<PAGE>
GENERAL AMERICAN INVESTORS
COMPANY, INC.
FIRST QUARTER REPORT
MARCH 31, 1997
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
- -------------------------------------------------------------------------------
The year has started on a subdued note with the average domestic stock mutual
fund losing almost 2% of its value in the first quarter. Even the shares of
large capitalization companies which have benifitted from the public's
enthusiasm for index funds have started to weaken. With our emphasis on
long-term capital appreciation and substantial cash balance, General American
Investors Company is well positioned to participate in the opportunities that a
less ebullient market should provide. For the three months ended March 31, 1997,
the time-weighted rate of return (including income but excluding expenses) on
the net assets of the Company was 1.4%. By comparison, the rate of return
(including income) for the Standard & Poor's 500 Stock Index was 2.7%.
The net assets of the Company as of March 31, 1997, as set forth in the
accompanying financial statements (unaudited), were $588,868,820, equal to
$25.06 per share of Common Stock.
The increase in net assets resulting from operations for the three months was
$7,051,048. Net realized gain on securities sold was $18,328,616 of which
$18,324,592 ($.78 per share) was long-term; the decrease in unrealized
appreciation was $12,394,619. Net investment income for the three months was
$1,117,051.
During the three months, 514,300 shares of the Company's Common Stock were
repurchased for $11,199,443 at an average discount from net asset value of
15.1%.
We are pleased to report that, on March 12, 1997, at the Company's annual
meeting, the Stockholders (1) elected thirteen directors, (2) ratified the
selection of Ernst & Young LLP as auditors of the Company for the year 1997 and
(3) rejected the shareholder proposal relating to the conversion of the Company
from closed-end status to an open-end mutual fund. Of the votes cast on the
shareholder proposal (59% of the shares outstanding), 84.5% voted against the
conversion. We strongly believe that the outcome of this vote is in the best
long-term interest of all of our Stockholders.
As indicated in the 1996 annual report, on March 12, 1997, Malcolm B. Smith
retired as Vice-Chairman of the Board and as a Director of the Company. At the
organization meeting of the Board of Directors immediately following the annual
meeting of Stockholders, Mr. Smith was named Senior Consultant. We, again,
express gratitude and deepest appreciation for Mr. Smith's distiguished
leadership and dedicated service to the Company during his 49 years' association
with General American, including 28 years as President.
By Order of the Board of Directors,
GENERAL AMERICAN INVESTORS COMPANY, INC.
Spencer Davidson
President and Chief Executive Officer
<PAGE>
2 STATEMENT OF ASSETS AND LIABILITIES March 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
General American Investors
<TABLE>
<CAPTION>
ASSETS
- -------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENTS, AT VALUE ( NOTE 1a )
Common stocks (cost $277,069,650) ................... $491,684,222
Convertible corporate notes (cost $4,940,000) ....... 4,915,000
Corporate discount notes (cost $91,307,205) ......... 91,307,205
------------
587,906,427
CASH, RECEIVABLES AND OTHER ASSETS
Cash ................................................ $ 36,595
Receivable for securities sold ...................... 5,118,909
Dividends, interest and other receivables ........... 4,105,534
Other ............................................... 859,039 10,120,077
----------- -----------
TOTAL ASSETS .......................................... 598,026,504
LIABILITIES
- -------------------------------------------------------------------------------------
Payable for securities purchased ................... 5,416,908
Accrued expenses and other liabilities ............. 3,740,776
-----------
TOTAL LIABILITIES ..................................... 9,157,684
------------
NET ASSETS ............................................ $588,868,820
============
NET ASSETS
- -------------------------------------------------------------------------------------
Common Stock, $1 par value (note 2)
Authorized 30,000,000 shares; outstanding
23,496,931 shares (exclusive of 617,485
shares in Treasury) ............................. $ 23,496,931
Paid-In Capital ( note 2 ) ......................... 332,519,309
Undistributed realized gain on securities sold ..... 18,141,019
Undistributed net income ........................... 121,989
Unrealized appreciation on investments (including
aggregate gross unrealized appreciation of
$234,698,132) ................................... 214,589,572
------------
TOTAL NET ASSETS ...................................... $588,868,820
============
NET ASSET VALUE PER SHARE ............................. $ 25.06
============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months
Ended Year Ended
March 31, 1997 December 31,
OPERATIONS (Unaudited) 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Net investment income ..................... $ 1,117,051 $ 5,189,266
Net realized gain on sales of securities .. 18,328,616 61,830,203
Net increase (decrease) in unrealized
appreciation .............................. (12,394,619) 26,713,604
------------- -------------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ................. 7,051,048 93,733,073
------------- -------------
DISTRIBUTIONS TO STOCKHOLDERS
- --------------------------------------------------------------------------------
From net income, including
short-term capital gain ................. (1,417,469) (4,446,885)
From long-term capital gain ............... (10,394,776) (57,682,349)
------------- -------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS .... (11,812,245) (62,129,234)
------------- -------------
CAPITAL SHARE TRANSACTIONS
- --------------------------------------------------------------------------------
Value of Common Shares issued in payment
of dividends (note 2) ................... 7,232,767 34,645,324
Cost of Common Shares purchased (note 2) .. (11,199,443) (42,345,895)
------------- -------------
DECREASE IN NET ASSETS - CAPITAL TRANSACTIONS (3,966,676) (7,700,571)
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS ........ (8,727,873) 23,903,268
NET ASSETS
- --------------------------------------------------------------------------------
BEGINNING OF PERIOD .......................... 597,596,693 573,693,425
-------------- -------------
END OF PERIOD (including undistributed net
income of $121,989 and distributions
in excess of net income of $779,270,
respectively) ............................. $ 588,868,820 $ 597,596,693
============= =============
<FN>
( see notes to financial statements )
</FN>
</TABLE>
<PAGE>
3 STATEMENT OF OPERATIONS Three Months Ended March 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
General American Investors
<TABLE>
<CAPTION>
INCOME
- --------------------------------------------------------------------------------
<S> <C> <C>
Dividends (net of foreign withholding taxes
of $54,588) ................................. $ 1,475,065
Interest ...................................... 1,179,597
Investment advisory fees (note 1c) ............ 34,099 $ 2,688,761
-----------
EXPENSES
- --------------------------------------------------------------------------------
Investment research ........................... 680,313
Administration and operations ................. 492,861
Office space and general ...................... 141,157
Transfer agent, custodian and registrar
fees and expenses ........................... 74,340
Stockholders' meeting and reports ............. 70,022
Directors' fees and expenses .................. 52,917
Auditing and legal fees ....................... 39,000
Miscellaneous taxes (note 1b) ................. 21,100 1,571,710
--------- ---------
NET INVESTMENT INCOME ............................ 1,117,051
REALIZED GAIN AND CHANGE IN UNREALIZED APPRECIATION ON INVESTMENTS (NOTES 1d AND 4)
- -----------------------------------------------------------------------------------
Net realized gain on sales of securities
(long-term except for $4,024) ................ 18,328,616
Net decrease in unrealized appreciation ........ (12,394,619)
------------
NET GAIN ON INVESTMENTS ......................... 5,933,997
------------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ..................... $7,051,048
============
</TABLE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following table shows per share operating performance data, total investment
return, ratios and supplemental data for the three months ended March 31, 1997
and the year ended December 31, 1996. This information has been derived from
information contained in the financial statements and market price data for the
Company's shares.
<TABLE>
<CAPTION>
Three Months
Ended Year Ended
March 31, 1997 December 31,
(Unaudited) 1996
--------- ------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period ............ $ 25.24 $ 23.94
-------- --------
Net investment income ....................... .05 .22
Net gain (loss) on securities -
realized and unrealized .................. .27 3.86
-------- --------
Total from investment operations ................ .32 4.08
-------- --------
Less distributions:
Dividends from investment income ............ (.06)* (.20)
Distributions from capital gains ............ (.44) (2.58)
In excess of net income ..................... -- --
-------- --------
Total distributions ............................. (.50) (2.78)
-------- --------
Net asset value, end of period .................. $ 25.06 $ 25.24
======== ========
Per share market value, end of period ........... $ 21.375 $ 21.00
======== ========
TOTAL INVESTMENT RETURN - Stockholder
Return, based on market price per share ..... 4.13%** 19.48%
RATIOS AND SUPPLEMENTAL DATA
Total net assets, end of period (000's omitted) . $588,869 $597,597
Ratio of expenses to average net assets ......... 0.26%** 1.05%
Ratio of net income to average net assets ....... 0.19%** 0.88%
Portfolio turnover rate ......................... 10.04%** 33.40%
Average commission rate paid .................... $ .0500 $ .0500
Shares outstanding, end of period (000's omitted) 23,497 23,679
<FN>
* Includes short-term capital gain in the amount of $.05 per share.
** Not annualized.
(see notes to financial statements)
</FN>
</TABLE>
<PAGE>
4 STATEMENT OF INVESTMENTS March 31, 1997 (Unaudited)
- -------------------------------------------------------------------------------
General American Investors
<TABLE>
<CAPTION>
SHARES OR VALUE
COMMON STOCKS PRINCIPAL AMOUNT (NOTE 1a)
<S> <C> <C>
COMMUNICATIONS AND INFORMATION SERVICES (5.5%)
Comcast UK Cable Partners Limited Class A + ....... 439,500 $ 4,889,438
Cox Communications, Inc. Class A + ................ 350,000 7,218,750
NTL Incorporated + ................................ 252,000 5,323,500
Reuters Holdings Plc-ADR .......................... 109,000 6,342,492
TeleWest Communications Plc-ADR + ................. 110,000 1,911,250
Wolters Kluwer NV-ADR ............................. 55,000 6,593,125
----------
(COST $23,402,748) -- 32,278,555
----------
COMPUTER SOFTWARE AND SYSTEMS (3.7%)
Avid Technology, Inc.+ ............................ 255,500 3,369,534
Broderbund Software, Inc.+ ........................ 200,000 4,375,000
Cisco Systems, Inc.+ .............................. 168,000 8,085,000
Hewlett-Packard Company ........................... 60,000 3,202,500
Pinnacle Systems, Inc.+ ........................... 205,000 2,793,125
----------
(COST $18,114,492) -- 21,825,159
----------
CONSUMER PRODUCTS AND SERVICES (8.7%)
AAPC Ltd. ......................................... 8,172,000 4,805,136
Buffets, Inc.+ .................................... 1,390,000 9,991,320
The Cheesecake Factory Incorporated + ............. 104,000 2,054,000
Chrysler Corporation .............................. 400,000 12,000,000
Ford Motor Company ................................ 400,000 12,550,000
PepsiCo, Inc. ..................................... 300,000 9,712,500
----------
(COST $51,695,958) -- 51,112,956
----------
ELECTRONICS (1.0%)
Sensormatic Electronics Corporation ............... 360,000 6,075,000
----------
(COST $4,622,450)
ENVIRONMENTAL CONTROL
(INCLUDING SERVICES) (3.0%)
USA Waste Services, Inc.+ ......................... 493,000 17,501,500
----------
(COST $7,326,953)
FINANCE AND INSURANCE (22.5%)
Ace Limited ....................................... 48,500 3,104,000
American International Group, Inc. ................ 100,000 11,737,500
American States Financial Corporation ............. 327,500 10,930,312
Banco Popular Espanol, S.A. ....................... 16,000 2,882,000
Crestar Financial Corp. ........................... 312,000 10,803,000
Everest Reinsurance Holdings, Inc. ................ 125,500 3,686,562
First Empire State Corporation .................... 50,000 16,000,000
First Midwest Bancorp, Inc. ....................... 237,500 7,065,625
General Re Corporation ............................ 100,000 15,800,000
Golden West Financial Corporation ................. 168,500 10,573,375
Life Re Corporation ............................... 279,000 11,369,250
TIG Holdings, Inc. ................................ 172,500 5,476,875
Transatlantic Holdings, Inc. ...................... 150,000 12,600,000
U.S. Bancorp ...................................... 190,000 10,165,000
-----------
(COST $57,606,027) -- 132,193,499
-----------
HEALTH CARE (19.7%)
PHARMACEUTICALS (12.3%)
AB Astra Class A .................................. 319,500 15,375,938
AB Astra Class B .................................. 306,500 14,367,187
Alpha-Beta Technology, Inc.+ ...................... 270,000 2,868,750
BioChem Pharma Inc.+ .............................. 20,000 860,000
Pfizer Inc. ....................................... 272,000 22,882,000
R.P. Scherer Corporation + ........................ 207,000 10,738,125
Ribi ImmunoChem Research, Inc.+ ................... 349,500 1,551,081
Vertex Pharmaceuticals Incorporated + ............. 93,500 3,786,750
----------
(COST $30,447,564) -- 72,429,831
----------
MEDICAL INSTRUMENTS AND DEVICES (2.2%)
Medtronic, Inc. ................................... 208,000 12,948,000
-----------
(COST $3,229,682)
</TABLE>
<PAGE>
5 STATEMENT OF INVESTMENTS March 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
General American Investors
<TABLE>
<CAPTION>
SHARES OR VALUE
COMMON STOCKS (continued) PRINCIPAL AMOUNT (NOTE 1a)
<S> <C> <C>
HEALTH CARE SERVICES (5.2%)
Aetna, Inc. ....................................... 100,000 $ 8,587,500
Huntingdon International Holdings Plc-ADR+ ........ 669,500 6,276,563
MedPartners, Inc.+ ................................ 484,000 10,285,000
Physician Reliance Network, Inc.+ ................. 352,500 1,806,562
United Healthcare Corporation ..................... 80,000 3,810,000
-----------
(COST $29,379,739) -- 30,765,625
-----------
(COST $63,056,985) -- 116,143,456
-----------
MISCELLANEOUS (3.4%)
Other ............................................. 20,048,338
----------
(COST $22,520,407)
OIL & NATURAL GAS (INCLUDING SERVICES) (4.0%)
Repsol, S.A.-ADR .................................. 213,000 8,679,750
Texaco Inc. ....................................... 135,000 14,782,500
----------
(COST $17,947,223) -- 23,462,250
----------
RETAIL TRADE (11.0%)
Giordano Holdings Limited - ADR ................... 304,500 1,851,360
The Home Depot, Inc. .............................. 755,500 40,419,250
Wal-Mart Stores, Inc. ............................. 815,000 22,718,125
----------
(COST $5,463,291) -- 64,988,735
----------
SPECIAL HOLDINGS #+ (NOTE 6) (0.3%)
Microbiological Associates, Inc. Preferred Series D 456,829 456,829
Microbiological Associates, Inc. Preferred Series E 384,242 384,242
Sequoia Capital IV ................................ ++ 156,000
Warburg, Pincus Capital Partners, L.P. ............ ++ 897,078
Welsh, Carson, Anderson & Stowe III ............... ++ 7,500
---------
(COST $3,141,301) -- 1,901,649*
---------
TRANSPORTATION (0.7%)
Werner Enterprises, Inc. .......................... 221,500 4,153,125
---------
(COST $2,171,815)
TOTAL COMMON STOCKS (83.5%) (COST $277,069,650) 491,684,222
------------
CONVERTIBLE CORPORATE NOTES
Medimmune, Inc., 7% due 7/1/2003 .................. $4,000,000 3,880,000
USA Waste Services, Inc., 4% due 2/1/2002 ......... 1,000,000 1,035,000
---------
TOTAL CONVERTIBLE CORPORATE NOTES (0.8%)
(COST $4,940,000) 4,915,000
---------
SHORT-TERM SECURITIES AND OTHER ASSETS
- --------------------------------------------------------------------------------
Ford Motor Credit Company notes
due 4/10-5/5/97; 5.30%-5.50% ................... $24,050,000 23,903,785
General Electric Capital Corp. notes
due 4/1-5/8/97; 5.25%-5.53% ................... 19,950,000 19,835,311
General Motors Acceptance Corp. notes
due 4/2-5/12/97; 5.31%-5.57% ................... 25,450,000 25,304,378
Sears Roebuck Acceptance Corp. notes
due 4/7-5/1/97; 5.30%-5.37% .................... 22,400,000 22,263,731
------------
(COST $91,307,205) 91,307,205
Cash, receivables and other assets, less liabilities 962,393
------------
TOTAL SHORT-TERM SECURITIES AND OTHER ASSETS, NET (15.7%) 92,269,598
------------
NET ASSETS (COST $374,279,248) $588,868,820
============
<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) 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.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
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. 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.
c. 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.
d. 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 the three months ended March 31, 1997 and
the year ended December 31, 1996 were as follows:
<TABLE>
<CAPTION>
SHARES AMOUNT
----------------------- ----------------------------
1997 1996 1997 1996
----------------------- ----------------------------
<S> <C> <C> <C> <C>
Shares issued in payment of dividends ................... 332,541 1,684,879 $ 332,541 $ 1,684,879
Increase in paid-in capital ............................. 6,900,226 32,960,445
------------ ------------
Total increase .................................... 7,232,767 34,645,324
------------ ------------
Shares purchased (at an average discount from net asset
value of 15.1% and 15.7%, respectively) ............... 514,300 1,968,905 (514,300) (1,968,905)
Decrease in paid-in capital ............................. (10,685,143) (40,376,990)
------------ ------------
Total decrease .................................... (11,199,443) (42,345,895)
------------ ------------
Net increase (decrease) ................................. ($3,966,676) ($ 7,700,571)
============ ============
</TABLE>
The cost of the 617,485 shares of Common Stock held in Treasury at March 31,
1997 amounted to $13,387,747.
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 three months ended
March 31, 1997 to its officers amounted to $578,750.
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
three months ended March 31, 1997 were $51,615,968 and $74,227,680,
respectively. At March 31, 1997, 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 three months ended March 31, 1997 were
$100,804, including $21,690 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 1,062,101 156,000
Warburg, Pincus Capital Partners, L.P.* ........... 10/04/83 6,964 897,078
Welsh, Carson, Anderson & Stowe III* .............. 3/10/83 261,136 7,500
Other ............................................. 500,300 --
---------- ----------
Total ............................................. $3,141,301 $1,901,649
========== ==========
<FN>
* The amounts shown are net of distributions from these limited partnership
interests which, in the aggregate, amounted to $4,630,710, $4,531,382 and
$3,617,418, 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 $67,000 for the three months ended March 31, 1997.
Minimum rental commitments under the operating lease are approximately $331,000
in 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. Minimum rental receipts under the
sublease are approximately $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 March 31, 1997 (UNAUDITED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR PRINCIPAL
SHARES OR AMOUNT HELD
INCREASES PRINCIPAL AMOUNT MARCH 31, 1997
- --------------------------------------------------------------------------------------------------------
NEW POSITIONS
<S> <C> <C>
Medimmune, Inc. 7% Convertible Subordinated
Notes Due 7/1/03 $4,000,000 $4,000,000
Ribi ImmunoChem Research, Inc. 349,500 349,500
USA Waste Services, Inc. 4% Convertible
Subordinated Notes Due 2/1/02 $1,000,000 $1,000,000
ADDITIONS
American States Financial Corporation 25,000 327,500
Avid Technology, Inc. 27,500 255,500
Broderbund Software, Inc. 24,500 200,000
NTL Incorporated 80,000 252,000
Sensormatic Electronics Corporation 44,000 360,000
Texaco Inc. 5,000 135,000
DECREASES
- --------------------------------------------------------------------------------------------------------
ELIMINATIONS
Alexander Haagen Properties, Inc. 107,000 --
DSC Communications Corporation 425,000 --
Williams-Sonoma, Inc. 85,000 --
REDUCTIONS
Alpha-Beta Technology, Inc. 9,500 270,000
American International Group, Inc. 15,000 100,000
BioChem Pharma Inc. 116,000 20,000
Buffets, Inc. 41,500 1,390,000
The Cheesecake Factory Incorporated 90,000 104,000
Cisco Systems, Inc. 15,000 168,000
Comcast UK Cable Partners Limited Class A 142,000 439,500
First Empire State Corporation 6,500 50,000
Hewlett-Packard Company 120,000 60,000
Life Re Corporation 11,000 279,000
Medtronic, Inc. 20,000 208,000
PepsiCo, Inc. 25,000 300,000
Physician Reliance Network, Inc. 147,500 352,500
Pinnacle Systems, Inc. 40,000 205,000
TIG Holdings, Inc. 30,000 172,500
Transatlantic Holdings, Inc. 6,500 150,000
United Healthcare Corporation 20,000 80,000
USA Waste Services, Inc. 101,000 493,000
U.S. Bancorp 62,500 190,000
Vertex Pharmaceuticals Incorporated 55,000 93,500
Wal-Mart Stores, Inc. 10,000 815,000
Werner Enterprises, Inc. 110,000 221,500
<FN>
* Excludes transactions in Stocks - Miscellaneous - Other.
</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
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
- --------------------------------------------------------------------------------
Spencer Davidson, President & Chief Executive Officer
Victoria Hamilton, Executive Vice-President & Chief Operating Officer
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
- --------------------------------------------------------------------------------
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
RESULTS OF THE ANNUAL MEETING
OF STOCKHOLDERS
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The votes cast by Stockholders at the Company's annual meeting held on March 12,
1997 were as follows:
Election of Directors:
<TABLE>
<CAPTION>
FOR WITHHELD
<S> <C> <C>
Arthur G. Altschul, Jr. 19,765,623 404,867
Lawrence B. Buttenwieser 19,775,355 395,135
Lewis B. Cullman 19,705,374 465,116
Spencer Davidson 19,789,592 380,898
Gerard M. Edelman 19,719,419 451,071
Anthony M. Frank 19,782,214 388,276
John D. Gordan, III 19,781,487 389,003
Bill Green 19,723,093 447,397
Victoria Hamilton 19,718,947 451,543
Sidney R. Knafel 19,776,212 394,278
Richard R. Pivirotto 19,739,879 430,611
Joseph T. Stewart, Jr. 19,777,317 393,173
Raymond S. Troubh 19,736,513 433,977
</TABLE>
Ratification of the selection of Ernst & Young LLP as auditors of the Company
for the year 1997:
For - 19,780,961; Against - 240,310; Abstain - 149,219
Stockholder proposal relating to the conversion of the Company from closed-end
status to an open-end mutual fund:
For - 2,159,926; Against - 11,802,450; Abstain - 618,998
