<PAGE>
As filed with the Securities and Exchange Commission on March 27, 1997
File No. 2-77092
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO. / /
POST-EFFECTIVE AMENDMENT NO. 16 /X/
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 16
GENERAL SECURITIES, INCORPORATED
(Exact Name of Registrant as Specified in Charter)
5100 EDEN AVENUE, SUITE 204, EDINA, MN 55435
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (612) 927-6799
Copy to:
JOHN P. ROBINSON JOHN R. HOUSTON
GENERAL SECURITIES, INCORPORATED LINDQUIST & VENNUM P.L.L.P.
5100 EDEN AVENUE, SUITE 204 4200 IDS CENTER
EDINA, MINNESOTA 55435 MINNEAPOLIS, MINNESOTA 55402
(Name and Address of Agent for Service)
------------------------------
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: It is proposed that the filing
will become effective (check appropriate box):
/ / immediately upon filing pursuant to paragraph (b)
/X/ on March 31, 1997 pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
/ / This post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
------------------------------
Registrant has elected to register an indefinite number of shares of its
Common Stock, $.01 par value, pursuant to Rule 24f-2 under the Investment
Company Act of 1940 and filed with the Commission on January 27, 1997 a Rule
24f-2 Notice for the most recent fiscal year.
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<PAGE>
GENERAL SECURITIES, INCORPORATED
REGISTRATION STATEMENT ON FORM N-1A
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER
- -----------
PROSPECTUS
PART A PROSPECTUS CAPTION PAGE NUMBER
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1. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . 2
3. Financial Highlights . . . . . . . . . . . . . . . . . . . . . . 4
4. Investment Objectives and Policies . . . . . . . . . . . . . . . 5
5.(a-c) Management of the Fund . . . . . . . . . . . . . . . . . . . . . 5
(d-e) Management of the Fund; General
Information - Investment Advisor, Manager,
Underwriter and Distributor;
General Information - Custodian and
Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . .5, 16
(f-g) Management of the Fund . . . . . . . . . . . . . . . . . . . . . 5
5A. *
6.(a) General Information - Capital Stock. . . . . . . . . . . . . . .12
(b) Management of the Fund . . . . . . . . . . . . . . . . . . . . . 5
(c-d) General Information - Capital Stock. . . . . . . . . . . . . . .12
(e) Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(f-g) Distribution Policy and Tax Status . . . . . . . . . . . . . . . 9
(h) *
7.(a-b) Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . 7
(c) Shareholder Services . . . . . . . . . . . . . . . . . . . . . .11
(d) Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . 7
(e) *
(f) *
(g) *
8. Redemption of Shares . . . . . . . . . . . . . . . . . . . . . . 9
9. *
STATEMENT OF ADDITIONAL STATEMENT OF ADDITIONAL
PART B INFORMATION CAPTION INFORMATION PAGE NUMBER
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10. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
11. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
12. *
13. Investment Objectives and Policies . . . . . . . . . . . . . . . 2
<PAGE>
14.(a) Management of the Fund . . . . . . . . . . . . . . . . . . . . . 3
(b-c) Management of the Fund; Investment
Advisory, Management and Distribution
Services . . . . . . . . . . . . . . . . . . . . . . . . . . . .3,5
15.(a-b) *
(c) Management of the Fund - Directors
and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . 3
16.(a-d) Investment Advisory, Management and
Distribution Services. . . . . . . . . . . . . . . . . . . . . . 5
(e-g) *
(h) See Part A - General information . . . . . . . . . . . . . . . . -
(i) *
17. Brokerage. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
18. *
19.(a) See Part A - Purchase of Shares;
Shareholder Services. . . . . . . . . . . . . . . . . . . . . . 11
(b) Determination of Net Asset Value;. . . . . . . . . . . . . . . . 9
See Part A - Purchase of Shares
(c) *
20. *
21. *
22. Calculation of Performance Data. . . . . . . . . . . . . . . . .10
23. Financial Statements . . . . . . . . . . . . . . . . . . . . . .16
PART C
- ------
Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C to this Registration Statement.
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*Not Applicable.
<PAGE>
GENERAL SECURITIES INCORPORATED
5100 Eden Avenue, Suite 204, Edina, Minnesota 55436
Telephone (612) 927-6799
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LOGO General Securities, Incorporated (the "Fund") is a
FOCUS ON diversified open- end management investment company which seeks
---- possible long-term capital appreciation and preservation of
TQM capital for its shareholders with reasonable risk. The Fund
---- invests primarily, but not exclusively, in selected common
TOTAL QUALITY stocks of companies that have implemented Total Quality Man-
MANAGEMENT agement or Continuous Quality Improvement principles.
COMPANIES
This Prospectus sets forth concisely the information a
prospective investor should know before investing in the Fund.
Investors should read and retain this Prospectus for future
reference. A Statement of Additional Information dated March 31,
1997 (the "Statement of Additional Information"), containing
additional information about the Fund, has been filed with the
Securities and Exchange Commission (the "Commission") and is
hereby incorporated by reference into this Prospectus. A copy of
the Statement of Additional Information can be obtained without
charge by telephone or written request to the Fund at the
address and telephone number printed above. In addition, the
Commission maintains a Website at http:// www.sec.gov that
contains this Prospectus, the Statement of Additional
Information and certain other electronic filings made by the
Fund with the Commission.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS MARCH 31, 1997.
<PAGE>
GENERAL SECURITIES INCORPORATED
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS APPEARING ELSEWHERE IN THIS PROSPECTUS AND
THE STATEMENT OF ADDITIONAL INFORMATION.
THE FUND
The Fund is an open-end diversified management investment company which
continuously offers its shares of Common Stock to prospective purchasers and
also offers to redeem its shares at current net asset value.
INVESTMENT OBJECTIVES
The investment objective is to select securities with a view to possible
long-term capital appreciation and preservation of capital. Consistent with that
objective, the Investment Advisor believes companies implementing a Total
Quality Management ("TQM") approach or using Continuous Quality Improvement
("CQI") practices throughout the company is, in general, best positioned for
superior growth as a result of the internal disciplines imposed by TQM and CQI
principles. The Investment Advisor has and intends to invest most of the Fund's
assets in common stocks, particularly common stocks of companies that have
implemented TQM or CQI principles. However, investments in corporate bonds or
debentures, United States Government securities and other types of securities
have and will be made as economic conditions dictate. The Investment Advisor
attempts to diversify investments (subject to certain restrictions set forth
herein) as a matter of course as to individual companies and as to industries
most likely to achieve these objectives. No guarantee can be made that these
objectives will be achieved, and inherent in this policy are risks of
unpredictable market fluctuations. See "INVESTMENT OBJECTIVES AND POLICIES."
EXPENSES
The following table summarizes certain shareholder transaction and Fund
operating expenses.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
<S> <C>
Maximum Sales Load Imposed on Purchases...................................... None
Maximum Deferred Sales Load.................................................. None
Maximum Sales Load Imposed on Reinvested Dividends........................... None
Redemption Fees.............................................................. None(1)
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
Management Fees.............................................................. .60%
Administrative Fees.......................................................... .40%
Other Expenses (after expense reimbursement)................................. .50%(2)
---------
Total Fund Operating Expenses.............................................. 1.50%(2)
</TABLE>
- ------------------------
(1) The Fund charges $20 for wire transfer of redemption proceeds. See
"REDEMPTION OF SHARES -- EXPEDITED WIRE REDEMPTION."
(2) Without an expense reimbursement, Other Expenses and Total Fund Operating
Expenses would have been .52% and 1.52%, respectively, in fiscal 1996.
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses (rounded) on
a $1,000 investment, assuming (1) 5% annual
return and (2) redemption at the end of each time
period: ......................................... $ 15 $ 47 $ 82 $ 179
</TABLE>
2
<PAGE>
The table is intended to assist in assessing the various costs and expenses
which an investor will bear, directly or indirectly, with respect to an
investment in the Fund. Expenses have been restated to reflect current expenses.
For a complete description of these expenses, see "MANAGEMENT OF THE FUND;"
"PURCHASE OF SHARES;" "REDEMPTION OF SHARES" and Statement of Additional
Information. The table set forth above utilizes a 5% annual rate of return as
mandated by Commission regulations. The expenses or the annual rate of return
should not be considered a representation of past or future expenses or the
annual rate of return. Actual future expenses or the annual rate of return may
be greater or lesser than those shown.
MANAGEMENT OF THE FUND
Robinson Capital Management, Inc. ("Robinson Capital") serves as Investment
Advisor to the Fund pursuant to an Investment Advisory Agreement and manages the
Fund's business affairs pursuant to a Management Agreement. Robinson Capital is
an investment advisory firm controlled by John P. Robinson who has acted as the
Fund's President and has served on the Board of Directors since the Fund's
inception in 1951. The Fund currently acts as its own underwriter and
distributor in connection with the sale of the Fund's shares. See "MANAGEMENT OF
THE FUND" and "PURCHASE OF SHARES."
RISK FACTORS
There is no assurance that the investment objectives of the Fund will be
achieved or that a focus on investments in companies implementing TQM or CQI
principles will provide a greater return than investments in other companies.
The returns and per share net asset value of the Fund will regularly fluctuate,
as the Fund is subject to market and financial risks. Market risk is the
potential for fluctuations in the price of a security because of market factors.
For equity securities, market risk is the possibility of change in price caused
by stock market price changes; for debt securities, market risk is the
possibility that the price will fall because of changing interest rates.
Financial risk is based on the financial situation of the issuer. For equity
securities, financial risk is the possibility that the price of the security
will fall because of poor earnings performance by the issuer. For debt
securities, financial risk is the possibility that a bond issuer will fail to
make timely payments of interest or principal to the Fund. The Fund also invests
in U.S. Government securities, the market value of which is not guaranteed and
will fluctuate. Although investments in U.S. Government securities provide
protection against financial risk, they do not protect investors against price
changes due to market risk. See "INVESTMENT OBJECTIVES AND POLICIES."
PURCHASE OF SHARES
Shares of the Fund may be purchased directly from the Fund at a price equal
to the net asset value, as determined at the close of business immediately
following the receipt by the Fund of an application. The minimum purchase is
$1,500 initially with a $100 minimum for subsequent purchases. There are no
minimum amounts for reinvestment of dividends and capital gains distributions
and the Investment Advisor retains the right to waive the minimum purchase
amount in its sole discretion. See "PURCHASE OF SHARES."
REDEMPTION OR REPURCHASE OF SHARES
Shares may be redeemed at net asset value without charge. See "REDEMPTION OF
SHARES."
DISTRIBUTION POLICY
Distribution of substantially all income is made quarterly with distribution
of realized long- and short-term capital gains, if any, made in December. See
"DISTRIBUTION POLICY AND TAX STATUS."
3
<PAGE>
FINANCIAL HIGHLIGHTS
The following information has been audited by KPMG Peat Marwick LLP,
independent auditors, whose report appears in the Statement of Additional
Information. The performance discussion required by the Commission can be found
in the Fund's Annual Report to Shareholders and will be made available without
charge upon request.
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
--------------------------------------------------------------------------------------------------
1996 1995 1994* 1993 1992 1991 1990 1989 1988 1987
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
year........................... $14.61 $12.08 $12.23 $12.36 $12.23 $10.37 $11.43 $10.91 $10.05 $11.71
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Operations:
Investment income -- net..... .17 .25 .20 .28 .49 .53 .38 .46 .25 .34
Net realized and unrealized
gains (losses) on
investments................ 2.46 3.49 .40 .39 .78 3.01 (.58) 1.95 1.65 (.99)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total from operations........... 2.63 3.74 .60 .67 1.27 3.54 (.20) 2.41 1.90 (.65)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Distributions to shareholders:
From investment income --
net........................ (.17) (.25) (.21) (.27) (.46) (.56) (.49) (.39) (.22) (.70)
Excess distributions of net
investment income.......... (.01) -- (.02) -- -- -- -- -- -- --
From net realized gains...... (.98) (.96) (.52) (.53) (.68) (1.12) (.37) (1.50) (.82) (.31)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total distributions to
shareholders................... (1.16) (1.21) (.75) (.80) (1.14) (1.68) (.86) (1.89) (1.04) (1.01)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of year.... $16.08 $14.61 $12.08 $12.23 $12.36 $12.23 $10.37 $11.43 $10.91 $10.05
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total return**.................. 18.15% 31.15% 4.89% 5.56% 9.65% 33.75% (1.56%) 23.07% 18.07% (5.44%)
Net assets, end of year (000's
omitted)....................... $39,974 $32,541 $26,581 $26,331 $25,509 $21,957 $17,540 $16,980 $15,633 $14,360
Ratio of expenses to average
daily net assets............... 1.50% 1.50% 1.50% 1.31% 1.32% 1.39% 1.47% 1.39% 1.46% 1.49%
Ratio of net investment income
to average daily net assets.... 1.11% 1.79% 1.69% 2.26% 3.69% 4.18% 3.40% 3.71% 2.23% 3.27%
Portfolio turnover rate......... 18% 24% 42% 30% 39% 54% 17% 54% 78% 77%
Average Brokerage Commission
Rate***........................ $ .0918 -- -- -- -- -- -- -- -- --
</TABLE>
* From March 23, 1994 through November 30, 1994, The Fund's Investment Advisor
was Alpha Source Asset Management, Inc., a wholly-owned subsidiary of
Hamilton Investments, Inc. From March 23, 1994 through November 30, 1994,
the Fund's Administrator was Hamilton Investments, Inc. Prior to March 23,
1994, the Fund's Investment Advisor and its Administrator was Craig-Hallum,
a division of Hamilton Investments, Inc.
** These are the Fund's total returns during the years, including reinvestment
of all dividend and capital gain distributions without adjustments for sales
charge.
*** 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.
4
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The Fund was incorporated in Minnesota on February 27, 1951 and has been in
operation as a diversified, open-end management investment company since that
time.
INVESTMENT OBJECTIVES
The Fund's purpose is to provide a means for investors to combine their
capital, diversify their investments and secure the advantages of continuous and
informed management to obtain possible capital appreciation consistent with
reasonable risk. The investment objective is to select securities with a view to
possible long-term capital appreciation and preservation of capital. Consistent
with that objective the Fund believes companies implementing a TQM approach or
using CQI practices throughout the company is, in general, best positioned for
superior growth and is most likely to weather any economic downturn. Also, the
Fund's search for companies with a commitment to total quality management or
continuous quality improvement often yields strong companies poised for growth
which are relatively unnoticed because they may be outside the so-called
"glamour" industries. There can be no assurance that the objective of the Fund
will be realized.
When determining whether a company being considered as an investment
candidate implements TQM or CQI principles, the Investment Advisor reviews
public reports by the company and then, if necessary, interviews representatives
of the company to discuss TQM and CQI implementation within the company. As a
result of review, the Investment Advisor develops a judgment, principally
subjective, of the degree of commitment of the company to TQM and CQI principles
and the stage of full implementation of those principles. Once an investment is
made by the Fund, the Investment Advisor continually monitors, reviews and
evaluates the company's performance. If a portfolio company is determined to
have dropped its TQM or CQI focus, or otherwise to have ceased to meet
performance expectations, the policy of the Investment Advisor is to sell the
Fund's shares in that company.
From time to time the Fund may also invest in selected corporate bonds or
debentures rated at the time of purchase as A or above by Moody's Investors
Service or Standard & Poors. In addition, when the Investment Advisor believes
that market conditions warrant a temporary defensive position, the Fund
periodically invests in United States Treasury bills, notes and bonds and may in
the future consider investments in certificates of deposit and bank depository
accounts of banks which have total assets in excess of $500 million. Management
attempts to diversify investments (subject to certain restrictions) as a matter
of course as to individual companies and as to industries most likely to achieve
these objectives. No guarantee can be made that these objectives will be
achieved, and inherent in this policy are risks of unpredictable market
fluctuations.
The investment objective of the Fund is a fundamental policy of the Fund and
may not be changed without the approval of the holders of a majority of the
Fund's outstanding voting securities.
MANAGEMENT OF THE FUND
The officers of the Fund, along with Robinson Capital, the Investment
Advisor and Administrator, manage the Fund's investment activities and
day-to-day operations, subject to supervision by the Board of Directors. The
Board of Directors sets broad policies for the Fund and chooses the Fund's
officers and the companies that provide the Fund with services. A team led by
John P. Robinson, Chairman of the Board and President of the Fund and the sole
director, President and controlling shareholder of Robinson Capital and
including Mark D. Billeadeau, Winfield S. Holland and Craig H. Robinson, each a
Vice President of the Fund and an officer of Robinson Capital, serve as the
Fund's
5
<PAGE>
principal portfolio managers. Mr. John P. Robinson has managed the Fund since
1951 and Messrs. Mark D. Billeadeau, Winfield S. Holland and Craig H. Robinson
have been involved in fund management since 1996, 1984 and 1996, respectively.
Messrs. John P. Robinson and Winfield S. Holland were employees of Craig-Hallum
and then Hamilton Investments until November 30, 1994. Robinson Capital is a
Minnesota corporation with offices at 5100 Eden Avenue, Suite 204, Edina,
Minnesota 55436. Robinson Capital does not serve as investment advisor to any
other registered investment companies.
Pursuant to an Investment Advisory Agreement which was approved by the
Fund's shareholders on March 3, 1995, Robinson Capital provides the Fund all
necessary information, advice, recommendation services and determinations
relating to investments and portfolio management. Robinson Capital has acted as
Investment Advisor and Administrator for the Fund from December 1, 1994. Orders
for securities are placed by Robinson Capital with the view to obtaining the
best combination of price and execution available. Robinson Capital attempts to
evaluate the overall quality and reliability of the broker-dealers and the
services provided, including research services, general execution capability,
reliability and integrity, willingness to take a position in securities, general
operational capabilities and financial condition. Robinson Capital is authorized
to place orders with various broker-dealers, subject to all applicable legal
requirements. Robinson Capital may also place orders with broker-dealers that
sell the Fund's shares, provided Robinson Capital believes the price and
execution are comparable to other broker-dealers. A greater spread, discount or
commission may be paid to broker-dealers that provide research services, which
may be used by Robinson Capital in managing assets of its clients, including the
Fund. Although it is believed that research services received directly or
indirectly benefit all of Robinson Capital's clients, the degree of benefit
varies by account and is not directly related to the commissions or remuneration
paid by the account.
As compensation for its services under the Investment Advisory Agreement,
Robinson Capital is paid an investment advisory fee, payable monthly, at an
annual rate of 0.60% for average net assets up to and including $100 million,
0.35% for the next $150 million of average net assets and 0.10% for net assets
over $250 million. While the advisory fee paid Robinson Capital is comparable to
the advisory fee paid by other mutual funds, the total expenses of the Fund are
higher than total expenses paid by most mutual funds, many of which have net
assets that are substantially larger than the net assets of the Fund. For the
fiscal year ended November 30, 1996, the advisory fees paid Robinson Capital
were $225,164.
Robinson Capital also provides the Fund with non-investment advisory
management and administrative services necessary for the conduct of the Fund's
business pursuant to a Management Agreement which was approved by the Fund's
shareholders on March 3, 1995. Robinson Capital prepares and updates securities
registration statements and filings, shareholder reports and other documents. In
addition, Robinson Capital provides office space and facilities for the
management of the Fund and provides accounting, record-keeping and data
processing facilities and services. Robinson Capital also provides information
and certain administrative services for shareholders of the Fund. For managing
the business affairs and providing certain shareholder services pursuant to the
Management Agreement, the Fund pays Robinson Capital a management administration
fee, payable monthly, at an annual rate of 0.40% of the average daily net assets
of the Fund, plus out-of-pocket expenses incurred in connection with shareholder
servicing activities such as postage, data entry, stationery, tax forms and
other printed material. Robinson Capital may subcontract with other entities to
provide certain shareholder servicing activities.
6
<PAGE>
The Fund serves as its own underwriter and distributor of its shares.
Investors Fiduciary Trust Company ("IFTC"), 1004 Baltimore, 7th Floor, P.O.
Box 419249, Kansas City, Missouri 64105-6249, serves as the Fund's Transfer and
Dividend Paying Agent ("Transfer Agent") and Custodian. IFTC maintains the
Fund's shareholder records and assets and performs certain accounting services
for the Fund. Assets of the Fund may also be held by sub-custodians selected by
IFTC and approved by the Board of Directors.
The Fund pays the investment management advisory fee, administrative fee,
shareholder services expenses, transaction costs, interest, taxes, legal,
accounting, audit, transfer agent and custodial fees, brokerage commissions and
other costs incurred in buying and selling assets, fees paid to directors not
affiliated with Robinson Capital, the cost of stationery and envelopes, the cost
of qualification and registration of shares under state and federal laws, the
cost of solicitation of proxies and certain other operational expenses. However,
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 1/2% of the Fund's average net assets for any fiscal year on the first $100
million of average net assets, 1 1/4% 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. During the fiscal year ended November 30, 1996, total expenses of the
Fund amounted to $571,297, of which $8,514 was reimbursed by Robinson Capital.
Net expenses of the Fund for the year ended November 30, 1996 were $562,783, or
1.50% of average net assets.
PURCHASE OF SHARES
Shares of the Fund may be purchased directly from the Fund or through
authorized investment dealers. Initial investments in the Fund may be made by
mailing a completed application, together with a check for the total purchase
price, to General Securities, Incorporated, c/o IFTC, P.O. Box 419249, Kansas
City, Missouri 64105-6249, or by contacting an authorized investment dealer.
Initial investments may also be made by submitting a completed application and
check to an authorized investment dealer who will forward them to the Fund's
Transfer Agent. The dealer is responsible for transmitting the order promptly to
the Transfer Agent in order to permit the investor to obtain the current price.
Subsequent purchases in the Fund may be made by mailing a check directly to the
Transfer Agent at General Securities, Incorporated, c/o IFTC, P.O. Box 419249,
Kansas City, Missouri 64105-6249, or by contacting an authorized investment
dealer. Checks should be made payable to General Securities, Incorporated,
subsequent purchases should indicate the account number on the check and checks
must be drawn on a U.S. bank or its foreign branch or subsidiary and must be
payable in U.S. dollars. Third party checks, except those payable to an existing
shareowner who is a natural person (as opposed to a corporation or partnership),
credit cards and cash will not be accepted. When purchases are made by check or
periodic automatic investment, redemptions will not be allowed until the
investment being redeemed has been in the account for 15 days. Initial and
subsequent investments may also be made by wiring Federal Funds to Investors
Fiduciary Trust Company; Routing #ABA 101003621; Deposit Account: Bank Account
7523491; From: Shareholder Name, Address, Tax Identification Number-For purchase
of: General Securities, Incorporated shares. In order for a wire investment to
be processed on the same day, (1) the investor must notify the Transfer Agent of
his or her intention to make such investment by 12:00 noon Eastern time on the
day of his or her investment by calling the Transfer Agent at 1-800-939-9990;
and (2) the wire must be received by 4:00 p.m. Eastern time that same day.
7
<PAGE>
Shares of the Fund may also be purchased through a "Servicing Organization"
which is a broker-dealer, bank or other financial institution that purchases
shares for its customers. When shares are purchased this way, the Servicing
Organization, rather than its customer, may be the shareholder of record of the
shares. The minimum initial and subsequent investments in the Fund for
shareholders who invest through a Servicing Organization generally will be set
by the Servicing Organization. Servicing Organizations may also impose other
charges and restrictions in addition to or different from those applicable to
investors who remain the shareholder of record of their shares. Thus, an
investor contemplating investing with the Fund through a Servicing Organization
should read materials provided by the Servicing Organization in conjunction with
this Prospectus.
Although Servicing Organizations will sell and redeem shares at net asset
value, they may charge their customers a fee in connection with services offered
to customers. Shares held through a Servicing Organization may be transferred
into the investor's name following procedures established by the investor's
Servicing Organization and the Fund's Transfer Agent. Certain Servicing
Organizations may receive compensation from Robinson Capital.
The Fund reserves the right to withdraw all or any part of the offering made
by this Prospectus and to reject purchase orders in whole or in part. Also, from
time to time, the Fund may temporarily suspend the offering of its shares to new
investors. During the period of such suspension, persons who are already
shareholders of the Fund normally are permitted to continue to purchase
additional shares and to have dividends reinvested.
Shares may be purchased in any amount not less than $1,500 initially with a
$100 minimum on subsequent investments (reduced pursuant to the Low Minimum
Initial Investment Plan/Automatic Investment Plan described below and subject to
waiver at the discretion of the Investment Advisor). Dividends and capital gains
distributions, if any, will be reinvested regardless of amount at the net asset
value determined on the distribution date, unless requested in cash, although
they will be taxable in the manner set forth in the section of this Prospectus
entitled DISTRIBUTION POLICY AND TAX STATUS. When the dollar amount of a
purchase is not evenly divisible by the current price of shares, the purchaser
will receive a number of whole shares plus a fractional share which is
proportionately the same as a whole share. Investments may thus be made in any
dollar amount (subject to the minimum described above) regardless of the current
price of shares.
The Fund is offering its shares at a public offering price equal to the next
determined net asset value per share. Net asset value is based upon and varies
with changes in the market value of securities owned by the Fund and is
determined for purposes of a purchase at the close of business immediately
following the receipt of a subscription by the Fund. Subscription forms and
other information concerning the purchase of shares may be obtained from the
Fund at the address and telephone number listed on the cover page of this
Prospectus or from securities dealers offering shares of the Fund. Stock
certificates will not be issued.
Shares of the Fund may be purchased at a price equal to their net asset
value. The net asset value of a Fund share is the proportionate interest of each
share (or a fractional share) in the net corporate assets. It is computed not
less frequently than once daily. For the purposes of determining the net
corporate assets, securities are valued, as of the market close New York time,
on the basis of the last sale (if a sale occurred that day). If no sale occurred
that day, securities traded on a national securities
8
<PAGE>
exchange are valued at the last bid price, whereas securities traded on the
Nasdaq National Market System or in the over-the-counter market are valued at
the mean between the last bid and asked price, in all cases excluding brokerage
commissions and odd lot premiums.
DISTRIBUTION POLICY AND TAX STATUS
The Fund follows a policy of distributing substantially all income on a
quarterly basis to shareholders; it distributes realized capital gains, both
long- and short-term, if any, on an annual basis to shareholders.
As an investment company, and so long as certain diversification of assets
and source of income requirements prescribed by the Internal Revenue Code are
met and at least 90% of its "investment company taxable income" plus certain
other amounts are distributed to its shareholders, the Fund is allowed to deduct
certain dividends paid to shareholders and "pass through" the tax character of
certain dividends and long-term capital gains to shareholders who receive
dividend distributions. The Fund has always qualified for such tax treatment
(including with respect to the last fiscal year) and intends to continue to do
so.
Distributions from dividend and interest income, including short-term
capital gains, whether paid in cash or reinvested in shares, are taxable to
shareholders as ordinary income for federal income tax purposes.
Long-term capital gains distributions, whether paid in cash or reinvested,
will, for federal income tax purposes, be taxable as long-term capital gains to
shareholders regardless of the length of time Fund shares have been owned by
shareholders, but will not be eligible for the dividends received deduction
generally available to corporate shareholders. If the net asset value of shares
should be reduced below a shareholder's cost by distribution of gain realized on
sale of securities, such distribution would be a return of investment, the
shareholder's basis in the Fund's shares would remain unchanged and the
distribution would be taxable as stated above. Accordingly, it may not
necessarily be advantageous for a shareholder to purchase shares in anticipation
of the payment of dividends or of capital gain distributions.
Pursuant to the Omnibus Budget Reconciliation Act of 1993, an individual's
net long-term capital gains are taxed at a maximum rate of 28%, while an
individual's ordinary income and net short-term capital gains are taxed at a
maximum rate of 39.6%. However, a corporation's net long-term capital gains
continue to be taxed at the corporate ordinary income tax rate, which is 35%.
The preceding discussion is based on the Internal Revenue Code of 1986, as
amended, regulations, rulings and decisions in effect on the date of this
Prospectus, all of which are subject to change. This summary does not discuss
any aspect of state, local or foreign taxation and does not discuss all the tax
considerations that may be relevant to particular shareholders in light of their
personal investment circumstances, or to certain types of shareholders that may
be subject to special tax rules. Shareholders should consult their own tax
advisors concerning the application to distributions of federal, state, local,
foreign or other tax laws.
REDEMPTION OF SHARES
SELLING YOUR SHARES. You may redeem all or a portion of your shares on any
day that the New York Stock Exchange is open. Your shares will be redeemed at
the next net asset value calculated after the Transfer Agent has received a
properly executed redemption request. Payment for shares will be
9
<PAGE>
made as promptly as practicable but in no event later than seven days after
receipt of a properly executed request. When the Fund is requested to redeem
shares for which it may not have yet received good payment, it may delay the
mailing of a redemption draft until it has determined that collected funds have
been received for the purchase of such shares, which may take up to 15 days from
the purchase date.
SELLING BY TELEPHONE. If the proceeds of the redemption are $50,000 or less
and the proceeds are to be payable to the shareholder(s) of record and mailed to
the address of record, normally a telephone request by any one account owner is
sufficient for redemptions unless the account application has denied such
privilege. Telephone requests may be made by calling 1-800-939-9990.
Institutional account owners may exercise this special privilege of redeeming
shares by telephone request subject to the same conditions as individual account
owners provided that this privilege has been pre-authorized by the institutional
account owner by written instruction to the Transfer Agent with signatures
guaranteed. This privilege of redeeming shares by telephone request may not be
used if any address change for the shareholder's account has been effected
within 30 days of the redemption request. During periods when it is difficult to
contact the Transfer Agent by telephone, it may be difficult to implement the
telephone redemption privilege. The Fund reserves the right to terminate or
modify this privilege at any time. Additional information concerning telephone
redemptions appears under the section entitled "Important Information."
EXPEDITED WIRE REDEMPTION. If you give authorization for expedited wire
redemption, shares of the Fund can be redeemed and the proceeds sent by Federal
wire transfer to a single previously designated bank account. Requests received
by the Transfer Agent prior to the close of the Exchange (currently 4:00 p.m.
Eastern time) will result in shares being redeemed that day at the next deter-
mined net asset value of the Fund and normally the proceeds being sent to the
designated bank account the following business day. Delivery of the proceeds of
a wire redemption request of $250,000 or more may be delayed by the Fund for up
to 7 days if the Investment Advisor deems it appropriate under then current
market conditions. Once authorization is on file, the Transfer Agent will honor
requests by telephone at 1-800-939-9990. The Fund cannot be responsible for the
efficiency of the Federal wire system or the shareholder's financial
institution. The Fund currently charges $20 for wire transfer of redemption
proceeds. The shareholder is responsible for any charges imposed by the
shareholder's bank. The minimum amount that may be wired is $2,500. The Fund
reserves the right to change this minimum or to terminate the wire redemption
privilege. To change the name of the single designated bank account to receive
wire redemption proceeds, it is necessary to send a written request with
signatures guaranteed to the Transfer Agent. During periods when it is difficult
to contact the Transfer Agent by telephone, it may be difficult to implement the
expedited redemption privilege.
SELLING BY MAIL. When shares are held for the account of a shareholder by
the Transfer Agent, the shareholder may redeem them by making a written request
to the Transfer Agent, Attention: Redemption Department, PO. Box 419249, Kansas
City, Missouri 64105-6249. If the proceeds of the redemption are $50,000 or less
on an account, no signature guarantee will be required, unless a change in
address for the shareholder's account has been effected within 30 days of the
redemption request. For all other redemptions, signatures must be guaranteed by
a bank, broker/dealer, municipal securities broker, government securities dealer
or broker, credit union, savings association, national securities exchange,
registered securities association or clearing agency. The purpose of a signature
guarantee is to protect shareholders against the possibility of fraud. The
Transfer Agent may reject redemption instructions if the guarantor is neither a
member of nor a participant in a signature
10
<PAGE>
guarantee program (currently known as "STAMP-SM-"). Guarantees from institutions
or individuals who do not provide reimbursement in case of fraud, such as
notaries public, will not be accepted. Further documentation may be requested
from institutional or fiduciary accounts, such as corporations, custodians
(e.g., under the Uniform Gifts to Minors Act), executors, administrators,
trustees or guardians ("institutional account owners"). The redemption request
must be signed by all registered owners exactly as the account is registered,
including any special capacity of the registered owner. The Fund currently
charges for actual costs of special delivery service of redemption proceeds.
IMPORTANT INFORMATION. The Transfer Agent employs procedures designed to
confirm that instructions communicated by telephone are genuine, including
requiring certain identifying information prior to acting upon instructions,
recording all telephone instructions and sending written confirmations of
telephone instructions. To the extent such procedures are reasonably designed to
prevent unauthorized or fraudulent instructions, neither the Transfer Agent nor
the Fund would be liable for any losses from unauthorized or fraudulent
instructions. However, if such reasonable procedures are not followed, the
Transfer Agent and the Fund may be liable for losses due to unauthorized
telephone transactions.
MINIMUM ACCOUNT BALANCE REQUIREMENT. Because of the high cost of
maintaining small accounts, the Fund reserves the right to redeem a shareholder
account that falls below the minimum investment level, currently $1,500, unless
the shareholder account falls below the minimum due to changes in the market
value of the portfolio. Currently, Individual Retirement Accounts, employee
benefit plan accounts, Employer Sponsored Payroll Deduction Plans and other
accounts with respect to which the Investment Advisor, in its sole discretion,
has waived the minimum purchase amount, are not subject to this procedure. You
will be notified in writing and will be allowed 60 days to make additional
purchases to bring the account value up to the minimum investment level before
the Fund redeems the account.
SHAREHOLDER SERVICES
The following shareholder services are offered by the Fund. For further
information regarding the details of these services, see the Statement of
Additional Information or contact the Fund.
LOW MINIMUM INITIAL INVESTMENT PLAN/AUTOMATIC INVESTMENT PLAN. A
shareholder may automatically purchase additional shares of the Fund through the
Low Minimum Initial Investment Plan or Automatic Investment Plan. The minimum
initial investment in the Fund is $1,500. However, the Low Minimum Initial
Investment Plan allows an account to be opened with an initial investment of
$100 and subsequent monthly investments of $100 or more for a one year period.
Under these Plans, monthly investments (minimum $100, except where reduced in
certain cases by the Fund) are made automatically from the shareholder's account
at a bank, savings and loan or credit union into the shareholder's account. By
enrolling in either Plan, the shareholder authorizes the Fund and its agents to
either draw checks or initiate Automated Clearing House debits against the
designated account at a bank or other financial institution. Such account must
have check or draft writing privileges. This privilege may be selected by
completing the appropriate section on the Account Application or by contacting
the Transfer Agent for appropriate forms. If the shareholder also has expedited
wire transfer redemption privileges, the same bank, savings and loan or credit
union account must be designated for both the Automatic Investment Plan and the
wire redemption programs. You may terminate your Plan by sending written notice
to the Transfer Agent. Termination by a shareholder will become effective within
five days after the Transfer Agent has received the written request. The Fund
may immediately terminate a shareholder's Plan in the event that any item is
unpaid by the
11
<PAGE>
shareholder's financial institution. The payment of proceeds from the redemption
of Fund shares purchased through the Automatic Investment Plan may be delayed to
allow the check or transfer of funds for payment of the purchase to clear, which
may take up to 15 calendar days from the purchase date. If a shareholder cancels
the Low Minimum Initial Investment Plan before a one year period, the Fund
reserves the right to redeem the shareholder's account if the balance is below
the minimum investment level, currently $1,500. The Fund may terminate or modify
this privilege at any time.
IRA PLAN, SEP-IRA PLAN AND SIMPLE IRA PLANS. An Individual Retirement
Account ("IRA") is available for all working individuals who receive
compensation for services rendered. A $12 per year maintenance fee is imposed on
IRA accounts. In addition, individuals covered by an employer sponsored Savings
Incentive Match Plan for employees ("SIMPLE Plan") or Simplified Employee
Pension-IRA Plan ("SEP-IRA Plan") may establish an IRA to which the employer can
make tax deductible contributions as a uniform percentage of compensation.
SIMPLE Plans are a form of qualified retirement plan authorized by tax law
changes in 1996 that are available to employers who employ 100 or fewer
employees and may be established after January 1, 1997. No new SEP-IRA Plans may
be established after December 31, 1996. An IRA established pursuant to a SEP-IRA
Plan or SIMPLE Plan may invest in the Fund.
EMPLOYER SPONSORED QUALIFIED RETIREMENT PLANS. Employer sponsored pension
plans and their related trusts that are qualified under the Internal Revenue
Code, including so-called Section 401(k) salary reduction plans, may invest in
mutual funds such as General Securities, Incorporated.
AUTOMATIC WITHDRAWAL PLAN. The owner of $10,000 or more of Fund shares at
net asset value may provide for the payment from the owner's account of any
requested dollar amount of $100 or more to be paid to the owner or a designated
payee monthly, quarterly, semi-annually or annually. Shares are redeemed on the
5th business day from the end of the month so that the payee will receive
payment approximately the first week of the following month. When receiving
payments under the Automatic Withdrawal Plan, any income and capital gain
dividends will be automatically reinvested at net asset value on the
reinvestment date. A sufficient number of full and fractional shares will be
redeemed to make the designated payment. Depending upon the size of the payments
requested and fluctuations in the net asset value of the shares redeemed,
redemptions for the purpose of making such payments may reduce or even exhaust
the account.
The Fund reserves the right to amend the Automatic Withdrawal Plan on thirty
days written notice and to terminate this privilege at any time. The plan may be
changed or terminated at any time by you in writing, with all registered owners'
signatures guaranteed. Additional information concerning signature guarantees
appears under the section entitled "REDEMPTION OF SHARES -- SELLING BY MAIL."
GENERAL INFORMATION
CAPITAL STOCK
General Securities, Incorporated is authorized to issue 10 million shares of
the nominal par value of one cent per share. On March 3, 1997, there were
2,650,112 shares outstanding. All shares are fully paid, nonassessable, and
transferable and have equal rights in earnings, in voting and on liquidation.
There are no junior or senior securities and no preemptive rights. No securities
senior to the shares of common stock can be issued.
12
<PAGE>
The shares have noncumulative voting rights which means that the holders of
more than 50% of the shares voting for the election of directors can elect 100%
of the directors if they choose to do so, and, in such event, the holders of the
remaining less than 50% of the shares voting for the election of directors will
not be able to elect any person or persons to the Board of Directors.
INVESTMENT ADVISOR, MANAGER, UNDERWRITER AND DISTRIBUTOR
Robinson Capital Management, Inc. acts as the Fund's Investment Advisor and
its Administrator. The Fund acts as its own underwriter and distributor of its
shares.
CUSTODIAN AND TRANSFER AGENT
All securities and cash are deposited with Investors Fiduciary Trust
Company, as Custodian. The Custodian has no supervision over management in such
matters as the purchase and sale of securities and the payment of dividends.
IFTC also acts as the Fund's Registrar and Transfer Agent.
LEGAL COUNSEL
Lindquist & Vennum PLLP, Minneapolis, Minnesota, are counsel for the Fund.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP has been selected as the independent auditors of the
Fund. The selection of independent auditors is subject to annual ratification by
the Fund's Board of Directors.
REPORTS TO SHAREHOLDERS
The fiscal year of the Fund ends on November 30 of each year. The Fund will
send to its shareholders, at least semiannually, reports showing its portfolio
securities and other information. An annual report containing financial
statements audited by the Fund's independent auditors will be sent to
shareholders each year.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to the Fund at the address or
telephone number set forth on the cover page of this Prospectus.
ADDITIONAL INFORMATION
The Fund has filed with the Securities and Exchange Commission in
Washington, D.C. a Registration Statement under the Securities Act of 1933 and
the Investment Company Act of 1940 with respect to the securities offered
hereby. This Prospectus does not contain all of the information set forth in the
Registration Statement, as permitted by the rules and regulations of the
Commission. The Statement of Additional Information included in the Registration
Statement may be obtained by calling or writing the Fund or Robinson Capital at
the address and telephone number set forth on the cover page of this Prospectus.
For further information pertaining to the Fund and the shares offered hereby,
reference is made to the Registration Statement and the exhibits thereto, which
may be examined without charge at the Public Reference Room of the Commission at
450 Fifth Street, N.W, Washington, D.C. 20549, and copies thereof may be
obtained from the Commission upon payment of the prescribed fees. In addition,
the Commission maintains a Website at http://www.sec.gov that contains this
Prospectus, the Statement of Additional Information and certain other electronic
filings made by the Fund with the Commission.
13
<PAGE>
PROSPECTUS
- --------------------------------------------------------------------------------
CONTENTS
<TABLE>
<S> <C>
Prospectus Summary.................................... 2
Financial Highlights.................................. 4
Investment Objectives and Policies.................... 5
Management of the Fund................................ 5
Purchase of Shares.................................... 7
Distribution Policy and Tax Status.................... 9
Redemption of Shares.................................. 9
Shareholder Services.................................. 11
General Information................................... 12
</TABLE>
- --------------------------------------------------------------------------------
GENERAL SECURITIES is the registered service mark of General Securities,
Incorporated
PRESIDENT John P. Robinson
VICE Mark D. Billeadeau
PRESIDENTS
Winfield S. Holland III
Craig H. Robinson
SECRETARY John R. Houston
DIRECTORS John P. Robinson,
CHAIRMAN
M. Michelle Coady
David W. Preus
LaVerne W. Rees
Oscar Victor
Charles J. Walton
James S. Womack
----------
INVESTMENT Robinson Capital
ADVISOR AND Management, Inc.
MANAGER
CUSTODIAN, Investors Fiduciary
REGISTRAR AND Trust Company
TRANSFER AGENT
GENERAL Lindquist & Vennum PLLP
COUNSEL
INDEPENDENT KPMG Peat Marwick LLP
AUDITORS
LOGO
GENERAL SECURITIES
INCORPORATED
5100 EDEN AVENUE, SUITE 204, EDINA, MINNESOTA 55436
PROSPECTUS
-------------------------------------------
LOGO
FOCUS ON
----
TQM
----
TOTAL QUALITY
MANAGEMENT
COMPANIES
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
DATED MARCH 31, 1997
GENERAL SECURITIES, INCORPORATED
5100 Eden Avenue, Suite 204, Edina, Minnesota 55436
Telephone (612) 927-6799
General Securities, Incorporated (the "Fund") is a diversified open-end
management investment company which seeks possible long-term capital
appreciation and preservation of capital for its shareholders with reasonable
risk. The Fund invests primarily, but not exclusively, in selected common
stocks. Shares of the Fund may be purchased directly from the Fund at a price
equal to the net asset value, as determined at the close of business immediately
following receipt by the Fund of a subscription.
This Statement of Additional Information provides certain detailed
information concerning the Fund. It is not a prospectus and should be read in
conjunction with the Fund's current Prospectus, a copy of which may be obtained
by telephone or written request to the Fund at the address and telephone number
printed above.
This Statement of Additional Information relates to the Fund's Prospectus
dated March 31, 1997.
----------
TABLE OF CONTENTS
Page
----
Investment Objectives and Policies . . . . . . . . . . . . . . . . . . . . 2
Management of the Fund . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Investment Advisory, Management and Distribution
Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Brokerage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . . . 9
Calculation of Performance Data. . . . . . . . . . . . . . . . . . . . . . 10
Shareholder Services . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . 15
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
As described in the Fund's Prospectus, the Fund's investment objective is
to select securities with a view to possible long-term capital appreciation and
preservation of capital. Consistent with that objective, the Fund believes
companies implementing a Total Quality Management ("TQM") approach or using
Continuous Quality Improvement ("CQI") practices throughout the company is, in
general, best positioned for superior growth. The Fund intends to invest most
of its assets in common stocks, although investments in corporate bonds,
debentures or preferred stocks and United States Government Securities, in
addition to certificates of deposit, bank depository accounts and other short-
term investments, have and will be made as economic conditions dictate.
In order to define its investment policies, the Fund has established
certain rules and guidelines. Some have been voluntarily adopted and others
have been required to meet either federal or state statutes. As indicated, some
policies are in the form of fundamental policies or charter restrictions which
may be changed only with the approval of a majority of the Fund's outstanding
voting securities while others are subject to change by the Board of Directors.
Without the affirmative vote of the lesser of (i) a majority of all outstanding
shares of the Company, or (ii) 67% or more of the Company's shares represented
at a meeting if more than 50% of all outstanding shares of the Company are
represented in person or by proxy at such meeting, the Fund may not, among other
things,:
1. Buy "on margin" or sell "short";
2. Borrow money;
3. Issue securities senior to the outstanding shares of common stock;
4. Act as underwriter;
5. Invest more than 5% of the value of its total assets (taken at cost)
in the securities of any one company, or purchase more than 10% of any
class of voting securities or more than 10% of any class of securities
of any one company;
6. Invest more than 25% of the value of its total assets (taken at cost)
in the securities of companies all of which conduct their principal
business activities in the same industry;
7. Invest in commodities or commodity contracts, or interests in real
estate;
8. Lend money or assets;
2
<PAGE>
9. Purchase or retain the securities of any issuer if those officers and
directors of the Fund or the advisor owning beneficially more than
1/2 of 1% of the securities of such issuer together own more than 5%
of the securities of such issuer;
10. Purchase the securities of any other investment company; or
11. Invest in companies for the purpose of exercising control or
management.
MANAGEMENT OF THE FUND
DIRECTORS AND OFFICERS
The directors and officers of the Fund are listed below together with their
addresses and information as to their principal business occupations during the
last five years (if other than their present business occupations) and other
current business affiliations, including affiliation with the investment
advisor.
*JOHN P. ROBINSON, Chairman of the Board of Directors and President of the
Fund, 5100 Eden Avenue, Suite 204, Edina, Minnesota 55436. He is President
and Treasurer of Robinson Capital. He is the father of Craig H. Robinson.
M. MICHELLE COADY, Director of the Fund, 3236 48th Avenue South,
Minneapolis, Minnesota 55406. She is Director of Corporate Quality, at The St.
Paul Companies, Inc., St. Paul, MN, since 1995 and a proprietor of a consulting
business since 1985. From 1991 to 1994, Ms. Coady was Senior Director of
Continuous Quality Improvement, at HealthPartners, Inc., Minneapolis, MN.
DAVID W. PREUS, Director of the Fund, 60 Seymour Avenue S.E., Minneapolis,
Minnesota 55414. He is the Presiding Bishop Emeritus of The American Lutheran
Church and a Distinguished Visiting Professor at Luther Northwestern Theological
Seminary, St. Paul, Minnesota.
LAVERNE W. REES, Director of the Fund, 13 Lily Pond Road, North Oaks,
Minnesota 55110. He is a business consultant.
OSCAR VICTOR, Director of the Fund, 3917 W. 24th Street, Minneapolis,
Minnesota 55416. He is currently retired and the former President of Vic
Research and Development Incorporated, a Minneapolis, Minnesota provider of
consulting services. He is also the former Chief Executive Officer of Vic
Manufacturing Co. Incorporated, a manufacturer of commercial dry cleaning and
air pollution control equipment. He serves on the Board of Directors of Check
Technology Corporation and Fidelity Bank.
- --------------------
*Designates director who is an "interested person" with respect to the Fund
as defined in the Investment Company Act of 1940.
3
<PAGE>
CHARLES J. WALTON, Director of the Fund, 653 S.W. Thorn Hill Lane, Palm
City, Florida. He is President of Walton Enterprise Leasing Co., a Minneapolis,
Minnesota automobile, truck and equipment leasing corporation.
JAMES S. WOMACK, Director of the Fund, 9905 Oak Shore Drive, Lakeville,
Minnesota. He is Chairman of the Board of Sheldahl, Inc., a Northfield,
Minnesota manufacturer of electronic materials and circuitry. He serves on the
Board of Directors of Zytec Corp.
MARK D. BILLEADEAU, Vice President of the Fund, 5100 Eden Avenue, Suite
204, Edina, Minnesota 55436. He has served as a Vice President of Robinson
Capital since February 1995. From September 1990 to February 1995, he was a
Manager of Consulting Service of Craig-Hallum and its successor, Principal
Financial Services, Inc.
WINFIELD S. HOLLAND III, Vice President of the Fund, 5100 Eden Avenue,
Suite 204, Edina, Minnesota 55436. He was a registered representative of
Hamilton Investments, Inc. from July 1993 through November 1994 and prior to
July 1993 was a registered representative and Vice President of Craig-Hallum,
Inc.
JOHN R. HOUSTON, Secretary of the Fund, 4200 IDS Center, Minneapolis,
Minnesota 55402. He is a partner of Lindquist & Vennum P.L.L.P., legal counsel
for the Fund.
CRAIG H. ROBINSON, Vice President of the Fund, 5100 Eden Avenue, Suite
204, Edina, Minnesota 55436. He has worked in sales and marketing at
Robinson Capital since August 1995 and is Vice President of Robinson Capital
since February 1997. From August 1994 to August 1995, he worked as an
Account Executive at Paine Webber Incorporated. From 1990 to August 1994, he
worked as a Sales Manager at Comprehensive Loss Management, Inc. He is the
son of John P. Robinson.
On March 3, 1997, the officers and directors owned 52,817 shares, or 2.0%
of the total number of the Fund shares outstanding.
REMUNERATION OF OFFICERS AND DIRECTORS
The Fund does not pay any remuneration directly to its officers, but
compensation of officers and employees is paid by Robinson Capital Management,
Inc., its current investment advisor, and fees for legal services to the Fund
are paid by the Fund to the law firm in which the Fund's Secretary is a partner.
During the last fiscal year, the Fund paid Robinson Capital Management, Inc., a
Minnesota corporation, its investment advisor for the year, $225,164 for
investment advisory services, prior to an expense reimbursement.
The directors who have no substantial interest in the investment advisor or
its affiliates (Ms. Coady and Messrs. Preus, Rees, Victor, Walton and Womack)
receive a nominal honorarium from the Fund for each directors' meeting attended
(an aggregate of $8,400 during the last fiscal year).
4
<PAGE>
INVESTMENT ADVISORY, MANAGEMENT AND DISTRIBUTION SERVICES
Robinson Capital Management, Inc. ("Robinson Capital"), a Minnesota
corporation with offices at 5100 Eden Avenue, Suite 204, Edina, Minnesota 55436,
is the Investment Advisor for the Fund and provides the Fund with professional
investment supervision and management. Robinson Capital is an investment
advisory firm controlled by John P. Robinson who has acted as the Fund's
President and has served on the Board of Directors since the Fund's inception in
1951.
From March 23, 1994 through November 30, 1994, the Fund's Investment
Advisor was Alpha Source Asset Management, Inc. ("Alpha Source"), a wholly-owned
subsidiary of Hamilton Investments, Inc. ("Hamilton Investments"), which in turn
was a wholly-owned subsidiary of Household International, Inc., a holding
company with its principal subsidiary engaged in financial services. From March
23, 1994 through November 30, 1994, the Fund's Administrator was Hamilton
Investments. Prior to March 23, 1994, the Fund's Investment Advisor and its
Administrator was Craig-Hallum, a division of Hamilton Investments ("Craig-
Hallum").
Pursuant to an Investment Advisory Agreement which was approved by the
Fund's shareholders on March 3, 1995, Robinson Capital provides the Fund all
necessary information, advice, recommendation services and determinations
relating to investments and portfolio management. Orders for securities are
placed by Robinson Capital with the view to obtaining the best combination of
price and execution available. Robinson Capital attempts to evaluate the
overall quality and reliability of the broker-dealers and the services provided,
including research services, general execution capability, reliability and
integrity, willingness to take a position in securities, general operational
capabilities and financial condition. Robinson Capital is authorized to place
orders with various broker-dealers, subject to all applicable legal
requirements. Robinson Capital may also place orders with broker-dealers that
sell the Fund's shares, provided Robinson Capital believes the price and
execution are comparable to other broker-dealers. A greater spread, discount or
commission may be paid to broker-dealers that provide research services which
may be used by Robinson Capital in managing assets of its clients, including the
Fund. Although it is believed that research services received directly or
indirectly benefit all of Robinson Capital's clients, the degree of benefit
varies by account and is not directly related to the commissions or remuneration
paid by the account.
As compensation for its services under the Investment Advisory Agreement,
Robinson Capital is paid an investment advisory management fee, payable monthly,
at an annual rate of 0.60% for average net assets up to and including $100
million, 0.35% for the next $150 million of average net assets and 0.10% for net
assets over $250 million. From March 23, 1994 to November 30, 1994, the Fund
paid investment advisory fees to Alpha Source at the same rate as is paid
Robinson Capital. Prior to March 23, 1994, the Fund paid investment advisory
fees to Craig-Hallum at an annual rate of 1% for average net assets up to $15
million, 0.75% for the next $15 million of average net assets and 0.50% for net
assets over $30 million. For the fiscal years ended November 30, 1996 and 1995,
the advisory fees paid Robinson Capital were $225,164 and $183,570,
respectively, and for the fiscal
5
<PAGE>
year ended November 30, 1994, the advisory fees paid Alpha Source and Craig
Hallum were $191,997.
Robinson Capital also provides the Fund with non-investment advisory
management and administrative services necessary for the conduct of the Fund's
business pursuant to a Management Agreement which was approved by the Fund's
shareholders on March 3, 1995. Robinson Capital prepares and updates securities
registration statements and filings, shareholder reports and other documents.
In addition, Robinson Capital provides office space and facilities for the
management of the Fund and provides accounting, record-keeping and data
processing facilities and services. Robinson Capital also provides information
and certain administrative services for shareholders of the Fund. 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 net assets of
the Fund, plus out-of-pocket expenses incurred in connection with shareholder
servicing activities such as postage, data entry, stationery, tax forms and
other printed material. Robinson Capital may subcontract with other entities to
provide certain shareholder servicing activities.
During the fiscal year ended November 30, 1996 the Fund paid total fees to
Robinson Capital amounting to $375,273. Of this amount, $225,164 was paid for
investment advisory services and $150,109 was paid for non-investment management
or administrative services. For the fiscal year ended November 30, 1995,
Robinson Capital received $305,950 in total advisory and management fees from
the Fund and for the fiscal year ended 1994, Alpha Source, Hamilton Investments
and Craig-Hallum received $264,332 in total advisory and management fees from
the Fund.
The Fund's total net assets at the beginning and end of fiscal 1996 were
$32,540,736 and $39,974,254, respectively. The combined advisory management
fees and non-investment management and administrative fees of 1% on the first
$100 million of the Fund's net assets and 3/4 of 1% on the next $150 million of
the Fund's net assets are higher than similar fees paid by most mutual funds,
many of which have net assets that are substantially larger than the net assets
of the Fund.
The Fund pays the investment advisory management fee, administrative fee,
shareholder services expenses, transaction costs, interest, taxes, legal,
accounting, audit, transfer agent and custodial fees, brokerage commissions and
other costs incurred in buying and selling assets, fees paid to directors not
affiliated with Robinson Capital, the cost of stationery and envelopes, the cost
of qualification and registration of shares under state and federal laws, the
cost of solicitation of proxies and certain other operational expenses.
However, 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 1-1/2% of the Fund's average net assets for any fiscal year on the
first $100 million of average net assets, 1-1/4% 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. During fiscal 1994, the Fund was subject to identical
expense limitations with Alpha Source, Hamilton Investments and Craig-Hallum.
For the fiscal year ended
6
<PAGE>
November 30, 1996, total expenses of the Fund amounted to $571,297 of which
$8,514 was reimbursed by Robinson Capital. Net expenses to the Fund for the
year ended November 30, 1996 were $562,783, or 1.50% of average net assets.
Each of the Investment Advisory Agreement and Management Agreement will
continue in force from year to year so long as the continuance is specifically
approved at least annually (1) by the Board of Directors of the Fund or (2) by a
vote of the majority of the outstanding voting securities of the Fund, provided
that in either event the continuance is also approved by the vote of a majority
of directors who are not interested persons of the Fund or Robinson Capital,
cast in person at a meeting called for the purpose of voting on such approval.
Each of the Investment Advisory Agreement and Management Agreement may be
terminated at any time, without the payment of any penalty, by the Board of
Directors of the Fund, by a vote of the majority of the Fund's outstanding
voting securities, or by Robinson Capital on 60 days' written notice. They each
terminate automatically in the event of an assignment.
The Fund serves as its own underwriter and distributor of its shares.
Investors Fiduciary Trust Company ("IFTC"), 1004 Baltimore, 7th Floor, P.O.
Box 419249, Kansas City, Missouri 64105-6249, currently serves as the Fund's
Transfer Agent and Dividend Paying Agent and Custodian. IFTC, which is not
affiliated with either the Fund or Robinson Capital, maintains the Fund's
shareholder records and assets and performs certain accounting services for the
Fund. Assets of the Fund may also be held by sub-custodians selected by IFTC
and approved by the Board of Directors.
BROKERAGE
During the past fiscal year, the Fund had total purchases of portfolio
securities, other than short-term securities, of $8,569,010 and sales of such
securities of $5,362,630, resulting in portfolio turnover in that year of 18%,
compared with 24% during fiscal 1995 and 42% during fiscal 1994. The Fund's
total net assets at the beginning of fiscal 1996 were $32,540,736 and
$39,974,254 at the end of the year. The total amount of brokerage fees for
handling portfolio transactions of the Fund during the three fiscal years ended
November 30, 1996, 1995 and 1994 were $24,420, $51,082 and $46,889,
respectively.
The Fund's brokerage business is distributed among various brokers and
dealers, and the allocation is determined primarily at the discretion of the
investment advisor. The Fund always seeks to effect its transactions in
portfolio securities where it can get prompt execution of orders at the most
favorable prices ("best execution"). The commissions charged by brokers and
dealers vary and the Fund is not required by law to utilize the services of
national securities exchange members or other brokers or dealers charging the
lowest commission for any particular transaction.
It is the practice of the Fund and its Investment Advisor to consider
statistical and factual information, as well as reports on general market
conditions, industry analysis and analysis of
7
<PAGE>
particular companies whose securities are publicly traded, furnished to them by
investment banking firms as a factor in connection with allocation of brokerage
business to such firms, provided the best execution is still obtained. Such
services are generally provided to the investment advisor, to the extent that
such services are used by it in rendering investment advice to the Fund, they
tend to reduce the advisor's expenses. During fiscal 1996, certain brokers
rendered research services to the Fund and in exchange for such services the
Fund directed brokerage transactions to them. However, such placement of
brokerage transactions was not pursuant to binding written agreement with such
brokers. The aggregate amount of such transactions was $13,931,640; the
aggregate amount of related commissions was $24,420.
Where the concept of best execution is satisfied by two brokers and one
broker charges a lower commission but does not provide such services, the
advisor has indicated that it may place its orders with the broker charging a
higher commission where the amount of such commission is reasonable in relation
to the value of the brokerage and research services provided. If the investment
advisor purchases such information its expenses will increase without
reimbursement from the Fund. If it is concluded that it would be impractical
for the advisor to attempt to provide the full range of services which are
available from brokerage firms or if the advisor deems that it cannot afford
purchasing such information and services, it may become necessary to pay a
higher level of commissions to firms offering these services. The advisor will
not institute such a policy without the prior authorization of its Board of
Directors, however, and any such payments will be reviewed by the directors on
at least a quarterly basis.
The Fund made no allocation of brokerage business during the last fiscal
year to those dealers and brokers who were sellers of the Fund's shares and no
reciprocal brokerage business was received by the advisor. When appropriate,
the advisor may make brokerage allocation to sellers of Fund shares in the
current fiscal year. Purchases and sales of securities which are not listed or
traded on a securities exchange will ordinarily be executed with primary market
makers acting as principals, except where best execution may otherwise be
obtained.
Robinson Capital is not registered as a broker/dealer and, consequently,
did not in either fiscal 1995 or 1996, and will not in fiscal 1997, be acting as
broker in the execution of any orders for the Fund. The prior Investment
Advisory Agreement permitted Hamilton Investments to act as broker in executing
orders for the purchase and sale of securities in the Fund's portfolio but only
if commissions charged did not exceed customary charges for such services. Such
charges, if made, would not exceed the minimum charges for similar services
provided to its most favored customers. In the past, most of the portfolio
transactions have been executed by members of stock exchanges. During fiscal
year 1994, the Fund paid Hamilton Investments or Craig-Hallum an aggregate
$2,450 in brokerage commissions, which constituted 5.23% of all brokerage
commissions paid by the Fund and reflects the utilization of Hamilton
Investments or Craig-Hallum to effect 0.067% of the Fund's aggregate dollar
amount of transactions involving the payment of commissions. The transactions
effected by Hamilton Investments and Craig-Hallum were generally smaller
aggregate dollar purchases, for which higher commissions were normally charged.
8
<PAGE>
DETERMINATION OF NET ASSET VALUE
Shares of the Fund may be purchased at a price equal to their net asset
value. The net asset value of a Fund share is the proportionate interest of
each share (or fractional share) in the net corporate assets. Net asset value
varies as prices of portfolio securities fluctuate. It is computed not less
frequently than once daily. For the purposes of determining the net corporate
assets, securities are valued, as of the market close New York time, on the
basis of the last sale (if a sale occurred that day). If no sale occurred that
day, securities traded on a national securities exchange are valued at the last
bid price, whereas securities traded on the Nasdaq National Market System or in
the over-the-counter market are valued at the mean between the last bid and
asked price, in all cases excluding brokerage commissions and odd lot premiums.
Securities having no readily available market quotation and all other assets are
valued in good faith at fair value under the direction of the Board of
Directors.
Computation of net asset value as of November 30, 1996 is illustrated
below:
Market value of portfolio securities . . . . . . . $42,476,381
Cash and receivables less liabilities . . . . . . . (2,502,127)
-----------
Net assets . . . . . . . . . . . . . . . . . . . . 39,974,254
-----------
-----------
Number of shares outstanding . . . . . . . . . . . 2,485,550
Net asset value per share (net assets
divided by shares outstanding) . . . . . . . . . $ 16.08
The net asset value used by General Securities, Incorporated in selling and
redeeming shares is that of the computation at the close of business immediately
following the receipt of a subscription for shares or of a request for
redemption.
9
<PAGE>
CALCULATION OF PERFORMANCE DATA
Advertisements and other sales literature for the Fund may refer to
"average annual total return" and "cumulative total return." Average annual
total return is computed by finding the average annual compounded rates of
return over the periods indicated in the advertisement that would equate the
initial amount invested to the ending redeemable value, according to the
following formula:
n
P(1+T) = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return;
n = number of years; and
ERV = ending redeemable value at the end of the period of a
hypothetical $1,000 payment made at the beginning of such period.
The average annual compounded total return on investments in the Fund for
the one, five and ten year periods ended December 31, 1996 were 20.0%, 12.7% and
13.2%, respectively.
Cumulative total return figures are computed by finding the cumulative
compounded rate of return over the period indicated in the advertisement that
would equate the initial amount invested to the ending redeemable value,
according to the following formula:
CTR = (ERV - P) 100
---------
P
Where:
CTR = Cumulative total return
ERV = ending redeemable value at the end of the period of a
hypothetical $1,000 payment made at the beginning of such period;
and
P = initial payment of $1,000
The cumulative total return on investments in the Fund for the one, five
and ten year periods ended December 31, 1996 were 20.0%, 82.2% and 245.9%,
respectively.
The calculations for both average annual total return and cumulative total
return assume all dividends and all capital gain distributions are reinvested at
net asset value on the appropriate reinvestment dates as described in the
Prospectus and include all recurring fees, such as investment advisory and
management fees, charged as expenses to all shareholder accounts.
10
<PAGE>
SHAREHOLDER SERVICES
LOW MINIMUM INITIAL INVESTMENT PLAN/AUTOMATIC INVESTMENT PLAN. A
shareholder may automatically purchase additional shares of the Fund through the
Low Minimum Initial Investment Plan or Automatic Investment Plan. The minimum
initial investment in the Fund is $1,500. However, the Low Minimum Initial
Investment Plan allows an account to be opened with an initial investment of
$100 and subsequent monthly investments of $100 or more for a one year period.
Under these Plans, monthly investments (minimum $100, except where reduction in
certain cases by the Fund) are made automatically from the shareholder's account
at a bank, savings and loan or credit union into the shareholder's account. By
enrolling in either Plan, the shareholder authorizes the Fund and its agents to
either draw checks or initiate Automated Clearing House debits against the
designated account at a bank or other financial institution. Such account must
have check or draft writing privileges. This privilege may be selected by
completing the appropriate section on the Account Application or by contacting
the Transfer Agent for appropriate forms. If the shareholder also has expedited
wire transfer redemption privileges, the same bank, savings and loan or credit
union account must be designated for both the Automatic Investment Plan and the
wire redemption programs. You may terminate your Plan by sending written notice
to the Transfer Agent. Termination by a shareholder will become effective
within five days after the Transfer Agent has received the written request. The
Fund may immediately terminate a shareholder's Plan in the event that any item
is unpaid by the shareholder's financial institution. The payment of proceeds
from the redemption of Fund shares purchased through the Automatic Investment
Plan may be delayed to allow the check or transfer of funds for payment of the
purchase to clear, which may take up to 15 calendar days from the purchase date.
If a shareholder cancels the Low Minimum Initial Investment Plan before a one
year period, the Fund reserves the right to redeem the shareholder's account if
the balance is below the minimum investment level, currently $1,500. The Fund
may terminate or modify this privilege at any time.
INDIVIDUAL RETIREMENT ACCOUNT (IRA PLAN), SEP-IRA PLANS AND SIMPLE IRA
PLANS. Any individual with earned income can establish an individual retirement
account (IRA) to provide retirement benefits to the individual. The Fund offers
an IRA Plan funded with shares of the Fund. The Fund's IRA Plan follows the
basic format of the Internal Revenue Service model plan, and accordingly, upon
submission to the Service for approval, the Fund was advised that no further
qualifying action was required by individuals adopting the IRA Plan. Any person
with earned income may establish his or her own IRA by adopting the IRA Plan and
may make annual contributions in an amount not exceeding the lesser of 100% of
his or her adjusted gross income or $2,000. An individual can make an
additional contribution of up to $2,000 to an IRA for a nonworking spouse if the
combined contributions for both the individual's and his or her spouse's IRAs do
not exceed 100% of the individual's or spouse's adjusted gross income. Such
contributions are tax deductible by all individuals except those who are active
participants, or whose spouses are active participants, in a qualified employer
sponsored profit sharing or pension plan. For these individuals, the tax
deduction is reduced or eliminated but income on such contributions continues to
be currently tax deferred. Minimum annual distributions from the IRA are
required beginning in the year following the year in which the individual
attains age 70-1/2. Substantial tax penalties exist for premature
11
<PAGE>
distributions from the IRA Plan or for failure to make timely distributions and
the adoption of such Plan should be reviewed by the individual and his or her
attorney prior to investing.
The IRA Plan may also be utilized by any person under age 70-1/2 to
maintain the tax-sheltered treatment of benefits distributed from an employer's
tax qualified pension plan because of the employee's termination of employment.
Benefits distributed in a lump sum or installments for a period less than ten
years can be invested in the IRA Plan, provided the employee elects either to
make a direct rollover from the trustee of the employee's plan to the IRA Plan,
or of the employee receives the distribution directly and invests in the IRA
Plan within 60 days of such receipt. In this manner, assets from the previous
employer's pension plan are reinvested, the tax consequences stemming from the
distribution are deferred, and the assets deposited in the IRA Plan, at the
option of the holder, may in the future be "rolled over" to a tax qualified
pension plan of a subsequent employer.
In addition, individuals covered by an employer sponsored Savings Incentive
Match Plan for employees ("SIMPLE Plan") or Simplified Employee Pension-IRA
Plan ("SEP-IRA Plan") may establish an IRA to which the employer can make tax
deductible contributions as a uniform percentage of compensation. The employer
sponsoring a SIMPLE Plan is required to make either a matching contribution of
100% of the employee's contributions up to 3% of the employee's compensation or
a uniform contribution to all eligible employees equal to 2% of compensation.
The employer sponsoring the SEP-IRA may contribute up to the lesser of $30,000
or 15% of the employee's compensation, up to a maximum compensation of $160,000
for 1997. SIMPLE Plans are a form of qualified retirement plan authorized by
tax law changes in 1996 that are available to employers who employ 100 or less
employees and may be established after January 1, 1997. No new SEP-IRA Plans may
be established after December 31, 1996. SIMPLE Plans are exempt from many of the
testing and other requirements imposed on qualified retirement plans. SIMPLE
Plans and certain SEP-IRA Plans in existence prior to January 1, 1997 permit
employees to elect to contribute portions of their pre-tax compensation to such
plans in addition to the employer's contribution, subject to the above
limitations. Generally, such individual contributions are limited to a maximum
dollar amount of compensation each year ($6,000 for SIMPLE Plans and $9,500 for
SEP-IRA Plans for 1997). The employee covered by a SEP-IRA Plan that prohibits
individual pre-tax contributions may make additional contributions of the lesser
of $2,000 or 100% of compensation either to the SEP-IRA Plan or to a separate
IRA which may be deductible. An IRA established pursuant to a SEP-IRA Plan or
SIMPLE Plan may invest in the Fund.
Under the Fund's IRA Plan, IFTC serves as custodian of the assets. IFTC
will charge an annual maintenance fee of $12 for its custodial services. In
addition, there will be a fee of $15 for a lump sum benefit distribution, but no
fee for each periodic cash distribution received from the Fund. This fee
schedule may be altered at any time by IFTC on 60 days' written notice. Persons
opening an IRA Plan may rescind it upon written notice to the custodian on or
before the seventh day following acceptance of the Plan by the custodian. Any
individual rescinding an IRA Plan during the seven-day period will be fully
reimbursed even though it is the Fund's practice to invest all proceeds
immediately upon receipt. If the proceeds so invested depreciate prior to
rescission, the investment
12
<PAGE>
advisor will absorb the loss. If the proceeds invested appreciate, the Fund
will realize the gain. To date there has not been any rescission of an IRA Plan
by any investor in the Fund. Shares held in an IRA Plan may be redeemed at any
time pursuant to a proper redemption request. See "Redemption of Shares" in the
Prospectus.
EMPLOYER SPONSORED QUALIFIED RETIREMENT PLANS. Employer sponsored pension
plans and their related trusts that are qualified under the Internal Revenue
Code, including so-called Section 401(k) salary reduction plans, may invest in
mutual funds such as General Securities, Incorporated. A SIMPLE Plan established
by an employer with 100 or less employees under which contributions are made to
a tax exempt trust rather than individual IRAs as described above may also
invest in the Fund. SIMPLE Plans are a form of qualified retirement plan
authorized by tax law changes in 1996 that are available to employers who employ
100 or fewer employees and may be established after January 1, 1997. The
employer sponsoring a SIMPLE Plan is required to make either a matching
contribution of 100% of the employee's contributions up to 3% of the employee's
compensation or a uniform contribution to all eligible employees equal to 2% of
compensation. Certain retirement plans permit employees to elect to contribute
portions of their compensation pre-tax to such plans in addition to the
employer's contribution, subject to the above limits. Generally, such
individual contributions are limited to a maximum dollar amount of compensation
each year ($6,000 for SIMPLE Plans and $9,500 for other qualified profit sharing
plans for 1997). Such qualified retirement plans may also be established by
self employed individuals for themselves and their eligible employees, if any.
These individuals may make annual tax deductible contributions out of earned
income to their self-employed plan, in amounts up to the lesser of $30,000 or 15
% of earned income (after such contributions of the contribution is
discretionary (e.g., a profit sharing plan) or $30,000 or 25% if the
contribution is fixed (e.g., a pension plan) to purchase shares of the Fund.
Prior to 1997, the Fund provided a Self-Employed Retirement Plan document and
Custodial Agreement for adoption by self-employed individuals. After 1996,
self-employed individuals are responsible for amending the documents to maintain
compliance with tax and other laws, or adopting new documents to maintain
compliance with such laws. Initial and annual maintenance fees, withdrawal,
termination and distribution fees are charged by IFTC, the custodian bank,
according to a schedule of fees established in the Custodial Agreement. The
fees are the same as the fees IFTC charges for IRA Plan services. The custodian
has reserved the right to increase fees for its services on 60 days' written
notice.
It is recommended that interested persons consult with an attorney and a
qualified trustee regarding the nature of such plans, including their tax
consequences and dollar limitations. Since such a retirement investment program
involves commitments covering future years and tax penalties for premature
distributions, it is important that the investor consider the investment
objectives of the Fund as described in the Prospectus and this Statement. The
Fund may elect to provide quarterly statements containing information regarding
transactions for the period covered in lieu of confirming each transaction to
persons making purchases pursuant to the IRA Plan, SEP-IRA, SIMPLE IRA or
employer sponsored qualified retirement plans.
13
<PAGE>
AUTOMATIC WITHDRAWAL PLAN. The owner of $10,000 or more of Fund shares at
net asset value may provide for the payment from the owner's account of any
requested dollar amount of $100 or more to be paid to the owner or a designated
payee monthly, quarterly, semi-annually or annually. Shares are redeemed on the
5th business day from the end of the month so that the payee will receive
payment approximately the first week of the following month. When receiving
payments under the Automatic Withdrawal Plan, any income and capital gain
dividends will be automatically reinvested at net asset value on the
reinvestment date. A sufficient number of full and fractional shares will be
redeemed to make the designated payment. Depending upon the size of the payments
requested and fluctuations in the net asset value of the shares redeemed,
redemptions for the purpose of making such payments may reduce or even exhaust
the account.
The Fund reserves the right to amend the Automatic Withdrawal Plan on
thirty days' written notice and to terminate this privilege at any time. The
plan may be changed or terminated at any time by you in writing, with all
registered owners' signatures guaranteed. Additional information concerning
signature guarantees appears under the section entitled "Redemption of Shares -
Selling by Mail."
14
<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 presented
on page 4 of the Prospectus for each of the years in the ten-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 audit provides 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 ten-year period ended November 30, 1996, in conformity
with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Minneapolis, Minnesota
December 27, 1996
<PAGE>
GENERAL SECURITIES
INCORPORATED
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
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.
[GRAPH]
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>
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS NOVEMBER 30, 1996
ASSETS
Number of Market
shares value (a)
--------- -----------
<S> <C> <C>
INVESTMENT SECURITIES (percentages represent value of investments compared to total net assets):
COMMON STOCK (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 1,473,000
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
Weyerhausor 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
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
------
------
NOTES OF 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 in 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
-----------
-----------
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1996
<S> <C>
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
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED NOVEMBER 30, 1996 AND 1995
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 of 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
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to financial statements.
<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.
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>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
The following financial statements and exhibits have been filed as part of
the Registration Statement:
a. FINANCIAL STATEMENTS:
1. Independent Auditors' Report dated December 27, 1996 (included in
Part B);
2. Statement of Net Assets as of November 30, 1996 (included in Part B);
3. Statement of Operations for the year ended November 30, 1996 (included
in Part B);
4. Statements of Changes in Net Assets for each of the years in the two-
year period ended November 30, 1996 (included in Part B);
5. Notes to Financial Statements (included in Part B);
Other schedules have been omitted since they are not applicable or are not
required by Regulation S-X.
b. EXHIBITS:
1. Articles of Incorporation of the Fund now in effect, filed as Exhibit
1 to initial Form N-1 Registration Statement, File No. 2-77092, are
incorporated herein by reference.
2. By-Laws of the Fund, filed as Exhibit 2 to initial Form N-1
Registration Statement, File No. 2-77092, are incorporated herein by
reference.
3. Not Applicable.
4. Not Applicable.
5.1 Investment Advisory Agreement between the Fund and Robinson Capital
Management, Inc., filed as Exhibit 5.1 to Form N-1A Registration
Statement, Amendment No. 14, File No. 2-77092, is incorporated herein
by reference.
<PAGE>
5.2 Management Agreement between the Fund and Robinson Capital Management,
Inc., filed as Exhibit 5.2 to Form N-1A Registration Statement,
Amendment No. 14, File No. 2-77092, is incorporated herein by
reference.
6. Not Applicable.
7. Not Applicable.
8. Custodian Agreement between the Fund and Investors Fiduciary Trust
Company, filed as Exhibit 8 to Form N-1A Registration Statement,
Amendment No. 13, File No. 2-77092, is incorporated herein by
reference.
9. Transfer Agency Agreement between the Fund and Investors Fiduciary
Trust Company, filed as Exhibit 9 to Form N-1A Registration Statement,
Amendment No. 13, File No. 2-77092, is incorporated herein by
reference.
10. Opinion of Counsel as to the legality of the securities being
registered, filed as Exhibit 7 to initial Form N-1 Registration
Statement, File No. 2-77092, is incorporated herein by reference.
11. Independent Auditors' Consent.
12. Not Applicable.
13. Not Applicable.
14. General Securities, Incorporated Prototype Individual Retirement
Custodial Account (including Transmittal Letter, Disclosure Statement,
Membership Agreement, Master Plan and Trust, and Request for Transfer
of IRA account), filed as Exhibit 9 to initial Form N-1 Registration
Statement, File No. 2-77092, is incorporated herein by reference.
15. Not Applicable.
16. Schedule of Computation of Performance Quotations in Calculation of
Performance Data.
17. Financial Data Schedule.
18. Not Applicable.
C-2
<PAGE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
All of the officers and one of the directors of the Fund are employees of
Robinson Capital Management, Inc., the Fund's investment advisor.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
NUMBER OF
TITLE OF CLASS HOLDERS OF RECORD
-------------- -----------------
Common Stock par value $.01 per
share as of March 3, 1997 2,650,112
ITEM 27. INDEMNIFICATION
Minnesota Statutes Section 302A.521 provides that a corporation shall
indemnify any person made or threatened to be made a party to a proceeding by
reason of the former or present official capacity of such person against
judgments, penalties, fines, including, without limitation, excise taxes
assessed against such person with respect to an employee benefit plan,
settlements and reasonable expenses, including attorneys' fees and
disbursements, incurred by such person in connection with the proceeding, if,
with respect to the acts or omissions of such person complained of in the
proceeding, such person (1) has not been indemnified therefor by another
organization or employee benefit plan; (2) acted in good faith; (3) received no
improper personal benefit and Section 302A.255 (with respect to director
conflicts of interest), if applicable, has been satisfied; (4) in the case of a
criminal proceeding, had no reasonable cause to believe the conduct was
unlawful; and (5) reasonably believed that the conduct was in the best interest
of the corporation in the case of acts or omissions in such person's official
capacity for the corporation, or reasonably believed that conduct was not
opposed to the best interests of the corporation in the case of acts or
omissions in such person's official capacity for other affiliated organizations.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR
Robinson Capital Management, Inc., the Fund's Investment Advisor, was
organized in 1994. Its activities are limited to acting as an investment
advisor.
The officers and directors of Robinson Capital Management, Inc., together
with a description of their business, profession, vocation or employment during
the past two fiscal years, is listed below. The principal business address of
all such persons, except Mr. Houston, is 5100 Eden Avenue, Suite 204, Edina,
Minnesota 55436.
JOHN P. ROBINSON, President and Treasurer of Robinson Capital Management,
Inc., November 1994 to present; Chairman of the Board of Directors and President
of the Registrant.
C-3
<PAGE>
MARK D. BILLEADEAU, Vice President of Robinson Capital Management, Inc.,
from February 1995 to present; Vice President of the Registrant from February
1997 to present; Manager (Consulting Service) of Craig-Hallum, Inc., and its
successor, Principal Financial Services, Inc., from September 1990 to February
1995.
WINFIELD S. HOLLAND III, Vice President of Robinson Capital Management,
Inc., December 1994 to present; Vice President of the Registrant; registered
representative of Hamilton Investments, Inc. from July 1993 to December 1994;
registered representative and Vice President of Craig-Hallum, Inc. prior to July
1993.
CRAIG H. ROBINSON, sales and marketing position at Robinson Capital
Management, Inc., from August 1995 to present; Vice President of Robinson
Capital since February 1997; Vice President of the Registrant from
February 1997 to present; Account Executive with Paine Webber Incorporated
from August 1994 to August 1995.
JOHN R. HOUSTON, 4200 IDS Center, Minneapolis, Minnesota 55402, Secretary
of Robinson Capital Management, Inc., and the Registrant from December 1994 to
present; Partner of Lindquist & Vennum P.L.L.P.
RENEE A. RASMUSSON, Assistant Treasurer of Robinson Capital Management,
Inc., December 1994 to present; employee of Hamilton Investments, Inc. from July
1993 to July 1994; Vice President of Craig-Hallum, Inc. prior to July 1993.
LORY M. HASSLER, Assistant Secretary of Robinson Capital Management, Inc.,
December 1994 to present; registered representative of Hamilton Investments,
Inc. from July 1993 to December 1994; registered representative and Vice
President of Craig-Hallum, Inc. prior to July 1993.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) None; the Registrant acts as its own underwriter.
(b) None; the Registrant acts as its own underwriter.
(c) None; the Registrant acts as its own underwriter.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and
rules promulgated thereunder are in the possession of Robinson Capital
Management, Inc. at its offices at 5100 Eden Avenue, Suite 204, Edina, Minnesota
55436 except those books, records and other documents maintained by the
custodian, transfer agent and registrar, Investors Fiduciary Trust Company,
which are located at its offices at 1004 Baltimore, 7th Floor, Kansas City,
Missouri 64105.
C-4
<PAGE>
ITEM 31. MANAGEMENT SERVICES
Not Applicable.
ITEM 32. UNDERTAKINGS
The Registrant hereby undertakes to furnish to each person to whom the
Prospectus included in this Registration Statement is delivered with a copy of
the Registrant's latest Annual Report to Shareholders, upon request and without
charge.
C-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this post-
effective amendment to the Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Edina, State of
Minnesota, on the 26th day of March, 1997.
GENERAL SECURITIES, INCORPORATED
By /s/ John P. Robinson
-----------------------------------------------
John P. Robinson, President
Pursuant to the requirements of the Securities Act of 1933, this post-
effective amendment to the Registration Statement has been signed below on the
26th day of March, 1997, by the following persons in the capacities indicated.
Signature Title
--------- -----
/s/ John P. Robinson President
- ----------------------------------- (principal executive, financial
John P. Robinson and accounting officer) and Director
/s/ M. Michelle Coady Director
- -----------------------------------
M. Michelle Coady
/s/ David W. Preus Director
- -----------------------------------
David W. Preus
/s/ LaVerne W. Rees Director
- -----------------------------------
LaVerne W. Rees
/s/ Oscar Victor Director
- -----------------------------------
Oscar Victor
Director
- -----------------------------------
Charles J. Walton
/s/ James S. Walton Director
- -----------------------------------
James S. Womack
C-6
<PAGE>
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
General Securities, Incorporated:
We consent to the use of our report included herein and to the reference to
our Firm under the headings "FINANCIAL HIGHLIGHTS" and "GENERAL INFORMATION -
Independent Auditors" in the prospectus.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Minneapolis, Minnesota
March 25, 1997
<PAGE>
EXHIBIT 16
SCHEDULE OF COMPUTATION OF PERFORMANCE
QUOTATIONS IN CALCULATION OF PERFORMANCE DATA
The average annual compounded total return on investments is calculated as
follows:
n
P(1+T) = ERV
1 Year 1000 (1+T)1 = 1200.00 = 20.0%
5 Years 1000 (1+T)5 = 1821.56 = 12.7%
10 Years 1000 (1+T)10 = 3459.50 = 13.2%
The cumulative total return on investments is calculated as follows:
CTR = ERV - P
------- 100
P
1 Year (1,200.00 - 1,000) x 100 = 20.0%
-------------------
1,000
5 Year (1,821.56 - 1,000) x 100 = 82.2%
-------------------
1,000
10 Year (3,459.50 - 1,000) x 100 = 245.9%
-------------------
1,000
See "Calculation of Performance Data" in the Statement of Additional Information
for a legend defining the symbols.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1996
<INVESTMENTS-AT-COST> 30,712
<INVESTMENTS-AT-VALUE> 42,476
<RECEIVABLES> 91
<ASSETS-OTHER> 3
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 42,570
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2595
<TOTAL-LIABILITIES> 2595
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 2486
<SHARES-COMMON-PRIOR> 2438
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 25
<ACCUMULATED-NET-GAINS> 2418
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11,765
<NET-ASSETS> 39,974
<DIVIDEND-INCOME> 359
<INTEREST-INCOME> 619
<OTHER-INCOME> 0
<EXPENSES-NET> 563
<NET-INVESTMENT-INCOME> 415
<REALIZED-GAINS-CURRENT> 2418
<APPREC-INCREASE-CURRENT> 3655
<NET-CHANGE-FROM-OPS> 6488
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 442
<DISTRIBUTIONS-OF-GAINS> 2436
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 283
<NUMBER-OF-SHARES-REDEEMED> 193
<SHARES-REINVESTED> 168
<NET-CHANGE-IN-ASSETS> 7434
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 15
<OVERDISTRIB-NII-PRIOR> (33)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 225
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 572
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 14.61
<PER-SHARE-NII> .17
<PER-SHARE-GAIN-APPREC> 2.46
<PER-SHARE-DIVIDEND> (.18)
<PER-SHARE-DISTRIBUTIONS> (.98)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.08
<EXPENSE-RATIO> 1.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
