<PAGE> 1
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders........................... 1
Economic Snapshot................................ 2
Performance Results.............................. 3
Portfolio Management Review...................... 4
Glossary of Terms................................ 7
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 8/99
NOT FDIC INSURED. MAY LOSE VALUE. NO BANK GUARANTEE.
<PAGE> 2
LETTER TO SHAREHOLDERS
July 20, 1999
Dear Shareholder,
With the volatility that we've experienced recently in many financial
markets, some investors have sold securities because of uncertainty about where
the markets were going, only to be left rethinking whether they made the right
decision. We've witnessed this kind of market activity numerous times over the
past several years, sparked by concerns such as the impact of the Asian economic
crisis, high stock valuations, or, most recently, the stability of many
high-flying technology companies. While these fears eventually subsided,
investors who may have sold during this period were unable to reap the benefits
of the subsequent rally. That's partly because most of the recent big gains
happened in relatively short periods of time. This kind of volatility--and the
danger of making short-term decisions--highlights the importance of investing
for the long term, in accordance with your individual financial objectives.
Although the worst of the Asian crisis appears to be behind us, new concerns
are always emerging. In the coming months, we'll likely hear more about how the
year 2000 computer problem may affect the markets or that we're overdue for a
correction. While the markets could undoubtedly suffer as a result of these or
any number of other events, we encourage you to focus on your long-term
investment goals. Although nothing is certain, history has shown us that over
time, the markets tend to recover--and most investors want to be positioned to
take advantage of any recovery.
If you have concerns about market volatility or questions about how your
portfolio is structured to respond to these events, we encourage you to contact
your financial advisor. Your advisor can talk with you about sustaining a
long-term investment plan through a variety of market conditions. We hope that
Van Kampen Funds will play an important role as you and your advisor build a
portfolio designed to help you weather what the markets have in store.
Sincerely,
[SIG]
Richard F. Powers, III
Chairman
Van Kampen Asset Management Inc.
[SIG]
Dennis J. McDonnell
President
Van Kampen Asset Management Inc.
1
<PAGE> 3
ECONOMIC SNAPSHOT
The strength of the domestic economy continued to defy expectations in the
first half of 1999, although it finally began to show signs of slowing down.
Strong growth, healthy employment, and low inflation all contributed to the
favorable economic environment.
STRONG ECONOMIC GROWTH
The nation's gross domestic product rose at an impressive rate of 4.3
percent during the first quarter of 1999, but fell to 2.3 percent in the second
quarter. The first-quarter expansion was fueled by an increase in consumer
spending, which dropped to more moderate levels later in the reporting period.
POSITIVE EMPLOYMENT ENVIRONMENT
In May, the unemployment rate dropped to 4.2 percent--its lowest level in
more than 30 years. Throughout the reporting period, unemployment remained low,
the number of jobs grew, and wages rose. The labor market remained especially
tight in the service industry and most urban areas.
LOW INFLATION
Inflation remained low throughout most of the reporting period, although a
sharp increase in oil prices contributed to a spike in April's consumer price
index report (CPI). Following this up-tick, the Federal Reserve raised interest
rates 0.25 percent on June 30. Although the Fed had expressed a bias toward a
series of rate increases, May's tame CPI report prompted it to drop this bias
when announcing the June rate increase.
ECONOMIC OUTLOOK
Our outlook for the economy suggests that the moderate slowdown may
continue, bringing the economy back to historically normal growth levels.
Healthy job growth, which has been supporting the consumer confidence and
spending levels, showed signs of faltering toward the end of the reporting
period. However, a renewed optimism for corporate earnings, low unemployment,
and a vibrant housing market should provide some balance against a slower job
growth rate.
INTEREST RATES AND INFLATION
June 30, 1997, through June 30, 1999
<TABLE>
<CAPTION>
INTEREST RATES INFLATION
-------------- ---------
<S> <C> <C>
Jun 1997 6.5000 2.3000
6.0000 2.2000
5.5000 2.2000
Sep 1997 6.2500 2.2000
5.7500 2.1000
5.6875 1.8000
Dec 1997 6.5000 1.7000
5.5625 1.6000
5.6250 1.4000
Mar 1998 6.1250 1.4000
5.6250 1.4000
5.6875 1.7000
Jun 1998 6.0000 1.7000
5.5625 1.7000
5.9375 1.6000
Sep 1998 5.7500 1.5000
5.2500 1.5000
4.8750 1.5000
Dec 1998 4.0000 1.6000
4.8125 1.7000
4.8750 1.6000
Mar 1999 5.1250 1.7000
4.9375 2.3000
4.5000 2.1000
Jun 1999 4.0000 2.0000
</TABLE>
Interest rates are represented by the closing midline federal funds rate
on the last day of each month. Inflation is indicated by the annual
percent change of the Consumer Price Index for all urban consumers at
the end of each month.
2
<PAGE> 4
PERFORMANCE RESULTS FOR THE PERIOD ENDED JUNE 30, 1999
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)... 10.02% 9.58% 9.58%
Six-month total return(2)................ 3.69% 4.58% 8.58%
One-year total return(2)................. 11.90% 12.77% 16.83%
Five-year average annual total
return(2)................................ 22.26% 22.58% 22.73%
Ten-year average annual total
return(2)................................ 15.69% N/A N/A
Life-of-Fund average annual total
return(2)................................ 13.02% 17.88% 18.86%
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 Comparative Performance section of the current prospectus. An investment
should be made with an understanding of the risks that an investment in equity
securities entails. These include the risk that the financial condition of the
issuers of the securities in the portfolio, or the condition of the stock market
in general, may worsen and therefore, the value of Fund shares may decline. Past
performance does not guarantee future results. Investment return and net asset
value will fluctuate with market conditions. 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> 5
PORTFOLIO MANAGEMENT REVIEW
VAN KAMPEN COMSTOCK FUND
We recently spoke to the management team of the Van Kampen Comstock Fund about
the events and economic forces that shaped the markets during the past six
months. The team is led by B. Robert Baker, Jr., senior portfolio manager. He
has managed the Fund since July 1994 and has worked in the investment industry
since 1979.
Mr. Baker is joined by Jason Leder and Edie Terreson, portfolio managers, and
Stephen L. Boyd, chief investment officer for equity investments. The following
excerpts reflect their views on the Fund's performance during the six-month
period ended June 30, 1999.
Q CAN YOU DESCRIBE THE STOCK MARKET ENVIRONMENT DURING THE PAST SIX MONTHS?
A Investors gained confidence in the U.S. stock market as international
economies showed new strength and the domestic economy remained healthy.
The Dow Jones Industrial Average soared to record highs amid these
conditions, breaking through the 10,000 point milestone and pushing past 11,000.
In the closing weeks of the period, the market moderated slightly as fears about
rising interest rates increased.
For value-oriented portfolios such as the Comstock Fund, the first quarter
of 1999 was challenging because investors continued to prefer the perceived
stability of growth-oriented companies. When investors began to feel more
confident about the fitness of the international and domestic economies,
however, they became more willing to invest in economically sensitive companies.
Many of these cyclical stocks were undervalued relative to the overall market;
consequently, the second quarter marked a dramatic and favorable turnaround for
value stocks and for the Fund's total return.
Q WHAT WAS YOUR STRATEGY IN SEEKING TO MEET THE FUND'S OBJECTIVE?
A We consistently seek to invest in 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, meaning
their stock prices are lower than we believe they should be. Then, we apply
basic fundamental analysis to determine whether the company is sound and has the
potential to reach its fair value. When we find a company that we think is
undervalued and fundamentally sound, we consider adding it to the portfolio.
Q HOW DID YOU APPLY THIS STRATEGY DURING THE PAST SIX MONTHS?
A Coming into the reporting period, the Fund was heavily weighted in
cyclical stocks--including commodities such as paper, oil, and other raw
materials. These stocks were relatively cheap compared to the rest of the
market, so we had invested substantially in this area. During the first quarter,
our exposure to cyclical stocks hurt the
4
<PAGE> 6
Fund's performance, as these stocks fared poorly. They began to rally in late
March, however, and were a major contributor to positive Fund returns for the
rest of the period.
We had also built up a significant weighting in the utility sector because
utilities presented some of the best values in the market. Unlike cyclical
stocks, utilities struggled throughout the entire reporting period. Given their
sluggishness this year, utility stocks had a negative effect on the Fund. In
adherence to our value strategy, we remain heavily weighted in utilities because
their valuations continue to be low and we believe the fundamentals of this
sector are attractive.
Q WHICH STOCKS SUPPORTED FUND PERFORMANCE?
A As we mentioned, cyclical stocks were among the Fund's best performers. We
saw favorable returns from paper companies Champion International and
Boise Cascade, metal mining company Freeport McMoRan Copper & Gold, and
oil services providers ENSCO International, Rowan, and Halliburton. Large
holdings that supported the Fund's return were Providian Financial, up 24
percent, and United HealthCare, up 45 percent.
Remember that not all stocks in the portfolio performed favorably, and there
is no guarantee that any of these stocks will perform well in the future. For
additional portfolio highlights, please see page 8.
Q WHAT FACTORS WORKED AGAINST THE FUND?
A The Fund suffered from general weakness among value stocks in early 1999,
although the recent turnaround has more than erased those early losses.
With regard to specific stocks, we were disappointed by Tenet Healthcare,
which has lost 29 percent year to date. This company is struggling with the
challenges imposed by managed care and changing Medicare reimbursement policies.
On the plus side, Tenet recently purchased a number of failing hospitals in the
Philadelphia area and has been turning them around faster than expected. We view
Tenet as a long-term holding and have maintained our investment.
Another disappointment was Philip Morris. This stock took a significant
downturn in the first quarter due to litigation issues, and we took advantage of
this dip in stock price to add to our holdings. We've recently seen a modest
rebound in the stock's price, although it is still down almost 25 percent this
year. Due to the stock's extremely low valuation (by historical standards) and
the potential for an improving outlook, we have kept it in the portfolio.
5
<PAGE> 7
Q HOW DID THE FUND PERFORM DURING THE PAST SIX MONTHS?
A The difficulties of value stocks during the first quarter were compensated
by their rally during the second quarter, which ultimately left the Fund
on the upside for the first six months of 1999. The Fund achieved a
six-month total return of 10.02 percent(1) (Class A shares at net asset value)
as of June 30, 1999.
By comparison, the Standard & Poor's 500 Index returned 12.36 percent, and
the Lipper Growth and Income Fund Index, which more closely resembles the Fund,
returned 11.59 percent. The S&P 500 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 statistical composites that do not
include any commissions or sales charges that would be paid by an investor
purchasing the securities or investments they represent. Please refer to the
footnotes and chart on page 3 for additional Fund performance results. Past
performance is no guarantee of future results.
Q WHAT IS YOUR OUTLOOK FOR THE FUND FOR THE REMAINDER OF THE YEAR?
A The U.S. economy is still growing steadily and inflation remains subdued.
In addition, overseas economies appear to be regaining their strength
after two turbulent years. The U.S. stock market reflects these positive
conditions, as investors are showing a renewed interest in undervalued,
economically sensitive stocks. We will continue to be vigilant in assessing your
Fund's holdings as well as potential new investments in our efforts to achieve
the Fund's objective.
[SIG]
B. Robert Baker, Jr.
Senior Portfolio Manager
[SIG]
Jason Leder
Portfolio Manager
[SIG]
Edie Terreson
Portfolio Manager
[SIG]
Stephen L. Boyd
Chief Investment Officer
Equity Investments
6
<PAGE> 8
GLOSSARY OF TERMS
CYCLICAL STOCKS: Stocks within industries where earnings tend to rise quickly
when the economy strengthens and fall quickly when the economy weakens.
Examples of cyclical stocks include housing, automobile, and paper
companies.
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.
FUNDAMENTALS: Characteristics of a company, such as revenue growth, earnings
growth, financial strength, market share, and quality of management.
MARKET CAPITALIZATION: The size of a company, as measured by the value of its
issued and outstanding stock.
NET ASSET VALUE (NAV): The value of a mutual fund share, calculated by deducting
a fund's liabilities from the total assets in its portfolio 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 general stock market more fully.
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.
7
<PAGE> 9
PORTFOLIO HIGHLIGHTS
VAN KAMPEN COMSTOCK FUND
TOP TEN PORTFOLIO HOLDINGS AS OF JUNE 30, 1999*
<TABLE>
<S> <C>
WASTE MANAGEMENT provides a range of waste management
services--including collection, transfer, disposal, and
recycling--to commercial, industrial, municipal, and
residential customers....................................... 5.2%
TENET HEALTHCARE is a nationwide provider of health-care
services that owns or operates acute-care hospitals and
related businesses through its subsidiaries................. 3.9%
PHILIP MORRIS is a holding company whose principal
subsidiaries manufacture and sell various consumer products,
including cigarettes, packaged and processed foods, and
beverages................................................... 3.0%
PROVIDIAN FINANCIAL, a consumer lender, offers a range of
lending products, including credit cards and a variety of
fee-based products and services............................. 2.8%
TEXAS UTILITIES is a holding company that, through its
subsidiaries, engages primarily in processing and
distributing electricity and natural gas services........... 2.7%
SUNGARD DATA SYSTEMS is a computer services and software
company that specializes in providing investment support
systems, computer disaster recovery services, and
proprietary health-care information systems................. 2.2%
BOISE CASCADE is a distributor of office products and
building materials and an integrated manufacturer and
distributor of paper and wood products...................... 2.2%
AMBAC FINANCIAL GROUP provides financial guarantee insurance
and management services to public and private clients....... 2.1%
RHONE-POULENC is an international company engaged in the
research, development, production, marketing, and sale of
chemicals, pharmaceuticals, and other products.............. 2.0%
WASHINGTON MUTUAL is a regional financial services company
serving consumers and small to mid-sized businesses......... 2.0%
</TABLE>
TOP FIVE PORTFOLIO INDUSTRIES*
[BAR GRAPH]
<TABLE>
<CAPTION>
JUNE 30, 1999 DECEMBER 31, 1998
------------- -----------------
<S> <C> <C>
Utilities 23.0 18.1
Finance 14.8 14.5
Raw Materials/Processing Industries 12.1 12.2
Health Care 10.1 14.2
Energy 9.4 9.7
</TABLE>
* As a percentage of long-term investments
8
<PAGE> 10
PORTFOLIO OF INVESTMENTS
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- ---------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS 85.7%
CONSUMER DISTRIBUTION 3.8%
Consolidated Stores Corp. (a)..................... 500,000 $ 13,500,000
Federated Department Stores, Inc. (a)............. 405,500 21,466,156
Payless Shoesource Inc. (a)....................... 394,400 21,100,400
Saks, Inc. (a).................................... 1,043,100 30,119,513
--------------
86,186,069
--------------
CONSUMER NON-DURABLES 5.6%
Dial Corp. ....................................... 783,400 29,132,688
Kimberly-Clark Corp. ............................. 636,000 36,252,000
Philip Morris Cos., Inc. ......................... 1,562,800 62,805,025
--------------
128,189,713
--------------
CONSUMER SERVICES 0.3%
Mirage Resorts, Inc. (a).......................... 473,000 7,922,750
--------------
ENERGY 8.5%
Atlantic Richfield Co. ........................... 256,000 21,392,000
BP Amoco PLC -- ADR (United Kingdom).............. 150,319 16,309,612
Chevron Corp. .................................... 282,000 26,842,875
Diamond Offshore Drilling, Inc. .................. 286,000 8,115,250
Enron Oil & Gas Co................................ 128,500 2,602,125
ENSCO International, Inc. ........................ 807,000 16,089,563
Halliburton Co. .................................. 415,000 18,778,750
Rowan Cos., Inc. (a).............................. 802,100 14,788,719
Texaco, Inc. ..................................... 270,000 16,875,000
Ultramar Diamond Shamrock......................... 639,900 13,957,819
Unocal Corp. ..................................... 556,000 22,031,500
USX -- Marathon Group............................. 538,000 17,518,625
--------------
195,301,838
--------------
FINANCE 13.3%
AMBAC Financial Group, Inc. ...................... 752,300 42,975,138
Aon Corp.......................................... 165,900 6,843,375
Bank One Corp. ................................... 232,600 13,854,238
BankAmerica Corp. ................................ 438,397 32,139,980
Bear Stearns Cos., Inc. .......................... 415,520 19,425,560
</TABLE>
See Notes to Financial Statements
9
<PAGE> 11
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- ---------------------------------------------------------------------------------
<S> <C> <C>
FINANCE (CONTINUED)
Chase Manhattan Corp. ............................ 152,000 $ 13,167,000
Everest Reinsurance Holdings, Inc. ............... 185,000 6,035,625
LandAmerica Financial Group, Inc. ................ 241,900 6,954,625
Liberty Financial Cos., Inc. ..................... 150,300 4,377,488
Nationwide Financial Services, Inc., Class A...... 58,900 2,665,225
Providian Financial Corp. ........................ 630,000 58,905,000
Radian Group, Inc. ............................... 208,060 10,155,929
Torchmark, Inc. .................................. 430,800 14,701,050
United Asset Management Corp. .................... 186,200 4,236,050
Washington Mutual, Inc. .......................... 1,185,800 41,947,675
Wells Fargo Co. .................................. 694,500 29,689,875
--------------
308,073,833
--------------
HEALTHCARE 9.1%
Aetna, Inc. ...................................... 72,700 6,502,106
American Home Products Corp. ..................... 467,000 26,852,500
HEALTHSOUTH Corp. (a)............................. 725,000 10,829,688
Mylan Laboratories, Inc. ......................... 258,000 6,837,000
Rhone-Poulenc, SA, Class A -- ADR (France)........ 912,600 42,093,675
Tenet Healthcare Corp. (a)........................ 4,396,200 81,604,463
United HealthCare Corp. .......................... 565,600 35,420,700
--------------
210,140,132
--------------
PRODUCER MANUFACTURING 7.2%
American Power Conversion Corp. (a)............... 1,358,200 27,333,775
Cognex Corp. (a).................................. 1,024,850 32,346,828
Waste Management, Inc. ........................... 1,995,750 107,271,563
--------------
166,952,166
--------------
RAW MATERIALS/PROCESSING INDUSTRIES 10.9%
Barrick Gold Corp. ............................... 640,000 12,400,000
Bethlehem Steel Corp. (a)......................... 2,950,000 22,678,125
Boise Cascade Corp. .............................. 1,045,000 44,804,375
British Steel PLC -- ADR (United Kingdom)......... 346,000 9,017,625
Champion International Corp. ..................... 481,100 23,032,663
Freeport-McMoRan Copper & Gold, Inc., Class B..... 1,315,600 23,598,575
Homestake Mining Co. ............................. 1,010,000 8,269,375
</TABLE>
See Notes to Financial Statements
10
<PAGE> 12
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- ---------------------------------------------------------------------------------
<S> <C> <C>
RAW MATERIALS/PROCESSING INDUSTRIES (CONTINUED)
Imperial Chemical Industries PLC -- ADR (United
Kingdom)........................................ 414,000 $ 16,456,500
International Paper Co. .......................... 314,360 15,875,180
Louisiana-Pacific Corp. .......................... 753,000 17,883,750
Placer Dome, Inc. ................................ 805,000 9,509,063
Smurfit-Stone Container Corp. (a)................. 822,960 16,922,115
Temple-Inland, Inc. .............................. 100,000 6,825,000
USX -- U.S. Steel, Inc. .......................... 917,500 24,772,500
--------------
252,044,846
--------------
TECHNOLOGY 5.7%
Avnet, Inc. ...................................... 139,000 6,463,500
BMC Software, Inc. (a)............................ 340,200 18,370,800
Check Point Software Technologies Ltd. (a)........ 353,400 18,951,075
Comverse Technology, Inc. (a)..................... 155,300 11,725,150
ECI Telecommunications Ltd. ...................... 403,000 13,374,563
Electronics for Imaging, Inc. (a)................. 104,500 5,368,688
Hewlett-Packard Co. .............................. 110,100 11,065,050
SunGard Data Systems, Inc. (a).................... 1,341,300 46,274,850
--------------
131,593,676
--------------
TRANSPORTATION 0.6%
Canadian National Railway Co. .................... 200,000 13,400,000
--------------
UTILITIES 20.7%
BEC Energy........................................ 629,000 25,946,250
Bell Atlantic Corp. .............................. 405,000 26,476,875
Carolina Power & Light Co. ....................... 374,000 16,011,875
Central & South West Corp. ....................... 638,000 14,913,250
Constellation Energy Group........................ 396,000 11,731,500
DTE Energy Co. ................................... 925,000 37,000,000
Edison International.............................. 548,000 14,659,000
Entergy Corp. .................................... 378,000 11,812,500
FirstEnergy Corp. ................................ 545,000 16,895,000
Florida Progress Corp. ........................... 110,000 4,544,375
GPU, Inc. ........................................ 472,000 19,912,500
Idacorp, Inc. .................................... 661,000 20,821,500
</TABLE>
See Notes to Financial Statements
11
<PAGE> 13
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- ---------------------------------------------------------------------------------
<S> <C> <C>
UTILITIES (CONTINUED)
Illinova Corp. ................................... 575,000 $ 15,668,750
New Century Energies, Inc. ....................... 854,000 33,145,875
Northern States Power Co. ........................ 378,000 9,142,875
OGE Energy Corp. ................................. 796,000 18,905,000
P G & E Corp. .................................... 332,000 10,790,000
PacifiCorp........................................ 352,000 6,468,000
Pinnacle West Capital Corp. ...................... 445,000 17,911,250
Public Service Co. of New Mexico.................. 584,000 11,607,000
Public Service Enterprise Group................... 408,000 16,677,000
Reliant Energy, Inc. ............................. 1,434,000 39,614,250
Texas Utilities Co. .............................. 1,376,000 56,760,000
Unicom Corp. ..................................... 543,000 20,939,431
--------------
478,354,056
--------------
TOTAL COMMON STOCKS 85.7%
(Cost $1,635,738,216)........................................ 1,978,159,079
--------------
U.S. TREASURY SECURITIES 4.4%
United States Treasury Notes ($34,000,000 par, 5.00% coupon,
04/30/01 maturity) (b)......................................... 33,713,380
United States Treasury Notes ($34,000,000 par, 5.25% coupon,
05/15/04 maturity)............................................. 33,415,540
United States Treasury Notes ($34,000,000 par, 6.25% coupon,
02/28/02 maturity) (b)......................................... 34,520,540
--------------
TOTAL U.S. TREASURY SECURITIES
(Cost $102,207,319).......................................... 101,649,460
--------------
TOTAL LONG-TERM INVESTMENTS 90.1%
(Cost $1,737,945,535)........................................ 2,079,808,539
--------------
SHORT-TERM INVESTMENTS 8.9%
U.S. GOVERNMENT AGENCY OBLIGATIONS 6.2%
Federal Home Loan Mortgage Discount Notes ($20,000,000 par,
yielding 4.84%, 07/14/99 maturity)........................... 19,965,261
Federal Home Loan Mortgage Discount Notes ($25,000,000 par,
yielding 4.90%, 08/05/99 maturity) (b)......................... 24,881,875
Federal National Mortgage Association Discount Notes
($25,000,000 par, yielding 4.79%, 07/28/99 maturity) (b)....... 24,911,219
</TABLE>
See Notes to Financial Statements
12
<PAGE> 14
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Market Value
- ---------------------------------------------------------------------------------
<S> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS (CONTINUED)
Federal National Mortgage Association Discount Notes
($50,000,000 par, yielding 4.87%, 07/19/99 maturity)........... $ 49,878,250
Federal National Mortgage Association Discount Notes
($25,000,000 par, yielding 4.88%, 7/20/99 maturity)............ 24,935,875
--------------
144,572,480
--------------
COMMERCIAL PAPER 2.2%
General Electric Capital Corp. ($50,000,000 par, yielding
5.70%, 07/01/99 maturity)...................................... 49,992,083
--------------
REPURCHASE AGREEMENT 0.5%
BankAmerica Securities ($11,690,000 par collateralized by U.S.
Government obligations in a pooled cash account, dated
06/30/99, to be sold on 07/01/99 at $11,691,640)............... 11,690,000
--------------
TOTAL SHORT-TERM INVESTMENTS 8.9%
(Cost $206,254,563).......................................... 206,254,563
--------------
TOTAL INVESTMENTS 99.0%
(Cost $1,944,200,098)........................................ 2,286,063,102
OTHER ASSETS IN EXCESS OF LIABILITIES 1.0%.................... 22,539,140
--------------
NET ASSETS 100.0%............................................. $2,308,602,242
==============
</TABLE>
(a) Non-income producing security as this stock currently does not declare
dividends.
(b) Assets segregated for open futures transactions.
ADR--American Depositary Receipt
See Notes to Financial Statements
13
<PAGE> 15
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $1,944,200,098)..................... $2,286,063,102
Cash........................................................ 168
Receivables:
Fund Shares Sold.......................................... 26,864,749
Investments Sold.......................................... 9,170,859
Dividends................................................. 3,601,744
Variation Margin on Futures............................... 1,875,000
Interest.................................................. 1,224,647
Other....................................................... 154,514
--------------
Total Assets.......................................... 2,328,954,783
--------------
LIABILITIES:
Payables:
Investments Purchased..................................... 13,481,199
Fund Shares Repurchased................................... 3,738,403
Distributor and Affiliates................................ 1,150,328
Investment Advisory Fee................................... 879,120
Income Distributions...................................... 300,740
Accrued Expenses............................................ 546,302
Trustees' Deferred Compensation and Retirement Plans........ 256,449
--------------
Total Liabilities..................................... 20,352,541
--------------
NET ASSETS.................................................. $2,308,602,242
==============
NET ASSETS CONSIST OF:
Capital (Par value of $.01 per share with an unlimited
number of shares authorized).............................. $1,826,034,141
Net Unrealized Appreciation................................. 344,564,382
Accumulated Net Realized Gain............................... 135,680,161
Accumulated Undistributed Net Investment Income............. 2,323,558
--------------
NET ASSETS.................................................. $2,308,602,242
==============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $1,921,814,986 and 110,216,221 shares of
beneficial interest issued and outstanding)........... $ 17.44
Maximum sales charge (5.75%* of offering price)......... 1.06
--------------
Maximum offering price to public........................ $ 18.50
==============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $293,637,101 and 16,857,768 shares of
beneficial interest issued and outstanding)........... $ 17.42
==============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $93,150,155 and 5,348,057 shares of
beneficial interest issued and outstanding)........... $ 17.42
==============
</TABLE>
*On sales of $50,000 or more, the sales charge will be reduced.
See Notes to Financial Statements
14
<PAGE> 16
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends................................................... $ 20,997,233
Interest.................................................... 3,690,586
------------
Total Income............................................ 24,687,819
------------
EXPENSES:
Investment Advisory Fee..................................... 4,935,904
Distribution (12b-1) and Service Fees (Attributed to Classes
A, B and C of $2,042,630, $1,181,063 and $354,100
respectively)............................................. 3,577,793
Shareholder Services........................................ 1,452,021
Custody..................................................... 77,371
Trustees' Fees and Related Expenses......................... 42,638
Legal....................................................... 38,915
Other....................................................... 421,346
------------
Total Expenses.......................................... 10,545,988
Less Credits Earned on Cash Balances.................... 33,171
------------
Net Expenses............................................ 10,512,817
------------
NET INVESTMENT INCOME....................................... $ 14,175,002
============
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $150,468,682
Futures................................................... 143,625
------------
Net Realized Gain........................................... 150,612,307
------------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 309,805,817
------------
End of the Period:
Investments............................................... 341,863,004
Futures................................................... 2,701,378
------------
344,564,382
------------
Net Unrealized Appreciation During the Period............... 34,758,565
------------
NET REALIZED AND UNREALIZED GAIN............................ $185,370,872
============
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $199,545,874
============
</TABLE>
See Notes to Financial Statements
15
<PAGE> 17
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended June 30, 1999 and the
Year Ended December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1999 December 31, 1998
- -------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income.......................... $ 14,175,002 $ 27,232,025
Net Realized Gain.............................. 150,612,307 250,360,369
Net Unrealized Appreciation During the
Period....................................... 34,758,565 54,098,357
--------------- ---------------
Change in Net Assets from Operations........... 199,545,874 331,690,751
--------------- ---------------
Distributions from Net Investment Income:
Class A Shares............................... (13,531,801) (26,565,926)
Class B Shares............................... (977,759) (1,559,063)
Class C Shares............................... (306,689) (279,636)
--------------- ---------------
(14,816,249) (28,404,625)
--------------- ---------------
Distributions from Net Realized Gain:
Class A Shares............................... (44,565,055) (252,009,151)
Class B Shares............................... (5,841,036) (26,759,641)
Class C Shares............................... (1,789,209) (5,604,576)
--------------- ---------------
(52,195,300) (284,373,368)
--------------- ---------------
Total Distributions............................ (67,011,549) (312,777,993)
--------------- ---------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES................................... 132,534,325 18,912,758
--------------- ---------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold...................... 1,174,747,841 1,592,909,683
Net Asset Value of Shares Issued Through
Dividend Reinvestment........................ 61,710,611 288,459,416
Cost of Shares Repurchased..................... (1,067,393,864) (1,546,025,177)
--------------- ---------------
NET CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS................................. 169,064,588 335,343,922
--------------- ---------------
TOTAL INCREASE IN NET ASSETS................... 301,598,913 354,256,680
NET ASSETS:
Beginning of the Period........................ 2,007,003,329 1,652,746,649
--------------- ---------------
End of the Period (Including accumulated
undistributed net investment income of
$2,323,558 and $2,964,805, respectively)..... $ 2,308,602,242 $ 2,007,003,329
=============== ===============
</TABLE>
See Notes to Financial Statements
16
<PAGE> 18
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, 1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of the Period........... $ 16.394 $ 16.204 $ 14.785 $ 14.54 $ 12.40
-------- -------- -------- -------- --------
Net Investment Income..... .120 .268 .275 .264 .26
Net Realized and
Unrealized Gain......... 1.469 2.875 3.966 2.828 4.1125
-------- -------- -------- -------- --------
Total from Investment
Operations.............. 1.589 3.143 4.241 3.092 4.3725
-------- -------- -------- -------- --------
Less:
Distributions from and
in Excess of Net
Investment Income..... .125 .280 .250 .255 .27
Distributions from Net
Realized Gain......... .421 2.673 2.572 2.592 1.9625
-------- -------- -------- -------- --------
Total Distributions....... .546 2.953 2.822 2.847 2.2325
-------- -------- -------- -------- --------
Net Asset Value, End of
the Period.............. $ 17.437 $ 16.394 $ 16.204 $ 14.785 $ 14.54
======== ======== ======== ======== ========
Total Return (a).......... 10.02%* 20.12% 29.92% 22.34% 36.16%
Net Assets at End of the
Period (In millions).... $1,921.8 $1,752.4 $1,518.7 $1,240.9 $1,071.4
Ratio of Expenses to
Average Net
Assets (b).............. .89% .91% .94% 1.00% .96%
Ratio of Net Investment
Income to Average Net
Assets (b).............. 1.46% 1.59% 1.71% 1.71% 1.82%
Portfolio Turnover........ 36%* 102% 114% 176% 151%
</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> 19
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, 1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period................. $16.383 $16.209 $14.802 $ 14.56 $ 12.42
------- ------- ------- ------- -------
Net Investment Income....... .060 .131 .145 .144 .14
Net Realized and Unrealized
Gain...................... 1.462 2.876 3.964 2.825 4.1125
------- ------- ------- ------- -------
Total from Investment
Operations................ 1.522 3.007 4.109 2.969 4.2525
------- ------- ------- ------- -------
Less:
Distributions from and in
Excess of Net Investment
Income.................... .065 .160 .130 .135 .15
Distributions from Net
Realized Gain........... .421 2.673 2.572 2.592 1.9625
------- ------- ------- ------- -------
Total Distributions......... .486 2.833 2.702 2.727 2.1125
------- ------- ------- ------- -------
Net Assets at End of the
Period (In millions)...... $17.419 $16.383 $16.209 $14.802 $ 14.56
======= ======= ======= ======= =======
Total Return (a)............ 9.58%* 19.13% 28.88% 21.39% 34.99%
Net Assets at End of the
Period (in millions)...... $ 293.6 $ 204.7 $ 123.1 $ 75.4 $ 45.2
Ratio of Expenses to Average
Net Assets (b)............ 1.67% 1.70% 1.74% 1.80% 1.79%
Ratio of Net Investment
Income to Average Net
Assets (b)................ .69% .79% .92% .91% .96%
Portfolio Turnover.......... 36%* 102% 114% 176% 151%
</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> 20
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, 1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of the Period............ $16.382 $16.210 $14.805 $ 14.56 $ 12.41
------- ------- ------- -------- -------
Net Investment Income...... .068 .127 .144 .151 .15
Net Realized and Unrealized
Gain..................... 1.454 2.878 3.963 2.821 4.1125
------- ------- ------- -------- -------
Total from Investment
Operations............... 1.522 3.005 4.107 2.972 4.2625
------- ------- ------- -------- -------
Less:
Distributions from and in
Excess of Net
Investment Income...... .065 .160 .130 .135 .15
Distributions from Net
Realized Gain.......... .421 2.673 2.572 2.592 1.9625
------- ------- ------- -------- -------
Total Distributions........ .486 2.833 2.702 2.727 2.1125
------- ------- ------- -------- -------
Net Asset Value, End of the
Period................... $17.418 $16.382 $16.210 $ 14.805 $ 14.56
======= ======= ======= ======== =======
Total Return (a)........... 9.58%* 19.13% 28.89% 21.38% 35.11%
Net Assets at End of the
Period (In millions)..... $ 93.2 $ 49.9 $ 10.9 $ 5.8 $ 4.1
Ratio of Expenses to
Average Net Assets (b)... 1.66% 1.71% 1.74% 1.80% 1.79%
Ratio of Net Investment
Income to Average Net
Assets (b)............... .72% .78% .92% .92% .97%
Portfolio Turnover......... 36%* 102% 114% 176% 151%
</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
19
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen 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 or
indications of value obtained from an independent pricing service. 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, 1999, there
were no when issued or delayed delivery purchase commitments.
20
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
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 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. Discounts are amortized over
the life of each applicable security. Premiums on debt securities are not
amortized. Income and 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 relating to wash sale
transactions.
At June 30, 1999, for federal income tax purposes, cost of long- and
short-term investments is $1,950,135,459, the aggregate gross unrealized
appreciation is $404,153,786 and the aggregate gross unrealized depreciation is
$68,226,143, resulting in net unrealized appreciation on long- and short-term
investments of $335,927,643.
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> 23
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
F. EXPENSE REDUCTIONS--During the six months ended June 30, 1999, the Fund's
custody fee was reduced by $33,171 as a result of credits earned on overnight
cash balances.
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, 1999, the Fund recognized expenses of
approximately $38,900 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, 1999, the Fund recognized expenses of
approximately $191,400 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, 1999, the Fund recognized expenses of approximately $1,117,300. 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> 24
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
3. CAPITAL TRANSACTIONS
At June 30, 1999, capital aggregated $1,462,812,698, $272,801,617 and
$90,419,826 for Classes A, B, and C, respectively. For the six months ended June
30, 1999, transactions were as follows:
<TABLE>
<CAPTION>
SHARES VALUE
- ---------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A................................... 61,030,710 $ 1,018,223,377
Class B................................... 6,741,588 113,439,025
Class C................................... 2,585,531 43,085,439
----------- ---------------
Total Sales................................. 70,357,829 $ 1,174,747,841
=========== ===============
Dividend Reinvestment:
Class A................................... 3,313,715 $ 53,452,938
Class B................................... 392,386 6,301,106
Class C................................... 121,798 1,956,567
----------- ---------------
Total Dividend Reinvestment................. 3,827,899 $ 61,710,611
=========== ===============
Repurchases:
Class A................................... (61,021,897) $(1,015,027,660)
Class B................................... (2,770,614) (45,590,573)
Class C................................... (403,496) (6,775,631)
----------- ---------------
Total Repurchases........................... (64,196,007) $(1,067,393,864)
=========== ===============
</TABLE>
23
<PAGE> 25
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
At December 31, 1998, capital aggregated $1,406,164,043, $198,652,059 and
$52,153,451 for Classes A, B and C, respectively. For the year ended December
31, 1998, transactions were as follows:
<TABLE>
<CAPTION>
SHARES VALUE
- ---------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A................................... 83,732,230 $ 1,415,589,727
Class B................................... 5,791,567 97,707,747
Class C................................... 4,751,195 79,612,209
----------- ---------------
Total Sales................................. 94,274,992 $ 1,592,909,683
=========== ===============
Dividend Reinvestment:
Class A................................... 15,656,535 $ 256,645,127
Class B................................... 1,608,779 26,272,540
Class C................................... 342,409 5,541,749
----------- ---------------
Total Dividend Reinvestment................. 17,607,723 $ 288,459,416
=========== ===============
Repurchases:
Class A................................... (86,217,522) $(1,460,462,850)
Class B................................... (2,505,505) (42,032,661)
Class C................................... (2,722,355) (43,529,666)
----------- ---------------
Total Repurchases........................... (91,445,382) $(1,546,025,177)
=========== ===============
</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> 26
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
For the six months ended June 30, 1999, Van Kampen, as Distributor for the
Fund, received commissions on sales of the Fund's Class A shares of
approximately $387,900 and CDSC on redeemed shares of approximately $233,500.
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 $712,703,161 and $741,177,825,
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 to 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, cash or liquid 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 risk of
loss associated with a futures contract is in excess of the variation margin
reflected on the Statement of Assets and Liabilities.
25
<PAGE> 27
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Transactions in futures contracts for the six months ended June 30, 1999,
were as follows:
<TABLE>
<CAPTION>
CONTRACTS
- -----------------------------------------------------------------------
<S> <C>
Outstanding at December 31, 1998.......................... 50
Futures Opened............................................ 300
Futures Closed............................................ (50)
---
Outstanding at June 30, 1999.............................. 300
===
</TABLE>
The futures contracts outstanding as of June 30, 1999, and the description
and unrealized appreciation/depreciation is as follows:
<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION/
CONTRACTS DEPRECIATION
- --------------------------------------------------------------------------
<S> <C> <C>
Long Contracts:
S&P 500 Future September 1999
(Current Notional Value $345,425 per
contract)................................. 300 $2,701,378
=== ==========
</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 six months ended June 30, 1999, are payments retained by Van Kampen of
approximately $1,338,800.
26
<PAGE> 28
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
Small Cap Value
Technology
Utility
Value
Global/International
Asian Growth
Emerging Markets
European Equity
Global Equity
Global Equity Allocation
Global Franchise
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
Reserve
Tax Free Money
SENIOR LOAN FUNDS
Prime Rate Income Trust
Senior Floating Rate
To find out more about any of these funds, ask your financial advisor 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.VANKAMPEN.COM--to view a prospectus, select Download 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.VANKAMPEN.COM and selecting Contact Us
27
<PAGE> 29
VAN KAMPEN COMSTOCK FUND
BOARD OF TRUSTEES
J. MILES BRANAGAN
JERRY D. CHOATE
RICHARD M. DEMARTINI*
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
JACK E. NELSON
DON G. POWELL*
PHILLIP B. ROONEY
FERNANDO SISTO
WAYNE W. WHALEN* - Chairman
SUZANNE H. WOOLSEY, PH.D.
PAUL G. YOVOVICH
OFFICERS
RICHARD F. POWERS, III*
President
DENNIS J. MCDONNELL*
Executive Vice President and
Chief Investment Officer
A. THOMAS SMITH III*
Vice President and Secretary
JOHN L. SULLIVAN*
Vice President, Treasurer and Chief Financial Officer
CURTIS W. MORELL*
Vice President and Chief Accounting Officer
TANYA M. LODEN*
Controller
PETER W. HEGEL*
PAUL R. WOLKENBERG*
EDWARD C. WOOD, III*
Vice Presidents
INVESTMENT ADVISER
VAN KAMPEN
ASSET MANAGEMENT INC.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555
DISTRIBUTOR
VAN KAMPEN FUNDS INC.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555
SHAREHOLDER SERVICING AGENT
VAN KAMPEN INVESTOR
SERVICES INC.
P.O. Box 218256
Kansas City, Missouri 64121-8256
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., 1999 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, 1999, the report, if used with
prospective investors, must be accompanied by a quarterly performance update, if
applicable.
28
<PAGE> 30
YEAR 2000 READINESS DISCLOSURE
Like other mutual funds, financial and business organizations and individuals
around the world, the Fund could be adversely affected if the computer systems
used by the Fund's investment adviser and other service providers do not
properly process and calculate date-related information and data from and after
January 1, 2000. This is commonly known as the "Year 2000 Problem." The Fund's
investment adviser is taking steps that it believes are reasonably designed to
address the Year 2000 Problem with respect to computer systems that it uses and
to obtain reasonable assurances that comparable steps are being taken by the
Fund's other major service providers. At this time, there can be no assurances
that these steps will be sufficient to avoid any adverse impact to the Fund. In
addition, the Year 2000 Problem may adversely affect the markets and the issuers
of securities in which the Fund may invest that, in turn, may adversely affect
the net asset value of the Fund. Improperly functioning trading systems may
result in settlement problems and liquidity issues. In addition, corporate and
governmental data processing errors may result in production problems for
individual companies or issuers and overall economic uncertainty. Earnings of
individual issuers will be affected by remediation costs, which may be
substantial and may be reported inconsistently in U.S. and foreign financial
statements. Accordingly, the Fund's investments may be adversely affected. The
statements above are subject to the Year 2000 Information and Readiness
Disclosure Act, which may limit the legal rights regarding the use of such
statements in the case of dispute.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> COMSTOCK CLASS A
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<INVESTMENTS-AT-COST> 1,944,200,098<F1>
<INVESTMENTS-AT-VALUE> 2,286,063,102<F1>
<RECEIVABLES> 42,736,999<F1>
<ASSETS-OTHER> 0<F1>
<OTHER-ITEMS-ASSETS> 154,682<F1>
<TOTAL-ASSETS> 2,328,954,783<F1>
<PAYABLE-FOR-SECURITIES> 13,471,199<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 6,881,342<F1>
<TOTAL-LIABILITIES> 20,352,541<F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,462,812,698
<SHARES-COMMON-STOCK> 110,216,221
<SHARES-COMMON-PRIOR> 106,893,693
<ACCUMULATED-NII-CURRENT> 2,323,558<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> 135,680,161<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 344,564,382<F1>
<NET-ASSETS> 1,921,814,986
<DIVIDEND-INCOME> 20,997,233<F1>
<INTEREST-INCOME> 3,690,586<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (10,512,817)<F1>
<NET-INVESTMENT-INCOME> 14,175,002<F1>
<REALIZED-GAINS-CURRENT> 150,612,307<F1>
<APPREC-INCREASE-CURRENT> 34,758,565<F1>
<NET-CHANGE-FROM-OPS> 199,545,874<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> (13,531,801)
<DISTRIBUTIONS-OF-GAINS> (44,565,055)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 61,030,710
<NUMBER-OF-SHARES-REDEEMED> (61,021,897)
<SHARES-REINVESTED> 3,313,715
<NET-CHANGE-IN-ASSETS> 169,380,663
<ACCUMULATED-NII-PRIOR> 2,964,805<F1>
<ACCUMULATED-GAINS-PRIOR> 37,263,154<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 4,935,904<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 10,545,988<F1>
<AVERAGE-NET-ASSETS> 1,806,745,263
<PER-SHARE-NAV-BEGIN> 16.394
<PER-SHARE-NII> 0.120
<PER-SHARE-GAIN-APPREC> 1.469
<PER-SHARE-DIVIDEND> (0.125)
<PER-SHARE-DISTRIBUTIONS> (0.421)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 17.437
<EXPENSE-RATIO> 0.89
<FN>
<F1>This item relates to the Fund on a composite
basis and not on a class basis
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 12
<NAME> COMSTOCK CLASS B
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<INVESTMENTS-AT-COST> 1,944,200,098<F1>
<INVESTMENTS-AT-VALUE> 2,286,063,102<F1>
<RECEIVABLES> 42,736,999<F1>
<ASSETS-OTHER> 0<F1>
<OTHER-ITEMS-ASSETS> 154,682<F1>
<TOTAL-ASSETS> 2,328,954,783<F1>
<PAYABLE-FOR-SECURITIES> 13,471,199<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 6,881,342<F1>
<TOTAL-LIABILITIES> 20,352,541<F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 272,801,617
<SHARES-COMMON-STOCK> 16,857,768
<SHARES-COMMON-PRIOR> 12,494,408
<ACCUMULATED-NII-CURRENT> 2,323,558<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> 135,680,161<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 344,564,382<F1>
<NET-ASSETS> 293,637,101
<DIVIDEND-INCOME> 20,997,233<F1>
<INTEREST-INCOME> 3,690,586<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (10,512,817)<F1>
<NET-INVESTMENT-INCOME> 14,175,002<F1>
<REALIZED-GAINS-CURRENT> 150,612,307<F1>
<APPREC-INCREASE-CURRENT> 34,758,565<F1>
<NET-CHANGE-FROM-OPS> 199,545,874<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> (977,759)
<DISTRIBUTIONS-OF-GAINS> (5,841,036)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,741,588
<NUMBER-OF-SHARES-REDEEMED> (2,770,614)
<SHARES-REINVESTED> 392,386
<NET-CHANGE-IN-ASSETS> 88,939,450
<ACCUMULATED-NII-PRIOR> 2,964,805<F1>
<ACCUMULATED-GAINS-PRIOR> 37,263,154<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 4,935,904<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 10,545,988<F1>
<AVERAGE-NET-ASSETS> 238,445,485
<PER-SHARE-NAV-BEGIN> 16.383
<PER-SHARE-NII> 0.060
<PER-SHARE-GAIN-APPREC> 1.462
<PER-SHARE-DIVIDEND> (0.065)
<PER-SHARE-DISTRIBUTIONS> (0.421)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 17.419
<EXPENSE-RATIO> 1.67
<FN>
<F1>This item relates to the Fund on a composite
basis and not on a class basis
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 13
<NAME> COMSTOCK CLASS C
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<INVESTMENTS-AT-COST> 1,944,200,098<F1>
<INVESTMENTS-AT-VALUE> 2,286,063,102<F1>
<RECEIVABLES> 42,736,999<F1>
<ASSETS-OTHER> 0<F1>
<OTHER-ITEMS-ASSETS> 154,682<F1>
<TOTAL-ASSETS> 2,328,954,783<F1>
<PAYABLE-FOR-SECURITIES> 13,471,199<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 6,881,342<F1>
<TOTAL-LIABILITIES> 20,352,541<F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 90,419,826
<SHARES-COMMON-STOCK> 5,348,057
<SHARES-COMMON-PRIOR> 3,044,224
<ACCUMULATED-NII-CURRENT> 2,323,558<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> 135,680,161<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 344,564,382<F1>
<NET-ASSETS> 93,150,155
<DIVIDEND-INCOME> 20,997,233<F1>
<INTEREST-INCOME> 3,690,586<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (10,512,817)<F1>
<NET-INVESTMENT-INCOME> 14,175,002<F1>
<REALIZED-GAINS-CURRENT> 150,612,307<F1>
<APPREC-INCREASE-CURRENT> 34,758,565<F1>
<NET-CHANGE-FROM-OPS> 199,545,874<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> (306,689)
<DISTRIBUTIONS-OF-GAINS> (1,789,209)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,585,531
<NUMBER-OF-SHARES-REDEEMED> (403,496)
<SHARES-REINVESTED> 121,798
<NET-CHANGE-IN-ASSETS> 43,278,800
<ACCUMULATED-NII-PRIOR> 2,964,805<F1>
<ACCUMULATED-GAINS-PRIOR> 37,263,154<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 4,935,904<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 10,545,988<F1>
<AVERAGE-NET-ASSETS> 71,492,418
<PER-SHARE-NAV-BEGIN> 16.382
<PER-SHARE-NII> 0.068
<PER-SHARE-GAIN-APPREC> 1.454
<PER-SHARE-DIVIDEND> (0.065)
<PER-SHARE-DISTRIBUTIONS> (0.421)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 17.418
<EXPENSE-RATIO> 1.66
<FN>
<F1>This item relates to the Fund on a composite
basis and not on a class basis
</FN>
</TABLE>
