For the three months ended March 31, 2018, return as measured based upon net asset value (NAV) per common share, including reinvestment of dividends and distributions, was -0.35% while the investment return to our stockholders (based upon market price per share), also including reinvestment of dividends and distributions, was -1.29%. By comparison, the return for our benchmark, the Standard and Poor’s 500 Stock Index (including income), was -0.76% during this period. For the twelve months ended March 31, 2018, return on net asset value was 10.29% and return to our stockholders was 10.66% which compares to the return of the S&P 500 Stock Index of 14.00%. During both time periods, the discount at which our shares traded continued to fluctuate and on March 31, 2018 it was 15.8%.

As detailed in the accompanying financial statements (unaudited), as of March 31, 2018, the net assets applicable to the Company’s Common Stock were $1,037,082,348 equal to $39.75 per Common Share.

The decrease in net assets resulting from operations for the three months ended March 31, 2018 was $7,603,061. During this period, the net realized gain on investments sold was $23,440,868 and the decrease in net unrealized appreciation was $29,468,583. Net investment income for the three months was $1,252,647. Distributions to preferred shareholders amounted to $2,827,993 and distributions to common shareholders totaled $13,105,940. During the three months, the Company also repurchased 361,539 of its shares at a cost of $12,692,096, an average discount to net asset value of 15.5%.

During the first quarter, equity market participants appeared to have entered a period of reflection following last year’s extraordinarily robust performance amid record low volatility. The muted performance and high volatility, in part, reflected the push and pull of earnings, multiple contraction and a large increase in earnings per share expectations. Functionally, multiple compression is likely the result of a modest increase in long-term interest rates while raised earnings expectations derive from the expected benefit of new lower U.S. corporate tax rates which may feed a stronger economy and improve revenue growth.

The Federal Reserve has played a role in this tug of war, raising short-term rates in conjunction with higher expectations for inflation as the economy approaches full employment. Though rate increases appear benign, thus far, they could reduce equity market inflows as rising yields make bonds more competitive.

Trade war headlines and politics also may have impacted confidence, as evidenced by weakening American Association of Individual Investors surveys, while the economy seemingly remains robust with corporate buybacks and dividend increases continuing apace. Workers’ wages are improving, but at a rate consistent with modest inflation, whereas capital expenditures, which improve productivity, have risen. Credit availability remains strong and leverage at the government, corporate and individual level remains manageable, presuming that interest rates do not accelerate meaningfully. Margins have contracted modestly, but remain at historically high levels which may bode well for reported earnings.

In aggregate, the potential for improving performance for both the economy and equities continues to outweigh the negatives, albeit less so than last year, and we continue to be favorably inclined toward the stock market, but vigilant regarding the risks inherent in the second longest bull market in history.

Information about the Company, including our investment objectives, operating policies and procedures, investment results, record of dividend and distribution payments, financial reports and press releases, is on our website and has been updated through March 31, 2018. It can be accessed on the internet at www.generalamericaninvestors.com.

By Order of the Board of Directors,

GENERAL AMERICAN INVESTORS COMPANY, INC.

Jeffrey W. Priest

President and Chief Executive Officer

April 18, 2018

---

 

---

 

---

 

ADR - American Depository Receipt (a) Non-income producing security.

(b) Security is held as collateral for options written.

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

(d) 7 day yield.

(e) At March 31, 2018, the cost of investments for Federal income tax purposes was $680,850,125; aggregate gross unrealized appreciation was
    $575,621,752; aggregate gross unrealized depreciation was $24,434,160; and net unrealized appreciation was $551,187,592.

 

(a) Common shares unless otherwise noted; excludes transactions in Common Stocks - Miscellaneous - Other.
(b) Shares purchased in prior period and previously carried under Common Stocks - Miscellaneous - Other.

(see notes to unaudited financial statements)

---

The diversification of the Company’s net assets applicable to its Common Stock by industry group as of March 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)

 

(see notes to unaudited financial statements)

5

---

 

(see notes to unaudited financial statements)

---

 

 

(see notes to unaudited financial statements)

 

 

---

The following table shows per share operating performance data, total investment return, ratios and supplemental data for the three months
ended March 31, 2018 and for each year in the five-year period ended December 31, 2017. This information has been derived from informa-
tion contained in the financial statements and market price data for the Company’s shares.

 

* Not annualized
** Annualized

(see notes to unaudited financial statements)

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 accompanying financial statements have been prepared in accordance with United States generally accepted accounting principles
(“U.S. GAAP”) pursuant to the requirements for reporting; Accounting Standards Codification 946, Financial Services - Investment
Companies (“ASC 946”), and Regulation S-X.

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income, expenses
and gains and losses during the reported period. Changes in the economic environment, financial markets, and any other parameters used
in determining these estimates could cause actual results to differ, and these differences could be material.

8

---

1. SIGNIFICANT ACCOUNTING POLICIES - (Continued from bottom of previous page.) .

a. SECURITY VALUATION Equity securities traded on a national securities exchange are valued at the last reported sales price on the
last business day of the period. Equity securities reported on the NASDAQ national market are valued at the official closing price on
that day. Listed and NASDAQ equity 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 (asked price for options written) on the valuation date. Equity securities traded primarily
in foreign markets are valued at the closing price of such securities on their respective exchanges or markets. Corporate debt securities,
domestic and foreign, are generally traded in the over-the-counter market rather than on a securities exchange. The Company utilizes
the latest bid prices provided by independent dealers and information with respect to transactions in such securities to determine cur-
rent market value. If, after the close of foreign markets, conditions change significantly, the price of certain foreign securities may
be adjusted to reflect fair value as of the time of the valuation of the portfolio. Investments in money market funds are valued at their
net asset value. Special holdings (restricted securities) and other securities for which quotations are not readily available are valued at
fair value determined in good faith pursuant to specific procedures appropriate to each security as established by and under the general
supervision of the Board of Directors. The determination of fair value involves subjective judgments. As a result, using fair value to
price a security may result in a price materially different from the price used by other investors or the price that may be realized upon
the actual sale of the security.

b. OPTIONS The Company may purchase and write (sell) put and call options. The Company purchases put options or writes call
options to hedge the value of portfolio investments while it purchases call options and writes put options to obtain equity market
exposure. The risk associated with purchasing an option is that the Company pays a premium whether or not the option is exercised.
Additionally, the Company bears the risk of loss of the premium and a change in market value should the counterparty not perform
under the contract. Put and call options purchased are accounted for in the same manner as portfolio securities. Premiums received
from writing options are reported as a liability on the Statement of Assets and Liabilities. Those that expire unexercised are treated
by the Company on the expiration date as realized gains on written option transactions in the Statement of Operations. The difference
between the premium received and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is
also treated as a realized gain, or, if the premium is less than the amount paid for the closing purchase transaction, as a realized loss on
written option transactions in the Statement of Operations. If a written call option is exercised, the premium is added to the proceeds
from the sale of the underlying security in determining whether the Company has realized a gain or loss on investments in the Statement
of Operations. If a written put option is exercised, the premium reduces the cost basis for the securities purchased by the Company and
is parenthetically disclosed under cost of investments on the Statement of Assets and Liabilities. The Company as writer of an option
bears the market risk of an unfavorable change in the price of the security underlying the written option. See Note 4 for option activity.

c. SECURITY TRANSACTIONS AND INVESTMENT INCOME Security transactions are recorded as of the trade date. Dividend income and
distributions to stockholders are recorded as of the ex-dividend dates. Interest income, adjusted for amortization of discount and pre-
mium on investments, is earned from settlement date and is recognized on the accrual basis. Cost of short-term investments represent
amortized cost.

d. FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the exchange rate of such currencies versus U.S. dollars on the date of valuation.
Purchases and sales of securities, income and expense items denominated in foreign currencies are translated into U.S. dollars at the
exchange rate in effect on the transaction date. Events may impact the availability or reliability of foreign exchange rates used to
convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using proce-
dures established and approved by the Company’s Board of Directors. The Company does not separately report the effect of changes
in foreign exchange rates from changes in market prices on securities held. Such changes are included in net realized and unrealized
gain or loss on the Statement of Operations.

Realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade
and settlement dates on securities transactions and the difference between the recorded amounts of dividends, interest, and foreign
withholding taxes and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and
losses arise from changes in foreign exchange rates on foreign denominated assets and liabilities other than investments in securities
held at the end of the reporting period.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S.
companies as a result of, among other factors, the possibility of political or economic instability or the level of governmental supervi-
sion and regulation of foreign securities markets.

e. DIVIDENDS AND DISTRIBUTIONS The Company expects to pay dividends of net investment income and distributions of net realized
capital and currency gains, if any, annually to common shareholders and quarterly to preferred shareholders. Dividends and distribu-
tions to common and preferred shareholders, which are determined in accordance with Federal income tax regulations are recorded on
the ex-dividend date. Permanent book/tax differences relating to income and gains are reclassified to paid-in capital as they arise.

f. 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. In accordance with U.S. GAAP requirements regarding accounting for uncertainties in income taxes, man-
agement has analyzed the Company’s tax positions taken or expected to be taken on Federal and state income tax returns for all open
tax years (the current and the prior three tax years) and has concluded that no provision for income tax is required in the Company’s
financial statements.

g. CONTINGENT LIABILITIES Amounts related to contingent liabilities are accrued if it is probable that a liability has been incurred and
an amount is reasonably estimable. Management evaluates whether there are incremental legal or other costs directly associated with
the ultimate resolution of a matter that are reasonably estimable and, if so, they are included in the accrual.

h. INDEMNIFICATIONS In the ordinary course of business, the Company enters into contracts that contain a variety of indemnifications.
The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses
pursuant to these indemnification provisions and expects the risk of loss thereunder to be remote.

2. FAIR VALUE MEASUREMENTS - Various data inputs are used in determining the value of the Company’s investments. These inputs are
summarized in a hierarchy consisting of the three broad levels listed below:

Level 1 - quoted prices in active markets for identical securities (including money market funds which are valued using amortized cost
and which transact at net asset value, typically $1.00 per share),

Level 2 - other significant observable inputs (including quoted prices for similar securities, interest rates, credit risk, etc.), and

Level 3 - significant unobservable inputs (including the Company’s own assumptions in determining the fair value of investments).

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those
securities. The following is a summary of the inputs used to value the Company’s net assets as of March 31, 2018:

---

2. FAIR VALUE MEASUREMENTS - (Continued from bottom of previous page.)

 

Transfers of Level 3 securities, if any, are reported as of the actual date of reclassification. No such transfers occurred during the three
months ended March 31, 2018.

3. PURCHASES AND SALES OF SECURITIES - Purchases and sales of securities (other than short-term securities and options) for the three
months ended March 31, 2018 amounted to $91,501,339 and $65,542,858, on long transactions, respectively.

4. OPTIONS - The level of activity in purchased and written options varies from year to year based upon market conditions. Transactions
in purchased calls and put options, as well as written covered call options and collateralized put options for the three months ended March
31, 2018 were as follows:

 

5. CAPITAL STOCK AND DIVIDEND DISTRIBUTIONS - The authorized capital stock of the Company consists of 50,000,000 shares of Common
Stock, $1.00 par value, and 10,000,000 shares of Preferred Stock, $1.00 par value. With respect to the Common Stock, 26,091,597 shares
were issued and outstanding; 8,000,000 Preferred Shares were originally issued and 7,604,687 were outstanding on March 31, 2018.
On September 24, 2003, the Company issued and sold 8,000,000 shares of its 5.95% Cumulative Preferred Stock, Series B in an under-
written offering. The Preferred Shares were noncallable for the 5 year period ended September 24, 2008 and have a liquidation preference
of $25.00 per share plus accumulated and unpaid dividends to the date of redemption. On December 10, 2008, the Board of Directors
authorized the repurchase of up to 1 million Preferred Shares in the open market at prices below $25.00 per share. This authorization has
been renewed annually thereafter. To date, 395,313 shares have been repurchased.

The Company allocates distributions from net capital gains and other types of income proportionately among holders of shares of
Common Stock and Preferred Stock. To the extent that dividends on the shares of Preferred Stock are not paid from net capital gains,
they will be paid from investment company taxable income or will represent a return of capital.

Under the Investment Company Act of 1940, the Company is required to maintain an asset coverage of at least 200% of the Preferred
Stock. In addition, pursuant to Moody’s Investor Service, Inc. Rating Agency Guidelines, the Company is required to maintain a certain
discounted asset coverage for its portfolio that equals or exceeds a Basic Maintenance Amount. If the Company fails to meet these
requirements in the future and does not cure such failure, the Company may be required to redeem, in whole or in part, shares of Preferred
Stock at a redemption price of $25.00 per share plus accumulated and unpaid dividends. In addition, failure to meet the foregoing asset
coverage requirements could restrict the Company’s ability to pay dividends on shares of Common Stock and could lead to sales of
portfolio securities at inopportune times.

The holders of Preferred Stock have voting rights equivalent to those of the holders of Common Stock (one vote per share) and, generally,
vote together with the holders of Common Stock as a single class.

Holders of Preferred Stock will elect two members to the Company’s Board of Directors and the holders of Preferred and Common Stock,
voting as a single class, will elect the remaining directors. If the Company fails to pay dividends on the Preferred Stock in an amount
equal to two full years’ dividends, the holders of Preferred Stock will have the right to elect a majority of the directors. In addition, the
Investment Company Act of 1940 requires that approval of the holders of a majority of any outstanding Preferred Shares, voting sepa-
rately as a class, would be required to (a) adopt any plan of reorganization that would adversely affect the Preferred Stock and (b) take
any action requiring a vote of security holders, including, among other things, changes in the Company’s subclassification as a closed-end
investment company or changes in its fundamental investment policies.

The Company presents its Preferred Stock, for which its redemption is outside of the Company’s control, outside of the net assets appli-
cable to Common Stock in the Statement of Assets and Liabilities.

Transactions in Common Stock during the three months ended March 31, 2018 and the year ended December 31, 2017 were as follows:

 

---

5. CAPITAL STOCK AND DIVIDEND DISTRIBUTIONS - (Continued from bottom of previous page.)

At March 31, 2018, the Company held in its treasury 5,889,275 shares of Common Stock with an aggregate cost of $193,274,105.

The tax basis distributions during the year ended December 31, 2017 are as follows: ordinary distributions of $17,329,407 and net capi-
tal gains distributions of $80,713,640. As of December 31, 2017, distributable earnings on a tax basis included $16,747,116 from undis-
tributed net capital gains and $580,692,277 from net unrealized appreciation on investments if realized in future years. Reclassifications
arising from permanent “book/tax” difference reflect non-tax deductible expenses during the year ended December 31, 2017. As a
result, additional paid-in capital was decreased by $1,517 and over-distributed net investment income was decreased by $1,517. As of
December 31, 2017, the Company had straddle loss deferrals of $131,762. Net assets were not affected by this reclassification.

6. OFFICERS’ COMPENSATION - The aggregate compensation accrued and paid by the Company during the three months ended March 31,
2018 to its officers (identified on back cover) amounted to $1,682,000.

7. BENEFIT PLANS - The Company has funded (qualified) and unfunded (supplemental) noncontributory defined benefit pension plans that
are available to its employees. The pension plans provide defined benefits based on years of service and final average salary with an offset
for a portion of social security covered compensation. The components of the net periodic benefit cost (income) of the plans for the three
months ended March 31, 2018 were:

 

The Company recognizes the overfunded status of its defined benefit postretirement plan as an asset in the Statement of Assets and
Liabilities and recognizes changes in funded status in the year in which the changes occur through other comprehensive income.
The Company also has funded (qualified) and unfunded (supplemental) defined contribution thrift plans that are available to its employees.
The aggregate cost of such plans for the three months ended March 31, 2018 was $212,369. The qualified thrift plan acquired 13,899
shares of the Company’s Common Stock during the three months ended March 31, 2018 and held 642,591 shares of the Company’s
Common Stock at March 31, 2018.

8. OPERATING LEASE COMMITMENT - In 2007, the Company entered into an operating lease agreement for office space which expired on
January 31,2018. The Company extended the lease for two months through March 31, 2018 at which time this leases concluded. Total
expense for this operating lease were approximately $180,600.

In 2017, the Company entered into a new operating lease agreement for office space which commenced on January 1, 2018 and will expire on
October 31, 2028 and provides for aggregate rental payments of approximately $6,437,500. The lease agreement contains clauses whereby
the Company will receive free rent for a specified number of months and credit towards construction of office improvements and incurs
escalations annually relating to operating costs and real property taxes and to annual rent charges beginning in 2023. The Company
has the option to extend the lease for an additional five years at market rates. Total expense for this operating lease was approximately
$148,600 through March 31, 2018. Minimum rental commitments (cash payments) under this operating lease are approximately:

2018: $104,000 (2 months)     2019 - 2022: $624,200 (per year)Thereafter: $3,836,500

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02,
Leases, which requires lessees to reassess if a contract is or contains lease agreements and assess the lease classification to determine if
they should recognize right-of-use asset and offsetting liability on the Statement of Assets and Liabilities that arises from entering into
a lease, including an operating lease. Existing U.S. GAAP does not require the lessee to record an asset and offsetting liability associ-
ated with an operating lease. Generally consistent with existing U.S. GAAP, the annual cost of an operating lease will continue to be
reflected as an expense in the Statements of Operations and Changes in Net Assets and disclosure of the terms of a lease will continue to
be reported in the footnotes to the financial statements. ASU 2016-02 is effective for financial statements issued for fiscal years beginning
after December 15, 2018, including interim periods within those fiscal years. Early application is permitted and the Company adopted
such accounting requirements in conjunction with the expiration of its prior operating lease and entrance into a new operating lease. The
above referenced right-of-use asset and offsetting liability is reported on the Statement of Assets and Liabilities of the Company in line
items entitled, “Present value of future office lease payments.” Since the operating lease does not specify an implicit rate, the right-of-use
asset and liability have been calculated using a discount rate of 3.0%, which is based upon high quality corporate interest rates for a term
equivalent to the lease period as of January 1, 2018.

Previous purchases of the Company’s Common and Preferred Stock are set forth in Note 5 on page 10. Prospective purchases of Common
and Preferred 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.

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 twelve-month period ended June 30, 2017 are available: (1) without charge, upon request, by calling us at
our toll-free telephone number (1-800-436-8401), (2) on the Company’s website at www.generalamericaninvestors.com and (3) on the
Securities and Exchange Commission’s website at www.sec.gov.

In addition to distributing financial statements as of the end of each quarter, General American Investors files a Quarterly Schedule of
Portfolio Holdings (Form N-Q) with the Securities and Exchange Commission (“SEC”) as of the end of the first and third calendar quar-
ters. The Company’s Forms N-Q are available at www.generalamericaninvestors.com and on the SEC’s website: www.sec.gov. Copies
of Forms N-Q may also be obtained and reviewed at the SEC’s Public Reference Room in Washington, DC or through the Company
by calling us at 1-800-436-8401. Information on the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-
SEC-0330.

On April 26, 2018, the Company submitted a CEO annual certification to the New York Stock Exchange (“NYSE”) on which the
Company’s principal executive officer certified that he was not aware, as of that date, of any violation by the Company of the NYSE’s
Corporate Governance listing standards. In addition, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and related SEC
rules, the Company’s principal executive and principal financial officer made quarterly certifications, included in filings with the SEC
on Forms N-CSR and N-Q relating to, among other things, the Company’s disclosure controls and procedures and internal control over
financial reporting, as applicable.

---

 

 

 

RESULTS OF THE ANNUAL MEETING
OF STOCKHOLDERS

---

The votes cast by stockholders at the Company’s annual meeting held
on April 18, 2018 were as follows:

 

Ratification of the selection of Ernst & Young LLP as auditors of the
Company for the year 2018:

For - 28,023,957; Against - 1,708,251; Abstain - 130,883