<PAGE>
FPA PARAMOUNT FUND, INC.
SEMI-ANNUAL REPORT
[LOGO]
DISTRIBUTOR:
FPA FUND DISTRIBUTORS, INC.
11400 West Olympic Boulevard, Suite 1200
Los Angeles, California 90064
MARCH 31, 1999
<PAGE>
OFFICERS AND DIRECTORS
DIRECTORS
Julio J. de Puzo, Jr.
John P. Endicott
Leonard Mautner
John H. Rubel
John P. Shelton
Joseph Lowitz, CHAIRMAN EMERITUS
John F. Allard, DIRECTOR EMERITUS
OFFICERS
William M. Sams, PRESIDENT AND
CHIEF INVESTMENT OFFICER
Julio J. de Puzo, Jr., EXECUTIVE VICE
PRESIDENT
Eric S. Ende, VICE PRESIDENT
Janet M. Pitman, VICE PRESIDENT
J. Richard Atwood, TREASURER
Sherry Sasaki, SECRETARY
Christopher H. Thomas, ASSISTANT TREASURER
INVESTMENT ADVISER
First Pacific Advisors, Inc.
11400 West Olympic Boulevard, Suite 1200
Los Angeles, California 90064
DISTRIBUTOR
FPA Fund Distributors, Inc.
11400 West Olympic Boulevard, Suite 1200
Los Angeles, California 90064
COUNSEL
O'Melveny & Myers LLP
Los Angeles, California
CUSTODIAN & TRANSFER AGENT
State Street Bank and Trust Company
Boston, Massachusetts
SHAREHOLDER SERVICE AGENT
Boston Financial Data Services, Inc.
P.O. Box 8115
Boston, Massachusetts 02266-8115
(800) 638-3060
(617) 483-5000
This report has been prepared for the information of shareholders of FPA
Paramount Fund, Inc., and is not authorized for distribution to prospective
investors unless preceded or accompanied by an effective prospectus. The
financial information included in this report has been taken from the records of
the Fund without examination by independent auditors.
1
<PAGE>
LETTER TO SHAREHOLDERS
Dear Fellow Shareholders:
This Semi-Annual Report covers the six months ended March 31, 1999. During
this period, the per share net asset value of your Fund decreased 19.4%, while
the Russell 2500 Index increased 11.8%, the Standard & Poor's 500 Stock Index
(S&P 500) increased 27.3% and the Dow Jones Industrial Average increased 25.9%.
The above changes include reinvestment of all dividends and distributions during
the period.
On September 30, 1998, the net asset value per share was $10.24 and on
March 31, 1999, it was $8.22. During the period, $0.04 from net investment
income was paid on December 29, 1998 to shareholders of record on December 22,
1998.
THE SIX MONTHS IN REVIEW
The last six months have not been good ones for shareholders of Paramount.
Large cap growth companies have continued to be the investment of choice. This
has been going on for several years and has propelled these large enterprises to
unbelievable values. For instance, the S&P 500 Index is now selling for 26.5
times expected 1999 earnings. This is 67 percent higher than the average of 15.9
times over the last 20 years. When I say large company outperformance, I mean
it. Even though the S&P 500 was up 28.6 percent for calendar year 1998, most
companies did not reach that level of performance.
The following table shows the 1998 unweighted price performance of all
publicly traded stocks based on market cap tiers, from those over $20 billion in
size (about 100 companies), to those with market caps under $250 million (over
5,000).
<TABLE>
<CAPTION>
1998
Unweighted
Capitalization Tier Performance
-------------------------- -------------
<S> <C>
Greater than $20 Billion 25.9%
$5-$20 Billion 6.2%
$2-$5 Billion (6.1)%
$250 Million-$2 Billion (16.6)%
Less than $250 Million (24.1)%
Source: Salomon Smith Barney
</TABLE>
As the table shows, there was almost perfect correlation in that the
smaller the market capitalization of a company, the worse its performance. The
difference in performance between the largest companies, over $20 billion, and
the smallest, under $250 million, was 50% -- what a difference! The strong
performance of the "stock market" in 1998 was fueled by just a few of these
large companies with extraordinary gains. Looking at this from another
perspective, the ten largest S&P 500 companies were up 38% in 1998 and they
account for 20% of the S&P's market cap. Further, more than half of the S&P
500's 1998 gain came from only 15 of the Index's 500 stocks.
There are several reasons for this:
1) The largest companies have done an excellent job of reducing cost.
2) They have enjoyed superior pricing power in a competitive worldwide
economy.
3) The Justice Department has, until recently, had a hands off policy on
large company mergers and acquisitions.
4) During periods of low inflation and low interest rates which have been
experienced for a number of years, high earnings ratios are placed on
growth companies which dominate the largest companies in the S&P 500.
5) Index investing has become extremely popular because it has produced
exceptional results. For instance, during the last four calendar years
starting 1995, the S&P 500 has returned 37.6%, 23.0%, 33.4%, and 28.6%.
Four consecutive years of 20 plus percent gains has never happened before.
6) The U.S. economy is entering its ninth consecutive year of economic growth
and is by far the strongest in the world. The U.S. dollar is very strong.
Therefore, foreign investors are investing heavily in the U.S.,
2
<PAGE>
and when they do, large household name companies are their favorite.
7) Because of this unprecedented long economic expansion, investors have been
pouring money into the stock market principally through mutual funds.
Therefore, large companies, because of their liquidity, are emphasized
especially when they are doing well.
While these trends that I have outlined have been used by many to justify
the current valuations, I believe that the premiums investors are paying for a
limited number of large companies are excessive and allow no margin of safety
should these trends reverse or slow.
BUT, WHAT ABOUT MY FUND, MR. SAMS?
I have been managing Paramount since 1981 and it had produced superior
results until 1997. In fact, we never had a down year until 1997. That's 15
happy years. But, 1997 and 1998 have been terrible. Why? Starting in 1997, I
began to feel very concerned about the stock market because we were entering our
seventh year of economic expansion which I felt was getting long in the tooth
when comparing past economic cycles. On top of that, the stock market certainly
appeared full when looking at history. What does well when the market
experiences a serious decline? The gold stocks. Also, being a value investor, I
concentrated on smaller companies -- several of which were down fifty percent
from their highs. Well, we all know what happened. The economy kept right on
going with very low inflation and interest rates. The gold stocks collapsed and
the smaller companies continued to have problems, generally because of the lack
of pricing power.
IS THERE ANY HOPE, MR. SAMS?
Of course there is, but there must be a change of leadership in the market.
Just recently we have witnessed a surge in cyclical stocks which included metal,
energy, and yes, even the golds. In fact, Paramount increased over nine percent
in just one week which ended April 16. Now this may be just a flash in the pan,
but this happened because there is a feeling by some investors that Southeast
Asia is starting to recover and Japan will not be far behind. Couple that with a
continued strong U.S. economy and there is reason for increased commodity
prices. This could lead to higher inflation and higher interest rates. This
would almost surely lead to lower prices for high multiple growth stocks which
have provided market leadership for such a long time. Remember, the world is
reflating with the U.S. money supply alone growing at a rate in excess of seven
percent.
Nobody knows when the market leadership will change, but someday it will.
Frankly, I think it has already begun. Judging by history, it is long overdue.
Many have decided not to wait and have left the Fund, but I have found over the
years that there is meaning to the phrase "Patience is a Virtue." Our value
style of investing requires discipline, patience and a longer-term time frame to
be successfully implemented. In today's fast moving, dynamic stock market, value
investing has not been in favor. As a result, growth stock valuations have
reached levels that are, in many cases, unimaginable to disciplined value
investors. Thus, the worst thing I could do would be to sell what has not
worked, and buy what has at this stage of the market. I must stay the course.
Respectfully submitted,
/s/ William M. Sams
William M. Sams
President
April 22, 1999
3
<PAGE>
MAJOR PORTFOLIO CHANGES
Six Months Ended March 31, 1999
<TABLE>
<CAPTION>
Shares
------------
<S> <C>
NET PURCHASES
COMMON STOCKS
EEX Corporation............................................. 500,000
Magellan Health Services, Inc............................... 1,000,000
Paging Network, Inc......................................... 1,000,000
Stanley Works, The (1)...................................... 200,000
NET SALES
COMMON STOCKS
BRC Holdings, Inc. (2)...................................... 425,000
Charming Shoppes, Inc. (2).................................. 3,685,000
Columbia/HCA Healthcare Corporation (2)..................... 1,047,000
De Beers Consolidated Mines Ltd. (ADR) (2).................. 850,000
Homestake Mining Company.................................... 300,000
Leucadia National Corporation (2)........................... 600,000
Lone Star Steakhouse & Saloon, Inc.......................... 750,000
Luby's, Inc................................................. 212,000
Physician Reliance Network, Inc. (2)........................ 456,900
Placer Dome Inc............................................. 900,000
Service Merchandise Company, Inc............................ 7,748,600
Sunglass Hut International, Inc. (2)........................ 530,000
Unifi, Inc. (2)............................................. 150,000
Venator Group, Inc. (2)..................................... 900,000
</TABLE>
(1) Indicates new commitment to portfolio
(2) Indicates elimination from portfolio
4
<PAGE>
PORTFOLIO OF INVESTMENTS
March 31, 1999
<TABLE>
<CAPTION>
COMMON STOCKS Shares Value
- ----------------------------------------------------------------------- ------------- ----------------
<S> <C> <C>
MINING C 35.2%
Homestake Mining Company..................................................... 3,000,000 $ 25,875,000
Newmont Mining Corporation................................................... 1,260,000 22,050,000
Placer Dome Inc.............................................................. 2,000,000 22,375,000
----------------
$ 70,300,000
----------------
CONSUMER NON-DURABLE GOODS -- 19.1
Oakley, Inc.*................................................................ 1,865,100 $ 12,939,131
Polymer Group, Inc.*+........................................................ 2,736,500 25,312,625
----------------
$ 38,251,756
----------------
COMMUNICATIONS & INFORMATION -- 8.9%
Paging Network, Inc.*........................................................ 3,800,000 $ 17,812,500
----------------
OIL & GAS PRODUCTION/EXPLORATION -- 5.8%
Chieftain International, Inc.*............................................... 150,000 $ 1,837,500
EEX Corporation*............................................................. 2,000,000 9,750,000
----------------
$ 11,587,500
----------------
REAL ESTATE INVESTMENT TRUST -- 5.2%
Prison Realty Corporation.................................................... 600,000 $ 10,462,500
----------------
RESTAURANTS -- 4.1%
Lone Star Steakhouse & Saloon, Inc.*......................................... 550,000 $ 5,637,500
Luby's, Inc.................................................................. 150,000 2,531,250
----------------
$ 8,168,750
----------------
HEALTH CARE -- 3.8%
Magellan Health Services, Inc.*+............................................. 1,800,000 $ 7,537,500
----------------
CONSUMER DURABLES -- 2.6%
Stanley Works, The........................................................... 200,000 $ 5,125,000
----------------
</TABLE>
5
<PAGE>
PORTFOLIO OF INVESTMENTS
March 31, 1999
<TABLE>
<CAPTION>
Shares or
Principal
COMMON STOCKS--CONTINUED Amount Value
- ----------------------------------------------------------------------- -------------- ----------------
<S> <C> <C>
RETAILING -- 0.3%
Service Merchandise Company, Inc.*+.......................................... 1,751,400 $ 410,485
----------------
OTHER COMMON STOCKS -- 2.0%.................................................. $ 4,031,250
----------------
TOTAL COMMON STOCKS -- 87.0% (Cost $288,834,884)............................. $ 173,687,241
----------------
SHORT-TERM INVESTMENTS -- 13.7%
Short-term Corporate Notes:
Coca-Cola Company, The -- 4.79% 4/5/99..................................... $ 3,000,000 $ 2,998,403
Anheuser-Busch Companies, Inc. -- 4.7% 4/6/99.............................. 1,000,000 999,347
Walt Disney Company, The -- 4.72% 4/9/99................................... 5,000,000 4,994,756
Anheuser-Busch Companies, Inc. -- 4.78% 4/22/99............................ 10,000,000 9,972,117
MetLife Funding, Inc. -- 4.84% 4/30/99..................................... 6,000,000 5,976,607
State Street Bank Repurchase Agreement -- 4% 4/1/99
(Collateralized by U.S. Treasury Bond
--13 1/4% 2014, market value $2,516,419).................................. 2,462,000 2,462,273
----------------
TOTAL SHORT-TERM INVESTMENTS (Cost $27,403,503)............................. $ 27,403,503
----------------
TOTAL INVESTMENTS -- 100.7% (Cost $316,238,387)............................. $ 201,090,744
Liabilities less other assets -- (0.7)%..................................... (1,389,136)
----------------
TOTAL NET ASSETS -- 100%.................................................... $ 199,701,608
----------------
----------------
</TABLE>
* Non-income producing security
+ Affiliate as defined in the Investment Company Act of 1940 by reason of
ownership of 5% or more of its outstanding voting securities. Following is a
summary of transactions in securities of these affiliates during the six months
ended March 31, 1999.
<TABLE>
<CAPTION>
Purchases Sales Realized Dividend
at Cost at Cost Gain (Loss) Income
---------- ----------- ------------- ----------
<S> <C> <C> <C> <C>
Magellan Health Services, Inc. $8,857,683 -- -- --
Polymer Group, Inc. -- -- -- --
Service Merchandise Company, Inc. -- $38,883,540 $(36,974,914) --
</TABLE>
See notes to financial statements.
6
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1999
<TABLE>
<S> <C> <C>
ASSETS
Investments at value:
Common stocks -- at market value
(identified cost $288,834,884)........................................... $ 173,687,241
Short-term investments -- at cost plus interest earned
(maturities of 60 days or less).......................................... 27,403,503 $ 201,090,744
------------------
Cash......................................................................... 980
Receivable for:
Investment securities sold................................................. $ 412,647
Dividends.................................................................. 90,000
Capital Stock sold......................................................... 58,709 561,356
------------------ ----------------
$ 201,653,080
LIABILITIES
Payable for:
Capital Stock repurchased.................................................. $ 1,728,331
Advisory fees and financial services....................................... 144,141
Accrued expenses........................................................... 79,000 1,951,472
------------------ ----------------
NET ASSETS .................................................................... $ 199,701,608
-----------------
-----------------
SUMMARY OF SHAREHOLDERS' EQUITY
Capital Stock -- par value $0.25 per share; authorized
100,000,000 shares; outstanding 24,305,839 shares.......................... $ 6,076,460
Additional Paid-in Capital................................................... 372,055,006
Accumulated net realized loss on investments................................. (63,673,984)
Undistributed net investment income.......................................... 391,769
Unrealized depreciation of investments....................................... (115,147,643)
-----------------
NET ASSETS..................................................................... $ 199,701,608
-----------------
-----------------
NET ASSET VALUE, REDEMPTION PRICE AND MAXIMUM
OFFERING PRICE PER SHARE
Net asset value and redemption price per share
(net assets divided by shares outstanding).................................. $8.22
--------
--------
Maximum offering price per share
(100/93.5 of per share net asset value)..................................... $8.79
--------
--------
</TABLE>
See notes to financial statements.
7
<PAGE>
STATEMENT OF OPERATIONS
For the Six Months Ended March 31, 1999
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest................................................................... $ 709,974
Dividends.................................................................. 1,285,240
----------------
$ 1,995,214
EXPENSES
Advisory fees.............................................................. $ 1,010,327
Transfer agent fees and expenses........................................... 162,918
Financial services......................................................... 151,589
Directors' fees and expenses............................................... 29,304
Audit fees................................................................. 25,200
Reports to shareholders.................................................... 24,844
Custodian fees and expenses................................................ 19,612
Legal fees................................................................. 17,952
Registration fees.......................................................... 17,059
Insurance.................................................................. 6,941
Other expenses............................................................. 12,396 1,478,142
----------------- ----------------
Net investment income.............................................. $ 517,072
----------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized loss on investments:
Proceeds from sales of investment securities (excluding
short-term investments with maturities of 60 days or less)............... $ 144,320,021
Cost of investment securities sold......................................... 207,469,071
-----------------
Net realized loss on investments....................................... $ (63,149,050)
Unrealized appreciation (depreciation) of investments:
Unrealized depreciation at beginning of period............................. $ (120,286,962)
Unrealized depreciation at end of period................................... (115,147,643)
-----------------
Unrealized appreciation of investments................................. 5,139,319
-----------------
Net realized and unrealized loss on investments.................... $ (58,009,731)
-----------------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS.............................................................. $ (57,492,659)
-----------------
-----------------
</TABLE>
See notes to financial statements.
8
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended Year Ended
March 31, 1999 September 30, 1998
------------------------------- -------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS
Operations:
Net investment income....................... $ 517,072 $ 7,023,320
Net realized gain (loss) on investments..... (63,149,050) 3,948,496
Unrealized appreciation (depreciation)
of investments............................ 5,139,319 (172,160,257)
--------------- ---------------
Decrease in net assets
resulting from operations................... $ (57,492,659) $(161,188,441)
Distributions to shareholders from:
Net investment income....................... $ (1,252,739) $ (9,597,211)
Net realized capital gains.................. -- (1,252,739) (93,084,048) (102,681,259)
--------------- ---------------
Capital Stock transactions:
Proceeds from Capital Stock sold............ $ 8,199,304 $ 36,433,838
Proceeds from shares issued to
shareholders upon reinvestment
of dividends and distributions............ 1,073,905 89,093,956
Cost of Capital Stock repurchased........... (136,670,983) (127,397,774) (306,546,410) (181,018,616)
--------------- --------------- --------------- -------------
Total decrease in net assets.................. $ (186,143,172) $(444,888,316)
NET ASSETS
Beginning of period, including
undistributed net investment income
of $1,127,436 and $3,701,327................ 385,844,780 830,733,096
--------------- -------------
End of period, including
undistributed net investment income
of $391,769 and $1,127,436.................. $ 199,701,608 $ 385,844,780
--------------- -------------
--------------- -------------
CHANGE IN CAPITAL STOCK
OUTSTANDING
Shares of Capital Stock sold.................. 869,107 2,801,067
Shares issued to shareholders upon
reinvestment of dividends and
distributions............................... 123,154 7,263,242
Shares of Capital Stock repurchased........... (14,363,814) (24,454,493)
--------------- -------------
Decrease in Capital Stock
outstanding................................. (13,371,553) (14,390,184)
--------------- -------------
--------------- -------------
</TABLE>
See notes to financial statements.
9
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT
EACH PERIOD
<TABLE>
<CAPTION>
Six
Months
Ended Year Ended September 30,
March 31, ------------------------------------------------
1999 1998 1997 1996 1995 1994
--------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Per share operating performance:
Net asset value at beginning of period............... $ 10.24 $ 15.95 $ 16.54 $ 14.90 $ 14.73 $ 13.72
------- ------- ------- ------- ------- -------
Net investment income................................ $ 0.03 $ 0.16 $ 0.29 $ 0.30 $ 0.30 $ 0.24
Net realized and unrealized gain (loss) on
investment securities.............................. (2.01) (3.77) 2.30 2.52 1.17 2.54
------- ------- ------- ------- ------- -------
Total from investment operations..................... $ (1.98) $ (3.61) $ 2.59 $ 2.82 $ 1.47 $ 2.78
------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income............... $ (0.04) $ (0.20) $ (0.31) $ (0.27) $ (0.29) $ (0.25)
Distributions from net realized
capital gains.................................... -- (1.90) (2.87) (0.91) (1.01) (1.52)
------- ------- ------- ------- ------- -------
Total distributions................................ $ (0.04) $ (2.10) $ (3.18) $ (1.18) $ (1.30) $ (1.77)
------- ------- ------- ------- ------- -------
Net asset value at end of period..................... $ 8.22 $ 10.24 $ 15.95 $ 16.54 $ 14.90 $ 14.73
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
Total investment return*............................. (19.36)% (24.76)% 17.70% 20.42% 11.11% 21.69%
Ratios/supplemental data:
Net assets at end of period (in $000's).............. 199,702 385,845 830,733 683,059 595,917 421,382
Ratio of expenses to average net assets.............. 1.04%+ 0.92% 0.86% 0.87% 0.89% 0.90%
Ratio of net investment income to
average net assets................................. 0.36%+ 1.14% 1.84% 1.94% 2.25% 1.69%
Portfolio turnover rate.............................. 33%+ 68% 110% 131% 95% 76%
</TABLE>
* Return is based on net asset value per share, adjusted for reinvestment of
distributions, and does not reflect deduction of the sales charge. The
return for the six months ended March 31, 1999 is not annualized.
+ Annualized
See notes to financial statements.
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS
March 31, 1999
NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940 as a
diversified, open-end, management investment company. The Fund's objective is a
high total investment return, including capital appreciation and income, from a
diversified portfolio of securities. The following is a summary of significant
accounting policies consistently followed by the Fund in the preparation of its
financial statements.
A. Security Valuation
Securities listed or traded on a national securities exchange or on
the NASDAQ National Market System are valued at the last sale price on the
last business day of the period, or if there was not a sale that day, at
the last bid price. Unlisted securities are valued at the most recent bid
price. Short-term investments with maturities of 60 days or less are valued
at cost plus interest earned, which approximates market value.
B. Federal Income Tax
No provision for federal income tax is required because the Fund
has elected to be taxed as a "regulated investment company" under the
Internal Revenue Code and intends to maintain this qualification and to
distribute each year to its shareholders, in accordance with the minimum
distribution requirements of the Code, all of its taxable net investment
income and taxable net realized gains on investments.
C. Securities Transactions and Related
Investment Income
Securities transactions are accounted for on the date the securities
are purchased or sold. Dividend income and distributions to shareholders
are recorded on the ex-dividend date. Interest income and expenses are
recorded on an accrual basis.
D. Use of Estimates
The preparation of the financial statements in accordance with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported. Actual
results could differ from those estimates.
NOTE 2 -- PURCHASES OF INVESTMENT SECURITIES
Cost of purchases of investment securities (excluding short-term
investments with maturities of 60 days or less) aggregated $44,550,893 for the
six months ended March 31, 1999. Realized gains or losses are based on the
specific-certificate identification method. Cost of securities held at March 31,
1999 was the same for federal income tax and financial reporting purposes. Gross
unrealized depreciation for all investment securities at March 31, 1999 for
federal income tax purposes was $115,147,643.
NOTE 3 -- ADVISORY FEES AND OTHER
AFFILIATED TRANSACTIONS
Pursuant to an Investment Advisory Agreement, advisory fees were paid by
the Fund to First Pacific Advisors, Inc. (the "Adviser"). Under the terms of
this Agreement, the Fund pays the Adviser a monthly fee calculated at the annual
rate of 0.75% of the first $50 million of the Fund's average daily net assets
and 0.65% of the average daily net assets in excess of $50 million. In addition,
the Fund reimburses the Adviser monthly for the costs incurred by the Adviser in
providing financial services to the Fund, providing, however, that this
reimbursement shall not exceed 0.1% of the average daily net assets for any
fiscal year. The Agreement obligates the Adviser to reduce its fee to the extent
necessary to reimburse the Fund for any annual expenses (exclusive of interest,
taxes, the cost of any supplemental statistical and research information,
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Continued
and extraordinary expenses such as litigation) in excess of 1 1/2% of the first
$30 million and 1% of the remaining average net assets of the Fund for the year.
For the six months ended March 31, 1999, the Fund paid aggregate fees of
$28,000 to all Directors who are not affiliated persons of the Adviser. Certain
officers of the Fund are also officers of the Adviser and FPA Fund Distributors,
Inc.
NOTE 4 -- DISTRIBUTOR
For the six months ended March 31, 1999, FPA Fund Distributors, Inc.
("Distributor"), a wholly owned subsidiary of the Adviser, received $6,072 in
net Fund share sales commissions after reallowance to other dealers. The
Distributor pays its own overhead and general administrative expenses, the cost
of printing prospectuses and the cost of supplemental sales literature,
promotion and advertising.
12
