<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
<TABLE>
<S> <C>
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
FPA PARAMOUNT FUND, INC.
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(Exact Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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</TABLE>
<PAGE>
FPA PARAMOUNT FUND, INC.
11400 WEST OLYMPIC BOULEVARD, SUITE 1200, LOS ANGELES, CALIFORNIA 90064
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MONDAY, OCTOBER 23, 2000
Notice is hereby given that the annual meeting of shareholders of FPA
Paramount Fund, Inc. ("Fund") will be held in the Board Room, Twelfth Floor, at
the offices of First Pacific Advisors, Inc., the Fund's investment adviser,
11400 West Olympic Boulevard, Suite 1200, Los Angeles, California 90064, on
Monday, October 23, 2000, at 1:30 P.M. Pacific Time, to consider and vote on the
following matters:
1. Election of the Board of Directors (Five Directors);
2. Approval or disapproval of an investment advisory agreement ("New
Agreement") between the Fund and First Pacific Advisors, Inc., the Fund's
investment adviser ("Adviser");
3. Ratification or rejection of the selection of Ernst & Young LLP as
independent auditors for the Fund for the fiscal year ending September
30, 2001; and
4. Such other matters as may properly come before the meeting or any
adjournment or adjournments thereof.
You are entitled to vote if you held shares of the Fund as of August 24,
2000.
By Order of the Board of Directors
SHERRY SASAKI
Secretary
September 15, 2000
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IT IS REQUESTED THAT YOU PROMPTLY EXECUTE THE ENCLOSED PROXY AND RETURN IT IN
THE ENCLOSED ENVELOPE THUS ENABLING THE FUND TO AVOID UNNECESSARY EXPENSE AND
DELAY. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. THE PROXY IS
REVOCABLE AND WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE
MEETING.
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<PAGE>
FPA PARAMOUNT FUND, INC.
11400 WEST OLYMPIC BOULEVARD, SUITE 1200, LOS ANGELES, CALIFORNIA 90064
PROXY STATEMENT
The accompanying proxy is solicited by the Board of Directors of the Fund in
connection with the annual meeting of shareholders to be held on Monday, October
23, 2000. Any shareholder executing a proxy has the power to revoke it prior to
its exercise by submission of a later proxy, by voting in person, or by letter
to the Secretary of the Fund. Unless the proxy is revoked, the shares
represented thereby will be voted in accordance with specifications thereon.
Proxy solicitation will be principally by mail but may also be made by telephone
or personal interview conducted by officers and regular employees of the
Adviser, or Boston Financial Data Services, Inc., the Fund's Shareholder
Servicing Agent. No specially engaged employees or paid solicitors have been
retained by the Fund for such purpose. If any such persons are retained by the
Adviser, the costs will be paid by United Asset Management Corporation ("UAM"),
the parent of the Adviser. The cost of solicitation of proxies will be borne by
UAM. The costs estimated to be incurred in connection with the solicitation of
proxies for the Fund's annual meeting (including typesetting, printing,
materials, postage, freight, reimbursements to brokers and legal expenses) will
be approximately $20,000. The Fund will reimburse banks, brokerage firms,
nominees, fiduciaries and other custodians for reasonable expenses incurred by
them in sending the proxy material to beneficial owners of shares of the Fund.
This Proxy Statement was first mailed to shareholders on or about September 15,
2000. You may obtain a copy of the Fund's most recent annual report, and of any
succeeding semi-annual report, without charge, by writing to the Secretary of
the Fund at the above address, or by telephoning (800) 982-4372.
On August 24, 2000 (record date for determining shareholders entitled to
notice of and to vote at the meeting), there were outstanding 10,174,166 shares
of Common Stock, $0.25 par value. Each share is entitled to one vote.
On August 24, 2000, no person is known by management to own beneficially as
much as 5% of the outstanding shares of the Fund.
Signed but unmarked proxies will be voted for the directors nominated below
and in favor of all proposals. Shareholders who return proxies marked as
abstaining from voting on one or more proposals are treated as being present at
the meeting for purposes of obtaining the quorum necessary to hold the meeting,
but are not counted as part of the vote necessary to approve the proposal(s). If
brokers holding shares for their customers in so-called "Street Name" report
that they have not received instructions and are not authorized to vote without
instruction, those shares will be treated the same as abstentions.
1
<PAGE>
1. ELECTION OF THE BOARD OF DIRECTORS
Five directors are to be elected at the meeting, each to hold office until
the next meeting of shareholders and until a successor is elected and qualified.
The five nominees receiving the highest number of votes will be elected.
Because we do not expect meetings of shareholders to be held each year, the
directors' terms will be indefinite in length. Future meetings will be held if
required by the Investment Company Act of 1940. Four of the nominees for
director, John P. Endicott, Leonard Mautner, John H. Rubel and John P. Shelton,
were elected by shareholders at their last meeting on May 10, 1993. Eric S. Ende
was elected by directors in 2000. The table below sets forth certain information
regarding the nominees.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING
NAME AND POSITION PAST FIVE YEARS DIRECTOR
WITH THE FUND AND DIRECTORSHIP OF PUBLIC COMPANIES AGE SINCE
------------------------ -------------------------------------------------- -------- ---------
<S> <C> <C> <C>
Eric S. Ende* Senior Vice President of the Adviser for more than 56 2000
(Director, the past five years; director, President and Chief
President and Investment Officer of Source Capital, Inc.;
Portfolio Manager) President and Portfolio Manager of FPA Perennial
Fund, Inc.; and Vice President of FPA Capital
Fund, Inc. and of FPA New Income, Inc. (2).
Nominee for director of FPA Perennial Fund, Inc.
John P. Endicott Independent Management Consultant for more than 82 1979
(Director)(1) the past five years. Associate, Case and
Company, Inc. (management consultants) from 1981
to 1983; and President and director, Sierracin
Corporation (manufacturer of high technology
products) from 1969 to 1979. Director of FPA
Perennial Fund, Inc. (2).
Leonard Mautner President, Leonard Mautner Associates (management 82 1981
(Director)(1) consultants) for more than the past five years;
General Partner, Goodman & Mautner Ltd. (venture
capital partnership) and President of Goodman &
Mautner, Inc. (its investment manager) from 1969
to 1979. Director of FPA Perennial Fund, Inc. (2).
John H. Rubel President, John H. Rubel & Associates, Inc. 80 1977
(Director)(1) (management consultants) for more than the past
five years.
John P. Shelton Professor Emeritus at U.C.L.A. Graduate School of 80 1977
(Director)(1) Management for more than the past five years.
Director of Genisco Systems, Inc. (manufacturer of
hardened computers and electronics).
</TABLE>
------------------------
* Director who is an interested person of the Fund and of the Adviser as
defined in the Investment Company Act of 1940 ("Act") by virtue of being an
officer of the Fund and of the Adviser.
2
<PAGE>
(1) Member of the Nominating Committee and of the Audit and Compliance
Committee of the Board of Directors.
(2) FPA Capital Fund, Inc., FPA New Income, Inc., FPA Perennial Fund, Inc. and
Source Capital, Inc. are other investment companies advised by the Adviser
("FPA Fund Complex"). See "Information Concerning the Adviser" herein.
As of August 24, 2000, the following directors owned shares of the Fund,
including shares held in the name of a spouse and trust accounts: Mr. Ende owned
2,395 shares; Mr. Endicott owned 6,861 shares; Mr. Mautner owned 719 shares;
Mr. Rubel owned 8,453 shares; and Mr. Shelton owned no shares. On the same date,
all officers and directors as a group owned of record and beneficially less than
1% of the Fund's shares.
All nominees have consented to being named in this Proxy Statement and have
indicated their intention to serve if elected. Should any nominee for director
withdraw or otherwise become unavailable for reasons not presently known, it is
intended that the proxy holders will vote the signed but unmarked proxies and
those marked for the nominated directors for such other nominee as the Board of
Directors may designate.
The Board of Directors has designated the four members identified by
footnote (1) to the preceding table as the Nominating Committee. The Committee
recommends to the full Board of Directors nominees for election as directors of
the Fund to fill vacancies on the Board, when and as they occur. While the
Committee expects to be able to identify from its own resources an ample number
of qualified candidates, it will review recommendations from shareholders of
persons to be considered as nominees to fill future vacancies. The determination
of nominees recommended by the Committee is within the sole discretion of the
Committee and the final selection of management nominees is within the sole
discretion of the Board. Therefore, no assurance can be given that persons
recommended by shareholders will be nominated as directors. The Nominating
Committee met once during the last fiscal year.
The Board of Directors has designated the four members identified by
footnote (1) to the preceding table as the Audit and Compliance Committee of the
Board. The Committee makes recommendations to the Board of Directors concerning
the selection of the Fund's independent auditors and reviews with such auditors
the results of the annual audit, including the scope of auditing procedures, the
adequacy of internal controls, and compliance by the Fund with the accounting,
recording and financial reporting requirements of the Act. The Audit and
Compliance Committee met twice during the last fiscal year.
During the fiscal year ended September 30, 1999, the Board of Directors held
seven meetings. Each director attended more than 75% of the aggregate of
(1) the total number of meetings of the Board of Directors and (2) the total
number of meetings held by all Committees of the Board on which they served.
During the fiscal year ended September 30, 1999, the Fund did not pay any
salaries directly to officers but paid an investment advisory fee to the Adviser
as described herein. The following information relates to director compensation.
Each director who was not an interested person of the
3
<PAGE>
Adviser was compensated by the Fund at the rate of $6,000 per year plus a fee of
$1,000 per day for each Board of Directors meeting attended. The directors who
were not interested persons of the Adviser received total directors' fees of
$52,000 for such year. Each such director is also reimbursed for out-of-pocket
expenses incurred as a director.
<TABLE>
<CAPTION>
TOTAL COMPENSATION*
AGGREGATE COMPENSATION* FROM THE FPA FUND COMPLEX
NAME OF DIRECTORS FROM THE FUND INCLUDING THE FUND
------------------------ ----------------------- -------------------------
<S> <C> <C>
John P. Endicott $13,000 $18,000**
Leonard Mautner 13,000 17,500**
John H. Rubel 13,000 13,000
John P. Shelton 13,000 13,000
</TABLE>
------------------------
* No pension or retirement benefits are provided to directors of the Fund or
the FPA Fund Complex.
** Includes compensation from the Fund and one other open-end investment
company.
The following information relates to each executive officer of the Fund who
is not a director of the Fund. Each officer also serves as a director and/or
officer of the Adviser and has received employee stock options to acquire shares
of UAM, of which the Adviser is an indirect wholly owned subsidiary. The
business address of each of the following officers is 11400 West Olympic
Boulevard, Suite 1200, Los Angeles, California 90064.
<TABLE>
<CAPTION>
NAME AND POSITION PRINCIPAL OCCUPATION DURING OFFICER
WITH THE FUND PAST FIVE YEARS AGE SINCE
---------------------------- ------------------------------------------------ -------- ---------
<S> <C> <C> <C>
Steven R. Geist Vice President of the Adviser for more than the 46 2000
(Executive Vice past five years. Mr. Geist also serves as Senior
President & Portfolio Vice President and Fixed-Income Manager of
Manager) Source Capital, Inc.; and as Executive Vice
President and Portfolio Manager of FPA Perennial
Fund, Inc. Mr. Geist served as Vice President
of Source Capital, Inc. from August 1996 to
November 1999 and of FPA Perennial Fund, Inc.
from August 1996 to August 1999.
J. Richard Atwood Director (since May 2000), Principal (since 40 1997
(Treasurer) May 2000), Chief Operating Officer (since
May 2000), Chief Financial Officer (since
January 1997) and Treasurer (since
January 1997) of the Adviser; and director
(since May 2000), President (since May 2000),
Chief Executive Officer (since May 2000), Chief
Financial Officer (since March 1998) and
Treasurer (since January 1997) of FPA Fund
Distributors, Inc. ("Distributor"). Mr. Atwood
also serves as Treasurer of
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION PRINCIPAL OCCUPATION DURING OFFICER
WITH THE FUND PAST FIVE YEARS AGE SINCE
---------------------------- ------------------------------------------------ -------- ---------
<S> <C> <C> <C>
FPA Capital Fund, Inc., of FPA New
Income, Inc., of FPA Perennial Fund, Inc. and of
Source Capital, Inc. Mr. Atwood served as Vice
President and Chief Financial Officer of
Transamerica Investment Services, Inc. from
January 1995 to January 1997; and Senior Vice
President from January 1997 to May 2000 of the
Adviser and of the Distributor.
Sherry Sasaki Assistant Vice President and Secretary of the 45 1982
(Secretary) Adviser for more than the past five years; and
Secretary of the Distributor for more than the
past five years. Ms. Sasaki also serves as
Secretary of FPA Capital Fund, Inc., of FPA New
Income, Inc., of FPA Perennial Fund, Inc. and of
Source Capital, Inc.
</TABLE>
2. APPROVAL OR DISAPPROVAL OF AN INVESTMENT ADVISORY
AGREEMENT ("NEW AGREEMENT")
First Pacific Advisors, Inc. ("Adviser"), a Massachusetts corporation,
maintains its principal office at 11400 West Olympic Boulevard, Suite 1200, Los
Angeles, California 90064. The Adviser has provided investment management and
advisory services to the Fund since July 1, 1978. Such services are presently
provided pursuant to an investment advisory agreement, dated June 27, 1991
("Present Agreement"), which was most recently approved by shareholders of the
Fund on May 10, 1993. The Adviser is a wholly owned subsidiary of United Asset
Management Holdings, Inc. which is a subsidiary of UAM, which is a holding
company principally engaged, through affiliated firms, in providing
institutional investment management and acquiring institutional investment
management firms.
UAM has announced an agreement dated June 19, 2000 with Old Mutual plc ("Old
Mutual"), a United Kingdom-based financial services group with substantial asset
management, insurance, and banking businesses. This agreement provides for a
tender offer by Old Mutual to purchase all outstanding shares of UAM and
following completion of the tender offer a merger by which UAM will become a
wholly-owned subsidiary of Old Mutual. At such time as 25% or more of the
outstanding shares of UAM are acquired pursuant to the tender offer, there will
be a change in control of UAM and thus an assignment which under the Investment
Company Act of 1940 will automatically terminate the Present Agreement.
5
<PAGE>
Because the change in control which will terminate the Present Agreement is
expected to occur prior to this shareholders meeting, the Board of Directors of
the Fund has approved an interim investment advisory agreement with the Adviser
to allow the continued receipt of advisory services by the Fund after the
assignment and prior to shareholder approval of a new agreement. Under the
Investment Company Act, the Adviser may continue to serve as investment adviser
to the Fund beyond an interim period of 150 days only if shareholders of the
Fund approve a new investment advisory agreement. The Board of Directors of the
Fund have approved, and recommend shareholder approval of, a new investment
advisory agreement ("New Agreement") between the Fund and the Adviser to become
effective upon approval by shareholders of the Fund. The New Agreement is
identical to the Present Agreement in all material respects, except for the
effective date. Shareholder approval requires the affirmative vote of (a) 67% or
more of the voting securities represented at the meeting, if more than 50% of
the outstanding voting securities are present or represented by proxy or
(b) more than 50% of all outstanding voting securities, whichever is less.
If shareholders of the Fund do not approve the New Agreement, the Board of
Directors of the Fund would seek to obtain interim advisory services at the
lesser of cost or the current fee rate either from the Adviser or from another
advisory organization. Thereafter, the Board of Directors would either negotiate
a new investment advisory agreement with an advisory organization selected by
the Board or make other appropriate arrangements, in either event subject to the
approval of shareholders.
INVESTMENT ADVISORY AGREEMENTS
The terms of the Present Agreement and the New Agreement are identical in
all material respects, except for the effective date. The initial term of the
New Agreement will commence on the date approved by shareholders of the Fund and
continue to May 31, 2001. A copy of the New Agreement is attached as Exhibit A
hereto. Under each Agreement, the Fund retains the Adviser to manage the
investment of the Fund's assets, including the placing of orders for the
purchase and sale of portfolio securities. The Adviser agrees to obtain and
evaluate economic, statistical and financial information to formulate and
implement the Fund's investment programs. In addition to providing management
and investment advisory services, the Adviser furnishes office space, facilities
and equipment. It also compensates all officers and other personnel of the Fund
except directors who are not affiliated with the Adviser.
The Adviser provides at its expense personnel to serve as officers of the
Fund and office space, facilities and equipment for managing the affairs of the
Fund, subject to cost reimbursement for financial services provided to the Fund
as described below. All other expenses incurred in the operation of the Fund are
borne by the Fund. Expenses incurred by the Fund include brokerage commissions
on portfolio transactions, fees and expenses of directors not affiliated with
the Adviser, taxes, transfer agent fees, dividend disbursement and reinvestment
and custodian fees, auditing and legal fees, the cost of printing and mailing
reports and proxy materials to shareholders, expenses of printing and engraving
stock certificates, expense of trade association memberships, premiums for the
fidelity bond and errors and omissions insurance maintained by the Fund, and
reimbursement of the Adviser's expenses in providing financial services to the
Fund as described below.
6
<PAGE>
For services rendered, the Adviser is paid an investment advisory and
management fee. Such fee is payable monthly at the annual rate of 0.75% of the
first $50 million, and 0.65% of the excess over $50 million, of the Fund's
average net assets. This fee is higher than the fee paid by some other mutual
funds. Average net assets are determined by taking the average of all the daily
determinations of net assets during a calendar month.
In addition to the investment advisory and management fee, the Fund
reimburses the Adviser monthly for the costs incurred by the Adviser in
providing financial services to the Fund including maintaining the accounts,
books and other documents which constitute the record forming the basis for the
Fund's financial statements, preparing such financial statements and other Fund
documents and reports of a financial nature required by federal and state laws,
calculating daily net asset value of the Fund, and participating in the
production of the Fund's registration statements, prospectuses, proxy
solicitation materials and reports to shareholders (including compensation of
the Treasurer or other principal financial officer of the Fund, compensation of
personnel working under such person's direction and expenses of office space,
facilities, and equipment used by such personnel in the performance of their
financial services duties to the Fund). However, for any fiscal year, the cost
of such financial services paid by the Fund cannot exceed 0.10% of the average
daily net assets of the Fund.
The Advisory Agreement includes a provision for a reduction in the
investment advisory and management fee and cost reimbursement paid to the
Adviser in the amount by which certain defined operating expenses of the Fund
(including such advisory fee and cost reimbursement) for any fiscal year exceed
1.50% of the first $30 million of average net assets of the Fund, plus 1% of the
remaining average net assets of the Fund, such values to be taken at the close
of business on the last business day of each calendar month. Operating expenses,
as defined in the Advisory Agreement, exclude (i) interest, (ii) taxes, (iii)
expenditures for brokerage and research services, and (iv) any extraordinary
expenses such as those of litigation, merger, reorganization or
recapitalization, to the extent such extraordinary expenses are permitted to be
excluded by the rules or policies of the states in which shares of the Fund are
periodically qualified for sale. All expenditures, including costs incurred in
connection with the purchase, holding or sale of portfolio securities, which are
capitalized in accordance with generally accepted accounting principles
applicable to investment companies, are accounted for as capital items and not
as expenses. This expense limitation provision does not require any payment by
the Adviser beyond the return of the investment advisory and management fee and
cost reimbursement paid to it by the Fund for a fiscal year.
The Advisory Agreement provides that the Adviser shall have no liability to
the Fund or any shareholders of the Fund for any error of judgment, mistake of
law or any loss arising out of any investment, or for any other act or omission
in the performance by the Adviser of its duties under the Advisory Agreement,
except for liability resulting from willful misfeasance, bad faith or negligence
on the part of the Adviser or the reckless disregard of its duties under the
Advisory Agreement. The Advisory Agreement may be terminated without penalty by
the Board of Directors of the Fund or the vote of a majority (as defined in the
Act) of the outstanding voting securities of the Fund upon 60 days' written
notice to the Adviser or by the Adviser upon like notice to the Fund. The
Advisory
7
<PAGE>
Agreement will automatically terminate in the event of its assignment, as that
term is defined in the Act.
The recommendation of the Board of Directors that shareholders approve the
New Agreement is based upon the Board's assessment of the new portfolio
management team provided by the Adviser, including the investment performance of
FPA Perennial Fund, Inc., as indicative of the prior performance results
achieved by this new team consisting of Eric Ende and Steven Geist. Advisory
fees were found by the Board to be reasonable in comparison to those paid by
other open-end equity funds. The Directors also took into consideration the
benefits derived by the Fund's adviser from arrangements under which it receives
research services from brokers to whom the Fund's brokerage transactions are
allocated, as described below under "Portfolio Transactions and Brokerage."
For the fiscal year ended September 30, 1999, the Adviser received
investment advisory and management fees of $1,637,506, plus reimbursement of
$244,232 for costs incurred in providing financial services to the Fund. The
Fund's average net assets during the fiscal year were $235,348,681. On June 30,
2000, the Fund's total net assets were $78,529,306.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Under the Advisory Agreement, the Adviser makes decisions to buy and sell
securities for the Fund, selects broker-dealers and negotiates commission rates
or net prices. In over-the-counter transactions, orders are placed directly with
a principal market maker unless it is believed better prices and executions are
available elsewhere. Portfolio transactions are effected with broker-dealers
selected for their abilities to give prompt execution at prices which are
favorable to the Fund. If these primary considerations are met, agency
transactions for the Fund are typically placed with brokers which provide
brokerage and research services to the Fund or the Adviser at commission rates
considered to be reasonable, although higher than the lowest brokerage rates
available. No formula for such allocation exists. The Fund thus bears the cost
of such services. While research services may be useful to supplement other
available investment information, the receipt thereof does not necessarily
reduce the expenses of the Adviser. The Fund does not pay any mark-up over the
market price of securities acquired in principal transactions with dealers. Any
solicitation fees which are received by the Adviser in connection with a tender
of portfolio securities of the Fund in acceptance of an exchange or tender offer
are applied to reduce the advisory fees payable by the Fund.
The Advisory Agreement includes direct authorization for the Adviser to pay
commissions on securities transactions to broker-dealers furnishing research
services in an amount higher than the lowest available rate, if the Adviser
determines in good faith that the amount is reasonable in relation to the
brokerage and research services provided (as required by Section 28(e) of the
Securities Exchange Act of 1934), viewed in terms of the particular transaction
or the Adviser's overall responsibilities with respect to accounts as to which
it exercises investment discretion. The term brokerage and research services is
defined to include advice as to the value of securities; the advisability of
investing in, purchasing or selling securities; the availability of securities
or purchasers or sellers of securities; furnishing analyses and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and performance of accounts; and effecting securities
transactions, and performing functions incidental thereto, such as clearance,
settlement and custody.
8
<PAGE>
The Adviser also places portfolio transactions for other advisory accounts,
including other investment companies. Research services furnished by
broker-dealers which effect securities transactions for the Fund may be used by
the Adviser in servicing all of its advisory accounts and not all such research
services may be used by the Adviser in the management of the Fund's portfolio.
Conversely, research services furnished by broker-dealers which effect
securities transactions for other advisory accounts may be used by the Adviser
in the management of the Fund. In the opinion of the Adviser, it is not possible
to measure separately the benefits from research services to each advisory
account. Because the volume and nature of the trading activities of the advisory
accounts are not uniform, the amount of commissions in excess of the lowest
available rate paid by each advisory account for brokerage and research services
will vary. In the opinion of the Adviser, however, total commissions paid by the
Fund are not disproportionate to the benefits received by it on a continuing
basis. During the fiscal year ended September 30, 1999, brokerage commissions
paid by the Fund totaled $795,911 of which $565,129 was paid on transactions
having a total value of $109,352,221 to broker-dealers selected because of
research services provided to the Adviser.
The Adviser seeks to allocate portfolio transactions equitably whenever
concurrent decisions are made to purchase or sell securities for the Fund and
another advisory account. In some cases, this procedure could have an adverse
effect on the price or the amount of securities purchased or sold by the Fund.
In making such allocations, the main factors considered by the Adviser are the
respective investment objectives, the relative size of portfolio holdings of the
same or comparable securities, the availability of cash for investment, the size
of investment commitments generally held and the opinions of the persons
responsible for recommending the investment.
INFORMATION CONCERNING THE ADVISER
The Advisory Agreement permits the Adviser to render advisory services to
others, and the Adviser also serves as investment adviser to Source Capital,
Inc., a publicly traded (closed-end) investment company, which had net assets of
$416,779,511 on June 30, 2000. Source Capital, Inc. pays an advisory fee at the
annual rate of 0.725% on the first $100 million of its net assets, 0.700% on the
next $100 million of its net assets, and 0.675% on any net assets in excess of
$200 million. The Adviser also advises FPA Capital Fund, Inc., FPA New Income,
Inc., FPA Perennial Fund, Inc. and FPA Crescent Portfolio, open-end investment
companies, which had net assets of $449,376,868, $506,458,635, $40,802,448 and
$40,525,052, respectively, on June 30, 2000. FPA New Income, Inc. pays an
advisory fee at the annual rate of 0.50% of its average daily net assets. FPA
Capital Fund, Inc. and FPA Perennial Fund, Inc. each pay advisory fees at the
same annual rate as the Fund. FPA Crescent Portfolio pays an advisory fee at the
annual rate of 1.00% of its average daily net assets. The Adviser also advises
institutional accounts. The Adviser had total assets under management of $2.9
billion at June 30, 2000.
The directors and principals of the Adviser are the following persons: J.
Richard Atwood, Chief Operating Officer, Chief Financial Officer and Treasurer
of the Adviser; and Robert L. Rodriguez, Chief Executive Officer and Chief
Investment Officer of the Adviser. Mr. Rodriguez, 51, serves as director,
President and Chief Investment Officer of FPA Capital Fund, Inc. and of FPA New
Income, Inc., and as director of the Distributor. The principal occupation of
Mr. Atwood is described
9
<PAGE>
in the preceding table. The business address of Messrs. Atwood and Rodriguez is
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, a wholly owned subsidiary of the Adviser, acts as the
principal distributor of shares of the Fund pursuant to a Distribution Agreement
dated September 3, 1991. For 1999, the Distributor received $10,025 in net sales
commissions (after reallowance to other dealers) on sales of shares of the Fund.
FPA Fund Distributors, Inc. will continue to serve as distributor for shares of
the Fund.
DIRECTORS' RECOMMENDATION AND OTHER INFORMATION
The New Agreement has been approved by the Board of Directors of the Fund,
including those directors who are not "interested persons" of the Fund, as that
term is defined in the Act, at a meeting held on August 15, 2000. In so doing,
the directors have acted in what they believe to be in the best interests of the
shareholders of the Fund.
In approving the New Agreement and recommending that it be approved by the
shareholders, the directors have considered the Adviser's expressed intention to
continue the investment operations of the Fund and the Adviser under the
direction of current management; the nature, quality and extent of the services
to be performed by the Adviser; the investment record of the Fund; comparative
data as to investment performance, advisory fees and expenses; the financial
resources of UAM and Old Mutual; and such other information and factors as the
directors believe to be relevant. The Adviser has assured the directors that
there will be no reduction in the nature or quality of its services to the Funds
as a result of the transaction.
The Act provides that in connection with the sale of any interest in an
investment adviser which results in the "assignment" of an investment advisory
contract, an investment adviser of a registered investment company such as the
Fund, or an affiliated person of such investment adviser, may receive any amount
or benefit if (i) for a period of 3 years after the sale, at least 75% of the
members of the Board of Directors of the investment company are not "interested
persons" of the investment adviser or the predecessor adviser, and (ii) there is
no "unfair burden" imposed on the investment company as a result of such sale or
any expressed or implied terms, conditions or understandings applicable thereto.
For this purpose, "unfair burden" is defined to include any arrangement during
the 2-year period after the transaction, whereby the investment adviser or its
predecessor or successor investment adviser, or any interested persons of any
such adviser, receives or is entitled to receive any compensation directly or
indirectly (i) from any person in connection with the purchase or sale of
securities or other property to, from or on behalf of the investment company
other than regular type ordinary compensation as principal underwriter for such
company, or (ii) from the investment company or its security holders for other
than regular type investment advisory or other services. This provision of the
Act was enacted by Congress in 1975 to make it clear that an investment adviser
(or an affiliated person of the adviser) can realize a profit on the sale of the
adviser's business, subject to the two safeguards described above. In their
agreement, Old Mutual and UAM have agreed not to take or recommend any action
that would constitute an unfair burden on the Fund within the
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meaning of this provision. Old Mutual and UAM have also agreed that, for a
period of three years after the transaction, they will not take or recommend any
action that would cause more than 25% of the directors to be interested persons
of the Adviser.
THE DIRECTORS RECOMMEND THAT SHAREHOLDERS
APPROVE THE NEW AGREEMENT
3. RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS
Shareholders are requested to ratify the selection by the Board of Directors
(including a majority of directors who are not interested persons of the Fund as
that term is defined in the Act) of the firm of Ernst & Young LLP as independent
auditors for the Fund for the fiscal year ending September 30, 2001. In addition
to normal audit services, Ernst & Young LLP provides services in connection with
the preparation and review of federal and state tax returns for the Fund. The
employment of Ernst & Young LLP is conditioned upon the right of the Fund, by
vote of a majority of its outstanding voting securities, to terminate such
employment forthwith without any penalty. Ernst & Young LLP have served as
independent auditors for the Fund for the past twenty-two fiscal years.
Representatives of Ernst & Young LLP are expected to be present at the meeting,
with the opportunity to make a statement if they desire to do so, and such
representatives are expected to be available to respond to any appropriate
questions from shareholders.
4. OTHER MATTERS
The proxy holders have no present intention of bringing before the meeting
for action any matters other than those specifically referred to in the
foregoing, and in connection with or for the purpose of effecting the same, nor
has the management of the Fund any such intention. Neither the proxy holders nor
the management of the Fund are aware of any matters which may be presented by
others. If any other business shall properly come before the meeting, the proxy
holders intend to vote thereon in accordance with their best judgment.
SIMULTANEOUS MEETINGS
The annual meeting of shareholders of the Fund is called to be held at the
same time as the meeting of shareholders of FPA Capital Fund, Inc., FPA New
Income, Inc. and FPA Perennial Fund, Inc. It is anticipated that such meetings
will be held simultaneously. In the event that any Fund shareholder at the
meeting objects to the holding of a simultaneous meeting and moves for an
adjournment of the meeting so that the meeting of the Fund may be held
separately, the persons named as proxies will vote in favor of such an
adjournment.
SHAREHOLDER PROPOSALS
The Fund does not expect to hold regular annual meetings of shareholders.
Any shareholder who wishes to submit proposals for consideration at a meeting of
the Fund's shareholders should send such proposals to the Fund at the address
shown above. Proposals must be received a
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<PAGE>
reasonable time prior to the date of a meeting of shareholders to be considered
for inclusion in the materials for that meeting. Timely submission of a proposal
does not necessarily mean that such proposal will be included.
ADJOURNMENT
In the event that sufficient votes in favor of the proposals set forth in
the Notice of Annual Meeting and Proxy Statement are not received by the time
scheduled for the meeting, the persons named as proxies may move one or more
adjournments of the meeting for a period or periods of not more than 30 days in
the aggregate to permit further solicitation of proxies with respect to any such
proposals. Any such adjournment will require the affirmative vote of a majority
of the shares present at the meeting. The persons named as proxies will vote in
favor of such adjournment those shares which they are entitled to vote which
have voted in favor of such proposals. They will vote against any such
adjournment those proxies which have voted against any of such proposals.
By Order of the Board of Directors
SHERRY SASAKI
Secretary
September 15, 2000
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED REPLY ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
12
<PAGE>
EXHIBIT A
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, dated October , 2000, between FPA PARAMOUNT FUND, INC., a
Maryland corporation (hereinafter called "Paramount"), and FIRST PACIFIC
ADVISORS, INC., a Massachusetts corporation (hereinafter called the "Adviser").
W I T N E S S E T H :
WHEREAS, Paramount and the Adviser wish to enter into an Agreement setting
forth the terms on which the Adviser will perform certain investment advisory
and management services for Paramount.
NOW, THEREFORE, in consideration of the premises and covenants hereinafter
contained, Paramount and the Adviser agree as follows:
1. EMPLOYMENT OF ADVISER
Paramount hereby employs the Adviser to manage the investment and
reinvestment of the assets of Paramount and to administer its affairs, to the
extent described herein, subject to the supervision of the Board of Directors of
Paramount, for the period and on the terms set forth in this Agreement. The
Adviser hereby accepts such employment and agrees during such period to render
the services and to assume the obligations herein set forth. The Adviser agrees
to use its best efforts and judgment in the performance of its obligations
hereunder. The Adviser shall, for all purposes herein, be deemed an independent
contractor and shall, unless otherwise expressly provided or authorized, have no
authority to act for or represent Paramount in any way, or otherwise be deemed
an agent of Paramount.
2. ADVISORY SERVICES
Subject to any general directions furnished by the Board of Directors of
Paramount, the Adviser agrees to formulate and implement a continuing program
for the management of the assets of Paramount and to determine from time to time
what securities or other property shall be purchased or sold by Paramount, and
the portion of its assets to be held in cash or cash equivalents, giving due
consideration to, among other things, the policies of Paramount as expressed in
Paramount's Certificate of Incorporation, By-Laws, Registration Statement under
the Investment Company Act of 1940, and amended (the "1940 Act"), Registration
Statement under the Securities Act of 1933, as amended (the "1933 Act"), as
reports under the Securities Exchange Act of 1934 (the "1934 Act"), as well as
to the factors affecting Paramount's status as a regulated investment company
under the Internal Revenue Code of 1954, as amended. The Adviser shall obtain
and evaluate such statistical, financial, and other information relating to the
economy, industries, businesses, securities markets, and securities as it may
deem necessary or useful in the performance of its obligations hereunder.
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3. OTHER SERVICES AND EXPENSES OF ADVISER
The Adviser shall furnish to Paramount the following services and
facilities:
(a) Office space, furniture, equipment and supplies, which may be the same
as occupied or used by the Adviser;
(b) Qualified personnel for administering the affairs, managing the
investments, and preparing and maintaining the books of account, records,
reports and tax returns of Paramount, except as specified in Section 4
hereof;
(c) Adequate facilities and qualified personnel for the placement with
broker-dealers of orders for the purchase and sale of portfolio
securities for Paramount;
(d) Members of the Adviser's organization to serve without compensation from
Paramount (except as specified otherwise in Section 5 hereof) as officers
or agents of Paramount, if desired by Paramount;
(e) Daily determination of net assets;
(f) General purpose accounting forms, supplies, stationery and postage and
telephones and utilities relating to the obligations of the Adviser
hereunder.
4. EXPENSES OF PARAMOUNT
Except to the extent expressly assumed by the Adviser herein, Paramount will
pay all costs and expenses in connection with its operations. Without limiting
the generality of the foregoing, Paramount shall pay the following costs and
expenses:
(a) Fees and charges of independent accountants, custodian and depository
and legal counsel for Paramount;
(b) Fees and charges of Paramount's transfer agent, including the costs of
maintaining Paramount's shareholder account books and records, dividend
disbursing agent and registrar, if any;
(c) Costs of designing, printing, engraving and issuing certificates
representing shares of Paramount;
(d) Expenses, including fees and disbursements of counsel, in connection
with litigation by or against Paramount;
(e) Taxes, including franchise, income, issue, transfer, business license
and other corporate fees payable by Paramount to Federal, State or other
governmental agencies;
(f) Premiums for the fidelity bond maintained by Paramount pursuant to
Section 17 of the 1940 Act and for any errors and omissions insurance
policy maintained by Paramount;
(g) Dues for Paramount's membership in trade organizations;
(h) Interest on indebtedness, if any, incurred by Paramount;
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(i) Costs of designing, printing and mailing periodic and other reports to
shareholders, proxy statements, dividend notice and other communications
to Paramount's shareholders;
(j) Expenses of meeting of shareholders and directors;
(k) Brokers' commissions, issued and transfer taxes and other costs
chargeable to Paramount in connection with security transactions to which
Paramount is a party or with securities owned by Paramount;
(l) Fees and expenses in connection with maintaining registration of
Paramount under the Federal securities laws and under the laws of states
which regulates the sale of Paramount's shares and complying with the
requirements of the Securities and Exchange Commission under the 1940
Act, the 1933 Act, the 1934 Act and applicable state securities laws.
The advisory fee payable hereunder has been negotiated on the understanding,
and the parties hereto agree, that the Adviser has received, and shall continue
to receive, supplementary research and other information from broker-dealers
which execute portfolio transactions for Paramount.
5. COMPENSATION OF ADVISER
For the services to be rendered pursuant to this Agreement, Paramount shall
pay to the Adviser a monthly fee computed at the annual rates of 0.75% on the
first $50 million of Paramount's average net asset value and 0.65% on the excess
over $50 million of Paramount's average net asset value. Such average net asset
value shall be determined by taking the average of all of the determinations of
net asset value, made in the manner provided in Paramount's Certificate of
Incorporation, for each business day during a given calendar month. Such fee
shall be payable for each calendar month as soon as practicable after the end of
the month.
In addition to the above-stated fee, Paramount shall reimburse the Adviser
monthly for the costs incurred by the Adviser in providing financial services to
Paramount including, among other normal financial services for Paramount,
maintaining the accounts, books and other documents which constitute the record
forming the basis for Paramount's financial statements, preparation of such
financial statements and other Paramount documents and reports of a financial
nature required by Federal and state laws, calculating daily net asset value of
Paramount, and participating in the production of Paramount's registration
statements, prospectuses, proxy solicitation materials and reports to
stockholders (including compensation of the Treasurer or other principal
financial officer of Paramount, compensation of personnel working under such
person's direction and expenses of office space, facilities and equipment used
by such personnel in the performance of their financial services duties to
Paramount); provided, however, that such reimbursement shall not exceed for any
fiscal year of Paramount 0.10% of the average net asset value of Paramount. Such
maximum reimbursement shall be calculated in the same manner as the fee referred
to in the preceding paragraph.
The fees and reimbursements to be paid to the Adviser shall be payable for
the period commencing on the date hereof and ending on the date of termination
hereof. If this Agreement is
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terminated, the fees and reimbursements shall be prorated for any fraction of a
month at termination.
The fees and reimbursements payable hereunder shall be reduced by an amount
which is equivalent to any solicitation fees received by the Adviser, or any
affiliated person of the Adviser, in connection with a tender of portfolio
securities of Paramount in acceptance of an exchange or tender offer. The
Adviser shall use its best efforts to recapture any available solicitation fees.
The Adviser also agrees to reduce the advisory fee and reimbursement payable
hereunder by the amount by which certain operating expenses of Paramount (after
the exclusions described below and after reflecting any advisory fee and
reimbursement reduction provided for in the preceding paragraph) for any fiscal
year shall exceed 1 1/2% of the first $30 million of Paramount's average net
asset value taken at the close of business on the last business day of each
calendar month of such year, plus 1% of the remaining average net asset value of
Paramount so taken. For purposes of this expense limitation provision, the
following expenses shall be excluded from the total operating expenses in
computing "certain operating expenses": (i) interest, (ii) taxes, (iii) any
expenditures pursuant to Section 6 hereof for brokerage and research services,
and (iv) any extraordinary expenses, such as those of litigation, merger,
reorganization, or recapitalization, to the extent such extraordinary expenses
are permitted to be excluded by the rules or policies of the states in which
shares of Paramount are from time to time qualified for sale. All expenditures,
including costs incurred in connection with the purchase, holding, or sale of
portfolio securities, which are capitalized in accordance with generally
accepted accounting principles applicable to investment companies, shall be
accounted for as capital items and not as expenses. Any accrued advisory fee
reduction under this expense limitation provision shall be withheld by Paramount
from the fees paid hereunder. Any additional reduction computed at the end of
the fiscal year shall be paid to Paramount within five days of the computation
as a reduction of advisory fees paid during the fiscal year.
For purposes of this Section 5, the term "fiscal year" shall exclude the
portion of the current fiscal year which shall have elapsed prior to the date
hereof and shall include the portion of the then current fiscal year which shall
have elapsed at the date of termination of this Agreement.
6. BROKERAGE AND RESEARCH SERVICES
The advisory fee payable hereunder has been negotiated on the understanding,
and the parties hereto agree, that the Adviser has received, and shall continue
to receive, supplementary research and other information from brokers and
dealers which execute portfolio transactions for Paramount. The Adviser may
employ, retain, or otherwise avail itself of the services or facilities of other
persons or organizations for the purpose of providing the Adviser or Paramount
with such statistical and other factual information, such advice regarding
economic factors and trends, such advice as to occasional transactions in
specific securities or such other information, advice or assistance as the
Adviser may deem necessary, appropriate or convenient for the discharge of its
obligations hereunder or otherwise helpful to Paramount, or in the discharge of
Adviser's overall responsibilities with respect to any other accounts which it
might serve as investment adviser. The Adviser and any person performing
executive, administrative or trading functions for Paramount, whose services
were made available to Paramount by the Adviser, are specifically authorized to
allocate brokerage and principal
A-4
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business to firms that provide such services or facilities and to cause
Paramount to pay a member of a securities exchange, or any other securities
broker or dealer, an amount of commission for effecting a securities transaction
in excess of the amount of commission another member of an exchange, broker or
dealer would have charged for effecting that transaction, if the Adviser or such
person determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage and research services (as such services
are defined in Section 28(e) of the 1934 Act) provided by such member, broker or
dealer, viewed in terms of either that particular transaction or the overall
responsibilities of the Adviser with respect to the accounts as to which the
Adviser exercises investment discretion (as that term is defined in Section
3(a)(35) of the 1934 Act).
7. OTHER ACTIVITIES
The Adviser may perform investment advisory, management or distribution
services for other investment companies and other persons or companies, and
affiliates of the Adviser may engage in other related or unrelated businesses.
Except as otherwise required by the 1940 Act, any of the shareholders,
directors, officers and employees of Paramount may be a shareholder, director,
officer or employee of, or be otherwise interested in, the Adviser, and in any
person controlled by or under common control with the Adviser, and the Adviser,
and any person controlled by or under common control with the Adviser, may have
an interest in Paramount.
8. LIABILITY OF ADVISER
Neither the Adviser nor any of its officers, directors or employees, nor any
person performing executive, administrative or trading functions for Paramount
whose services were made available to Paramount by the Adviser, shall be liable
for any error of judgment or mistake of law or for any loss suffered by
Paramount in connection with the matters to which this Agreement relates, except
for loss resulting from willful misfeasance, bad faith or negligence in the
performance of its duties, on behalf of Paramount or from reckless disregard by
the Adviser or any such person of the duties of the Adviser under this
Agreement. Without limiting the generality of the foregoing, neither the Adviser
nor any such person shall be deemed to have acted unlawfully or to have breached
any duty to Paramount under State or Federal law in effect at the date of the
enactment of Section 28(e) of the 1934 Act solely by reason of having caused
Paramount to pay a member of any securities exchange or any other securities
broker or dealer, an amount of commission for effecting a securities transaction
in excess of the commission another member of a securities exchange or another
securities broker or dealer would have charged for effecting that transaction if
the Adviser or such person determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such member, broker or dealer, viewed in terms of either
that particular transaction or the overall responsibilities of the Adviser with
respect to the account as to which the Adviser exercises investment discretion.
9. TERM OF AGREEMENT
This Agreement shall continue in effect to May 31, 2001. It may be continued
in effect thereafter by mutual consent, provided that such continuance shall be
specifically approved at least annually by
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(i) the Board of Directors of Paramount, or by the vote of a majority (as
defined in the 1940 Act) of the outstanding voting securities of Paramount, and
(ii) by a majority of directors who are not parties to this Agreement or
interested persons (as defined in the 1940 Act) of any such party, cast in
person at a meeting called for the purpose of voting on such approval.
10. TERMINATION OF AGREEMENT
This Agreement may be terminated at any time, without payment of any
penalty, by the Board of Directors of Paramount or by the vote of a majority (as
defined in the 1940 Act) of the outstanding voting securities of Paramount, on
sixty (60) days' written notice to the Adviser, or by the Adviser on like notice
to Paramount. This Agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act).
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers thereunto duly authorized as of the day and year
first above written.
<TABLE>
<S> <C>
FPA PARAMOUNT FUND, INC.
By:
-----------------------------------------
Eric S. Ende,
President
FIRST PACIFIC ADVISORS, INC.
By:
-----------------------------------------
J. Richard Atwood,
Principal
</TABLE>
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<PAGE>
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
--------------------------------------------------------------------------------
FPA PARAMOUNT FUND, INC.
--------------------------------------------------------------------------------
Mark box at right if an address change or comment has been noted on the reverse
side of this card. / /
CONTROL NUMBER:
-------------------------------
Please be sure to sign and date this Proxy. Date
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Shareholder sign here Co-owner sign here (if any)
IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3.
1. Election of Directors. NOMINEES:
With- For All
For hold Except
E.S. ENDE J. H. RUBEL / / / / / /
J.P. ENDICOTT J. P. SHELTON
L. MAUTNER
INSTRUCTION: IF YOU DO NOT WISH YOUR SHARES VOTED "FOR" A PARTICULAR NOMINEE,
MARK THE "FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE NAME(S) OF THE
NOMINEES(S). YOUR SHARES WILL BE VOTED FOR THE REMAINING NOMINEE(S).
2. Approval of an investment advisory agreement between the Fund and First
Pacific Advisors, Inc., the Fund's investment adviser.
For Against Abstain
/ / / / / /
3. Selection of Ernst & Young LLP as independent auditors.
/ / / / / /
In their discretion, the Proxies are authorized to vote upon such other business
as may properly come before the meeting.
The undersigned acknowledges receipt of the Notice of Annual Meeting and Proxy
Statement, dated September 2000.
RECORD DATE SHARES:
<PAGE>
FPA PARAMOUNT FUND, INC.
STATE STREET BANK & TRUST CO.
P.O. BOX 8115, BOSTON, MA 02266-8115
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints ERIC S. ENDE, JOHN P. ENDICOTT and LEONARD
MAUTNER, and each of them proxies with power of substitution, and hereby
authorizes each of them to represent and to vote, as provided on the reverse
side, all shares of stock of the above Fund which the undersigned is entitled to
vote at the annual meeting to be held on Monday, October 23, 2000, and at any
adjournments thereof.
--------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
When shares are held by joint tenants, both should sign. When signing as
attorney, executor, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
--------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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