<PAGE> 1
American Capital Comstock Fund, Inc.
[Photo of 2 Women walking down stairs]
Annual Report
December 31, 1994
[LOGO]
This brochure includes a prospectus which describes in detail the Fund's
objectives, investment policies, risks, sales charges, fees and other matters
of interest. Please read the prospectus carefully before you invest or send
money.
<PAGE> 2
American Capital Comstock Fund Highlights
[Phot of Woman]
For investors seeking growth and income through a portfolio of common stocks.
American Capital's Quality Commitment
[Photo of 2 Dalbar Service Awards]
American Capital has been recognized for providing the highest quality service
in the mutual fund industry in 1994. For the second consecutive year, DALBAR
Surveys, Inc., an independent research firm in the mutual fund industry,
awarded American Capital its coveted crystal pyramid for ranking number one in
service. This ranking is based on evaluations by investment professionals
across the country.
American Capital also has received the DALBAR Quality Tested Service Seal for
outstanding customer service five years in a row.
Not a part of the Prospectus
<PAGE> 3
Shareholders' Message
February 1, 1995
[Photo of Don G. Powell]
Dear Shareholder,
For more than six decades, American Capital has helped investors achieve their
financial goals. As a shareholder, you know that American Capital's goal is to
provide you with consistent, competitive returns and outstanding customer
service. Those goals will remain unchanged as we embark on a new era as Van
Kampen American Capital.
In December, shareholders of American Capital funds approved new agreements
with the funds' manager that cleared the way for completion of the merger
between American Capital Management & Research, Inc., the company that owns
your Fund's manager, and The Van Kampen Merritt Companies, Inc. on December 20,
1994. While this merger will have no direct impact on your Fund shares, it will
create a stronger company that will be able to provide shareholders with a
broader range of investment options and nearly 100 years of combined investment
experience.
The strength and experience of Van Kampen American Capital is enhanced further
by the international and emerging markets expertise of John Govett & Co., Ltd.
Last fall, Van Kampen American Capital Distributors, Inc. (formerly American
Capital Marketing, Inc.) became the exclusive U.S. distributor of The Govett
Funds, Inc. This relationship will provide six additional fund options for Van
Kampen American Capital shareholders who want to add an international or global
component to their portfolios.
Although 1994 was a year of significant change for American Capital, one thing
has not changed: our belief in investing for the long term. The past year was
extremely challenging for both the stock and bond market, as concerns about
rising inflation prompted repeated increases in short-term interest rates that
made many investors nervous. While the markets did not perform as well in 1994
as in previous years, investing in a stock mutual fund still is the one of the
best ways to achieve long-term capital appreciation.
We will continue to communicate with you on a regular basis as we go
forward, providing information about both market conditions and new investment
opportunities. We appreciate your continued confidence in your Fund and Van
Kampen American Capital.
Sincerely,
/s/ DON G. POWELL
Don G. Powell
President
Not a part of the Prospectus 1
<PAGE> 4
Portfolio Perspective
_______________________________________________________________________
The following is an interview with the management team of American
Capital Comstock Fund. The team is led by portfolio manager B. Robert
Baker, Jr. and Alan T. Sachtleben, executive vice president for
equity investments
_______________________________________________________________________
Q. Interest rates increased steadily during 1994. How did this impact the
Fund's performance?
A. The Federal Reserve Board raised short-term interest rates six times
during the past year because it was concerned that the economy
was growing too rapidly and this would cause the inflation rate to
increase. Many investors believed higher interest rates would reduce
corporate earnings, so the stock market reacted negatively, which
impacted the performance of stocks and stock mutual funds.
Q. How did you react to the changing interest-rate environment?
A. As the year started, the Fund was more heavily invested in financial,
cyclical and, to a lesser extent, smaller capitalization stocks. These
types of stocks typically underperform when interest rates rise. So,
as the Fed began raising interest rates, we gradually sold many of the
financial, cyclical and small-cap issues in the portfolio. We focused
instead on the stocks of larger companies, particularly those that were
relatively inexpensive compared to their underlying value. We continued
to emphasize growth in earnings because that is what drives stock
prices.
We increased the Fund's holdings of health care and utility
stocks. The price of stocks in both industries had been depressed,
creating what we believe are many good values. Health care companies
suffered early in the year from concerns about the potential impact of
health care reform, which now appears less likely to occur. Utility
stocks came under pressure as interest rates rose and as regulators in
California took steps that gradually will deregulate parts of the
industry and, thus, increase com-petition among electric utilities. We
believe health care and utility stocks are undervalued and, therefore,
offer good potential for appreciation.
The Fund's largest long-term holding as of December 31, 1994 was
Exxon, which was a relatively cheap stock because of continuing concern
about the long-term impact of the Valdez oil spill on the company's
profitability. The Fund's diversification is illustrated by the chart
at left. For a complete list of the portfolio holdings at the end of
the reporting period, see the Investment Portfolio beginning on
page 8.
[INDUSTRY HOLDINGS CHART]
Not a part of the Prospectus 2
<PAGE> 5
[Photo of Woman and 2 Men at Computer Screens]
Q. How did the Fund perform during 1994?
A. Class A shares achieved a total return at net asset value (without a
sales charge) of -3.67%, including reinvestment of dividends
totalling $.3225 per share. Class B shares achieved a total return at
net asset value of -4.41%, including reinvestment of dividends
totalling $.1875 per share. Class C shares achieved a total return
at net asset value of -4.43%, including reinvestment of dividends
totalling $.1875 per share. All three classes of shares paid a
capital gains distribution of $3.0475 per share.
Q. How did stocks perform last year?
A. The Standard & Poor's 500-Stock Index, a broad-based, unmanaged
index that reflects general stock market performance achieved a total
return of 1.36% during 1994. Your Fund was more heavily invested in
small-cap stocks than was the S&P 500 during much of the year, which
impacted the Fund's performance relative to the Index. In addition, the
Index does not reflect any commission or fees that would be paid by an
investor purchasing the securities it represents.
Q. What is the outlook for the Fund for the next six months?
A. The economy appears to be growing at a moderate, non-inflation
inducing rate. Factory orders climbed 2.6% in November and the
Government's index of leading economic indicators increased 0.3% in
November, its largest gain since August. However, most observers still
expect the Fed to raise rates at least one more time in early 1995,
after which rates should stabilize. As this happens, stock valuations
probably will begin to increase as investors respond to generally
strong corporate earnings instead of concerns about interest rates. In
addition, new leaders in Congress have indicated they will push for
changes such as a cut in the capital gains tax that could provide a
further economic boost.
We think 1995 will be a difficult year, as 1994 was. But this is
the kind of market where careful stock selection can make a tremendous
difference, and we believe our investment approach will prove its value
during the months ahead.
/s/ ALAN T. SACHTLEBEN /s/ B.ROBERT BAKER, JR.
Alan T. Sachtleben B. Robert Baker, Jr.
Executive Vice President Portfolio Manager
Equity Investments
Not a part of the Prospectus 3
<PAGE> 6
American Capital Comstock Fund
Your Diversified Portfolio
Your investment in American Capital Comstock Fund makes you a part owner of a
diversified portfolio of stocks. Here's a list of the 10 largest holdings in
the portfolio as of December 31, 1994.
Top 10 Holdings
<TABLE>
<CAPTION>
% of Fund's
% of Fund's Net Assets
Net Assets 6 months ago
<S> <C> <C>
Exxon Corp. 3.12% N.A.
Major producer and supplier of energy
products worldwide.
WMX Technologies Inc. 2.34 N.A.
One of the country's largest providers
of waste management services.
AMR Corp. 2.02 N.A.
Parent company of American Airlines.
Philip Morris Companies, Inc. 1.93 0.60
Major producer and distributor of food
and tobacco products.
Federal National Mortgage Assoc. 1.63 1.43
Buys conventional and federally insured
mortgages from private lenders.
Walt Disney Company 1.60 0.36
Major entertainment company that owns
and operates amusement parks, movie
studios and retail outlets.
Sprint Corp. 1.49 0.92
One of the largest providers of long-
distance and telecommunications services.
Tenneco, Inc. 1.42 0.41
Diversified company with major operations
in the energy and shipbuilding industries.
BankAmerica Corp. 1.41 1.01
Major San Francisco-based bank holding
company, with operations nationwide.
Browning-Ferris Industries, Inc. 1.39 0.67
One of the country's largest waste management
and recycling companies.
</TABLE>
For a complete list of portfolio holdings, see the Investment Portfolio section
beginning on page 8.
Not a part of the Prospectus 4
<PAGE> 7
American Capital Comstock Fund
The American Capital Advantage
As a shareholder in an American Capital fund you have the option of
automatically investing your dividends and capital gains into most other
American Capital funds without a sales charge. This fund-to-fund privilege,
which can help you create a diversified portfolio, is just one of the many
shareholder services available to you at no charge.
[5 Dalbar Quality Tested Service Seals dated 1990 to 1995]
Van Kampen American Capital is extremely proud of its shareholder services, and
is committed to continuing to provide outstanding service. For the fifth
consecutive year, American Capital received the Quality Tested Service Seal
awarded by DALBAR Surveys, Inc., a well-respected independent research firm in
the mutual fund industry. American Capital was one of only five mutual fund
groups in the nation in 1994 to receive this prestigious award for consistent,
quality service, and one of only two fund groups to receive the award every
year since its inception. In addition, our shareholder services agent, ACCESS,
won the 1993 Missouri Quality Award. To experience our award-winning customer
service call 1-800-421-5666 between 7a.m. and 7p.m. Central time Monday through
Friday.
<TABLE>
<S> <C>
Service When You Want It To help meet the needs of busy shareholders,
American Capital offers 24-hour account
information through ACCESS PLUS, our automated
telephone service. Just call 1-800-847-2424 from
a Touch-Tone phone to check your account balance,
obtain current fund prices, exchange between funds
and more.
Variety of Distribution Options Dividends from net investment income for American
Capital Comstock Fund are paid quarterly and capital
gains, if any, are distributed at least annually. You
may automatically reinvest these distributions into
additional shares to build your account value, take them
in cash, or have them automatically invested into any other
American Capital fund.
Low Subsequent Investments You can make additional investments in American Capital
Comstock Fund for as little as $25.
Automatic Investment Plan An automatic investment plan can help you carry out a
disciplined financial plan by allowing you to invest regularly
into your mutual fund account through automatic deductions from
your personal bank account. With our Step Up option, you also
can increase your investment amount on a pre-established schedule.
</TABLE>
Not a part of the Prospectus 5
<PAGE> 8
American Capital Comstock Fund
American Capital Comstock Fund:
Growth for the Long-Term Investor
Average Annual Total Returns as of 12/31/94
<TABLE>
<CAPTION>
<S> <C> <C>
Class A Shares (Based on maximum sales charge of 5.75%)
- -------------------------------------------------------------------------------------------
1 Year: -9.21% 10 Years: 10.68%
5 Years: 6.12% Inception: 10.90%
(10/7/68)
- -------------------------------------------------------------------------------------------
<CAPTION>
Class B Shares Total Return If withdrawn early*
- -------------------------------------------------------------------------------------------
<S> <C> <C>
1 Year -4.41% -8.20%
Inception (10/19/92) 4.06% 3.14%
- -------------------------------------------------------------------------------------------
</TABLE>
*Early withdrawal figures are adjusted for the applicable contingent
deferred sales charge (maximum 5%).
<TABLE>
<CAPTION>
Class C Shares Total Return If withdrawn early*
- -------------------------------------------------------------------------------------------
<S> <C> <C>
1 Year -4.43% -5.19%
Inception (10/26/93) -2.86% -2.86%
</TABLE>
*Early withdrawal figures are adjusted for the applicable contingent
deferred sales charge (maximum 1%).
Figures quoted on the chart at right represent past performance based on
$10,000 investment in Class A shares made on November 7, 1968, using the
applicable sales charge of 5.75%. Past performance is not indicative of future
performance.
All figures include reinvestment of all dividends, and capital gains
distributions. Investment results prior to 10/1/89 do not reflect the effect of
fees currently paid pursuant to a plan of distribution which went into effect
9/29/89. No adjustments have been made to reflect any income taxes payable by a
shareholder. Investment return and net asset value of an investment will
fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost. While the period covered was, on the whole, one
of generally rising common stock prices, it may have included interim periods
of substantial market decline.
Not a part of the Prospectus 6
<PAGE> 9
[Graph indicating Total Value of Investment. Graph starts on bottom of Page 6
and ends on Page 7, taking up most of the page.]
Not a part of the Prospectus 7
<PAGE> 10
Investment Portfolio
December 31, 1994
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Number of Market
Shares Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock 95.5%
CONSUMER DISTRIBUTION 6.0%
100,000 American Stores Co. ................................................. $ 2,687,500
60,000 Circuit City Stores, Inc. ........................................... 1,335,000
86,600 Dayton Hudson Corp. ................................................. 6,126,950
80,000 Dillard Department Stores, Inc. ..................................... 2,140,000
*140,000 Federated Department Stores, Inc. ................................... 2,695,000
90,000 Gap, Inc. ........................................................... 2,745,000
150,000 Limited, Inc. ....................................................... 2,718,750
80,000 May Department Stores Co. ........................................... 2,700,000
88,000 Penney (J.C.), Inc. ................................................. 3,927,000
100,000 Premark International Inc. .......................................... 4,475,000
170,000 Sears Roebuck & Co. ................................................. 7,820,000
110,000 Sysco Corp. ......................................................... 2,832,500
*90,000 Toys R Us, Inc. ..................................................... 2,745,000
400,000 Wal-Mart Stores, Inc. ............................................... 8,500,000
--------------
Total Consumer Distribution ...................................... 53,447,700
--------------
CONSUMER DURABLES 4.2%
70,000 Armstrong World Industries, Inc. .................................... 2,695,000
120,000 Black & Decker Corp. ................................................ 2,850,000
200,000 Brunswick Corp. ..................................................... 3,775,000
100,000 Eastman Kodak Co. ................................................... 4,775,000
80,000 Eaton Corp. ......................................................... 3,960,000
125,000 Echlin, Inc. ........................................................ 3,750,000
130,000 Ford Motor Co. ...................................................... 3,640,000
220,000 General Motors Corp. ................................................ 9,295,000
80,000 Leggett & Platt, Inc. ............................................... 2,800,000
--------------
Total Consumer Durables ......................................... 37,540,000
--------------
CONSUMER NON-DURABLES 7.5%
135,000 Anheuser-Busch Companies, Inc. ...................................... 6,868,125
150,000 Archer Daniels Midland Co. .......................................... 3,093,750
80,000 Clorox Co. .......................................................... 4,710,000
*210,000 Dr Pepper/Seven-Up Companies, Inc. .................................. 5,381,250
180,000 PepsiCo, Inc. ....................................................... 6,525,000
300,000 Pet, Inc. ........................................................... 5,925,000
300,000 Philip Morris Companies, Inc. ....................................... 17,250,000
80,000 Procter & Gamble Co. ................................................ 4,960,000
200,000 Quaker Oats Co. ..................................................... 6,150,000
175,000 Sara Lee Corp. ...................................................... 4,418,750
100,000 U.S. Shoe Corp. ..................................................... 1,875,000
--------------
Total Consumer Non-Durables ...................................... 67,156,875
--------------
CONSUMER SERVICES 6.1%
72,000 Belo (A.H.) Corp. ................................................... 4,068,000
310,000 Disney (Walt) Co. ................................................... 14,298,750
60,000 Donnelley (R. R.) & Sons Co. ........................................ 1,770,000
170,000 Dun & Bradstreet Corp. .............................................. 9,350,000
160,000 Marriott International, Inc. ........................................ 4,500,000
60,000 McDonald's Corp. .................................................... 1,755,000
</TABLE>
Not a part of the Prospectus 8
<PAGE> 11
Investment Portfolio, continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Number of Market
Shares Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Consumer Services-continued
26,000 McGraw-Hill, Inc. ................................................... $ 1,738,750
200,000 New York Times Co., Class A ......................................... 4,425,000
*140,000 Promus Companies, Inc. .............................................. 4,340,000
51,000 Time Warner, Inc. ................................................... 1,791,375
125,000 Tribune Co. ......................................................... 6,843,750
--------------
Total Consumer Services .......................................... 54,880,625
--------------
ENERGY 11.0%
160,000 Ashland Oil, Inc. ................................................... 5,520,000
45,000 Atlantic Richfield Co. .............................................. 4,578,750
150,000 Baker Hughes, Inc. .................................................. 2,737,500
80,000 Chevron Corp. ....................................................... 3,570,000
350,000 Coastal Corp. ....................................................... 9,012,500
200,000 Consolidated Natural Gas Co. ........................................ 7,100,000
460,000 Exxon Corp. ......................................................... 27,945,000
180,000 Halliburton Co. ..................................................... 5,962,500
150,000 Occidental Petroleum Corp. .......................................... 2,887,500
520,400 Pacific Enterprises ................................................. 11,058,500
225,000 Panhandle Eastern Corp. ............................................. 4,443,750
150,000 Repsol, S.A., ADR ................................................... 4,087,500
80,000 Schlumberger, Ltd. .................................................. 4,030,000
90,000 Texaco, Inc. ........................................................ 5,388,750
--------------
Total Energy ..................................................... 98,322,250
--------------
FINANCE 11.8%
175,000 Ahmanson (H.F.) & Co. ............................................... 2,821,875
75,000 Allstate Corp. ...................................................... 1,771,875
64,000 American General Corp. .............................................. 1,808,000
72,000 American International Group, Inc. .................................. 7,056,000
320,000 BankAmerica Corp. ................................................... 12,640,000
330,000 Chase Manhattan Corp. ............................................... 11,343,750
250,000 Chemical Banking Corp. .............................................. 8,968,750
32,000 Chubb Corp. ......................................................... 2,476,000
68,000 CoreStates Financial Corp. .......................................... 1,768,000
60,000 Crestar Financial Corp. ............................................. 2,257,500
150,000 Dean Witter, Discover & Co. ......................................... 5,081,250
200,000 Federal National Mortgage Association ............................... 14,575,000
40,000 First Interstate Bancorp. ........................................... 2,705,000
36,000 Marsh & McLennan Companies, Inc. .................................... 2,853,000
68,000 Midlantic Corp. ..................................................... 1,802,000
240,000 NationsBank Corp. ................................................... 10,830,000
80,000 NWNL Co., Inc. ...................................................... 2,320,000
150,000 Providian Corp. ..................................................... 4,631,250
100,000 St. Paul Companies, Inc. ............................................ 4,475,000
65,000 Transamerica Corp. .................................................. 3,233,750
--------------
Total Finance .................................................... 105,418,000
--------------
</TABLE>
Not a part of the Prospectus 9
<PAGE> 12
Investment Portfolio, continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Number of Market
Shares Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
HEALTH CARE 9.0%
90,000 Abbott Laboratories ................................................. $ 2,936,250
*70,000 Amgen, Inc. ......................................................... 4,130,000
340,000 Baxter International, Inc. .......................................... 9,605,000
120,000 Bristol-Myers Squibb Co. ............................................ 6,945,000
140,000 Columbia/HCA Healthcare Corp. ....................................... 5,110,000
80,000 Lilly (Eli) & Co. ................................................... 5,250,000
150,000 Mallinckrodt Group, Inc. ............................................ 4,481,250
170,000 Merck & Co., Inc. ................................................... 6,481,250
*75,000 Nellcor, Inc. ....................................................... 2,475,000
70,000 Pfizer, Inc. ........................................................ 5,407,500
130,000 Schering-Plough Corp. ............................................... 9,620,000
330,000 Upjohn Co. .......................................................... 10,147,500
100,000 Warner Lambert Co. .................................................. 7,700,000
--------------
Total Health Care ................................................ 80,288,750
--------------
PRODUCER MANUFACTURING 9.5%
440,000 Browning-Ferris Industries, Inc. .................................... 12,485,000
50,000 Caterpillar, Inc. ................................................... 2,756,250
44,000 Emerson Electric Co. ................................................ 2,750,000
160,000 General Electric Co. ................................................ 8,160,000
325,000 Hanson, PLC, ADR .................................................... 5,850,000
75,000 ITT Corp. ........................................................... 6,646,875
68,000 Minnesota Mining & Manufacturing Co. ................................ 3,629,500
150,000 Philip N.V., ADR .................................................... 4,406,250
300,000 Tenneco, Inc. ....................................................... 12,750,000
*74,000 Varity Corp. ........................................................ 2,682,500
200,000 Westinghouse Electric Corp. ......................................... 2,450,000
800,000 WMX Technologies, Inc. .............................................. 21,000,000
--------------
Total Producer Manufacturing ..................................... 85,566,375
--------------
RAW MATERIALS/PROCESSING INDUSTRIES 7.2%
20,000 Aluminum Co. of America ............................................. 1,732,500
200,000 American Barrick Resources Corp. .................................... 4,450,000
*100,000 Bethlehem Steel Corp. ............................................... 1,800,000
65,000 Consolidated Papers, Inc. ........................................... 2,925,000
*155,000 Crown Cork & Seal Co., Inc. ......................................... 5,851,250
100,000 DuPont (E.I.) de Nemours & Co., Inc. ................................ 5,625,000
203,600 Ethyl Corp. ......................................................... 1,959,650
36,000 Hercules, Inc. ...................................................... 4,153,500
45,000 International Paper Co. ............................................. 3,391,875
120,000 Lubrizol Corp. ...................................................... 4,065,000
100,000 Mead Corp. .......................................................... 4,862,500
34,000 Monsanto Co. ........................................................ 2,397,000
160,000 Newmont Mining Corp. ................................................ 5,760,000
200,000 Praxair, Inc. ....................................................... 4,100,000
170,000 Sherwin Williams Co. ................................................ 5,631,250
50,000 USX/US Steel Group .................................................. 1,775,000
47,000 Weyerhauser Co. ..................................................... 1,762,500
50,000 Willamette Industries, Inc. ......................................... 2,375,000
--------------
Total Raw Materials/Processing Industries ........................ 64,617,025
--------------
</TABLE>
Not a part of the Prospectus 10
<PAGE> 13
Investment Portfolio, continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Number of Market
Shares Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY 6.3%
70,000 Apple Computer, Inc. ................................................ $ 2,730,000
95,700 Avnet, Inc. ......................................................... 3,540,900
125,000 Boeing Co. .......................................................... 5,843,750
60,000 Computer Associates International, Inc. ............................. 2,910,000
28,000 Hewlett-Packard Co. ................................................. 2,796,500
50,000 Intel Corp. ......................................................... 3,193,750
150,000 International Business Machines Corp. ............................... 11,025,000
80,000 Loral Corp. ......................................................... 3,030,000
180,000 Rockwell International Corp. ........................................ 6,435,000
*220,000 Stratus Computer, Inc. .............................................. 8,360,000
*100,000 Sun Microsystems, Inc. .............................................. 3,550,000
40,000 Texas Instruments, Inc. ............................................. 2,995,000
--------------
Total Technology ................................................. 56,409,900
--------------
TRANSPORTATION 3.5%
*340,000 AMR Corp. ........................................................... 18,105,000
*150,000 Federal Express Corp. ............................................... 9,037,500
150,000 Illinois Central Corp. .............................................. 4,612,500
--------------
Total Transportation ............................................. 31,755,000
--------------
UTILITIES 13.4%
56,000 American Electric Power, Inc. ....................................... 1,841,000
120,000 Ameritech Corp. ..................................................... 4,845,000
125,000 AT&T Corp. .......................................................... 6,281,250
137,000 Baltimore Gas & Electric Co. ........................................ 3,031,125
90,000 Bell Atlantic Corp. ................................................. 4,477,500
120,000 Bellsouth Corp. ..................................................... 6,495,000
125,000 Boston Edison Co. ................................................... 2,984,375
100,000 Carolina Power & Light Co. .......................................... 2,662,500
100,000 Centerior Energy Corp. .............................................. 887,500
34,000 Cipsco, Inc. ........................................................ 918,000
32,000 Florida Progress Corp. .............................................. 960,000
150,000 FPL Group, Inc. ..................................................... 5,268,750
225,000 GTE Corp. ........................................................... 6,834,375
30,000 Houston Industries, Inc. ............................................ 1,068,750
40,000 Idaho Power Co. ..................................................... 940,000
110,000 Illinova Corp. ...................................................... 2,392,500
30,000 Ipalco Enterprises, Inc. ............................................ 900,000
45,000 Nevada Power Co. .................................................... 916,875
174,000 Nipsco Industries, Inc. ............................................. 5,176,500
180,000 Nynex Corp. ......................................................... 6,615,000
150,000 Ohio Edison Co. ..................................................... 2,775,000
100,000 Pacificorp .......................................................... 1,812,500
160,000 Pacific Telesis Group ............................................... 4,560,000
200,000 PECO Energy Co. ..................................................... 4,900,000
67,000 Public Service Company of Colorado .................................. 1,968,125
*72,000 Public Service Company of New Mexico ................................ 936,000
</TABLE>
Not a part of the Prospectus 11
<PAGE> 14
Investment Portfolio, continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Number of Market
Shares Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Utilities-continued
275,000 Public Service Enterprise Group ..................................... $ 7,287,500
45,000 Puget Sound Power & Light Co. ....................................... 905,625
45,000 San Diego Gas & Electric Co. ........................................ 866,250
400,000 Southern Co. ........................................................ 8,000,000
34,000 Southwestern Public Service Co. ..................................... 901,000
484,300 Sprint Corp. ........................................................ 13,378,787
180,000 U.S. West, Inc. ..................................................... 6,412,500
--------------
Total Utilities .................................................. 120,199,287
--------------
Total Common Stock (Cost $859,667,847) ........................... 855,601,787
--------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Short-Term Investments 8.7%
- --------------
<S> <C>
$ 18,000,000 Federal National Mortgage Association, 5.85%, 2/8/95 ................ 17,886,900
40,000,000 General Electric Capital Corp., 5.30%, 1/3/95 ....................... 39,981,667
17,745,000 Repurchase Agreement with Lehman Government Securities, Inc.,
dated 12/30/94, 5.35%, due 1/3/95 (collateralized by
U.S. Government obligations in a pooled cash account)
repurchase proceeds $17,755,548 ................................... 17,745,000
2,000,000 United States Treasury Bills, 5.37%, 3/9/95 ......................... 1,979,380
------------
Total Short-Term Investments (Cost $77,593,506) ................... 77,592,947
------------
TOTAL INVESTMENTS (Cost $937,261,353) 104.2% ........................ 933,194,734
Other assets and liabilities, net (4.2%) ............................ (37,275,163)
------------
NET ASSETS 100% ..................................................... $895,919,571
============
</TABLE>
*Non-income producing security.
See Notes to Financial Statements.
Not a part of the Prospectus 12
<PAGE> 15
Statement of Assets and Liabilities
December 31, 1994
<TABLE>
<S> <C>
ASSETS
Investments, at market value (Cost $937,261,353) .......................................... $933,194,734
Cash ...................................................................................... 24,364
Receivable for investments sold ........................................................... 31,051,805
Receivable for Fund shares sold ........................................................... 5,043,628
Dividends and interest receivable ......................................................... 2,348,581
Other assets .............................................................................. 24,125
------------
Total Assets ............................................................................ 971,687,237
------------
LIABILITIES
Payable for investments purchased ......................................................... 65,370,041
Dividends payable ......................................................................... 6,245,016
Payable for Fund shares redeemed .......................................................... 2,923,090
Due to Distributor ........................................................................ 446,229
Due to Adviser ............................................................................ 368,378
Due to shareholder service agent .......................................................... 222,600
Accrued expenses .......................................................................... 148,212
Due to broker-variation margin ............................................................ 44,100
------------
Total Liabilities ....................................................................... 75,767,666
------------
Net Assets, equivalent to $12.40 per share for Class A shares and $12.42
per share for Class B shares and $12.41 per share for Class C shares .................... $895,919,571
============
NET ASSETS WERE COMPRISED OF:
Capital stock, at par; 70,310,407 Class A, 1,769,036 Class B and 186,551
Class C shares outstanding .............................................................. $ 722,660
Capital surplus ........................................................................... 878,855,535
Undistributed net realized gain on securities ............................................. 19,436,251
Net unrealized depreciation of securities ................................................. (4,066,619)
Undistributed net investment income ....................................................... 971,744
------------
NET ASSETS at December 31, 1994 ........................................................... $895,919,571
============
</TABLE>
See Notes to Financial Statements.
Not a part of the Prospectus 13
<PAGE> 16
Statement of Operations
Year Ended December 31, 1994
<TABLE>
<S> <C>
Investment Income
Dividends ................................................................................. $ 25,622,556
Interest ................................................................................. 2,062,518
------------
Investment income ....................................................................... 27,685,074
------------
Expenses
Management fees ........................................................................... 4,707,089
Shareholder service agent's fees and expenses ............................................. 2,524,748
Service fees-Class A ...................................................................... 1,665,854
Distribution and service fees-Class B ..................................................... 188,376
Distribution and service fees-Class C ..................................................... 16,789
Accounting services ....................................................................... 141,161
Reports to shareholders ................................................................... 133,693
Registration and filing fees .............................................................. 121,339
Audit fees ................................................................................ 37,653
Custodian fees ............................................................................ 35,924
Directors' fees and expenses .............................................................. 30,800
Legal fees ................................................................................ 11,190
Miscellaneous ............................................................................. 68,766
------------
Total expenses .......................................................................... 9,683,382
------------
Net investment income ................................................................... 18,001,692
------------
Realized and Unrealized Gain (Loss) on Securities
Net realized gain on securities
Investments ............................................................................. 189,664,994
Futures contracts ....................................................................... 131,745
Net unrealized depreciation of securities during the year
Investments ............................................................................. (242,613,707)
Futures contracts ....................................................................... (126,069)
------------
Net realized and unrealized loss on securities .......................................... (52,943,037)
------------
Decrease in net assets resulting from operations ........................................ $(34,941,345)
============
</TABLE>
See Notes to Financial Statements.
Not a part of the Prospectus 14
<PAGE> 17
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended December 31
-----------------------------------------
1994 1993
------------ ------------
<S> <C> <C>
NET ASSETS, beginning of year ............................................... $994,910,318 $959,843,568
------------ ------------
Operations
Net investment income .................................................... 18,001,692 17,675,995
Net realized gain on securities ........................................... 189,796,739 109,366,007
Net unrealized depreciation of securities during the year ................. (242,739,776) (42,586,055)
------------ ------------
Increase (decrease) in net assets resulting from operations ............. (34,941,345) 84,455,947
------------ ------------
Dividends and distributions to shareholders from
Net investment income .....................................................
Class A ................................................................. (18,545,606) (16,159,769)
Class B ................................................................. (238,732) (75,681)
Class C ................................................................. (23,465) (1,295)
------------ ------------
(18,807,803) (16,236,745)
------------ ------------
Net realized gain on securities
Class A ................................................................. (174,099,107) (113,716,090)
Class B ................................................................. (4,195,711) (1,419,775)
Class C ................................................................. (441,419) (37,193)
------------ ------------
(178,736,237) (115,173,058)
------------ ------------
Total dividends and distributions ..................................... (197,544,040) (131,409,803)
------------ ------------
Fund share transactions
Proceeds from shares sold
Class A ................................................................. 97,825,457 109,489,318
Class B ................................................................. 12,817,155 16,950,978
Class C ................................................................. 2,206,502 526,205
------------ ------------
112,849,114 126,966,501
------------ ------------
Proceeds from shares issued for dividends and distributions
reinvested
Class A ................................................................. 176,744,344 118,227,206
Class B ................................................................. 4,113,202 1,386,777
Class C ................................................................. 443,048 38,488
------------ ------------
181,300,594 119,652,471
------------ ------------
Cost of shares redeemed
Class A ................................................................. (156,755,958) (160,217,172)
Class B ................................................................. (3,588,713) (4,381,194)
Class C ................................................................. (310,399) --
------------ ------------
(160,655,070) (164,598,366)
------------ ------------
Increase in net assets from share transactions .............................. 133,494,638 82,020,606
------------ ------------
Increase (decrease) in Net Assets ........................................... (98,990,747) 35,066,750
------------ ------------
NET ASSETS, end of year ..................................................... $895,919,571 $994,910,318
============ ============
</TABLE>
See Notes to Financial Statements
Not a part of the Prospectus 15
<PAGE> 18
Notes to Financial Statements
Note 1-Significant Accounting Policies
American Capital Comstock Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The following is a summary of significant
accounting policies consistently followed by the Fund in the preparation of its
financial statements.
A. Investment Valuations
Investments listed or traded on a national securities exchange are valued at
the last sale price. Unlisted securities and listed securities for which the
last sale price is not available are valued at the mean between the last
reported bid and asked price.
Short-term investments with a maturity of 60 days or less when purchased
are valued at amortized cost, which approximates market value. Short-term
investments with a maturity of more than 60 days when purchased are valued
based on market quotations until the remaining days to maturity becomes less
than 61 days. From such time, until maturity, the investments are valued at
amortized cost.
B. Futures Contracts
Transactions in futures contracts are utilized in strategies to manage
the market risk of the Fund's investments. The purchase of a futures
contract increases the impact of changes in the market price of investments
on net asset value. There is a risk that the market movement of such
instruments may not be in the direction forecasted.
Upon entering into futures contracts, the Fund maintains, in a
segregated account with its custodian, securities with a value equal to its
obligation under the futures contracts. A portion of these funds is held as
collateral in an account in the name of the broker, the Fund's agent in
acquiring the futures position. During the period the futures contract is
open, changes in the value of the contract ("variation margin") are
recognized by marking the contract to market on a daily basis. As unrealized
gains or losses are incurred, variation margin payments are received from or
made to the broker. Upon the closing or cash settlement of a contract, gains
and losses are realized. The cost of securities acquired through delivery
under a contract is adjusted by the unrealized gain or loss on the contract.
C. Repurchase Agreements
A repurchase agreement is a short-term investment in which a Fund
acquires ownership of a debt security and the seller agrees to repurchase
the security at a future time and specified price. The Fund may invest
independently in repurchase agreements, or transfer uninvested cash balances
into a pooled cash account along with other investment companies advised or
subadvised by Van Kampen American Capital Asset Management, Inc. (the
"Adviser"), the daily aggregate of which is invested in repurchase
agreements. Repurchase agreements are collateralized by the underlying debt
securities. The Fund will make payment for such securities only upon
physical delivery or evidence of book entry transfer to the account of the
custodian bank. The seller is required to maintain the value of the
underlying security at not less than the repurchase proceeds due the Fund.
D. Federal Income Taxes
No provision for federal income taxes is required because the Fund has
elected to be taxed as a "regulated investment company" under the Internal
Revenue Code and intends to maintain this qualification by annually
distributing all of its taxable net investment income and taxable net
realized gains to its shareholders.
Not a part of the Prospectus 16
<PAGE> 19
E. Investment Transactions and Related Investment Income
Investment transactions are accounted for on the trade date. Realized
gains and losses on investments are determined on the basis of identified
cost. Dividend income is recorded on the ex-dividend date. Interest income
is accrued daily.
F. Dividends and Distributions
Dividends and distributions to shareholders are recorded on the record
date. The Fund distributes tax basis earnings in accordance with the minimum
distribution requirements of the Internal Revenue Code, which may differ
from generally accepted accounting principles. Such dividends or
distributions may exceed financial statement earnings.
G. Debt Discount and Premium
For financial reporting purposes, debt discounts and premiums are
accounted for on the same basis as is followed for federal income tax
reporting. Accordingly, original issue discounts on debt securities
purchased are amortized over the life of the security. Premiums on debt
securities are not amortized. Market discounts are recognized at the time
of sale as realized gains for book purposes and as ordinary income for tax
purposes.
Note 2-Management Fees and Other Transactions with Affiliates
The Adviser serves as investment manager of the Fund. Management fees are paid
monthly, based on the average daily net assets of the Fund at an annual rate of
.50% of the first $1 billion, .45% of the next $1 billion, .40% of the next $1
billion, and .35% of the amount in excess of $3 billion.
Accounting services include the salaries and overhead expenses of the Fund's
Treasurer and the personnel operating under his direction. Charges are
allocated among all investment companies advised or sub advised by the Adviser.
For the year ended December 31, 1994, these charges included $17,574 as the
Fund's share of the employee costs attributable to the Fund's accounting
officers. A portion of the accounting services expense was paid to the Adviser
in reimbursement of personnel, facilities and equipment costs attributable to
the provision of accounting services to the Fund. The services provided by the
Adviser are at cost.
Van Kampen American Capital Shareholder Services, Inc., an affiliate of the
Adviser, serves as the Fund's shareholder service agent. These services are
provided at cost plus a profit. For the year ended December 31, 1994, such fees
aggregated $2,187,536.
The Fund has been advised that Van Kampen American Capital Distributors, Inc.
(the "Distributor") and Advantage Capital Corporation (the "Retail Dealer"),
both affiliates of the Adviser, received $119,806 and $63,696, respectively, as
their portion of the commissions charged on sales of Fund shares during the
year.
During the year, the Fund paid brokerage commissions of $369,315, to companies
which are deemed affiliates of the Adviser's parent because it owns more than
5% of the companies' outstanding voting securities.
Under the Distribution Plans, the Fund pays up to .25% per annum of its average
daily net assets to the Distributor for expenses and service fees incurred.
Class B shares and Class C shares pay an additional fee of up to .75% per annum
of their average net assets to reimburse the Distributor for its distribution
expenses. Actual distribution expenses incurred by the Distributor for Class B
shares and Class C shares may exceed the amounts reimbursed to the Distributor
by the Fund. At December 31, 1994, the unreimbursed expenses incurred by the
Distributor under the Class B plan and Class C plan aggregated approximately
$943,000 and $33,000, respectively, and may be carried forward and reimbursed
through either the collection of the contingent deferred sales charges from
share redemptions or, subject to the annual renewal of the plans, future Fund
reimbursements of distribution fees.
Not a part of the Prospectus 17
<PAGE> 20
Legal fees were for services rendered by O'Melveny & Myers, counsel for the
Fund. Lawrence J. Sheehan, of counsel to that firm, is a director of the Fund.
Certain officers and directors of the Fund are officers and directors of the
Adviser, the Distributor, the Retail Dealer and the shareholder service agent.
Note 3-Investment Activity
During the year, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $1,226,029,732 and $1,262,282,747,
respectively.
For federal income tax purposes, the identified cost of investments owned at
December 31, 1994, was $938,925,194. Net unrealized depreciation of investments
aggregated $5,730,460, gross unrealized appreciation of investments aggregated
$38,043,148, and gross unrealized depreciation of investments aggregated
$43,773,608.
Note 4-Director Compensation
Fund directors who are not affiliated with the Adviser are compensated by the
Fund at the annual rate of $2,190 plus a fee of $55 per day for Board and
Committee meetings attended. The Chairman receives additional fees from the
Fund at the annual rate of $820. During the year, such fees aggregated $26,425.
The directors may participate in a voluntary Deferred Compensation Plan (the
"Plan"). The Plan is not funded, and obligations under the Plan will be paid
solely out of the Fund's general accounts. The Fund will not reserve or set
aside funds for the payment of its obligations under the Plan by any form of
trust or escrow. At December 31, 1994, the liability for the Plan aggregated
$85,097. Each director covered under the Plan elects to be credited with an
earnings component on amounts deferred equal to the income earned by the Fund
on its short-term investments or equal to the total return of the Fund.
Note 5-Capital
The Fund offers three classes of shares at their respective net asset values
per share, plus a sales charge which is imposed either at the time of purchase
(the Class A shares) or at the time of redemption on a contingent deferred
basis (the Class B shares and Class C shares). All classes of shares have the
same rights, except that Class B shares and Class C shares bear the cost of
distribution fees and certain other class specific expenses. Realized and
unrealized gains or losses, investment income and expenses (other than class
specific expenses) are allocated daily to each class of shares based upon the
relative proportion of net assets of each class. Class B shares and Class C
shares automatically convert to Class A shares six years and ten years after
purchase, respectively, subject to certain conditions.
Not a part of the Prospectus 18
<PAGE> 21
The Fund has 200 million shares of each class of $.01 par value of capital
stock authorized. Transactions in shares of capital stock were as follows:
<TABLE>
<CAPTION>
Year Ended December 31
-----------------------------------
1994 1993
------------ -------------
<S> <C> <C>
Shares sold
Class A .................................................. 6,288,477 6,312,155
Class B .................................................. 816,632 963,086
Class C .................................................. 138,497 30,153
------------ -----------
7,243,606 7,305,394
----------- -----------
Shares issued for dividends and distributions reinvested
Class A .................................................. 14,045,849 7,236,696
Class B .................................................. 330,049 85,979
Class C .................................................. 35,656 2,397
----------- -----------
14,411,554 7,325,072
----------- -----------
Shares redeemed
Class A .................................................. (9,862,202) (9,149,776)
Class B .................................................. (227,469) (248,942)
Class C .................................................. (20,152) --
----------- -----------
(10,109,823) (9,398,718)
----------- -----------
Increase in shares outstanding ......................... 11,545,337 5,231,748
=========== ===========
</TABLE>
Note a part of the Prospectus 19
<PAGE> 22
Financial Highlights
Selected data for a share of capital stock outstanding throughout each of the
periods indicated.
<TABLE>
<CAPTION>
Class A
------------------------------------------------------
Year Ended December 31
------------------------------------------------------
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
Net asset value, beginning of year ......................... $16.38 $17.30 $17.52 $14.29 $15.29
-------- -------- -------- ------- --------
Income from investment
operations
Investment income .......................................... .47 .49 .48 .535 .59
Expenses ................................................... (.16) (.17) (.15) (.14) (.12)
-------- -------- -------- ------- --------
Net investment income ...................................... .31 .32 .33 .395 .47
Net realized and unrealized gains
or losses on securities .................................. (.92) 1.18 .795 4.065 (.9875)
-------- -------- -------- ------- --------
Total from investment operations ........................... (.61) 1.50 1.125 4.46 (.5175)
-------- -------- -------- ------- --------
Less Distributions
Dividends from net investment income ....................... (.3225) (.2975) (.3275) (.395) (.475)
Distributions from net realized
gains on securities ...................................... (3.0475) (2.1225) (1.0175) (.835) (.0075)
-------- -------- -------- ------- --------
Total distributions ........................................ (3.37) (2.42) (1.345) (1.23) (.4825)
-------- -------- -------- ------- --------
Net asset value, end of year ............................... $12.40 $16.38 $17.30 $17.52 $14.29
======== ======== ======== ======= ========
TOTAL RETURN(1) ............................................ (3.67%) 9.09% 6.53% 31.96% (3.36%)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (millions) ......................... $871.6 $980.4 $959.0 $986.2 $812.1
Average net assets (millions) .............................. $920.9 $967.7 $931.8 $897.9 $866.9
Ratios to average net assets
Expenses ................................................. 1.01% .96% .87% .82% .79%
Net investment income .................................... 1.93% 1.82% 1.84% 2.32% 2.99%
Portfolio turnover rate .................................... 136% 50% 36% 38% 30%
</TABLE>
(1) Total return does not consider the effect of sales charges.
See Notes to Financial Statements.
Not a part of the Prospectus 20
<PAGE> 23
Financial Highlights, continued
<TABLE>
<CAPTION>
Class B Class C
--------------------------------- -------------------------
Year Ended October 19, Year October 26,
December 31 1992(1) to Ended 1993(1) to
------------------- December 31, December 31, December 31,
1994 1993(4) 1992(4) 1994(4) 1993(4)
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING ------- ------- ------- -------- -------
PERFORMANCE
Net asset value, beginning of year ......................... $16.40 $17.30 $17.62 $16.39 $18.16
-------- -------- -------- ------- --------
Income from investment
operations
Investment income .......................................... .43 .49 .105 .47 .07
Expenses ................................................... (.27) (.31) (.075) (.29) (.05)
-------- -------- -------- ------- --------
Net investment income ...................................... .16 .18 .03 .18 .02
Net realized and unrealized gains or losses
on securities ............................................ (.905) 1.192 .9225 (.925) .1425
-------- -------- -------- ------- --------
Total from investment operations ........................... (.745) 1.372 .9525 (.745) .1625
-------- -------- -------- ------- --------
Less distributions
Dividends from net investment income ....................... (.1875) (.1495) (.29) (.1875) (.065)
Distributions from net realized
gains on securities ...................................... (3.0475) (2.1225) (.9825) (3.0475) (1.8675)
-------- -------- -------- ------- --------
Total distributions ........................................ (3.235) (2.272) (1.2725) (3.235) (1.9325)
-------- -------- -------- ------- --------
Net asset value, end of year ............................... $12.42 $16.40 $17.30 $12.41 $16.39
======== ======== ======== ======= ========
TOTAL RETURN(3) ............................................ (4.41%) 8.25% 4.66% (4.43%) 1.11%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (millions) ......................... $22.0 $13.9 $0.8 $2.3 $0.5
Average net assets (millions) .............................. $18.8 $7.0 $0.4 $1.7 $0.2
Ratios to average net assets
Expenses ................................................. 1.84% 1.76% 1.88%(2) 1.85% 1.93%(2)
Net investment income .................................... 1.12% 1.04% .74%(2) 1.15% .78%(2)
Portfolio turnover rate .................................... 136% 50% 36% 136% 50%
</TABLE>
(1) Commencement of offering of sales.
(2) Annualized
(3) Total return for periods of less than one full year are not annualized.
Total return does not consider the effect of sales charges.
(4) Based on average month-end shares outstanding.
See Notes to Financial Statements.
Not a part of the Prospectus 21
<PAGE> 24
Report of Independent Accountants
To the Shareholders and Board of Directors of
American Capital Comstock Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of American Capital Comstock Fund,
Inc. at December 31, 1994, the results of its operations, the changes in its
net assets and the selected per share data and ratios for each of the fiscal
periods presented, in conformity with generally accepted accounting principles.
These financial statements and selected per share data and ratios (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1994 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
Houston, Texas
February 2, 1995
Not a part of the Prospectus 22
<PAGE> 25
Fund Performance Data
Management Discussion
American Capital Comstock Fund seeks capital growth and income through
investments in equity securities, including common and preferred stocks and
securities convertible into common and preferred stocks. During 1994, the
performance of stocks was adversely impacted by repeated increases in
short-term interest rates and concerns about rising inflation. During the
year, the Fund's management team shifted a greater portion of the portfolio
into larger-capitalization stocks that were likely to be less affected by
economic conditions.
For additional information on market conditions and the Fund's performance
during the reporting period, see pages 2-3 of this report.
[Graph indicating change in value of $10,000 Investment in comparison to
Standard & Poor's 500-Stock Index.]
Past performance is not indicative of future performance. Performance of other
classes of the fund will be greater or less than the lines shown based on the
differences in loads or fees paid by shareowners investing in the different
classes.
*The Standard & Poor's 500-Stock Index is a broad-based unmanaged index of
stocks. The Index does not reflect any commissions or fees which would be
incurred by an investor purchasing the stocks it represents. All sales charges
and all other fees and expenses are included in the performance shown for
American Capital Comstock Fund Class A shares with ending value of $283,215. In
addition, since investors purchase shares of the Fund with varying sales
charges depending primarily on volume purchased, the Fund's Class A performance
at net asset value is also shown.
<TABLE>
<S> <C> <C> <C>
Average Annual Total Return - Class A (as of 12/31/94) 1 Year 5 Years 10 Years
At Net Asset Value -3.67% 7.38% 11.33%
With Maximum 5.75% Sales Charge -9.21% 6.12% 10.68%
</TABLE>
<TABLE>
<S> <C> <C>
Average Annual Total Return - Class B (as of 12/31/94) 1 Year Since Inception (10/19/92)
At Net Asset Value -4.41% 4.06%
With Applicable Contingent Deferred Sales Charge
Upon Redemption (Maximum 5%) -8.20% 3.14%
Average Annual Total Return - Class C (as of 12/31/94) 1 Year Since Inception (10/26/93)
At Net Asset Value -4.43% -2.86%
With Applicable Contingent Deferred Sales Charge
Upon Redemption (Maximum 1%) -5.19% -2.86%
</TABLE>
Not a part of the Prospectus 23
<PAGE> 26
American Capital Comstock Fund
Board of Directors
J. Miles Branagan
Richard E. Caruso
Roger Hilsman
Don G. Powell
David Rees
Lawrence J. Sheehan
Fernando Sisto*
William S. Woodside
*Chairman of the Board
- ------------------------- ********************************************
Officers * Tax Notice to Corporate *
Don G. Powell * Shareholders *
President * For 1994, 100% of the dividends taxable *
* as ordinary income qualified for the *
Curtis W. Morell * 70% dividends received deduction for *
Vice President and * corporations. *
Treasurer ********************************************
Alan T. Sachtleben
Paul R. Wolkenberg
Vice Presidents
Tanya M. Loden
Vice President and
Controller
Nori L. Gabert
Vice President and Secretary
J. David Wise
Vice President and
Assistant Secretary
Perry F. Farrell
M. Robert Sullivan
Assistant Treasurers
Huey P. Falgout, Jr.
Assistant Secretary
- ---------------------------------------------
Investment Adviser
Van Kampen American Capital Asset Management, Inc.
2800 Post Oak Blvd., Houston, Texas 77056
- ---------------------------------------------
Distributor
Van Kampen American Capital Distributors, Inc.
2800 Post Oak Blvd., Houston, Texas 77056
- ---------------------------------------------
Shareholder Service Agent
Van Kampen American Capital Shareholder Services, Inc.
P.O. Box 418256, Kansas City, Missouri 64141-9256
- ---------------------------------------------
Custodian
State Street Bank and Trust Company
225 Franklin Street, Boston, Massachusetts 02110
- ---------------------------------------------
Counsel
O'Melveny & Myers
400 South Hope Street, Los Angeles, California 90071
- ---------------------------------------------
Independent Accountants
Price Waterhouse LLP
1201 Louisiana, Houston, Texas 77002
- --------------------------------------------------------------------------------
This report is submitted for the general information of the shareholders of the
Fund. It is not authorized for distribution to prospective investors unless it
has been preceded or is accompanied by an effective prospectus of the Fund
which contains additional information on how to purchase shares, the sales
charge, and other pertinent data. If used for distribution to prospective
investors after 3/31/95, this annual report must be accompanied by an American
Capital Comstock Fund performance data update for the most recent calendar
quarter.
- --------------------------------------------------------------------------------
Not a part of the Prospectus
24
<PAGE> 27
American Capital Family of Funds
Emerging Growth Fund
American Capital Emerging Growth Fund, Inc.
Midcap Fund
American Capital Enterprise Fund, Inc.
Core Growth Funds
American Capital Pace Fund, Inc.
American Capital Global Equity Fund
Real Estate Fund
American Capital Real Estate Securities Fund, Inc.
Growth-Income Funds
American Capital Comstock Fund, Inc.
American Capital Growth and Income Fund, Inc.
American Capital Equity Income Fund, Inc.
American Capital Global Managed Assets Fund, Inc.
American Capital Harbor Fund, Inc.
Income-Growth Fund
American Capital Utilities Income Fund, Inc.
Corporate Bond Funds
American Capital High Yield Investments, Inc.
American Capital Corporate Bond Fund, Inc.
Government Securities Funds
American Capital Global Government Securities Fund
American Capital U.S. Government Trust for Income
American Capital Government Securities, Inc.
American Capital Federal Mortgage Trust
Tax-Free Funds
American Capital Tax-Exempt Trust
High Yield Municipal Portfolio
American Capital Texas Municipal Securities, Inc.
American Capital Municipal Bond Fund, Inc.
American Capital Tax-Exempt Trust
Insured Municipal Portfolio
Money Market Fund
American Capital Reserve Fund, Inc.
The Govett Funds, Inc.
Nationally Distributed by Van Kampen American Capital Distributors, Inc.
(Formerly American Capital Marketing, Inc.)
Govett Latin America Fund
Govett Pacific Strategy Fund
Govett Emerging Markets Fund
Govett Smaller Companies Fund
Govett International Equity Fund
Govett Global Government Income Fund
For more complete information about any Van Kampen American Capital or Govett
Fund, including charges and expenses, obtain a prospectus from your investment
professional or write Van Kampen American Capital Distributors, Inc., P.O. Box
1411, Houston, TX 77251-1411. Read the prospectus carefully before you invest
or send money.
American Capital
Comstock Fund, Inc.
C/O ACCESS
P.O. Box 418256
Kansas City, MO 64141-9256
PRINTED MATTER
Printed in U.S.A./013RPT-001
