<PAGE>
CORPORATE DATA
Transfer and Dividend Disbursing Agent
Harris Trust and Savings Bank
(312) 461-3309 or
(800) 394-5187
Custodian
UMB Bank, N.A.
Legal Counsel
Bell, Boyd & Lloyd
Address of Company
200 West Madison Street
Suite 3510
Chicago, Illinois 60606
(312) 236-9190 or
(800) BKF-1891
Baker, Fentress & Company
- -----------------------------
REPORT TO SHAREHOLDERS
[ARTWORK]
THIRD QUARTER
SEPTEMBER 30, 1997
[RECYCLING LOGO]
The Company's Report to Shareholders is printed on recycled paper. We encourage
recycling and use of recycled products.
<PAGE>
TO OUR SHAREHOLDERS:
Total net assets have grown to a record $853.1 million, or $25.06 per share, as
of September 30, 1997. This compares to $741.1 million, or $21.77 per share, at
the end of 1996.
For the nine months ended September 30, 1997, the total return on our net
asset value was 16.9%, trailing the phenomenal 29.6% return on the S&P 500. From
our shareholders' perspective, the picture is significantly better. Total
shareholder return, based on changes in market price, was 25.0% for the first
nine months of 1997. Market value total return was higher than net asset value
total return because our discount narrowed from 22.5% to 16.7% over the same
period.
For your information, we have included an overview of the market as well as
updates on each component of the Baker Fentress portfolio, including the Public
Portfolio, John A. Levin & Co., Inc. ("Levco"), Consolidated-Tomoka, and Private
Placements.
Market Commentary
The U.S. equity market continued its push to record highs during the third
quarter. A notable feature of the quarter was a shift in investor sentiment away
from large, multi-national companies that have been market favorites for an
extended period. The move toward small and mid-cap stocks, which began in May,
accelerated during the third quarter, resulting in a broadening market.
Investors seem to be placing greater emphasis on companies with domestic
earnings and cyclical or industrial exposures that have been less exploited in
the recent past.
The primary force driving the market appears to be investor sentiment.
Every indication is that the stock market continues to possess strong upward
momentum, with investors continuing to put substantial amounts into mutual
funds.
Investor confidence has been rooted in a long-term favorable outlook for
earnings, expanding foreign markets, business savings through mergers, and
developments in technology. Nevertheless, some of the factors that have fueled
this extended bull market may be changing. With a great deal of cost-cutting
already having been achieved and pricing pressures growing more intense in many
businesses, earnings gains may prove to be more difficult to sustain. Emerging
markets growth may be slowed by trade deficit pressures, currency woes, and
over-expansion. Furthermore, technological innovation, while proceeding at an
extraordinary rate, may not meet investor expectations since competition is
intense, free cash flows are modest, and product cycles are short. The mixture
of these factors has led to a market this year which has exhibited more daily
volatility but with a pronounced upward bias. In our view, market volatility is
exacerbated by computer-driven futures trading programs.
Public Portfolio
Levco has nearly completed the restructuring of our public portfolio. Levco's
approach focuses on selective investments in large-cap value stocks, with a
particular focus on the preservation of capital and risk-adjusted returns. Levco
believes in following this disciplined, time-tested investment strategy even
through this challenging market environment for value investors.
The total return of our public portfolio was 18.5% for the nine months
ended September 30, 1997. In light of the strong equity market performance in
1997, hedging certain oversized pre-Levco positions in a manner consistent with
Levco's capital preservation philosophy resulted in performance which lagged the
market. In addition, certain historic mid-capitalization securities and recently
acquired large-cap value positions have not kept pace with the S&P 500.
Looking forward, despite the significant market advance of the past three
years, Levco's portfolio managers believe they will be able to identify
additional investments that offer
1
<PAGE>
TO OUR SHAREHOLDERS (continued)
substantial potential for appreciation while providing above average capital
protection. They also believe our public portfolio is well positioned to capture
important parts of market advances while still being resistant to declines, as
evidenced by the fact that the public portfolio has consistently declined less
than the market in periods when the S&P 500 has fallen.
Levco
Overall, Levco's operations are encouraging. Total assets under management as
of September 30, 1997 were $8.0 billion, up 23% from $6.5 billion at the end of
1996. Revenues for the last nine months were $28.5 million.
As previously reported, Jessica Bibliowicz, formerly Executive Vice
President of Smith Barney, joined Levco in July as President and Chief Operating
Officer. She is devoting much of her time to enhancing and expanding Levco's
marketing and client servicing activities as well as developing new products. In
September, Jeffrey A. Kigner, Co-Chairman of Levco, was named Chief Investment
Officer of that company. Also in September, Melody Sarnell left Levco to pursue
other interests. She will be resigning as a director of Baker Fentress.
We are pleased to announce that Dan Theriault has rejoined Levco as a
Senior Portfolio Manager. Mr. Theriault was previously the President and
Portfolio Manager of the T. Rowe Price Financial Services Fund, which he managed
since its inception on September 30, 1996, and a Vice President/Insurance and
Financial Services Analyst for T. Rowe Price Associates. Prior to working at T.
Rowe Price, Mr. Theriault was a Securities Analyst at Levco. Mr. Theriault's
arrival expands Levco's investment expertise, and based on prior experience with
him, we are confident that he will immediately enhance Levco's investment team
and process.
Beginning October 27, 1997, Mr. Theriault will be managing a portion of the
public portfolio of BKF pursuant to the investment management agreement between
BKF and Levco. We will allocate approximately $20 million to Mr. Theriault's
management and will report on his portion of the portfolio separately. Levco
will maintain complete discretion as to the amount of BKF assets to be managed
by Mr. Theriault. Mr. Theriault's investments will be made in insurance and
specialty financial services companies using the same investment strategy he
employed at the fund he managed for T. Rowe Price. We believe that concentrating
a portion of the BKF portfolio in this sector will give us better exposure to an
area that Levco feels has significant potential. Levco will continue to manage
the rest of the public portfolio according to its large cap value strategy.
Consolidated-Tomoka
The real estate operations of Consolidated-Tomoka Land Co. (AMEX symbol: "CTO")
continue to improve. The contract for the sale of 11,000 acres of Daytona Beach
area lands to St. John's River Water Management District was announced in June.
This sale is expected to close in December, with proceeds of about $10 million.
The backlog of real estate sales continues to expand over last year's level. All
of this should result in record profits for CTO's real estate operations in
1997.
The search for permanent financing for the resort hotel at LPGA
International continues. In the meantime, CTO has agreed to finance the
construction of a second golf course and a clubhouse in return for a long-term
lease from the City of Daytona Beach for both golf courses at LPGA
International. The first golf course has been operational since July 1994.
Construction of the second golf course began in September.
Profitability of the citrus operations is down from last year because of a
record Florida citrus
2
<PAGE>
crop that depressed prices. CTO expects a larger citrus harvest for the new crop
year that began September 1.
In August, CTO declared and paid a $0.35 per share dividend. This resulted
in total dividends for 1997 of $0.65 per share, compared to $0.55 for 1996.
Private Placements
After a period of on-target returns of about 20% per year for the four years
ended December 31, 1996, this sector of our portfolio experienced a total return
of about 1.2% for the nine months ended September 30, 1997. The only significant
valuation change in the third quarter was the reduction of our investment in
Home State Holdings to zero, resulting in a loss of $7.7 million. This followed
Home State's insurance subsidiaries being placed into regulatory receivership
after a failed attempt to find a buyer for this company. As of September 30,
securities held in our private portfolio totaled $61.2 million, or 7.2% of net
assets. Securities representing 55.7% of this amount were readily marketable.
Over the last two years the private placement market has been flooded with
new capital. Competition for transactions is intense and prices are, in our
opinion, extremely high. Given the risk and illiquidity in this type of
investment, we therefore have made a decision not to pursue further private
investment opportunities. As our present portfolio matures, we expect the
proceeds will be invested in publicly-traded securities.
Projected 1997 Distributions
Our year-end distributions will not be declared until November, but we want to
provide shareholders some guidance for 1997 tax planning and cash flow purposes.
In June, we announced that for each of 1997 and 1998 Baker Fentress plans to
make calendar year distributions totaling about 12% of average net assets for
the 12 months ended October 31 of each year. Based on average net assets for the
11 months ended September 30, 1997, the 12% target for this year would be $2.75
per share.
A midyear dividend of $0.20 per share was paid in June. This would leave an
estimated $2.55 per share to be paid in mid-December. In early November, our
board will decide the exact amounts and declare the year-end distributions. As
has been our past practice, the distributions will consist of two separate
payments, a year-end ordinary income dividend and a long-term capital gain
distribution.
Complete tax information on all 1997 ordinary income dividends and the 1997
long-term capital gain distribution will be provided in January 1998 on Form
1099-DIV. The tax information you receive will reflect the changes in capital
gain tax rates and holding periods made by the Taxpayer Relief Act of 1997.
Closing
As always, please contact us at 1-800-BKF-1891 if you have any questions or
would like to discuss any of these topics further.
/s/ James P. Gorter
James P. Gorter
Chairman of the Board
/s/ John A. Levin
John A. Levin
President and Chief Executive Officer
3
<PAGE>
STATEMENT OF INVESTMENTS
<TABLE>
<CAPTION>
September 30, 1997 - Unaudited Shares Value
------- -----------
<S> <C> <C>
INVESTMENTS IN UNAFFILIATED ISSUERS - 62.75%
Public - 58.27%
Common Stock - 56.53%
Basic Materials - 6.96%
Air Products & Chemicals, Inc....................... 98,000 $ 8,127,875
Allegheny Teledyne Incorporated..................... 281,000 8,043,625
E.I. du Pont de Nemours and Company................. 164,000 10,096,250
Getchell Gold Corporation (b)....................... 225,400 9,241,400
IMC Global Inc...................................... 90,800 3,200,700
Monsanto Company.................................... 176,200 6,871,800
USG Corporation (b)................................. 150,000 7,190,625
W.R. Grace & Co..................................... 90,000 6,626,250
-----------
59,398,525
-----------
Capital Goods - 10.56%
The Boeing Company.................................. 236,436 12,870,985
Corning Incorporated................................ 126,000 5,953,500
Crown Cork & Seal Company, Inc...................... 79,000 3,643,875
Electronic Data Systems Corporation................. 132,000 4,686,000
General Electric Company............................ 80,000 5,460,000
Harnischfeger Industries, Inc....................... 218,920 9,358,830
Litton Industries, Inc. (b)......................... 95,000 5,165,625
Lockheed Martin Corporation......................... 68,600 7,314,475
Minnesota Mining and Manufacturing Company.......... 62,300 5,758,856
Owens-Illinois, Inc. (b)............................ 226,500 7,686,844
Rockwell International Corporation.................. 87,100 5,481,856
Waste Management, Inc............................... 292,120 10,205,942
York International Corporation...................... 145,000 6,488,750
-----------
90,075,538
-----------
Communication Services - 1.68%
Bell Atlantic Corporation........................... 35,500 2,855,531
MCI Communications Corporation...................... 390,000 11,456,250
-----------
14,311,781
-----------
Consumer Cyclical - 4.75%
The Black & Decker Corporation...................... 111,600 4,157,100
General Motors Corporation.......................... 122,100 8,173,069
HFS Incorporated (b)................................ 100,700 7,495,856
Owens Corning....................................... 100,000 3,650,000
J.C. Penney Company, Inc............................ 35,000 2,038,750
Tribune Company..................................... 230,000 12,261,875
Woolworth Corporation (b)........................... 124,100 2,745,712
-----------
40,522,362
-----------
Consumer Staples - 2.98%
Kellogg Company..................................... 69,200 2,915,050
Newell Co........................................... 250,000 10,000,000
Time Warner Inc..................................... 130,000 7,044,375
U. S. West Media Group (b).......................... 245,000 5,466,562
-----------
25,425,987
-----------
Energy - 1.60%
Amerada Hess Corporation............................ 34,200 2,109,713
Chesapeake Energy Corp. (b)......................... 150,000 1,706,250
Union Texas Petroleum Holdings, Inc................. 420,000 9,870,000
-----------
13,685,963
-----------
</TABLE>
See accompanying Notes to Statement of Investments
4
<PAGE>
STATEMENT OF INVESTMENTS
<TABLE>
<CAPTION>
September 30, 1997 - Unaudited Shares or
Principal
Amount Value
--------- ------------
<S> <C> <C>
INVESTMENTS IN UNAFFILIATED ISSUERS (continued)
Financials -- 13.38%
Aetna, Inc.................................................. 83,500 $ 6,800,031
American International Group, Inc........................... 33,000 3,405,188
Aon Corporation............................................. 255,000 13,451,250
Barnett Banks, Inc.......................................... 400,000 28,300,000
The Chase Manhattan Corporation............................. 54,000 6,372,000
Citicorp.................................................... 40,500 5,424,469
General Re Corporation...................................... 60,000 11,910,000
TIG Holdings, Inc........................................... 295,000 10,325,000
T. Rowe Price Associates, Inc............................... 208,100 13,994,725
Tokio Marine and Fire Insurance Company (ADR)............... 125,000 7,562,500
Unitrin, Inc................................................ 102,000 6,630,000
------------
114,175,163
------------
Health Care -- 4.95%
Baxter International Inc...................................... 191,100 9,984,975
Genentech, Inc. (b)........................................... 100,000 5,812,500
Pfizer Inc.................................................... 226,400 13,612,300
Rhone-Poulenc S.A. (ADR)...................................... 67,500 2,729,531
United HealthCare Corporation................................. 201,000 10,050,000
------------
42,189,306
------------
Technology -- 5.12%
Ascend Communications, Inc. (b)............................... 52,500 1,699,688
General Motors Corporation, Class H........................... 82,700 5,468,538
Glenayre Technologies, Inc. (b)............................... 40,000 670,000
International Business Machines Corporation................... 107,200 11,363,200
Nextel Communications, Class A (b)............................ 125,000 3,609,375
Seagate Technology, Inc. (b).................................. 145,000 5,256,250
Tellabs, Inc. (b)............................................. 158,000 8,137,000
Varian Associates, Inc........................................ 120,000 7,455,000
------------
43,659,051
------------
Transportation -- 0.68%
Union Pacific Corporation..................................... 93,000 5,824,125
------------
Utilities -- 3.87%
Duke Energy Corporation....................................... 365,540 18,071,384
Long Island Lighting Company.................................. 453,000 11,664,750
Texas Utilities Company....................................... 91,300 3,286,800
------------
33,022,934
------------
Total common stock (Cost $299,324,736)....................... 482,290,735
------------
Preferred Stock -- 0.23%
Aetna Inc., 6.25% Class C..................................... 25,000 1,945,312
------------
Total preferred stock (Cost $1,625,491)...................... 1,945,312
------------
Convertible Bonds -- 1.38%
Alza Corporation, Zero Coupon due 07/14/2014.................. $11,150,000 4,850,250
National Semiconductor Corporation, 6.50% due 10/01/2002 (h).. $ 6,000,000 6,915,000
------------
Total convertible bonds (Cost $11,972,435)................... 11,765,250
------------
</TABLE>
See accompanying Notes to Statement of Investments
5
<PAGE>
STATEMENT OF INVESTMENTS
<TABLE>
<CAPTION>
September 30, 1997 - Unaudited Shares, Principal
Amount
or Contracts Value
----------------- ------------
INVESTMENTS IN UNAFFILIATED ISSUERS (continued)
Purchased Put Options - 0.13%
Expiration Date/
Strike Price
----------------
<S> <C> <C> <C>
MCI Communications Corporation........................ Oct 97/$37.50 950 $ 748,125
MCI Communications Corporation........................ Oct 97/$40.00 340 357,000
Tellabs, Inc.......................................... Oct 97/$50.00 120 22,500
------------
Total purchased put options (Cost $302,793)........ 1,127,625
------------
Total public portfolio (Cost $313,225,455).......... 497,128,922
------------
Private Placement - 4.48%
Echlin Inc.- manufacturer of automotive parts and components
Common Stock............................................................. 553,162 19,395,243
Home State Holdings, Inc.- property and casualty insurers
11.50% Subordinated Note due 10/03/2004 (c)(d)(e)(f)..................... $10,050,000 -
Stock Purchase Warrants Expiring 10/03/2004 (c)(d)(e).................... 150,750 -
Paracelsus Healthcare Corporation - hospital management company
Common Stock (b)(c)(d)(f)................................................ 535,443 2,998,481
Security Capital U.S. Realty - real estate investment trust
Common Stock (b)......................................................... 983,528 14,654,561
Golder, Thoma, Cressey Fund II Limited Partnership (c)(d)(e).............. $ 202,264 1,116,429
Phillips-Smith Specialty Retail Group Limited Partnership (c)(d)(e)....... $ 60,886 60,886
------------
Total private placement portfolio (Cost $34,873,312).................... 38,225,600
------------
Total investments in unaffiliated issuers (Cost $348,098,767)............. 535,354,522
------------
INVESTMENTS IN NON-CONTROLLED AFFILIATES - 1.46%
Private Placement - 1.46%
Citadel Communications Corporation - radio broadcasting
Series A Convertible Preferred Stock (b)(c)(d)(e)........................ 746,412 11,942,590
TBN Holdings Inc.- hazardous waste recycler
12% Subordinated Note due 12/31/2002 (c)(d)(e)(g)........................ $ 8,000,000 500,000
Series C-3 Convertible Preferred Stock (b)(c)(d)(e)...................... 1,511,628 -
Stock Purchase Warrants Expiring 12/31/2002 (c)(d)(e).................... 1,100,000 -
------------
Total investments in non-controlled affiliates (Cost $13,110,996)......... 12,442,590
------------
</TABLE>
See accompanying Notes to Statement of Investments
6
<PAGE>
STATEMENT OF INVESTMENTS
September 30, 1997 - Unaudited
<TABLE>
<CAPTION>
Shares, Principal
Amount
or Contracts Value
----------------- ------------
<S> <C> <C>
INVESTMENTS IN CONTROLLED AFFILIATES--30.45%
Publicly-Traded -- 13.85%
Consolidated-Tomoka Land Co., Common Stock
(majority-owned) -- development of Florida real estate;
production and sale of citrus fruit (Cost $5,030,627) (c)........ 5,000,000 $118,125,000
------------
Private Placement -- 1.23%
DuroLite International, Inc. -- manufacturer and distributor of
specialized lighting products
Convertible Preferred Stock (b)(c)(d)(e)......................... 2,500 2,627,250
12% Subordinated Note due 11/03/2004 (c)(d)(e)................... $ 8,000,000 7,872,750
------------
Total private placement portfolio (Cost $10,500,000)........... 10,500,000
------------
Wholly-Owned Subsidiary -- 15.37%
Levin Management Co., Inc. -- investment management
Common Stock (c)(d)(e)........................................... 1,000 66,155,368
9.75% Note due 06/28/1999 (c)(d)(e).............................. $65,000,000 65,000,000
------------
Total wholly-owned subsidiary (Cost $120,645,890).............. 131,155,368
------------
Total investments in controlled affiliates (Cost $136,176,517).... 259,780,368
------------
MONEY MARKET SECURITIES--5.74%
U.S. Treasury Bill -- 5.120% due 01/22/1998....................... $10,000,000 9,837,866
U.S. Treasury Bill -- 5.155% due 02/26/1998....................... $40,000,000 39,146,561
------------
Total investments in money market securities (Cost $48,984,427)... 48,984,427
------------
Total Investments -- 100.40% (Cost $546,370,707).................. 856,561,907
------------
WRITTEN CALL OPTIONS -- (0.00%)
Expiration Date/
Strike Price
----------------
MCI Communications Corporation.................... Oct 97/$30.00 350 (21,875)
------------
Total written call options (Premium received $313,940).......... (21,875)
------------
SECURITIES SOLD SHORT -- (4.79)%
Ascend Communications, Inc........................................ 52,500 (1,699,688)
Barnett Banks..................................................... 247,000 (17,475,250)
Chesapeake Energy Corp............................................ 150,000 (1,706,250)
MCI Communications Corporation.................................... 117,500 (3,451,562)
T. Rowe Price Associates, Inc..................................... 62,000 (4,169,500)
Tellabs, Inc...................................................... 123,000 (6,334,500)
United HealthCare Corporation..................................... 25,000 (1,250,000)
York International Corporation.................................... 107,300 (4,801,675)
------------
Total securities sold short (Proceeds $44,072,517) (h)............ (40,888,425)
------------
Cash and Other Assets Less Liabilities -- 4.39%................... 37,424,201
------------
NET ASSETS -- 100.00%............................................. $853,075,808
============
See accompanying Notes to Statement of Investments
7
</TABLE>
<PAGE>
NOTES TO STATEMENT OF INVESTMENTS
---------------------
(a) Based on the cost of investments of $495,152,085, for federal income
tax purposes at September 30, 1997, net unrealized appreciation was
$361,387,947, which consisted of gross unrealized appreciation of
$381,215,856 and gross unrealized depreciation of $19,827,909.
(b) Non-income producing security.
(c) Securities subject to legal or contractual restrictions on sale are
valued at cost on the dates of acquisition and at a fair value
determined in good faith by the board of directors of the Company as
of September 30, 1997 based upon all factors deemed relevant by the
board. The quantitative and qualitative factors considered by the
board of directors may include, but are not limited to, type of
securities, nature of business, marketability, restrictions on
disposition, market price of unrestricted securities of the same issue
(if any), comparative valuation of securities of publicly-traded
companies in the same or similar industries, valuation of recent
mergers and acquisitions of similar companies, current financial
condition and operating results, sales and earnings growth, operating
revenues, competitive conditions, and current and prospective
conditions in the overall stock market.
The values determined by the board of directors may not reflect
amounts that could be realized upon immediate sale, nor amounts that
ultimately may be realized. Accordingly, the fair values included in
the statement of investments may differ from the values that would
have been used had a ready market existed for these securities, and
such differences could be significant.
(d) The aggregate value of restricted securities was $158,273,754, or
18.55% of net assets, at September 30, 1997.
(e) There were no unrestricted securities of the same issue outstanding on
September 30, 1997 or the dates of acquisition.
(f) Represents 80% of the current market price of unrestricted common
stock of Paracelsus Healthcare Corporation.
(g) Security not current as to payment of interest.
(h) Security exempt from registration requirements under Rule 144A of the
Securities Act of 1993 which permits resales of eligible securities
issued in private placements and other transactions to "Qualified
Institutional Investors".
(i) The aggregate market value of stocks held in escrow at September 30,
1997 to collateralize securities sold short was $40,888,425. In
addition the Company maintains cash deposits of $42,585,914 with
brokers to collateralize securities sold short.
8
<PAGE>
PORTFOLIO CHANGES EXCEEDING $2.5 MILLION
Quarter Ended September 30, 1997 - Unaudited
<TABLE>
<CAPTION>
Purchases Cost
- --------- -----------
<S> <C>
Long Island Lighting Company.................. $ 9,339,929
Getchell Gold Corporation..................... 7,264,557
National Semiconductor Corporation
Conv. Bond, 6.5% due 10/01/02............... 6,901,500
Monsanto Company.............................. 6,737,985
HFS Incorporated.............................. 6,133,504
Pfizer Inc.................................... 5,936,096
Minnesota Mining and Manufacturing
Company..................................... 5,787,390
Rockwell International Corporation............ 4,453,267
Rhone-Poulenc S.A. (ADR)...................... 2,917,906
-----------
$55,472,134
===========
</TABLE>
BAKER FENTRESS AT A GLANCE
Baker, Fentress & Company, a domestic equity closed-end fund listed on the
New York Stock Exchange (Symbol: BKF), invests primarily for capital
appreciation and for income consistent with capital appreciation. The Company's
portfolio of publicly-traded securities is managed by John A. Levin & Co., Inc.,
a wholly-owned subsidiary. The balance of the portfolio is internally managed by
its officers under the supervision of its board of directors. The business of
the Company was started in 1891.
The Company's portfolio includes:
. Publicly-traded companies with focus on long-term
appreciation and capital protection
. Illiquid private placements and controlled affiliates
with higher risk but greater potential for growth
. Long-term investments with significant unrealized
appreciation
The Company has a policy of distributing to shareholders annually amounts equal
to at least 8% of the Company's average net assets. For both 1997 and 1998, the
Company intends to pay out about 12% of average net assets.
<TABLE>
<CAPTION>
Sales Proceeds
- ----- -----------
<S> <C>
The Manitowoc Company, Inc...... $ 7,461,641
Cisco Systems, Inc.............. 6,381,785
Newell Co....................... 6,261,910
Pharmacia & Upjohn, Inc......... 5,478,479
United HealthCare Corporation... 5,471,148
T. Rowe Price Associates, Inc... 5,406,120
Great Lakes Chemical Corporation 4,720,462
Eastman Kodak Company........... 4,705,783
MCI Communications Corporation.. 3,661,877
Tupperware Corporation.......... 2,820,224
-----------
$52,369,429
===========
</TABLE>
SELECTED DATA
As of September 30, 1997
<TABLE>
<S> <C>
Total net assets................. $853,075,808
Net investment income (YTD)...... $ 12,632,510
Net realized capital gain (YTD).. $ 38,090,322
Unrealized appreciation.......... $313,667,357
Shares outstanding............... 34,042,181
Per share
Net asset value.............. $ 25.06
Market price................. $ 20.875
</TABLE>
9
<PAGE>
DIRECTORS AND OFFICERS
BOARD OF DIRECTORS
Frederick S. Addy
Bob D. Allen
Jessica M. Bibliowicz
Eugene V. Fife
J. Barton Goodwin
James P. Gorter
David D. Grumhaus
Jeffrey A. Kigner
John A. Levin
Burton G. Malkiel
David D. Peterson
William H. Springer
OFFICERS
James P. Gorter Chairman of the Board
John A. Levin President and Chief Executive Officer
James P. Koeneman Executive Vice President and Secretary
Scott E. Smith Executive Vice President
Janet Sandona Jones Vice President, Treasurer and Assistant Secretary
Todd H. Steele Vice President
Lana L. Spence Assistant Treasurer
10
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