-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JUap3Bm6Rjha68/p05YgTpjkirwgt/hYFOVcFb8ST58r3IpAPKil3koAxksxGV3C mImGfN93CK7lDE8aWtoa/A== 0000950131-99-006043.txt : 19991105 0000950131-99-006043.hdr.sgml : 19991105 ACCESSION NUMBER: 0000950131-99-006043 CONFORMED SUBMISSION TYPE: N-30B-2 PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991104 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BAKER FENTRESS & CO CENTRAL INDEX KEY: 0000009235 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 360767350 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30B-2 SEC ACT: SEC FILE NUMBER: 811-02144 FILM NUMBER: 99741163 BUSINESS ADDRESS: STREET 1: 200 W. MADISON ST. STREET 2: SUITE 3510 CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3122369190 FORMER COMPANY: FORMER CONFORMED NAME: BAKER FENTRESS & CO ET AL DATE OF NAME CHANGE: 19940714 N-30B-2 1 QUARTERLY REPORT DATED 9/30/99 To Our Shareholders The third quarter marked an important change for Baker, Fentress & Company (BKF). The plan to distribute most of BKF's assets and to de-register as an investment company was approved by shareholders at a special meeting on August 19, 1999. The detailed voting results for this special meeting can be found on page three of this report. STATUS OF THE PLAN The initial distributions as part of the plan were paid on September 24, 1999. They consisted of two cash payments totaling $4.00 per share and the distribution of all the shares of Consolidated-Tomoka Land Co. (AMEX:CTO) owned by BKF. There are three major steps remaining to be completed: . the final distribution of the Company's remaining cash; . a reverse stock split; and . the de-registration of BKF as a registered investment company. The Company expects to pay the final distribution in January 2000 (with a part of that distribution being taxable in 1999). We plan for the reverse stock split, which shareholders also approved at the special meeting, to occur at or about the same time that the NYSE reduces the BKF per share market price by the amount of the final distribution. In the reverse stock split, you will receive one "new" BKF share for each six "old" BKF shares you own, and cash for any resulting fraction of a share. The reverse stock split is intended to increase the per share market price of BKF and should have no economic impact on BKF share-holders. You will receive more information about the mechanics of the reverse split at a later date. The final step is ceasing to be an investment company. We have applied to the Securities and Exchange Commission for an order declaring that, after payment of the final distribution, BKF no longer will be an investment company. We hope to receive that order sometime in the first quarter of 2000. After that order is received, the plan will have been completely implemented. The Company will be a holding company with one principal asset - John A. Levin & Co., Inc. (Levco) and the related Levco Companies. BKF intends to continue to be listed on the NYSE after the distribution plan is completed. PERFORMANCE UPDATE This year's shareholder return, as measured by market value total return, was positively impacted by the announcement of the distribution plan. Since the announcement, 18.3 million shares (46.8% of BKF's outstanding shares) have traded, and our discount has narrowed from 25.8% on May 5, 1999 to 7.0% on September 30, 1999. For the nine months ended September 30, 1999, the shareholder return was 33.5%. This compares to net asset value total return for this same period of 7.5%. STATUS OF THE PORTFOLIO The Company started selling portfolio securities immediately after shareholders approved the distribution plan on August 19th. As of September 30, 1999, our total net assets were comprised of the following:
Market Value As of 9/30/99 (in millions) ------------- Cash and cash equivalents $424.0 Public portfolio securities 56.2 Private placement securities 9.4 Levco 102.0 Other assets less liabilities (6.4) ------ Total net assets $585.2 ======
As can be seen from the above table, the Company has sold a substantial portion of its portfolio securities, and invested the proceeds in U.S. Treasury Bills. At the end of September, the amount of the Company's assets in cash Baker, Fentress & Company 3rd Quarter Report 1999 1 To Our Shareholders (continued) equivalents was about 72% of the Company's total net assets. That percentage should increase as the balance of the public and private portfolios are liquidated. Included in the $56.2 million public portfolio securities still held at September 30th, is $48.3 million of securities with unrealized gains that were short-term as of September 30th, but will become long-term before year-end and will be sold when they cross that long-term threshold. From October 1 through October 20, 1999 $18.9 million of these securities were sold, resulting in gains of $8.0 million. The remaining public portfolio securities will also be sold before the end of 1999. During September, the balance of our Citadel Communications Corporation shares was sold. This was one of the best performing private placement investments in the Company's history. The Company received total sale proceeds of $83.4 million for our equity investment, compared to an original cost of $4.3 million. The remaining private placement portfolio consists of our investment in Durolite International and three smaller holdings. Recent events suggest our generating liquidity in the Durolite investment at a reasonable valuation before year end is not likely. On October 22, we reduced this investment's carrying value from $8.0 million to $2.0 million to reflect this fact. We continue efforts to maximize the ultimate value to be realized from the investment. During the third quarter, one of the small investments was converted into a debt security which matures prior to year end. Subsequent to the third quarter's end, another investment converted into unrestricted publicly traded securities which will be liquidated. We continue to evaluate options for liquidating the last and smallest holding, an unrestricted but illiquid public security. The largest single position within our portfolio continues to be Levco, which is valued by the board of directors at $102.0 million, or $2.61 per BKF share, and represented 17.4% of total net assets as of September 30, 1999. Levco is a registered investment adviser, located in New York City, that Baker Fentress acquired on June 28, 1996. Levco currently manages $7.8 billion of assets as of September 30, 1999 for both institutional and individual accounts. Gross revenues for the nine months ended September 30, 1999 were $37.7 million. Shareholders are reminded that as the BKF public portfolio is liquidated, Levco will no longer earn management fees on these assets. Such fees totaled $1.5 million in 1998. This change in revenues has already been reflected in the valuation of Levco. SUMMARY OF DISTRIBUTIONS In addition to the $0.30 per share ordinary income dividend paid on June 15, 1999, the following cash distributions were paid on September 24, 1999: . Ordinary income dividend of $1.00 per share. . Capital gain distribution of $3.00 per share. . All 5,000,000 shares of CTO owned by BKF. The distribution ratio was 0.128109 shares of CTO for each BKF share, with any fractional share sold and the proceeds paid in cash. The Company expects to pay the final distribution in one aggregate amount in January 2000. This distribution should consist of an ordinary income dividend, a capital gain distribution and a return of capital. A part of the distribution will be taxable in 1999, even though shareholders will not receive it until January 2000. Complete tax information regarding all distributions for 1999, including those received in 2000, will be sent to all shareholders in January 2000. ESTIMATED FINAL DISTRIBUTION We have received many requests from shareholders for more information about the estimated amount of the final distribution. The actual amount of the final distribution 2 Baker, Fentress & Company 3rd Quarter Report 1999 (and its precise timing) will be determined by the Company's board of directors in mid-December. Based upon the composition of the Company's assets as of September 30, 1999, our estimates of the Company's income and expenses, and our estimates of the amount of additional gain or loss to be realized when the remaining portfolio securities are sold, we are currently estimating that the final per share distribution will be as shown below:
Estimate As of 9/30/99 ------------- Ordinary Income $ 1.42 Capital Gain 1.87 Return of Capital 8.95 ------ Total $12.24 ======
Remember that these amounts, and the allocation among the various sources, are only estimates. The actual amounts and sources will depend on the Company's actual income, expenses and realized gains on securities sales. TERMINATION OF DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN On October 4, 1999, the board of directors authorized the termination of the Company's Dividend Reinvestment and Cash Purchase Plan. The Plan was terminated as of October 22, 1999. Within three days after the termination of the Plan, certificates were issued for whole shares held in participants' plan accounts. Fractional shares were sold and the proceeds paid in cash a few days later. BASIS INFORMATION The Company has information from 1971 to the present that might help some shareholders to calculate their basis in BKF common stock. If you need more information to compute the basis of your BKF shares, go to the Company's web site at www.bakerfentress.com. Information on the web site includes per share ordinary income dividends, capital gain distributions and reinvestment prices from June 1971 to the present. It also provides amounts which can be added to your basis for years 1971 through 1987 when the Company retained all or a portion of realized capital gains and paid the related taxes. CLOSING COMMENTS We continue to believe that our asset distribution plan is in the best interests of the shareholders of the Company and wish to thank our shareholders for their support. We are now concentrating our efforts on the timely liquidation of those investments remaining in our public and private portfolios, and developing the business of Levco. /s/ James P. Gorter - --------------------- James P. Gorter Chairman of the Board /s/ John A. Levin - ----------------- John A. Levin President and CEO SPECIAL MEETING OF SHAREHOLDERS A special meeting of shareholders was held on August 19, 1999. The results of the two proposals voted on by the shareholders were as follows: 1. A proposal to approve the Plan for Distribution of Assets of Baker, Fentress & Company was approved with 27,162,378 shares voted in favor, 960,767 shares voted against, and 203,488 shares abstained from voting. 2. A proposal to amend the Company's Certificate of Incorporation to provide for a reverse stock split of the shares of the Company's common stock was approved with 26,603,954 shares voted in favor, 1,404,454 shares voted against and 318,221 shares abstained from voting. Baker, Fentress & Company 3rd Quarter Report 1999 3 Statement of Investments
September 30, 1999 - Unaudited Shares Value ------- ---------- INVESTMENTS IN UNAFFILIATED ISSUERS-9.75% Common Stock -- 7.86% Basic Materials -- 0.33% Minerals Technologies Inc...................................... 3,000 $ 145,689 Monsanto Company............................................... 46,500 1,659,492 Solutia Inc.................................................... 8,000 143,000 ---------- 1,948,181 ---------- Capital Goods -- 0.12% Cable Design Technologies Corporation (b)...................... 10,000 228,130 Cordant Technologies Inc....................................... 2,000 60,876 Howmet International Inc. (b).................................. 10,000 140,000 IDEX Corporation............................................... 5,000 141,565 York International Corporation................................. 4,200 150,940 ---------- 721,511 ---------- Consumer Cyclical -- 1.18% Beazer Homes USA, Inc. (b)..................................... 7,000 129,941 The Black & Decker Corporation................................. 2,800 127,926 Tribune Company................................................ 131,000 6,517,250 Valuevision International, Inc., Class A (b)................... 5,000 130,000 ---------- 6,905,117 ---------- Consumer Staples -- 1.10% The Ackerley Group, Inc........................................ 11,000 135,443 AMFM Inc. (b).................................................. 88,500 5,387,438 Cumulus Media Inc., Class A (b)................................ 7,000 228,816 Interstate Bakeries Corporation................................ 9,000 207,000 Loews Cineplex Entertainment Corporation (b)................... 25,000 196,875 Meredith Corporation........................................... 5,000 181,565 Pegasus Communications (b)..................................... 2,500 112,812 ---------- 6,449,949 ---------- Energy -- 1.04% Conoco Inc. (b)................................................ 200,200 5,555,550 Conoco Inc., Class B........................................... 1 18 Unocal Corporation............................................. 15,000 555,945 ---------- 6,111,513 ----------
See accompanying Notes to Statement of Investments 4 Baker, Fentress & Company 3rd Quarter Report 1999 Statement of Investments
September 30, 1999 - Unaudited Shares Value --------- ----------- INVESTMENTS IN UNAFFILIATED ISSUERS (continued) Financials -- 1.36% Ace Ltd........................................................ 3,995 $ 67,667 Aetna Life Insurance and Annuity Company....................... 1,284 63,237 Annuity and Life RE (Holdings), Ltd............................ 1,412 35,124 Bank One Corporation........................................... 540 18,799 The Bank of New York Company, Inc.............................. 7,903 264,261 W.R. Berkley Corporation....................................... 9,128 209,944 Countrywide Credit Industries, Inc............................. 1,060 34,185 Crescent Real Estate Equities Company.......................... 9,000 162,000 CRIIMI MAE Inc................................................. 6,494 13,397 Fairfax Financial Holdings Ltd. (Stock Purchase Rights)........ 78,000 4,680 Financial Federal Corporation.................................. 702 13,250 First Investors Financial Services Group, Inc. (b)............. 292,600 1,463,000 First Union Corporation........................................ 510 18,169 Horace Mann Educators Corporation.............................. 4,000 103,252 Indymac Mortgage Holdings, Inc................................. 15,556 233,340 Kennedy-Wilson, Inc. (b)....................................... 17,500 162,978 KeyCorp........................................................ 730 18,843 Mellon Bank Corporation........................................ 578 19,507 Mutual Risk Management Ltd..................................... 2,330 82,715 Nationwide Financial Services, Inc............................. 850 30,069 Northern Trust Corporation..................................... 41,800 3,490,300 PartnerRe Ltd.................................................. 6,356 220,871 Prison Realty Trust, Inc....................................... 18,000 193,500 Pxre Group Ltd................................................. 2,241 32,636 Scottish Annuity & Life Holdings, Ltd. (b)..................... 4,762 46,727 Superior National Insurance Group, Inc. (b).................... 49,300 693,306 UICI (b)....................................................... 6,436 164,523 Vail Banks, Inc. (b)........................................... 1,100 9,900 XL Capital Ltd., Class A....................................... 1,411 63,495 ------------ 7,933,675 ------------ Health Care -- 0.20% Carematrix Corporation (b)..................................... 20,000 103,760 Covance Inc. (b)............................................... 9,500 92,036 EG&G, Inc...................................................... 5,000 198,750 Haemonetics Corporation (b).................................... 10,000 196,880 Paracelsus Healthcare Corporation (b)(c)(e).................... 535,443 401,582 Sunrise Assisted Living, Inc. (b).............................. 6,000 159,378 ------------ 1,152,386 ------------
See accompanying Notes to Statement of Investments Baker, Fentress & Company 3rd Quarter Report 1999 5 Statement of Investments
September 30, 1999 - Unaudited Shares, or Principal Amount Value ---------------- ----------- INVESTMENTS IN UNAFFILIATED ISSUERS (continued) Technology -- 1.01% First Data Corporation......................................... 30,388 $ 1,333,273 Koninklijke Philips Electronics N.V............................ 39,560 3,995,560 Metamor Worldwide, Inc. (b).................................... 10,000 177,500 Schawk, Inc.................................................... 20,000 195,000 Symantec Corporation (b)....................................... 5,500 197,830 ----------- 5,899,163 ----------- Utilities -- 1.52% The Williams Companies, Inc.................................... 236,900 8,869,062 ----------- 8,869,062 ----------- Total common stock (Cost $37,631,169)....................... 45,990,557 ----------- Preferred Stock -- 1.50% The News Corporation Limited (ADR)............................. 308,000 8,219,904 Owens-Illinois, Inc., 4.75%.................................... 17,500 573,125 ----------- Total preferred stock (Cost $8,158,414)..................... 8,793,029 ----------- Convertible Bonds -- 0.32% Hewlett-Packard Company, Zero Coupon Bond due 10/14/2017............................................... $3,000,000 1,837,500 ----------- Total convertible bonds (Cost $1,696,524)................... 1,837,500 ----------- Limited Partnerships -- 0.07% Golder, Thoma, Cressey Fund II Limited Partnership (c)(d)...... 428,947 ----------- Total limited partnerships (Cost $140,824).................. 428,947 ----------- Total investments in unaffiliated issures (Cost $47,626,931).. 57,050,033 -----------
See accompanying Notes to Statement of Investments 6 Baker, Fentress & Company 3rd Quarter Report 1999 Statement of Investments
September 30, 1999 - Unaudited Shares or Principal Amount Value ---------------- ------------ INVESTMENTS IN CONTROLLED AFFILIATES -- 18.90% Wholly-Owned Subsidiary -- 17.43% Levin Management Co., Inc - investment management Common Stock (b)(c)(d).................................................... 1,000 $ 37,000,000 9.23% Notes due 12/31/1999 (c)(d).......................................... $ 65,000,000 65,000,000 ------------ Total wholly-owned subsidiary (Cost $120,645,890)......................... 102,000,000 ------------ Other -- 1.47% DuroLite International, Inc. - manufacturer and distributor of specialized lighting products Convertible Preferred Stock (b)(c)(d)...................................... 2,500 -- 12% Subordinated Note due 11/03/2004 (c)(d)................................ $ 8,000,000 7,501,105 DuroLite Europe Holdings, Inc. - subsidiary of DuroLite International, Inc. 23% Promissory Note due 08/20/1999 (c)(d).................................. $ 498,895 498,895 Stock Purchase Warrant expiring 08/20/2008 (b)(c)(d)....................... 1 -- Alta Group Ltd - environmental services 6% Note due 12/31/1999 (c)(d).............................................. $ 600,000 600,000 ------------ Total other (Cost $11,600,000)............................................ 8,600,000 ------------ Total investments in controlled affiliates (Cost $132,245,890)............... 110,600,000 ------------ MONEY MARKET SECURITIES -- 65.52% U.S. Treasury bills - 4.732 - 4.745% due 12/16/1999.......................... $106,000,000 104,995,650 U.S. Treasury bills - 4.693 - 5.004% due 02/10/2000.......................... $283,324,000 278,443,744 ------------ Total investments in money market securities (Cost $383,310,232)............. 383,439,394 ------------ Total Investments -- 94.17% (Cost $563,183,053)...................................... 551,089,427 ------------ Cash and Other Assets, Less Liabilities -- 5.83%..................................... 34,124,770 ------------ NET ASSETS -- 100.00%................................................................ $585,214,197 ============
See accompanying Notes to Statement of Investments Baker, Fentress & Company 3rd Quarter Report 1999 7 Notes to Statement of Investments - ---------------- (a) Based on the cost of investments of $512,278,370 for federal income tax purposes at September 30, 1999, net unrealized appreciation was $38,811,057, which consisted of gross unrealized appreciation of $47,301,839 and gross unrealized depreciation of $8,490,782. (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, 1999, 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. The aggregate value of restricted securities was $111,430,529, or 19.04% of net assets, at September 30, 1999. (d) There were no unrestricted securities of the same issue outstanding on September 30, 1999 or the dates of acquisition. (e) Represents 80% of the current market price of unrestricted common stock of Paracelus Healthcare Corporation. 1999 Distribution Summary
Per Share Description Amount Payment Date - ----------- --------- ------------------ Ordinary Income Dividend $0.30 June 15, 1999 Ordinary Income Dividend 1.00 September 24, 1999 Capital Gain Distribution 3.00 September 24, 1999 Gain Distribution (1) September 24, 1999 in the form of 5,000,000 Consolidated-Tomoka Land Co. (CTO) shares
(1) BKF shareholders received 0.128109 shares of CTO stock for each BKF share held, with any fractional share paid in cash. The cost basis of the CTO shares was $13.75 per share, the closing CTO price on the AMEX on September 24, 1999. For federal income tax purposes, the holding period of the CTO shares distributed began on September 24, 1999. Selected Data As of September 30, 1999 Cash and cash equivalents........................... $423,972,165 Public portfolio securities......................... $ 56,219,504 Private placement securities........................ $ 9,430,529 Levco............................................... $102,000,000 Other assets less liabilities....................... $ (6,408,001) ------------ Total net assets.................................... $585,214,197 Net investment income (YTD)......................... $ 10,220,834 Net realized capital gain (YTD)..................... $263,384,840 Unrealized depreciation............................. $(12,093,625) Shares outstanding.................................. 39,029,101 Per Share Net asset value.................................... $ 14.99 Market price....................................... $ 13.9375
8 Baker, Fentress & Company 3rd Quarter Report 1999 Portfolio Changes Exceeding $2.5 Million Quarter Ended September 30, 1999 - Unaudited
Purchases Cost Sales Proceeds - --------- ----------- ----- ------------ AMR Corporation..................................... $ 8,587,391 Consolidated-Tomoka Land Co. (1).... $ 68,750,000 Veritas Software Texas Instruments Incorporated...... 27,310,301 1.856% Bond due 8/13/2006.......................... 6,372,584 Citadel Communications Corporation.. 21,192,383 Viacom Inc., Class B................................ 6,157,987 Tribune Company..................... 19,634,910 The Gillette Company................................ 3,886,843 International Business Machines Compaq Computer Corporation......................... 3,859,097 Corporation........................ 18,882,660 Xerox Corporation................................... 2,514,889 KeySpan Energy Corporation.......... 15,949,250 ----------- Seagate Technology, Inc............. 15,003,039 $31,378,791 XL Capital Ltd., Class A............ 14,574,461 =========== Hewlett-Packard Company, Zero Coupon Bond due 10/14/2001.... 14,496,956 Bell Atlantic Corporation........... 13,790,399 Johnson & Johnson................... 13,525,678 Ralston Purina Company.............. 12,278,762 BellSouth Corporation............... 12,270,007 General Electric Company............ 12,023,771 Owens-Illinois, Inc................. 11,776,977 Warner-Lambert Company.............. 11,676,043 The Black & Decker Corporation...... 11,115,952 Monsanto Company.................... 11,106,499 Penta Japan Domestic Partners, L.P.. 10,720,415 United Technologies Corporation..... 10,528,981 Koninklijke Philips Electronics N.V. 10,042,130 Unocal Corporation.................. 9,655,678 The Bank of New York Company, Inc... 9,601,821 Nabisco Holdings Corporation........ 9,506,448 Schlumberger N.V.................... 8,654,590 First Data Corporation.............. 8,594,179 Loral Space & Communications........ 8,292,379 AMR Corporation..................... 7,600,241 Xerox Corporation................... 7,417,516 Tokio Marine & Fire Insurance Company, Limited (ADR)............. 7,342,792 Veritas Software 1.856% Bond due 8/13/2006...................... 6,869,600 McKesson HBOC Inc................... 6,789,378 Pfizer Inc.......................... 6,687,334 The News Corporation Limited........ 6,551,626 Tyco International Ltd.............. 6,373,002 Compaq Computer Corporation......... 6,324,984 Viacom Inc., Class B................ 5,715,539 Ace Ltd............................. 5,577,112 AMFM Inc............................ 5,442,358 Aetna Life Insurance and Annuity Company.................... 5,281,981 The Fox Entertainment Group, Inc.... 5,182,322 Crown Cork & Seal Company, Inc...... 4,911,860 PartnerRe Ltd....................... 4,766,624 The Walt Disney Company............. 4,751,835 The Boeing Company.................. 4,376,843 BankAmerica Corporation............. 3,956,022 The Gillette Company................ 3,692,527 Tenneco Inc......................... 3,495,885 E.I. Du Pont de Nemours and Company. 2,711,414 ------------ $532,773,464 ============
(1) Consolidated-Tomoka Land Co. common stock was distributed to shareholders on September 24, 1999. Baker, Fentress & Company 3rd Quarter Report 1999 9 Directors and Officers BOARD OF DIRECTORS Frederick S. Addy Jeffrey A. Kigner Bob D. Allen John A. Levin Eugene V. Fife Burton G. Malkiel J. Barton Goodwin David D. Peterson James P. Gorter William H. Springer David D. Grumhaus Dean J. Takahashi 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 Julie A. Heironimus Treasurer and Assistant Secretary Beverly J. Friedberg Assistant Treasurer 10 Baker, Fentress & Company 3rd Quarter Report 1999 Baker, Fentress & Company 3rd Quarter Report 1999 11 Corporate Data Transfer and Dividend Disbursing Agent ChaseMellon Shareholder Services Overpeck Center 85 Challenger Road Ridgefield Park, New Jersey 07660 1-800-719-9058 Custodian UMB Bank, N.A. Legal Counsel Bell, Boyd & Lloyd Address of Company 200 West Madison Street Suite 590 Chicago, Illinois 60606 312-236-9190 or 800-BKF-1891 Web Site www.bakerfentress.com [ARTWORK] Baker, Fentress & Company Report to Shareholders [ARTWORK] THIRD QUARTER SEPTEMBER 30, 1999 [Recycling Logo] The Company's Report to Shareholders is printed on recycled paper. We encourage recycling and use of recycled products. -----END PRIVACY-ENHANCED MESSAGE-----