the relative allocations of capital to each investment manager,  
the Investment Advisor considers the risk and return characteristics of each of 
the investment managers, including the average expected volatility of returns,  
drawdown patterns and liquidity and leverage characteristics. In addition, the  
Investment Advisor considers how each investment manager's returns are expected 
to correlate to the other investment managers in the portfolio. It is expected  
that allocations will vary significantly over time as returns for different     
investment managers vary. The Investment Advisor also may adjust allocations    
from time to time when it deems it appropriate to do so. In addition, it is     
expected that individual allocations will grow larger or smaller as each        
investment manager's performance varies over time.                              

The identity and number of the investment managers and Underlying Funds may     
change materially over time. The Investment Advisor may withdraw from or invest 
in different Underlying Funds without prior notice to or the consent of the     
Portfolio or the members of the Portfolio, including the Fund and its           
Shareholders.                                                                   

The Investment Advisor may invest a substantial portion of the Portfolio's      
assets with investment managers who may have limited track records and          
Underlying Funds with limited operating histories. In such cases, the investment
managers or individual members of their management teams generally will have    
had, in the Investment Advisor's opinion, significant relevant experience       
trading in the strategies that such investment managers are expected to utilize.
However, the Fund is not able to ensure Shareholders that each of the investment
managers, even those with longer track records, will perform as expected or not 
undertake actions that would not be in the best interest of the Fund or the     
Shareholders.                                                                   

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CONTROL PERSONS                                                                 

Set forth below are the names, addresses and percentage ownership of each person
that controls the Investment Advisor and the Manager:                           

                                                        [Enlarge/Download Table]

            Name                                     Address                              Ownership Percentage      
------------------------------  ----------------------------------------------------  ------------------------------
                                                                                                                    
[R. Hunter Biden]               [   ]                                                 [  ]% of Investment Advisor   
[James B. Biden]                [   ]                                                 [  ]% of Investment Advisor   
Grahams St. Group, LLC*         [   ]                                                 50% of Manager                
Provident Group Limited**       [   ]                                                 50% of Manager                

* Grahams St. Group, LLC owns 50% of Provident. Brian P. Mathis is the sole     
member of Grahams St. Group, LLC and is a Managing Partner of Provident.        
**Provident Group Limited owns 50% of Provident. Steven J. Carlson, Pavlos      
Mavrides Matos, James B. Roper and Mark J. Bishop are shareholders of Provident 
Group Limited.                                                                  

INVESTMENT RESTRICTIONS                                                         

Each Fund has adopted certain fundamental investment restrictions, which cannot 
be changed without the vote of a majority of the Fund's outstanding voting      
securities. Under the Investment Company Act, the vote of a majority of the     
outstanding voting securities means the vote, at an annual or a special meeting 
of the security holders of a Fund duly called, of (i) 67% or more of the voting 
securities present at the meeting, if the holders of more than 50% of the       
outstanding voting securities of the Fund are present or represented by proxy or
of (ii) more than 50% of the outstanding voting securities of the Fund,         
whichever is less. As a matter of fundamental policy, a Fund may not:           

1. invest more than 15% of its net assets in any one security, except that all  
or substantially all of the assets of the Fund may be invested in another       
registered investment company having the same investment objective and          
substantially similar investment policies as the Fund.                          

2. invest 25% or more of the value of its total assets in the securities (other 
than U.S. Government securities) of issuers engaged in any single industry. This
restriction does not apply to the Fund's investments in another registered      
investment company having the same investment objective and substantially       
similar investment policies as the Fund.                                        

3. issue senior securities representing stock, except to the extent permitted by
the Investment Company Act. In addition, the Fund will not issue senior         
securities representing indebtedness, except that: (a) the Fund may borrow money
from banks, brokers and other lenders, to finance portfolio transactions and    
engage in other transactions involving the issuance by the Fund or the Portfolio
of "senior securities" representing indebtedness, and (b) the Fund may borrow   
money from banks for temporary or emergency purposes or in connection with      
repurchases of, or tenders for, Shares.                                         

4. underwrite securities of other issuers, except insofar as the Fund may be    
deemed an underwriter under the Securities Act in connection with the           
disposition of portfolio securities received pursuant to an "in kind"           
distribution.                                                                   

5. make loans of money or securities to other persons, except through purchasing
fixed-income securities or entering into repurchase agreements in a manner      
consistent with the Fund's investment policies.                                 

6. purchase or sell commodities or commodity contracts; however, this           
restriction shall not apply to the Fund to the extent that it is deemed to      
purchase or sell commodities or commodity contracts through its investments in  
another registered investment company having the same investment objective and  
substantially similar investment policies as the Fund.                          

7. purchase or sell real estate or interests therein; however, this restriction 
shall not apply to the Fund to the extent that it is deemed to purchase or sell 
real estate or interests therein through its investments in another registered  
investment company having the same investment objective and substantially       
similar investment policies as the Fund.                                        

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The investment objective of each Fund is non-fundamental. Thus, it may be       
changed without a vote of a majority of the Fund's outstanding Shares. Except as
otherwise indicated, each Fund's investment policies and restrictions are not   
fundamental and may be changed without a vote of the Shareholders.              

With respect to these investment restrictions, and other policies described in a
Fund's PPM or this SAI, a Fund will not look through the Portfolio to its       
underlying securities. If a percentage restriction is adhered to at the time of 
an investment or transaction, a later change in percentage resulting from a     
change in the values of investments or the value of the Fund's total assets,    
unless otherwise stated, will not constitute a violation of such restriction or 
policy.                                                                         

The Portfolio has adopted substantially the same fundamental investment         
restrictions as the foregoing investment restrictions adopted by each Fund. As a
matter of fundamental policy, the Portfolio may not:                            

1. invest more than 15% of its net assets in any one Underlying Fund.           

2. invest 25% or more of the value of its total assets in the securities (other 
than U.S. Government securities) of issuers engaged in any single industry. This
restriction does not apply to the Portfolio's investments in Underlying Funds.  

3. issue senior securities representing stock, except to the extent permitted by
the Investment Company Act. In addition, the Portfolio will not issue senior    
securities representing indebtedness, except that: (a) the Portfolio may borrow 
money from banks, brokers and other lenders, to finance portfolio transactions  
and engage in other transactions involving the issuance by the Fund or the      
Portfolio of "senior securities" representing indebtedness, and (b) the         
Portfolio may borrow money from banks for temporary or emergency purposes or in 
connection with repurchases of, or tenders for, Units.                          

4. underwrite securities of other issuers, except insofar as the Portfolio may  
be deemed an underwriter under the Securities Act in connection with the        
disposition of its portfolio securities.                                        

5. make loans of money or securities to other persons, except through purchasing
fixed-income securities, lending portfolio securities or entering into          
repurchase agreements in a manner consistent with the Portfolio's investment    
policies.                                                                       

6. purchase or sell commodities or commodity contracts, except, subject to the  
Investment Manager's registration with the CFTC, that it may invest in commodity
pools and other entities that purchase and sell commodities and commodity       
contracts; however, this restriction shall not apply to Portfolio to the extent 
that it may purchase or sell commodities or commodity contracts through         
Underlying Funds.                                                               

7. purchase or sell real estate or interests therein, except that it may invest 
in securities of issuers engaged in the real estate industry and may invest in  
securities secured by real estate or interests therein; however, this           
restriction shall not apply to the Portfolio to the extent that it may purchase 
or sell real estate or interests therein through Underlying Funds.              

The investment objective of the Portfolio is non-fundamental. Thus, it may be   
changed without a vote of a majority of the Portfolio's outstanding Units.      
Except as otherwise indicated, the Portfolio's investment policies and          
restrictions are not fundamental and may be changed without a vote of its       
members.                                                                        

With respect to these investment restrictions, and other policies described in  
the Portfolio's PPM or SAI, the Portfolio will not look through the Underlying  
Funds to their underlying securities. If a percentage restriction is adhered to 
at the time of an investment or transaction, a later change in percentage       
resulting from a change in the values of investments or the value of the        
Portfolio's total assets, unless otherwise stated, will not constitute a        
violation of such restriction or policy.                                        

The Investment Advisor will not cause a Fund or the Portfolio to make loans to, 
or to receive loans from, the Investment Advisor or its affiliates, except to   
the extent permitted by the Investment Company Act or as otherwise permitted by 
applicable law. The Portfolio may effect brokerage transactions, if any, through
affiliates of the Investment Advisor, in accordance with the requirements of the
Investment Company Act.                                                         

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RISK FACTORS                                                                    

Risks Associated with the Funds                                                 

No Operating History. While the Investment Advisor has been in the business of  
managing fund of funds strategies since 1991, each Fund has no operating history
on which you might evaluate its performance. There can be no assurance that a   
Fund's investment objective will be realized or that a Fund's investment        
strategy will prove successful. No assurance can be given that a Fund's         
investments in the Portfolio will generate any income or appreciate in value.   

Master/Feeder Structure. Each Fund is a feeder fund that invests all of its     
assets in the Portfolio. Shareholders will acquire an indirect interest in the  
Portfolio. The likelihood that Shareholders will realize income or gain from    
investing in a Fund will depend on the investment performance of the Portfolio. 

Investment Advisor. The Investment Advisor and certain of its investment        
professionals also carry on substantial investment activities for other funds   
and client accounts (collectively, "Other Accounts"). As a result, the          
Investment Advisor and Mr. Karr may have conflicts of interest in allocating    
their time and activity between the management of the Funds and the management  
of Other Accounts. The Investment Advisor and its staff will devote only so much
time to the management of the Funds as in their judgment is necessary and       
appropriate. In addition, the Investment Advisor may charge the Other Accounts  
fees that are lower than those charged by the Fund.                             

Limited Liquidity. With very limited exceptions, Shares are not transferable and
liquidity will be provided only through limited quarterly repurchase offers.    
Furthermore, the Portfolio may invest in Underlying Funds that do not permit    
frequent withdrawals from the Underlying Funds. An investment in Shares of a    
Fund should be considered only by persons financially able to maintain their    
investment and who can afford a loss of a substantial part or all of such       
investment.                                                                     

Risks Associated with the Investment Advisor and the Portfolio                  

General. The Portfolio intends to invest substantially all of its available     
capital (other than capital the Investment Advisor determines to retain in cash 
or cash equivalents) in securities of private investment companies. Markets for 
such instruments in general are subject to fluctuations and the market value of 
any particular investment may be subject to substantial variation. The          
Portfolio's investments will generally be restricted securities that are subject
to substantial holding periods or are not traded in public markets at all, so   
that the Portfolio may not be able to resell some of its securities holdings for
extended periods, which may be several years. In addition to being illiquid,    
securities may be issued by unseasoned companies and may be highly speculative. 

Underlying Fund Selection and Monitoring. The Investment Advisor employs a      
detailed analysis for the screening and monitoring of the Underlying Funds so   
that the Investment Advisor can monitor leverage levels, positions concentration
and adherence to stated strategies. However, the Investment Advisor does not    
have access to nor control over the daily investment holdings of any of the     
Underlying Funds. As a result, there can be no assurance that the manager of any
Underlying Fund will conform its conduct to the Underlying Fund's stated        
strategies.                                                                     

In most cases, the Portfolio will have little ability to assess the accuracy of 
the valuations received from an Underlying Fund. Furthermore, these valuations  
will typically be estimates only, subject to revision through the end of each   
Underlying Fund's annual audit. Revisions to the Portfolio's gain and loss      
calculations will be an ongoing process, and no appreciation or depreciation    
figure can be considered final until the Portfolio's annual audit is completed. 

Certain securities in which Underlying Funds invest may not have a readily      
ascertainable market price. Such securities will nevertheless generally be      
valued by portfolio managers, which valuation will be conclusive with respect to
the Portfolio, even though the portfolio managers will generally face a conflict
of interest in valuing such securities because the value thereof will affect    
their compensation.                                                             

The Portfolio's portfolio will consist of securities of a limited number of     
Underlying Funds that may invest in the same or similar securities. The         
Investment Advisor will seek to reduce the company- and sector-specific risk of 
its portfolio by investing in certain Underlying Funds that are industry-,      
sector- or security-specific. However, there can be no assurance that Underlying
Funds with these characteristics will be made available to the Portfolio or that
the Investment Advisor will ultimately choose to invest in these types of       
Underlying Funds. Concentrations in industries or sectors that produce          
unfavorable performance may cause the Portfolio to perform more unfavorably than
a broadly diversified fund that has less exposure to those industries or        
sectors.                                                                        

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Investment decisions for the Underlying Funds are made by their respective      
portfolio managers entirely independent of each other and the Investment        
Advisor. As a result, at any particular time, one Underlying Fund may be        
purchasing shares of an issuer whose shares are either held or being sold by    
another Underlying Fund. Consequently, the Portfolio could directly or          
indirectly incur certain transaction costs without accomplishing any net        
investment result.                                                              

The Portfolio calculates its net asset value, which is in turn used to calculate
the net asset value for the Funds, based upon valuations provided by the        
investment managers of the Underlying Funds. Generally, the Portfolio will not  
have any ability to assess the accuracy of such valuations. Although the        
Portfolio or the Investment Advisor may obtain information provided by the      
Investment managers about their net asset values, the Portfolio is not able to  
confirm independently the accuracy of such valuations (which generally are      
unaudited except for the Underlying Funds valuation at its fiscal year-end which
is generally audited at a later date). Most investment managers treat their     
investment positions as proprietary information, and many of them will not      
provide such information to their investors. Furthermore, the net asset values  
received by the Portfolio from each Underlying Fund's investment manager may be 
based on estimated or unaudited reports only, and such values will ordinarily be
used to calculate the Portfolio's and the Funds' net asset value and fee        
accruals for purposes of determining amounts payable on redemption to the extent
audited information is not then available. In some cases investment managers do 
not use independent administrators or other third party providers to value and  
report their net asset values. In such cases, the valuations used to determine  
the net asset values of these Underlying Funds will be dependent upon the       
investment managers for validation, and even when third parties are involved,   
the investment managers may have primary responsibilities for determining the   
values of their respective portfolio securities. The valuation reports will not 
be audited by third parties in most cases. Valuations provided by each          
Underlying Fund's investment managers may be subject to later adjustment based  
on valuation information available at that time, including, for example, as a   
result of year-end audits or other valuation reviews conducted by Underlying    
Fund's auditors. Furthermore, there is a risk that any valuation the Portfolio  
receives from an Underlying Fund will be fraudulent or may inadvertently contain
material errors that the Portfolio would not know when it prepares its financial
statements, which are used to prepare the financial statements for the Funds.   
Prospective investors should understand that the Funds cannot prevent this risk 
since the Funds and the Portfolio do not have access to the Underlying Funds'   
books and records.                                                              

Any such adjustments resulting from wrong valuations or errors in calculations  
may result in the Funds restating their net asset value at the time of such     
restatement as well as for prior periods. Any such restatement, whether         
increasing or decreasing the net asset value of the Funds, will result in a     
Shareholder who had its Shares repurchased based on previously disclosed net    
asset value receiving a greater or lesser amount than it would have received had
such restatement been effected prior to such repurchase. However, if a          
restatement is effected prior to, or in connection with, the audit of the       
financial statements of the Funds for any fiscal year in which repurchased      
Shares were valued, the Funds will adjust the amount of the final payment in    
respect of such repurchase. If such an adjustment or revision occurs after a    
Shareholder has had all of its Shares repurchased, subject to the ability of the
Funds to recoup the purchase proceeds received by Shareholders under certain    
circumstances, the Funds may have limited or no recourse against such           
Shareholder, and any corresponding restatement of and reduction in the net asset
value of the Funds will be borne by the remaining Shareholders of the Funds.    
Conversely, any increase in the Funds' net asset value resulting from such      
subsequent adjustments or revisions may be entirely for the benefit of the      
outstanding Shares and to the detriment of the Shareholders who had their Shares
repurchase in full at a lesser value than the adjusted amount. The same         
principles apply to purchases of Shares. Shareholders of the Funds are assuming 
the risk that valuations may be materially incorrect and/or will need to be     
adjusted, and prospective investors should not make an investment in the Funds  
if they are unwilling to assume such risks.                                     

Limited Operating History. While the Investment Advisor has been in the business
of managing fund of funds strategies since 1991, the Portfolio has no operating 
history on the basis of which prospective investors might evaluate its          
performance. There can be no assurance that the Portfolio's investment objective
will be realized or that the Portfolio's investment strategy will prove         
successful. No assurance can be given that the Portfolio's investment portfolio 
will generate any income or appreciate in value.                                

Reliance on the Investment Advisor. The likelihood that Shareholders will       
realize income or gain from investing in a Fund will depend on the investment   
selection and monitoring by the Investment Advisor on behalf of the Portfolio in
which the Fund invests and the acumen and expertise of the Management Team. If  
the Management Team were to cease working for the Investment Advisor, the       
Investment Advisor may not be able to hire a qualified replacement, or may      
require an extended period of time to do so.                                    

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Special Risks of the Portfolios' Fund of Funds Structure. The Underlying Funds  
may not be registered as investment companies under the Investment Company Act  
and, therefore, the Portfolio will not have the protections of the Investment   
Company Act with respect to their investments in the Underlying Funds. Each     
Underlying Fund will pay any performance-based allocations or fees for which    
they are obligated irrespective of the performance of the other Underlying Funds
and a Portfolio generally. Accordingly, an Underlying Fund with positive        
performance may be entitled to receive a performance allocation or fee from the 
Portfolio, and thus indirectly from Members, even if the Portfolio's overall    
investment return is negative.                                                  

Underlying Funds generally are permitted to redeem their interests in-kind.     
Thus, upon the Portfolio's withdrawal of all or a portion of its interest in an 
Underlying Fund, the Portfolio may receive securities that are illiquid or      
difficult to value. In such circumstances, the Investment Advisor would seek to 
dispose of these securities in a manner that is in the best interests of the    
Portfolio, which may include distributions in kind to Members (including the    
Fund).                                                                          

Risks Associated with the Underlying Funds                                      

Investment Funds not Registered. The Fund is registered as an investment company
under the Investment Company Act. The Investment Company Act is designed to     
afford various protections to investors in pooled investment vehicles. For      
example, the Investment Company Act imposes limits on the amount of leverage    
that a registered investment company can assume, restricts layering of costs and
fees, restricts transactions with affiliated persons, and requires that the     
investment company's operations be supervised by a board of directors, a        
majority of whose members are independent of management. The Fund is itself     
subject to these restrictions. However, the underlying portfolio companies in   
which the Portfolio invests are not subject to the provisions of the Investment 
Company Act. In addition, although the SEC has adopted new rules that will      
require most of the investment managers of the Underlying Funds to register as  
investment advisers under the Investment Advisers Act of 1940, as amended (the  
"Advisers Act"), there is expected to be a significant period of time before    
such registrations are complete. As an investor in the Underlying Funds managed 
by investment managers that are not registered as investment advisers, the Fund 
will not have the benefit of certain of the protections of the Advisers Act.    

The Underlying Funds generally are exempted from regulation under the Investment
Company Act because they permit investment only by investors who meet very high 
thresholds of investment experience and sophistication, as measured by net      
worth. The Fund's investment qualification thresholds are considerably lower, As
a result, the Fund provides an avenue for investing in Underlying Funds that    
would not otherwise be available to certain investors. This means that investors
who would not otherwise qualify to invest in largely unregulated vehicles will  
have the opportunity to make such an investment.                                

In addition, the Underlying Funds typically do not maintain their securities and
other assets in the custody of a bank or a member of a securities exchange, as  
generally required of registered investment companies, in accordance with       
certain SEC rules. A registered investment company which places its securities  
in the custody of a member of a securities exchange is required to have a       
written custodian agreement, which provides that securities held in custody will
be at all times individually segregated from the securities of any other person 
and marked to clearly identify such securities as the property of such          
investment company and which contains other provisions designed to protect the  
assets of such investment company. It is anticipated that the Underlying Funds  
in which the Fund will invest generally will maintain custody of their assets   
with brokerage firms which do not separately segregate such customer assets as  
would be required in the case of registered investment companies. Under the     
provisions of the Securities Investor Protection Act of 1970, as amended, the   
bankruptcy of any such brokerage firm could have a greater adverse effect on the
Fund than would be the case if custody of assets were maintained in accordance  
with the requirements applicable to registered investment companies. There is   
also a risk that an investment manager could convert assets committed to it by  
the Fund to its own use or that a custodian could convert assets committed to it
by an investment manager to its own use. There can be no assurance that the     
investment managers or the entities they manage will comply with all applicable 
laws and that assets entrusted to the investment managers will be protected.    

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Prospective investors should understand that the Fund is an appropriate         
investment only for investors who can tolerate a high degree of risk, including 
lesser regulatory protections in connection with the Fund's investments in      
Underlying Funds than might normally be available through investments in        
registered investment company vehicles.                                         

Valuation of the Fund's Interests in Investment Funds. The valuation of the     
Fund's investments in the Underlying Funds is ordinarily determined based upon  
valuations provided by the investment managers of such Underlying Funds which   
valuations are not audited. Certain securities in which the Underlying Funds    
invest may not have a readily ascertainable market price and will be valued by  
the investment managers. In this regard, an investment manager may face a       
conflict of interest in valuing the securities as their value will affect the   
investment manager's compensation. Valuations of the securities may be          
subjective and could prove in hindsight to have been wrong, and at times by     
significant amounts. The Portfolio will establish a committee approved by the   
Board of Directors of the Portfolio to oversee the valuation of the Fund's      
investments (the "Fair Value Pricing Committee"), which will be comprised of at 
least one member of the Board of Directors as well as various officers and      
representatives of the Portfolio's service providers. The members of the Fair   
Value Pricing Committee may face conflicts of interest in overseeing the        
valuation of the Portfolio's investments, as the value of the Portfolio's       
investments will affect the Investment Advisor's compensation. Although prior to
investing in any Underlying Fund, the Investment Advisor will conduct a due     
diligence review of the valuation methodology utilized by such investment fund, 
no assurances can be given that the Investment Advisor will be given access to  
necessary aspects of the Underlying Fund's systems, that such due diligence     
review will ascertain whether accurate valuations will be provided by such      
Underlying Funds to the Investment Advisor, that the Underlying Funds will      
comply with their own internal policies or procedures for keeping records or    
making valuations, or that the Underlying Funds' policies and procedures and    
systems will not change without notice to the Fund. Moreover, neither the Fair  
Value Pricing Committee nor the Investment Advisor will generally have          
sufficient information in order to be able to confirm or review the accuracy of 
valuations provided by investment managers. In addition, the net asset values or
other valuation information received by the Fair Value Pricing Committee from an
Underlying Fund are typically estimated, and may be subject to later adjustment 
or revision by the Underlying Fund.                                             

Any such adjustment or revision will result in either an increase or decrease in
the net asset value of the Fund at the time that the Fund is provided with      
information regarding the adjustment.                                           

If an investment manager's valuations are consistently delayed or inaccurate,   
the Investment Advisor will consider whether the Underlying Fund continues to be
an appropriate investment for the Fund. However, the Investment Advisor may     
elect in its sole discretion to have the Fund retain its investment in the      
Underlying Fund. The investment manager's information could be inaccurate due to
fraudulent activity, misevaluation or inadvertent error. In any case, the Fund  
may not uncover errors for a significant period of time. Even if the Investment 
Advisor elects to cause the Fund to redeem or sell its interests in such an     
Underlying Fund, the Fund may be unable to redeem or sell interests in such an  
Underlying Fund quickly, and could therefore be obligated to continue to hold   
such interests for an extended period of time. In such a case, such interests   
would continue to be valued without the benefit of the investment manager's     
valuation, and the Fair Value Pricing Committee may, in its sole discretion,    
determine to discount the value of the interests or value them at zero.         

Shareholders should be aware that situations involving uncertainties as to the  
valuations by investment managers could have a material adverse effect on the   
Fund if the investment manager's, the Investment Advisor's or the Fund's        
judgments regarding valuations should prove incorrect. Persons who are unwilling
to assume such risks should not make an investment in the Fund.                 

Market Risks. The profitability of a significant portion of a Fund's and the    
Portfolio's investment program will depend to a great extent on correct         
assessments of the future course of price movements of securities and other     
instruments. There can be no assurance that managers of the Underlying Funds    
will be able to accurately predict these price movements. The securities markets
have in recent years been characterized by great volatility and                 
unpredictability. One or more of the managers of the Underlying Funds are likely
to assume a significant degree of market risk.                                  

Small Cap Securities. The Underlying Funds may invest in companies with modest  
capitalization. While small companies can provide greater growth potential than 
larger, more mature companies, investing in the securities of such companies    
also involves greater risk, potential price volatility and trading cost. These  
companies often involve higher risks because they lack the management           
experience, financial resources, product diversification, markets, distribution 
channels and competitive strengths of larger companies. In addition, in many    
instances, the frequency and volume of their trading is substantially less than 
is typical of larger companies. Therefore, the securities of smaller companies  
may be subject to wider price fluctuations. The spreads between the bid and     
asked prices of the securities of these companies in the U.S. over-the-counter  
market typically are larger than the spreads for more actively traded           
securities. As a result, the Underlying Funds could incur a loss if they were to
sell such a security (or close a short position) a short time after its         
acquisition. When making a large sale, an Underlying Fund may have to sell a    
portfolio holding at a discount from quoted prices or may have to make a series 
of small sales over an extended period of time because of the limited trading   
volume of smaller company securities.                                           

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Hedging Strategies. The Underlying Funds may engage in short sales, the use of  
derivatives, trading in index futures and index options and the use of leverage 
(including, but not limited to, margin trading and investing in derivatives) and
other strategies from time to time in order to "hedge" or offset investment     
risk. Any hedging strategies discussed herein should be expected to increase the
Underlying Funds' transaction costs, interest expense and other costs and       
expenses. These securities may also be subject to greater than ordinary         
investment risks and such investment strategies could result in material losses 
for the Underlying Funds.                                                       

Derivative instruments present special considerations and risks. Successful use 
of these instruments depends on the manager of the Underlying Fund's ability to 
predict movements in the overall securities and currency markets, which requires
different skills than predicting changes in the prices of individual securities.
There can be no assurance that any particular strategy adopted will succeed. In 
adverse circumstances the use of derivatives may result in sudden and severe    
losses.                                                                         

Short Sales. A short sale results in a gain if the price of the securities sold 
short declines between the date of the short sale and the date on which         
securities are purchased to replace those borrowed. A short sale results in a   
loss if the price of the securities sold short increases. Any gain is decreased,
and any loss is increased, by the amount of any payment, dividend or interest   
that an Underlying Fund may be required to pay with respect to the borrowed     
securities, offset (wholly or partly) by short interest credits. In a generally 
rising market, short positions may be more likely to result in losses because   
securities sold short may be more likely to increase in value. A short sale     
involves a finite opportunity for appreciation, but a theoretically unlimited   
risk of loss.                                                                   

To make a short sale, the Underlying Fund must borrow the securities being sold 
short. In this regard, it may be impossible for the Underlying Fund to borrow   
securities at the most desirable time to make a short sale. In addition, there  
are rules prohibiting short sales of securities at prices below the last sale   
price, which may prevent the Underlying Fund from executing short sales of      
securities at the most desirable time. If the prices of securities sold short   
increase, the Underlying Fund may be required to provide additional funds or    
collateral to maintain the short positions. This could require the Underlying   
Fund to liquidate other investments to provide additional collateral, and such  
liquidations might not be at favorable prices. Generally, entering into a short 
sale "against the box" will be treated as a taxable transaction.                

Leverage; Borrowing. The Underlying Funds are authorized to borrow money to meet
repurchase requests and for cash management purposes. While borrowings are      
outstanding for these purposes, the Underlying Funds will be permitted to       
reinvest the proceeds of the sale of securities or new sales of Units and, thus,
may employ leverage. To the extent that the Underlying Funds use leverage, the  
value of their net assets will tend to increase or decrease at a greater rate   
than if no leverage were employed. If an Underlying Fund's investments decline  
in value, the loss will be magnified if the Underlying Fund has borrowed money  
to make its investments.                                                        

If an Underlying Fund does not generate sufficient cash flow from operations, it
may not be able to repay borrowings, or it may be forced to sell investments at 
disadvantageous times to repay borrowings. An Underlying Fund's performance may 
be adversely affected if it is not able to repay borrowings (because of the     
continuing interest expense) or if it is forced to sell investments at          
disadvantageous times in order to repay borrowings. The Underlying Funds likely 
will sell their more liquid assets first to repay borrowings, thus increasing   
their concentration in private securities. As the percentage of an Underlying   
Fund's portfolio invested in private securities increases, the associated risk  
described under "Small Cap Securities" will increase.                           

The rights of any lenders to an Underlying Fund to receive payments of interest 
or repayments of principal will be senior to those of the holders of an         
Underlying Fund's Units, and the terms of any borrowings may contain provisions 
that limit certain activities of an Underlying Fund. Payments of interest and   
fees incurred in connection with borrowings will increase an Underlying Fund's  
expense ratio and will reduce any income the Underlying Fund otherwise would    
have available. An Underlying Fund's obligation to make interest or principal   
payments on borrowings may prevent the Underlying Fund from taking advantage of 
attractive investment opportunities.                                            

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Foreign Investments. An Underlying Fund may invest in securities of non-U.S.    
companies, which are generally denominated in foreign currencies, and American  
Depository Receipts ("ADRs") traded on U. S. securities exchanges and           
representing interests in foreign securities. Such investing involves certain   
considerations comprising both risk and opportunity not typically associated    
with investing in U. S. companies. These considerations include fluctuation in  
exchange rates of foreign currencies, less public information with respect to   
issuers of securities, less governmental supervision of foreign issuers of      
securities, lack of uniform accounting, auditing and financial reporting        
standards, the possible expropriation of assets or confiscatory taxation by a   
host government, the possible imposition of foreign taxes, and political risks  
associated with the countries in which foreign issuers are located. Individual  
foreign economies may differ favorably or unfavorably from the U. S. economy in 
growth of gross national product, rate of inflation, rate of savings and capital
reinvestment, resource self-sufficiency and balance of payments positions, and  
in other respects. Underlying Funds may invest in securities of foreign         
governments (or agencies or subdivisions thereof), and some or all of the       
foregoing considerations may apply to such investments as well.                 

The use of leverage by the Underlying Funds will not result in the treatment of 
distributions by the Fund to be "unrelated business taxable income" to          
Shareholders who may be affected by such treatment.                             

Limited Liquidity. Each Fund and the Portfolio are closed-end investment        
companies designed primarily for long-term investors. Units of an Underlying    
Fund will not be traded on any securities exchange or other market. With very   
limited exceptions, Shares are not transferable and liquidity will be provided  
only through limited quarterly repurchase offers. These repurchases will be made
at such times and on such terms as may be determined by the Board of Trustees of
the Trust (the "Board"), in its complete and exclusive discretion. The          
Investment Advisor and the Manager each expects that generally it will recommend
to the Board that each Fund offer to repurchase Shares from Shareholders four   
times each year, effective March 31, June 30, September 30 and December 31. The 
Portfolio has a similar repurchase policy. Each Fund will offer to purchase only
a small portion of its Shares, and there is no guarantee that an investor will  
be able to sell all of the Shares that an investor desires to sell in any       
particular repurchase offer. If investors oversubscribe a repurchase offer, a   
Fund will repurchase only a PRO RATA portion of the Shares tendered by each     
investor. The potential for pro-ration may cause some investors to tender more  
Shares for repurchase than they wish to have repurchased.                       

Each Fund's and the Portfolio's repurchase policies will have the effect of     
decreasing the size of each Fund over time from what it otherwise would have    
been. Therefore, it may force the Portfolio to liquidate its investments in     
Underlying Funds, which in turn may force the Underlying Funds to sell assets   
they otherwise would not sell. It also may reduce the investment opportunities  
available to the Underlying Funds and cause expense ratios to increase. In      
addition, because of the limited market for an Underlying Fund's investments in 
private securities, the Underlying Fund may be forced to sell its publicly      
traded securities to meet cash requirements for repurchases. This may have the  
effect of substantially increasing an Underlying Fund's ratio of illiquid       
investments to liquid investments for the remaining investors.                  

Securities Lending Arrangements. An Underlying Fund may also lend securities to 
broker-dealers and other institutions as a means of earning additional income.  
If the borrower becomes insolvent or bankrupt, the Underlying Funds could       
experience delays and costs in recovering securities. To the extent that, in the
meantime, the value of securities on loan declines, the Underlying Funds could  
experience further losses.                                                      

Repurchase Agreements. An Underlying Fund may also enter into repurchase        
agreements, where it buys a security and simultaneously agrees to sell it back  
later at a higher price, or in reverse repurchase agreements, by which the      
Underlying Fund sells a security and simultaneously agrees to buy it back later 
at a higher price. The repurchase date is usually within 7 days of the          
initiation of the agreement. If the other party to a repurchase or reverse      
repurchase agreement becomes insolvent or bankrupt, the Underlying Fund may     
experience delays and incur costs in recovering payment or the securities. To   
the extent that the value of the security purchased changes in the meantime, the
Underlying Fund could experience further losses. Repurchase agreements to which 
the Underlying Fund is a party must be fully collateralized. Repurchase and     
reverse repurchase agreements can have effects similar to margin trading and    
other leveraging strategies.                                                    

Options. Stock options that may be purchased or sold by the Underlying Funds    
include options not traded on a securities exchange. Options not traded on an   
exchange or traded on a foreign exchange are not issued by The U.S. Options     
Clearing Corporation, therefore, the risk of nonperformance by the obligor on   
such an option may be greater and the ease with which the Underlying Funds can  
dispose of such an option may be less than in the case of an exchange traded    
option issued by The U.S. Options Clearing Corporation.                         

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Options can be highly volatile investments and involve special risks. Successful
investment strategies using options require the ability to predict future       
movements in securities prices, interest rates and other economic factors. An   
Underlying Fund's efforts to use options (even for hedging purposes) may not be 
successful and could result in a reduction in the Underlying Fund's total       
return.                                                                         

The Underlying Funds may buy and sell options (including purchasing special     
expiration price options) to manage exposure to changing interest rates,        
security prices, currency exchange rates and precious metal prices. Some options
strategies, including buying puts and writing calls, hedge the Underlying Fund's
investments against price fluctuations. Other strategies, including writing puts
and buying calls, tend to increase market exposure. Underlying Funds may invest 
in options based on any type of security, index or currency related to its      
investments, including options traded on foreign exchanges and options not      
traded on exchanges. Options can be volatile investments involving a high degree
of risk. If an Underlying Fund applies a hedge at an inappropriate time or      
judges market conditions incorrectly, options strategies may reduce its return. 

Options traded on foreign exchanges generally are not regulated by United States
authorities and may offer less liquidity and less protection if the other party 
to the contract defaults. The Underlying Fund also could experience losses if   
the prices of option positions were to be poorly correlated with its other      
investments, or if it could not close its positions because of an illiquid      
secondary market.                                                               

Underlying Funds also may purchase put and call options on one or more baskets  
of securities of issuers in a particular industry or sector if it is believed   
that their value will increase or decrease generally as a group.                

Portfolio Turnover. The Underlying Funds should be expected to have higher      
portfolio turnover than many other investment funds. The brokerage commissions  
and other transaction costs incurred by the Underlying Funds will be generally  
higher than those incurred by investment funds with lower portfolio turnover    
rates. In addition, a high portfolio turnover will result in special tax        
considerations. See "Taxes" below.                                              

Restricted Securities. An Underlying Fund may invest in restricted securities   
that are not traded in public markets. Restricted securities generally are      
difficult or impossible to sell at prices comparable to the market prices of    
similar securities that are publicly traded. No assurance can be given that any 
such restricted securities will be eligible for resale or otherwise to be traded
on a public market even if a public market for the securities were to develop.  

Operating Deficits. It is anticipated that the Underlying Funds will trade      
securities actively and incur significant brokerage, custody and other          
transaction costs and expenses. These and other expenses of operating the       
Underlying Funds may exceed their income, thereby requiring that the difference 
be paid out of capital, reducing the Underlying Fund's investments and potential
for profitability.                                                              

Limited or No Distributions. It is expected that the Underlying Funds will not  
make substantial periodic distributions to investors and may not make any       
distributions at all. Instead, the Underlying Funds will generally reinvest     
substantially all income and gain. Cash that might otherwise be available for   
distribution is likely to be reduced by payment of obligations of the Underlying
Funds and establishment of appropriate reserves. As a result, if an Underlying  
Fund is profitable, investors (including the Fund) in all likelihood will be    
credited with net income, and will incur the consequent income tax liability,   
even though investors may receive little or no distributions of cash to cover   
that liability.                                                                 

Performance Fees. Most of the Underlying Funds will pay a performance based fee.
In certain cases, managers may be paid a fee based on appreciation during the   
specific measuring period without taking into account losses occurring in prior 
measuring periods, although the Investment Advisor anticipates that managers who
charge such fees will take into account prior losses. These fee arrangements may
create an incentive for such managers to make investments that are riskier or   
more speculative than if a performance based fee were not paid. In addition,    
because performance fees are generally calculated based on unrealized as well as
realized gains on securities positions, the amount of any performance fee       
ordinarily will be greater in any period than if it were based solely on        
realized gains.                                                                 

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FEES AND EXPENSES                                                               

Operating expenses of the Funds will be paid by the Funds, and therefore,       
indirectly by each Fund's Shareholders. The Investment Advisor will incur annual
operating expenses on behalf of each Fund which shall include, but not be       
limited to, the following expenses:                                             

o     the Fund's proportionate share of all costs and expenses directly related 
to portfolio transactions and positions for the Portfolio's account,
including, but not limited to, brokerage commissions, research fees,
interest and commitment fees on loans and debit balances, borrowing 
    charges on securities sold short, dividends on securities sold short but
  not yet purchased, custodial fees, member servicing fees, margin fees,
transfer taxes and premiums and taxes withheld on foreign dividends;

o     all costs and expenses associated with the organization and registration  
    of the Fund, certain offering costs and the costs of compliance with any
applicable Federal or state laws;                                   

o     the costs and expenses of holding any meetings of any investors that are  
    regularly scheduled, permitted or required to be held under the terms of
  the Trust's Declaration of Trust (the "Declaration of Trust") or other
applicable law;                                                     

o     fees and disbursements of any attorneys, accountants, auditors and other  
consultants and professionals engaged on behalf of the Fund;        

o     the fees of custodians and other persons providing administrative services
to the Fund;                                                        

o     the costs of a fidelity bond and any liability insurance obtained on      
behalf of the Fund of the Investment Advisor;                       

o     all costs and expenses of preparing, setting in type, printing and        
 distributing reports, repurchase notices, and other communications to
investors;                                                          

o     all expenses of computing the Fund's net asset value, including the Fund's
      proportionate share of the expenses of computing the Portfolio's net asset
   value and any equipment or services obtained for the purpose of valuing
    the Portfolio's investment portfolio, including appraisals and valuation
services provided by third parties;                                 

o     all charges for equipment or services used for communications between the 
Fund and any custodian, or other agent engaged by the Fund; and     

o     such other types of expenses as may be approved from time to time by the  
Investment Advisor.                                                 

Each Fund will reimburse the Investment Advisor for any of the above expenses   
that it pays on behalf of the Fund.                                             

SHARES OF THE FUNDS                                                             

Each Fund will issue up $100,000,000 in Shares at an initial net asset value of 
$5,000 per Share. The Board may, from time to time, in accordance with the      
Declaration of Trust, authorize the issue of additional Shares at the then      
existing net asset value or series and classes of Shares containing such terms  
and conditions, including conversion rights, sales, repurchase and other charges
and terms of redemptions, as the Board may determine. Each Fund's Shares        
participates ratably with all other outstanding Shares in the Fund's profits and
losses and has the redemption rights described below.                           

No conversion or preemptive rights exist in connection with any Shares. All     
Shares, when duly issued, will be fully paid and nonassessable.                 

DISTRIBUTION                                                                    

Each Fund is offering Shares to Eligible Investors. Investors must subscribe for
Shares in an amount that equals or exceeds $25,000. Additional subscriptions for
Shares will be subject to a minimum investment amount of $10,000. The Board may 
waive any minimum investment amounts in its sole discretion.                    

Each Fund may offer its Shares through financial institutions and intermediaries
such as broker-dealers, investment counselors, registered investment advisors,  
mutual fund/hedge fund supermarkets, insurance companies, banks and savings and 
loans that have entered into selling agreements with the Portfolio.             

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As described in the Fund's prospectus, subsequent to its initial public         
offering, the Funds continue to sell their Shares typically beginning and       
closing on the first day of each calendar month.                                

Payment for Shares. Payment for Shares ordinarily must be received in cash at   
the time the order is placed on the first business day of a calendar month. The 
Board, in its sole discretion, may permit a grace period to facilitate a        
transfer of funds by the investor.                                              

Investments by Tax-Qualified Retirement Plans. Shares are available for purchase
in connection with certain types of tax-qualified retirement plans. Eligible    
investors may establish individual retirement accounts ("IRAs"); Employee       
Pensions ("SEPs"); other pension and profit sharing plans or 401(k) plans. The  
purchase of Shares may be limited by the plans' provisions.                     

Investors considering establishing a retirement plan or purchasing any Shares in
connection with a retirement plan, should consult with their attorney or tax    
advisor with respect to plan requirements and tax aspects pertaining to the     
investor.                                                                       

The illiquid nature of the Shares may affect the nature of distributions from   
tax sheltered retirement plans and may affect the ability of participants in    
such plans to rollover assets to other tax sheltered retirement plans.          

An investment in a Fund by a tax-qualified retirement plan should not expose    
such investors to "unrelated taxable business income" unless the purchase or    
holding of such investor's shares is leveraged.                                 

USE OF PROCEEDS                                                                 

As described in each Fund's prospectus, the Funds invest all of their assets in 
the Portfolio under a master/feeder structure. Pending investment by a Fund, the
proceeds may be invested in short-term debt securities or money market funds.   

REDEMPTIONS, REPURCHASES OF SHARES AND TRANSFERS                                

No Right of Redemption. No Shareholder or other person holding a Share or a     
portion of a Share acquired from a Shareholder will have the right to require   
the respective Fund to redeem that Share or portion thereof. There is no public 
market for Fund Shares, and none is expected to develop. Consequently, investors
may not be able to liquidate their investment other than as a result of         
repurchases of Shares by the Fund, as described below.                          

Repurchases of Shares. The Board may, from time to time and in their sole       
discretion, determine to cause each Fund to repurchase Shares or portions       
thereof from Shareholders pursuant to written tenders by Shareholders at such   
times and on such terms and conditions as they may determine. In determining    
whether a Fund should offer to repurchase Shares or portions thereof from       
Shareholders, the Board will consider the recommendation of the Investment      
Advisor. The Investment Advisor and the Manager each expects that generally it  
will recommend to the Board that each Fund offer to repurchase Shares from      
Shareholders four times each year, effective March 31, June 30, September 30 and
December 31. The Board will also consider the following factors, among others,  
in making this determination:                                                   

o     whether any Shareholders have requested to tender Shares or portions      
thereof to a Fund;                                                  

o     whether the relevant Portfolio imposes any limitations on a Fund's ability
to redeem its Units;                                                

o     the liquidity of each Fund's assets and the investment plans and working  
capital requirements of the Fund;                                   

o     the relative economies of scale with respect to the size of each Fund;    

o     the history of each Fund in repurchasing Shares or portions thereof;      

o     the availability of information as to the value of a Fund's interest in   
the Portfolio in which it invests, and the value of the Portfolio's 
interests in Underlying Funds;                                      

o     the economic condition of the securities markets; and                     

o     the anticipated tax consequences of any proposed repurchases of Shares or 
portions thereof.                                                   

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Each Fund will repurchase Shares or portions thereof from Shareholders pursuant 
to written tenders (received by the Board at least thirty-five (35) days prior  
to the applicable repurchase date) on terms and conditions that the Board       
determine to be fair to the Fund and to all Shareholders or persons holding     
Shares acquired from Shareholders, or to one or more classes of Shareholders, as
applicable. Only Shares held for at least twelve (12) months will be eligible   
for repurchase by a Fund. The value of a Shareholder's Share (or the portion    
thereof) that is being repurchased is equal to the value of the Share as of the 
Valuation Date (as defined below), after giving effect to all allocations that  
are made as of such date. When the Board determines that a Fund shall repurchase
Shares or portions thereof, notice will be provided to Shareholders describing  
the terms thereof, containing information Shareholders should consider in       
deciding whether to participate in the repurchase opportunity and containing    
information on how to participate. Shareholders who are deciding whether to     
tender their Shares or portions thereof during the period that a repurchase     
offer is open may ascertain the approximate net asset value of their Shares by  
contacting the Investment Advisor prior to the date upon which such Shareholder 
must decide whether to participate in the repurchase opportunity. Under the     
repurchase procedures described herein, Shareholders will have to decide whether
to tender their Shares for repurchase without the benefit of having current     
information regarding the value of the Shares as of a date proximate to the     
Valuation Date. In addition, there will be a substantial period of time between 
the date as of which Shareholders must tender their Shares and the date they can
expect to receive payment for their Shares from the Fund.                       

Repurchases of Shares or portions thereof from Shareholders by a Fund may be    
made at the discretion of the Fund, and may be paid in cash or by the           
distribution of securities in-kind or partly in cash and partly in-kind.        
However, the Funds do not expect to distribute securities in-kind except in the 
unlikely event that making a cash payment would result in a material adverse    
effect on the Funds or on Shareholders not tendering Shares for repurchase.     
Repurchases will be effective after receipt and acceptance by the Funds of all  
eligible written tenders of Shares or portions thereof from Shareholders. Any   
in-kind distribution of securities may consist of marketable or non-marketable  
securities (valued in accordance with the Declaration of Trust), which will be  
distributed to all tendering Shareholders on a PRO RATA basis. The Funds do not 
impose any charges in connection with repurchases of Shares or portions thereof.

Due to liquidity restraints associated with the Portfolio's investments in      
Underlying Funds and the fact that a Fund may have to effect withdrawals from a 
Portfolio to pay for Shares being repurchased, each Fund presently expects to   
employ the following repurchase procedures:                                     

(a)   Shareholders choosing to tender Shares (or portions thereof) for          
    repurchase must do so by the date specified in the notice describing the
terms of the offer (the "Expiration Date") which generally will be  
thirty-five (35) days before the date as of which Shares are to be  
  repurchased. The Shares (or portions thereof) will be valued as of the
    date on which Shares are to be repurchased (the "Valuation Date"), which
 is generally expected to be either March 31, June 30, September 30 or
December 31;                                                        

(b)   Promptly after the Expiration Date, the Fund will give to each Shareholder
  whose Shares (or portions thereof) have been accepted for repurchase a
   promissory note (the "Promissory Note") entitling the Shareholder to be
      paid an amount equal to the value, determined as of the Valuation Date, of
 the repurchased Share (or portions thereof). The determination of the
   value of Shares as of the Valuation Date is subject to adjustment based
upon the results of the next annual audit of the Fund's financial   
statements.                                                         

(c)   The Promissory Note, which will be non-interest bearing and               
   non-transferable, is expected to contain terms providing for payment at
two separate times.                                                 

      The first payment (the "Initial Payment") will be in an amount equal to at
   least 90% of the estimated value of the repurchased Shares (or portions
      thereof), determined as of the Valuation Date. The Initial Payment will be
   made as of the later of (a) within 30 days after the Valuation Date, or
(b) if the Fund has requested withdrawals of its capital from any   
 Underlying Funds in order to fund the repurchase of Shares, within 10
   business days after the Fund has received at least 90% of the aggregate
amount withdrawn by the Fund from such Underlying Funds.            

     The second and final payment (the "Contingent Payment") is expected to be
in an amount equal to the excess, if any, of (a) the value of the   
    repurchased Shares (or portions thereof), determined as of the Valuation
Date and based upon the results of the annual audit of the Fund's   
     financial statements for the year in which the Valuation Date falls, over
   (b) the Initial Payment. It is anticipated that the annual audit of the
      Fund's financial statements will be completed within 60 days after the end
   of each fiscal year of the Fund and that the Contingent Payment will be
made promptly after the completion of the audit.                    

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(d)   Although the amounts required to be paid by the Fund under the Promissory 
   Note will generally be paid in cash, the Fund may under certain limited
    circumstances noted above pay all or a portion of the amounts due by the
in-kind distribution of marketable or non-marketable securities.    

The foregoing procedures may be amended by the Board from time to time and will 
be effective upon notification to the Shareholders.                             

Repurchases of Shares by each Fund are subject to certain regulatory            
requirements imposed by SEC rules. The Funds believe that the repurchase        
procedures described above comply with these requirements. However, if          
modification of the Funds' repurchase procedures is deemed necessary to comply  
with regulatory requirements, the Board will adopt revised procedures designed  
to provide Shareholders substantially the same liquidity for Shares as would be 
available under the procedures described above.                                 

Transfers of Shares. A Shareholder may transfer his Shares only (i) by operation
of law pursuant to the death, divorce, bankruptcy, insolvency or dissolution of 
such Shareholder or (ii) with the written consent of the Board (which may be    
withheld in its sole discretion); provided, however, that the Board may not     
consent to any transfer other than a transfer (i) in which the tax basis of the 
Shares in the hands of the transferee is determined, in whole or in part, by    
reference to its tax basis in the hands of the transferor (e.g., certain        
transfers to affiliates, gifts and contributions to family partnerships), (ii)  
to members of the Shareholder's immediate family (brothers, sisters, spouse,    
parents and children), or (iii) a distribution from a qualified retirement plan 
or an individual retirement account.                                            

MANAGEMENT OF THE FUNDS                                                         

The Board provides broad oversight over the affairs of each Fund. The day-to-day
affairs of each Fund and the Portfolio are managed by the Manager and the       
investment activities are managed by the Investment Advisor, subject to the     
ultimate supervision of and any policies established by the Board, and pursuant 
to the terms of the Declaration of Trust and the Investment Advisory Agreement. 

Board Of Trustees. The Board has overall responsibility for the management and  
supervision of the operations of the Funds. The Board of Directors of the       
Portfolio (the "Portfolio's Board of Directors") has overall responsibility for 
management and supervision of the operations of the Portfolio. The Trust and the
Portfolio have the same board members. The Board exercises the same powers,     
authority and responsibilities on behalf of the Funds as are customarily        
exercised by the board of directors of a registered investment company organized
as a corporation.                                                               

Members of the Board are not required to contribute to the capital of the Trust 
or hold Shares in the Funds. A majority of the Board are not "interested        
persons" (as defined in the Investment Company Act) of the Trust (collectively, 
the "Independent Trustees") and perform the same functions for the Trust as are 
customarily exercised by the non-interested directors of a registered investment
company organized as a corporation.                                             

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The identity of the Trustees and brief biographical information regarding each  
Trustee is set forth below. Each Trustee who is deemed to be an "interested     
person" of the Trust, as defined in the Investment Company Act, is indicated by 
an asterisk.                                                                    

                                                        [Enlarge/Download Table]

                                                 Term of              Principal             Other               
Name, (date of birth) and                        Office and           Occupation(s)         Directorships       
Address During the Past 5     osition(s)         Length of            During Past 5         Served Held by      
Years                         Held with Fund     Time                 Years                 Trustee             
----------------------------  -----------------  -------------------  --------------------  --------------------
                                                                                                                
Nelson Diaz                   Trustee            Since                Partner, Blank        Exelon              
May 23, 1947                                     September 19,        Rome LLP; City        Corporation; PNC    
One Logan Square                                 2006                 Solicitor, City       Bank;               
Phildelphia, PA 19103                                                 of Philadelphia.      Pennsylvania        
                                                                                            Convention          
                                                                                            Authority;          
                                                                                            PARADIGM            
                                                                                            Multi Strategy      
                                                                                            Fund I, LLC         

Ernest Jones                  Trustee            Since                President and         UGI Corporation;    
November 21, 1944                                November 21, 2006    CEO, Philadelphia     The Philadelphia    
1617 JFK Boulevard                                                    Workforce             Contributionship;   
Philadelphia, PA 19103                                                Development           Vector Security;    
                                                                      Corporation;          Philadelphia        
                                                                      President,            National Bank;      
                                                                      Greater               CoreStates          
                                                                      Philadelphia          Financial           
                                                                      Urban Affairs         Corporation;        
                                                                      Coalition             First Union         
                                                                                            Financial           
                                                                                            Corporation;        
                                                                                            PARADIGM            
                                                                                            Multi Strategy      
                                                                                            Fund I, LLC         

Charles Provini*                                                                            PARADIGM            
650 Fifth Avenue              Trustee,           Since                President and         Multi Strategy      
17th Floor                    President          January 24, 2007     CEO, CRP Financial    Fund I, LLC         
New York, NY 10019                                                                                              

      * Charles Provini is considered an "interested person" of the Fund as that
     term is defined in the Investment Company Act. Mr. Provini is an employee
of the Advisor.                                                     

The Board has overall responsibility for the management and supervision of the  
operations of the Trust. The initial Trustees serving on the Board have been    
elected by the organizational shareholder of the Trust (who is affiliated with  
the Investment Advisor). Any vacancy in the position of Trustee may be filled by
the remaining Trustees, or, if required by the Investment Company Act, by vote  
of a plurality of the vote at a meeting of the Shareholders at which a quorum of
Shareholders is present in person or by proxy.                                  

The Trustees serve on the Board for terms of indefinite duration. A Trustee's   
position in that capacity will terminate if such Trustee is removed, resigns or 
is subject to various disabling events such as death or incapacity. A Trustee   
may resign upon 90 days' prior written notice to the other Trustees, and may be 
removed either by vote of two-thirds of the Trustees not subject to the removal 
vote or by vote of the Shareholders holding not less than two-thirds of the     
total number of votes eligible to be cast by all Shareholders. The Trustees will
render assistance to Shareholders on the question of the removal of Trustees in 
the manner required by Section 16(c) of the Investment Company Act. In the event
of any vacancy in the position of a Trustee, the remaining Trustees may appoint 
an individual to serve as a Trustee, so long as immediately after such          
appointment at least two-thirds of the Trustees then serving would have been    
elected by the Shareholders. The Trustees may call a meeting of Shareholders to 
fill any vacancy in the position of a Trustee, and must do so within 60 days    
after any date on which Trustees who were elected by the Shareholders cease to  
constitute a majority of the Trustees then serving.                             

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The Declaration of Trust provides that a Trustee's responsibilities shall       
terminate if the Trustee (i) dies; (ii) is adjudicated incompetent; (iii)       
voluntarily withdraws as a Trustee (upon not less than 90 days' prior written   
notice to the other Trustees); (iv) is removed; (v) is certified by a physician 
to be mentally or physically unable to perform his duties hereunder; (vi) is    
declared bankrupt by a court with appropriate jurisdiction or files a petition  
commencing a voluntary case under any bankruptcy law or make an assignment for  
the benefit of creditors; (vii) has a receiver appointed to administer his      
property or affairs; or (viii) otherwise ceases to be a Trustee of the Trust    
under law. A Trustee may be removed either by (a) the vote or written consent of
at least two-thirds (2/3) of the Trustees not subject to the removal vote or (b)
the vote or written consent of Shareholders holding not less than two-thirds    
(2/3) of the total number of votes eligible to be cast by all Shareholders.     

The Declaration of Trust provides that a Trustee shall not be liable to the     
Trust or to any of its Shareholders for any loss or damage caused by any act or 
omission in the performance of his or her services under the Declaration of     
Trust, unless it is determined that such loss is due to an act or omission of   
the Trustee constituting willful misfeasance, bad faith, gross negligence or    
reckless disregard of the duties involved in the conduct of the Trustee's       
office. Trustees are also entitled to be indemnified to the fullest extent      
permitted by law against all losses, claims, damages, liabilities, costs and    
expenses, including, but not limited to, amounts paid in satisfaction of        
judgments, in compromise, or as fines or penalties, and reasonable counsel fees,
incurred in connection with the defense or disposition of any action, suit,     
investigation or other proceeding, whether civil or criminal, before any        
judicial, arbitral, administrative or legislative body, in which the Trustee may
be or may have been involved as a party or otherwise, or with which the Trustee 
may be or may have been threatened, while in office or thereafter, by reason of 
being or having been a Trustee of the Fund or the past or present performance of
services to the Fund by the Trustee, except to the extent such loss, claim,     
damage, liability, cost or expense shall have been finally determined in a      
decision on the merits in any such action, suit, investigation or other         
proceeding to have been incurred or suffered by the Trustee by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties   
involved in the conduct of such the Trustee's office. The rights of             
indemnification and exculpation provided under the Declaration of Trust do not  
provide for indemnification under Federal securities laws that, under certain   
circumstances, impose liability even on persons that act in good faith, to the  
extent, but only to the extent, that such indemnification would be in violation 
of applicable law.                                                              

Board Standing Committees. The Board has established the following standing     
committees:                                                                     

Audit Committee. The Board has a standing Audit Committee that is composed of   
each of the Independent Trustees of the Trust. The Audit Committee operates     
under a written charter approved by the Board. The Audit Committee will meet    
periodically, as necessary. During the fiscal year ended December 31, 2006, the 
Audit Committee held one meeting.                                               

Fair Value Pricing Committee. The Board has a standing Fair Value Pricing       
Committee that is composed of at least one Independent Trustee and various      
officers and representatives of the Trust's service providers, as appointed by  
the Board. The Fair Value Pricing Committee operates under procedures approved  
by the Board. The principal responsibilities of the Fair Value Pricing Committee
are to determine the fair value of securities for which current market          
quotations are not readily available. The Fair Value Pricing Committee's        
determinations are reviewed by the Board. The Fair Value Pricing Committee will 
meet periodically, as necessary. During the fiscal year ended December 31, 2006,
the Fair Value Pricing Committee did not meet.                                  

Nominating Committee. The Board has a standing Nominating Committee that is     
composed of each of the Independent Trustees of the Trust. The principal        
responsibility of the Nominating Committee is to consider, recommend and        
nominate candidates to fill vacancies on the Board, if any. The Nominating      
Committee will meet periodically, as necessary. During the fiscal year ended    
December 31, 2006, the Nominating Committee held one meeting.                   

Fund Shares Owned By Board Members. The following table shows the dollar amount 
range of each Trustee's "beneficial ownership" of shares of the Funds as of the 
end of the most recently completed calendar year. Dollar amount ranges disclosed
are established by the Securities and Exchange Commission. "Beneficial          
ownership" is determined in accordance with Rule 16a-1(a)(2) under the          
Securities Exchange Act of 1934 ("1934 Act").                                   

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                                                        [Enlarge/Download Table]

Name of Nominee or Trustee or Director   Dollar Range of Equity Securities in   Aggregate Dollar Range of Equity       
                                         the Trust and Master Fund              Securities in All Registered           
                                                                                Investment Companies Overseen by       
                                                                                Nominee or Director in Fund Complex    
                                                                                                                       
Nelson Diaz                              None                                   None                                   
Ernest Jones                             None                                   None                                   
Charles Provini                          [  ]                                   [  ]                                   

Note:      a = None      b = $1 - $10,000      c = $10,001 - $50,000      d = $50,001 - $100,000      e = Over $100,000

COMPENSATION OF THE TRUSTEES                                                    

                        Aggregate                             Total Compensation
                       Compensation                          From the Fund and
Name                    From the Trust and Master Fund*       the Fund Complex  
----                    -------------------------------       ------------------
Antoine Bernheim**      [$3,100]                              [$6,200]          
Frank Coates**          [$3,100]                              [$6,200]          
Timothy Dalton**        [$3,100]                              [$6,200]          
Nelson Diaz             [______]                              [______]          
Ernest Jones            [______]                              [______]          
Marcus Karr***          None                                  [$6,200]          
Charles Provini****     N/A                                   N/A               

* Actually paid during the fiscal year ending December 31, 2006 ** Resigned     
effective September 19, 2006 *** Resigned effective January 24, 2007.           
**** Mr. Provini was not a Director during the calendar year ended December 31, 
2006.                                                                           

Prior to January 24, 2007, the Independent Trustees received an annual retainer 
of $5,000, except that the Chairman of the Board received an annual retainer of 
$7,500. For each in-person meeting, the meeting attendance fee was $300 for     
in-person or telephonic Board meetings. Trustees were not paid for committee    
meetings.                                                                       

Effective January 24, 2007, the Independent Trustees receive an annual retainer 
of $10,000. For each in-person meeting, the meeting attendance fee is $300 for  
in-person or telephonic Board meetings. Trustees are not paid for committee     
meetings. The other Trustees receive no annual or other fees from the Trust. All
Trustees are reimbursed by the Trust for their reasonable out-of-pocket         
expenses. The Trustees do not receive any pension or retirement benefits from   
the Trust.                                                                      

Trust Officers. Set forth below are the names, dates of birth, position with the
Trust, length of term of office, and the principal occupations for the last five
years of each of the persons currently serving as Executive Officers of the     
Trust. Unless otherwise noted, the business address of each Officer is 650 Fifth
Avenue, 17th Floor, New York, New York 10019. None of the Officers receive      
compensation from the Trust for their services.                                 

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                                                        [Enlarge/Download Table]

Name, (Age) and                                          Term of Office                                             
Address During               Position(s)                 and Length of                Principal Occupation(s)       
the Past 5 Years             Held with Fund              Time Served                  During Past 5 Years           
---------------------------  --------------------------- ---------------------------  ------------------------------
                                                                                                                    
Charles Provini              President                   Since January 24, 2007       President and CEO, CRP        
1946                                                                                  Financial                     
650 Fifth Avenue                                                                                                    
17th Floor                                                                                                          
New York, NY 10019                                                                                                  

Markus Karr                  Chief Investment            Since Inception              Managing Director of Asset    
March 22, 1967               Officer, Principal                                       Allocation of the Investment  
650 Fifth Avenue             Financial Officer,                                       Advisor.                      
17th Floor                   Treasurer                                                                              
New York, NY 10019                                                                                                  

Ronald Wilhelm               Chief Operating Officer,    Since Inception              Since December 2005, Chief    
August 13, 1958              Chief Compliance Officer                                 Compliance and Risk           
650 Fifth Avenue                                                                      Management Officer and        
17th Floor                                                                            Director of Operations of     
New York, NY 10019                                                                    the Investment Advisor. June  

                                                                                      2003                          
                                                                                      founding                      
                                                                                      Managing                      
                                                                                      Director                      
                                                                                      of                            
                                                                                      EOS                           
                                                                                      Fund                          
                                                                                      Services                      
                                                                                      LLC.                          
                                                                                      From                          
                                                                                      1998                          
                                                                                      through                       
                                                                                      May                           
                                                                                      2003,                         
                                                                                      manager                       
                                                                                      of                            
                                                                                      operations,                   
                                                                                      compliance                    
                                                                                      oversight,                    
                                                                                      documentation                 
                                                                                      and                           
                                                                                      closing                       
                                                                                      processes                     
                                                                                      for                           
                                                                                      the                           
                                                                                      distressed                    
                                                                                      bank                          
                                                                                      loan                          
                                                                                      trading                       
                                                                                      and                           
                                                                                      sales                         
                                                                                      desk                          
                                                                                      of                            
                                                                                      the                           
                                                                                      Fixed                         
                                                                                      Income                        
                                                                                      Division                      
                                                                                      of                            
                                                                                      Morgan                        
                                                                                      Stanley's                     
                                                                                      New                           
                                                                                      York                          
                                                                                      office.                       

Alaina Metz*                 Secretary                   Since Inception              Vice President of BISYS       
April 1967                                                                            Fund Services                 
3435 Stelzer Road                                                                                                   
Columbus, OH 43219                                                                                                  

Velvet Regan                 Assistant Secretary         Since November 21, 2006      Assitant Counsel, BISYS       
July 1978                                                                             Fund Services, since          
100 Summer Street                                                                     September 2006.  Associate    
Suite 1500                                                                            Attorney, Gilmartin,          
Boston, MA 02110                                                                      Magence, Camiel & Ross LLP,   
                                                                                      from February 2006 through    
                                                                                      September 2006.  Law          
                                                                                      Student 2002-2005.            

*Resigned, effective February 22, 2007.                                         

COMPENSATION OF THE INVESTMENT TEAM AND THE MANAGER                             

Investment Advisor. PARADIGM Global Advisors, LLC serves as Investment Advisor  
to the Funds and also serves as Investment Advisor to the Portfolio. The        
Investment Advisor is responsible for formulating a continuing investment       
program for each Fund. The Trust has entered into an investment management      
agreement with Provident ("Investment Management Agreement") and a sub-advisory 
agreement with the Investment Advisor. The Investment Advisor provides          
management advisory services to the PARADIGM Group of Companies. The principal  
business address of the Investment Advisor is 650 Fifth Avenue, New York, New   
York 10019. As of December 31, 2006, the Investment Advisor and its affiliates, 
managed assets of approximately $[1.8] billion.                                 

The Fund and the Portfolio are both managed by the Investment Advisor. The      
personnel of the Investment Advisor who will initially have primary             
responsibility for management of the Fund and the Portfolio (the "Investment    
Team") are:                                                                     

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Dr. James Park serves as a consultant to the Investment Advisor and 
    chairman of the investment committee and provides advice about strategic
   growth and client relationships for the PARADIGM group of entities. Dr.
 Park holds a PhD in Financial Economics from Columbia Business School
      (October 1995); a J.D. from Harvard and Columbia Law Schools (1987); and a
B.S. in economics with honors from The Wharton School of Finance,   
University of Pennsylvania (1984). From 1991 to 1998, Dr. Park was a
professor of Finance at Long Island University, where he founded the
   Center for Financial Markets Research. Dr. Park also taught at Columbia
      Business School and West Point Military Academy. Dr. Park has authored and
    presented numerous studies and articles on the investment performance of
hedge funds and trading advisors.                                   

    Markus Karr is a Managing Director of Asset Allocation of the Investment
   Advisor and has over ten years investment experience. Mr. Karr received
     his B.S. in computer science and engineering from Massachusetts Institute
     of Technology in June 1989, where he concentrated his studies on modeling
      and simulation design. Mr. Karr was a registered Commodity Trading Advisor
from 1995 to 2002.                                                  

Nikolay Fedorovskiy is a Senior Research Analyst of the Investment  
  Advisor. Mr. Fedorovskiy received his Ph.D. in mathematics from Moscow
   State University with high algebra and computer modeling as his majors.
  Mr. Fedorovskiy has 8 years of experience in practical programming and
  engineering in Russia's Institute of Electric Power Research, where he
   worked on creating programming language for the description of semantic
networks. Mr. Fedorovskiy joined the Investment Advisor in 2000 as a
     senior research analyst and is responsible for development and support of
     a secure online statistical reporting system for the Investment Advisor's
asset allocation team.                                              

Ronald E. Wilhelm is the Chief Compliance and Risk Management Officer and       
Director of Operations of the Investment Advisor. Mr. Wilhelm joined the        
Investment Advisor in December 2005 from EOS Fund Services LLC where he was     
served from June 2003 as a founding Managing Director and provided third-party  
global fund management, operations and administration services and compliance   
oversight to a select group of investment management firms, mutual fund         
companies, endowments and foundations. He also served as a founding Managing    
Director of EOS Compliance Services LLC where he provided outsourced compliance 
programs for and consulting services to registered investment advisers, mutual  
fund companies, hedge funds and hedge funds of funds with combined assets of $15
billion. In that capacity, Mr. Wilhelm acted as named Chief Compliance Officer  
to Investure, LLC, a registered investment adviser (with assets under management
exceeding $2 billion) operating domestic and offshore hedge funds of funds and  
private equity funds. From 1998 through May 2003, he managed the operations,    
compliance oversight, documentation and closing processes for the distressed    
bank loan trading and sales desk of the Fixed Income Division of Morgan         
Stanley's New York office. Mr. Wilhelm was associated with the law firms of     
Parker Chapin Flattau & Klimpl, LLP in New York from 1994 to 1997 and Jones Day 
in Paris, France and Cleveland, Ohio from 1986 to 1993. His practice experience 
primarily included general corporate and business law, mergers and acquisitions,
international corporate law, securities law, finance and banking, and compliance
and regulatory issues. Mr. Wilhelm attended Brigham Young University where he   
obtained the degrees of B.A. summa cum laude, French and International Relations
in1982; M.A., International Relations in 1983; and J.D. cum laude in 1986.      

In addition to the Fund, the Investment Team has the primary responsibility for 
managing the operations of the following investment funds (the "Other Funds"):  

      Investment Funds               Assets Under Management (in millions)
-----------------------------------   ------------------------------------------
PARADIGM Master Fund (Onshore)                     $187,780,136                 
PARADIGM Enhanced Master                            $27,221,155                 
PARADIGM Equities Fund I                            $26,019,019                 
PARADIGM Master Fund (Offshore)                    $180,578,587                 
PARADIGM Asian Fund                                 $21,186,238                 
PARADIGM Public Fund                                 $1,001,006                 
PARADIGM Tax Exempt Fund                               $611,589                 
PARADIGM Equities Fund                             $104,767,197                 
PARADIGM Global Fund                               $191,055,974                 

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The Other Funds may wish to invest with investment managers with which the Fund 
invests or that would be an appropriate investment for the Fund. Because        
investment managers may limit the number of investors in or the size of their   
investment funds or the amount of assets that they manage, the Other Funds may  
compete with the Fund for appropriate investment opportunities.                 

In determining the allocation of such opportunities among the Fund and the Other
Funds, a number of factors may be considered by the Investment Advisor that may 
include, without limitation, the relative size of the Other Funds and the Fund  
and their expected future sizes, the expected future capacity of the applicable 
investment manager, the investment objectives and guidelines, risk tolerance,   
availability of other investment opportunities and available cash for the       
investment of the Fund and the Other funds.                                     

Allocation of investment opportunities with investment managers among the Fund  
and the Other Funds will be made by the Investment Advisor in a manner that it  
considers, in its sole discretion, to be reasonable and equitable over time.    
Allocation among the Other Funds and the Fund in any particular circumstance may
be more or less advantageous to any one fund. The Investment Advisor may        
determine that an investment opportunity or purchases and sales are appropriate 
for one or more of the Other Funds, but not for the Fund, or is appropriate for,
or available to, the Fund but in different sizes, structures, terms or timing   
that is appropriate for others. Therefore, the amount, timing, structuring or   
terms of an investment by the Fund may differ from, and performance may be lower
than, investments and performance of the Other Funds. Although allocating       
investment opportunities with investment managers among the Fund and the Other  
Funds may create potential conflicts of interests because of the interest of the
Investment Advisor in such Other Funds or because the Investment Advisor may    
receive greater fees or compensation from the Other Funds, the Investment       
Advisor will not make allocation decisions based on such interests or such      
greater fees or compensation.                                                   

Manager Principals. Persons responsible for the day-to-day management           
responsibilities of the Fund by Provident are: [ ], [ ] and [ ] (each, a        
"Principal"). [Mr. ] is [President]of the firm and is responsible for [ ]. Prior
to [Provident], [Mr. ] served as [ ] of [company] from [year] to [year]. [Mr. ] 
is [Vice President] of the firm and is responsible for [ ]. Prior to [joining   
Provident], he served as [ ] from [year] to [year].                             

Other Accounts Managed by the Manager. Certain Principals who are primarily     
responsible for the day-to-day management of the Fund also manage other         
registered investment companies, other pooled investment vehicles and other     
accounts, as indicated below. The following tables identify, as of December 31, 
2006: (i) the number of other registered investment companies, pooled investment
vehicles and other accounts managed by these Principals and the total assets of 
such companies, vehicles and accounts; and (ii) the number and total assets of  
such companies, vehicles and accounts with respect to which the advisory fee is 
based on performance.                                                           

The table below includes only those Provident Principals who are primarily      
involved in the portfolio management of the Fund:                               

                                                        [Enlarge/Download Table]

---------------------- ---------------------------- --------------------------- ----------------------------
                            Other Registered         Other Pooled Investment                                
                          Investment Companies         Vehicles Managed by       Other Accounts Managed by  
                          Managed by Principal              Principal                    Principal          
---------------------- ---------------------------- --------------------------- ----------------------------

  Name of Principal       Number     Total Assets     Number     Total Assets      Number     Total Assets  
---------------------- ------------- -------------- ------------ -------------- ------------- --------------
                                                                                                            
[  ]                       [ ]           $[ ]           [ ]          $[ ]           [ ]           $[ ]      
---------------------- ------------- -------------- ------------ -------------- ------------- --------------

[  ]                       [ ]           $[ ]           [ ]          $[ ]           [ ]           $[ ]      
---------------------- ------------- -------------- ------------ -------------- ------------- --------------

[  ]                       [ ]           $[ ]           [ ]          $[ ]           [ ]           $[ ]      
---------------------- ------------- -------------- ------------ -------------- ------------- --------------

[  ]                       [ ]           $[ ]           [ ]          $[ ]           [ ]           $[ ]      
---------------------- ------------- -------------- ------------ -------------- ------------- --------------

Management Fee. The Funds will not pay a Management Fee to the Investment       
Advisor or Manager directly, but each Fund's Shareholders bear an indirect share
of the Management Fee applicable to the Portfolio. Pursuant to its Investment   
Advisory Agreement with the PARADIGM Multi Strategy Fund, LLC, the Manager is   
entitled to receive a monthly management fee (the "Management Fee"), of which a 
sub-advisory fee is paid to the Investment Advisor. The Management Fee is equal 
to 1/12th of 1.25% of the net asset value of each of the Portfolio's Units.     

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For purposes of determining the Management Fee for the Portfolio, net assets    
will be determined by taking into account net realized gain or loss and the net 
change in unrealized appreciation or depreciation of net assets as reported by  
the sponsors of the Underlying Funds. The overall fees payable by the           
Shareholders, including their proportionate share of a Portfolio's Management   
Fees, may be higher than those paid by other registered investment companies but
may be lower than those paid by many private investment funds with similar      
investment policies.                                                            

Board Considerations in Approving the Advisory Agreement. At a special meeting  
on November 21, 2006, the Board, including all of the Independent Directors,    
discussed the Investment Advisory Agreements. At the November 21, 2006 meeting, 
the Board, including all of the Independent Directors, approved the Investment  
Advisory Agreements to take effect following approval by shareholders, and also 
called for a meeting of shareholders to approve the Investment Advisory         
Agreements. In its consideration of the Investment Advisory Agreements, the     
Board, including the Independent Directors, received information about          
Provident. The Board, including the Independent Directors, did not identify any 
single factor as all-important or controlling, but among other factors          
considered the following: (i) that the Investment Advisory Agreements with      
Provident would not result in a material change in the terms of the investment  
advisory agreements, the investment advisory fees, or any of the Fund's         
investment objectives or policies; (ii) the Board received assurances from      
Provident that there would be no reduction in the nature or quality of the      
investment advisory services; and (iii) the Board reviewed information          
concerning Provident's personnel, organization structure, financial information 
and condition, and investment capabilities. The Board noted, however, the       
increase in total expenses ratio as a result of the termination of the expense  
reimbursement agreement. Based on their evaluation of all material factors and  
assisted by the advice of independent counsel for the Independent Directors, the
Board and Independent Directors concluded that the Investment Advisory Agreement
is fair, reasonable and would provide continuity for the Funds, and voted to    
approve it. The Board, including the Independent Directors, also voted to       
approve the submission of the Investment Advisory Agreements to shareholders.   

CONFLICTS OF INTEREST OF THE INVESTMENT TEAM                                    

[TO BE UPDATED]                                                                 
CONFLICTS OF INTEREST OF THE MANAGER                                            

[TO BE UPDATED]                                                                 

OUTSTANDING SECURITIES                                                          

Advantage Series*.                                                              

                                                        [Enlarge/Download Table]

---------------------- ----------------------- ---------------------------- --------------------------------
                                                                             Amount Outstanding Exclusive   
                                                Amount Held by Registrant   of Amount Shown Under Previous  
                         Amount Authorized         of for its Account                   Column              
---------------------- ----------------------- ---------------------------- --------------------------------
                                                                                                            
Shares                 [Unlimited]                        [N/A]                          $[ ]               
---------------------- ----------------------- ---------------------------- --------------------------------

Institutional Series*.                                                          

                                                        [Enlarge/Download Table]

---------------------- ----------------------- ---------------------------- --------------------------------
                                                                             Amount Outstanding Exclusive   
                                                Amount Held by Registrant   of Amount Shown Under Previous  
                         Amount Authorized         of for its Account                   Column              
---------------------- ----------------------- ---------------------------- --------------------------------
                                                                                                            
Shares                 [Unlimited]                        [N/A]                          $[ ]               
---------------------- ----------------------- ---------------------------- --------------------------------

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*As of December 31, 2006.                                                       

As of December 31, 2006, the Fund is not aware of any person who owns of record 
or beneficially 5% of its outstanding interests.                                

CODE OF ETHICS                                                                  

The Trust, the Investment Advisor and the Manager each have adopted codes of    
ethics under Rule 17j-1 of the Investment Company Act that applies to their     
activities. The codes of ethics can 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 the SEC at 1-202-942-8090. The code is
available on the EDGAR database on the SEC's web site at http.//www.sec.gov, and
also may be obtained, after paying a duplicating fee, by electronic request at  
the following email address: publicinfo@sec.gov, or by writing the SEC's Public 
Reference Section, Washington, DC 20549-0102.                                   

BROKERAGE PRACTICES OF THE PORTFOLIO                                            

The Funds do not expect to buy and sell securities, except for interests in the 
Portfolio. The Investment Advisor seeks to execute each transaction in          
Underlying Funds at a net price that provides the most favorable cost for the   
Portfolio. It is anticipated that most transactions in Underlying Fund interests
on behalf of the Portfolio will be conducted on a private placement basis and   
may be subject to commissions or placement agent fees payable to one or more    
broker. In this regard, the Investment Advisor will generally be unable to seek 
competitive fees payable in such transactions.                                  

The investment decisions for the Funds and the Portfolio are made independently 
from those for other accounts managed by the Investment Advisor. The Investment 
Advisor and its affiliates have other clients and other accounts with investment
objectives similar to those of the Funds and the Portfolio. The Investment      
Advisor and its affiliates are permitted to make an investment decision on      
behalf of the Funds and the Portfolio that differ from decisions made for, or   
advice given to, such other accounts and clients even though the investment     
objectives may be the same or similar, provided that the Investment Advisor or  
its affiliates act in good faith and follow a policy of allocating over a period
of time investment opportunities to the Funds and the Portfolio on a basis      
intended to be fair and equitable relative to such other accounts and clients,  
taking into consideration the investment policies and investment restrictions to
which such other accounts and clients and the Funds and the Portfolio are       
subject. Neither the Investment Advisor nor its affiliates are obligated to     
treat the Funds or the Portfolio more favorably than accounts and clients.      

The Investment Advisor may retain the services of consultants and sub-advisers, 
which may be affiliates, when the Investment Advisor determines it to be        
appropriate.                                                                    

VOTING                                                                          

Each Shareholder has the right to cast a number of votes based on the value of  
the Shareholder's shares at a meeting of Shareholders called by the Board of    
Trustees or by Shareholders holding 25% or more of the total number of votes    
eligible to be cast. Shareholders will be entitled to vote on any matter on     
which shareholders of a registered investment company organized as a corporation
would normally be entitled to vote, including election of Trustees, approval of 
the Investment Advisory Agreement, and approval of the Trust's auditors, and on 
certain other matters. Except for the exercise of their voting privileges,      
Shareholders in their capacity as such are not entitled to participate in the   
management or control of the Trust's business, and may not act for or bind the  
Trust.                                                                          

PROXY VOTING POLICIES AND PROCEDURES                                            

The Fund invests substantially all of its assets in the Portfolio, which in turn
invests substantially all of its assets in the securities of Underlying Funds.  
The Underlying Funds are privately placed investment vehicles, typically        
referred to as "hedge funds." These securities do not typically convey          
traditional voting rights to the holder and the occurrence of corporate         
governance or other notices of this type of investment is substantially less    
than that encountered in connection with the registered equity securities. On   
occasion, however, the Investment Advisor and/or the Portfolio may have received
notices from the Underlying Funds seeking the consent of holders in order to    
change certain rights within the structure of the security itself or change     
terms of the Underlying Fund's limited partnership agreement, limited liability 
company operating agreement or similar agreement with investors. To the extent  
that the Portfolio receives notices or proxies from Underlying Funds (or        
received proxy statements or similar notices in connection with any other       
portfolio securities), the Portfolio has delegated proxy voting responsibilities
with respect to the Portfolio's portfolio securities to the Investment Advisor, 
subject to the Board of Directors' oversight and with the direction that proxies
should be voted in the Fund's best interest. See "Appendix A."                  

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The Fund will be required to file annually with the SEC Form N-PX by August 31  
of each year, containing its complete proxy voting record for the twelve months 
ended June 30. The Fund's Form N-PX filing will be available: (i) without       
charge, upon request, by calling the Fund at [ ] or (ii) by visiting the SEC's  
website at www.sec.gov.                                                         

TAXES                                                                           

The following U.S. federal income tax discussion is based on provisions of the  
Internal Revenue Code of 1986, as amended (the "Code"), existing Treasury       
regulations, rulings published by the IRS and other applicable authority as of  
the date of this SAI. These authorities are subject to change by legislative or 
administrative action. The following discussion is only a summary of some of the
important tax considerations generally applicable to investments in a Fund.     
There may be other tax considerations applicable to particular investors, and   
therefore investors should consult with their own tax advisers about the tax    
consequences of an investment in a Fund in light of each investor's particular  
tax situation. In addition, income earned through an investment in the Fund may 
be subject to state, local, or foreign taxes.                                   

Taxation of the Funds. Each Fund intends to qualify each year for treatment as a
regulated investment company under the provisions of Subchapter M of the Code.  
To qualify for the special tax treatment accorded regulated investment companies
and their shareholders, a Fund must, among other things:                        

 (a) derive at least 90% of its gross income from dividends, interest,
payments with respect to certain securities loans, and gains from the sale of   
stock, securities and foreign currencies, or other income (including but not    
limited to gains from options, futures, or forward contracts) derived with      
respect to its business of investing in such stock, securities, or currencies;  

    (b) distribute with respect to each taxable year at least 90% of the sum
of its taxable net investment income, its net tax-exempt income, and the excess,
if any, of net short-term capital gains over net long-term capital losses for   
such year (the "Distribution Test"); and                                        

      (c) diversify its holdings so that, at the end of each fiscal quarter, (i)
at least 50% of the market value of the Fund's assets is represented by cash and
cash items, U.S. government securities, securities of other regulated investment
companies, and other securities limited in respect of any one issuer to a value 
not greater than 5% of the value of the Fund's total assets and not more than   
10% of the outstanding voting securities of such issuer, and (ii) not more than 
25% of the value of the Fund's assets is invested in the securities (other than 
those of the U.S. Government or other regulated investment companies) of any one
issuer or of two or more issuers which the Fund controls and which are engaged  
in the same, similar, or related trades or businesses (the "Diversification     
Test").                                                                         

If a Fund qualifies as a regulated investment company under the Code, the Fund  
will not pay any federal income tax on the income and gains it distributes in a 
timely manner to Shareholders. As described in Part A of this Registration      
Statement, the Fund expects to purchase U.S. Government securities prior to the 
end of each fiscal quarter in an amount such that the Fund's total assets will  
meet the Diversification Test, and then sell such U.S. Government securities    
promptly following the end of each such fiscal quarter.                         

If a Fund failed to qualify as a regulated investment company under the Code in 
any taxable year (for example, by failing to satisfy either the Distribution    
Test or the Diversification Test), the Fund would be subject to tax on its      
taxable income at corporate rates, and all distributions from earnings and      
profits, including any distributions of net tax-exempt income and net long-term 
capital gains, would be taxable to Shareholders as ordinary income. In addition,
the Fund could be required to recognize unrealized gains, pay substantial taxes 
and interest and make substantial distributions before requalifying as a        
regulated investment company that is accorded special tax treatment.            

A Fund may retain its net capital gain for investment. However, if a Fund       
retains any net capital gain or any investment company taxable income, it will  
be subject to tax at regular corporate rates on the amount retained. If a Fund  
retains any net capital gain, it may designate the retained amount as           
undistributed capital gains in a notice to its Shareholders who, if subject to  
federal income tax on long-term capital gains, (i) will be required to include  
in income for federal income tax purposes, as long-term capital gain, their     
share of such undistributed amount, and (ii) will be entitled to credit their   
proportionate shares of the tax paid by the Fund on such undistributed amount   
against their federal income tax liabilities, if any, and to claim refunds to   
the extent the credit exceeds such liabilities. For federal income tax purposes,
the tax basis of Shares owned by a Shareholder of the Fund will be increased by 
an amount equal under current law to the difference between the amount of       
undistributed capital gains included in the Shareholder's gross income and the  
tax deemed paid by the Shareholder under clause (ii) of the preceding sentence. 

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The Fund intends to distribute at least annually to its Shareholders all or     
substantially all of its investment company taxable income and net capital gain.

If a Fund fails to distribute in a calendar year at least an amount equal to the
sum of 98% of its ordinary income for such year and 98% of its capital gain net 
income for the one-year period ending December 31, plus any retained amount from
the prior year, the Fund will be subject to a nondeductible 4% excise tax on the
undistributed amounts. A dividend paid to Shareholders in January of a year will
be treated as paid on December 31 of the preceding year, if the dividend was    
declared and payable to Shareholders of record on a date in October, November,  
or December of that preceding year. The Funds intend generally, but may not     
always be able, to make distributions sufficient to avoid imposition of the 4%  
excise tax. A Fund may not be able to avoid the excise tax if one or more of the
Underlying Funds fails to provide timely information to the Portfolio in which  
the Fund invests and in turn the Portfolio is unable to provide such information
to the Fund for the Fund to determine the amount of distributions necessary to  
avoid the excise tax. Further, the IRS has publicly ruled that notwithstanding  
the general rule that the taxable income of a partner in a partnership is based 
on the partner's distributive share of partnership items of income, gain, loss, 
and deduction for any partnership taxable year that ends within or with the     
partner's taxable year, a regulated investment company that is a partner in a   
partnership must generally determine its required distribution under the excise 
tax provisions of the Code by taking into account its share of partnership items
at the time it would have taken them into account if it directly held the       
partnership assets underlying the share. As a result, if the Fund's taxable year
is different than the taxable year of the Portfolio or one or more of the       
Underlying Funds in which the Portfolio invests, the Fund may be treated as     
having income that must be distributed to avoid the excise tax, but may not be  
treated as having enough income to make distributions in the amount necessary to
avoid incurring the excise tax. Tax years of entities taxable as partnerships,  
such as the Portfolio and the Underlying Funds, may change under complex rules  
under the Code which depend, in part, on the tax years of the members or        
partners of such entities (the composition of which may change over time).      

Fund Distributions. Distributions from the Funds will be taxable to Shareholders
as ordinary income to the extent derived from investment income and net         
short-term capital gains. Distributions of net capital gains (that is, the      
excess of net gains from the sale of capital assets held for more than one year 
by a Fund over net losses from the sale of capital assets held for not more than
one year by the Fund) will be taxable to Shareholders as such, regardless of how
long a Shareholder has held the Shares. Distributions by a Fund to a Shareholder
who qualifies for tax-exempt status under Federal income tax rules will not be  
taxable. Special tax rules apply to investments by such a Shareholder. Such a   
Shareholder should consult its tax adviser to determine the suitability of an   
investment in the Funds and the tax treatment of distributions from the Funds.  

Dividend and capital gains distributions will be taxable as described above     
whether received in cash or reinvested in additional Shares. Such distributions 
will be taxable to Shareholders in the calendar year in which the distributions 
are declared, rather than the calendar year in which the distributions are      
received. A Shareholder whose distributions are reinvested in Shares will be    
treated as having received a dividend equal to the fair market value of the new 
Shares issued to the Shareholder, or the amount of cash allocated to the        
Shareholder for the purchase of Shares on its behalf.                           

As required by federal law, detailed federal tax information reporting,         
including the amount and nature of ordinary income distributions and            
distributions of net capital gains, will be furnished to each Shareholder for   
each calendar year on or before January 31 of the succeeding year.              

An investment in a Fund may in some circumstances result in liability for       
federal alternative minimum tax for Shareholders.                               

Return of Capital Distributions. If a Fund makes a distribution to a Shareholder
in excess of its current and accumulated earnings and profits in any taxable    
year, the excess distribution will be treated as a return of capital to the     
extent of such Shareholder's tax basis in his or her Shares, and thereafter as  
capital gain. A return of capital is not taxable, but it reduces the            
Shareholder's tax basis in his or her Shares, thus reducing any loss or         
increasing any gain on a subsequent taxable disposition by the Shareholder of   
his or her Shares.                                                              

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Dividends and distributions on the Shares are generally subject to federal      
income tax as described herein to the extent they do not exceed a Fund's current
and accumulated earnings and profits, even though such dividends and            
distributions may economically represent a return of a particular Shareholder's 
investment. Such distributions are likely to occur in respect of Shares         
purchased at a time when a Fund's net asset value reflects gains that are either
unrealized, or realized but not distributed. Such realized gains may be required
to be distributed even when a Fund's NAV also reflects unrealized losses.       

Distributions are taxable to a Shareholder even if they are paid from income or 
gains earned by a Fund prior to the Shareholder's investment (and thus included 
in the price paid by the Shareholders).                                         

Capital Loss Carryover. Distributions from capital gains are generally made     
after applying any available capital loss carryovers.                           

Treatment of Certain Expenses. If a Fund has fewer than 500 persons at any time 
during a calendar year, for federal income tax purposes, individuals and certain
trusts or estates that hold shares in the Fund (directly or through a           
partnership, S corporation or grantor trust) will be treated as receiving an    
additional dividend equal to their share of certain Fund expenses that are      
treated as "miscellaneous itemized deductions" for federal income tax purposes  
(including, for example, custodian fees) and as having paid such expenses       
themselves. For this purpose, such expenses generally would equal the excess of 
the total expenses deductible for purposes of determining the Fund's investment 
company taxable income over the sum of expenses relating to the organization and
administration of the Fund and the Fund's net operating loss (determined without
regard to the dividends-paid deduction and net capital gains), if any. Because  
Shareholders treated as receiving any additional dividend and as having paid    
such expenses may deduct such expenses in a taxable year only to the extent that
their respective aggregate miscellaneous itemized deductions for the year exceed
2% of their respective adjusted gross income for the year, all or a portion of  
the above expenses may not be deductible for certain Shareholders in certain    
taxable years.                                                                  

Sale or Repurchase of Shares. The sale or repurchase of Shares may give rise to 
a gain or loss. Present law taxes both long-term and short-term capital gains of
corporations at the rates applicable to ordinary income. For non-corporate      
taxpayers, pursuant to recently enacted tax legislation short-term capital gains
and ordinary income will be taxed at a maximum rate of 38.6% for tax years      
beginning in 2002 (which such maximum rate shall be reduced to 35% over a       
five-year phase-in period and shall be 39.6% for tax years beginning after      
December 31, 2010 unless Congress provides otherwise) while long-term capital   
gains will generally be taxed at a maximum rate of 20%. Because of certain      
limitations on itemized deductions and the deduction for personal exemptions    
applicable to higher income taxpayers, the effective rate of tax may be higher  
in certain circumstances. In general, any gain or loss realized upon a taxable  
disposition of Shares will be treated as long-term capital gain or loss if the  
Shares have been held for more than 12 months. Otherwise the gain or loss on the
taxable disposition of Shares will be treated as short-term capital gain or     
loss. Any loss realized upon a taxable disposition of Shares held for six months
or less but not disallowed as provided in the following sentence will be treated
as long-term, rather than short-term, to the extent of any long-term capital    
gain distributions received by the Shareholder with respect to the Shares. All  
or a portion of any loss realized upon a taxable disposition of Shares will be  
disallowed if other Shares are purchased within 30 days before or after the     
disposition. In such a case, the basis of the newly purchased Shares will be    
adjusted to reflect the disallowed loss.                                        

From time to time a Fund may offer to repurchase Shares. A tendering Shareholder
who tenders all Shares held, or considered under certain attribution rules of   
the Code to be held, by such Shareholder will be treated as having sold its     
Shares and generally will realize a capital gain or loss. If a Shareholder      
tenders fewer than all of its Shares, such Shareholder may be treated as having 
received a taxable dividend upon the tender of its Shares. In such a case, there
is a remote risk that non-tendering Shareholders will be treated as having      
received taxable distributions from the Fund. Likewise, if a Fund redeems some  
but not all of the Shares held by a Shareholder and such Shareholder is treated 
as having received a taxable dividend upon such redemption, there is a remote   
risk that non-redeeming Shareholders will be treated as having received taxable 
distributions from the Fund. To the extent that a Fund recognizes net gains on  
the liquidation of its investments to meet such tenders of Shares, the Fund will
be required to make additional distributions to its Shareholders.               

Hedging Transactions. If the Underlying Funds engage in hedging transactions,   
including hedging transactions in options, futures contracts, and straddles, or 
other similar transactions, a Fund will be subject to special tax rules         
(including constructive sale, mark-to-market, straddle, wash sale, and short    
sale rules), the effect of which may be to accelerate income to the Fund, defer 
losses to the Fund, cause adjustments in the holding periods of the securities  
that the Fund holds through an Underlying Fund, convert long-term capital gains 
into short-term capital gains or convert short-term capital losses into         
long-term capital losses. These rules could therefore affect the amount, timing 
and character of distributions to Shareholders. The Funds will endeavor to make 
any available elections pertaining to such transactions in a manner believed to 
be in the best interests of the Funds.                                          

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Certain of the Funds' hedging activities (e.g., through an Underlying Fund) are 
likely to produce a difference between its book income and the sum of its net   
tax-exempt and taxable income. If a Fund's book income exceeds the sum of its   
net tax-exempt and taxable income, the distribution (if any) of such excess will
be treated as (i) a taxable dividend to the extent of the Fund's remaining      
earnings and profits (including earnings and profits arising from tax-exempt    
income), (ii) thereafter as a return of capital to the extent of the recipient's
basis in the Shares, and (iii) thereafter as gain from the sale or exchange of a
capital asset. If a Fund's book income is less than the sum of its net          
tax-exempt and taxable income, the Fund could be required to make distributions 
exceeding book income to qualify as a regulated investment company that is      
accorded special tax treatment.                                                 

Securities Issued or Purchased at a Discount. Investments by a Fund, the        
Portfolio or any Underlying Fund in which it invests in securities issued at a  
discount and certain other obligations will (and investments in securities      
purchased at a discount may) require the Fund to accrue and distribute income   
not yet received. In order to generate sufficient cash to make the requisite    
distributions, a Fund may make such distributions from its cash assets, by      
entering into a line of credit or by liquidating its investments. A Fund may    
realize gains or losses from such liquidations. To the extent that a Fund       
realizes net capital gains from such transactions, its Shareholders may receive 
a larger capital gain distribution, if any, than they would in the absence of   
such transactions.                                                              

Foreign Currency Transactions. Transactions by any Underlying Fund in foreign   
currencies, foreign currency-denominated debt obligations and certain foreign   
currency options, futures contracts and forward contracts (and similar          
instruments) may give rise to ordinary income or loss to the extent such income 
or loss results from fluctuations in the value of the foreign currency          
concerned.                                                                      

Foreign Taxation. Income received by the Underlying Funds from sources within   
foreign countries may be subject to withholding and other taxes imposed by such 
countries. Tax conventions between certain countries and the U.S. may reduce or 
eliminate such taxes.                                                           

Passive Foreign Investment Companies. Investments by the Underlying Funds in an 
entity which is a "passive foreign investment company" (a "PFIC") could subject 
the Portfolio, and indirectly the Fund, to a U.S. federal income tax (including 
interest charges) on distributions received from the PFIC (directly or through  
the Underlying Fund), which tax cannot be eliminated by making distributions to 
Fund Shareholders. If a Fund invests in a PFIC through an Underlying Fund that  
is not a U.S. person within the meaning of the Code, certain election may be    
made to treat a PFIC as a "qualified electing fund" ("QEF election"), in which  
case the Underlying Fund will be required to include its share of the PFIC's    
income and net capital gains annually, regardless of whether it receives any    
distribution from the PFIC. The Underlying Fund also may make an election to    
mark the gains (and to a limited extent losses) in such holdings "to the market"
as though it had sold and repurchased its holdings in those PFICs on the last   
day of the Underlying Fund's taxable year. Such gains and losses are treated as 
ordinary income and loss. The QEF and mark-to-market elections may accelerate   
the recognition of income (without the receipt of cash) and increase the amount 
ultimately required to be distributed for the Fund to avoid taxation. If an     
Underlying Fund makes these elections, it may result in the Fund having to      
liquidate other investments (including when it is not advantageous to do so) to 
meet its distribution requirement, which also may accelerate the recognition of 
gain and affect the Fund's total return.                                        

Non-U.S. Shareholders. Under U.S. federal tax law, dividends other than capital 
gains dividends paid on Shares beneficially held by a person who is a "foreign  
person" within the meaning of the Code, are, in general, subject to withholding 
of U.S. federal income tax at a rate of 30% of the gross dividend, which may, in
some cases, be reduced by an applicable tax treaty. Dividends are subject to    
withholding even if they are funded by income or gains (such as portfolio       
interest, short-term capital gains, or foreign-source dividend and interest     
income) that, if paid to a foreign person directly, would not be subject to     
withholding. If a beneficial holder who is a foreign person has a permanent     
establishment in the United States, and the Shares held by such beneficial      
holder are effectively connected with such permanent establishment, and in      
addition, the dividends are effectively connected with the conduct by the       
beneficial holder of trade or business in the United States, the dividend will  
be subject to U.S. federal net income taxation at regular income tax rates.     

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Distributions of long-term net realized capital gains will not be subject to    
withholding of U.S. federal income tax.                                         

Under U.S. federal tax law, a beneficial holder of Shares who is a foreign      
person is not, in general, subject to U.S. federal income tax on gains (and is  
not allowed a deduction for losses) realized on the sale of such Shares unless  
(i) the Shares in question are effectively connected with a permanent           
establishment in the United States of the beneficial holder and such gain is    
effectively connected with the conduct of a trade or business carried on by such
holder within the United States or (ii) in the case of an individual holder, the
holder is present in the United States for a period or periods aggregating 183  
days or more during the year of the sale and certain other conditions are met.  

A beneficial holder of Shares who is a foreign person may be subject to state   
and local tax and to the U.S. federal estate tax in addition to the federal tax 
on income referred to above.                                                    

Withholding. A Fund generally is required to withhold and remit to the U.S.     
Treasury a percentage of the taxable dividends and other distributions paid to, 
and the proceeds of Share sales, repurchases or redemptions made by, any        
individual Shareholder who fails to properly furnish the Fund with a correct    
taxpayer identification number (TIN), who has under-reported dividend or        
interest income, or who fails to certify to the Fund that he or she is not      
subject to such withholding. Pursuant to recently enacted tax legislation, the  
backup withholding tax rate will be (i) 30% for amounts paid during 2002 and    
2003, (ii) 29% for amounts paid during 2004 and 2005, and (iii) 28% for amounts 
paid during 2006 through 2010. This legislation will expire and the backup      
withholding rate will be 31% for amounts paid after December 31, 2010, unless   
Congress enacts tax legislation providing otherwise.                            

U.S. Treasury Regulations affecting the application to foreign investors of the 
backup withholding and withholding tax rules generally become effective for     
payments made after December 31, 2000. In some circumstances, the new rules     
increase the certification and filing requirements imposed on foreign investors 
in order to qualify for exemption from the backup withholding tax and for       
reduced withholding tax rates under income tax treaties. Foreign investors in   
the Fund should consult their tax advisers with respect to the application of   
these new regulations to their respective investment in the Fund.               

ERISA CONSIDERATIONS                                                            

Prudence and Diversification. Before authorizing an investment in Shares of a   
Fund, fiduciaries of a pension, profit sharing or other employee benefit plan   
subject to the Employee Income Security Act of 1974, as amended, ("ERISA Plans")
should consider (i) whether the investment in such Shares satisfies the prudence
and diversification requirements of Section 404 of ERISA, and (ii) whether such 
fiduciaries have authority to acquire such Shares under the plan's investment   
policies and appropriate governing instruments (including Title I of ERISA). If 
a fiduciary of an ERISA Plan breaches its responsibilities in selecting an      
investment or an investment course of action for such ERISA Plan, the fiduciary 
may be held personally liable for losses incurred by the ERISA Plan as a result 
of such breach. Accordingly, the Investment Advisor requires all ERISA Plans    
proposing to invest in a Fund to represent, among other things, that: (i) it is 
aware and understands, and any fiduciaries responsible for the Plan's           
investments are aware and understand the Fund's investment objective, policies  
and strategies; (ii) the decision to invest assets of the ERISA Plan in the Fund
was made with appropriate consideration of relevant investment factors with     
regard to the ERISA Plan; and (iii) the fiduciary making the investment decision
on behalf of the ERISA Plan met its fiduciary duties and obligations as imposed 
by ERISA in making the decision to invest assets of the ERISA Plan in the Fund. 

Also, fiduciaries of an individual retirement account ("IRA"), a Keogh plan or  
other "plan" described in Section 4975(e)(1) of the Code that is not otherwise  
subject to Title I of ERISA (collectively "Tax-Qualified Plans"), should        
consider that a Tax-Qualified Plan may only make investments that are authorized
by the appropriate governing instruments.                                       

Because the Trust is registered as an investment company under the Investment   
Company Act, the underlying assets of each Fund should not be considered to be  
"plan assets" of any Plan investing in a Fund for purposes of the fiduciary     
rules under ERISA and the prohibited transaction rules under ERISA and the Code.
Thus, neither the Investment Advisor nor any of its affiliates will be          
fiduciaries with respect to any ERISA Plans or Tax-Qualified Plans              
(collectively, "Plans") investing in a Fund based solely on the Investment      
Advisor's investment management of the Fund's assets.                           

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Decision To Invest In Shares. Certain prospective Plan investors may currently  
maintain relationships (i.e., investment management, investment advisory or     
other services) with the Investment Advisor (or an affiliate thereof). Each such
affiliated person may be deemed to be a party in interest (or disqualified      
person) and/or a fiduciary with respect to such prospective Plan investor.      
Generally, ERISA prohibits (and the Code penalizes) the use of Plan assets for  
the benefit of a party in interest (or disqualified person) and also prohibits  
(or penalizes) a Plan fiduciary for using its position to cause a Plan to make  
an investment from which the fiduciary or a third party in which the fiduciary  
has an interest would receive a fee or other consideration. Accordingly,        
fiduciaries of Plans will be required to represent that the decision to invest  
in a Fund was made by a fiduciary independent of such affiliated persons, that  
such fiduciaries are duly authorized to make such investment decisions and that 
they have not relied upon any individualized advice or recommendation of such   
affiliated persons as a primary basis for the decision to invest in the Fund.   

In short, it is the responsibility of any fiduciary or other person with        
investment responsibilities over the assets of a Plan considering an investment 
in the Shares of a Fund to see that the above factors have been carefully       
considered before making an investment. Moreover, because the provisions of     
ERISA and the related provisions of the Code are highly technical and subject to
extensive and varying administrative and judicial interpretation and review,    
Plan fiduciaries considering an investment in a Fund should consult with their  
own counsel and advisors regarding the impact of ERISA and the related          
provisions of the Code.                                                         

DESCRIPTION OF SHARES                                                           

The Declaration of Trust authorizes the issuance of an unlimited number of      
series and shares of each series. Each share of a series represents an equal    
proportionate interest in that series with each other share. Upon liquidation,  
shares are entitled to a pro rata share in the net assets of the series. The    
Declaration of Trust provides that the Trustees of the Trust may create         
additional series of shares or separate classes of series. All consideration    
received by the Trust for shares of any series and all assets in which such     
consideration is invested would belong to that series and would be subject to   
the liabilities related thereto. Share certificates representing shares will not
be issued.                                                                      

LIMITATION OF TRUSTEES' LIABILITY                                               

The Declaration of Trust provides that a Trustee shall be liable only for his   
own willful defaults and, if reasonable care has been exercised in the selection
of officers, agents, employees or investment advisers, shall not be liable for  
any neglect or wrongdoing of any such person. The Declaration of Trust also     
provides that the Trust will indemnify its Trustees and officers against        
liabilities and expenses incurred in connection with actual or threatened       
litigation in which they may be involved because of their offices with the Trust
unless it is determined in the manner provided in the Declaration of Trust that 
they have not acted in good faith in the reasonable belief that their actions   
were in the best interests of the Trust. However, nothing in the Declaration of 
Trust shall protect or indemnify a Trustee against any liability for his willful
misfeasance, bad faith, gross negligence or reckless disregard of his duties.   

OTHER SERVICE PROVIDERS                                                         

Administrator and Transfer Agent. BISYS Fund Services Ohio, Inc. (the           
"Administrator"), a Delaware corporation, serves as the administrator and       
transfer agent for the Portfolio and the Trust. It provides general             
administration related services, including those relating to valuation of the   
Portfolio's and each Fund's assets. The Administrator is located at 3435 Stelzer
Road, Columbus, Ohio 43219.                                                     

Custodian and Dividend Paying Agent. J.P. Morgan Trust Company, N.A. (the       
"Custodian"), a limited purpose trust company incorporated under the laws of    
Delaware, serves as the primary custodian of the Portfolio's and each Fund's    
assets, and may maintain custody of the Portfolio's and each Fund's assets with 
domestic and foreign subcustodians (which may be banks, trust companies,        
securities depositories and clearing agencies) selected by the Investment       
Advisor. Assets of the Portfolio and the Funds are not held by the Investment   
Advisor or commingled with the assets of other accounts other than to the extent
that securities are held in the name of a custodian in a securities depository, 
clearing agency or omnibus customer account of such custodian. The Custodian's  
principal business address is 2220 Chemsearch Blvd., Suite 150, Irving, Texas   
75062.                                                                          

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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM AND LEGAL COUNSEL                 

Briggs, Bunting & Dougherty LLP ("Briggs") serves as the independent registered 
public accounting firm of the Trust. Its principal business address is Two Penn 
Center Plaza, Philadelphia, Pennsylvania 19102. Briggs provides audit services, 
tax return preparation and assistance, and consultation in connection with      
certain SEC filings.                                                            

Tannenbaum Helpern Syracuse & Hirschtritt LLP acts as legal counsel to the      
Trust. Its principal business address is 900 Third Avenue, New York, New York   
10022.                                                                          

FISCAL YEAR                                                                     

Fiscal Year. The Trust's fiscal year ends on December 31st.                     

DISCLOSURE OF PORTFOLIO HOLDINGS                                                

Information regarding portfolio holdings may be made available to third parties 
in the following circumstances:                                                 

- Through disclosure in a Fund's latest annual or semi-annual report or Form    
N-Q;                                                                            

- In marketing and other materials, provided that the information regarding     
portfolio holdings contained therein is at least fifteen days old; or           

- When a Fund has a legitimate business purpose for doing so (see example       
below), and either the recipients are subject to a confidentiality agreement or 
the Board has determined that the policies of the recipient are adequate to     
protect the information that is disclosed. Such disclosures will be authorized  
by the Fund's Chief Executive Officer or Chief Financial Officer and will be    
reported periodically to the Board.                                             

When it has been determined that a legitimate business purpose exists for the   
disclosure of portfolio holdings, the disclosure is considered to be in the best
interests of shareholders, and conflicts of interest between the Fund's         
shareholders, investment adviser, principal underwriter, or any affiliated      
person of the Funds, are addressed through the imposition of a duty of          
confidentiality on the recipient of the information.                            

Examples of instances in which a legitimate business purpose exists for the     
selective disclosure of portfolio securities include: for due diligence purposes
to an investment adviser that is in merger or acquisition talks with the Fund's 
adviser, to a newly hired investment adviser or sub-adviser prior to commencing 
its duties, and to a performance reporting bureau or rating agency for use in   
developing a rating.                                                            

It is the policy of the Fund to not disclose material information about its     
portfolio holdings, trading strategies implemented or to be implemented, or     
pending transactions to third parties other than the Fund's service providers.  
The Fund's service providers are prohibited from disclosing to other third      
parties material information about the Fund's portfolio holdings, trading       
strategies implemented or to be implemented, or pending transactions. However,  
the Fund may provide information regarding its portfolio holdings to its service
providers where relevant to duties to be performed for the Fund. The Board of   
Trustees has determined that disclosure under such circumstances is in the best 
interests of shareholders because it is necessary to the Fund's operation, and  
it is subject to a confidentiality requirement. Such service providers include  
fund accountants (currently, BISYS), administrators (currently, BISYS),         
investment advisers and sub-advisers (currently, Provident and PGA), custodians 
(currently, JP Morgan Trust Company NA), independent public accountants         
(currently, Briggs), and attorneys (currently, Tannenbaum Helpern Syracuse &    
Hirschtritt LLP).                                                               

In no event shall information regarding the Fund's portfolio holdings be        
disclosed for compensation.                                                     

The frequency with which information regarding the Fund's portfolio holdings    
will be disclosed, as well as the lag time associated with such disclosure, will
vary depending on such factors as the circumstances of the disclosure and the   
reason therefor.                                                                

Other than the service provider arrangements discussed above, the Fund does not 
have in place any ongoing arrangements to provide information regarding         
portfolio holdings to any person.                                               

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INQUIRIES                                                                       

Inquiries concerning the Funds (including procedures for purchasing shares)     
should be directed to:                                                          

PARADIGM Global Advisors LLC                                                    
650 Fifth Avenue, 17th Floor                                                    
New York, NY 10019                                                              

Any Shareholder may request from the Manager an estimate, based on unaudited    
data, of the net asset value of the Fund as of the end of any calendar month.   
Such requests may be made by calling (212) 271-3388.                            

FINANCIAL STATEMENTS                                                            

The Fund's audited financial statements dated December 31, 2006, the Portfolio's
audited financial statements dated December 31, 2006, and the registered public 
accountant's reports thereon are set forth in the following pages. [Report of   
auditor and financial statements - to be furnished by separate post-effective   
amendment.]                                                                     

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APPENDIX A

PARADIGM MULTISTRATEGY FUND I, LLC
PARADIGM FUNDS TRUST
 (THE "FUNDS")

PROXY VOTING POLICY AND PROCEDURES

GENERAL POLICY

     It is the policy of PARADIGM Global Advisors, LLC ("Advisor") to consider
and vote each proxy proposal in the best interests of clients and account       
beneficiaries with respect to securities held in the accounts of clients for    
whom Advisor provides discretionary investment management services and have     
authority to vote their proxies.                                                

    The Advisor may vote proxies as part of its authority to manage, acquire
and dispose of account assets. The Advisor will not vote proxies if the advisory
agreement does not provide for the Advisor to vote proxies or the "named        
fiduciary" for an account has explicitly reserved the authority for itself.     

     When voting proxies for client accounts, the Advisor primary objective is
to make voting decisions solely in the best interests of clients and account    
beneficiaries. In fulfilling its obligations to clients, the Advisor will act in
a manner deemed to be prudent and diligent and which is intended to enhance the 
economic value of the underlying securities held in client accounts. If         
appropriate to do so, the Advisor may employ an independent service provider to 
vote a proxy or to advise in the voting of a proxy. In certain situations, a    
client or its fiduciary may provide the Advisor with a statement of proxy voting
policy. In these situations, the Advisor will generally seek to comply with such
policy to the extent it would not be inconsistent with the fiduciary            
responsibility of the Advisor.                                                  

PROCEDURES FOR VOTING PROXIES                                                   

   These procedures are adopted pursuant to the policy cited above and are
hereby delegated to the Proxy Committee. The Proxy Committee may consist of     
executive, investment, compliance, legal and operations personnel. The Proxy    
Committee will review these procedures on a yearly basis and make such changes  
as it believes are necessary to maintain compliance with applicable federal     
securities regulations.                                                         

Evaluation and Voting                                                           

    The Proxy Committee shall designate one or more employees of the Advisor
(each a "designated employee") to review each proxy received by the Advisor for 
which the Advisor has the responsibility to vote and to ensure that all proxies 
are voted according to the Advisor's guidelines.                                

1.    The issues presented in the proxy materials;                  

2.    The interests of the Advisor, if any, in those issues;        

3.    How the proxy will be voted; and                              

      The record will include any external conversations and copies of all other
materials that were material to the evaluation and recommendation made by the   
designated employee. Where an apparent conflict of interest exists, or where the
designated employee requires additional guidance, the nature and circumstances  
of the proxy will be brought to the attention of the Proxy Committee, which will
determine how the proxy will be voted.                                          

      In cases where a client has asked the Advisor for advice with respect to a
proxy, the designated employee will submit a memorandum containing the          
recommendation to the Proxy Committee, which will:                              

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1.    Endorse the memorandum for delivery to the client;            

2.    Return the memorandum for further consideration; or           

3.    In the case of a potential conflict of interest or basic      
            disagreement about the voting of the proxy, submit the memorandum to
         the Investment Policy Committee for direction with respect to the
           advice the Advisor should provide to the client with respect to the
proxy.                                                  

Conflicts of Interest                                                           

    The Advisor will maintain a list of those companies which issue publicly
traded securities and with which affiliates of the Advisor has such a           
relationship that proxies presented with respect to those companies may, or may 
be perceived to give rise to a conflict of interest between the Advisor and its 
clients.                                                                        

     The term "conflict of interest" refers to a situation in which affiliates
of the Advisor has a financial interest in a matter presented by a proxy other  
than the obligation the Advisor incurs as investment adviser and any other      
client which may compromise the Advisor freedom of judgment and action with     
respect to the voting of the proxy. Examples of such a situation include:       

1.    Companies affiliated with Directors/Trustees;                 

2.    Companies affiliated with officers of the Advisor; and        

     3.    Companies that maintain significant business relationships with the
           Advisor or is actively seeking a significant business relationship.

    Proxies that are received from companies on the list will be directed by
the designated employee to the Proxy Committee for its review and consideration.
The Proxy Committee will determine, based on a review of the issues raised by   
the solicitation, the nature of the potential conflict and, most importantly,   
the Advisor's commitment to vote proxies in the best interests of client        
accounts, how the proxy will be voted.                                          

     In rare instances, the Proxy Committee may decline to vote the proxy when
the cost of addressing the potential conflict of interest is greater than the   
benefit to the Funds or any other clients of voting the proxy.                  

      All votes submitted by the Advisor on behalf of its clients are not biased
in any way by other clients of the Advisor. For example, the fact that XYZ      
Corporation is a client of the Advisor does not impact the proxy voting of XYZ  
stock that may be held in the portfolios of other clients. All proxy voting     
proposals are voted with regard to enhancing shareholder wealth and voting power
(unless otherwise directed by a client with respect to that client's stock).    

Reporting and Disclosure                                                        

      Once each year, the Advisor shall include in its presentation materials to
the Boards of Directors/Trustees of the investment companies which it serves as 
investment adviser, a record of each proxy voted with respect to portfolio      
securities of the investment companies during the year. With respect to those   
proxies that the Advisor has identified as involving a conflict of interest, the
Advisor shall submit a separate report indicating the nature of the conflict of 
interest and how that conflict was resolved with respect to the voting of the   
proxy. the Advisor shall disclose within its Form ADV how other clients can     
obtain information on how their securities were voted. the Advisor shall also   
describe this proxy voting policy and procedures within the Form ADV, along with
a disclosure that a client shall be provided a copy upon request.               

Recordkeeping                                                                   

the Advisor shall retain records relating to the voting of proxies, including:  

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   1.    A copy of this proxy voting policy and procedures relating to the
voting of proxies.                                      

  2.    A copy of each proxy statement received by the Advisor regarding
portfolio securities in the Advisor's client accounts.  

  3.    A record of each vote cast by the Advisor on behalf of a client.

  4.    A copy of each written client request for information on how the
            Advisor voted proxies on behalf of the client account, and a copy of
  any written response by the Advisor to the client account.

     5.    A copy of any document prepared by the Advisor that was material to
            making a decision regarding how to vote proxies or that memorializes
the basis for the decision.                             

      the Advisor shall rely on proxy statements filed on the SEC's EDGAR system
instead of maintaining its own copies.                                          

  These records shall be retained for five (5) years from the end of the
fiscal year during which the last entry was made on such record and during the  
first two (2) years onsite at the appropriate office of the Advisor.            

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Schedule A

   The following is a concise summary of the Advisor`s proxy voting policy
guidelines.                                                                     

1.    Auditors                                                                  

Vote FOR proposals to ratify auditors, unless any of the following apply:       

o     An auditor has a financial interest in or association with the
company, and is therefore not independent               

o     Fees for non-audit services are excessive, or                 

      o     There is reason to believe that the independent auditor has rendered
            an opinion which is neither accurate nor indicative of the company's
financial position.                                     

2.    Board of Directors/Trustees                                               

Voting on Director Nominees in Uncontested Elections                            

Votes on director nominees should be made on a CASE-BY-CASE basis, examining the
following factors: independence of the board and key board committees,          
attendance at board meetings, corporate governance provisions and takeover      
activity, long-term company performance, responsiveness to shareholder          
proposals, any egregious board actions, and any excessive non-audit fees or     
other potential auditor conflicts.                                              

Classification/Declassification of the Board                                    

Vote AGAINST proposals to classify the board.                                   

Vote FOR proposals to repeal classified boards and to elect all Trustees        
annually.                                                                       

Independent Chairman (Separate Chairman/CEO)                                    

Vote on a CASE-BY-CASE basis shareholder proposals requiring that the positions 
of chairman and CEO be held separately. Because some companies have governance  
structures in place that counterbalance a combined position, certain factors    
should be taken into account in determining whether the proposal warrants       
support. These factors include the presence of a lead director, board and       
committee independence, governance guidelines, company performance, and annual  
review by outside Trustees of CEO pay.                                          

Majority of Independent Directors/Establishment of Committees                   

Vote FOR shareholder proposals asking that a majority or more of Directors be   
independent unless the board composition already meets the threshold for        
definition of independence.                                                     

Vote FOR shareholder proposals asking that board audit, compensation, and/or    
nominating committees be composed exclusively of independent Directors if they  
currently do not meet that standard.                                            

3.    Shareholder Rights                                                        

Shareholder Ability to Act by Written Consent                                   

Vote AGAINST proposals to restrict or prohibit shareholder ability to take      
action by written consent.                                                      

Vote FOR proposals to allow or make easier shareholder action by written        
consent.                                                                        

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Shareholder Ability to Call Special Meetings                                    

Vote AGAINST proposals to restrict or prohibit shareholder ability to call      
special meetings.                                                               

Vote FOR proposals that remove restrictions on the right of shareholders to act 
independently of management.                                                    

Supermajority Vote Requirements                                                 

Vote AGAINST proposals to require a supermajority shareholder vote.             

Vote FOR proposals to lower supermajority vote requirements.                    

Cumulative Voting                                                               

Vote AGAINST proposals to eliminate cumulative voting.                          

Vote proposals to restore or permit cumulative voting on a CASE-BY-CASE basis   
relative to the company's other governance provisions.                          

Confidential Voting                                                             

Vote FOR shareholder proposals requesting that corporations adopt confidential  
voting, use independent vote tabulators and use independent inspectors of       
election, as long as the proposal includes a provision for proxy contests as    
follows: In the case of a contested election, management should be permitted to 
request that the dissident group honor its confidential voting policy. If the   
dissidents agree, the policy remains in place. If the dissidents will not agree,
the confidential voting policy is waived.                                       

Vote FOR management proposals to adopt confidential voting.                     

4.    Proxy Contests                                                            

Voting for Director Nominees in Contested Elections                             

Votes in a contested election of Directors must be evaluated on a CASE-BY-CASE  
basis, considering the factors that include the long-term financial performance,
management's track record, qualifications of director nominees (both slates),   
and an evaluation of what each side is offering shareholders.                   

Reimbursing Proxy Solicitation Expenses                                         

Vote CASE-BY-CASE.                                                              

5.    Poison Pills                                                              

Vote FOR shareholder proposals that ask a company to submit its poison pill for 
shareholder ratification. Review on a CASE-BY-CASE basis shareholder proposals  
to redeem a company's poison pill and management proposals to ratify a poison   
pill.                                                                           

6.    Mergers and Corporate Restructurings                                      

Vote CASE-BY-CASE on mergers and corporate restructurings based on such features
as the fairness opinion, pricing, strategic rationale, and the negotiating      
process.                                                                        

7.    Reincorporation Proposals                                                 

Proposals to change a company's state of incorporation should be evaluated on a 
CASE-BY-CASE basis, giving consideration to both financial and corporate        
governance concerns, including the reasons for reincorporating, a comparison of 
the governance provisions, and a comparison of the jurisdictional laws. Vote FOR
reincorporation when the economic factors outweigh any neutral or negative      
governance changes.                                                             

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8.    Capital Structure                                                         

Common Stock Authorization                                                      

Votes on proposals to increase the number of shares of common stock authorized  
for issuance are determined on a CASE-BY-CASE basis..                           

Vote AGAINST proposals at companies with dual-class capital structures to       
increase the number of authorized shares of the class of stock that has superior
voting rights.                                                                  

Vote FOR proposals to approve increases beyond the allowable increase when a    
company's shares are in danger of being delisted or if a company's ability to   
continue to operate as a going concern is uncertain.                            

Dual-class Stock                                                                

Vote AGAINST proposals to create a new class of common stock with superior      
voting rights.                                                                  

Vote FOR proposals to create a new class of nonvoting or sub voting common stock
if:                                                                             

      o     It is intended for financing purposes with minimal or no dilution to
current shareholders                                    

  o     It is not designed to preserve the voting power of an insider or
significant shareholder                                 

9.    Executive and Director Compensation                                       

Votes with respect to compensation plans should be determined on a CASE-BY-CASE 
basis. Our methodology for reviewing compensation plans primarily focuses on the
transfer of shareholder wealth (the dollar cost of pay plans to shareholders    
instead of simply focusing on voting power dilution). Using the expanded        
compensation data disclosed under the SEC's rules, the Advisor will value every 
award type. The Advisor will include in its analyses an estimated dollar cost   
for the proposed plan and all continuing plans. This cost, dilution to          
shareholders' equity, will also be expressed as a percentage figure for the     
transfer of shareholder wealth, and will be considered long with dilution to    
voting power. Once the Advisor determines the estimated cost of the plan, we    
compare it to a company-specific dilution cap.                                  

Vote AGAINST equity plans that explicitly permit repricing or where the company 
has a history of repricing without shareholder approval.                        

Management Proposals Seeking Approval to Reprice Options                        

Votes on management proposals seeking approval to reprice options are evaluated 
on a CASE-BY-CASE basis giving consideration to the following:                  

o     Historic trading patterns                                     

o     Rationale for the repricing                                   

o     Value-for-value exchange                                      

o     Option vesting                                                

o     Term of the option                                            

o     Exercise price                                                

o     Participation                                                 

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Employee Stock Purchase Plans                                                   

Votes on employee stock purchase plans should be determined on a CASE-BY-CASE   
basis.                                                                          

Vote FOR employee stock purchase plans where all of the following apply:        

o     Purchase price is at least 85 percent of fair market value    

o     Offering period is 27 months or less, and                     

o Potential voting power dilution (VPD) is ten percent or less.     

Vote AGAINST employee stock purchase plans where any of the opposite conditions 
obtain.                                                                         

Shareholder Proposals on Compensation                                           

Vote on a CASE-BY-CASE basis for all other shareholder proposals regarding      
executive and director pay, taking into account company performance, pay level  
versus peers, pay level versus industry, and long term corporate outlook.       

10.   Social and Environmental Issues                                           

These issues cover a wide range of topics, including consumer and public safety,
environment and energy, general corporate issues, labor standards and human     
rights, military business, and workplace diversity.                             

In general, vote CASE-BY-CASE. While a wide variety of factors goes into each   
analysis, the overall principal guiding all vote recommendations focuses on how 
the proposal will enhance the economic value of the company.                    

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PARADIGM FUNDS TRUST

 PART C: OTHER INFORMATION

ITEM 25.    FINANCIAL STATEMENTS AND EXHIBITS.                                  

1     FINANCIAL STATEMENTS:                                         

Included in Part A: None                                

        Included in Part B: The financial statements are included in the
Statement of Additional Information contained in this Registration Statement- to
be filed by post-effective amendment.                                           

2     EXHIBITS                                                      

ITEM NUMBER                        EXHIBITS                                     
----------- --------------------------------------------------------------------

a(1).       Certificate of Trust as filed with the State of Delaware on October 
14, 2005*                                               

a(2)        Form of Agreement and Declaration of Trust of PARADIGM Funds Trust* 

b.          Form of By-Laws of PARADIGM Funds Trust*                            

c.          Not Applicable.                                                     

d.          See Item 24(a)(2).                                                  

e.          Not Applicable.                                                     

f.          Not Applicable.                                                     

g (1).      Form of Investment Advisory Agreement by and between PARADIGM Funds 
 Trust and Provident Asset Management, LLC- to be filed by
post-effective amendment.                               

g (2).      Form of Sub-Advisory Agreement by and between Provident Asset       
         Management, LLC and PARADIGM Global Advisors, LLC- to be filed by
post-effective amendment.                               

h.          Form of Amended Distribution and Shareholder Services Plan- to be   
filed by post-effective amendment.                      

i.          Not applicable                                                      

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j.          Form of Custodial Agreement between J.P. Morgan Trust Company,      
National Association and PARADIGM Funds Trust*          

k.          Form of Administration Agreement between PARADIGM Funds Trust,      
         PARADIGM Multi Strategy Fund I, LLC and BISYS Fund Services Ohio,
Inc.*                                                   

l.          Opinion and Consent of counsel- to be filed by post-effective       
amendment.                                              

m.          Not applicable                                                      

n.          Consent of Auditors- to be filed by post-effective amendment.       

o.          Not applicable                                                      

p.          Purchase Agreement for initial capital**                            

q.          Not applicable                                                      

r (1).      Code of Ethics of PARADIGM Global Advisors LLC- to be filed by      
post-effective amendment.                               

r (2).      Code of Ethics of PARADIGM Funds Trust*                             

r (3).      Code of Ethics of Provident Asset Management, LLC - to be filed by  
post-effective amendment.                               

r (4).      Power of Attorney - filed herewith.                                 

----------                                                                      
*Incorporated by reference to pre-effective amendment No. 2 to the Registrant's 
registration statement filed with the Commission on December 16, 2005.          

**Incorporated by reference to pre-effective amendment No. 3 to the Registrant's
registration statement filed with the Commission on December 30, 2005.          

ITEM 26. MARKETING ARRANGEMENTS.                                                

Not Applicable.                                                                 

ITEM 27.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.                          

The following table sets forth the estimated expenses expected to be incurred in
connection with the offering described in this Registration Statement:          

      Registration Fees                                               $   35,000
      Board Fees                                                           1,000
      Cost of Printing                                                     5,000
      Legal Fees and Expenses                                             40,000
      Accounting Fees and Expenses                                         2,500
      Miscellaneous                                                        1,500
      Total                                                           $   85,000

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ITEM 28. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.         

After completion of the initial public offering of Shares, Registrant expects   
that no person will be directly or indirectly under common control with         
Registrant, except that the Registrant may be deemed to be controlled by        
PARADIGM Global Advisors, LLC (the "Investment Advisor"), the current investment
advisor to the Registrant. Information regarding the Investment Advisor is set  
forth in its Form ADV, as filed with the U.S. Securities and Exchange Commission
(the "SEC") (SEC File No. 801-56897).                                           

ITEM 29. NUMBER OF HOLDERS OF SECURITIES.                                       

As of December 30, 2006, the Trust had the following:                           

   Title of Class                                       Number of Record Holders
   --------------                                       ------------------------
Beneficial Interests                                               [1]          

ITEM 30. INDEMNIFICATION.                                                       

Article VII of the Registrant's Agreement and Declaration of Trust filed as     
Exhibit 2(a)(2) to this Registration Statement. Insofar as indemnification for  
liability arising under the Securities Act of 1933 (the "1933 Act") may be      
permitted to directors, officers and controlling persons of the Registrant      
pursuant to the Declaration of Trust or otherwise, the Registrant is aware that 
in the opinion of the SEC, such indemnification is against public policy as     
expressed in the Act and, therefore, is unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the     
Registrant of expenses incurred or paid by trustees, directors, officers or     
controlling persons of the Registrant in connection with the successful defense 
of any act, suit or proceeding) is asserted by such trustees, directors,        
officers or controlling persons in connection with the shares being registered, 
the Registrant will, unless in the opinion of its counsel the matter has been   
settled by controlling precedent, submit to a court of appropriate jurisdiction 
the question whether such indemnification by it is against public policy as     
expressed in the Act and will be governed by the final adjudication of such     
issues.                                                                         

ITEM 31 BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR.                   

ADVISORS                                                                        

PARADIGM Global Advisors, LLC                                                   

PARADIGM Global Advisors, LLC ("PGA") is the Investment Advisor for the PARADIGM
Funds Trust. PGA is a Delaware limited liability company whose principal address
is at 650 Fifth Avenue, 17 th Floor, New York, New York 10019. PGA is an SEC    
registered investment adviser.                                                  

Provident Asset Management, LLC ("Provident")                                   

Information regarding the Registrant's proposed Investment Manager, Provident,  
will be filed by post-effective amendment.                                      

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ITEM 32. LOCATION OF ACCOUNTS AND RECORDS.                                      

Accounts and records of the Trust are maintained at the offices of:             

PARADIGM Global Advisors, LLC 650 Fifth Avenue, 17 th Floor New York, NY 10019  

ITEM 33. MANAGEMENT SERVICE.                                                    

Not Applicable.                                                                 

ITEM 34. UNDERTAKINGS.                                                          

1.    Not applicable.                                                           

2.    Not applicable.                                                           

3.    Not applicable.                                                           

4.    The Registrant undertakes:                                                

a. To file during any period in which offers or sales are being made, a         
post-effective amendment to this registration statement: (i) to include any     
prospectus required by Section 10(a)(3) of the Securities Act; (ii) to reflect  
in the prospectus any facts or events arising after the effective date of the   
registration statement (or the most recent post-effective amendment thereof)    
which, individually or in the aggregate, represent a fundamental change in the  
information set forth in the registration statement; and (iii) to include any   
material information with respect to the plan of distribution not previously    
disclosed in the registration statement or any material change to such          
information in the registration statement.                                      

b. That, for the purpose of determining any liability under the Securities Act, 
each such post-effective amendment shall be deemed to be a new registration     
statement relating to the securities offered therein, and the offering of such  
securities at that time shall be deemed to be the initial bona fide offering    
thereof.                                                                        

c. To remove from registration by means of post-effective amendment any of the  
securities being registered which remain unsold at the termination of the       
offering.                                                                       

5.    Not applicable.                                                           

6.    The Registrant undertakes to send by first class mail or other means      
   designed to ensure equally prompt delivery, within two business days of
receipt of a written or oral request, any Statement of Additional   
Information.                                                        

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SIGNATURES                                                                    

   Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this registration statement to be signed on its      
behalf by the undersigned, thereunto duly authorized, in the City of New York,  
and the State of New York, on the 28th day of February, 2007.                   

                          PARADIGM FUNDS TRUST

                             By: /s/ Charles Provini
                                               ---------------------------------
                             Charles Provini
                                   President and Trustee

    Pursuant to the requirements of the Investment Company Act of 1940, this
registration statement has been signed below by the following persons in the    
capacities and on the date indicated:                                           

                                                        [Enlarge/Download Table]

SIGNATURE                      TITLE                                           DATE             

                                                                                                
/s/ Charles Provini            Chief Executive Officer, President and Trustee  February 28, 2007
-----------------------                                                                         
Charles Provini                                                                                 

/s/ Markus Karr                Chief Financial Officer and Treasurer           February 28, 2007
-----------------------                                                                         
Markus Karr                                                                                     

           *                   Trustee                                         February 28, 2007
-----------------------                                                                         
Nelson Diaz                                                                                     

           *                   Trustee                                         February 28, 2007
-----------------------                                                                         
Ernest Jones                                                                                    

      *By: /s/ Ronald Wilhelm  --                                              February 28, 2007
      -----------------------                                                                   
      Ronald Wilhelm,                                                                           
      as attorney-in-fact                                                                       

* Pursuant to powers of attorney included as an exhibit to this Registrant's    
Registration Statement on Form N-2.                                             

SIGNATURES

Pursuant to the requirements of the Investment Company Act of 1940, the         
registrant has duly caused this registration statement to be signed on its      
behalf by the undersigned, thereunto duly authorized, in the City of New York,  
and the State of New York, on the 28th day of February 2007.                    

                                 PARADIGM Multi Strategy Fund I, LLC

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                                                        [Enlarge/Download Table]

SIGNATURE                       TITLE                                             DATE             

                                                                                                   
/s/ Charles Provini              Chief Executive Officer, President and Director  February 28, 2007
-----------------------                                                                            
Charles Provini                                                                                    

/s/ Markus Karr                 Chief Financial Officer and Treasurer             February 28, 2007
-----------------------                                                                            
Markus Karr                                                                                        

            *                   Director                                          February 28, 2007
-----------------------                                                                            
Nelson Diaz                                                                                        

            *                   Director                                          February 28, 2007
-----------------------                                                                            
Ernest Jones                                                                                       

       *By: /s/ Ronald Wilhelm                                                    February 28, 2007
      -----------------------                                                                      
       Ronald Wilhelm,                                                                             
       as attorney-in-fact                                                                         

* Pursuant to powers of attorney included as an exhibit to this Registrant's    
Registration Statement on Form N-2 .                                            

46

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘485APOS’ Filing		Date		First		Last			Other Filings
		12/31/10		103		105
Filed on:		3/1/07		1					NTFNSAR
		2/28/07		120		121
		2/22/07		96
		1/24/07		93		96
		12/31/06		94		108			N-CSR,  NSAR-B,  NT-NSAR
		12/30/06		118
		11/21/06		93		99
		9/19/06		95
		8/31/06		12		47
		12/30/05		117					N-2/A
		12/16/05		117					N-2/A
		10/14/05		31		116
		9/22/05		76
		12/31/00		105
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