eneral American Investors’ net asset value (NAV) per Common Share (assuming re-investment of all dividends) decreased 7.0% for the year ended December 31, 2018. The U.S. stock market was down 4.4% for the year, as measured by our benchmark, the Standard & Poor’s 500 Stock Index (including income). The return to our Common Stockholders decreased by 9.9% and the discount at which our shares traded to their NAV continued to fluctuate and on December 31, 2018, it was 17.6%.

The table that follows provides a comprehensive presentation of our performance and compares our returns on an annualized basis with the S&P 500.

Market volatility returned with a vengeance in 2018 reflected in the equity market’s strong early performance and weak finish as December’s market decline was unmatched since 1931. As we hypothesized last year, earnings multiples contracted with interest rate increases just as earnings accelerated rapidly with an improved economy on the back of significantly reduced U.S. corporate tax rates and regulatory reforms. Thus, while earnings rose in excess of 23% for the year, the performance of the S&P 500 logged 7% gains through October 31 and ended down 4.4% for the year. Much of the decline can be traced to escalating trade spats threatening corporate supply chains, elevated debt levels and liquidity concerns, perhaps in part, a result of Fed balance sheet reductions and similar planned actions by other central banks. Significant geo-political tensions also appeared to reach a zenith in the fourth quarter with tariff implementations, degrading world economic growth, especially in China and Europe, an uncertain outcome with Brexit and the rise of political populism across the European Union.

As is often the case, the very circumstances that lead to market corrections cause adjustment in policy as participants adjust their strategies, relieving the overriding pessimism, upending the negative sentiment and in the short-term lead markets higher. Recent favorable comments by Federal Reserve Chairman Powell and others are the case in point and have diminished market fears of a “too tight” Federal Reserve policy, and recent U.S./China discussions seem to have calmed trade and geopolitical concerns converting pessimism to hope that many of the issues contributing to the 4th quarter and late December selloff may be resolved favorably.

In truth, nothing has yet been resolved, although, at the fringes some progress has been made. Valuations are largely where they were at the end of November with the exception of the FAANG stocks, which have experienced significant multiple contraction as of this writing. 2019 earnings growth for the S&P 500 anticipated at the end of September to be 9% has been reduced by analysts to 5%, with a few calling for an outright earnings recession, as we had in 2015. However, stock buybacks have likely been large enough over the past year, despite some margin compression, to grow earnings around 1-2% per S&P 500 share on their own and assuming nominal gross domestic product growth in the U.S. economy in excess of 3.5%, 4-5% earnings growth seems plausible, if not conservative. Assuming no significant policy errors here and abroad, China successfully rebooting its expansion and the addition of announced, but not implemented buybacks, growth in earnings may improve further.

In sum, the rise of uncertainty has negatively affected anticipated growth rates, margins and multiples paid for corporate earnings. Volatility in financial markets has risen dramatically with much of it self-induced by poorly planned or implemented policy decisions and commentary. As some of these uncertainties resolve themselves over time, negative expectations may not be realized and the equity markets may find their footing and continue to advance as one of the longest market expansions in U.S. history unfolds into its eleventh year. We remain guardedly optimistic on the equity markets, but vigilant on the potential for rising risks to the economy.

Ms. Diane G. Radosti, an employee of the Company for the last thirty-eight years and Treasurer since 1990, retired effective December 31, 2018. Ms. Radosti will continue in a consulting role with the Company during the first quarter of 2019. Effective January 1, 2019, Ms. Samantha X. Jin was appointed Treasurer.

The Company is also pleased to report the following officer promotions effective January 1, 2019: Mr. Anang K. Majmudar to Senior Vice-President, Mr. Liron Kronzon to Vice-President, and Ms. Connie A. Santa Maria to Assistant Corporate Secretary.

Information about the Company, including our investment objectives, operating policies and procedures, investment results, record of dividend payments, financial reports and press releases, etc., is available on our website, which can be accessed at www.generalamericanin-vestors.com.

By Order of the Board of Directors,

Jeffrey W. Priest
President and Chief Executive Officer

February 6, 2019

General American Investors, established in 1927, is one of the nation’s oldest closed-end investment companies. It is an independent organization that is internally managed. For regulatory purposes, the Company is classified as a diversified, closed-end management investment company; it is registered under and subject to the Investment Company Act of 1940 and Sub-Chapter M of the Internal Revenue Code.

The primary objective of the Company is long-term capital appreciation. Lesser emphasis is placed on current income. In seeking to achieve its primary objective, the Company invests principally in common stocks believed by its management to have better than average growth potential.

The Company’s investment approach focuses on the selection of individual stocks, each of which is expected to meet a clearly defined portfolio objective. A continuous investment research program, which stresses fundamental security analysis, is carried on by the officers and staff of the Company under the oversight of the Board of Directors. The Directors have a broad range of experience in business and financial affairs.

Mr. Jeffrey W. Priest, has been President of the Company since February 1, 2012 and has been responsible for the management of the Company since January 1, 2013 when he was appointed Chief Executive Officer and Portfolio Manager. Mr. Priest joined the Company in 2010 as a senior investment analyst and has spent his entire 30-year business career on Wall Street. Mr. Priest succeeds Mr. Spencer Davidson who served as Chief Executive Officer and Portfolio Manager from 1995 through 2012.

As a closed-end investment company, the Company does not offer its shares continuously. The Common Stock is listed on The New York Stock Exchange (symbol, GAM) and can be bought or sold in the same manner as all listed stocks. Net asset value is computed and published on the Company’s website daily (on an unaudited basis) and is also furnished upon request. It is also available on most electronic quotation services using the symbol “XGAMX.” Net asset value per share (NAV), market price, and the discount or premium from NAV as of the close of each week, is published in Barron’s and The Wall Street Journal, Monday edition.

Shares of the Company usually sell at a discount to NAV, as do the shares of most other domestic equity closed-end investment companies.

Since March 1995, the Board of Directors has authorized the repurchase of Common Stock in the open market when the shares trade at a discount to NAV of at least 8%. To date, 27,368,114 shares have been repurchased.

On September 24, 2003, the Company issued and sold in an underwritten offering 8,000,000 shares of its 5.95% Cumulative Preferred Stock, Series B with a liquidation preference of $25 per share ($200,000,000 in the aggregate). The Preferred Shares are rated “A1” by Moody’s Investors Service, Inc. and are listed and traded on The New York Stock Exchange (symbol, GAM Pr B). The Preferred Shares are available to leverage the investment performance of the Common Stockholders; higher market volatility for the Common Stockholders may result.

The Board of Directors authorized the repurchase of up to 1 million Preferred Shares in the open market at prices below $25 per share. To date, 395,313 shares have been repurchased.

The Company’s dividend and distribution policy is to distribute to stockholders before year-end substantially all ordinary income estimated for the full year and capital gains realized during the ten-month period ended October 31 of that year. If any additional capital gains are realized and available or ordinary income is earned during the last two months of the year, a “spill-over” distribution of these amounts may be paid. Dividends and distributions on shares of Preferred Stock are paid quarterly. Distributions from capital gains and dividends from ordinary income are allocated proportionately among holders of shares of Common Stock and Preferred Stock.

Dividends from income have been paid continuously on the Common Stock since 1939 and capital gain distributions in varying amounts have been paid for each of the years 1943-2018 (except for the year 1974). (A table listing dividends and distributions paid during the 20-year period 1999-2018 is shown at the bottom of page 4.) To the extent that shares can be issued, dividends and distributions are paid to Common Stockholders in additional shares of Common Stock unless the stockholder specifically requests payment in cash.

The policies and procedures used by the Company to determine how to vote proxies relating to portfolio securities and the Company’s proxy voting record for the 12-month period ended June 30, 2018 are available: (1) without charge, upon request, by calling the Company at its toll-free number (1-800-436-8401), (2) on the Company’s website at www.generalamerican-investors.com and (3) on the Securities and Exchange Commission’s website at www.sec. gov.

The Company makes available direct registration for its Common Shareholders. Direct registration, an element of the Investors Choice Plan administered by our transfer agent, is a system that allows for book-entry ownership and electronic transfer of our Common Shares. Accordingly, when Common Shareholders, who hold their shares directly, receive new shares resulting from a purchase, transfer or dividend payment, they will receive a statement showing the credit of the new shares as well as their Plan account and certificated share balances. A brochure which describes the features and benefits of the Investors Choice Plan, including the ability of shareholders to deposit certificates with our transfer agent, can be obtained by calling American Stock Transfer & Trust Company at 1-800-413-5499, calling the Company at 1-800-436-8401 or visiting our website: www.generalameri-caninvestors.com - click on Distributions & Reports, then Report Downloads.

The Company collects non-public personal information about its direct stockholders with respect to their transactions in shares of the Company’s securities (those stockholders whose shares are registered directly in their names). This information includes the stockholder’s address, tax identification or Social Security number and dividend elections. We do not have knowledge of, nor do we collect personal information about, stockholders who hold the Company’s securities in “street name” registration.

We do not disclose any nonpublic personal information about our current or former stockholders to anyone, except as permitted by law. We restrict access to nonpublic personal information about our stockholders to those few employees who need to know that information to perform their responsibilities. We maintain safeguards to comply with federal standards to secure our stockholders’ information.

This table shows dividends and distributions on the Company’s Common Stock for the prior 20-year period. Amounts shown are based upon the year in which the income was earned, not the year paid. Spill-over payments made after year-end are attributable to income and gains earned in the prior year.

The diversification of the Company’s net assets applicable to its Common Stock by industry group as of December 31, 2018 is shown in the table.

* Net Assets applicable to the Company’s Common Stock.

** Securities which have been held for less than one year, not previously disclosed and not restricted.

(see notes to unaudited financial statements)

The table shows per share operating performance data, total investment return, ratios and supplemental data for each year in the five-year period ended December 31, 2018. This information has been derived from information contained in the financial statements and market price data for the Company’s shares.