<PAGE>
GENERAL SECURITIES
INCORPORATED
[LOGO]
FOCUS ON
-------------
TQM
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TOTAL QUALITY
MANAGEMENT
Annual Report November 30, 1999
<PAGE>
TO THE SHAREHOLDERS OF
GENERAL SECURITIES
INCORPORATED
The past year has been one of incremental change for General Securities, Inc.
The process of systematically shifting the portfolio holdings to be more
representative of the overall market is progressing smoothly. We have had a few
surprises along the way, some pleasant, some less pleasant. On the pleasant
side, performance of our holdings in Ortel, Corning and Motorola have
significantly exceeded our expectations owing to the markets surging interest in
companies that supply products that help their customers meet the "insatiable
demand for bandwidth". To put it simply, the greater the demand for services we
place on telephone and cable providers in the form of more programming choices,
greater convenience or internet access, the greater the demand for products that
help them meet our demands. Products manufactured by Ortel, Corning and Motorola
help providers meet our demands. In fact, nearly all of General Securities
positive performance can be attributed to holdings in these companies,
particularly Ortel, in addition to our holdings in several other technology
oriented companies including Intel, Solectron and Zygo. In contrast, several new
and longer term "value oriented" holdings didn't do as well as expected;
however, no one company had a significant negative influence on the overall
portfolio. The cash position in the portfolio has been reduced a little over the
past year but remains high relative to our long-term goal of being fully
invested.
Our strategy to diversify the portfolio continues to be influenced, in part by
the potential tax consequences. We distributed a larger than usual $2.58 capital
gain this past year and based upon the unrealized gains in the portfolio as of
11/30/99 it is possible, depending upon market conditions, that we will realize
a portion of those gains in the upcoming fiscal year. For the year ending
November 30, 1999, the Fund's total return of 19.8% compared reasonably well to
the 20.9% return of the S&P 500-TM- and 10.5% return of the Russell 1000 Value
Index.
We are firm in our belief that a more fully invested and diversified portfolio
in "leading quality companies" will provide you with superior long-term risk
adjusted performance. We define a "leading quality company" as any company
having a relatively high composite quality score such that we are confident a
successful "quality oriented" management system is in place. We have developed a
set of indicators which are scored individually and then aggregated to provide
us with the composite quality score we use to make our assessment. In future
letters we will explain in more detail what specific indicators attempt to
measure and how they have evolved over time.
On behalf of all of us at Robinson Capital Management, we would like to thank
each of you for your continued confidence in us.
Mark Billeadeau
Senior Portfolio Manager
<PAGE>
PERFORMANCE
November 30, 1999
General Securities, Incorporated
The following graph was prepared assuming a hypothetical investment of $10,000
on November 30,1989. The investment return and prinicipal value of an investment
will fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost.
General Securities Inc.
- ---------------------------
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
1 YEAR 5 YEAR 10 YEAR
<S> <C> <C>
+19.82% +17.38% +13.61%
</TABLE>
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[GRAPH]
AVERAGE ANNUAL RETURN
INVESTMENT GROWTH OF $10,000
<TABLE>
<CAPTION>
GSI* Rus. 1000 Value** S&P 500**
<S> <C> <C> <C>
Nov. 89 $10,000.00 $ 10,000.00 $10,000.00
Nov. 90 -1.95% $ 9,805.30 $ 9,162.00 $ 9,652.00
Nov. 91 34.41% $13,178.92 $ 10,801.00 $11,616.00
Nov. 92 10.30% $14,536.96 $ 13,014.00 $13,762.00
Nov. 93 5.48% $15,334.16 $ 15,445.00 $15,149.00
Nov. 94 4.83% $16,074.14 $ 15,249.00 $15,307.00
Nov. 95 31.21% $21,090.41 $ 20,818.00 $20,961.00
Nov. 96 18.15% $24,918.93 $ 26,280.00 $26,797.00
Nov. 97 14.07% $28,424.63 $ 34,076.00 $34,435.00
Nov. 98 5.17% $29,895.39 $ 39,222.00 $42,583.00
Nov. 99 19.82% $35,819.25 $ 43,330.00 $51,480.00
</TABLE>
Past Performance is not indicative of future performance.
*These are the portfolios total returns during the period including reinvestment
of all dividend and capital gains distributions.
**This is an unmanaged index.
<PAGE>
STATEMENT OF NET ASSETS NOVEMBER 30, 1999
ASSETS
<TABLE>
<CAPTION>
Number of Market
shares value (a)
--------- ---------
<S> <C> <C>
INVESTMENT SECURITIES (percentages
represent value of investments
compared to total net assets):
COMMON STOCKS (84.86%):
Aerospace/Defense (.72%):
Lockheed Martin Corp. (b) .................... 15,000 $ 298,125
Auto Parts - Original Equipment (3.77%): ------------
Dana Corp. .................................... 35,000 971,250
Tower Automotive (c) .......................... 40,000 600,000
------------
1,571,250
Banking (1.69%): ------------
Banc One (c) .................................. 20,000 705,000
Chemicals (1.87%): ------------
Eastman Chemical Company ...................... 20,000 777,500
Communications Equipment (12.30%): ------------
Ortel Corp. ................................... 80,000 5,120,000
Computer Peripherals (2.19%): ------------
Microsoft Corp. (b) ........................... 10,000 910,469
Electrical Equipment, Machinery ------------
and Supplies (6.52%):
General Electric Co. (b) ...................... 10,000 1,300,000
Grainger (W.W.), Inc. (c) ..................... 30,000 1,413,750
------------
2,713,750
Electronics (13.76%): ------------
Intel Corp. (d) ............................... 25,000 1,917,187
Motorola, Inc. (c) ............................ 7,000 799,750
Solectron Corp. (c) ........................... 10,000 823,750
Xerox Corp. (d) ............................... 10,000 270,625
Zygo Corp. .................................... 100,000 1,918,750
------------
5,730,062
Farm & Construction Machinery (3.09%): ------------
Deere & Co. (d) ............................... 30,000 1,288,125
Food Processing Equipment (2.04%): ------------
Sara Lee Corp. (b) ............................ 35,000 848,750
Hospital Suppliers (3.74%): ------------
Johnson & Johnson ............................. 15,000 1,556,250
Information Services (2.73%): ------------
Hewlett-Packard (c) ........................... 12,000 1,138,500
Instruments & Related Products (4.30%): ------------
Honeywell, Inc. (c) ........................... 16,000 1,791,000
Medical Instruments & Supplies (1.82%): ------------
Adac Laboratories ............................. 65,000 759,688
Paper & Forest Products (2.94%): ------------
Weyerhauser & Co. (c) ......................... 20,000 1,225,000
------------
Petroleum - Equipment & Service (2.79%):
Halliburton Co. (b) ........................... 30,000 1,160,625
Pharmaceuticals (2.92%): ------------
Covance, Inc. (b) ............................. 25,000 271,875
Merck (d) ..................................... 12,000 942,000
------------
1,213,875
Printing & Publishing (1.58%): ------------
Banta Corp. ................................... 30,000 658,125
Retail & Wholesale (2.25%): ------------
Corning, Inc. ................................. 10,000 936,875
Steel/Producers (4.61%): ------------
Worthington Industries ........................ 120,000 1,920,000
Transportation - Road (1.71%): ------------
CSX Corp. (b) ................................. 20,000 711,250
------------
</TABLE>
<PAGE>
STATEMENT OF NET ASSETS NOVEMBER 30, 1999
ASSETS (Cont.)
<TABLE>
<CAPTION>
Number of Market
shares value (a)
--------- ---------
<S> <C> <C>
COMMON STOCKS (Cont.):
Utilities (5.52%):
AT&T Corp. (b) ................................ 15,000 838,125
GTE (c) ....................................... 20,000 1,460,000
------------
2,298,125
------------
Total common stock (cost $ 21,376,276) 35,332,344
------------
U.S. TREASURY BILLS (9.58%):
$4,000,000, 4.76%, due 12/23/99 (e) .................... 3,988,694
------------
Total U.S. Treasury Bills (cost $3,988,694) ......... 3,988,694
------------
Total investment securities
(cost $25,364,970)(f) ...................................... 39,321,038
Cash ........................................................ 8,725,365
Receivable for capital shares sold .......................... 100
Prepaid expenses ............................................ 24
Dividends receivable ........................................ 54,275
Interest receivable ......................................... 848
------------
Total assets ........................................ $ 48,101,650
------------
LIABILITIES
Accrued investment advisory fees ............................ 23,108
Accrued management administration fees ...................... 15,406
Other accrued expenses ...................................... 52,009
Payable for shares redeemed ................................. 25,786
Dividend payable ............................................ 6,347,176
------------
Total liabilities ......................................... 6,463,485
------------
Net assets applicable to outstanding capital stock .......... $ 41,638,165
------------
Represented by:
Capital stock - authorized 10,000,000 shares of $.01
par value per share; outstanding 2,460,121 shares ......... 24,601
Capital surplus ........................................... 27,610,374
Undistributed net investment income ....................... 23,557
Accumulated net realized gain on investments .............. 23,565
Unrealized appreciation of investments .................... 13,956,068
------------
Net assets applicable to outstanding capital stock .......... $ 41,638,165
------------
------------
Net asset value per share of outstanding capital stock ...... $16.93
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------
</TABLE>
See accompanying notes to investment securities list and financial statements.
NOTES TO INVESTMENT SECURITIES LIST:
NOVEMBER 30, 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) Rate shown is annualized yield on date of purchase.
(f) At November 30, 1999 the cost of securities for federal income
tax purposes was $25,364,970, and the aggregate unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation ................................. $15,525,386
Unrealized depreciation ................................. (1,569,318)
-----------
$13,956,068
-----------
-----------
<PAGE>
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1999
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
Income:
Dividends ......................................... $ 540,824
Interest .......................................... 458,010
----------
Total income ................................... 998,834
----------
Expenses (note 2):
Investment advisory fees .......................... 273,311
Management administration fees .................... 182,208
Shareholder notices and reports ................... 26,800
Auditing and tax services ......................... 23,867
Custodian and portfolio accounting fees ........... 47,450
Transfer agent, registrar and disbursing agent fees 71,383
Legal services .................................... 30,600
Directors' fees ................................... 8,872
Federal and state registration fees and expenses .. 14,295
Other ............................................. 1,775
----------
Total expenses ................................. 680,561
----------
Investment income - net ........................... 318,273
----------
Realized and unrealized gains from Investments - net:
Net realized gains on securities
transactions (note 3) ............................. 6,369,580
Net change in unrealized appreciation
or depreciation of investments .................... 1,565,600
----------
Net gain on investments .............................. 7,935,180
----------
Net increase in net assets resulting
from operations ................................... $8,253,453
----------
----------
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS: YEAR ENDED NOVEMBER 30
SELECTED PER SHARE HISTORICAL DATA WERE AS FOLLOWS: 1999 1998 1997 1996 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ............................... $ 16.34 $ 16.55 $ 16.08 $ 14.61 $ 12.08
------- ------- ------- ------- -------
Operations:
Investment income - net ........................................ .12 .15 .18 .17 .25
Net realized and unrealized gains (losses) on investments ...... 3.11 .72 2.08 2.46 3.49
------- ------- ------- ------- -------
Total from operations ............................................ 3.23 .87 2.26 2.63 3.74
------- ------- ------- ------- -------
Distributions to shareholders:
From investment income - net ................................... (.06) (.15) (.18) (.17) (.25)
Excess distributions of net investment income (.03) - (.01) -
From net realized gains ........................................ (2.58) (.90) (1.61) (.98) (.96)
------- ------- ------- ------- -------
Total distributions to shareholders .............................. (2.64) (1.08) (1.79) (1.16) (1.21)
------- ------- ------- ------- -------
Net asset value, end of year ..................................... $ 16.93 $ 16.34 $ 16.55 $ 16.08 $ 14.61
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Total return* .................................................... 19.85% 5.26% 14.08% 18.15% 31.15%
Net assets, end of year (000's omitted) .......................... $41,638 $43,791 $46,006 $39,974 $32,541
Ratio of expenses to average daily net assets .................... 1.49% 1.47% 1.44% 1.50% 1.50%
Ratio of net investment income to average daily net assets ....... .70% .90% 1.02% 1.11% 1.79%
Portfolio turnover rate .......................................... 22% 25% 20% 18% 24%
</TABLE>
*These are the Fund's total returns during the years, including reinvestment of
all dividend and capital gain distributions.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED NOVEMBER 30, 1999
AND YEAR ENDED NOVEMBER 30, 1998
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
OPERATIONS:
Net investment income......................... $ 318,273 $ 439,630
Net realized gains on investments............. 6,369,580 2,429,181
Net change in unrealized appreciation
or depreciation of investments............. 1,565,600 (472,241)
---------- ----------
Net increase in assets from
operations................................. 8,253,453 2,396,570
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income...................... (164,449) (439,630)
Excess distributions of net
investment income........................ - (74,394)
Net realized gains on investments.......... (6,346,015) (2,425,433)
---------- ----------
Total distributions........................ (6,510,464) (2,939,457)
---------- ----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of 48,932 and
74,357 shares, respectively................ 823,327 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 412,694
and 434,124 shares, respectively........... (7,078,580) (7,314,188)
---------- ----------
(Decrease) in net assets from
capital share transactions, representing
net (decrease) of (219,903) and
(99,587) shares, respectively.............. (3,895,685) (1,671,851)
---------- ----------
TOTAL INCREASE (DECREASE) IN NET ASSETS......... (2,152,696) (2,214,738)
NET ASSETS:
Beginning of period........................... 43,790,861 46,005,599
---------- ----------
End of period (Including undistributed
net investment income of $23,557
and $(130,267) respectively)............... $41,638,165 $43,790,861
---------- ----------
---------- ----------
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1999
(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 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
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOVEMBER 30, 1999
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 $7,534,545 and $15,195,111,
respectively, for the year ended November 30, 1999.
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, 1999, 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 ended November 30, 1999, and the
financial highlights for each of the years in the five-year period ended
November 30, 1999. These financial statements and the financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Investment securities held in custody are confirmed to us by the
custodian. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights
referred to above present fairly, in all material respects, the financial
position of General Securities, Incorporated at November 30, 1999 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 ended November 30, 1999, and the
financial highlights for each of the years in the five-year period ended
November 30, 1999, in conformity with generally accepted accounting principles.
Minneapolis, Minnesota
January 7, 2000 KPMG LLP
<PAGE>
GENERAL SECURITIES
INCORPORATED
PRESIDENT Craig H. Robinson
VICE PRESIDENT Mark D. Billeadeau
SECRETARY John R. Houston
TREASURER Renee A. Rasmusson
DIRECTORS M. Michelle Coady,
Chairman
Gary D. Floss
David W. Preus
Charles Walton
Arnold M. Weimerskirch
INVESTMENT MANAGER Robinson Capital
Management, Inc.
CUSTODIAN, REGISTRAR State Street Corporation
AND TRANSFER AGENT
GENERAL COUNSEL Robins, Kaplan, Miller &
Ciresi L.L.P.
INDEPENDENT AUDITORS KPMG LLP
This report has been prepared primarily for the benefit of existing
stockholders of the company and is not intended as an offer to sell the
company's shares. When used otherwise, it must be accompanied or preceded
by the current prospectus.
FOR FURTHER
INFORMATION ABOUT
GENERAL SECURITIES
INCORPORATED
CONTACT:
ROBINSON CAPITAL MANAGEMENT, INC.
5100 EDEN AVENUE, SUITE 204
EDINA, MINNESOTA 55436
(612) 927-6799
800-577-9217
<PAGE>
This page is intentionally blank
<PAGE>
GENERAL SECURITIES
INCORPORATED
ROBINSON CAPITAL MANAGEMENT, INC.
5100 EDEN AVENUE, SUITE 204
EDINA, MINNESOTA 55436
(612) 927-6799
800-577-9217
