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SIGNATURE J. RICHARD ATWOOD
TITLE TREASURER
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and
Shareholders of FPA Paramount Fund, Inc.
In planning and performing our audit of the financial statements of
FPA New Income, Inc. (the Fund) for the year ended September 30,
1999, we considered its internal control, including control activities for
safeguarding securities, in order to determine our auditing procedures
for the purpose of expressing our opinion on the financial statements
and to comply with the requirements of Form N-SAR, not to provide
assurance on the internal control.
The management of the Fund is responsible for establishing and
maintaining internal control. In fulfilling this responsibility, estimates
and judgments by management are required to assess the expected
benefits and related costs of controls. Generally, controls that are
relevant to an audit pertain to the entitys objective of preparing
financial statements for external purposes that are fairly presented in
conformity with generally accepted accounting principles. Those
controls include the safeguarding of assets against unauthorized
acquisition, use or disposition.
Because of inherent limitations in internal control, error or fraud may
occur and not be detected. Also, projection of any evaluation of
internal control to future periods is subject to the risk that it may
become inadequate because of the changes in conditions or that the
effectiveness of the design and operation may deteriorate.
Our consideration of the internal control would not necessarily disclose
all matters in the internal control that might be material weaknesses
under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the
design or operation of one or more of the specific internal control
components does not reduce to a relatively low level the risk that
misstatements caused by error or fraud in amounts that would be
material in relation to the financial statements being audited may
occur and not be detected within a timely period by employees in
the normal course of performing their assigned functions. However,
we noted no matters involving the internal control and its operation,
including controls for safeguarding securities, that we consider to be
material weaknesses as defined above at September 30, 1999.
This report is intended solely for the information and use of the board
of directors and management of FPA New Income, Inc. and the
Securities and Exchange Commission and is not intended to be and
should not be used by anyone other than these specified parties.
November 12, 1999
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