<Page>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number: 811-852
FPA PARAMOUNT FUND, INC.
(Exact name of registrant as specified in charter)
11400 WEST OLYMPIC BLVD., SUITE 1200, LOS ANGELES, CALIFORNIA 90064
(Address of principal executive offices)
J. RICHARD ATWOOD,
11400 WEST OLYMPIC BLVD., SUITE 1200, LOS ANGELES, CALIFORNIA 90064
(Name and address of agent for service)
Registrant's telephone number, including area code: 310-473-0225
Date of fiscal year end: SEPTEMBER 30
Date of reporting period: MARCH 31, 2004
Item 1. Report to Stockholders.
<Page>
FPA PARAMOUNT FUND, INC.
SEMI-ANNUAL REPORT
[FPA LOGO]
DISTRIBUTOR:
FPA FUND DISTRIBUTORS, INC.
11400 WEST OLYMPIC BOULEVARD, SUITE 1200
LOS ANGELES, CALIFORNIA 90064
MARCH 31, 2004
40285
<Page>
LETTER TO SHAREHOLDERS
Dear Fellow Shareholders:
It has now been four years since Steve Geist and I assumed the management
of the FPA Paramount Fund. Although we did not realize it at the time, we were
entering a period of multi-year decline for all the major stock indexes, a trend
which reversed only in March 2003.
We are pleased to note that Paramount was up substantially over these four
years, with a 13% average annual gain and a cumulative advance of over 60%. This
performance is well in excess of the benchmark Russell 2500 as well as the
large-cap S&P and Nasdaq indexes.
<Table>
<Caption>
PERIODS ENDED MARCH 31, 2004
----------------------------
ONE TWO THREE FOUR
QUARTER YEAR YEARS* YEARS* YEARS*
------- ---- ------ ------ ------
Paramount** 4.6% 61.6% 10.1% 17.4% 12.8%
Russell 2500 5.9% 60.6% 10.5% 12.0% 5.0%
S&P 500 1.7% 35.1% 0.8% 0.6% (5.5)%
Nasdaq (0.5)% 48.7% 4.0% 2.7% (18.7)%
</Table>
* Annualized
** Does not reflect deduction of the sales charge which, if reflected, would
reduce the performance shown.
The market has been discounting both a vigorous economic recovery, with no
significant price inflation, as well as a reasonably well-behaved international
environment. We continue to be concerned that this "best-case" scenario may not
be realized, and as a result, the market may find current price levels, let
alone further advances, hard to sustain.
A consequence of the market's advance is that we have had difficulty
identifying high quality companies selling at attractive valuations. Although we
did add two new names to the portfolio during the recent quarter, Bio-Rad
Laboratories and Heartland Express, in both cases we bought only relatively
small positions, as the valuations did not justify a more aggressive stance. As
a result, cash continues at relatively high levels - 14% of total assets at
March 31st.
Two companies in Paramount's portfolio have been involved in very large
mergers. Carnival Corp. acquired P & O Princess Cruises last year, and North
Fork Bank announced the acquisition of Green Point Financial, expected to be
completed this Fall.
We believe both acquisitions will be highly beneficial, strengthening
competitive positions, increasing business diversification, and adding to
earnings. Each is a potentially transforming event.
CARNIVAL has been in the Paramount portfolio since 2000. It acquired
Princess in April 2003 for $8 billion, after a lengthy and hard fought battle
with rival Royal Caribbean Cruises.
Princess is the third largest cruise company, with approximately 10% of the
worldwide market. The combined company will have an over 40% share of the
market, with Royal a distant second at 25%. In North America, Carnival will now
have about half of the market, followed by Royal at 30% and Norwegian Cruise
Lines with 10%.
The combined company has 12 separate brands, including Carnival, Princess,
Holland-America, Costa, Cunard, and P & O. It has 73 ships, 120,000 berths, and
carries over 5 million in passengers annually.
The merged company has taken the dually listed company (DLC) structure. An
English company, Carnival plc will trade in London, and will own 21% of the
combined entity, while the American company, Carnival Corp. trades in New York
and owns 79%. The combined company is called Carnival Corporation & plc and is
managed as a single entity from its Miami headquarters. Shell and Unilever have
long had similar structures, with ownership shared by English and Dutch
companies.
The acquisition has increased Carnival's total debt from $3 billion to $8
billion. However, with $14 billion of shareholders equity and about 8 times
interest coverage, this level is not uncomfortably high. In addition, very
substantial cash flow will be available after new ship additions peak this year,
and Carnival would be able to reduce debt by over $2 billion annually if it
chose to do so.
In summary, we see the benefits of the merger to Carnival as follows:
- Unchallenged #1 market share in worldwide cruise industry
1
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- Strengthened position in growing European market
- Cost savings - $100 million stated goal, but potentially a good deal
greater
- Blocked Royal Caribbean's merger with Princess, which would have created a
company about equal in size to Carnival and improved Royal's over-leveraged
balance sheet
It was only six months ago that we described for shareholders our recent
purchase of NORTH FORK BANK. Soon after that, in December 2003, it announced the
acquisition of the Trust Company of New Jersey, a substantial purchase and one
which gives North Fork entry into the fast growing Northern New Jersey suburbs.
This $700 million purchase is expected to close in May and will increase North
Fork's assets by $4 billion or about 20%.
Now we are back again to describe a much larger and more significant
purchase by North Fork. In February, it announced the acquisition of Greenpoint
Financial, a $23 billion institution with a strong consumer bank -- the second
largest thrift in New York with 90 branches -- and a large mortgage company,
Greenpoint Mortgage, which operates nationally and originated $39 billion of
mortgages in 2003.
The acquisition will be all stock, and is valued at $6.3 billion. It is
expected to close in the third quarter, and will double North Fork's assets to
about $50 billion.
To be honest, our initial reaction to the merger announcement was one of
concern. Although North Fork has demonstrated its ability to negotiate and
execute mergers, completing 15 over the past seven years, Greenpoint is clearly
much larger than any of the others, and puts North Fork into two businesses that
it had not emphasized in the past - a retail savings bank and a national
mortgage business.
Over the past months, however, we have met with the bank's senior
management and thought further about the merger. We have concluded that it is
well within North Fork's ability to manage, and is likely to have a substantial
positive impact on North Fork's performance.
Among the benefits we see are the following:
- Diversification - combines North Fork's entrepreneur/small business base
with Greenpoint's retail customer. Both brands will be maintained.
- Expands North Fork's market share by adding 90 New York area branches and
$13 billion of deposits. The merged bank will be #4 in the market.
- Enhanced "franchise value." Creates a bank which would be very attractive
to a large financial institution wanting to enter the New York metropolitan
area.
- Substantial earnings accretion - 50 cents for the Greenpoint and Trust
Company of New Jersey deals combined.
- Greenpoint Mortgage - while a national mortgage business may lack
significant strategic appeal to North Fork, there are two offsets. First,
much of its volume is in specialty products - low-doc, no-doc, and
Alternative A mortgages - which are less interest rate sensitive than
conforming paper. Second, the business is well regarded and would be
readily saleable, if desired, at some future time.
Carnival and North Fork are both substantial positions in the Fund's
portfolio. We are optimistic that each of the acquisitions described above will
be important and positive events and hopeful that our continued holding of both
companies will produce positive returns for Paramount shareholders in the
future, as they have done in the past.
Respectfully submitted,
/s/ Eric S. Ende
Eric S. Ende
President
April 30, 2004
2
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HISTORICAL PERFORMANCE
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURN
PERIODS ENDED MARCH 31, 2004
----------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
FPA Paramount Fund, Inc.
(NAV) 61.57% 17.43% 9.60% 5.50%
FPA Paramount Fund, Inc.
(Net of Sales Charge) 53.90% 15.33% 8.43% 4.93%
Lipper Mid-Cap Core
Average 47.77% 8.63% 10.41% 12.02%
Russell 2500 Index 60.64% 11.97% 11.74% 12.63%
</Table>
The table presented above shows the average annual total return, which includes
reinvestment of all distributions, for several different periods ended March 31,
2004 for the Fund and comparative indices of securities prices. The Russell 2500
Index consists of the 2,500 smallest companies in the Russell 3000 total
capitalization universe. This index is a measure of small to medium
capitalization stock performance. The Lipper Mid-Cap Core Average provides an
additional comparison of how your Fund performed in relation to other mutual
funds with similar objectives. The data quoted represents past performance, and
an investment in the Fund may fluctuate so that an investor's shares when
redeemed may be worth more or less than their original cost. Since investors
purchase shares of the Fund with varying sales charges depending primarily on
volume purchased, the returns for the Fund are presented at net asset value
(NAV) and also net of the current maximum sales charge of 5.25% of the offering
price.
3
<Page>
MAJOR PORTFOLIO CHANGES
Six Months Ended March 31, 2004
<Table>
<Caption>
SHARES
-------
NET PURCHASES
COMMON STOCKS
Advanced Fibre Communications, Inc. 62,500
Bio-Rad Laboratories, Inc. (1) 10,000
Brown & Brown, Inc. 15,000
Cognex Corporation 7,500
Crane Co. 6,000
Engelhard Corporation 35,000
Health Management Associates, Inc. (1) 81,200
Heartland Express, Inc. (1) 30,000
Lincare Holdings Inc. 30,000
National Commerce Financial Corporation 30,000
North Fork Bancorporation, Inc. 5,000
Renal Care Group, Inc. 10,000
Tidewater Inc. 22,500
NET SALES
COMMON STOCKS
Denison International plc (ADR) (2) 110,000
KEMET Corporation 27,500
OM Group, Inc. (2) 60,000
SanDisk Corporation 50,000
</Table>
(1) Indicates new commitment to portfolio
(2) Indicates elimination from portfolio
4
<Page>
PORTFOLIO OF INVESTMENTS
March 31, 2004
<Table>
<Caption>
COMMON STOCKS SHARES VALUE
- -------------------------------------------------------- ------------ --------------
PRODUCER DURABLE GOODS -- 14.0%
Cognex Corporation 132,500 $ 4,405,625
Crane Co. 110,000 3,630,000
Graco Inc. 121,500 3,536,865
IDEX Corporation 70,500 3,065,340
Zebra Technologies Corporation (Class A)* 54,000 3,745,980
--------------
$ 18,383,810
--------------
HEALTH CARE -- 11.3%
Bio-Rad Laboratories, Inc.* 10,000 $ 563,700
Health Management Associates, Inc. 81,200 1,884,652
Landauer, Inc. 4,500 189,000
Lincare Holdings Inc.* 120,000 3,770,400
Ocular Sciences, Inc.* 123,000 3,585,450
Renal Care Group, Inc. 105,000 4,804,800
--------------
$ 14,798,002
--------------
TECHNOLOGY -- 11.3%
Advanced Fibre Communications, Inc.* 190,000 $ 4,185,700
KEMET Corporation* 52,500 752,850
Plantronics, Inc.* 95,000 3,477,950
SanDisk Corporation* 160,000 4,539,200
TriQuint Semiconductor, Inc.* 248,746 1,815,846
--------------
$ 14,771,546
--------------
ENERGY -- 10.4%
Cal Dive International, Inc.* 195,000 $ 5,036,850
Noble Corporation* 120,000 4,610,400
Tidewater Inc. 142,500 4,008,525
--------------
$ 13,655,775
--------------
BUSINESS SERVICES & SUPPLIES -- 9.1%
Charles River Laboratories International, Inc. 33,100 $ 1,418,335
HON INDUSTRIES Inc. 80,000 2,972,800
Manpower Inc. 65,000 3,022,500
Office Depot, Inc.* 240,000 4,516,800
--------------
$ 11,930,435
--------------
DISTRIBUTION -- 6.7%
Black Box Corporation 60,000 $ 3,215,400
ScanSource, Inc.* 115,000 5,513,100
--------------
$ 8,728,500
--------------
</Table>
5
<Page>
<Table>
<Caption>
SHARES OR
PRINCIPAL
COMMON STOCKS - CONTINUED AMOUNT VALUE
- -------------------------------------------------------- ------------ --------------
BANKING -- 6.6%
National Commerce Financial Corporation 145,000 $ 4,148,450
North Fork Bancorporation, Inc. 105,000 4,443,600
--------------
$ 8,592,050
--------------
RETAILING -- 6.1%
CarMax, Inc.* 109,996 $ 3,211,883
O'Reilly Automotive, Inc.* 120,600 4,828,824
--------------
$ 8,040,707
--------------
ENTERTAINMENT -- 4.7%
CEC Entertainment, Inc.* 60,000 $ 2,082,000
Carnival Corporation 90,000 4,041,900
--------------
$ 6,123,900
--------------
MATERIALS -- 2.8%
Engelhard Corporation 125,000 $ 3,736,250
--------------
INSURANCE -- 1.6%
Brown & Brown, Inc. 55,000 $ 2,131,800
--------------
TRANSPORTATION -- 0.7%
Heartland Express, Inc. 30,000 $ 683,700
Knight Transportation, Inc.* 10,500 251,790
--------------
$ 935,490
--------------
TOTAL COMMON STOCKS -- 85.3% (Cost $77,960,804) $ 111,828,265
--------------
SHORT-TERM INVESTMENTS -- 14.6%
Short-term Corporate Notes:
American General Finance Corporation -- 0.97% 4/1/04 $ 6,124,000 $ 6,124,000
Federal Home Loan Mortgage Corporation -- 0.97% 4/13/04 5,147,000 5,145,336
ChevronTexaco Funding Corporation -- 0.99% 4/22/04 4,000,000 3,997,690
AIG Funding, Inc. -- 0.99% 4/27/04 3,923,000 3,920,195
--------------
TOTAL SHORT-TERM INVESTMENTS (Cost $19,187,221) $ 19,187,221
--------------
TOTAL INVESTMENTS -- 99.9% (Cost $97,148,025) $ 131,015,486
Other assets and liabilities, net -- 0.1% 120,143
--------------
TOTAL NET ASSETS -- 100% $ 131,135,629
==============
</Table>
* Non-income producing security
See notes to financial statements.
6
<Page>
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2004
<Table>
ASSETS
Investments at value:
Investment securities -- at market value
(identified cost $77,960,804) $ 111,828,265
Short-term investments -- at cost plus interest earned
(maturities of 60 days or less) 19,187,221 $ 131,015,486
--------------
Cash 118
Receivable for
Capital Stock sold $ 247,107
Dividends and accrued interest 34,280 281,387
-------------- --------------
$ 131,296,991
LIABILITIES
Payable for:
Advisory fees and financial services $ 85,575
Capital stock repurchased 45,387
Accrued expenses 30,400 161,362
-------------- --------------
NET ASSETS $ 131,135,629
==============
SUMMARY OF SHAREHOLDERS' EQUITY
Capital Stock -- par value $0.25 per share; authorized
100,000,000 shares; outstanding 10,429,252 shares $ 2,607,313
Additional Paid-in Capital 260,910,151
Accumulated net realized loss on investments (166,190,406)
Accumulated net investment loss (58,890)
Unrealized appreciation of investments 33,867,461
--------------
NET ASSETS $ 131,135,629
==============
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) $ 12.57
==============
Maximum offering price per share
(100/94.75 of per share net asset value) $ 13.27
==============
</Table>
See notes to financial statements.
7
<Page>
STATEMENT OF OPERATIONS
For the Six Months Ended March 31, 2004
<Table>
INVESTMENT INCOME
Interest $ 95,652
Dividends 507,929
--------------
$ 603,581
EXPENSES
Advisory fees $ 427,182
Transfer agent fees and expenses 70,696
Financial services 61,874
Reports to shareholders 21,066
Registration fees 20,766
Directors' fees and expenses 19,419
Audit fees 19,000
Custodian fees and expenses 14,266
Legal fees 3,534
Insurance 2,782
Other expenses 1,886 662,471
-------------- --------------
Net investment loss $ (58,890)
--------------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Net realized gain on investments:
Proceeds from sales of investment securities (excluding
short-term investments with maturities of 60 days or less) $ 10,488,326
Cost of investment securities sold 7,132,082
--------------
Net realized gain on investments $ 3,356,244
Unrealized appreciation of investments:
Unrealized appreciation at beginning of period $ 19,202,320
Unrealized appreciation at end of period 33,867,461
--------------
Increase in unrealized appreciation of investments 14,665,141
--------------
Net realized and unrealized gain on investments $ 18,021,385
--------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 17,962,495
==============
</Table>
See notes to financial statements.
8
<Page>
STATEMENT OF CHANGES IN NET ASSETS
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 2004 SEPTEMBER 30, 2003
-------------------------------- --------------------------------
INCREASE (DECREASE) IN
NET ASSETS
Operations:
Net investment loss $ (58,890) $ (413,654)
Net realized gain on investments 3,356,244 7,183,045
Unrealized appreciation
of investments 14,665,141 18,458,804
-------------- --------------
Increase in net assets
resulting from operations $ 17,962,495 $ 25,228,195
Capital Stock transactions:
Proceeds from Capital Stock sold $ 11,892,002 $ 31,201,909
Cost of Capital Stock repurchased (8,357,366) 3,534,636 (20,983,669) 10,218,240
-------------- -------------- -------------- --------------
Total increase in net assets $ 21,497,131 $ 35,446,435
NET ASSETS
Beginning of period 109,638,498 74,192,063
-------------- --------------
End of period $ 131,135,629 $ 109,638,498
============== ==============
CHANGE IN CAPITAL STOCK
OUTSTANDING
Shares of Capital Stock sold 982,097 3,301,409
Shares of Capital Stock repurchased (711,025) (2,278,134)
-------------- --------------
Increase in Capital Stock
outstanding 271,072 1,023,275
============== ==============
</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
MARCH YEAR ENDED SEPTEMBER 30,
31, --------------------------------------------------------
2004 2003 2002 2001 2000 1999
--------- --------- -------- --------- --------- ---------
Per share operating performance:
Net asset value at beginning of period $ 10.79 $ 8.12 $ 8.00 $ 7.33 $ 9.46 $ 10.24
--------- --------- -------- --------- --------- ---------
Income from investment operations:
Net investment income (loss) $ (0.01) $ (0.04) $ (0.03) $ 0.08 $ 0.13 $ 0.07
Net realized and unrealized gain (loss)
on investment securities 1.79 2.71 0.16 0.72 (2.17) (0.77)
--------- --------- -------- --------- --------- ---------
Total from investment operations $ 1.78 $ 2.67 $ 0.13 $ 0.80 $ (2.04) $ (0.70)
--------- --------- -------- --------- --------- ---------
Less dividends from net investment income -- -- $ (0.01) $ (0.13) $ (0.09) $ (0.08)
Net asset value at end of period $ 12.57 $ 10.79 $ 8.12 $ 8.00 $ 7.33 $ 9.46
========= ========= ======== ========= ========= =========
Total investment return* 16.50% 32.88% 1.63% 11.11% (21.73)% (6.79)%
Ratios/supplemental data:
Net assets at end of period (in $000's) 131,136 109,638 74,192 67,078 73,235 171,220
Ratio of expenses to average net assets:
Before reimbursement from Investment Adviser 1.05%+ 1.15% 1.18% 1.28% 1.22% 1.03%
After reimbursement from Investment Adviser 1.05%+ 1.15% 1.17% 1.20% 1.17% 1.03%
Ratio of net investment income (loss)
to average assets:
Before reimbursement from Investment Adviser (0.09)%+ (0.47)% (0.34)% 0.84% 1.18% 0.57%
After reimbursement from Investment Adviser (0.09)%+ (0.47)% (0.34)% 0.92% 1.22% 0.57%
Portfolio turnover rate 20%+ 17% 14% 16% 76% 21%
</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, 2004 is not annualized.
+ Annualized
See notes to financial statements.
10
<Page>
NOTES TO FINANCIAL STATEMENTS
March 31, 2004
NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES
FPA Paramount Fund, Inc. (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 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. Securities traded on
the NASDAQ National Market System are valued at the NASDAQ Official Closing
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
at the time of purchase 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
accounting principles generally accepted in the United States of America
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 at the time of purchase)
aggregated $13,081,533 for the six months ended March 31, 2004. Realized gains
or losses are based on the specific-certificate identification method. There
were no material differences between the amounts reported in the financial
statements at March 31, 2004 for federal income tax and financial reporting
purposes. Gross unrealized appreciation and depreciation for all investment
securities at March 31, 2004 for federal income tax purposes was $36,381,682 and
$2,514,221, respectively. The Fund currently has accumulated net realized losses
in the amount of $166,184,437 which can be carried forward to offset future
gains. These losses expire as follows; $93,728,858 in 2007, $1,128,157 in 2008
and $71,327,422 in 2009.
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
11
<Page>
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, 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, 2004, the Fund paid aggregate fees of
$18,000 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, 2004, FPA Fund Distributors, Inc.
("Distributor"), a wholly owned subsidiary of the Adviser, received $5,809 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
<Page>
DIRECTOR AND OFFICER INFORMATION
<Table>
<Caption>
POSITION(S) PORTFOLIOS IN
WITH FUND/ PRINCIPAL OCCUPATION(S) FUND COMPLEX
NAME, AGE & ADDRESS YEARS SERVED DURING THE PAST 5 YEARS OVERSEEN OTHER DIRECTORSHIPS
------------------- ------------ ----------------------- -------- -------------------
Willard H. Altman, Jr. - (68) Director* Retired. Formerly, until 1995, Partner 6
11400 W. Olympic Blvd., #1200 Years Served: 2 of Ernst & Young LLP, a public
Los Angeles, CA 90064 accounting firm.
Leonard Mautner - (86) Director* President, Leonard Mautner Associates; 2
11400 W. Olympic Blvd., #1200 Years Served: 23 and General Partner, Goodman &
Los Angeles, CA 90064 Mautner Ltd.
John H. Rubel - (84) Director* President, John H. Rubel and 1
11400 W. Olympic Blvd., #1200 Years Served: 26 Associates, Inc.
Los Angeles, CA 90064
John P. Shelton (83)
11400 W. Olympic Blvd., #1200 Director* Professor Emeritus at UCLA Graduate 1 Genisco Systems, Inc.
Los Angeles, CA 90064 Years Served: 27 School of Management.
Eric S. Ende - (59) Director* Senior Vice President of the Adviser. 3
11400 W. Olympic Blvd., #1200 President &
Los Angeles, CA 90064 Portfolio
Manager
Years Served: 4
Steven R. Geist (50) Executive Vice Vice President of the Adviser.
11400 W. Olympic Blvd., #1200 President &
Los Angeles, CA 90064 Portfolio
Manager
Years Served: 4
J. Richard Atwood - (43) Treasurer Principal and Chief Operating Officer First Pacific Advisors,
11400 W. Olympic Blvd., #1200 Years Served: 7 of the Adviser. President and Chief Inc. and FPA Fund
Los Angeles, CA 90064 Executive Officer of FPA Fund Distributors, Inc.
Distributors, Inc.
Sherry Sasaki - (49) Secretary Assistant Vice President and Secretary
11400 W. Olympic Blvd., #1200 Years Served: 21 of the Adviser and of FPA Fund
Los Angeles, CA 90064 Distributors, Inc.
Christopher H. Thomas - (47) Assistant Vice President and Controller of the FPA Fund
11400 W. Olympic Blvd., #1200 Treasurer Adviser and of FPA Fund Distributors, Distributors, Inc.
Los Angeles, CA 90064 Years Served: 9 Inc.
</Table>
* Directors serve until their resignation, removal or retirement.
13
<Page>
FPA PARAMOUNT FUND, INC.
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
SHAREHOLDER SERVICE AGENT
Boston Financial Data Services, Inc.
P.O. Box 8115
Boston, Massachusetts 02266-8500
(800) 638-3060
(617) 483-5000
INDEPENDENT AUDITORS
Deloitte & Touche LLP
Los Angeles, California
CUSTODIAN & TRANSFER AGENT
State Street Bank and Trust Company
Boston, Massachusetts
TICKER SYMBOL: FPRAX
CUSIP: 302546106
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.
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Item 2. Code of Ethics. N/A.
Item 3. Audit Committee Financial Expert. N/A.
Item 4. Principal Accountant Fees and Services. N/A.
Item 5. Audit Committee of Listed Registrants. N/A.
Item 6. Schedule of Investments. Not applicable for periods ending before
July 9, 2004.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies. N/A.
Item 8. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers. N/A.
Item 9. Submission of Matters to a Vote of Security Holders. There has been no
material changes to the procedures by which shareholders may recommend
nominees to the registrant's board of directors.
Item 10. Controls and Procedures.
(a) The principal executive officer and principal financial officer of FPA
Paramount Fund, Inc. ("Fund") have concluded that the Fund's
Disclosure Controls and Procedures (as defined in Rule 30a-2(c) under
the Investment Company Act of 1940) are effective based on their
evaluation of the Disclosure Controls and Procedures as of a date
within 90 days of the filing date of this report.
(b) There have been no significant changes in the Fund's internal controls
or in other factors that could significantly affect these controls
subsequent to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and material
weaknesses.
Item 11. Exhibits.
(a) Code of ethics as applies to the registrant's officers and directors,
as required to be disclosed under Item 2 of Form N-CSR. N/A.
(b) Separate certification for the registrant's principal executive
officer and principal financial officer, as required by Rule 30a-2
under the Investment Company Act of 1940. Attached hereto.
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SIGNATURES
Pursuant to the Securities Exchange Act of 1934 and the Investment Company Act
of 1940, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
FPA PARAMOUNT FUND, INC.
By: /s/ ERIC S. ENDE
---------------------------------
Eric S. Ende, President
Date: June 4, 2004
Pursuant to the Securities Exchange Act of 1934 and the Investment Company Act
of 1940, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
FPA PARAMOUNT FUND, INC.
By: /s/ J. RICHARD ATWOOD
---------------------------------
J. Richard Atwood, Treasurer
Date: June 4, 2004