<PAGE>
Van Kampen American Capital
COMSTOCK
FUND
Annual Report
December 31, 1997
[PICTURE APPEARS HERE]
------- A Wealth of Knowledge . A Knowledge of Wealth -------
Van Kampen American Capital
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders..................................................... 1
Performance Results........................................................ 3
Performance in Perspective................................................. 4
Glossary of Terms......................................................... 5
Portfolio of Mangement Review.............................................. 6
Portfolio Highlights....................................................... 9
Portfolio of Investments................................................... 10
Statement of Assests and Liabilities....................................... 15
Statement of Operations.................................................... 16
Statement of Changes in Net Assets......................................... 17
Financial Highlights....................................................... 18
Notes to Financial Statements.............................................. 21
Report of Independent Accountants.......................................... 26
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
- --------------------------------------------------------------------------------
February 1, 1998
Dear Shareholder,
The new year ushers in what promises to be an exciting and challenging time
for investors. The Taxpayer Relief Act of 1997 signed into law by President
Clinton in August creates many new opportunities for you and your family to take
a more active role in achieving your long-term financial goals.
Most Americans will benefit from the bill's $95 billion in tax cuts over
five years. The so-called Kiddie Credit gives parents $400 in immediate tax
relief for every child under age 17, and families will find it easier to save
for their children's college expenses through the new Education IRA. The bill
also cuts capital gains tax rates for the first time in over a decade and
loosens restrictions on tax-deductible IRA contributions. Perhaps the most
exciting feature of all is the new Roth IRA, which allows investment earnings to
grow tax free, not just tax deferred.
This year more than ever, it could be important for you to talk with your
financial adviser about how to make the tax code work to your advantage. At Van
Kampen American Capital, we have prepared a variety of publications to help you
understand your choices under the new tax legislation. And with the help of your
adviser, we'll help you locate the many benefits hidden among the changing tax
landscape.
ECONOMIC OVERVIEW
These continue to be the best of times for the U.S. economy. Growth is
strong, consumers are optimistic, unemployment is low, the budget is headed for
surplus, and our nation's currency is rising around the world.
Despite the strength in the economy, there is no indication of troublesome
inflation. In fact, the producer price index fell by 1.2 percent during the
year, the largest annual decline in wholesale prices since 1986. Inflation at
the consumer level was also virtually nonexistent, with the consumer price index
rising by only 1.7 percent during 1997. A strong dollar and significant
productivity gains helped offset inflationary pressures caused by rising wages.
After increasing short-term interest rates by 0.25 percent in March, the
Federal Reserve Board left monetary policy unchanged for the remainder of the
year. In addition to signs that the economy was slowing modestly from its
breakneck pace of early 1997, Fed policy-makers were concerned about the impact
that higher U.S. interest rates might have on the struggling economies of
Southeast Asia. Generally, higher U.S. interest rates cause the dollar to rise
relative to other currencies. With nearly all Asian currencies already down
significantly, a hike in U.S. rates would force monetary authorities in Asia to
choose between letting their currencies decline further or matching the rate
increase, thereby slowing their already-sluggish economies.
MARKET OVERVIEW
Bolstered by solid economic growth and low inflation, stock prices
continued their advance during the reporting period. Over the 12 months through
December, the Wilshire 5000 Index, which measures the performance of all
publicly
[PICTURE OF DENNIS J. McDONNELL AND DON POWELL APPEARS HERE]
1
<PAGE>
traded U.S. companies, gained 29.17 percent. And with its 22.64 percent advance
in 1997, the Dow Jones Industrial Average completed its third consecutive year
of 20 percent-plus gains for the first time in the history of the index.
But while U.S. stocks kept rising, volatility also picked up. During the
spring, stronger-than-expected economic growth and a subsequent hike in short-
term interest rates caused stock prices to fall by 10 percent. Later in the
year, investors were unnerved by the spreading economic crisis in Asia. Between
early August and late October, the DJIA fell by 16 percent before rebounding
sharply to close the reporting period near record-high territory.
Within the equity market, large stocks continued to outperform their small-
cap cousins. For the year, the Russell 1000 Index of large-cap companies
returned 30.49 percent, compared to 20.52 percent for the Russell 2000 Index of
small stocks. A wave of consolidations helped make Financial Services the top-
performing industry group. The Dow Jones Financial Index soared 48.44 percent
during 1997.
OUTLOOK
We expect that the recent upheavals in Southeast Asia will have a mixed
impact on the U.S. economy and financial markets. Sales of American goods
overseas are likely to decline in coming months, and competition from relatively
inexpensive imports could pinch profit margins. However, lower currency values
in Asia will likely result in less inflation in the U.S. and a greater
likelihood of stable or falling interest rates. Such a scenario usually benefits
stock prices, and we believe that a portfolio of high-quality domestic stocks
should continue to perform well. We also anticipate that stock selection will
play a larger role in generating investment performance due to the uneven impact
of the Asian crisis on individual companies.
As we noted earlier, the Taxpayer Relief Act of 1997 provides attractive
new vehicles through which investors can save for a variety of goals, including
higher education and retirement. We encourage you to work with your financial
adviser to consider how the tax changes can work to your benefit.
Additional details about your Fund, including a question-and-answer section
with your portfolio management team, are provided in this report. As always, we
are pleased to have the opportunity to serve you and your family through our
diverse menu of quality investments.
Sincerely,
/s/ Don G. Powell /s/ Dennis J. McDonnell
Don G. Powell Dennis J. McDonnell
Chairman President
Van Kampen American Capital Van Kampen American Capital
Asset Management, Inc. Asset Management, Inc.
2
<PAGE>
- --------------------------------------------------------------------------------
PERFORMANCE RESULTS FOR THE PERIOD ENDED DECEMBER 31,1997
- --------------------------------------------------------------------------------
VAN KAMPEN AMERICAN CAPITAL COMSTOCK FUND
<TABLE>
<CAPTION>
A Shares B Shares C Shares
<S> <C> <C> <C>
- -------------------
Total Returns
- -------------------
One-year total return based on NAV/1/.......... 29.92% 28.88% 28.89%
One-year total return/2/....................... 22.46% 23.88% 27.89%
Five-year average annual total return/2/....... 16.47% 16.77% N/A
Ten-year average annual total return/2/........ 15.87% N/A N/A
Life-of-Fund average annual total return/2/.... 12.66% 17.42% 18.63%
Commencement Date.............................. 10/07/68 10/19/92 10/26/93
</TABLE>
N/A = Not Applicable
/1/ Assumes reinvestment of all distributions for the period and does not
include payment of the maximum sales charge (5.75% for A shares) or contingent
deferred sales charge for early withdrawal (5% for B and 1% for C shares).
/2/ Standardized total return. Assumes reinvestment of all distributions for the
period and includes payment of the maximum sales charge (A shares) or contingent
deferred sales charge for early withdrawal (B and C shares).
See the Prior Performance section of the current prospectus. Past performance
does not guarantee future results. Investment return and net asset value will
fluctuate with market conditions. This performance was achieved during generally
rising stock prices. Fund shares, when redeemed, may be worth more or less than
their original cost.
The types of securities in which the Fund invests may be subject to special
risks including currency exchange, rate fluctuations, and political and economic
instability.
Market forecasts provided in this report may not necessarily come to pass.
3
<PAGE>
- --------------------------------------------------------------------------------
PUTTING YOUR FUND'S PERFORMANCE IN PERSPECTIVE
- --------------------------------------------------------------------------------
As you evaluate your progress toward achieving your financial goals, it is
important to track your investment portfolio's performance at regular intervals.
A good starting point is a comparison of your investment holdings to an
applicable benchmark, such as a broad-based market index. Such a comparison can:
(Yen) Illustrate the general market environment in which your investments
are being managed
(Yen) Reflect the impact of favorable market trends or difficult market
conditions
(Yen) Help you evaluate the extent to which your Fund's management team
has responded to the opportunities and challenges presented to them
over the period measured
For these reasons, you may find it helpful to review the chart below, which
compares your Fund's performance to that of the Standard & Poor's 500-Stock
Index and the Lipper Growth and Income Fund Index over time. These indicies are
unmanaged statistical composite, and do not reflect any commissions or fees
which would be incurred by an investor purchasing the securities it represents.
Similarly, its performance does not reflect any sales charges or other costs
which would be applicable to an actively managed portfolio, such as that of the
Fund.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
Van Kampen American Capital Comstock Fund vs. Standard & Poor's 500-Stock
Index and the Lipper Growth and Income Fund Index (December 31, 1987
through December 31, 1997)
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
____ VKAC Comstock Fund -- -- Standard & Poor's 500-Stock Index - - - Lipper Growth and Income Fund Index
<S> <C> <C> <C>
12/31/87 $ 9,426 $10,000 $10,000
12/31/88 $10,821 $11,835 $11,650
12/31/89 $14,125 $14,644 $15,330
12/31.90 $13,650 $13,766 $14,852
12,31,91 $18,011 $17,587 $19,358
12/31/92 $19,188 $19,281 $20,831
12/31/93 $20,933 $22,100 $22,921
12/31/94 $20,166 $22,009 $23,232
12/31/95 $27,456 $28,862 $31,931
12/31/96 $29,591 $34,833 $39,243
12/31/97 $43,640 $44,223 $52,317
</TABLE>
<TABLE>
<CAPTION>
Fund's Total Return
<S> <C>
1 Year Avg. Annual = 22.46%
5 Year Avg. Annual = 16.47%
10 Year Avg. Annual = 15.87%
Inception Avg. Annual = 12.66%
</TABLE>
The above chart reflects the performance of Class A shares of the Fund. The
performance of Class A shares will differ from that of other share classes of
the Fund because of the difference in sales charges and/or expenses paid by
shareholders investing in the different share classes. The Fund's performance
assumes reinvestment of all distributions and includes payment of the maximum
sales charge (5.75% for A shares).
While past performance is not indicative of future performance, the above
information provides a broader vantage point from which to evaluate the
discussion of the Fund's performance found in the following pages.
4
<PAGE>
GLOSSARY OF TERMS
BLUE-CHIP STOCKS:
Stocks of large, well-known companies that have a long record of growth and
a reputation for quality management. Examples of blue-chip stocks include
General Motors, International Business Machines (IBM), Coca-Cola, and
General Electric.
BOTTOM-UP INVESTING:
A management style that emphasizes the analysis of individual stocks,
rather than economic and market cycles.
CONTRARIAN STRATEGY:
An investment approach that often takes an opposite stance to prevailing
market sentiment.
DOW JONES INDUSTRIAL AVERAGE:
The oldest and most widely recognized stock market average, which reflects
the performance of 30 actively traded stocks of well-established, blue-chip
companies.
MARKET CAPITALIZATION:
The size of a company, as measured by the value of its issued and
outstanding shares of stock. Morningstar, Inc., an independent mutual fund
rating service, defines "small-cap" as less than $1 billion, "mid-cap" as
between $1 billion and $5 billion, and "large-cap" as more than $5 billion.
NET ASSET VALUE (NAV):
The value of a mutual fund share, computed by deducting a fund's
liabilities from its total assets and dividing this amount by the number of
shares outstanding. It does not include any initial or contingent deferred
sales charge.
STANDARD AND POOR'S 500-STOCK INDEX:
An index of the 500 largest, most actively traded stocks on the New York
Stock Exchange. It provides a guide to the overall health of the U.S. stock
market. The S&P 500 is a much broader index than the Dow Jones Industrial
Average and reflects the stock market more accurately.
VALUATION:
The estimated or determined worth of a stock, based on financial measures
such as its current price relative to earnings, revenue, book value, and
cash flow.
VALUE INVESTING:
A strategy that seeks to identify stocks that are sound investments but
generally out of favor in the marketplace. As a result, they trade at
prices below what value investors believe they are actually worth.
5
<PAGE>
PORTFOLIO MANAGEMENT REVIEW
VAN KAMPEN AMERICAN CAPITAL COMSTOCK FUND
We recently spoke to the management team of the Van Kampen American Capital
Comstock Fund about the key events and economic forces that shaped the markets
during the past year. The team is led by B. Robert Baker, Jr., portfolio
manager, and Alan T. Sachtleben, chief investment officer for equity
investments. The following excerpts reflect their views on the Fund's
performance during the 12-month period ended December 31, 1997.
Q WHAT WAS THE STOCK MARKET ENVIRONMENT FOR THE FUND DURING THE PAST 12
MONTHS?
A Moderate economic growth and low inflation provided a very favorable
environment for equity investments and drove the stock market to record
levels. However, the year was marked by several periods of notable volatility.
In March, the economy was growing so rapidly that investors feared inflation
might start to rise--a concern that sparked a month-long drop in the stock
market and erased its year-to-date gains. This setback was brief, and the market
had recouped its losses by early May. In October, the stock market became very
sensitive to economic turmoil in Southeast Asia, causing the Dow Jones
Industrial Average (DJIA) to drop a record number of points in a single day. The
DJIA rose back up to hover slightly below its all-time high by the end of the
reporting period.
Market leadership took several twists and turns as well. Investors favored
blue-chip stocks early in the year, but by mid-year momentum had switched to
small-capitalization stocks, which outperformed large caps in almost every major
economic sector in the third quarter. In October, uncertainty surrounding the
situation in Asia prompted investors to seek out large, well-established
companies--as a result, small stocks began to struggle again and large stocks
regained their dominant position
Q GIVEN THIS ENVIRONMENT, WHAT WAS YOUR STRATEGY IN SEEKING TO MEET THE
FUND'S OBJECTIVE?
A Our basic investment strategy is to identify undervalued stocks that have
the potential for future price appreciation. To do this, we look for
companies that are temporarily out of favor in the marketplace--their stock
prices are usually lower than what we believe these companies are truly worth.
Then, we look for factors that might move the stock from being undervalued to
being fairly valued. This catalyst could come from within the company in the
form of new management, operational enhancements, restructuring, or
reorganization. It could also be an external factor, such as an improvement in
industry conditions or a regulatory change. When we find a company that is
undervalued and has an identifiable catalyst, we consider adding the security to
the portfolio.
We use a "bottom-up" stock selection process, evaluating securities one by
one and making purchases wherever we find a good opportunity. In other words, we
don't mandate what percentage of the Fund's assets should be in any given
industry--instead, we select the stocks that best meet our criteria. Our sector
weightings are a reflection where we found the favorable opportunities on a
stock by stock basis.
Q IN JUNE, THE FUND WAS HEAVILY WEIGHTED IN ELECTRIC UTILITIES. IS THIS STILL
THE CASE?
A Yes, the Fund continues have a substantial weighing in electric utility
stocks, and some of our strongest performers were in this sector. When we
reported to you in June, investor opinion for these stocks was very
negative--many investors were concerned about the impact of industry
deregulation and competition, and stocks were undervalued. However, we increased
our holdings in electric utilities because we believed they were positioned to
appreciate, and that is exactly what happened in the second half of 1997.
Declining interest rates, as well as diminishing competitive and regulatory
concerns, led to strong performance in the second half of the year.
Another factor that aided the performance of electric utilities is that
most companies in this sector are domestically based and therefore largely
insulated from the current difficulties plaguing companies with foreign
exposure. In addition, an expected slowdown in U.S. economic growth could cause
a decline in corporate earnings growth, making electric utilities relatively
more attractive to investors than other equity investments. Electric utilities
have outperformed the stock market as a whole since mid-year, and we still
believe they offer favorable value opportunities in today's market. Key holdings
in this sector were Texas Utilities and Houston Industries, which appreciated 20
percent and 17 percent, respectively, during the past six months.
6
<PAGE>
Q WHAT STOCKS CONTRIBUTED TO THE FUND'S PERFORMANCE DURING THE PERIOD?
A Dial Corp., a manufacturer of soap and other personal care products, is
currently one of the Fund's largest holdings. The company is relatively
inexpensive compared to other stocks in the consumer nondurables sector, and we
believe it has been undervalued because of poor management and high costs. Dial
recently appointed an experienced CEO who is restructuring the company and
cutting expenses, and we think the market will eventually look more favorably
upon the company. In fact, its stock price rose nearly 34 percent in the second
half of the year.
Another strong holding was American Bankers Insurance Group, a specialty
insurance company. We initially purchased this stock in December of 1995 at
$18 1/2 per share. In December of 1997, the company announced that it agreed to
be acquired by American International Group for approximately $47 per share, so
the Fund should realize a notable gain. Tele-Communications Inc. (TCI), a cable
television operator, was a large position for the Fund throughout most of the
year. Its stock price appreciated more than 120 percent during the reporting
period, reaching what we believed was its fair market value, and we sold our
holdings.
Other contributors to performance included personal computer companies such
as Dell Computer and Compaq Computer. These stocks appeared to be
extraordinarily undervalued in the second quarter and did not reflect what we
thought were very exciting business prospects and outstanding execution by
management. We purchased Compaq in May at $35 per share, and the stock closed
the year at $55 1/8 per share--a gain of nearly 58 percent. However, we trimmed
our positions in these stocks toward the end of the year as valuations became
extended. There is no guarantee that these stocks will perform as favorably in
the future. Please refer to page nine for additional Fund portfolio highlights.
Q WHAT FACTORS WORKED AGAINST THE FUND?
A One area that performed poorly was raw materials--a sector that includes
paper and steel. Asia is a large consumer of U.S. raw materials, but demand
in that region has tapered off lately. In addition, many Asian countries are
desperate for cash, so they're selling reserves of paper products very cheaply,
which has forced U.S. producers to lower their prices. We had a small weighting
in raw materials during the reporting period, which modestly hindered the Fund's
performance.
Also, we recently established a significant position in gold stocks, which
were among the market's worst performers in 1997. Economic problems in Asia
slowed the demand for gold, and worldwide central banks are questioning the need
for large gold reserves to support their currency, prompting the announcement of
a sell-off of central bank reserves. These events have caused the price of gold
to drop sharply, and some mines have been forced to close because the price of
gold is less than the cost to produce it. In short, negative sentiment for gold
stocks is at an all-time high. As value investors, we have a strong contrarian
element to our management style, and we see these extreme valuations as a buying
opportunity.
Q HOW DID THE FUND PERFORM DURING THE PAST YEAR?
A We were very pleased with the Fund's performance during the year. The Fund
achieved a 12-month total return of 29.92 percent1 (Class A shares at net
asset value) as of December 31, 1997. By comparison, the Standard & Poor's 500-
Stock Index returned 33.31 percent, and the Lipper Growth and Income Fund Index,
which more closely resembles the Fund, returned 26.96 percent. The S&P 500-Stock
Index is a broad-based, unmanaged index that reflects the general performance of
the stock market, and the Lipper Growth and Income Fund Index reflects the
average performance of the 30 largest growth and income funds.
Keep in mind that these indices are unmanaged statistical composites that
do not include any commissions, fees, or sales charges that would be paid by an
investor purchasing the securities or investments they represent. Please refer
to the chart on page three for additional Fund performance results.
Q WHAT IS YOUR OUTLOOK FOR THE FUND FOR THE NEXT SIX MONTHS?
A We believe the economic situation in Asia will have little impact on the
Fund and our investment strategy. Many stocks that are likely to be
affected by Asia's problems--those with significant international exposure--are
relatively overvalued and therefore not the kind of securities we currently hold
in the Fund's portfolio. And while U.S. corporate profits might slow down
because of lower foreign sales and intense competition from imports, this could
keep U.S. economic growth at a moderate and sustainable level. Overall, we
expect stock selection to play a growing role in investment performance, as the
stock market may offer more limited opportunities for strong returns than the
broad market advances of recent years.
7
<PAGE>
In our opinion, the stock market is still highly valued, and rising stock
prices can mean more risk for investors--expensive securities have farther to
fall in a market downturn than undervalued stocks. We believe investments such
as the Comstock Fund, which seeks out undervalued securities, may be suited for
this environment.
/s/ Alan T. Sachtleben /s/ B. Robert Baker, Jr
Alan T. Sachtleben B. Robert Baker, Jr.
Chief Investment Officer Portfolio Manager
Equity Investments
8
<PAGE>
PORTFOLIO HIGHLIGHTS
VAN KAMPEN AMERICAN CAPITAL COMSTOCK FUND
TOP TEN HOLDINGS AS A PERCENTAGE OF LONG-TERM INVESTMENTS
<TABLE>
<CAPTION>
As of As of
December 31, 1997 June 30, 1997
<S> <C> <C>
Texas Utilities Co........................... 3.0%................2.3%
Houston Industries, Inc...................... 2.9%................1.8%
Waste Management, Inc........................ 2.8%................3.2%
Dial Corp.................................... 2.7%................1.3%
U.S. Treasury Notes (11/30/99)............... 2.5%................ N/A
U.S. Treasury Notes (05/15/07)............... 2.0%................2.2%
OGE Energy Corp.............................. 1.8%................1.7%
American Bankers Insurance Group, Inc........ 1.7%................1.6%
Ameritech Corp............................... 1.7%................1.1%
Pinnacle West Capital Corp................... 1.7%................1.3%
N/A = Not Applicable
</TABLE>
TOP FIVE PORTFOLIO SECTORS AS A PERCENTAGE OF LONG-TERM INVESTMENTS
<TABLE>
<CAPTION>
As of December 31, 1997 As of June 30, 1997
<S> <C> <C> <C>
Utilities..................................... 27% Utilities................... 21%
Finance....................................... 13% Finance..................... 12%
Raw Materials/Processing Industries........... 10% Energy...................... 11%
Consumer Non-Durables......................... 9% Consumer Non-Durables....... 9%
Technology.................................... 8% Producer Manufacturing...... 8%
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
December 31, 1997
================================================================================
Number
Description of Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS 90.2%
CONSUMER DISTRIBUTION 2.5%
Federated Department Stores, Inc. (a).......... 373,000 $ 16,062,313
Office Depot, Inc. (a)......................... 364,000 8,713,250
Sears Roebuck & Co............................. 360,000 16,290,000
-----------
41,065,563
-----------
CONSUMER DURABLES 0.6%
Cooper Tire & Rubber Co........................ 205,000 4,996,875
Maytag Corp.................................... 150,000 5,596,875
-----------
10,593,750
-----------
CONSUMER NON-DURABLES 9.3%
Dial Corp...................................... 2,038,000 42,415,875
First Brands Corp.............................. 687,900 18,530,306
Kimberly Clark Corp............................ 375,000 18,492,188
Philip Morris Cos., Inc........................ 525,000 23,789,063
RJR Nabisco Holdings Corp...................... 660,000 24,750,000
Tommy Hilfiger Corp............................ 746,500 26,220,812
-----------
154,198,244
-----------
CONSUMER SERVICES 2.0%
International Game Technology.................. 430,000 10,857,500
Outback Steakhouse, Inc. (a)................... 168,000 4,830,000
Time Warner, Inc............................... 273,000 16,926,000
-----------
32,613,500
-----------
ENERGY 5.5%
Amoco Corp..................................... 80,000 6,810,000
Atlantic Richfield Co.......................... 87,000 6,970,875
Chevron Corp................................... 160,000 12,320,000
Coastal Corp................................... 110,000 6,813,125
ENI--ADR (Italy) (a)........................... 220,000 12,553,750
Equitable Resources, Inc....................... 130,000 4,598,750
Texaco, Inc.................................... 160,000 8,700,000
Total SA--ADR (France)......................... 133,821 7,427,065
USX-Marathon Group............................. 220,000 7,425,000
YPF Sociedad Anonima--ADR (Argentina), Class D. 500,000 17,093,750
-----------
90,712,315
-----------
FINANCE 12.9%
AMBAC, Inc..................................... 450,900 20,741,400
American Bankers Insurance Group, Inc.......... 592,000 27,195,000
</TABLE>
See Notes to Financial Statements
10
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS.(CONTINUED)
December 31, 1997
================================================================================
Number
Description of Shares Market Value
- --------------------------------------------------------------------------------
<S>........................................... <C> <C>
FINANCE - (CONTINUED)
BA Securities Corp............................ 132,000 $ 9,636,000
BancOne Corp.................................. 379,000 20,584,437
Bear Stearns Cos., Inc........................ 240,000 11,400,000
Chase Manhattan Corp.......................... 100,000 10,950,000
CIGNA Corp.................................... 66,000 11,422,125
CMAC Investment Corp.......................... 298,800 17,134,421
Conseco, Inc.................................. 337,000 15,312,438
Everest Reinsurance Holdings, Inc............. 210,000 8,662,500
First Union Corp.............................. 434,000 22,242,500
Liberty Financial Cos., Inc................... 138,300 5,220,825
MBIA, Inc..................................... 136,000 9,086,500
Nationwide Financial Services, Inc., Class A.. 80,900 2,922,513
Norwest Corp.................................. 212,000 8,188,500
Travelers Group, Inc.......................... 120,000 6,465,000
United Asset Management Corp.................. 215,100 5,256,506
-----------
212,420,665
-----------
HEALTH CARE 7.0%
Aetna, Inc.................................... 121,200 8,552,175
American Home Products Corp................... 346,000 26,469,000
Bausch & Lomb, Inc............................ 452,000 17,910,500
Lincare Holdings, Inc. (a).................... 265,300 15,122,100
Mylan Laboratories, Inc....................... 370,000 8,605,313
PacifiCare Health Systems, Class B (a)........ 442,000 23,149,750
Pharmacia & Upjohn, Inc....................... 445,000 16,298,125
-----------
116,106,963
-----------
PRODUCER MANUFACTURING 5.4%
Bouygues Offshore SA--ADR (France) (a)........ 484,800 10,472,625
Cognex Corp. (a).............................. 162,000 4,414,500
Ingersoll-Rand Co............................. 120,000 4,860,000
ITT Corp...................................... 137,000 11,353,875
LucasVarity PLC--ADR (United Kingdom) (a)..... 302,000 10,532,250
Tubos De Acero De Mexico SA--ADR (Mexico) (a). 180,000 3,892,500
Waste Management, Inc......................... 1,580,000 43,450,000
-----------
88,975,750
-----------
RAW MATERIALS/PROCESSING INDUSTRIES 9.7%
Barrick Gold Corp............................. 1,145,100 21,327,487
Bethlehem Steel Corp. (a)..................... 777,000 6,701,625
</TABLE>
11
<PAGE>
Portfolio of Investments (Continued)
December 31, 1997
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
Number
Description of Shares Market Value
- ----------------------------------------------------------------------------------
<S> <C> <C>
RAW MATERIALS/PROCESSING INDUSTRIES (CONTINUED)
Boise Cascade Corp...................................... 700,000 $21,175,000
British Steel PLC--ADR (United Kingdom)................. 1,087,000 24,588,813
Georgia PacificNTimber Group (a)........................ 80,000 1,815,000
Georgia Pacific Group................................... 80,000 4,860,000
Homestake Mining Co..................................... 1,741,000 16,862,500
Imperial Chemical Industries PLC--ADR (United Kingdom).. 100,000 6,493,750
International Paper Co.................................. 280,100 12,079,313
Louisiana-Pacific Corp.................................. 454,000 8,626,000
Newmont Mining Corp..................................... 451,000 13,248,125
Placer Dome, Inc........................................ 1,165,000 14,780,937
Temple Inland, Inc...................................... 70,000 3,661,875
Union Camp Corp......................................... 86,000 4,617,125
-----------
160,837,550
-----------
TECHNOLOGY 7.7%
3Com Corp. (a).......................................... 353,000 12,332,937
Avnet, Inc.............................................. 110,000 7,260,000
Compaq Computer Corp. (a)............................... 386,000 21,784,875
Dell Computer Corp. (a)................................. 102,300 8,593,200
Gateway 2000, Inc. (a).................................. 148,000 4,828,500
Intel Corp.............................................. 58,000 4,074,500
LSI Logic Corp. (a)..................................... 104,000 2,054,000
Micron Technology, Inc.................................. 398,000 10,348,000
Nokia Corp. - ADR (Finland)............................. 68,000 4,760,000
Quantum Corp. (a)....................................... 888,000 17,815,500
SunGard Data Systems, Inc. (a).......................... 823,800 25,537,800
VLSI Technology, Inc. (a)............................... 353,100 8,341,988
-----------
127,731,300
-----------
TRANSPORTATION 0.8%
Canadian National Railway Co............................ 260,000 12,285,000
-----------
UTILITIES 26.8%
Ameritech Corp.......................................... 334,000 26,887,000
Baltimore Gas & Electric Co............................. 197,400 6,723,938
Bell Atlantic Corp...................................... 145,000 13,195,000
Bellsouth Corp.......................................... 200,000 11,262,500
Boston Edison Co........................................ 420,000 15,907,500
CMS Energy Corp......................................... 320,000 14,100,000
DTE Energy Co........................................... 370,000 12,834,375
</TABLE>
See Notes to Financial Statements
12
<PAGE>
Portfolio of investments (Continued)
December 31, 1997
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
Number
Description of Shares Market Value
- --------------------------------------------------------------------
<S> <C> <C>
UTILITIES (CONTINUED)
Duke Power Co............................ 146,956 $ 8,137,689
Edison International..................... 120,000 3,262,500
Endesa SA--ADR (Spain)................... 364,400 6,627,525
FPL Group, Inc........................... 150,000 8,878,125
GPU, Inc................................. 530,000 22,326,250
Houston Industries, Inc.................. 1,721,300 45,937,194
Idaho Power Co........................... 620,000 23,327,500
Illinova Corp............................ 377,000 10,155,437
New Century Energies, Inc................ 142,500 6,831,094
Nipsco Industries, Inc................... 160,000 7,910,000
Northeast Utilities...................... 508,500 6,006,656
Northern States Power Co................. 222,000 12,931,500
OGE Energy Corp.......................... 518,900 28,377,344
PacifiCorp............................... 520,000 14,202,500
Pinnacle West Capital Corp............... 630,000 26,696,250
Public Service Co. of New Mexico......... 981,000 23,237,437
SBC Communications, Inc.................. 220,000 16,115,000
Sierra Pacific Resources................. 92,000 3,450,000
Texas Utilities Co....................... 1,135,000 47,173,437
U.S. WEST Communications Group........... 460,000 20,757,500
-------------
443,251,251
-------------
TOTAL COMMON STOCKS...................... 1,490,791,851
-------------
</TABLE>
See Notes to Financial Statements
13
<PAGE>
Portfolio of Investments (Continued)
December 31, 1997
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Description Market Value
- -----------------------------------------------------------------------------------------------------------
<S> <C>
U.S. Treasury Securities 4.9%
U.S. Treasury Notes ($10,000,000 par, 5.75% coupon, 11/30/02 maturity)..................... $ 10,007,800
U.S. Treasury Notes ($30,000,000 par, 6.625% coupon, 05/15/07 maturity).................... 31,753,200
U.S. Treasury Notes ($40,000,000 par, 5.75% coupon, 11/30/99 maturity)..................... 39,962,123
-------------
TOTAL U.S. TREASURY SECURITIES............................................................. 81,723,123
-------------
TOTAL LONG-TERM INVESTMENTS 95.1% (Cost $1,316,807,514)................................... 1,572,514,974
-------------
SHORT-TERM INVESTMENTS 5.7%
REPURCHASE AGREEMENTS 3.2%
Swiss Bank Corp., ($53,330,000 par collateralized by U.S. Government obligations
in a pooled cash account, dated 12/31/97, to be sold on 01/02/98 at $53,348,073)........... 53,330,000
-------------
U.S. Government Agency Obligations 2.5%
Federal Home Loan Bank Consolidated Discount Note
($1,600,000 par, yielding 5.48%, maturing 01/01/98)........................................ 1,598,384
Federal Home Loan Mortgage Discount Notes
($13,000,000 par, yielding 5.72%, maturing 01/07/98)....................................... 12,985,830
Federal National Mortgage Association ($12,000,000 par, yielding 5.65%, maturing 03/03/98). 11,885,880
Federal National Mortgage Association ($14,000,000 par, yielding 5.65%, maturing 04/24/98). 13,756,120
-------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS................................................... 40,226,214
-------------
TOTAL SHORT-TERM INVESTMENTS (COST $93,556,214)............................................ 93,556,214
-------------
TOTAL INVESTMENTS 100.8% (COST $1,410,363,728)............................................ 1,666,071,188
LIABILITIES IN EXCESS OF OTHER ASSETS (0.8%)............................................... (13,324,539)
-------------
NET ASSETS 100.0%.......................................................................... $1,652,746,649
=============
</TABLE>
(a) Non-income producing security as this stock currently does not declare
dividends.
14
<PAGE>
Statement of Assets and Liabilities
December 31, 1997
<TABLE>
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS:
Total Investments (Cost $1,410,363,728)........................................................ $1,666,071,188
Cash........................................................................................... 6,198
Receivables:
Investments Sold.......................................................................... 9,531,524
Dividends................................................................................. 3,692,870
Fund Shares Sold.......................................................................... 1,715,228
Interest.................................................................................. 506,397
Other.......................................................................................... 58,549
--------------
Total Assets............................................................................ 1,681,581,954
--------------
LIABILITIES:
Payables:
Fund Shares Repurchased................................................................... 16,940,439
Income Distributions...................................................................... 5,944,361
Investments Purchased..................................................................... 3,969,565
Distributor and Affiliates................................................................ 850,429
Investment Advisory Fee................................................................... 662,118
Accrued Expenses............................................................................... 265,800
Trustees' Deferred Compensation and Retirement Plans........................................... 202,593
--------------
Total Liabilities....................................................................... 28,835,305
--------------
NET ASSETS..................................................................................... $1,652,746,649
==============
NET ASSETS CONSIST OF:
Capital........................................................................................ $1,321,625,631
Net Unrealized Appreciation.................................................................... 255,707,460
Accumulated Net Realized Gain.................................................................. 71,276,153
Accumulated Undistributed Net Investment Income................................................ 4,137,405
--------------
NET ASSETS..................................................................................... $1,652,746,649
==============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on net assets of
$1,518,654,933 and 93,722,450 shares of beneficial interest issued and outstanding)..... $ 16.20
Maximum sales charge (5.75%* of offering price)......................................... .99
--------------
Maximum offering price to public........................................................ $ 17.19
==============
Class B Shares:
Net asset value and offering price per share (Based on net assets of $123,182,846 and
7,599,567 shares of beneficial interest issued and outstanding)......................... $ 16.21
==============
Class C Shares:
Net asset value and offering price per share (Based on net assets of $10,908,870 and
672,975 shares of beneficial interest issued and outstanding)........................... $ 16.21
==============
</TABLE>
*On sales of $50,000 or more, the sales charge will be reduced.
See Notes to Financial Statements
15
<PAGE>
Statement of Operations
For the Year Ended December 31, 1997
<TABLE>
- ------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
Dividends............................................................................... $ 32,319,388
Interest................................................................................ 6,843,211
------------
Total Income....................................................................... 39,162,599
------------
EXPENSES:
Investment Advisory Fee................................................................. 7,158,774
Distribution (12b-1) and Service Fees (Attributed to Classes A, B and C of $2,929,434,
$989,873 and $81,492, respectively)................................................... 4,000,799
Shareholder Services.................................................................... 2,643,854
Legal................................................................................... 49,100
Trustees' Fees and Expenses............................................................. 39,084
Custody................................................................................. 57,105
Other................................................................................... 780,347
------------
Total Expenses..................................................................... 14,729,063
------------
Net Investment Income................................................................... $ 24,433,536
============
Realized and Unrealized Gain/Loss:
Realized Gain/Loss:
Investments.......................................................................... $266,838,287
Futures.............................................................................. 337,375
------------
Net Realized Gain....................................................................... 267,175,662
------------
Unrealized Appreciation/Depreciation:
Beginning of the Period.............................................................. 158,588,134
End of the Period.................................................................... 255,707,460
------------
Net Unrealized Appreciation During the Period........................................... 97,119,326
------------
NET REALIZED AND UNREALIZED GAIN........................................................ $364,294,988
============
NET INCREASE IN NET ASSETS FROM OPERATIONS.............................................. $388,728,524
============
</TABLE>
See Notes to Financial Statements
16
<PAGE>
Statement of Changes in Net Assets
For the Years Ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended
December 31, 1997 December 31, 1996
---------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income............................................................... $ 24,433,536 $ 20,313,852
Net Realized Gain................................................................... 267,175,662 204,739,541
Net Unrealized Appreciation During the Period....................................... 97,119,326 21,808,664
-------------- --------------
Change in Net Assets from Operations................................................ 388,728,524 246,862,057
-------------- --------------
Distributions from Net Investment Income:
Class A Shares................................................................. (20,935,347) (18,934,633)
Class B Shares................................................................. (802,099) (516,251)
Class C Shares................................................................. (68,046) (40,627)
-------------- --------------
(21,805,492) (19,491,511)
-------------- --------------
Distributions from Net Realized Gain:
Class A Shares................................................................. (214,376,498) (190,609,218)
Class B Shares................................................................. (16,706,248) (10,864,407)
Class C Shares................................................................. (1,451,558) (831,362)
-------------- --------------
(232,534,304) (202,304,987)
-------------- --------------
Total Distributions............................................................ (254,339,796) (221,796,498)
-------------- --------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES................................. 134,388,728 25,065,559
-------------- --------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold........................................................... 817,288,119 870,144,817
Net Asset Value of Shares Issued Through Dividend Reinvestment...................... 234,713,290 203,868,215
Cost of Shares Repurchased.......................................................... (855,710,525) (897,713,361)
-------------- --------------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS.................................. 196,290,884 176,299,671
-------------- --------------
TOTAL INCREASE IN NET ASSETS........................................................ 330,679,612 201,365,230
NET ASSETS:
Beginning of the Period............................................................. 1,322,067,037 1,120,701,807
-------------- --------------
End of the Period (Including accumulated undistributed net investment
income of $4,137,405 and $1,509,361, respectively)................................ $1,652,746,649 $1,322,067,037
============== ==============
</TABLE>
See Notes to Financial Statements
17
<PAGE>
Financial Highlights
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Class A Shares 1997 1996 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period............ $ 14.785 $ 14.54 $ 12.40 $ 16.38 $ 17.30
-------- -------- -------- ------- -------
Net Investment Income.......................... .275 .264 .26 .31 .32
Net Realized and Unrealized Gain/Loss.......... 3.966 2.828 4.1125 (.92) 1.18
-------- -------- -------- ------- -------
Total from Investment Operations.................... 4.241 3.092 4.3725 (.61) 1.50
-------- -------- -------- ------- -------
Less:
Distributions from and in Excess of
Net Investment Income........................ .250 .255 .27 .3225 .2975
Distributions from Net Realized Gain........... 2.572 2.592 1.9625 3.0475 2.1225
-------- -------- -------- ------- -------
Total Distributions................................. 2.822 2.847 2.2325 3.37 2.42
-------- -------- -------- ------- -------
Net Asset Value, End of the Period.................. $ 16.204 $ 14.785 $ 14.54 $ 12.40 $ 16.38
======== ======== ======== ======= =======
Total Return (a).................................... 29.92% 22.34% 36.16% (3.67%) 9.09%
Net Assets at End of the Period
(In millions).................................. $1,518.7 $1,240.9 $1,071.4 $ 871.6 $ 980.4
Ratio of Expenses to
Average Net Assets (b)......................... .94% 1.00% .96% 1.01% .96%
Ratio of Net Investment Income to
Average Net Assets (b)......................... 1.71% 1.71% 1.82% 1.93% 1.82%
Portfolio Turnover.................................. 114% 176% 151% 136% 50%
Average Commission Paid Per
Equity Share Traded (c)........................ $ .0602 $ .0598 --- --- ---
</TABLE>
(a) Total Return is based upon Net Asset Value which does not include payment
of the maximum sales charge or contingent deferred sales charge.
(b) The impact on the Ratios of Expenses and Net Investment Income to Average
Net Assets due to VKAC reimbursement of certain expenses was less than 0.01%.
(c) Represents the Average Brokerage Commission Paid Per Equity Share Traded
during the period for trades where commissions were applicable. This disclosure
was not required in fiscal years prior to 1996.
See Notes to Financial Statements
18
<PAGE>
Financial Highlights (Continued)
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B Shares 1997 1996 1995 1994 1993 (a)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $14.802 $ 14.56 $ 12.42 $ 16.40 $ 17.30
------- ------- ------- ------- -------
Net Investment Income .145 .144 .14 .16 .18
Net Realized and Unrealized Gain/Loss 3.964 2.825 4.1125 (.905) 1.192
------- ------- ------- ------- -------
Total from Investment Operations 4.109 2.969 4.2525 (.745) 1.372
------- ------- ------- ------- -------
Less:
Distributions from and in Excess of
Net Investment Income .130 .135 .15 .1875 .1495
Distributions from Net Realized Gain 2.572 2.592 1.9625 3.0475 2.1225
------- ------- ------- ------- -------
Total Distributions 2.702 2.727 2.1125 3.235 2.272
------- ------- ------- ------- -------
Net Asset Value, End of the Period $16.209 $14.802 $ 14.56 $ 12.42 $ 16.40
------- ------- ------- ------- -------
Total Return (b) 28.88% 21.39% 34.99% (4.41%) 8.25%
Net Assets at End of the Period (In millions) $ 123.1 $ 75.4 $ 45.2 $ 22.0 $ 13.9
Ratio of Expenses to Average Net Assets (c) 1.74% 1.80% 1.79% 1.84% 1.76%
Ratio of Net Investment Income to Average Net Assets (c) .92% .91% .96% 1.12% 1.04%
Portfolio Turnover 114% 176% 151% 136% 50%
Average Commission Paid Per Equity Share Traded (d) $ .0602 $ .0598 -- -- --
</TABLE>
(a) Based on average month-end shares outstanding.
(b) Total Return is based upon Net Asset Value which does not include payment
of the maximum sales charge or contingent deferred sales charge.
(c) The impact on the Ratios of Expenses and Net Investment Income to Average
Net Assets due to VKAC reimbursement of certain expenses was less than 0.01%.
(d) Represents the Average Brokerage Commission Paid Per Equity Share Traded
during the period for trades where commissions were applicable. This disclosure
was not required in fiscal years prior to 1996.
See Notes to Financial Statements
19
<PAGE>
Financial Highlights (Continued)
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
October 26, 1993
(Commencement
of Distribution)
Year Ended December31 to December 31,
--------------------------------------
Class C Shares 1997 1996 1995 1994 (a) 1993 (a)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period $14.805 $ 14.56 $ 12.41 $ 16.39 $ 18.16
------- ------- ------- ------- -------
Net Investment Income .144 .151 .15 .18 .02
Net Realized and Unrealized Gain/Loss 3.963 2.821 4.1125 (.925) .1425
------- ------- ------- ------- -------
Total from Investment Operations 4.107 2.972 4.2625 (.745) .1625
------- ------- ------- ------- -------
Less:
Distributions from and in Excess of
Net Investment Income .130 .135 .15 .1875 .065
Distributions from Net Realized Gain 2.572 2.592 1.9625 3.0475 1.8675
------- ------- ------- ------- -------
Total Distributions 2.702 2.727 2.1125 3.235 1.9325
------- ------- ------- ------- -------
Net Asset Value, End of the Period $16.210 $14.805 $ 14.56 $ 12.41 $ 16.39
======= ======= ======= ======= =======
Total Return (b) 28.89% 21.38% 35.11% (4.43%) 1.11%*
Net Assets at End of the Period (In millions) $ 10.9 $ 5.8 $ 4.1 $ 2.3 $ 0.5
Ratio of Expenses to Average Net Assets (c) 1.74% 1.80% 1.79% 1.85% 1.93%
Ratio of Net Investment Income to Average
Net Assets (c) .92% .92% .97% 1.15% .78%
Portfolio Turnover 114% 176% 151% 136% 50%
Average Commission Paid Per Equity Share Traded (d) $ .0602 $ .0598 -- -- --
</TABLE>
*Non-Annualized
(a) Based on average month-end shares outstanding.
(b) Total Return is based upon Net Asset Value which does not include payment
of the maximum sales charge or contingent deferred sales charge.
(c) The impact on the Ratios of Expenses and Net Investment Income to Average
Net Assets due to VKAC reimbursement of certain expenses was less than 0.01%.
(d) Represents the Average Brokerage Commission Paid Per Equity Share Traded
during the period for trades where commissions were applicable. This
disclosure was not required in fiscal years prior to 1996.
See Notes to Financial Statements
20
<PAGE>
Notes to Financial Statements
December 31, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen American Capital Comstock Fund (the "Fund") is organized as a
Delaware business trust and is registered as a diversified open-end investment
management company under the Investment Company Act of 1940, as amended. The
Fund's investment objective is capital growth and income through investments in
common and preferred stock, and debt securities convertible into common and
preferred stock. The Fund commenced investment operations on October 7, 1968.
The distribution of the Fund's Class B and Class C shares commenced on October
19, 1992 and October 26, 1993, respectively.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. SECURITY VALUATION-Investments in securities listed on a securities exchange
are valued at their sale price as of the close of such securities exchange.
Fixed income investments are stated at value using market quotations. Unlisted
securities and listed securities for which the last sales price is not available
are valued at the last bid price. For those securities where quotations or
prices are not available, valuations are determined in accordance with
procedures established in good faith by the Board of Trustees. Short-term
securities with remaining maturities of 60 days or less are valued at amortized
cost.
B. SECURITY TRANSACTIONS-Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis. The
Fund may purchase and sell securities on a "when issued" or "delayed delivery"
basis, with settlement to occur at a later date. The value of the security so
purchased is subject to market fluctuations during this period. The Fund will
maintain, in a segregated account with its custodian, assets having an aggregate
value at least equal to the amount of the when issued or delayed delivery
purchase commitments until payment is made. At December 31, 1997, there were no
when issued or delayed delivery purchase commitments.
The Fund may invest in repurchase agreements which are short-term
investments whereby the 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 by Van Kampen American Capital Asset Management, Inc. (the
"Adviser") or its affiliates, the daily aggregate of which is invested in
repurchase agreements. Repurchase agreements are fully collateralized by the
underlying debt security. 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.
C. INCOME AND EXPENSE-Dividend income is recorded on the ex-dividend date and
interest income is recorded on an accrual basis. Original issue discount is
amortized over the life of each applicable security. Premiums on debt securities
are not amortized. Expenses of the Fund are allocated on a pro rata basis to
each class of shares, except for distribution and service fees and transfer
agency costs which are unique to each class of shares.
D. FEDERAL INCOME TAXES-It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no provision for federal income taxes is required.
Net realized gains or losses may differ for financial and tax reporting
purposes primarily as a result of the deferral of losses for tax purposes
resulting from wash sales.
21
<PAGE>
Notes to Financial Statements (Continued)
December 31, 1997
- --------------------------------------------------------------------------------
At December 31, 1997, for federal income tax purposes, cost of long- and
short-term investments is $1,413,212,294, the aggregate gross unrealized
appreciation is $301,517,070 and the aggregate gross unrealized depreciation is
$48,658,176, resulting in net unrealized appreciation of $252,858,894.
E. DISTRIBUTION OF INCOME AND GAINS-The Fund declares and pays dividends
quarterly from net investment income. Net realized gains, if any, are
distributed annually. Distributions from net realized gains for book purposes
may include short-term capital gains and gains on option and futures
transactions. All short-term capital gains and a portion of option and futures
gains are included in ordinary income for tax purposes.
For Federal income tax purposes, the following information is furnished
with respect to the distributions paid by the Fund during its taxable year ended
December 31, 1997. The Fund designated $68,399,827 as a 28% rate capital gain
distribution and $25,393,891 as a 20% rate capital gain distribution.
Shareholders were sent a 1997 Form 1099-DIV in January 1998 representing their
proportionate share of the capital gain distribution to be reported on their
income tax returns. For corporate shareholders 17.15% of the distributions
qualify for the dividend received deductions.
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Fund's Investment Advisory Agreement, the Adviser will
provide facilities and investment advice to the Fund for an annual fee payable
monthly as follows:
<TABLE>
<CAPTION>
Average Net Assets % Per Annum
- --------------------------------------------------------------------------------
<S> <C>
First $1 billion................................................... .50 of 1%
Next $1 billion.................................................... .45 of 1%
Next $1 billion.................................................... .40 of 1%
Over $3 billion.................................................... .35 of 1%
</TABLE>
For the year ended December 31, 1997, the Fund recognized expenses of
approximately $49,100 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom (Illinois), counsel to the Fund, of which a trustee of the
Fund is an affiliated person.
For the year ended December 31, 1997, the Fund recognized expenses of
approximately $194,100 representing Van Kampen American Capital Distributors,
Inc.'s or its affiliates, (collectively "VKAC") cost of providing accounting
services to the Fund. These services are provided by VKAC at cost.
ACCESS Investor Services, Inc. ("ACCESS"), an affiliate of the Adviser,
serves as the shareholder servicing agent for the Fund. For the year ended
December 31, 1997, the Fund recognized expenses of approximately $1,901,300,
representing ACCESS' cost of providing transfer agency and shareholder services
plus a profit.
Certain officers and trustees of the Fund are also officers and directors
of VKAC. The Fund does not compensate its officers or trustees who are officers
of VKAC.
The Fund provides deferred compensation and retirement plans for its
trustees who are not officers of VKAC. Under the deferred compensation plan,
trustees may elect to defer all or a portion of their compensation to a later
date. Benefits under the retirement plan are payable for a ten-year period and
are based upon each trustee's years of service to the Fund. The maximum annual
benefit per trustee under the plan is equal to $2,500.
22
<PAGE>
Notes to Financial Statements (Continued)
December 31, 1997
- --------------------------------------------------------------------------------
3. CAPITAL TRANSACTIONS
The Fund has outstanding three classes of shares of beneficial interest, Classes
A, B and C, each with a par value of $.01 per share. There are an unlimited
number of shares of each class authorized.
At December 31, 1997, capital aggregated $1,194,392,039, $116,704,433 and
$10,529,159 for Classes A, B, and C, respectively. For the year ended December
31, 1997, transactions were as follows:
<TABLE>
<CAPTION>
Shares Value
- -------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A........................... 45,998,404 $ 744,890,923
Class B........................... 3,397,175 54,818,021
Class C........................... 1,047,262 17,579,175
---------- -------------
Total Sales............................ 50,442,841 $ 817,288,119
========== =============
Dividend Reinvestment:
Class A........................... 13,786,947 $ 217,128,859
Class B........................... 1,028,368 16,221,126
Class C........................... 86,370 1,363,305
---------- -------------
Total Dividend Reinvestment 14,901,685 $ 234,713,290
========== =============
Repurchases:
Class A........................... (49,991,503) $(810,383,665)
Class B........................... (1,916,981) (30,944,192)
Class C........................... (852,871) (14,382,668)
---------- -------------
Total Repurchases (52,761,355) $(855,710,525)
========== =============
</TABLE>
23
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
December 31, 1997
- --------------------------------------------------------------------------------
At December 31, 1996, capital aggregated $1,042,755,922, $76,609,478 and
$5,969,347 for Classes A, B and C, respectively. For the year ended December 31,
1996, transactions were as follows:
<TABLE>
<CAPTION>
SHARES VALUE
- --------------------------------------------------------------------------------
Sales:
<S> <C> <C>
Class A.................................... 53,832,803 $ 828,392,481
Class B.................................... 2,473,967 38,067,722
Class C.................................... 241,811 3,684,614
------------ -------------
Total Sales..................................... 56,548,581 $ 870,144,817
============ =============
Dividend Reinvestment:
Class A.................................... 13,289,272 $ 192,499,655
Class B.................................... 730,321 10,558,446
Class C.................................... 56,044 810,114
------------ -------------
Total Dividend Reinvestment..................... 14,075,637 $ 203,868,215
============ =============
Repurchases:
Class A.................................... (56,870,860) $(876,361,190)
Class B.................................... (1,214,527) (18,504,572)
Class C.................................... (186,167) (2,847,599)
------------ -------------
Total Repurchases............................... (58,271,554) $(897,713,361)
============ =============
</TABLE>
Class B and C shares are offered without a front end sales charge, but are
subject to a contingent deferred sales charge (CDSC). The CDSC for Class B and C
shares will be imposed on most redemptions made within five years of the
purchase for Class B and one year of the purchase for Class C as detailed in the
following schedule.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE
YEAR OF REDEMPTION CLASS B CLASS C
- --------------------------------------------------------------------------------
<S> <C> <C>
First............................................... 5.00% 1.00%
Second.............................................. 4.00% None
Third............................................... 3.00% None
Fourth.............................................. 2.50% None
Fifth............................................... 1.50% None
Sixth and Thereafter................................ None None
</TABLE>
24
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
December 31, 1997
- --------------------------------------------------------------------------------
For the year ended December 31, 1997, VKAC, as Distributor for the Fund,
received net commissions on sales of the Fund's Class A shares of approximately
$220,900 and CDSC on redeemed shares of approximately $156,000. Sales charges do
not represent expenses of the Fund.
4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $1,607,114,788 and $1,669,155,483,
respectively.
5. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
The Fund has a variety of reasons to use derivative instruments, such as to
attempt to protect the Fund against possible changes in the market value of its
portfolio or generate potential gain. All of the Fund's portfolio holdings,
including derivative instruments, are marked to market each day with the change
in value reflected in unrealized appreciation/depreciation. Upon disposition, a
realized gain or loss is recognized accordingly, except when exercising a call
option contract or taking delivery of a security underlying a futures contract.
In these instances the recognition of gain or loss is postponed until the
disposal of the security underlying the option or futures contract.
During the period, the Fund invested in futures contracts, a type of
derivative. A futures contract is an agreement involving the delivery of a
particular asset on a specified future date at an agreed upon price. The Fund
generally invests in exchange traded stock index futures. These contracts are
generally used to provide the return of an index without purchasing all of the
securities underlying the index or to manage the Fund's overall exposure to the
equity markets. 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. During the period the futures contract
is open, payments are received from or made to the broker based upon changes in
the value of the contract (the variation margin).
Transactions in futures contracts for the year ended December 31, 1997,
were as follows:
<TABLE>
<CAPTION>
CONTRACTS
- -----------------------------------------------------------------------
<S> <C>
Outstanding at December 31, 1996............................. -0-
Futures Opened............................................... 105
Futures Closed............................................... (105)
----
Outstanding at December 31, 1997............................. -0-
----
</TABLE>
6. DISTRIBUTION AND SERVICE PLANS
The Fund and its shareholders have adopted a distribution plan pursuant to Rule
12b-1 under the Investment Company Act of 1940 and a service plan (collectively
the "Plans"). The Plans govern payments for the distribution of the Fund's
shares, ongoing shareholder services and maintenance of shareholder accounts.
Annual fees under the Plans of up to .25% of Class A net assets and 1.00% each
of Class B and Class C net assets are accrued daily. Included in these fees for
the year ended December 31, 1997, are payments retained by VKAC of approximately
$1,041,654.
25
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
Van Kampen American Capital Comstock Fund
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, 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 Van Kampen American Capital
Comstock Fund (the "Fund") at December 31, 1997, and the results of its
operations, the changes in its net assets and the financial highlights for each
of the periods presented, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (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, 1997 by correspondence with the
custodian and brokers and the application of alternative auditing procedures
where confirmations from brokers were not received, provide a reasonable basis
for the opinion expressed above.
PRICE WATERHOUSE LLP
Chicago, Illinois
January 29, 1998
26
<PAGE>
- --------------------------------------------------------------------------------
FUNDS DISTRIBUTED BY VAN KAMPEN AMERICAN CAPITAL
- --------------------------------------------------------------------------------
EQUITY FUNDS
Domestic
MS Aggressive Equity
VKAC Aggressive Growth
MS American Value
VKAC Comstock
VKAC Emerging Growth
VKAC Enterprise
VKAC Equity Income
VKAC Growth
VKAC Growth and Income
VKAC Harbor
VKAC Pace
VKAC Real Estate Securities
MS U.S. Real Estate
VKAC Utility
MS Value
International /Global
MS Asian Growth
MS Emerging Markets
MS Global Equity
VKAC Global Equity
MS Global Equity Allocation
VKAC Global Managed Assets
MS International Magnum
MS Latin American
FIXED-INCOME FUNDS
Income
VKAC Corporate Bond
MS Global Fixed Income
VKAC Global Government Securities
VKAC Government Securities
VKAC High Income Corporate Bond
MS High Yield
VKAC High Yield
VKAC Short-Term Global Income
VKAC Strategic Income
VKAC U.S. Government
VKAC U.S. Government Trust for Income
MS Worldwide High Income
Tax Exempt Income
VKAC California Insured Tax Free
VKAC Florida Insured Tax Free Income
VKAC High Yield Municipal
VKAC Insured Tax Free Income
VKAC Intermediate Term Municipal Income
VKAC Municipal Income
VKAC New York Tax Free Income
VKAC Pennsylvania Tax Free Income
VKAC Tax Free High Income
Capital Preservation
VKAC Limited Maturity Government
VKAC Prime Rate Income Trust
VKAC Reserve
VKAC Senior Floating Rate
VKAC Tax Free Money
To find out more about any of these funds, ask your financial adviser for a
prospectus, which contains more complete information, including sales charges,
risks, and expenses. Please read it carefully before you invest or send money.
To view a current Van Kampen American Capital or Morgan Stanley fund prospectus
or to receive additional fund information, choose from one of the following:
(Yen) visit our web site at WWW.VKAC.COM -- to view prospectuses, select
Investors' Place, then Download a Prospectus
(Yen) call us at 1-800-341-2911 weekdays from 7:00 a.m. to 7:00 p.m. Central
time (Telecommunications Device for the Deaf users, call 1-800-421-2833)
(Yen) e-mail us by visiting WWW.VKAC.COM and selecting Investors' Place
27
<PAGE>
- --------------------------------------------------------------------------------
VAN KAMPEN AMERICAN CAPITAL COMSTOCK FUND
- --------------------------------------------------------------------------------
Board of Trustees
J. Miles Branagan
Richard M. DeMartini*
Linda Hutton Heagy
R. Craig Kennedy
Jack E. Nelson
Phillip B. Rooney
Fernando Sisto
Wayne W. Whalen* - Chairman
Officers
Dennis J. McDonnell*
President
Ronald A. Nyberg*
Vice President and Secretary
Edward C. Wood, III*
Vice President and Chief Financial Officer
Curtis W. Morell*
Vice President and Chief Accounting Officer
John L. Sullivan*
Treasurer
Tanya M. Loden*
Controller
Peter W. Hegel*
Alan T. Sachtleben*
Paul R. Wolkenberg*
Vice Presidents
Investment Adviser
VAN KAMPEN AMERICAN CAPITAL
ASSET MANAGEMENT, INC.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Distributor
VAN KAMPEN AMERICAN CAPITAL
DISTRIBUTORS, INC.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Shareholder Servicing Agent
ACCESS INVESTOR
SERVICES, INC.
P.O. Box 418256
Kansas City, Missouri 64141-9256
Custodian
STATE STREET BANK
AND TRUST COMPANY
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02105
Legal Counsel
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606
Independent Accountants
PRICE WATERHOUSE LLP
200 E. Randolph
Chicago, Illinois 60601
* "Interested" persons of the Fund, as defined in the Investment Company Act
of 1940.
(C) Van Kampen American Capital Distributors, Inc., 1997
All rights reserved.
/SM/ denotes a service mark of Van Kampen American Capital Distributors, Inc.
----------------------------------------------------
TAX NOTICE TO CORPORATE
SHAREHOLDERS
For 1997, 17.15% of the dividends taxable
as ordinary income qualified for the
70% dividends received deduction for
corporations.
----------------------------------------------------
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. After June 30, 1998, the report, if used with prospective
investors, must be accompanied by a quarterly performance update.
28
<PAGE>
VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> COMSTOCK CLASS A
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 1,410,363,728<F1>
<INVESTMENTS-AT-VALUE> 1,666,071,188<F1>
<RECEIVABLES> 15,446,019<F1>
<ASSETS-OTHER> 58,549<F1>
<OTHER-ITEMS-ASSETS> 6,198<F1>
<TOTAL-ASSETS> 1,681,581,954<F1>
<PAYABLE-FOR-SECURITIES> 3,969,565<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 24,865,740<F1>
<TOTAL-LIABILITIES> 28,835,305<F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,194,392,039
<SHARES-COMMON-STOCK> 93,722,450
<SHARES-COMMON-PRIOR> 83,928,602
<ACCUMULATED-NII-CURRENT> 4,137,405<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> 71,276,153<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 255,707,460<F1>
<NET-ASSETS> 1,518,654,933
<DIVIDEND-INCOME> 32,319,388<F1>
<INTEREST-INCOME> 6,843,211<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (14,729,063)<F1>
<NET-INVESTMENT-INCOME> 24,433,536<F1>
<REALIZED-GAINS-CURRENT> 267,175,662<F1>
<APPREC-INCREASE-CURRENT> 97,119,326<F1>
<NET-CHANGE-FROM-OPS> 388,728,524<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> (20,935,347)
<DISTRIBUTIONS-OF-GAINS> (214,376,498)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 45,998,404
<NUMBER-OF-SHARES-REDEEMED> (49,991,503)
<SHARES-REINVESTED> 13,786,947
<NET-CHANGE-IN-ASSETS> 277,753,533
<ACCUMULATED-NII-PRIOR> 1,509,361<F1>
<ACCUMULATED-GAINS-PRIOR> 36,634,795<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 7,158,774<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 14,729,063<F1>
<AVERAGE-NET-ASSETS> 1,372,980,089
<PER-SHARE-NAV-BEGIN> 14.785
<PER-SHARE-NII> 0.275
<PER-SHARE-GAIN-APPREC> 3.966
<PER-SHARE-DIVIDEND> (0.250)
<PER-SHARE-DISTRIBUTIONS> (2.572)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 16.204
<EXPENSE-RATIO> 0.94
<AVG-DEBT-OUTSTANDING> 0<F1>
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1> This item relates to the Fund on a composite basis and not on a class basis
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 12
<NAME> COMSTOCK CLASS B
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 1,410,363,728<F1>
<INVESTMENTS-AT-VALUE> 1,666,071,188<F1>
<RECEIVABLES> 15,446,019<F1>
<ASSETS-OTHER> 58,549<F1>
<OTHER-ITEMS-ASSETS> 6,198<F1>
<TOTAL-ASSETS> 1,681,581,954<F1>
<PAYABLE-FOR-SECURITIES> 3,969,565<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 24,865,740<F1>
<TOTAL-LIABILITIES> 28,835,305<F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 116,704,433
<SHARES-COMMON-STOCK> 7,599,567
<SHARES-COMMON-PRIOR> 5,091,005
<ACCUMULATED-NII-CURRENT> 4,137,405<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> 71,276,153<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 255,707,460<F1>
<NET-ASSETS> 123,182,846
<DIVIDEND-INCOME> 32,319,388<F1>
<INTEREST-INCOME> 6,843,211<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (14,729,063)<F1>
<NET-INVESTMENT-INCOME> 24,433,536<F1>
<REALIZED-GAINS-CURRENT> 267,175,662<F1>
<APPREC-INCREASE-CURRENT> 97,119,326<F1>
<NET-CHANGE-FROM-OPS> 388,728,524<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> (802,099)
<DISTRIBUTIONS-OF-GAINS> (16,706,248)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,397,175
<NUMBER-OF-SHARES-REDEEMED> (1,916,981)
<SHARES-REINVESTED> 1,028,368
<NET-CHANGE-IN-ASSETS> 47,823,948
<ACCUMULATED-NII-PRIOR> 1,509,361<F1>
<ACCUMULATED-GAINS-PRIOR> 36,634,795<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 7,158,774<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 14,729,063<F1>
<AVERAGE-NET-ASSETS> 98,947,619
<PER-SHARE-NAV-BEGIN> 14.802
<PER-SHARE-NII> 0.145
<PER-SHARE-GAIN-APPREC> 3.964
<PER-SHARE-DIVIDEND> (0.130)
<PER-SHARE-DISTRIBUTIONS> (2.572)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 16.209
<EXPENSE-RATIO> 1.74
<AVG-DEBT-OUTSTANDING> 0<F1>
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1> This item relates to the Fund on a composite basis and not on a class basis
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 13
<NAME> COMSTOCK CLASS C
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 1,410,363,728<F1>
<INVESTMENTS-AT-VALUE> 1,666,071,188<F1>
<RECEIVABLES> 15,446,019<F1>
<ASSETS-OTHER> 58,549<F1>
<OTHER-ITEMS-ASSETS> 6,198<F1>
<TOTAL-ASSETS> 1,681,581,954<F1>
<PAYABLE-FOR-SECURITIES> 3,969,565<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 24,865,740<F1>
<TOTAL-LIABILITIES> 28,835,305<F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 10,529,159
<SHARES-COMMON-STOCK> 672,975
<SHARES-COMMON-PRIOR> 392,214
<ACCUMULATED-NII-CURRENT> 4,137,405<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> 71,276,153<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 255,707,460<F1>
<NET-ASSETS> 10,908,870
<DIVIDEND-INCOME> 32,319,388<F1>
<INTEREST-INCOME> 6,843,211<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (14,729,063)<F1>
<NET-INVESTMENT-INCOME> 24,433,536<F1>
<REALIZED-GAINS-CURRENT> 267,175,662<F1>
<APPREC-INCREASE-CURRENT> 97,119,326<F1>
<NET-CHANGE-FROM-OPS> 388,728,524<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> (68,046)
<DISTRIBUTIONS-OF-GAINS> (1,451,558)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,047,262
<NUMBER-OF-SHARES-REDEEMED> (852,871)
<SHARES-REINVESTED> 86,370
<NET-CHANGE-IN-ASSETS> 5,102,130
<ACCUMULATED-NII-PRIOR> 1,509,361<F1>
<ACCUMULATED-GAINS-PRIOR> 36,634,795<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 7,158,774<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 14,729,063<F1>
<AVERAGE-NET-ASSETS> 8,142,719
<PER-SHARE-NAV-BEGIN> 14.805
<PER-SHARE-NII> 0.144
<PER-SHARE-GAIN-APPREC> 3.963
<PER-SHARE-DIVIDEND> (0.130)
<PER-SHARE-DISTRIBUTIONS> (2.572)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 16.210
<EXPENSE-RATIO> 1.74
<AVG-DEBT-OUTSTANDING> 0<F1>
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1> This item relates to the Fund on a composite basis and not on a class basis
</FN>
</TABLE>
