<PAGE>
To the shareholders of
G E N E R A L S E C U R I T I E S
I N C O R P O R A T E D
The total return for General Securities, Incorporated's (GSI) year ending
November 30, 1996 was 18.15%. It was a good year during which our research team
continued to improve the process we use to identify and evaluate companies that
meet our dual requirements of being fundamentally undervalued and committed to
the principles of Total Quality Management (TQM). Companies which met both
requirements and are new to GSI in fiscal 1996 include: W. W. Grainger, Inc.,
Manpower, Inc. and Ortel Corporation.
W. W. Grainger is a quality award winning industrial supply company and Manpower
is a large ISO certified temporary staffing firm. We believe both W. W. Grainger
and Manpower should benefit as organizations continue to outsource non-core
business functions and operations. This theme of outsourcing along with the
trend toward sole or single sourcing raw materials and other factors of
production plays a significant role in our decision to own many of the companies
in the GSI portfolio. We believe customer focused companies, looking back up the
supply chain in an effort to improve their ability to meet or exceed customer's
requirements, will seek out reliable customer focused, value producing suppliers
and reward them with a more predictable and growing stream of business. W. W.
Grainger contributed to the performance of GSI in fiscal 1996 while Manpower,
Inc. lost a little ground from our original purchase; both companies remain in
GSI's portfolio and we continue to believe they will provide excellent returns
over the long term.
On a quality related note, Dana Commercial Credit Corporation, a division of
Dana Corporation, won a 1996 Malcolm Baldrige award. We have owned Dana
Corporation in the GSI portfolio since fiscal 1995 and added to our position in
1996. We remain confident that one of the keys to help unlock the value of Dana
Corporation can be found in the growing commitment to quality and customer
service by each Dana employee
Looking forward to 1997 we will continue to improve our process for finding
undervalued quality oriented companies and will continue to hold cash reserves
for future investment opportunities.
General Securities declared a fourth quarter dividend of $0.98 a share of which
$.804 was from net long term gains, and $.176 from net short term capital gains
bringing total distributions for 1996 to $1.16. This is our One Hundred
Eighty-second consecutive quarterly dividend paid.
John P. Robinson
President
<PAGE>
Performance
November 30, 1996
General Securities, Incorporated
The following graph was prepared assuming a hypothetical investment of $10,000
on December 1, 1986. The investment return and principal value of an investment
will fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost.
AVERAGE ANNUAL TOTAL RETURN
1 YEAR 5 YEAR 10 YEAR
+18.15% +13.46% +13.03%
- S&P 500 **
- General Securities
Incorporated
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Year 11/86 11/87 11/88 11/89 11/90 11/91 11/92 11/93 11/94 11/95 11/96
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
S&P 500** $10,000 $9,539 $11,752 $15,360 $14,847 $17,866 $21,169 $23,307 $23,554 $32,211 $41,182
- -----------------------------------------------------------------------------------------------------------------------------------
General Securities Incorporated $10,000 $9,456 $11,165 $13,740 $13,526 $18,091 $19,837 $20,940 $21,964 $28,805 $34,034
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Past Performance is not indicative of future performance.
*These are the portfolios total returns during the period including reinvestment
of all dividend and capital gains distributions.
**This is an unmanaged index.
<PAGE>
Statement of Net Assets November 30, 1996
<TABLE>
<CAPTION>
ASSETS
Number of Market
shares value (a)
<S> <C> <C>
Investment securities (percentages represent value
of investments compared to total net assets):
Common Stocks (87.81%):
Automotive (1.64%):
Ford Motor Company (c) 20,000 $ 655,000
Auto Parts - Original Equipment (5.91%):
Dana Corp. (d) 45,000 1,400,625
Tower Automotive (e) 30,000 963,750
2,364,375
Banking (4.17%):
Banc One (c) 35,000 1,666,875
Chemicals (5.14%):
Air Products & Chemicals 9,000 625,500
Eastman Chemical Company 25,000 1,428,125
2,053,625
Communications Equipment (1.97%):
Ortel Corp. (b) 35,000 787,500
Computers & Software (6.78%):
IBM (d) 17,000 2,709,375
Education (2.67%):
National Computer Systems 45,000 1,068,750
Electrical Machinery, Equipment and Supplies (3.98%):
Grainger (W.W.) Inc. (b) 20,000 1,590,000
Electronics (14.16%):
Intel Corp. (c) 10,000 1,268,750
Motorola, Inc. (d) 10,000 553,750
Solectron Corp. (c), (e) 20,000 1,170,000
Xerox Corp (d) 30,000 1,473,750
Zygo Corp. (d), (e) 30,000 1,192,500
5,658,750
Hospital Suppliers (3.19%):
Johnson & Johnson (d) 24,000 1,275,000
Household Appliances (2.50%):
Whirlpool Corp. 20,000 1,000,000
Information Services (2.97%):
Hewlett-Packard (d) 22,000 1,185,250
Paper & Forest Products (8.54%):
Boise Cascade (d) 20,000 620,000
Mead Corp. 20,000 1,185,000
Weyerhauser Co. (d) 35,000 1,610,000
3,415,000
Pharmaceuticals (5.19%):
Merck 25,000 2,075,000
Photography (1.62%):
Eastman Kodak 8,000 648,000
Printing & Publishing (1.78%)
Banta Corp. (d) 30,000 712,500
Retail & Wholesale (2.41%):
Corning, Inc 16,000 $ 648,000
Raven Industries 15,000 315,000
963,000
Service Agency (4.90%)
Manpower (b) 60,000 1,957,500
Steel/Producers (4.92%):
Inland Steel (d) 45,000 838,125
<PAGE>
<CAPTION>
ASSETS (Cont.)
Number of Market
shares value (a)
<S> <C> <C>
Common Stocks (Cont.):
LTV Corp. (d) 105,000 1,128,750
1,966,875
Utilities (3.37%):
GTE (c) 30,000 1,346,250
Total common stock (cost $ 23,333,155) 35,098,625
U.S. Treasury Bills (16.18%):
$2,000,000, 5.12%, due 02/20/97 (f) 1,977,635
$4,500,000, 5.26%, due 12/12/96 (f) 4,492,974
Total U.S. Treasury Bills (cost $6,470,609) 6,470,609
Money Market Instrument (2.27%)
State Street Capital Markets Sweep Account
Variable Rate, 4.00%
(cost $907,147) 907,147
Total investment securities
(cost $30,710,911) (g) 42,476,381
Cash 2,400
Prepaid expenses 264
Receivable for capital shares sold 889
Dividends receivable 89,990
Interest receivable 202
Total assets $42,570,126
LIABILITIES
Payable to advisor for advisory and administration fees 109,571
Accrued expenses 50,516
Dividend payable 2,435,785
Total liabilities 2,595,872
Net assets applicable to outstanding capital stock $39,974,254
Represented by:
Capital stock - authorized 10,000,000 shares of $.01
par value per share; outstanding 2,485,550 shares 24,856
Capital surplus 28,246,163
Distributions in excess of net investment income (59,425)
Excess distribution of realized gain (2,810)
Unrealized appreciation of investments 11,765,470
Net assets applicable to outstanding capital stock $39,974,254
Net asset value per share of outstanding capital stock $16.08
</TABLE>
See accompanying notes to investment securities list and financial statements.
<PAGE>
NOTES TO INVESTMENT SECURITIES LIST:
November 30, 1996
(a) Investment securities are valued by the procedures described in note 1 to
the financial statements.
(b) New holding in fiscal 1996.
(c) Holding decreased in fiscal 1996.
(d) Holding increased in fiscal 1996.
(e) Currently non-income producing.
(f) Rate shown is annualized yield on date of purchase.
(g) At November 30, 1996 the cost of securities for federal income tax purposes
was $30,710,911, and the aggregate unrealized appreciation and depreciation
based on that cost was:
Unrealized appreciation $12,852,202
Unrealized depreciation (1,086,732)
$11,765,470
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
General Securities, Incorporated:
We have audited the accompanying statement of net assets of General Securities,
Incorporated as of November 30, 1996, and the related statement of operations
for the year then ended, the statements of changes in net assets for each of the
years in the two-year period then ended and the financial highlights for each of
the years in the five-year period ended November 30, 1996. These financial
statements and the financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Investment securities held in custody are confirmed to us by the
custodian. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
General Securities, Incorporated at November 30, 1996 and the results of its
operations for the year then ended, the changes in its net assets for each of
the years in the two-year period then ended, and the financial highlights for
each of the years in the five-year period ended November 30, 1996, in conformity
with generally accepted accounting principles.
Minneapolis, Minnesota KPMG Peat Marwick LLP
December 27, 1996
<PAGE>
NOTES TO FINANCIAL STATEMENTS
November 30, 1996
(1) Summary of Significant Accounting Policies
General Securities, Incorporated (the Fund) is registered under the
Investment Company Act of 1940, as amended, as a diversified open end management
investment company.
The significant accounting policies followed by the Fund are summarized as
follows:
Investments in Securities
Securities listed on national securities exchanges are valued on the basis
of the last reported sale each day, or if no sale is made, at the mean of the
last reported bid and asked price for such securities. Short-term securities are
valued at amortized cost which approximates market value.
Security transactions are recorded on the date securities are purchased or
sold. Realized gains or losses and unrealized appreciation or depreciation of
investments are determined on the basis of identified cost. Dividend income is
recorded on the ex-dividend date. Interest is recognized on the accrual basis
and, except for original issue discount, the Fund does not amortize discounts
and premiums for financial reporting purposes.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increase and decrease in net assets from
operations during the period. Actual results could differ from those estimates.
(Continued)
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
November 30, 1996
Federal Income Taxes
It is the Fund's policy to continue meeting the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute taxable income to its shareholders in amounts which will relieve it
from all, or substantially all, federal income and excise taxes. Therefore, the
Fund does not provide for federal income or excise taxes.
Distributions
Distributions to shareholders from investment income are made quarterly and
realized capital gain distributions, if any, are made annually. These
distributions are recorded on the record date and are payable in cash or
reinvested in additional shares of the Fund's capital stock.
Due to the timing of dividend distributions, the fiscal year in which
amounts are distributed for tax purposes may differ from the year that income or
realized gains were recorded by the Fund. The effect on distributions of this
book-to-tax difference is presented as "excess distributions of net investment
income" in the statement of changes in net assets and the financial highlights.
(2) Investment Advisory Fee and Other Transactions with Affiliates
Robinson Capital Management, Inc. is the Fund's investment advisor and
administrator. As compensation for its services under the Investment Advisory
Agreement, Robinson Capital is paid an investment management advisory fee,
payable monthly, at an annual rate of 0.60% for average net assets up to and
including $100 million, 0.35% for next $150 million of average net assets and
0.10% for net assets over $250 million. Robinson Capital is obligated to pay
all Fund expenses (exclusive of brokerage expenses and fees, interest and any
federal or state income taxes) which exceed 1.50% of the Fund's average net
assets for any fiscal year on the first $100 million of average net assets,
1.25% of the Fund's average net assets for any fiscal year on the next $150
million of average net assets, and 1% of the Fund's average net assets for any
fiscal year on average net assets in excess of $250 million. For managing the
business affairs and providing certain shareholder services pursuant to the
Management Agreement, the Fund pays Robinson Capital an administrative fee,
payable monthly, at an annual rate of 0.40% of the average daily assets of the
Fund, plus out-of-pocket expenses incurred. Robinson Capital may subcontract
with other entities to provide certain shareholder servicing activities.
Legal service fees were paid to a law firm in which the secretary of the
Fund is a partner.
(3) Securities Transactions
Cost of purchases and proceeds from sales of securities (other than
short-term obligations) aggregated $8,569,010 and $5,362,630, respectively, for
the year ended November 30, 1996.
<PAGE>
G E N E R A L S E C U R I T I E S
INCORPORATED
PRESIDENT John P. Robinson
VICE PRESIDENT Winfield S. Holland
SECRETARY John R. Houston
TREASURER Winfield S. Holland
DIRECTORS John P. Robinson,
Chairman
M. Michelle Coady
David W. Preus
LaVerne W. Rees
Oscar Victor
Charles Walton
James S. Womack
INVESTMENT MANAGER Robinson Capital
Management, Inc.
CUSTODIAN, REGISTRAR Investors Fiduciary Trust
AND TRANSFER AGENT Company
GENERAL COUNSEL Lindquist and Vennum
INDEPENDENT AUDITORS KPMG Peat Marwick LLP
This report has been prepared primarily for the benefit of existing
stockholders of the company and is not intended as an offer to sell the
company's shares. When used otherwise, it must be accompanied or preceded by the
current prospectus.
For further
information about
G E N E R A L S E C U R I T I E S
INCORPORATED
contact:
Robinson Capital Management, Inc.
5100 Eden Avenue, Suite 204
Edina, Minnesota 55436
(612) 927-6799
800-577-9217
<PAGE>
G E N E R A L S E C U R I T I E S
INCORPORATED
Statement of Operations
Year ended November 30, 1996
Investment Income:
Income:
Dividends $ 359,281
Interest 618,620
Total income 977,901
Expenses (note 2):
Investment advisory fees 225,164
Management administration fees 150,109
Shareholder notices and reports 6,978
Auditing and tax services 22,000
Custodian and portfolio accounting fees 54,742
Transfer agent, registrar and disbursing agent fees 71,118
Legal services 13,372
Directors' fees 8,400
Federal and state registration fees and expenses 15,775
Other 3,639
Total expenses 571,297
Reimbursement from advisor (8,514)
Total Net Expenses 562,783
Investment income - net 415,118
Realized and unrealized gains from Investments - net:
Net realized gains on securities
transactions (note 3) 2,418,144
Net change in unrealized appreciation
or depreciation of investments 3,654,851
Net gain on investments 6,072,995
Net increase in net assets resulting
from operations $6,488,113
See accompanying notes to financial statements.
<PAGE>
Statements of Changes in Net Assets
Years ended November 30, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Operations:
Investment income - net $ 415,118 $ 548,798
Net realized gains on securities
transactions 2,418,144 2,152,377
Net change in unrealized appreciation
or depreciation of investments 3,654,851 5,463,563
Net increase in net assets
from operations 6,488,113 8,164,738
Distributions to shareholders from:
Investment income - net (415,118) (547,428)
Excess distributions of
net investment income (26,412)
Net realized gains on
securities transactions (2,435,785) (2,138,401)
Total distributions (2,877,315) (2,685,829)
Capital share transactions:
Proceeds from sales of 282,594 and
161,653 shares, respectively (note 2) 4,314,439 2,338,462
Net asset value of 168,361 and 25,125
shares, respectively, issued in
reinvestment of net investment income
and net realized gain distributions 2,476,566 350,616
Payments for redemptions of 192,906 and
158,779 shares, respectively (note 2) (2,968,285) (2,208,218)
Increase in net assets from capital
share transactions, representing net
increase of 258,049 and 27,999
shares, respectively 3,822,720 480,860
Total increase in net assets 7,433,518 5,959,769
Net assets:
Beginning of year 32,540,736 26,580,967
End of year (including distributions
in excess of net investment income
of $59,425 and $33,013, respectively) $39,974,254 $32,540,736
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights: Selected per share historical data were as follows: Year Ended November 30
1996 1995 1994+ 1993 1992
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 14.61 $ 12.08 $ 12.23 $ 12.36 $ 12.23
Operations:
Investment income - net .17 .25 .20 .28 .49
Net realized and unrealized gains (losses) on investments 2.46 3.49 .40 .39 .78
Total from operations 2.63 3.74 .60 .67 1.27
Distributions to shareholders:
From investment income - net (.17) (.25) (.21) (.27) (.46)
Excess distributions of net investment income (.01) -- (.02) -- --
From net realized gains (.98) (.96) (.52) (.53) (.68)
Total distributions to shareholders (1.16) (1.21) (.75) (.80) (1.14)
Net asset value, end of year $ 16.08 $ 14.61 $ 12.08 $ 12.23 $ 12.36
Total return* 18.15% 31.15% 4.89% 5.56% 9.65%
Net assets, end of year (000's omitted) $39,974 $32,541 $26,581 $26,331 $25,509
Ratio of expenses to average daily net assets 1.50% 1.50% 1.50% 1.31% 1.32%
Ratio of net investment income to average daily net assets 1.11% 1.79% 1.69% 2.26% 3.69%
Portfolio turnover rate 18% 24% 42% 30% 39%
Average Brokerage Commission Rate# $ .0918
</TABLE>
*These are the Fund's total returns during the years, including reinvestment of
all dividend and capital gain distributions without adjustments for sales
charge.
+From March 23, 1994 through November 30, 1994, the Fund's advisor was Alpha
Source Asset Management, Inc., a wholly-owned subsidiary of Hamilton
Investments, Inc. Prior to March 23, 1994, the Fund's advisor was Craig-Hallum,
Inc., a division of Hamilton Investments, Inc.
#Beginning in fiscal 1996, the Fund is required to disclose an average brokerage
commission rate. The rate is calculated by dividing the total brokerage
commissions paid on applicable purchases and sales of portfolio securities for
the period by the total number of related shares purchased and sold.
<PAGE>
G E N E R A L S E C U R I T I E S
INCORPORATED
[LOGO]
Total Quality
Management
Annual Report November 30, 1996
