<PAGE>
GENERAL SECURITIES
INCORPORATED
[GRAPHIC]
FOCUS ON
--------
QUALITY
MANAGEMENT
SYSTEMS
--------
SEMI-ANNUAL REPORT MAY 31, 2000
<PAGE>
TO THE SHAREHOLDERS OF
GENERAL SECURITIES
INCORPORATED
Since our last letter, our focus on undervalued, quality oriented companies
along with a willingness to stick with a company through thick and thin met
up with Mergers and Acquisitions (M&A) -- one of the driving forces in the
market in the last six months. M&A played a role in three of our top five
performers, including Ortel (up approx.180%) which was acquired for stock by
Lucent Technologies. We believe Lucent saw in Ortel some of the same things
that initially attracted us to Ortel and kept us hanging in there when things
got rough. Ortel was an ISO-certified, quality oriented manufacturer of a key
component in the build out of optical communication networks. It had great
products and people and was undervalued in the market at the time of the
offer. Corning (up 98%), the world's largest supplier of the fiber in fiber
optics, acquired several smaller optical component manufacturers. To benefit
from Corning's recent performance, we had to stay with it through a tough
time not long ago when its management team decided to focus on its core
competencies in glass and optics and made the tough decision to divest
several sound but non-core businesses. Zygo (up 73%) was involved in an
acquisition which provided it with an entry into the business of optical
components manufacturing. Once again, being willing to hold shares in a
company during a difficult time proved to be rewarding. To round out the top
five performers, Intel (up 64%) has regained favor with investors along with
many other top-tier semiconductor companies. Finally, Adac (up approximately
56%), a past Malcolm Baldrige winner and another case of holding a company
through tough times, has started to recover as investors began to value the
company on its future prospects rather than on past mistakes.
Companies that held back performance in the past six months included AT&T (down
36%) as the market reacted to accelerating competition in its core long distance
businesses and the perception that they may have paid too much for recently
acquired cable companies, TCI and Media One
<PAGE>
Group. CSX (also down over 36%) is suffering as a result of prolonged
difficulties associated with the integration of the Conrail assets which it
acquired in the past year. Both AT&T and CSX, as well as three other significant
under performers including MSFT (down approx. 31%), Covance (down approx. 27%)
and Worthington (down 23%), underscore one of the risks we take when we seek to
find quality oriented companies that we believe are undervalued. This risk,
often referred to as a "bear trap", occurs when we incorrectly assess the
market's reaction to problems with a company and invest too soon, resulting in a
prolonged period of under performance. We use several tools to help us avoid
these problems but no one tool or technique works all the time so we continue to
seek ways to improve.
All companies in your portfolio are evaluated continually and, when performance
extremes occur, our investing discipline generally requires some action to be
taken in order to properly maintain the fund's risk/reward profile. We expect to
take profits in certain companies that we believe have reached their fair value,
and we intend to reduce or eliminate our holdings in companies that continue to
underperform relative to our expectations.
We are delighted to report that, overall, your fund was up 24.13% in the past
six months, outperforming both the S&P 500 and the Russell 1000 Value Index,
which were up 2.90% and 4.20% respectively. We remain, as Jack used to say,
cautiously optimistic about the future of the market and your fund's holdings
and want to thank you for your continued support.
Mark Billeadeau
Senior Portfolio Manager
<PAGE>
STATEMENT OF NET ASSETS MAY 31, 2000
ASSETS
(Unaudited)
<TABLE>
<CAPTION>
Number of Market
shares value (a)
----------- -------------
<S> <C> <C>
INVESTMENT SECURITIES (percentages repre-
sent value of investments compared to
total net assets):
COMMON STOCKS (86.75%):
Aerospace/Defense (.67%):
Lockheed Martin Corp. ...................... 15,000 $ 367,500
-------------
Auto Parts - Original Equipment (2.65%):
Dana Corp. ................................. 35,000 903,438
Tower Automotive ........................... 40,000 555,000
-------------
1,458,438
-------------
Banking (1.20%):
Bank One ................................... 20,000 661,250
-------------
Chemicals (1.66%):
Eastman Chemical Co. ....................... 20,000 911,250
-------------
Communications Equipment (26.14%):
Lucent Technologies, Inc. (b)............... 250,800 14,389,650
-------------
Computer Peripherals (1.14%):
Microsoft Corp. ............................ 10,000 625,625
-------------
Diversified Financials (2.26%):
Citigroup, Inc. (b) ........................ 20,000 1,243,750
-------------
Electrical Equipment, Machinery
and Supplies (5.04%):
General Electric Co. ....................... 30,000 1,578,750
Grainger (W.W.), Inc. ...................... 30,000 1,198,125
-------------
2,776,875
-------------
Electronics (14.52%):
Intel Corp. ................................ 25,000 3,117,188
Motorola, Inc. ............................. 7,000 656,250
Solectron Corp. ............................ 20,000 661,250
Xerox Corp. ................................ 10,000 271,250
Zygo Corp. ................................. 100,000 3,287,500
-------------
7,993,438
-------------
Farm & Construction Machinery (2.27%):
Deere & Co. ................................ 30,000 1,246,875
-------------
Food Processing Equipment (1.15%):
Sara Lee Corp. ............................. 35,000 630,000
-------------
Hospital Suppliers (2.44%):
Johnson & Johnson .......................... 15,000 1,342,500
-------------
Information Services (2.62%):
Hewlett-Packard ............................ 12,000 1,441,500
-------------
Instruments & Related Products (2.98%):
Honeywell, Inc. ............................ 30,000 1,640,625
-------------
Medical Instruments & Supplies (2.29%):
Adac Laboratories .......................... 65,000 1,259,375
-------------
Paper & Forest Products (1.80%):
Weyerhauser & Co. .......................... 20,000 992,500
-------------
Petroleum - Equipment & Service (2.78%):
Halliburton Co. ............................ 30,000 1,530,000
-------------
Pharmaceuticals (1.95%):
Covance, Inc. .............................. 25,000 178,125
Merck ...................................... 12,000 895,500
-------------
1,073,625
-------------
Printing & Publishing (1.01%):
Banta Corp. ................................ 30,000 555,000
-------------
Retail & Wholesale (3.51%):
Corning, Inc. .............................. 10,000 1,934,375
-------------
</TABLE>
<PAGE>
STATEMENT OF NET ASSETS MAY 31, 2000
ASSETS (CONT.)
(Unaudited)
<TABLE>
<CAPTION>
Number of Market
shares value (a)
----------- -------------
<S> <C> <C>
COMMON STOCKS (Cont.):
Steel/Producers (2.64%):
Worthington Industries ................... 120,000 1,455,000
-------------
Transportation - Road (.79%):
CSX Corp. ................................ 20,000 435,000
-------------
Utilities - Telephone (3.24%):
AT&T Corp. ............................... 15,000 520,312
GTE ...................................... 20,000 1,265,000
-------------
1,785,312
-------------
Total common stock (cost $22,528,526) ..................... 47,749,463
-------------
U.S. TREASURY BILLS (10.86%):
$6,000,000, 5.78%, due 06/22/00 (c) ........................ 5,980,190
-------------
Total U.S. Treasury Bills (cost $5,980,190) ............... 5,980,190
-------------
MONEY MARKET INSTRUMENT (2.14%):
State Street Capital Markets Sweep Account
Variable Rate, 3.50%
(cost $1,180,060) ......................................... 1,180,060
-------------
Total investment securities
(cost $29,688,776) (d) ........................................ 54,909,713
Cash ............................................................ 186,311
Prepaid expenses ................................................ 2,003
Dividends receivable ............................................ 47,280
Receivable for capital shares sold .............................. 115
-------------
Total assets .............................................. $55,145,422
-------------
LIABILITIES
Accrued investment advisory fees ................................ 28,064
Accrued management administration fees .......................... 18,710
Other accrued expenses .......................................... 42,640
Payable for shares redeemed ..................................... 10,614
-------------
Total liabilities ............................................. 100,028
-------------
Net assets applicable to outstanding capital stock .............. $55,045,394
=============
Represented by:
Capital stock - authorized 10,000,000 shares of $.01
par value per share; outstanding 2,619,044 shares ............. 26,190
Capital surplus ............................................... 29,630,780
Undistributed net investment income ........................... 143,858
Accumulated realized gains on investments ..................... 23,629
Unrealized appreciation of investments ........................ 25,220,937
-------------
Net assets applicable to outstanding capital stock .............. $55,045,394
-------------
Net asset value per share of outstanding capital stock .......... $21.02
======
</TABLE>
See accompanying notes to investment securities list and financial statements.
NOTES TO INVESTMENT SECURITIES LIST:
MAY 31, 2000
<TABLE>
<S> <C>
(a) Investment securities are valued by the procedures described
in note 1 to the financial statements.
(b) New holding in fiscal 2000.
(c) Rate shown is annualized yield on date of purchase.
(d) At May 31, 2000 the cost of securities for federal income tax
purposes was $29,688,776, and the aggregate unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation ..................................... $27,760,568
Unrealized depreciation ..................................... 2,539,631
-----------
$25,220,937
===========
</TABLE>
<PAGE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
Income:
Dividends ...................................................... $ 251,331
Interest ....................................................... 243,910
-----------
Total income ................................................. 495,241
-----------
Expenses (note 2):
Investment advisory fees ....................................... 164,068
Management administration fees ................................. 109,379
Shareholder notices and reports ................................ 10,400
Auditing and tax services ...................................... 11,214
Custodian and portfolio accounting fees ........................ 23,790
Transfer agent, registrar and disbursing agent fees ............ 35,789
Legal services ................................................. 7,650
Directors' fees ................................................ 4,012
Federal and state registration fees and expenses ............... 8,320
Other insurance and bonds expenses ............................. 318
-----------
Total expenses ............................................... 374,940
-----------
Investment income - net ........................................ 120,301
-----------
Realized and unrealized gains from investments - net:
Net realized gains on securities
transactions (note 3) .......................................... 64
Net change in unrealized appreciation
or depreciation of investments ................................. 11,264,869
-----------
Net gain on investments ......................................... 11,264,933
-----------
Net increase in net assets resulting
from operations ................................................ 11,385,234
===========
</TABLE>
<TABLE>
<CAPTION>
Six Months
Ended
May 31, 2000 Year Ended November 30
(Unaudited) 1999 1998 1997
<S> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS:
SELECTED PER SHARE HISTORICAL DATA WERE AS FOLLOWS:
Net asset value, beginning of year ................................ $ 16.93 $ 16.34 $ 16.55 $ 16.08
------- ------- ------- -------
Operations:
Investment income - net ......................................... .05 .12 .15 .18
Net realized and unrealized gains (losses) on investments ....... 4.04 3.11 .72 2.08
------- ------- ------- -------
Total from operations ............................................. 4.09 3.23 .87 2.26
------- ------- ------- -------
Distributions to shareholders:
From investment income - net .................................... - (.06) (.15) (.18)
Excess distributions of net investment income ................... - - (.03) -
From net realized gains ......................................... - (2.58) (.90) (1.61)
------- ------- ------- -------
Total distributions to shareholders ............................... - (2.64) (1.08) (1.79)
------- ------- ------- -------
Net asset value, end of year ...................................... $ 21.02 $ 16.93 $ 16.34 $ 16.55
======= ======= ======= =======
Total return* ..................................................... 24.13% 19.85% 5.26% 14.08%
Net assets, end of year (000's omitted) ........................... $55,045 $41,638 $43,791 $46,006
Ratio of expenses to average daily net assets ..................... 1.37% 1.49% 1.47% 1.44%
Ratio of net investment income to average daily net assets ........ .45% .70% .90% 1.02%
Portfolio turnover rate ........................................... 00% 22% 25% 20%
<CAPTION>
Year Ended November 30
1996 1995
<S> <C> <C>
FINANCIAL HIGHLIGHTS:
SELECTED PER SHARE HISTORICAL DATA WERE AS FOLLOWS:
Net asset value, beginning of year ................................ $ 14.61 $ 12.08
------- -------
Operations:
Investment income - net ......................................... .17 .25
Net realized and unrealized gains (losses) on investments ....... 2.46 3.49
------- -------
Total from operations ............................................. 2.63 3.74
------- -------
Distributions to shareholders:
From investment income - net .................................... (.17) (.25)
Excess distributions of net investment income ................... (.01) -
From net realized gains ......................................... (.98) (.96)
------- -------
Total distributions to shareholders ............................... (1.16) (1.21)
------- -------
Net asset value, end of year ...................................... $ 16.08 $ 14.61
======= =======
Total return* ..................................................... 18.15% 31.15%
Net assets, end of year (000's omitted) ........................... $39,974 $32,541
Ratio of expenses to average daily net assets ..................... 1.50% 1.50%
Ratio of net investment income to average daily net assets ........ 1.11% 1.79%
Portfolio turnover rate ........................................... 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
SIX MONTHS ENDED MAY 31, 2000 (UNAUDITED)
AND YEAR ENDED NOVEMBER 30, 1999
<TABLE>
<CAPTION>
May 31, November 30,
2000 1999
----------- -----------
<S> <C> <C>
OPERATIONS:
Net investment income ............................ $ 120,301 $ 318,273
Net realized gains on investments ................ 64 6,369,580
Net change in unrealized appreciation
or depreciation of investments .................. 11,264,869 1,565,600
----------- -----------
Net increase in assets from operations ........... 11,385,234 8,253,453
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ............................ _ (164,449)
Excess distributions of net
investment income ............................... _ _
Net realized gains on investments ................ _ (6,346,015)
----------- -----------
Total distributions .............................. _ (6,510,464)
----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of 27,937 and
48,932 shares, respectively ..................... 576,233 823,327
Net asset value of 339,557 and 143,859
shares, respectively, issued in
reinvestment of net investment income
and net realized gain distributions ............. 5,758,859 2,359,568
Payments for redemptions of 208,571
and 412,694 shares, respectively ................ (4,313,097) (7,078,580)
----------- -----------
Increase in net assets from capital share
transactions of 158,923 and decrease
of 219,903 shares, respectively ................. 2,021,995 (3,895,685)
----------- -----------
TOTAL INCREASE IN NET ASSETS ....................... 13,407,229 (2,152,696)
NET ASSETS:
Beginning of period .............................. 41,638,165 43,790,861
----------- -----------
End of period (Including distributions in
excess of net investment income of
$143,858 and $23,557 respectively) .............. $55,045,394 $41,638,165
=========== ===========
</TABLE>
*These are the Fund's total returns during the years, including reinvestment of
all dividend and capital gain distributions.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000
(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 fis-
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 2000
(Unaudited)
cal 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 $1,152,250 and $0, respectively, for
the six months ended May 31, 2000.
<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.
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
(952) 927-6799
800-577-9217
<PAGE>
GENERAL SECURITIES
INCORPORATED
ROBINSON CAPITAL MANAGEMENT, INC.
5100 EDEN AVENUE, SUITE 204
EDINA, MINNESOTA 55436
(952) 927-6799
800-577-9217
