<PAGE>
VAN KAMPEN
COMSTOCK FUND
Semi-Annual Report
June 30, 1998
[ARTWORK APPEARS HERE]
VAN KAMPEN
FUNDS
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders...................................................... 1
Performance Results......................................................... 3
Glossary of Terms........................................................... 4
Portfolio Management Review................................................. 5
Portfolio Highlights........................................................ 8
Portfolio of Investments.................................................... 9
Statement of Assets and Liabilities......................................... 14
Statement of Operations..................................................... 15
Statement of Changes in Net Assets.......................................... 16
Financial Highlights........................................................ 17
Notes to Financial Statements............................................... 20
</TABLE>
COM SAR 8/98
<PAGE>
Letter to Shareholders
July 16, 1998
[PHOTO APPEARS HERE]
Dennis J. McDonnell and Don G. Powell
Dear Shareholder,
As you may know, Van Kampen American Capital is consolidating all of the
retail mutual funds that we distribute under the single name of Van Kampen
Funds. This move accompanies the change in our legal name to Van Kampen Funds
Inc.
You can be assured that the change in your fund's name will not affect its
management or daily operations. You will begin seeing the application of this
change with this report. In addition, as of August 31, your fund will be listed
in the daily newspapers by share class under the heading "Van Kampen Funds." For
your convenience, we have enclosed a separate brochure that covers additional
details related to these changes.
Economic Review
The U.S. economy continued to expand at a robust pace despite a deepening
recession in a number of Asian nations. The nation's inflation-adjusted output
of goods and services ran at 5.4 percent during the first quarter, an annualized
rate considered by many economists to be virtually unsustainable without leading
to inflation. As the reporting period ended, however, there were indications
that the Asian financial crisis was finally having a moderating impact on the
economy. Also, the Conference Board's index of leading indicators points toward
a slowdown in economic growth later this year.
Despite the generally solid pace of economic activity, inflation remained
benign. Consumer prices rose by 1.7 percent during the 12 months through June,
while producer prices actually declined during the same period. Falling
commodity prices and the impact of the strong dollar helped to offset the
inflationary implications of a tight labor market and strong consumer spending.
While the Federal Reserve kept short-term interest rates steady at 5.5
percent during the reporting period, minutes from the central bank's May policy
meeting indicated growing sentiment for tightening monetary policy if the drag
from Asia does not slow the American economy on its own.
Market Review
U.S. stocks continued to post gains during the period, but the sharp
variation in returns across industry groups reflected the growing impact of the
Asian financial crisis on corporate profits. The Wilshire 5000 Index, consisting
of all publicly traded U.S. companies, gained 14.68 percent during the first six
months of 1998. Once again, most of the strength was concentrated in large-
capitalization companies, as the S&P 500 Index of large stocks returned 17.67
percent during the period compared to 4.93 percent for the Russell 2000 Index of
small-cap issues. Even large stocks, however, fell back significantly beginning
in April as the Asian crisis intensified.
Companies with heavy exposure to domestic consumers benefited from a strong
American economy, especially during the latter stages of the reporting period.
Consumer cyclical stocks
1 Continued on page two
<PAGE>
returned 28.94 percent during the first six months of 1998, compared to 6.35
percent for basic materials and 3.01 percent for energy issues. Eight of the ten
top-performing industry groups during the second quarter were from consumer-
related sectors. Meanwhile, the steep decline in energy and agricultural
prices--a consequence of reduced demand from Asia--undermined the performance of
commodity-related stocks. During the three months through June, five of the ten
worst-performing industry sectors were from either energy, metals, or commodity-
based industries.
Outlook
We believe economic growth in the United States is likely to slow in coming
months as the impact of the Asian crisis becomes more apparent. As growth
decelerates, corporate profits will come under pressure, especially among larger
companies. Given the difficult year-over-year earnings comparisons that will
begin to appear in coming quarters, we caution investors not to expect a
continuation of the large gains that have become almost routine for U.S. stocks
in recent years. The high valuations and decelerating profit growth could limit
returns in the equity market over the near term.
Still, the overall environment for equities remains positive. Inflation is
low, the economy continues to grow, the bond market is healthy, and monetary
policy is stable. These characteristics usually support relatively high
valuations in the stock market. We remain confident that the domestic equity
asset class will continue to provide solid growth for investors with a long-term
time horizon.
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 Asset Management Inc. Van Kampen Asset Management Inc.
2
<PAGE>
Performance Results for the Period Ended June 30, 1998
Van Kampen Comstock Fund
<TABLE>
<CAPTION>
A Shares B Shares C Shares
<S> <C> <C> <C>
Total Returns
Six-month total return based on NAV/1/.......... 11.30% 10.85% 10.78%
Six-month total return/2/....................... 4.89% 5.85% 9.78%
One-year total return/2/........................ 21.51% 22.94% 26.95%
Five-year average annual total return/2/........ 18.07% 18.38% N/A
Ten-year average annual total return/2/......... 15.55% N/A N/A
Life-of-Fund average annual total return/2/..... 12.84% 17.89% 19.06%
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 shares 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>
Glossary of Terms
Blue-chip stocks:
Stocks of large, well-known companies that have a long record of growth.
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.
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 stock. Morningstar,
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, calculated by deducting a fund's
liabilities from its total assets and dividing this amount by the number of
shares outstanding. The NAV does not include any initial or contingent
deferred sales charge.
Standard & Poor's 500-Stock Index:
A broad-based measurement of changes in stock-market conditions based on
the average performance of 500 widely held common stocks. The index, which
tracks industrial, transportation, financial, and utility stocks, 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 the stock's 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 are
temporarily out of favor in the marketplace. As a result, the stocks trade
at prices below the value that value investors believe they are actually
worth.
4
<PAGE>
Portfolio Management Review
Van Kampen Comstock Fund
We recently spoke to the management team of the Van Kampen Comstock Fund about
the key events and economic forces that shaped the markets during the past six
months. The team is led by B. Robert Baker, portfolio manager, and Dennis J.
McDonnell, president of the adviser. The following excerpts reflect their views
on the Fund's performance during the six-month period ended June 30, 1998.
Q Can you describe the stock market environment for the Fund during the past
six months?
A The stock market was influenced by two opposing factors. On the home front,
steady economic growth and low inflation provided a very favorable climate
for stocks. However, the aftermath of the currency collapse in Southeast Asia
threatened to slow the economies of countries around the world. Fortunately for
equity investors, positive economic conditions in the United States had a
greater influence on the stock market than overseas turmoil did. The Dow Jones
Industrial Average set record highs throughout the reporting period and has
fluctuated around the 9000 mark since April.
Investors continued to favor large, well-established companies during the
reporting period because of their uncertainty about how the Asian situation
would affect the U.S. markets. As a result, large-capitalization companies
generally made greater gains than small-cap firms did.
Q Given this environment, what was your strategy in seeking to meet the
Fund's objective?
A We consistently seek to identify undervalued stocks that we believe have
the potential for future price appreciation. To do this, we look for
companies that are temporarily out of favor in the marketplace, because their
stock prices are usually lower than what we think these companies are actually
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 that company 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 specify what percentage of the Fund's assets should be in any given
industry. We prefer to select the stocks that best meet our criteria. The Fund's
sector weightings reflect where we find the most favorable opportunities on a
stock-by-stock basis.
Q What changes did you make to the portfolio?
A The most notable sector changes occurred in the consumer nondurables and
the utilities sectors. The Fund's weighting in consumer nondurables
increased during the period, primarily because we added to our holdings in
Philip Morris, RJR Nabisco, and Kimberly Clark. Also, we decreased the Fund's
allocation to electric utility stocks, which lagged the market this year, and
5
<PAGE>
took some of the profits we earned when this sector outperformed at the end of
1997. We believe that electric utility stocks are still inexpensive and have not
achieved their fair value, so we maintained a substantial holding in this area.
Q Which stocks contributed to the Fund's performance during the period?
A One of our biggest winners for the period was Tommy Hilfiger, an upscale
casual clothing manufacturer. The company intentionally built up a large
inventory toward the end of 1997, but the market perceived this situation
negatively and the stock became very cheap. Then, the company enjoyed a
tremendous holiday season, cleared out its inventory, and exceeded year-end
sales estimates. The stock reacted with a huge rally in early 1998, soaring
almost 70 percent this year. We recently sold some of our position to take
advantage of these gains.
Because we used a bottom-up selection process, Fund performance was driven
by individual stock selection, and our best performers represented a broad range
of industries. For example, Waste Management had been a longtime holding for the
Fund, and a recent announcement that the company would be merging with U.S.A.
Waste contributed to a price increase of 26 percent for the reporting period.
Other standouts included American Bankers Insurance, Mylan Labs, and American
Home Products, all of which appreciated at least 30 percent during the past six
months. Of course, not all stocks in the portfolio performed as favorably, and
there is no guarantee that any of these stocks will perform as well in the
future. For additional Fund portfolio highlights, please refer to page eight.
Q What factors worked against the Fund?
A Our large holdings in Philip Morris and RJR Nabisco impeded Fund
performance. These stocks weakened this spring amid uncertainty surrounding
the outcome of a number of legal and legislative issues. We added to the stocks
when they became extremely cheap, reaching historically low valuations, and we
believe there are several factors that could drive the stocks upward. The most
significant and likely catalyst would be a more favorable resolution to the
tobacco legislation than the proposals recently debated in Washington. Although
the outcome is unknown, we think the stocks adequately reflect the associated
risks.
The Fund's gold stocks were a mixed bag during the reporting period. As we
mentioned in the last report, gold prices were at a historic low at the end of
1997. We used that opportunity to invest, believing that nearly any change in
the market environment would send gold prices higher. Gold has been very
volatile this year, helping the Fund during the first quarter of 1998 but
hindering it during the second quarter. As of June 30, gold prices were quite
low again, so we held on to our position.
Q How did the Fund perform during the past six months?
A The Fund achieved a six-month total return of 11.30 percent/1/ (Class A
shares at net asset value) as of June 30, 1998. By comparison, the Standard
& Poor's 500-Stock Index returned 17.67 percent, and the Lipper Growth and
Income Fund Index, which more closely resembles the Fund, returned 11.53
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.
6
<PAGE>
These indices are statistical composites that do not include any
commissions or sales charges that would be paid by an investor purchasing the
securities or investments represented by these indices. 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 At the time of your last report, the effects of the Asian economic crisis
on the U.S. stock market were unclear but ominous. Today, its effects are
still uncertain, but the domestic outlook is more positive: the crisis has had a
severe impact on a few segments of the U.S. market but otherwise has been fairly
contained. The stock market reached new highs during the reporting period, and
we expect that controlled growth and low inflation will continue to support
stock prices during the remainder of the year.
In managing the Fund, we continue to look for undervalued large-cap stocks
with limited exposure to Asia. The stock market is still highly valued, with
many stocks at record prices. Inflated stock prices translate into high risk for
investors, because expensive securities generally have farther to fall in a
market downturn than undervalued stocks. We believe that value-oriented products
like the Comstock Fund may be well suited for this environment.
/s/ B. Robert Baker /s/ Dennis J. Mcdonnell
B. Robert Baker Dennis J. McDonnell
Portfolio Manager President
Van Kampen Asset Management Inc.
7 Please see footnotes on page three
<PAGE>
PORTFOLIO HIGHLIGHTS
VAN KAMPEN COMSTOCK FUND
PORTFOLIO HOLDINGS AS A PERCENTAGE OF LONG-TERM INVESTMENTS
<TABLE>
<CAPTION>
Top Ten Percentage of
Holdings These Investments
as of June 30, 1998 Six Months Ago
<S> <C> <C>
U.S. Treasury Notes.............. 3.7% ............ 4.9%
Philip Morris Cos., Inc.......... 3.6% ............ 1.5%
Houston Industries, Inc.......... 3.1% ............ 2.9%
Texas Utilities Co............... 3.0% ............ 3.0%
RJR Nabisco Holdings Corp........ 2.7% ............ 1.6%
Waste Management, Inc............ 2.5% ............ 2.8%
Dial Corp........................ 2.5% ............ 2.7%
Tommy Hilfiger Corp.............. 2.1% ............ 1.7%
American Home Products Corp...... 2.1% ............ 1.7%
Tenet Healthcare Corp............ 2.0% ............ N/A
N/A = Not Applicable
</TABLE>
TOP FIVE PORTFOLIO SECTORS AS A PERCENTAGE OF LONG-TERM INVESTMENTS
<TABLE>
<CAPTION>
As of June 30, 1998 As of December 31, 1997
<S> <C> <C> <C>
Utilities.....................26% Utilities.............................27%
Consumer Non-Durables.........13% Finance...............................13%
Finance.......................12% Raw Materials/Processing Industries...10%
Health Care...................11% Consumer Non-Durables................. 9%
Raw Materials/Processing Technology............................ 8%
Industries.................. 9%
</TABLE>
8
<PAGE>
PORTFOLIO OF INVESTMENTS
June 30, 1998 (Unaudited)
================================================================================
<TABLE>
<CAPTION>
Description Shares Market Value
- ----------- --------- ------------
<S> <C> <C>
Common Stocks 93.0%
Consumer Distribution 3.3%
CompUSA, Inc. (a) ................................. 976,000 $ 17,629,000
Federated Department Stores, Inc. (a) ............. 329,000 17,704,313
Proffitt's, Inc. (a) .............................. 301,200 12,160,950
Sears Roebuck & Co. ............................... 216,400 13,213,925
------------
60,708,188
------------
Consumer Non-Durables 12.5%
Dial Corp. ........................................ 1,689,000 43,808,437
First Brands Corp. ................................ 282,800 7,246,750
Kimberly Clark Corp. .............................. 646,000 29,635,250
Philip Morris Cos., Inc. .......................... 1,636,600 64,441,125
RJR Nabisco Holdings Corp. ........................ 2,030,400 48,222,000
Tommy Hilfiger Corp. (a) .......................... 613,500 38,343,750
------------
231,697,312
------------
Consumer Services 0.9%
Hilton Hotels Corp. ............................... 402,000 11,457,000
News Corp. Ltd. - ADR (Australia) ................. 166,800 4,712,100
------------
16,169,100
------------
Energy 5.6%
Amoco Corp. ....................................... 359,000 14,943,375
Atlantic Richfield Co. ............................ 100,800 7,875,000
British Petroleum Co. PLC - ADR (United Kingdom) .. 98,000 8,648,500
Chevron Corp. ..................................... 200,000 16,612,500
ENI - ADR (Italy) ................................. 220,000 14,300,000
Rowan Cos., Inc. (a) .............................. 227,300 4,418,144
Texaco, Inc. ...................................... 140,000 8,356,250
Total SA - ADR (France) ........................... 144,821 9,467,673
USX - Marathon Group .............................. 154,000 5,284,125
YPF Sociedad Anonima, Class D - ADR (Argentina) ... 468,000 14,069,250
------------
103,974,817
------------
Finance 11.6%
AMBAC Financial Group, Inc. ....................... 457,900 26,787,150
</TABLE>
See Notes to Financial Statements
9
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1998 (Unaudited)
================================================================================
<TABLE>
<CAPTION>
Description Shares Market Value
- ----------- ------- -------------
<S> <C> <C>
Finance (Continued)
American Bankers Insurance Group, Inc................. 412,000 $ 24,771,500
BankAmerica Corp...................................... 117,000 10,113,187
Banc One Corp......................................... 87,600 4,889,175
Bear Stearns Cos., Inc................................ 193,000 10,976,875
Chase Manhattan Corp.................................. 284,000 21,442,000
CMAC Investment Corp.................................. 367,800 22,619,700
Conseco, Inc.......................................... 297,000 13,884,750
Everest Reinsurance Holdings, Inc..................... 185,000 7,110,938
First Union Corp...................................... 147,000 8,562,750
LandAmerica Financial Group, Inc...................... 202,700 11,604,575
Liberty Financial Cos., Inc........................... 134,300 4,633,350
MBIA, Inc............................................. 120,000 8,985,000
Nationwide Financial Services, Inc., Class A.......... 70,900 3,615,900
Norwest Corp.......................................... 309,000 11,548,875
United Asset Management Corp.......................... 285,800 7,448,663
Washington Mutual, Inc................................ 381,000 16,549,687
-----------
215,544,075
-----------
Healthcare 10.9%
Aetna, Inc............................................ 79,100 6,021,488
American Home Products Corp........................... 732,000 37,881,000
Bausch & Lomb, Inc.................................... 436,000 21,854,500
Mylan Laboratories, Inc............................... 888,000 26,695,500
PacifiCare Health Systems, Class B (a)................ 311,500 27,528,812
Pharmacia & Upjohn, Inc............................... 313,000 14,437,125
Rhodia, SA - ADR (France) (a)......................... 105,000 2,861,250
Rhone-Poulenc, SA, Class A - ADR (France)............. 515,000 28,936,562
Tenet Healthcare Corp. (a)............................ 1,162,000 36,312,500
-----------
202,528,737
-----------
Producer Manufacturing 8.2%
Alstom SA - ADR (France) (a).......................... 646,800 21,061,425
American Power Conversion Corp. (a)................... 763,000 22,890,000
Bouygues Offshore SA - ADR (France)................... 349,000 7,372,625
Cognex Corp. (a)...................................... 733,000 13,560,500
</TABLE>
See Notes to Financial Statements
10
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1998 (Unaudited)
================================================================================
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------------
<S> <C> <C>
Producer Manufacturing (Continued)
LucasVarity PLC - ADR (United Kingdom)................... 232,000 $ 9,236,500
Navistar International Corp. (a)......................... 328,500 9,485,437
The St. Joe Co........................................... 370,800 10,150,650
US Filter Corp. (a)...................................... 423,900 11,895,694
Waste Management, Inc.................................... 1,298,000 45,430,000
------------
151,082,831
------------
Raw Materials/Processing Industries 8.7%
Barrick Gold Corp........................................ 866,000 16,616,375
Bethlehem Steel Corp. (a)................................ 408,000 5,074,500
Boise Cascade Corp....................................... 368,000 12,052,000
British Steel PLC - ADR (United Kingdom)................. 1,120,000 25,480,000
Champion International Corp.............................. 73,000 3,590,688
Freeport-McMoran Copper & Gold, Inc., Class B............ 600,000 9,112,500
Homestake Mining Co...................................... 2,244,000 23,281,500
Imperial Chemical Industries PLC - ADR (United Kingdom).. 120,000 7,740,000
Louisiana-Pacific Corp................................... 1,003,000 18,304,750
Newmont Mining Corp...................................... 795,000 18,781,875
Placer Dome, Inc......................................... 1,225,000 14,393,750
Stone Container Corp. (a)................................ 359,000 5,609,375
------------
160,037,313
------------
Technology 5.7%
Amkor Technology, Inc. (a)............................... 591,500 5,526,828
Avnet, Inc............................................... 139,000 7,601,563
Cypress Semiconductor Corp. (a).......................... 54,000 448,875
Electronics for Imaging, Inc. (a)........................ 441,000 9,316,125
Etec Systems, Inc. (a)................................... 197,900 6,963,606
Micron Technology, Inc. (a).............................. 531,000 13,175,437
Nokia Corp. - ADR (Finland).............................. 127,000 9,215,438
Quantum Corp. (a)........................................ 891,000 18,488,250
SunGard Data Systems, Inc. (a)........................... 726,800 27,890,950
VLSI Technology, Inc. (a)................................ 448,100 7,519,678
------------
106,146,750
------------
</TABLE>
See Notes to Financial Statements
11
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1998 (Unaudited)
=======================================================================
<TABLE>
<CAPTION>
Description Shares Market Value
- ----------- --------- --------------
<S> <C> <C>
Transportation 0.8%
Canadian National Railway Co............. 283,000 $ 15,034,375
--------------
Utilities 24.8%
Ameritech Corp........................... 534,000 23,963,250
Baltimore Gas & Electric Co.............. 100,000 3,106,250
BEC Energy............................... 420,000 17,430,000
Bell Atlantic Corp....................... 488,000 22,265,000
Bellsouth Corp........................... 154,000 10,337,250
CMS Energy Corp.......................... 173,000 7,612,000
DTE Energy Co............................ 340,000 13,727,500
Edison International..................... 120,000 3,547,500
Endesa SA - ADR (Spain).................. 545,000 11,785,625
FPL Group, Inc........................... 80,000 5,040,000
GPU, Inc................................. 530,000 20,040,625
Houston Industries, Inc.................. 1,803,300 55,676,887
Idaho Power Co........................... 719,000 24,895,375
Illinova Corp............................ 416,000 12,480,000
New Century Energies, Inc................ 134,500 6,111,344
Niagara Mohawk Power Corp. (a)........... 169,800 2,536,388
NIPSCO Industries, Inc................... 155,000 4,340,000
Northeast Utilities (a).................. 473,500 8,019,906
Northern States Power Co................. 404,000 11,564,500
OGE Energy Corp.......................... 770,000 20,790,000
PacifiCorp............................... 1,266,000 28,643,250
Pinnacle West Capital Corp............... 555,000 24,975,000
Public Service Co. of New Mexico......... 740,000 16,788,750
SBC Communications, Inc.................. 411,000 16,440,000
Sierra Pacific Resources................. 50,000 1,815,625
Texas Utilities Co....................... 1,281,000 53,321,625
US West, Inc............................. 672,000 31,584,000
--------------
458,837,650
--------------
Total Common Stocks 93.0%................ 1,721,761,148
--------------
</TABLE>
See Notes to Financial Statements
12
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Market Value
- ----------- --------------
<S> <C>
U.S. Treasury Securities 3.6%
U.S. Treasury Notes ($30,000,000 par, 5.625% coupon, 11/30/99 maturity)...... $ 30,054,000
U.S. Treasury Notes ($36,000,000 par, 5.50% coupon, 02/29/00 maturity)....... 36,001,800
--------------
Total U.S. Treasury Securities.................................................... 66,055,800
--------------
Total Long-Term Investments 96.6%
(Cost $1,481,035,243)........................................................ 1,787,816,948
Short-Term Investments 3.4%
(Cost $62,790,286)........................................................... 62,790,286
--------------
Total Investments 100.0%
(Cost $1,543,825,529)........................................................ 1,850,607,234
Liabilities in Excess of Other Assets 0.0%........................................ (314,213)
--------------
Net Assets 100.0%................................................................. $1,850,293,021
==============
</TABLE>
(a) Non-income producing security as this stock currently does not declare
dividends.
See Notes to Financial Statements
13
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1998 (Unaudited)
================================================================================
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Total Investments (Cost $1,543,825,529).............................. $1,850,607,234
Cash................................................................. 6,780
Receivables:
Dividends.......................................................... 5,825,984
Fund Shares Sold................................................... 3,279,447
Interest........................................................... 804,724
Investments Sold................................................... 461,145
Other................................................................ 73,783
--------------
Total Assets..................................................... 1,861,059,097
--------------
LIABILITIES:
Payables:
Investments Purchased.............................................. 7,734,941
Distributor and Affiliates......................................... 1,222,734
Investment Advisory Fee............................................ 716,228
Income Distributions............................................... 307,980
Accrued Expenses..................................................... 582,080
Trustees' Deferred Compensation and Retirement Plans................. 202,113
--------------
Total Liabilities................................................ 10,766,076
--------------
NET ASSETS........................................................... $1,850,293,021
==============
NET ASSETS CONSIST OF:
Capital.............................................................. $1,420,407,468
Net Unrealized Appreciation.......................................... 306,781,705
Accumulated Net Realized Gain........................................ 117,064,748
Accumulated Undistributed Net Investment Income...................... 6,039,100
--------------
NET ASSETS........................................................... $1,850,293,021
==============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share
(Based on net assets of $1,662,792,995 and 96,787,756 shares of
beneficial interest issued and outstanding)...................... $ 17.18
Maximum sales charge (5.75%* of offering price).................. 1.05
--------------
Maximum offering price to public................................. $ 18.23
==============
Class B Shares:
Net asset value and offering price per share
(Based on net assets of $161,093,046 and 9,377,723 shares of
beneficial interest issued and outstanding)...................... $ 17.18
==============
Class C Shares:
Net asset value and offering price per share
(Based on net assets of $26,406,980 and 1,537,580 shares of
beneficial interest issued and outstanding)...................... $ 17.17
==============
*On sales of $50,000 or more, the sales charge will be reduced.
</TABLE>
See Notes to Financial Statements
14
<PAGE>
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1998 (Unaudited)
================================================================================
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C>
Dividends.................................................................. $ 19,297,059
Interest................................................................... 3,716,790
------------
Total Income.......................................................... 23,013,849
------------
EXPENSES:
Investment Advisory Fee.................................................... 4,237,201
Distribution (12b-1) and Service Fees (Attributed to Classes A, B and C of
$1,793,796, $711,394 and $74,358, respectively).......................... 2,579,548
Shareholder Services....................................................... 1,327,700
Custody.................................................................... 48,197
Legal...................................................................... 22,625
Trustees' Fees and Expenses................................................ 20,934
Other...................................................................... 441,699
------------
Total Expenses........................................................ 8,677,904
------------
NET INVESTMENT INCOME...................................................... $ 14,335,945
============
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments.............................................................. $119,425,839
Futures.................................................................. 509,724
------------
Net Realized Gain.......................................................... 119,935,563
------------
Unrealized Appreciation/Depreciation:
Beginning of the Period.................................................. 255,707,460
End of the Period:
Investments............................................................ 306,781,705
------------
Net Unrealized Appreciation During the Period.............................. 51,074,245
------------
NET REALIZED AND UNREALIZED GAIN........................................... $171,009,808
============
NET INCREASE IN NET ASSETS FROM OPERATIONS................................. $185,345,753
============
</TABLE>
See Notes to Financial Statements
15
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended June 30, 1998 and
the Year Ended December 31, 1997 (Unaudited)
<TABLE>
<CAPTION>
=========================================================================================================
Six Months Ended Year Ended
June 30, 1998 December 31, 1997
---------------- -----------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income............................................ $ 14,335,945 $ 24,433,536
Net Realized Gain................................................ 119,935,563 267,175,662
Net Unrealized Appreciation During the Period.................... 51,074,245 97,119,326
Change in Net Assets from Operations............................. 185,345,753 388,728,524
Distributions from Net Investment Income:
Class A Shares................................................. (11,801,598) (20,935,347)
Class B Shares................................................. (560,865) (802,099)
Class C Shares................................................. (71,787) (68,046)
-------------- --------------
(12,434,250) (21,805,492)
-------------- --------------
Distributions from Net Realized Gain:
Class A Shares.................................................. (67,711,390) (214,376,498)
Class B Shares.................................................. (5,873,986) (16,706,248)
Class C Shares.................................................. (561,592) (1,451,558)
-------------- --------------
(74,146,968) (232,534,304)
-------------- --------------
Total Distributions............................................ (86,581,218) (254,339,796)
-------------- --------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES.............. 98,764,535 134,388,728
-------------- --------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold........................................ 685,910,395 817,288,119
Net Asset Value of Shares Issued Through Dividend Reinvestment... 79,707,250 234,713,290
Cost of Shares Repurchased....................................... (666,835,808) (855,710,525)
-------------- --------------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS............... 98,781,837 196,290,884
-------------- --------------
TOTAL INCREASE IN NET ASSETS..................................... 197,546,372 330,679,612
NET ASSETS:
Beginning of the Period.......................................... 1,652,746,649 1,322,067,037
-------------- --------------
End of the Period (Including accumulated undistributed net
investment income of $6,039,100 and $4,137,405, Respectively).. $1,850,293,021 $1,652,746,649
-------------- --------------
</TABLE>
See Notes to Financial Statements
16
<PAGE>
FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated. (Unaudited)
<TABLE>
<CAPTION>
==========================================================================================================================
Year Ended December 31
Six Months Ended --------------------------------------------
Class A Shares June 30, 1998 1997 1996 1995 1994
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period..................... $ 16.204 $ 14.785 $ 14.54 $ 12.40 $ 16.38
-------- -------- -------- -------- -------
Net Investment Income...................................... .142 .275 .264 .26 .31
Net Realized and Unrealized Gain/Loss...................... 1.686 3.966 2.828 4.1125 (.92)
-------- -------- -------- -------- -------
Total from Investment Operations............................. 1.828 4.241 3.092 4.3725 (.61)
-------- -------- -------- -------- -------
Less:
Distributions from and in Excess of Net Investment Income.. .125 .250 .255 .27 .3225
Distributions from Net Realized Gain....................... .727 2.572 2.592 1.9625 3.0475
-------- -------- -------- -------- -------
Total Distributions.......................................... .852 2.822 2.847 2.2325 3.37
-------- -------- -------- -------- -------
Net Asset Value, End of the Period........................... $ 17.180 $ 16.204 $ 14.785 $ 14.54 $ 12.40
======== ======== ======== ======== =======
Total Return (a)............................................. 11.30%* 29.92% 22.34% 36.16% (3.67%)
Net Assets at End of the Period (In millions)................ $1,662.8 $1,518.7 $1,240.9 $1,071.4 $ 871.6
Ratio of Expenses to Average Net Assets (b).................. .91% .94% 1.00% .96% 1.01%
Ratio of Net Investment Income to
Average Net Assets (b)..................................... 1.68% 1.71% 1.71% 1.82% 1.93%
Portfolio Turnover........................................... 43%* 114% 176% 151% 136%
</TABLE>
*Non-Annualized
(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) For the year ended December 31,1996, the impact on the Ratios of Expenses
and Net Investment Income to Average Net Assets due to Van Kampen's
reimbursement of certain expenses was less than 0.01%.
See Notes to Financial Statements
17
<PAGE>
Financial Highlights (Continued)
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated. (Unaudited)
<TABLE>
<CAPTION>
========================================================================================================
Year Ended December 31
Six Months Ended -------------------------------------
Class B Shares June 30, 1998 1997 1996 1995 1994
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period............... $ 16.209 $14.802 $ 14.56 $ 12.42 $ 16.40
-------- ------- ------- ------- -------
Net Investment Income............................ .073 .145 .144 .14 .16
Net Realized and Unrealized Gain/Loss............ 1.688 3.964 2.825 4.1125 (.905)
-------- ------- ------- ------- -------
Total from Investment Operations................... 1.761 4.109 2.969 4.2525 (.745)
-------- ------- ------- ------- -------
Less:
Distributions from and in Excess of Net
Investment Income.............................. .065 .130 .135 .15 .1875
Distributions from Net Realized Gain............. .727 2.572 2.592 1.9625 3.0475
-------- ------- ------- ------- -------
Total Distributions................................ .792 2.702 2.727 2.1125 3.235
-------- ------- ------- ------- -------
Net Asset Value, End of the Period................. $ 17.178 $16.209 $14.802 $ 14.56 $ 12.42
======== ======= ======= ======= =======
Total Return (a)................................... 10.85%* 28.88% 21.39% 34.99% (4.41%)
Net Assets at End of the Period (In millions)...... $ 161.1 $ 123.1 $ 75.4 $ 45.2 $ 22.0
Ratio of Expenses to Average Net Assets (b)........ 1.69% 1.74% 1.80% 1.79% 1.84%
Ratio of Net Investment Income to
Average Net Assets (b)........................... .92% .92% .91% .96% 1.12%
Portfolio Turnover................................. 43%* 114% 176% 151% 136%
</TABLE>
*Non-Annualized.
(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) For the year ended December 31,1996, the impact on the Ratios of Expenses
and Net Investment Income to Average Net Assets due to Van Kampen's
reimbursement of certain expenses was less than 0.01%.
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. (Unaudited)
<TABLE>
<CAPTION>
==========================================================================================================
Year Ended December 31
Six Months Ended -------------------------------------------
Class C Shares June 30, 1998 1997 1996 1995 1994 (a)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period........ $16.210 $14.805 $ 14.56 $ 12.41 $ 16.39
------- ------- ------- ------- -------
Net Investment Income......................... .067 .144 .151 .15 .18
Net Realized and Unrealized Gain/Loss......... 1.689 3.963 2.821 4.1125 (.925)
------- ------- ------- ------- -------
Total from Investment Operations.............. 1.756 4.107 2.972 4.2625 (.745)
------- ------- ------- ------- -------
Less:
Distributions from and in Excess of Net
Investment Income........................... .065 .130 .135 .15 .1875
Distributions from Net Realized Gain.......... .727 2.572 2.592 1.9625 3.0475
------- ------- ------- ------- -------
Total Distributions............................. .792 2.702 2.727 2.1125 3.235
------- ------- ------- ------- -------
Net Asset Value, End of the Period.............. $17.174 $16.210 $14.805 $ 14.56 $ 12.41
======= ======= ======= ======= =======
Total Return (b)................................ 10.78%* 28.89% 21.38% 35.11% (4.43%)
Net Assets at End of the Period (In millions)... $ 26.4 $ 10.9 $ 5.8 $ 4.1 $ 2.3
Ratio of Expenses to Average Net Assets (c)..... 1.69% 1.74% 1.80% 1.79% 1.85%
Ratio of Net Investment Income to Average
Net Assets (c)................................ 1.04% .92% .92% .97% 1.15%
Portfolio Turnover.............................. 43%* 114% 176% 151% 136%
</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) For the year ended December 31,1996, the impact on the Ratios of Expenses
and Net Investment Income to Average Net Assets due to Van Kampen's
reimbursement of certain expenses was less than 0.01%.
See Notes to Financial Statements
19
<PAGE>
Notes to Financial Statements
June 30, 1998 (Unaudited)
================================================================================
1. Significant Accounting Policies
Van Kampen Comstock Fund, formerly known as 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 mean of the last reported bid and asked 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 June 30, 1998, 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 Asset Management, Inc. (the "Adviser") or its
affiliates, the daily aggregate of which is invested in repurchase agreements.
Repurchase agreements are fully collater-
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
alized 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.
At June 30, 1998, for federal income tax purposes, cost of long- and short-
term investments is $1,546,211,241, the aggregate gross unrealized appreciation
is $352,988,925 and the aggregate gross unrealized depreciation is $48,592,932,
resulting in net unrealized appreciation of $304,395,993.
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.
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
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 six months ended June 30, 1998, the Fund recognized expenses of
approximately $22,600 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 six months ended June 30, 1998, the Fund recognized expenses of
approximately $210,100 representing Van Kampen Funds Inc. or its affiliates'
(collectively "Van Kampen") cost of providing accounting services to the Fund.
Van Kampen Investor Services Inc. ("VKIS"), an affiliate of the Adviser,
serves as the shareholder servicing agent for the Fund. For the six months ended
June 30, 1998, the Fund recognized expenses of approximately $1,049,200.
Beginning in 1998, the transfer agency fees are determined through negotiations
with the Fund's Board of Trustees and are based on competitive market
benchmarks.
Certain officers and trustees of the Fund are also officers and directors of
Van Kampen. The Fund does not compensate its officers or trustees who are
officers of Van Kampen.
The Fund provides deferred compensation and retirement plans for its trustees
who are not officers of Van Kampen. 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 $2,500.
22
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
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 June 30, 1998, capital aggregated $1,247,747,859, $147,319,200 and
$25,340,409 for Classes A, B and C, respectively. For the six months ended June
30, 1998, transactions were as follows:
<TABLE>
<CAPTION>
Shares Value
- ----------------------------------------------------------
<S> <C> <C>
Sales:
Class A.................... 36,289,196 $ 624,170,144
Class B.................... 2,486,188 42,738,830
Class C.................... 1,109,514 19,001,421
----------- -------------
Total Sales.................. 39,884,898 $ 685,910,395
=========== =============
Dividend Reinvestment:
Class A.................... 4,237,212 $ 73,174,408
Class B.................... 345,115 5,967,496
Class C.................... 32,720 565,346
----------- -------------
Total Dividend Reinvestment.. 4,615,047 $ 79,707,250
=========== =============
Repurchases:
Class A.................... (37,461,102) $(643,988,732)
Class B.................... (1,053,147) (18,091,559)
Class C.................... (277,629) (4,755,517)
----------- -------------
Total Repurchases............ (38,791,878) $(666,835,808)
=========== =============
</TABLE>
23
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
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>
Class B and C shares are offered without a front end sales charge, but are
subject to a contingent deferred sales charge (CDSC). Class B shares will
automatically convert to Class A Shares after the eighth year following
purchase. 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)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
For the six months ended June 30, 1998, Van Kampen, as Distributor for the
Fund, received commissions on sales of the Fund's Class A shares of
approximately $197,500 and CDSC on redeemed shares of approximately $91,500.
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 $775,125,453 and $730,325,106,
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). The potential risk of loss
associated with a futures contract could be in excess of the variation margin
reflected on the Statement of Assets and Liabilities.
Transactions in futures contracts for the six months ended June 30, 1998, were
as follows:
<TABLE>
<CAPTION>
Contracts
- --------------------------------------------------------
<S> <C>
Outstanding at December 31, 1997.............. -0-
Futures Opened................................ 103
Futures Closed................................ (103)
----
Outstanding at June 30, 1998.................. -0-
====
</TABLE>
25
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
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 six months ended June 30, 1998, are payments retained by Van Kampen of
approximately $713,900.
26
<PAGE>
VAN KAMPEN FUNDS
EQUITY FUNDS
Domestic
Aggressive Equity
Aggressive Growth
American Value
Comstock
Emerging Growth
Enterprise
Equity Growth
Equity Income
Growth
Growth and Income
Harbor
Pace
Real Estate Securities
U.S. Real Estate
Utility
Value
International/Global
Asian Growth
Emerging Markets
Global Equity
Global Equity Allocation
Global Managed Assets
International Magnum
Latin American
FIXED-INCOME FUNDS
Income
Corporate Bond
Global Fixed Income
Global Government Securities
Government Securities
High Income Corporate Bond
High Yield
High Yield & Total Return
Limited Maturity Government
Short-Term Global Income
Strategic Income
U.S. Government
U.S. Government Trust for Income
Worldwide High Income
Tax Exempt Income
California Insured Tax Free
Florida Insured Tax Free Income
High Yield Municipal
Insured Tax Free Income
Intermediate Term Municipal Income
Municipal Income
New York Tax Free Income
Pennsylvania Tax Free Income
Tax Free High Income
Capital Preservation and
Senior Loan Funds
Prime Rate Income Trust
Reserve
Senior Floating Rate
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 fund prospectus or to receive additional fund
information, choose from one of the following:
. visit our web site at www.van-kampen.com -- to view prospectuses, select
Investors' Place, then Download a Prospectus
. 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)
. e-mail us by visiting www.van-kampen.com and selecting Investors' Place
27
<PAGE>
VAN KAMPEN COMSTOCK FUND
Board of Trustees
J. Miles Branagan
Richard M. DeMartini*
Linda Hutton Heagy
R. Craig Kennedy
Jack E. Nelson
Don G. Powell*
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*
Paul R. Wolkenberg*
Vice Presidents
Investment Adviser
Van Kampen
Asset Management Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Distributor
Van Kampen Funds Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Shareholder Servicing Agent
Van Kampen 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
PricewaterhouseCoopers LLP
200 E. Randolph Drive
Chicago, Illinois 60601
* "Interested" persons of the Fund, as defined in the Investment Company Act
of 1940.
(C) Van Kampen Funds Inc., 1998
All rights reserved.
/SM/ denotes a service mark of Van Kampen Funds Inc.
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 December 31, 1998, the report, if used with
prospective investors, must be accompanied by a quarterly performance update, if
applicable.
28
<PAGE>
Van Kampen Funds 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 1,543,825,529 <F1>
<INVESTMENTS-AT-VALUE> 1,850,607,234 <F1>
<RECEIVABLES> 10,371,300 <F1>
<ASSETS-OTHER> 73,783 <F1>
<OTHER-ITEMS-ASSETS> 6,780 <F1>
<TOTAL-ASSETS> 1,861,059,097 <F1>
<PAYABLE-FOR-SECURITIES> 7,734,941 <F1>
<SENIOR-LONG-TERM-DEBT> 0 <F1>
<OTHER-ITEMS-LIABILITIES> 3,031,135 <F1>
<TOTAL-LIABILITIES> 10,766,076 <F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,247,747,859
<SHARES-COMMON-STOCK> 96,787,756
<SHARES-COMMON-PRIOR> 93,722,450
<ACCUMULATED-NII-CURRENT> 6,039,100 <F1>
<OVERDISTRIBUTION-NII> 0 <F1>
<ACCUMULATED-NET-GAINS> 117,064,748 <F1>
<OVERDISTRIBUTION-GAINS> 0 <F1>
<ACCUM-APPREC-OR-DEPREC> 306,781,705 <F1>
<NET-ASSETS> 1,662,792,995
<DIVIDEND-INCOME> 19,297,059 <F1>
<INTEREST-INCOME> 3,716,790 <F1>
<OTHER-INCOME> 0 <F1>
<EXPENSES-NET> (8,677,904) <F1>
<NET-INVESTMENT-INCOME> 14,335,945 <F1>
<REALIZED-GAINS-CURRENT> 119,935,563 <F1>
<APPREC-INCREASE-CURRENT> 51,074,245 <F1>
<NET-CHANGE-FROM-OPS> 185,345,753 <F1>
<EQUALIZATION> 0 <F1>
<DISTRIBUTIONS-OF-INCOME> (11,801,598)
<DISTRIBUTIONS-OF-GAINS> (67,711,390)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 36,289,196
<NUMBER-OF-SHARES-REDEEMED> (37,461,102)
<SHARES-REINVESTED> 4,237,212
<NET-CHANGE-IN-ASSETS> 144,138,062
<ACCUMULATED-NII-PRIOR> 4,137,405 <F1>
<ACCUMULATED-GAINS-PRIOR> 71,276,153 <F1>
<OVERDISTRIB-NII-PRIOR> 0 <F1>
<OVERDIST-NET-GAINS-PRIOR> 0 <F1>
<GROSS-ADVISORY-FEES> 4,237,201 <F1>
<INTEREST-EXPENSE> 0 <F1>
<GROSS-EXPENSE> 8,677,904 <F1>
<AVERAGE-NET-ASSETS> 1,629,909,810
<PER-SHARE-NAV-BEGIN> 16.204
<PER-SHARE-NII> 0.142
<PER-SHARE-GAIN-APPREC> 1.686
<PER-SHARE-DIVIDEND> (0.125)
<PER-SHARE-DISTRIBUTIONS> (0.727)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 17.180
<EXPENSE-RATIO> 0.91
<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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 1,543,825,529 <F1>
<INVESTMENTS-AT-VALUE> 1,850,607,234 <F1>
<RECEIVABLES> 10,371,300 <F1>
<ASSETS-OTHER> 73,783 <F1>
<OTHER-ITEMS-ASSETS> 6,780 <F1>
<TOTAL-ASSETS> 1,861,059,097 <F1>
<PAYABLE-FOR-SECURITIES> 7,734,941 <F1>
<SENIOR-LONG-TERM-DEBT> 0 <F1>
<OTHER-ITEMS-LIABILITIES> 3,031,135 <F1>
<TOTAL-LIABILITIES> 10,766,076 <F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 147,319,200
<SHARES-COMMON-STOCK> 9,377,723
<SHARES-COMMON-PRIOR> 7,599,567
<ACCUMULATED-NII-CURRENT> 6,039,100 <F1>
<OVERDISTRIBUTION-NII> 0 <F1>
<ACCUMULATED-NET-GAINS> 117,064,748 <F1>
<OVERDISTRIBUTION-GAINS> 0 <F1>
<ACCUM-APPREC-OR-DEPREC> 306,781,705 <F1>
<NET-ASSETS> 161,093,046
<DIVIDEND-INCOME> 19,297,059 <F1>
<INTEREST-INCOME> 3,716,790 <F1>
<OTHER-INCOME> 0 <F1>
<EXPENSES-NET> (8,677,904) <F1>
<NET-INVESTMENT-INCOME> 14,335,945 <F1>
<REALIZED-GAINS-CURRENT> 119,935,563 <F1>
<APPREC-INCREASE-CURRENT> 51,074,245 <F1>
<NET-CHANGE-FROM-OPS> 185,345,753 <F1>
<EQUALIZATION> 0 <F1>
<DISTRIBUTIONS-OF-INCOME> (560,865)
<DISTRIBUTIONS-OF-GAINS> (5,873,986)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,486,188
<NUMBER-OF-SHARES-REDEEMED> (1,053,147)
<SHARES-REINVESTED> 345,115
<NET-CHANGE-IN-ASSETS> 37,910,200
<ACCUMULATED-NII-PRIOR> 4,137,405 <F1>
<ACCUMULATED-GAINS-PRIOR> 71,276,153 <F1>
<OVERDISTRIB-NII-PRIOR> 0 <F1>
<OVERDIST-NET-GAINS-PRIOR> 0 <F1>
<GROSS-ADVISORY-FEES> 4,237,201 <F1>
<INTEREST-EXPENSE> 0 <F1>
<GROSS-EXPENSE> 8,677,904 <F1>
<AVERAGE-NET-ASSETS> 143,578,360
<PER-SHARE-NAV-BEGIN> 16.209
<PER-SHARE-NII> 0.073
<PER-SHARE-GAIN-APPREC> 1.688
<PER-SHARE-DIVIDEND> (0.065)
<PER-SHARE-DISTRIBUTIONS> (0.727)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 17.178
<EXPENSE-RATIO> 1.69
<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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 1,543,825,529 <F1>
<INVESTMENTS-AT-VALUE> 1,850,607,234 <F1>
<RECEIVABLES> 10,371,300 <F1>
<ASSETS-OTHER> 73,783 <F1>
<OTHER-ITEMS-ASSETS> 6,780 <F1>
<TOTAL-ASSETS> 1,861,059,097 <F1>
<PAYABLE-FOR-SECURITIES> 7,734,941 <F1>
<SENIOR-LONG-TERM-DEBT> 0 <F1>
<OTHER-ITEMS-LIABILITIES> 3,031,135 <F1>
<TOTAL-LIABILITIES> 10,766,076 <F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 25,340,409
<SHARES-COMMON-STOCK> 1,537,580
<SHARES-COMMON-PRIOR> 672,975
<ACCUMULATED-NII-CURRENT> 6,039,100 <F1>
<OVERDISTRIBUTION-NII> 0 <F1>
<ACCUMULATED-NET-GAINS> 117,064,748 <F1>
<OVERDISTRIBUTION-GAINS> 0 <F1>
<ACCUM-APPREC-OR-DEPREC> 306,781,705 <F1>
<NET-ASSETS> 26,406,980
<DIVIDEND-INCOME> 19,297,059 <F1>
<INTEREST-INCOME> 3,716,790 <F1>
<OTHER-INCOME> 0 <F1>
<EXPENSES-NET> (8,677,904) <F1>
<NET-INVESTMENT-INCOME> 14,335,945 <F1>
<REALIZED-GAINS-CURRENT> 119,935,563 <F1>
<APPREC-INCREASE-CURRENT> 51,074,245 <F1>
<NET-CHANGE-FROM-OPS> 185,345,753 <F1>
<EQUALIZATION> 0 <F1>
<DISTRIBUTIONS-OF-INCOME> (71,787)
<DISTRIBUTIONS-OF-GAINS> (561,592)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,109,514
<NUMBER-OF-SHARES-REDEEMED> (277,629)
<SHARES-REINVESTED> 32,720
<NET-CHANGE-IN-ASSETS> 15,498,110
<ACCUMULATED-NII-PRIOR> 4,137,405 <F1>
<ACCUMULATED-GAINS-PRIOR> 71,276,153 <F1>
<OVERDISTRIB-NII-PRIOR> 0 <F1>
<OVERDIST-NET-GAINS-PRIOR> 0 <F1>
<GROSS-ADVISORY-FEES> 4,237,201 <F1>
<INTEREST-EXPENSE> 0 <F1>
<GROSS-EXPENSE> 8,677,904 <F1>
<AVERAGE-NET-ASSETS> 15,006,604
<PER-SHARE-NAV-BEGIN> 16.210
<PER-SHARE-NII> 0.067
<PER-SHARE-GAIN-APPREC> 1.689
<PER-SHARE-DIVIDEND> (0.065)
<PER-SHARE-DISTRIBUTIONS> (0.727)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 17.174
<EXPENSE-RATIO> 1.69
<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>
