<PAGE>
GENERAL SECURITIES
INCORPORATED
SEMI-ANNUAL REPORT MAY 31, 1999
<PAGE>
TO THE SHAREHOLDERS OF
GENERAL SECURITIES
INCORPORATED
Since our last letter the market has begun to reward value oriented investors
like General Securities, Inc. Moreover, the performance of Robinson Capital
Management's internal quality benchmarks continue to reinforce our belief that
quality oriented companies purchased at a discount to our estimate of their
intrinsic value can provide you with superior risk-adjusted returns.
We expect to have the transition to a more diversified and fully invested
portfolio nearly complete by calendar year end. Since a significant majority of
you own your shares in taxable accounts, we are trying to offset gains with
losses on sale transactions when possible to minimize the tax burden. This
process takes time to complete and has the effect of slowing down the rate at
which we invest the cash in the portfolio.
Investments we have made for the portfolio in the past six months include; AT&T,
Deere, CSX Corp, Halliburton, Lockheed Martin and Sara Lee. Together, we believe
these companies help to both diversify the portfolio and improve its risk/reward
profile. All of these companies in addition to the Fund's long term holdings in
Corning, Dana, Honeywell, Intel, Motorola, Solectron and Xerox are in one or
more of Robinson Capital Management's internal quality benchmark indices. We use
these benchmark indices to continuously evaluate the value-added of our quality
screening process. In general, we believe companies in these indices are the
best oriented companies we follow and expect they will play a significant role
in the future performance of General Securities, Inc.
<PAGE>
The most significant positive influences on the portfolio through June 30 has
been the turn around in both paper and forest products and the oil and oil
service industries. In addition, there has also been renewed market interest in
mid and small companies. We were also fortunate to have a significant holding in
the portfolio involved in a merger when it was announced that Honeywell would be
acquired by Allied Signal, another aggressive user of quality oriented
management techniques. The new company will keep the Honeywell name and we
expect to own shares in it for years to come.
Mark Billeadeau
Portfolio Manager
<PAGE>
STATEMENT OF NET ASSETS MAY 31, 1999
ASSETS
(Unaudited)
<TABLE>
<CAPTION>
Number of Market
shares value (a)
----------- ----------
INVESTMENT SECURITIES (percentages repre-
sent value of investments compared to
total net assets):
<S> <C> <C>
COMMON STOCKS (73.54%):
Aerospace/Defense (1.34%):
Lockheed Martin Corp. (b) ................ 15,000 $ 606,562
----------
Banks (4.14%):
Bank One Corp. ........................... 33,000 1,866,562
----------
Chemicals - Specialty (2.25%):
Eastman Chemical Co. ..................... 20,000 1,012,500
----------
Communications (1.91%):
Ortel Corp. (e) .......................... 80,000 860,000
----------
Computers (5.84%):
Hewlett Packard Co. ...................... 22,000 2,074,875
Xerox Corp (d) ........................... 10,000 561,875
----------
2,636,750
----------
Electrical Equipment (9.82%):
Grainger (W.W.), Inc. (c) ................ 30,000 1,591,875
Honeywell, Inc. .......................... 30,000 2,838,750
----------
4,430,625
----------
Electronic Components (9.02%):
Intel Corp. (d) .......................... 25,000 1,351,562
Motorola, Inc. ........................... 13,000 1,076,563
Solectron Corp. (c) (e) .................. 30,000 1,642,500
----------
4,070,625
----------
Food Processing Equipment (1.86%):
Sara Lee Corp. (b) ....................... 35,000 840,000
----------
Forest Products (2.75%):
Weyerheuser Co. (c) ...................... 20,000 1,241,250
----------
Health Care - General (3.08%):
Johnson & Johnson ........................ 15,000 1,389,375
----------
Household Durables (1.21%):
Corning, inc. ............................ 10,000 546,250
----------
Industrial Components (1.72%):
Zygo Corp. (e) ........................... 100,000 775,000
----------
Machinery (2.53%):
Deere & Co. (d) .......................... 30,000 1,141,875
----------
Medical Supplies (1.16%):
Adac Labs (e) ............................ 65,000 524,063
----------
Motor Vehicle Parts (6.03%):
Dana Corp. ............................... 35,000 1,806,875
Tower Automotive, Inc. (c) ............... 40,000 915,000
----------
2,721,875
----------
Petroleum - Equipment & Service (2.75%):
Halliburton Co. (b) ...................... 30,000 1,241,250
----------
Pharmaceuticals (2.97%):
Covance, Inc. (b) ........................ 25,000 529,688
Merck & Co., Inc. (d) .................... 12,000 810,000
----------
1,339,688
----------
Publishing, (1.63%):
Banta Corp. .............................. 30,000 735,000
----------
Steel (3.41%):
Worthington Inds., Inc. .................. 120,000 1,537,500
----------
Transportation - Road (2.08%):
CSX Corp. (b) ............................ 20,000 938,750
----------
<PAGE>
<CAPTION>
STATEMENT OF NET ASSETS MAY 31, 1999
ASSETS (CONT.)
(Unaudited)
Number of Market
shares value (a)
----------- ----------
<S> <C> <C>
COMMON STOCKS (Cont.):
Utilities - Telephone (6.04%):
AT&T Corp. (b) ........................... 15,000 832,500
GTE Corp. ................................ 30,000 1,891,875
----------
2,724,375
----------
Total common stock (cost $21,231,481) .............. 33,179,875
----------
U.S. TREASURY BILLS (13.28%):
$6,000,000, 4.52%, due 06/10/99 (f) ................. 5,991,180
----------
Total U.S. Treasury Bills (cost $5,991,180) ........ 5,991,180
----------
MONEY MARKET INSTRUMENT (13.21%):
State Street Capital Markets Sweep Account ..........
Variable Rate, 3.50%
(cost $5,962,930) .................................. 5,962,930
----------
Total investment securities
(cost $33,185,591) (g) ................................ 45,133,985
Prepaid expenses ........................................ 1,397
Dividends receivable .................................... 65,075
Interest receivable ..................................... 580
----------
Total assets ....................................... $45,201,037
----------
LIABILITIES
Accrued investment advisory fees ........................ 23,379
Accrued management administration fees .................. 15,586
Other accrued expenses .................................. 36,439
Payable for shares redeemed ............................. 5,853
----------
Total liabilities ..................................... 81,257
----------
Net assets applicable to outstanding capital stock ...... $45,119,780
----------
----------
Represented by:
Capital stock - authorized 10,000,000 shares of $.01
par value per share; outstanding 2,649,856 shares ..... 26,499
Capital surplus ....................................... 30,997,705
Distributions in excess of net investment income ...... (143,617)
Accumulated realized gain ............................. 2,290,799
Unrealized appreciation of investments ................ 11,948,394
----------
Net assets applicable to outstanding capital stock ...... $45,119,780
----------
----------
Net asset value per share of outstanding capital stock .. $17.03
------
------
</TABLE>
See accompanying notes to investment securities list and financial statements.
NOTES TO INVESTMENT SECURITIES LIST:
MAY 31, 1999
(a) Investment securities are valued by the procedures described in note 1 to
the financial statements.
(b) New holding in fiscal 1999.
(c) Holding decreased in fiscal 1999.
(d) Holding increased in fiscal 1999.
(e) Currently non-income producing.
(f) Rate shown is annualized yield on date of purchase.
(g) At May 31, 1999 the cost of securities for federal income tax
purposes was $33,185,591, and the aggregate unrealized
appreciation and depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation ............................ $14,117,207
----------
Unrealized depreciation ............................ (2,168,813)
----------
----------
$11,948,394
----------
----------
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1999
(Unaudited)
(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 Fund invests primarily in common stocks
of companies believed to be undervalued.
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.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principals 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 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, 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
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1999
(Unaudited)
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 $5,298,732 and $9,027,144, respectively,
for the six months ended May 31, 1999.
<PAGE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1999
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Dividends ............................................ $ 265,710
Interest ............................................. 227,164
----------
Total income ........................................ 492,874
----------
Expenses (note 2):
Investment advisory fees ............................. 135,317
Management administration fees ....................... 90,211
Shareholder notices and reports ...................... 11,820
Auditing and tax services ............................ 11,153
Custodian and portfolio accounting fees .............. 23,660
Transfer agent, registrar and disbursing agent fees .. 35,594
Legal services ....................................... 18,950
Directors' fees ...................................... 6,606
Federal and state registration fees and expenses ..... 9,224
Other insurance and bonds expenses ................... 401
----------
Total expenses ...................................... 342,936
----------
Investment income - net .............................. 149,938
----------
Realized and unrealized gains from investments - net:
Net realized gains on securities
transactions (note 3) ................................ 2,290,799
Net change in unrealized appreciation
or depreciation of investments ....................... (442,074)
----------
Net gain on investments ............................... 1,848,725
----------
Net increase in net assets resulting
from operations ...................................... 1,998,663
----------
----------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
MONTHS ENDED MAY 31, 1999 (UNAUDITED)
AND YEAR ENDED NOVEMBER 30, 1998
<TABLE>
<CAPTION>
May 31, November 30,
1999 1998
---------- ----------
<S> <C> <C>
OPERATIONS:
Net investment income .................... $ 149,938 $ 439,630
Net realized gains on investments ........ 2,290,799 2,429,181
Net change in unrealized appreciation
or depreciation of investments .......... (442,074) (472,241)
---------- ----------
Net increase in assets from operations ... 1,998,663 2,396,570
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income .................... (149,938) (439,630)
Excess distributions of net
investment income ....................... (13,350) (74,394)
Net realized gains on investments ........ (2,425,433)
---------- ----------
Total distributions ...................... (163,288) (2,939,457)
---------- ----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of 33,547 and
74,357 shares, respectively .............. 547,344 1,280,766
Net asset value of 143,859 and 260,180
shares, respectively, issued in
reinvestment of net investment income
and net realized gain distributions ..... 2,359,568 4,361,571
Payments for redemptions of 207,574
and 434,124 shares, respectively ........ (3,413,368) (7,314,188)
---------- ----------
Decrease in net assets from capital share
transactions, representing net decrease
of (30,168) and (99,587) shares,
respectively ............................ (506,456) (1,671,851)
---------- ----------
TOTAL INCREASE (DECREASE) IN NET ASSETS .... 1,328,919 (2,214,738)
NET ASSETS:
Beginning of period ...................... 43,790,861 46,005,599
---------- ----------
End of period (Including distributions in
excess of net investment income of
$143,617 and $130,267 respectively) ..... $45,119,780 $43,790,861
----------- -----------
----------- -----------
</TABLE>
<TABLE>
Six Months
FINANCIAL HIGHLIGHTS: Ended
May 31, 1999 Year Ended November 30
SELECTED PER SHARE HISTORICAL DATA WERE AS FOLLOWS: (Unaudited) 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning year .............................. $ 16.34 $ 16.55 $ 16.08 $ 14.61 $ 12.08 $ 12.23
------- ------- ------- ------- ------- -------
Operations:
Investment income - net .................................... .06 .15 .18 .17 .25 .20
Net realized and unrealized gains (losses) on investments .. .70 .72 2.08 2.46 3.49 .40
------- ------- ------- ------- ------- -------
Total from operations ........................................ .76 .87 2.26 2.63 3.74 .60
------- ------- ------- ------- ------- -------
Distributions to shareholders:
From investment income - net ............................... (.06) (.15) (.18) (.17) (.25) (.21)
Excess distributions of net investment income .............. (.01) (.03) - (.01) - (.02)
From net realized gains .................................... - (.90) (1.61) (.98) (.96) (.52)
------- ------- ------- ------- ------- -------
Total distributions to shareholders .......................... (.07) (1.08) (1.79) (1.16) (1.21) (.75)
------- ------- ------- ------- ------- -------
Net asset value, end of year ................................. $ 17.03 $ 16.34 $ 16.55 $ 16.08 $ 14.61 $ 12.08
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
Total return* ................................................ 4.59% 5.26% 14.08% 18.15% 31.15% 4.89%
Net assets, end of year (000's omitted) ...................... $45,120 $43,791 $46,006 $39,974 $32,541 $26,581
Ratio of expenses to average daily net assets ................ 1.52% 1.47% 1.44% 1.50% 1.50% 1.50%
Ratio of net investment income to average daily net assets ... .66% .90% 1.02% 1.11% 1.79% 1.69%
Portfolio turnover rate ...................................... 16% 25% 20% 18% 24% 42%
</TABLE>
* These are the Fund's total returns during the years, including reinvestment of
all dividend and capital gain distributions without adjustments for sales
charge.
+ From March 23, 1994 through November 30, 1994, the Fund's advisor was Alpha
Source Asset Management, Inc., a wholly-owned subsidiary of Hamilton
Investments, Inc. Prior to March 23, 1994, the Fund's advisor was Craig-
Hallum, Inc., a division of Hamilton Investments, Inc.
<PAGE>
GENERAL SECURITIES
INCORPORATED
PRESIDENT Craig H. Robinson
VICE PRESIDENTS Mark D. Billeadeau
SECRETARY John R. Houston
TREASURER Renee A. Rasmusson
DIRECTORS M.Michelle Coady, Chairman
Gary D. Floss
David W. Preus
Oscar Victor
Charles Walton
Arnold M. Weimerskirch
INVESTMENT MANAGER Robinson Capital
Management, Inc.
CUSTODIAN, REGISTRAR Investors Fiduciary Trust
AND TRANSFER AGENT Company
GENERAL COUNSEL Lindquist and Vennum PLLP
This report has been prepared primarily for the benefit of
existing stockholders of the company and is not intended as
an offer to sell the company's shares. When used otherwise,
it must be accompanied or preceded by the current prospectus.
FOR FURTHER
INFORMATION ABOUT
GENERAL SECURITIES
INCORPORATED
CONTACT:
ROBINSON CAPITAL MANAGEMENT, INC.
5100 EDEN AVENUE, SUITE 204
EDINA, MINNESOTA 55436
(612) 927-6799
800-577-9217
<PAGE>
GENERAL SECURITIES
INCORPORATED
ROBINSON CAPITAL MANAGEMENT, INC.
5100 EDEN AVENUE, SUITE 204
EDINA, MINNESOTA 55436
(612) 927-6799
800-577-9217
