<PAGE>
GENERAL AMERICAN INVESTORS
COMPANY, INC.
SECOND QUARTER REPORT
JUNE 30, 1996
A Closed-End Investment Company
listed on the New York Stock Exchange
450 LEXINGTON AVENUE
NEW YORK, N.Y. 10017
212-916-8400 1-800-436-8401
<PAGE>
TO THE STOCKHOLDERS
- --------------------------------------------------------------------------------
For the six months ended June 30, 1996, the time-weighted rate of return
(including income but excluding expenses) on the net assets of General American
Investors Company was 11.8%. By comparison, the rate of return (including
income) for the Standard & Poor's 500 Stock Index was 10.1%. For the twelve
months ended June 30, 1996, the return for the Company was 27.5%; this compares
to a return of 26% for the S&P 500.
During the second quarter, the Company's portfolio turnover continued at a
relatively brisk pace mirroring the heightened volatility of markets generally.
Several of the larger transactions were effected to minimize taxes and/or
maximize the benefits of impending mergers or acquisitions.
The net assets of the Company as of June 30, 1996, as set forth in the
accompanying financial statements (unaudited), were $601,824,005, equal to
$26.47 per share of Common Stock.
The increase in net assets resulting from operations for the six months was
$61,719,481. Net realized gain on securities sold was $33,308,867 of which
$31,095,163 ($1.37 per share) was long-term; the increase in unrealized
appreciation was $26,058,971. Net investment income for the six months was
$2,351,643.
During the six months, 1,225,487 shares of the Company's Common Stock were
repurchased for $25,940,576 at an average discount from net asset value of
15.8%.
By Order of the Board of Directors,
GENERAL AMERICAN INVESTORS COMPANY, INC.
Spencer Davidson
President and Chief Executive Officer
RESULTS OF THE ANNUAL MEETING OF STOCKHOLDERS
- --------------------------------------------------------------------------------
The votes cast by Stockholders at the Company's annual meeting held on March 13,
1996 were as follows:
Election of Directors:
<TABLE>
<CAPTION>
For Withheld
--- --------
<S> <C> <C>
Arthur G. Altschul, Jr. 20,743,580 591,729
Lawrence B. Buttenwieser 20,802,700 532,609
Lewis B. Cullman 20,777,354 557,955
Spencer Davidson 20,830,247 505,062
Gerald M. Edelman 20,747,875 587,434
Anthony M. Frank 20,824,098 511,211
John D. Gordan, III 20,824,331 510,978
Bill Green 20,773,804 561,505
Victoria Hamilton 20,755,854 579,455
Sidney R. Knafel 20,815,472 519,837
Richard R. Pivirotto 20,753,395 581,914
Malcolm B. Smith 20,779,096 556,213
Joseph T. Stewart, Jr. 20,827,463 507,846
Raymond S. Troubh 20,793,915 541,394
</TABLE>
Ratification of the selection of Ernst & Young LLP as auditors of the Company
for the year 1996:
For - 20,903,286; Against - 263,269; Abstain - 168,754
Stockholder proposal relating to the conversion of the Company from closed-end
status to an open-end mutual fund:
For - 2,653,130; Against - 11,929,614; Abstain - 1,093,609
<PAGE>
2 STATEMENT OF ASSETS AND LIABILITIES June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
General American Investors
<TABLE>
<CAPTION>
ASSETS
- -------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENTS, AT VALUE ( NOTE 1a )
General portfolio securities (cost $293,543,898) $519,873,456
Corporate discount notes (cost $79,376,450) 79,376,450
------------
599,249,906
CASH, RECEIVABLES AND OTHER ASSETS
Cash ................................................ $ 45,887
Receivable for securities sold ...................... 2,303,440
Dividends, interest and other receivables ........... 3,533,958
Other ............................................... 867,854 6,751,139
----------- -----------
TOTAL ASSETS .......................................... 606,001,045
LIABILITIES
- -------------------------------------------------------------------------------------
Payable for securities purchased ................... 545,595
Accrued expenses and other liabilities ............. 3,631,445
-----------
TOTAL LIABILITIES ..................................... 4,177,040
------------
NET ASSETS ............................................ $601,824,005
============
NET ASSETS
- -------------------------------------------------------------------------------------
Common Stock, $1 par value (note 2)
Authorized 30,000,000 shares; outstanding
(exclusive of 1,377,187 shares in
Treasury)22,737,229 shares .................... $ 22,737,229
Paid-in Capital ( note 2 ) ......................... 319,005,682
Undistributed realized gain on securities sold ..... 33,160,554
Undistributed net income ........................... 590,982
Unrealized appreciation on investments (including
aggregate gross unrealized appreciation of
$237,673,701) ................................... 226,329,558
------------
TOTAL NET ASSETS ...................................... $601,824,005
============
NET ASSET VALUE PER SHARE ............................. $ 26.47
============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
June 30, 1996 December 31,
OPERATIONS (Unaudited) 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Net investment income ..................... $ 2,351,643 $ 1,961,039
Net realized gain on sales of securities .. 33,308,867 63,862,317
Net increase in unrealized appreciation ... 26,058,971 42,984,363
------------- -------------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ................. 61,719,481 108,807,719
------------- -------------
DISTRIBUTIONS TO STOCKHOLDERS
- --------------------------------------------------------------------------------
From net income, including
short-term capital gain ................. (197,936) (2,633,530)
From long-term capital gain ............... (7,450,389) (65,253,760)
In excess of net income ................... -- (180,371)
------------- -------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS .... (7,648,325) (68,067,661)
------------- -------------
CAPITAL SHARE TRANSACTIONS
- --------------------------------------------------------------------------------
Value of Common Shares issued in payment
of dividends (note 2) ................... -- 41,998,878
Cost of Common Shares purchased (note 2) .. (25,940,576) (28,767,670)
------------- -------------
INCREASE (DECREASE) IN NET ASSETS -
CAPITAL TRANSACTIONS ...................... (25,940,576) 13,231,208
------------- -------------
NET INCREASE IN NET ASSETS ................... 28,130,580 53,971,266
NET ASSETS
- --------------------------------------------------------------------------------
BEGINNING OF PERIOD .......................... 573,693,425 519,722,159
-------------- -------------
END OF PERIOD (including undistributed net
net income of $590,982 and distributions
in excess of net income of $1,562,725,
respectively) ............................. $ 601,824,005 $ 573,693,425
============= =============
<FN>
( see notes to financial statements )
</FN>
</TABLE>
<PAGE>
3 STATEMENT OF OPERATIONS Six Months Ended June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
General American Investors
<TABLE>
<CAPTION>
INCOME
- --------------------------------------------------------------------------------
<S> <C> <C>
Dividends (net of foreign withholding taxes
of $116,742) ................................ $ 3,213,936
Interest ...................................... 2,114,699
Investment advisory fees (note 1d) ............ 136,652 $ 5,465,287
-----------
EXPENSES
- --------------------------------------------------------------------------------
Investment research ........................... 1,291,326
Administration and operations ................. 937,652
Office space and general ...................... 416,629
Directors' fees and expenses .................. 116,289
Transfer agent, custodian and registrar
fees and expenses ........................... 109,800
Auditing and legal fees ....................... 95,410
Stockholders' meeting and reports ............. 91,538
Miscellaneous taxes (note 1c) ................. 55,000 3,113,644
--------- ---------
NET INVESTMENT INCOME ............................ 2,351,643
REALIZED GAIN AND CHANGE IN UNREALIZED APPRECIATION ON INVESTMENTS (NOTES 1e AND 4)
- -----------------------------------------------------------------------------------
Net realized gain on sales of securities
(long-term, except for $2,213,704) ........... 33,308,867
Net increase in unrealized appreciation ........ 26,058,971
------------
NET GAIN ON INVESTMENTS ......................... 59,367,838
------------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ..................... $61,719,481
============
</TABLE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following table shows per share operating performance data, total investment
return, ratios and supplemental data for the six months ended June 30, 1996
and the year ended December 31, 1995. This information has been derived from
information contained in the financial statements and market price data for the
Company's shares.
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
June 30, 1996 December 31,
(Unaudited) 1995
--------- ------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period ............ $ 23.94 $ 22.31
-------- --------
Net investment income ....................... .10 .08
Net gain on securities -
realized and unrealized .................. 2.75 4.54
-------- --------
Total from investment operations ................ 2.85 4.62
-------- --------
Less distributions:
Dividends from investment income ............ (.01) (.11)*
Distributions from capital gains ............ (.31) (2.87)
In excess of net income ..................... -- (.01)
-------- --------
Total distributions ............................. (.32) (2.99)
-------- --------
Net asset value, end of period .................. $ 26.47 $ 23.94
======== ========
Per share market value, end of period ........... $ 22.00 $ 20.00
======== ========
TOTAL INVESTMENT RETURN - Stockholder
Return, based on market price per share ..... 11.79%** 21.22%
RATIOS AND SUPPLEMENTAL DATA
Total net assets, end of period (000's omitted) . $601,824 $573,693
Ratio of expenses to average net assets ***...... 0.53%** 1.25%
Ratio of net income to average net assets ....... 0.40%** 0.36%
Portfolio turnover rate ......................... 22.92%** 29.14%
Average commission rate paid .................... $ .0500
Shares outstanding, end of period (000's omitted) 22,737 23,963
<FN>
* Includes short-term capital gain in the amount of $.03 per share.
** Not annualized.
*** The ratio of expenses, exclusive of expenses attributable to the
advisory accounts which are managed directly by the Company, to
average net assets was 0.50% for the six months ended June 30, 1996,
which is not annualized, and 1.12% for 1995.
(see notes to financial statements)
</FN>
</TABLE>
<PAGE>
4 STATEMENT OF INVESTMENTS June 30, 1996 (Unaudited)
- -------------------------------------------------------------------------------
General American Investors
<TABLE>
<CAPTION>
STOCKS SHARES OR VALUE
ISSUER PRINCIPAL AMOUNT (NOTE 1a)
<S> <C> <C>
COMMUNICATIONS AND INFORMATION SERVICES (5.7%)
Comcast UK Cable Partners Limited Class A + ....... 668,500 $ 8,523,375
International CableTel Incorporated + ............. 172,000 5,074,000
Reuters Holdings Plc-ADR .......................... 139,000 10,077,500
TeleWest Communications Plc-ADR + ................. 110,000 2,743,180
Vodafone Group Plc-ADR ............................ 43,500 1,604,063
Wolters Kluwer NV-ADR ............................. 55,000 6,256,250
----------
(COST $19,711,788) ........ -- 34,278,368
----------
COMPUTER SOFTWARE AND SYSTEMS (5.4%)
Avid Technology, Inc.+ ............................ 258,000 4,773,000
Broderbund Software, Inc.+ ........................ 120,000 3,870,000
Cisco Systems, Inc.+ .............................. 183,000 10,362,375
Hewlett-Packard Company ........................... 100,000 9,962,500
Pinnacle Systems, Inc.+ ........................... 177,000 3,672,750
----------
(COST $25,391,201) ........ -- 32,640,625
----------
CONSUMER PRODUCTS AND SERVICES (11.5%)
AAPC Ltd. ......................................... 8,345,000 5,257,350
Brinker International Inc.+ ....................... 56,500 847,500
Buffets, Inc.+ .................................... 864,000 10,584,000
The Cheesecake Factory Incorporated+ .............. 194,000 5,335,000
Chrysler Corporation .............................. 160,000 10,000,000
Ford Motor Company ................................ 410,000 13,273,750
HomeTown Buffet, Inc.+ ............................ 485,000 6,850,625
Hormel Foods Corporation .......................... 255,000 6,821,250
PepsiCo, Inc. ..................................... 286,000 10,153,000
----------
(COST $55,404,867) ........ -- 69,122,475
----------
ELECTRONICS (0.9%)
Sensormatic Electronics Corporation ............... 316,000 5,174,500
----------
(COST $3,971,250)
ENVIRONMENTAL CONTROL
(INCLUDING SERVICES) (3.4%)
USA Waste Services, Inc.+ ......................... 699,000 20,707,875
----------
(COST $11,236,633)
FINANCE AND INSURANCE (20.0%)
Alexander Haagen Properties, Inc. ................. 143,000 1,823,250
American International Group, Inc. ................ 130,500 12,870,562
American States Financial Corporation+ ............ 271,000 5,826,500
Banco Popular Espanol, S.A. ....................... 16,000 2,856,000
Crestar Financial Corp. ........................... 156,000 8,326,500
Everest Reinsurance Holdings, Inc. ................ 125,500 3,247,312
First Empire State Corporation .................... 56,500 13,616,500
First Midwest Bancorp, Inc. ....................... 166,500 4,662,000
General Re Corporation ............................ 84,500 12,865,125
Golden West Financial Corporation ................. 168,500 9,436,000
Life Re Corporation ............................... 310,500 9,586,688
National Re Corporation ........................... 112,000 4,228,000
TIG Holdings, Inc. ................................ 202,500 5,872,500
Transatlantic Holdings, Inc. ...................... 156,500 10,955,000
U.S. Bancorp ...................................... 317,500 11,469,687
Walden Residential Properties ..................... 120,500 2,455,188
-----------
(COST $66,849,643) ........ -- 120,096,812
-----------
HEALTH CARE (21.8%)
PHARMACEUTICALS (10.4%)
AB Astra Class A .................................. 319,500 14,137,875
AB Astra Class B .................................. 306,500 13,371,062
Alpha-Beta Technology, Inc.+ ...................... 292,000 2,591,500
BioChem Pharma Inc.+ .............................. 166,000 6,225,000
Pfizer Inc. ....................................... 292,000 20,841,500
Vertex Pharmaceuticals Incorporated+ .............. 183,500 5,573,813
----------
(COST $23,995,710) ........ -- 62,740,750
----------
MEDICAL INSTRUMENTS AND DEVICES
(2.4%)
Medtronic, Inc. ................................... 253,000 14,168,000
-----------
(COST $4,041,642)
</TABLE>
<PAGE>
5 STATEMENT OF INVESTMENTS June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
General American Investors
<TABLE>
<CAPTION>
STOCKS (continued) SHARES OR VALUE
ISSUER PRINCIPAL AMOUNT (NOTE 1a)
<S> <C> <C>
HEALTH CARE SERVICES (9.0%)
Applied Bioscience International Inc.+ ............ 918,000 $ 9,639,000
Caremark International Inc. ....................... 350,000 8,837,500
Huntingdon International Holdings Plc-ADR+ ........ 669,500 4,017,000
United Healthcare Corporation ..................... 254,500 12,852,250
U.S. Healthcare, Inc. ............................. 348,000 19,140,000
-----------
(COST $40,889,395) ......... -- 54,485,750
-----------
(COST $68,926,747) ......... -- 131,394,500
-----------
MISCELLANEOUS (2.1%)
Manpower Inc. ..................................... 36,000 1,413,000
Other ............................................. 11,332,188
----------
(COST $12,900,036) ........ -- 12,745,188
----------
OIL & NATURAL GAS (INCLUDING SERVICES) (2.6%)
Repsol, S.A.-ADR .................................. 213,000 7,401,750
Texaco Inc. ....................................... 99,500 8,345,562
----------
(COST $14,114,033) ....... -- 15,747,312
----------
RETAIL TRADE (11.2%)
Giordano Holdings Limited - ADR ................... 304,500 2,953,650
The Home Depot, Inc. .............................. 765,500 41,337,000
Wal-Mart Stores, Inc. ............................. 825,000 20,934,375
Williams-Sonoma, Inc.+ ............................ 85,000 2,008,125
----------
(COST $6,683,573) ......... -- 67,233,150
----------
SPECIAL HOLDINGS #+ (note 6) (0.8%)
Microbiological Associates, Inc. Preferred Series D 456,829 456,829
Microbiological Associates, Inc. Preferred Series E 384,242 384,242
Sequoia Capital IV ................................ ++ 187,200
Tempest Reinsurance Company Limited ............... 15,000 2,250,000
Warburg, Pincus Capital Partners, L.P. ............ ++ 1,545,480
Welsh, Carson, Anderson & Stowe III ............... ++ 162,900
---------
(COST $4,941,688) ......... -- 4,986,651*
---------
TRANSPORTATION (1.0%)
Werner Enterprises, Inc. .......................... 221,000 5,746,000
---------
(COST $3,412,439)
TOTAL STOCKS (86.4%) (COST $293,543,898) ....... 519,873,456
------------
SHORT-TERM SECURITIES AND OTHER ASSETS
- --------------------------------------------------------------------------------
Ford Motor Credit Company notes
due 7/15-7/25/96; 5.34%-5.36% $16,750,000 16,668,048
General Electric Capital Corp. notes
due 7/8-8/8/96; 5.31%-5.38% 20,950,000 20,834,372
General Motors Acceptance Corp. notes
due 7/11-8/5/96; 5.35%-5.40% 21,500,000 21,381,107
Sears Roebuck Acceptance Corp. notes
due 7/2-7/29/96; 5.28%-5.38% 20,600,000 20,492,923
-------------
(COST $79,376,450) 79,376,450
Cash, receivables and other assets, less liabilities 2,574,099
-------------
TOTAL SHORT-TERM SECURITIES AND OTHER ASSETS, NET (13.6%) 81,950,549
-------------
NET ASSETS (COST $375,494,447) $601,824,005
=============
<FN>
+Non-income producing security. # Restricted security.
++ A limited partnership interest. * Fair value of each holding in the opinion of the
(see notes to financial statements) Board of Directors.
</FN>
</TABLE>
<PAGE>
6 NOTES TO FINANCIAL STATEMENTS (Unaudited)
- --------------------------------------------------------------------------------
General American Investors
1. SIGNIFICANT ACCOUNTING POLICIES
General American Investors Company, Inc. (the "Company"), established in 1927,
is registered under the Investment Company Act of 1940 as a closed-end,
diversified management investment company. It is internally managed by its
officers under the direction of the Board of Directors. The Company is also
registered under the Investment Advisers Act of 1940 as an investment adviser.
a. SECURITY VALUATION Securities traded on securities exchanges or on the NASDAQ
National Market System are valued at the last reported sales price on the last
business day of the period. Listed and NASDAQ securities for which no sales are
reported on that day and other securities traded in the over-the-counter market
are valued at the last bid price on the valuation date. Corporate discount notes
are valued at amortized cost, which approximates market value. Special holdings
are valued at fair value in the opinion of the Directors. In determining fair
value, in the case of restricted shares, consideration is given to cost,
operating and other financial data and, where applicable, subsequent private
offerings or market price of the issuer's unrestricted shares (to which a 30
percent discount is applied); for limited partnership interests, fair value is
based upon an evaluation of the partnership's net assets.
b. INVESTMENT IN CONTROLLED AFFILIATE On January 1, 1996, the investment in the
Company's wholly owned subsidiary, General American Advisers, Inc., was
eliminated when its business operations were transferred to the Company. This
transfer was accounted for as a combination of businesses under common control.
c. FEDERAL INCOME TAXES The Company's policy is to fulfill the requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all taxable income to its stockholders. Accordingly, no
provision for Federal income taxes is required.
d. INVESTMENT ADVISORY FEES Income from fees (charged, generally, at the annual
rate of 1/2% of assets under management, computed quarterly) is recorded as the
related advisory services are performed by the Company.
e. OTHER As customary in the investment company industry, securities
transactions are recorded as of the trade date. Dividend income and
distributions to stockholders are recorded as of the ex-dividend dates.
2. COMMON STOCK AND DIVIDEND DISTRIBUTIONS
Transactions in Common Stock during 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
SHARES AMOUNT
----------------------- ----------------------------
1996 1995 1996 1995
----------------------- ----------------------------
<S> <C> <C> <C> <C>
Shares issued in payment of dividends ................... -- 2,092,369 -- $ 2,092,369
Increase in paid-in capital ............................. -- 39,906,509
------------ ------------
Total increase .................................... -- 41,998,878
------------ ------------
Shares purchased (at an average discount from net asset
value of 15.8% and 16.5%, respectively) ............... 1,225,487 1,421,424 ($ 1,225,487) (1,421,424)
Decrease in paid-in capital ............................. ( 24,715,089) (27,346,246)
------------ ------------
Total decrease .................................... ( 25,940,576) (28,767,670)
------------ ------------
Net increase (decrease) ................................. ($25,940,576) $ 13,231,208
============ ============
</TABLE>
The cost of the 1,377,187 shares of Common Stock held in Treasury at June 30,
1996 amounted to $29,010,436.
Dividends in excess of net income for financial statement purposes result
primarily from transactions where tax treatment differs from book treatment.
3. OFFICERS' COMPENSATION AND RETIREMENT AND THRIFT PLANS
The aggregate compensation paid by the Company during the six months ended June
30, 1996 to its officers amounted to $1,205,078.
The Company has non-contributory retirement plans and a contributory thrift plan
which cover substantially all employees. The costs to the Company and the assets
and liabilities of the plans are not material. Costs of the plans are funded
currently.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (other than short-term securities) during the
six months ended June 30, 1996 were $116,974,472 and $155,327,157, respectively.
At June 30, 1996, the cost of investments for Federal income tax purposes was
the same as the cost for financial reporting purposes.
5. GENERAL INFORMATION
Brokerage commissions during the six months ended June 30, 1996 were $278,196,
including $34,702 paid to Goldman, Sachs & Co. The Chairman Emeritus of the
Company is a limited partner of The Goldman Sachs Group, L.P. which is an
affiliate of Goldman, Sachs & Co.
6. RESTRICTED SECURITIES
<TABLE>
<CAPTION>
DATE VALUE
ACQUIRED COST (NOTE 1a)
-------- ---------- ----------
<S> <C> <C> <C>
Microbiological Associates, Inc. Preferred Series D 12/20/91 $ 861,500 $ 456,829
Microbiological Associates, Inc. Preferred Series E 12/20/91 449,300 384,242
Sequoia Capital IV* ............................... 1/31/84 1,128,923 187,200
Tempest Reinsurance Company Limited ............... 9/15/93 1,500,000 2,250,000
Warburg, Pincus Capital Partners, L.P.* ........... 10/04/83 154,872 1,545,480
Welsh, Carson, Anderson & Stowe III* .............. 3/10/83 346,793 162,900
Other ............................................. 500,300 --
---------- ----------
Total ............................................. $4,941,688 $4,986,651
========== ==========
<FN>
* The amounts shown are net of distributions from these limited partnership
interests which, in the aggregate, amounted to $4,563,888, $3,725,979 and
$3,452,757, respectively. The initial investment in each limited partnership was
$2,000,000.
</FN>
</TABLE>
<PAGE>
7 NOTES TO FINANCIAL STATEMENTS (Unaudited)
- --------------------------------------------------------------------------------
General American Investors
7. OPERATING LEASE COMMITMENT
In July 1992, the Company entered into an operating lease agreement for new
office space which expires in 2007 and provides for future rental payments in
the aggregate amount of approximately $5.6 million. The lease agreement contains
a clause whereby the Company received twenty months of free rent beginning in
December 1992 and escalation clauses relating to operating costs and real
property taxes.
Rental expense approximated $252,000 for the six months ended June 30, 1996.
Minimum rental commitments under the operating lease are approximately $331,000
per annum in 1996 through 1997, $403,000 per annum in 1998 through 2002, and
$504,000 per annum in 2003 through 2007.
In March 1996, the Company entered into a sublease agreement which expires in
2003 and provides for future rental receipts beginning in November 1996. Minimum
rental receipts under the sublease are approximately $28,000 in 1996, $167,000
in 1997, $203,000 per annum in 1998 through 2002 and $64,000 in 2003. The
Company will also receive its proportionate share of operating expenses and real
property taxes under the sublease.
MAJOR STOCK CHANGES* Three Months Ended June 30, 1996 (UNAUDITED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Held
INCREASES SHARES JUNE 30, 1996
- --------------------------------------------------------------------------------------------------------
NEW POSITIONS
<S> <C> <C>
American States Financial Corporation 271,000 271,000
Broderbund Software, Inc. 20,000 120,000+
First Midwest Bancorp, Inc. 60,700 166,500+
Hewlett-Packard Company 100,000 100,000
HomeTown Buffet, Inc. 485,000 485,000
National Re Corporation 100 112,000+
Pinnacle Systems, Inc. 177,000 177,000
Williams-Sonoma, Inc. -- 85,000++
ADDITIONS
BioChem Pharma Inc. 10,000 166,000
Caremark International Inc. 50,000 350,000
Chrysler Corporation 40,000 160,000
Comcast UK Cable Partners Limited Class A 418,500 668,500
Ford Motor Company 10,000 410,000
USA Waste Services 193,500@ 699,000
DECREASES
- --------------------------------------------------------------------------------------------------------
ELIMINATIONS
The Walt Disney Company 65,500 --
JDN Realty Corporation 62,500 --
Western Waste Industries 129,000@ --
REDUCTIONS
AB Astra Class B 20,000 306,500
Applied Bioscience International Inc. 118,000 918,000
Avid Technology, Inc. 40,000 258,000
Brinker International Inc. 180,000 56,500
Buffets, Inc. 580,000 864,000
Manpower Inc. 140,000 36,000
PepsiCo, Inc. 25,000 286,000#
Pfizer Inc. 80,000 292,000
Repsol, S.A. - ADR 93,000 213,000
Reuters Holdings Plc - ADR 90,000 139,000
Sensormatic Electronics Corporation 207,000 316,000
U.S. Bancorp 40,000 317,500
Walden Residential Properties 6,000 120,500
<FN>
* Excludes transactions in Stocks - Miscellaneous - Other.
+ Includes shares purchased in prior period and previously carried under Stocks - Miscellaneous - Other.
++ Shares purchased in prior period and previously carried under Stocks - Miscellaneous - Other.
@ 193,500 shares of USA Waste Services, Inc. were received in exchange for 129,000 shares of
Western Waste Industries in conjunction with a merger.
# Includes shares received in conjunction with stock split.
</FN>
</TABLE>
- --------------------------------------------------------------------------------
In addition to purchases of the Company's Common Stock as set forth in Note 2 on
page 6, purchases of Common Stock may be made at such times, at such prices, in
such amounts and in such manner as the Board of Directors may deem advisable.
<PAGE>
DIRECTORS
- --------------------------------------------------------------------------------
Lawrence B. Buttenwieser, Chairman
Malcolm B. Smith, Vice-Chairman
Arthur G. Altschul, Jr.
Lewis B. Cullman
Spencer Davidson
Gerald M. Edelman
Anthony M. Frank
John D. Gordan, III
Bill Green
Victoria Hamilton
Sidney R. Knafel
Richard R. Pivirotto
Joseph T. Stewart, Jr.
Raymond S. Troubh
Arthur G. Altschul, Chairman Emeritus
William O. Baker, Director Emeritus
William T. Golden, Director Emeritus
OFFICERS
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Spencer Davidson, President & Chief Executive Officer
Victoria Hamilton, Executive Vice-President & Chief Operating Officer
S. Lawrence Feit, Senior Vice-President
John J. Smith, Vice-President
Andrew V. Vindigni, Vice-President
Eugene L. DeStaebler, Jr., Vice-President, Administration
Peter P. Donnelly, Vice-President & Trader
Diane G. Radosti, Treasurer
Carole Anne Clementi, Secretary
SERVICE COMPANIES
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COUNSEL
Sullivan & Cromwell
INDEPENDENT AUDITORS
Ernst & Young LLP
CUSTODIAN
Bankers Trust Company
TRANSFER AGENT AND REGISTRAR
ChaseMellon Shareholder Services, L.L.C.
Overpeck Centre
85 Challenger Road
Ridgefield Park, NJ 07660
1-800-413-5499
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
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To the Board of Directors and Stockholders of
GENERAL AMERICAN INVESTORS COMPANY, INC.
We have reviewed the accompanying statement of assets and liabilities of
General American Investors Company, Inc., including the statement of
investments, as of June 30, 1996, and the related statements of operations and
changes in net assets and financial highlights for the six month period ended
June 30, 1996. These financial statements and financial highlights are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data, and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit in
accordance with generally accepted auditing standards, which will be performed
for the full year with the objective of expressing an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on our review, we are not aware of any material modifications that
should be made to the interim financial statements referred to above for them to
be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the statement of changes in net assets and financial highlights for
the year ended December 31, 1995 and in our report, dated January 12, 1996, we
expressed an unqualified opinion on such financial statement and financial
highlights.
ERNST & YOUNG LLP
New York, New York
July 17, 1996
