<PAGE> 1
<TABLE>
<S> <C>
Table of Contents
OVERVIEW
LETTER TO SHAREHOLDERS 1
ECONOMIC SNAPSHOT 2
PERFORMANCE SUMMARY
RETURN HIGHLIGHTS 4
PORTFOLIO AT A GLANCE
TOP TEN HOLDINGS 6
TOP FIVE SECTORS 6
Q&A WITH YOUR PORTFOLIO MANAGERS 7
GLOSSARY OF TERMS 10
BY THE NUMBERS
YOUR FUND'S INVESTMENTS 11
FINANCIAL STATEMENTS 15
NOTES TO FINANCIAL STATEMENTS 21
VAN KAMPEN FUNDS
THE VAN KAMPEN FAMILY OF FUNDS 28
FUND OFFICERS AND IMPORTANT ADDRESSES 29
</TABLE>
It is times like these when money- management experience may make a difference.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
<PAGE> 2
OVERVIEW
LETTER TO SHAREHOLDERS
July 20, 2000
Dear Shareholder,
Whether you have held your fund for years or just joined the Van Kampen family
of shareholders in the last few months, you are likely to have questions and
even some concerns about how recent market volatility has affected your
investment. I encourage you to review the following Q&A in which your portfolio
manager provides an update on how your fund is being managed in this
environment.
It is times like these when money-management experience may make a difference.
Toward that end, you should know that Van Kampen is one of the nation's oldest
investment-management firms, with a history of money management dating back to
1926. Our portfolio managers have invested in all types of market
conditions--during bull and bear markets, periods of inflation and rising
interest rates, and now a technology revolution. We
have managed money long enough to understand short-term market
volatility and the value of investing for the long term.
As we move through the second half of 2000, count on us to
continue to draw on the wisdom of our 74 years of experience.
Along those lines, Van Kampen's "Generations of Experience" is the theme of a
national advertising campaign that we recently kicked off. The message
emphasizes our depth of investment-management history, as well as our firm
belief that with the right investments, anyone can realize life's true wealth.
Sincerely,
[SIG]
Richard F. Powers, III
President and CEO
Van Kampen Investments
1
<PAGE> 3
ECONOMIC SNAPSHOT
ECONOMIC GROWTH
BEGINNING IN THE SECOND QUARTER OF 2000, EVIDENCE OF SLOWER ECONOMIC GROWTH IN
THE UNITED STATES EMERGED. HOWEVER, ANALYSTS BELIEVE IT MAY HAVE BEEN PREMATURE
TO ASSUME THAT THE U.S. ECONOMY HAS SLOWED TO A SUSTAINABLE, NONINFLATIONARY
PACE, WITH THE GROSS DOMESTIC PRODUCT (GDP), A MEASURE OF ECONOMIC GROWTH, UP
5.2 PERCENT ANNUALIZED IN THE SECOND QUARTER OF 2000.
CONSUMER SPENDING AND EMPLOYMENT
CONSUMER SPENDING REMAINED THE MAIN ENGINE OF GROWTH BEHIND THE U.S. ECONOMY.
LIVING STANDARDS AND SPENDING HABITS WERE BOOSTED BY STRONG GAINS IN REAL
INCOME, AND INDIVIDUAL WEALTH INCREASED SUBSTANTIALLY, PRIMARILY DUE TO A
BUOYANT STOCK MARKET. NONETHELESS, DATA RELEASED IN THE SECOND QUARTER OF 2000
REFLECTED A MINOR DECREASE IN THE SPENDING OF INDIVIDUALS. IN JUNE, THE CONSUMER
PRICE INDEX (CPI), THE LEADING INFLATION INDICATOR, ROSE HIGHER THAN
EXPECTED--0.6 PERCENT MORE THAN THE PREVIOUS MONTH. THAT HEIGHTENED CONCERNS
ABOUT INFLATION, AND THE PROSPECT OF ADDITIONAL FEDERAL RESERVE BOARD
INTEREST-RATE INCREASES.
THE U.S. LABOR MARKET WAS STILL ROBUST DURING THIS TIME, AND JOB INSECURITY
CONTINUED TO DECLINE. SOLID EMPLOYMENT GROWTH WAS ACCOMPANIED BY UNUSUALLY LARGE
GAINS IN PRODUCTIVITY, WHICH LIMITED THE RISE IN UNIT LABOR COSTS ACROSS THE
WHOLE ECONOMY. GIVEN THE HIGH EMPLOYMENT NUMBERS AND STRONG LEVELS OF
PRODUCTIVITY, ANALYSTS BELIEVE AN INCREASE IN INTEREST RATES TO WARD OFF
INFLATION AND FURTHER SLOW THE ECONOMY IS POSSIBLE.
INTEREST RATES AND INFLATION
DURING THE PAST FEW MONTHS, PERSISTENT STRENGTH IN CONSUMER SPENDING ACCOMPANIED
BY A VERY TIGHT LABOR MARKET, RESULTED IN SOME INFLATION. THE CPI REACHED A
LEVEL OF 2.7 PERCENT IN JANUARY 2000 AND 3.7 PERCENT IN JUNE 2000, CLEARLY
DEMONSTRATING SIGNS OF INFLATION.
SINCE JUNE 1999, THE FEDERAL RESERVE HAS INCREASED THE FEDERAL FUNDS RATE SIX
TIMES BY A TOTAL OF 175 BASIS POINTS TO LOWER ECONOMIC GROWTH AND DECREASE ANY
FUTURE FEARS OF INFLATION. THESE INCREASES IN INTEREST RATES HELPED SLOW THE
INTEREST-SENSITIVE AUTO AND HOUSING MARKETS.
MANY OBSERVERS BELIEVE INTEREST RATES COULD BE LIFTED FURTHER IN COMING MONTHS.
WHILE MARKETS HAVE EXPERIENCED MUCH SHORT-TERM VOLATILITY, THE MARKET'S OUTLOOK
COULD IMPROVE ONCE INTEREST-RATE HIKES CEASE.
2
<PAGE> 4
U.S. GROSS DOMESTIC PRODUCT
SEASONALLY ADJUSTED ANNUALIZED RATES
(June 30, 1998 - June 30, 2000)
[BAR GRAPH]
<TABLE>
<CAPTION>
U.S. GROSS DOMESTIC PRODUCT
---------------------------
<S> <C>
Jun 98 2.10
Sep 98 3.80
Dec 98 5.90
Mar 99 3.50
Jun 99 2.50
Sep 99 5.70
Dec 99 8.30
Mar 00 4.80
Jun 00 5.20
</TABLE>
Source: Bureau of Economic Analysis
INTEREST RATES AND INFLATION
(June 30, 1998 - June 30, 2000)
[LINE GRAPH]
<TABLE>
<CAPTION>
INTEREST RATES INFLATION
-------------- ---------
<S> <C> <C>
Jun 98 5.50 1.70
5.50 1.70
5.50 1.60
Sep 98 5.25 1.50
5.00 1.50
4.75 1.50
Dec 98 4.75 1.60
4.75 1.70
4.75 1.60
Mar 99 4.75 1.70
4.75 2.30
4.75 2.10
Jun 99 5.00 2.00
5.00 2.10
5.25 2.30
Sep 99 5.25 2.60
5.25 2.60
5.50 2.60
Dec 99 5.50 2.70
5.50 2.70
5.75 3.20
Mar 00 6.00 3.70
6.00 3.00
6.50 3.10
Jun 00 6.50 3.70
</TABLE>
Interest rates are represented by the closing midline federal funds target 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.
3
<PAGE> 5
PERFORMANCE SUMMARY
RETURN HIGHLIGHTS
(as of June 30, 2000)
<TABLE>
<CAPTION>
A SHARES B SHARES C SHARES
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Six-month total return based on
NAV(1) 2.57% 2.29% 2.22%
-------------------------------------------------------------------------
Six-month total return(2) -3.31% -2.59% 1.25%
-------------------------------------------------------------------------
One-year total return(2) -10.02% -9.33% -6.01%
-------------------------------------------------------------------------
Five-year average annual total
return(2) 16.48% 16.80% 16.98%
-------------------------------------------------------------------------
Ten-year average annual total
return(2) 13.45% N/A N/A
-------------------------------------------------------------------------
Life-of-Fund average annual total
return(2) 12.42% 13.89%(3) 14.90%
-------------------------------------------------------------------------
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 Class A shares) or
contingent deferred sales charge ("CDSC") for Class B and C shares. On
purchases of Class A shares of $1 million or more, a CDSC of 1% may be
imposed on certain redemptions made within one year of purchase. Returns for
Class B shares are calculated without the effect of the maximum 5% CDSC,
charged on certain redemptions made within one year of purchase and
declining thereafter to 0% after the fifth year. Returns for Class C shares
are calculated without the effect of the maximum 1% CDSC, charged on certain
redemptions made within one year of purchase. If the sales charges were
included, total returns would be lower.
(2) Standardized total return. Assumes reinvestment of all distributions for the
period and includes payment of the maximum sales charge (5.75% for Class A
shares) or contingent deferred sales charge ("CDSC") for Class B and C
shares. On purchases of Class A shares of $1 million or more, a CDSC of 1%
may be imposed on certain redemptions made within one year of purchase.
Returns for Class B shares are calculated with the effect of the maximum 5%
CDSC, charged on certain redemptions made within one year of purchase and
declining thereafter to 0% after the fifth year. Returns for Class C shares
are calculated with the effect of the maximum 1% CDSC, charged on certain
redemptions made within one year of purchase.
(3) The total return reflects the conversion of Class B shares into Class A
shares six years after the end of the calendar month in which the shares
were purchased.
An investment in the Fund is subject to investment risks, and you could lose
money on your investment in the Fund. Please review the Risk/Return Summary
of the Prospectus for further details on investment risks. Fund shares, when
redeemed, may be worth more or less than
4
<PAGE> 6
their original cost. Past performance is no guarantee of future results.
Investment return and net asset value will fluctuate with market conditions.
Market forecasts provided in this report may not necessarily come to pass.
5
<PAGE> 7
PORTFOLIO AT A GLANCE
TOP TEN HOLDINGS
(as a percentage of long-term investments--June 30, 2000)
<TABLE>
<S> <C> <C>
1. PHILIP MORRIS 4.8%
Manufactures and sells various
consumer products.
2. PROVIDIAN FINANCIAL 3.7%
Offers a range of fee-based products
and services, including credit cards.
3. ALBERTSON'S 3.7%
Operates retail food- and drugstores
throughout the United States.
4. INTERNATIONAL PAPER 3.2%
Produces forest products and
distributes paper and office
supplies.
5. RELIANT ENERGY 3.2%
Provides electric and natural-gas
services to customers in the United
States, South America, and India.
6. SARA LEE 3.0%
Produces foods and consumer products,
including brands such as Sara Lee
baked goods, Ball Park franks, and
Hanes apparel.
7. VERIZON (FORMERLY BELL
ATLANTIC) 2.9%
Provides telecommunications services
throughout the United States.
8. TXU 2.8%
Processes and distributes electricity
and natural gas services.
9. TEXACO 2.7%
Explores for and produces petroleum
and natural gas.
10. TENET HEALTHCARE 2.6%
Owns and operates hospitals in the
United States and Spain.
</TABLE>
TOP FIVE SECTORS
(as a percentage of long-term investments)
[BAR GRAPH]
<TABLE>
<CAPTION>
JUNE 30, 2000 DECEMBER 31, 1999
------------- -----------------
<S> <C> <C>
Utilities 23.6 20.8
Finance 19.5 21.2
Energy 12 9.5
Consumer Non-Durables 11.9 9.3
Health Care 8.3 11.8
</TABLE>
6
<PAGE> 8
Q&A WITH YOUR PORTFOLIO MANAGERS
WE RECENTLY SPOKE WITH THE MANAGEMENT TEAM OF THE VAN KAMPEN COMSTOCK FUND ABOUT
THE KEY EVENTS AND ECONOMIC FORCES THAT SHAPED THE MARKETS AND INFLUENCED THE
FUND'S RETURN DURING THE SIX MONTHS ENDED JUNE 30, 2000. THE TEAM IS LED BY B.
ROBERT BAKER, JR., SENIOR PORTFOLIO MANAGER, WHO HAS MANAGED THE FUND SINCE JULY
1994 AND HAS WORKED IN THE INVESTMENT INDUSTRY SINCE 1979. HE IS JOINED BY
PORTFOLIO MANAGERS KEVIN HOLT AND JASON LEDER. THE FOLLOWING DISCUSSION REFLECTS
THEIR VIEWS ON THE FUND'S PERFORMANCE.
Q HOW WOULD YOU DESCRIBE THE
MARKET ENVIRONMENT IN WHICH THE FUND OPERATED, AND HOW DID THE FUND PERFORM
IN THAT ENVIRONMENT?
A Overall, it was an extremely volatile
period for the markets, which generally continued to favor growth stocks over
value. (There can be no assurance that growth stocks will continue to be favored
over value stocks in the future.)
The Standard & Poor's 500 Index started the reporting period strong, though
it encountered some turbulence when the strength of the economy caused investors
to worry about further interest-rate increases by the Federal Reserve Board (the
Fed). In late February and mid-March, the S&P 500 rocketed upward, along with
the technology-heavy NASDAQ index and the rest of the market. Both the S&P 500
and the NASDAQ fell sharply beginning in late March, however, due to concerns
about technology stocks' high valuations and the effects of continued
interest-rate increases on U.S. corporate earnings.
When technology stocks began to falter, some investors looked to traditional
value sectors for relatively strong performance potential with less volatility
than growth sectors. However, this short-lived rally was not enough for value
stocks to outperform growth stocks.
The fund, whose value-style strategy was out of favor with investors,
achieved a total return of 2.57 percent for the six-month period ended June 30,
2000 (Class A shares at net asset value; if the maximum sales charge of 5.75
percent were included, the return would have been lower). As a result of recent
market activity, current performance may vary from the figures shown. By
comparison, the S&P 500 Index lost 0.43 percent, and the Standard & Poor's Barra
Value Index lost 4.07 percent for the same period. Of course, past performance
is no guarantee of future results. The S&P 500 Index is an unmanaged, broad-
based index that measures the performance of 500 stocks from 83 industrial
groups, and reflects the general performance of the stock market. The S&P Barra
Value Index is an unmanaged, broad-based index that reflects the general
performance of value
7
<PAGE> 9
stocks. Generally, the companies in the value index exhibit characteristics such
as low price-to-earnings ratios, high dividend yields, and low historical and
predicted earnings growth. These indexes are statistical composites that do not
include any commissions or sales charges that would be paid by an investor
purchasing the securities they represent. Such costs would lower the performance
of the indexes. It is not possible to invest directly in an index. Please refer
to the chart and footnotes on page 4 for additional fund performance results.
Q WHAT WAS YOUR STRATEGY FOR
MANAGING THE FUND IN THIS ENVIRONMENT?
A Our job is to evaluate companies,
and this remains true regardless of market conditions. As value investors, we
look for solid companies that may be temporarily undervalued in the marketplace,
meaning they may have sound business fundamentals, but their stock prices are
lower than what we believe they should be.
We then do our homework to determine whether, in our opinion, the company's
stock has the potential to reach a price we think is more in line with the
company's true worth.
Q WHAT STOCKS PERFORMED WELL
DURING THE REPORTING PERIOD?
A During the reporting period, we
found bargains in the electric utilities sector. Reliant Energy and Illinova,
which was acquired by Dynegy in February and was sold from the fund's portfolio
in March, helped the fund's overall performance, as did the fund's overweighting
in utilities relative to its benchmark, the S&P Barra Value Index. Over the
six-month period, we didn't significantly change the fund's weighting in
utilities.
Health-care stocks, particularly health maintenance organizations (HMOs) and
hospital stocks, also contributed positively to the fund's performance.
UnitedHealth Group, an HMO, and Tenet Healthcare, a leading U.S. hospital chain,
posted solid gains during the reporting period. Two pharmaceutical stocks,
American Home Products and Aventis, also performed well.
We began to increase our exposure to cyclical stocks because their prices
fell as the Fed increased interest rates several times throughout the reporting
period. Investors' fears of an economic slowdown caused these stocks' prices to
drop, and we believed this period of falling prices presented a buying
opportunity, enabling us to position the fund to capitalize on their potential
return to favor.
Philip Morris was our largest holding and the top contributor to the fund's
performance. During the first six months of 2000, the company's business
fundamentals improved and investors seemed to realize that perhaps the
out-of-favor company would not collapse under the weight of its litigation
issues after all--and the stock price lifted as a result.
Despite the correction in the technology sector, a few of the fund's
technology stocks were strong performers. Checkpoint Systems, which develops
secure computer networking environments for businesses, had a large run-up in
price in the beginning
8
<PAGE> 10
of 2000, and we sold it to lock in its price appreciation. Some other notable
technology names included SunGard Data Systems, a provider of systems and
support for the financial industry; Cognex, a manufacturer of hardware and
software with vision capabilities; and American Power Conversion, a manufacturer
of power-surge protection devices.
Keep in mind that not all stocks in the portfolio performed favorably, and
there is no guarantee that any of these stocks will perform well or will be held
by the fund in the future. For additional fund highlights, please refer to page
6.
Q WHICH STOCKS WERE
DISAPPOINTMENTS?
A Cyclical stocks, as a group, were
the biggest drag on performance. Although we believe that the depressed prices
presented buying opportunities, it didn't change the fact that those prices led
to poor short-term performance. Paper stocks such as International Paper,
Weyerhaeuser, and Boise Cascade were all down year to date. Smurfit-Stone
Container also dragged down the fund's performance. The fund's holdings in
Caterpillar and its small exposure to the steel industry in Bethlehem Steel and
USX-U.S. Steel Group also hurt its return. These companies' stocks have tended
to fall when investors perceive a slowdown in the economy, a condition that
occurred as the Fed increased interest rates during the reporting period. As
interest rates rose, the costs of mortgages and automobile loans also increased,
which slowed the demand for houses and cars. Consequently, manufacturers'
earnings slowed, and their stock prices fell.
Q WHAT IS YOUR OUTLOOK FOR THE
FUND IN THE COMING MONTHS?
A Because our focus is on individual
companies, we are more concerned about each company's business model,
competitors, revenue, earnings, and other fundamentals than we are about
macroeconomic trends. Therefore, we will continue to seek undervalued stocks on
a company-first basis.
9
<PAGE> 11
GLOSSARY OF TERMS
A HELPFUL GUIDE TO SOME OF THE COMMON TERMS YOU'RE LIKELY TO SEE IN THIS REPORT
AND OTHER FINANCIAL PUBLICATIONS.
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. Noncyclical
or defensive stocks are typically less sensitive to changes in the economy.
These include utilities, grocery stores, and pharmaceutical companies.
DIVIDEND: A distribution of the earnings of a corporation. Dividends may be in
the form of cash, stock or property. The board of directors must declare all
dividends.
FEDERAL RESERVE BOARD (THE FED): The governing body of the Federal Reserve
System, which is the central bank of the United States. Its policy-making
committee, called the Federal Open Market Committee, meets eight times a year to
establish monetary policy and monitor the economic pulse of the United States.
FUNDAMENTALS: Characteristics of a company, such as revenue growth, earnings
growth, financial strength, market share, and quality of management.
GROWTH INVESTING: An investment strategy that seeks to identify stocks that tend
to offer greater-than-average earnings growth. Growth stocks typically trade at
higher prices relative to their earnings than value stocks, due to their higher
expected earnings growth.
STANDARD & POOR'S 500 INDEX: A broad-based measurement of changes in
stock-market conditions based on the average performance of 500 widely held
common stocks from 83 industrial groups. The index, which tracks industrial,
transportation, financial, and utility stocks, to name a few, provides a guide
to the overall health of the U.S. stock market.
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 what value investors believe the stocks are
actually worth.
VOLATILITY: A measure of the fluctuation in the market price of a security. A
security that is volatile has frequent and large swings in price.
10
<PAGE> 12
BY THE NUMBERS
YOUR FUND'S INVESTMENTS
June 30, 2000 (Unaudited)
THE FOLLOWING PAGES DETAIL YOUR FUND'S PORTFOLIO OF INVESTMENTS AT THE END OF
THE REPORTING PERIOD.
<TABLE>
<CAPTION>
MARKET
DESCRIPTION SHARES VALUE
<S> <C> <C>
COMMON STOCKS 89.9%
CONSUMER DISTRIBUTION 6.9%
Albertson's, Inc........................................... 2,203,500 $ 73,266,375
Federated Department Stores, Inc. (a)...................... 810,500 27,354,375
Kroger Co. (a)............................................. 1,741,500 38,421,844
Lowe's Cos., Inc........................................... 185,000 7,596,562
Target Corp................................................ 130,000 7,540,000
--------------
154,179,156
--------------
CONSUMER DURABLES 0.3%
Ford Motor Co.............................................. 172,000 7,396,000
--------------
CONSUMER NON-DURABLES 10.7%
Berkshire Hathaway, Inc., Class B (a)...................... 7,400 13,024,000
ConAgra, Inc............................................... 1,035,000 19,729,687
Kimberly-Clark Corp........................................ 387,000 22,204,125
Nabisco Holdings Corp...................................... 220,000 11,550,000
Nike, Inc., Class B........................................ 210,000 8,360,625
Philip Morris Cos., Inc.................................... 3,624,300 96,270,469
Procter & Gamble Co........................................ 131,250 7,514,063
Sara Lee Corp.............................................. 3,150,000 60,834,375
--------------
239,487,344
--------------
CONSUMER SERVICES 0.0%
Gartner Group, Inc., Class B (a)........................... 16,000 158,000
--------------
ENERGY 10.9%
BP Amoco PLC--ADR (United Kingdom)......................... 517,638 29,278,899
Chevron Corp............................................... 438,000 37,147,875
Conoco, Inc., Class A...................................... 1,978,000 43,516,000
Conoco, Inc., Class B...................................... 634,000 15,572,625
Diamond Offshore Drilling, Inc............................. 250,000 8,781,250
Halliburton Co............................................. 553,200 26,104,125
ScottishPower PLC--ADR (United Kingdom).................... 510,740 17,077,869
Texaco, Inc................................................ 1,024,000 54,528,000
Unocal Corp................................................ 197,000 6,525,625
USX--Marathon Group........................................ 168,000 4,210,500
--------------
242,742,768
--------------
</TABLE>
See Notes to Financial Statements
11
<PAGE> 13
YOUR FUND'S INVESTMENTS
June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
MARKET
DESCRIPTION SHARES VALUE
<S> <C> <C>
FINANCE 17.5%
Allstate Corp.............................................. 2,326,500 $ 51,764,625
AMBAC Financial Group, Inc................................. 857,100 46,979,794
Bank of America Corp....................................... 405,197 17,423,471
Bear Stearns Cos., Inc..................................... 436,296 18,160,821
Chase Manhattan Corp....................................... 235,500 10,847,719
Chubb Corp................................................. 392,100 24,114,150
CIGNA Corp................................................. 105,000 9,817,500
Everest Reinsurance Group Ltd.............................. 185,000 6,081,875
Federal Home Loan Mortgage Corp............................ 354,600 14,361,300
Federal National Mortgage Assoc............................ 109,900 5,735,406
FleetBoston Financial Corp................................. 464,053 15,777,802
LandAmerica Financial Group, Inc........................... 228,900 5,250,394
Liberty Financial Cos., Inc................................ 135,300 2,968,144
Nationwide Financial Services, Inc......................... 88,900 2,922,587
Providian Financial Corp................................... 831,700 74,853,000
Torchmark, Inc............................................. 430,800 10,635,375
U.S. Bancorp............................................... 1,713,200 32,979,100
Washington Mutual, Inc..................................... 785,600 22,684,200
Wells Fargo Co............................................. 455,000 17,631,250
--------------
390,988,513
--------------
HEALTHCARE 7.4%
American Home Products Corp................................ 369,000 21,678,750
Aventis--ADR (France)...................................... 347,600 25,222,725
Baxter International, Inc.................................. 415,750 29,232,422
HCA Healthcare Co.......................................... 1,043,300 31,690,237
Tenet Healthcare Corp. (a)................................. 1,951,300 52,685,100
UnitedHealth Group, Inc.................................... 60,600 5,196,450
--------------
165,705,684
--------------
PRODUCER MANUFACTURING 3.3%
American Power Conversion Corp. (a)........................ 455,000 18,569,687
Caterpillar, Inc........................................... 234,000 7,926,750
Cognex Corp. (a)........................................... 299,950 15,522,413
Ingersoll-Rand Co.......................................... 138,000 5,662,043
Visteon Corp. (a).......................................... 22,520 273,061
Waste Management, Inc...................................... 1,318,350 25,048,650
--------------
73,002,604
--------------
RAW MATERIALS/PROCESSING INDUSTRIES 6.7%
Barrick Gold Corp.......................................... 432,000 7,857,000
Bethlehem Steel Corp. (a).................................. 643,000 2,290,688
Boise Cascade Corp......................................... 186,900 4,836,037
Freeport-McMoRan Copper & Gold, Inc., Class B (a).......... 969,600 8,968,800
</TABLE>
See Notes to Financial Statements
12
<PAGE> 14
YOUR FUND'S INVESTMENTS
June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
MARKET
DESCRIPTION SHARES VALUE
<S> <C> <C>
RAW MATERIALS/PROCESSING INDUSTRIES (CONTINUED)
Homestake Mining Co........................................ 802,000 $ 5,513,750
International Paper Co..................................... 2,169,460 64,677,026
Placer Dome, Inc........................................... 632,000 6,043,500
Rohm & Haas Co............................................. 161,000 5,654,015
Smurfit-Stone Container Corp. (a).......................... 400,000 5,150,000
USX-U.S. Steel Group....................................... 625,000 11,601,562
Weyerhaeuser Co............................................ 633,000 27,219,000
--------------
149,811,378
--------------
TECHNOLOGY 4.7%
BMC Software, Inc. (a)..................................... 306,700 11,189,758
Computer Associates International, Inc..................... 354,100 18,125,493
Electronics for Imaging, Inc. (a).......................... 459,300 11,626,031
Hewlett-Packard Co......................................... 75,000 9,365,625
Microsoft Corp. (a)........................................ 139,800 11,184,000
SunGard Data Systems, Inc. (a)............................. 1,381,300 42,820,300
--------------
104,311,207
--------------
TRANSPORTATION 0.2%
Burlington Northern Santa Fe Corp.......................... 185,000 4,243,438
--------------
UTILITIES 21.3%
American Electric Power Inc................................ 300,000 8,887,500
Constellation Energy Group................................. 445,000 14,490,312
CP & L Energy Inc.......................................... 259,500 8,287,781
DTE Energy Co.............................................. 470,000 14,364,375
Duke Energy Corp........................................... 674,000 37,996,750
Edison International....................................... 628,000 12,874,000
Entergy Corp............................................... 96,000 2,610,000
FirstEnergy Corp........................................... 208,000 4,862,000
GPU, Inc................................................... 81,000 2,192,063
Idacorp, Inc............................................... 400,000 12,900,000
New Century Energies, Inc.................................. 660,000 19,800,000
NSTAR...................................................... 412,379 16,778,671
OGE Energy Corp............................................ 666,000 12,321,000
P G & E Corp............................................... 560,000 13,790,000
Pinnacle West Capital Corp................................. 198,000 6,707,250
Public Service Co. of New Mexico........................... 349,000 5,387,688
Public Service Enterprise Group............................ 324,000 11,218,500
Reliant Energy, Inc........................................ 2,149,000 63,529,812
SBC Communications, Inc.................................... 654,000 28,285,500
Southern Co................................................ 1,596,000 37,206,750
TXU Corp................................................... 1,880,100 55,462,950
</TABLE>
See Notes to Financial Statements
13
<PAGE> 15
YOUR FUND'S INVESTMENTS
June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
MARKET
DESCRIPTION SHARES VALUE
<S> <C> <C>
UTILITIES (CONTINUED)
Unicom Corp................................................ 694,000 $ 26,849,125
Verizon Communications, formerly Bell Atlantic Corp........ 1,136,000 57,723,000
--------------
474,525,027
--------------
TOTAL LONG-TERM INVESTMENTS 89.9%
(Cost $1,979,545,111)............................................... 2,006,551,119
--------------
SHORT-TERM INVESTMENTS 8.9%
COMMERCIAL PAPER 4.5%
General Electric Capital Corp. ($50,000,000 par, yielding 4.57%,
07/03/00 maturity).................................................... 49,980,972
Prudential Funding Corp. ($50,000,000 par, yielding 4.33%, 07/03/00
maturity)............................................................. 49,981,945
--------------
Total Commercial Paper.............................................. 99,962,917
--------------
REPURCHASE AGREEMENT 1.1%
DLJ Mortgage Acceptance Corp., ($23,807,000 par collateralized by U.S.
Government obligations in a pooled cash account, dated 6/30/00, to be
sold on 07/03/00 at $23,820,054)...................................... 23,807,000
--------------
U.S. GOVERNMENT AGENCY OBLIGATIONS 3.3%
Federal Home Loan Mortgage Discount Notes
($25,000,000 par, yielding 6.45%, 07/18/00 maturity).................. 24,924,268
Federal Home Loan Mortgage Discount Notes
($50,000,000 par, yielding 6.44%, 07/11/00 maturity).................. 49,910,972
--------------
Total U.S. Government Agency Obligations............................ 74,835,240
--------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $198,605,157)................................................. 198,605,157
--------------
TOTAL INVESTMENTS 98.8%
(Cost $2,178,150,268)............................................... 2,205,156,276
OTHER ASSETS IN EXCESS OF LIABILITIES 1.2%........................... 26,212,510
--------------
NET ASSETS 100.0%.................................................... $2,231,368,786
==============
</TABLE>
(a) Non-income producing security as this stock currently does not declare
dividends.
ADR--American Depositary Receipt
See Notes to Financial Statements
14
<PAGE> 16
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
June 30, 2000 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $2,178,150,268)..................... $2,205,156,276
Cash........................................................ 53,551
Receivables:
Investments Sold.......................................... 56,528,763
Fund Shares Sold.......................................... 16,813,848
Dividends................................................. 5,304,176
Interest.................................................. 4,351
Other....................................................... 347,564
--------------
Total Assets............................................ $2,284,208,529
--------------
LIABILITIES:
Payables:
Investments Purchased..................................... 41,486,972
Fund Shares Repurchased................................... 8,942,150
Distributor and Affiliates................................ 1,029,587
Investment Advisory Fee................................... 875,821
Trustees' Deferred Compensation and Retirement Plans........ 289,910
Accrued Expenses............................................ 215,303
--------------
Total Liabilities....................................... 52,839,743
--------------
NET ASSETS.................................................. $2,231,368,786
==============
NET ASSETS CONSIST OF:
Capital (Par value of $.01 per share with an unlimited
number of shares authorized).............................. $2,158,441,120
Accumulated Net Realized Gain............................... 38,797,585
Net Unrealized Appreciation................................. 27,006,008
Accumulated Undistributed Net Investment Income............. 7,124,073
--------------
NET ASSETS.................................................. $2,231,368,786
==============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $1,814,049,310 and 125,695,955 shares of
beneficial interest issued and outstanding)............. $ 14.43
Maximum sales charge (5.75%* of offering price)......... 0.88
--------------
Maximum offering price to public........................ $ 15.31
==============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $343,276,136 and 23,785,662 shares of
beneficial interest issued and outstanding)............. $ 14.43
==============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $74,043,340 and 5,130,059 shares of
beneficial interest issued and outstanding)............. $ 14.43
==============
</TABLE>
* On sales of $50,000 or more, the sales charge will be reduced.
See Notes to Financial Statements
15
<PAGE> 17
Statement of Operations
For the Six Months Ended June 30, 2000 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends................................................... $ 28,689,506
Interest.................................................... 4,434,097
Other....................................................... 69,608
------------
Total Income............................................ 33,193,211
------------
EXPENSES:
Investment Advisory Fee..................................... 5,021,516
Distribution (12b-1) and Service Fees (Attributed to Classes
A, B and C of $2,027,895, $1,580,955 and $349,974,
respectively)............................................. 3,958,824
Shareholder Services........................................ 1,344,012
Trustees' Fees and Related Expenses......................... 54,594
Custody..................................................... 54,515
Legal....................................................... 42,796
Other....................................................... 562,272
------------
Total Expenses.......................................... 11,038,529
Less Credits Earned on Cash Balances.................... 28,504
------------
Net Expenses............................................ 11,010,025
------------
NET INVESTMENT INCOME....................................... $ 22,183,186
============
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain........................................... $ 57,687,149
------------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 58,648,383
End of the Period......................................... 27,006,008
------------
Net Unrealized Depreciation During the Period............... (31,642,375)
------------
NET REALIZED AND UNREALIZED GAIN............................ $ 26,044,774
============
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 48,227,960
============
</TABLE>
See Notes to Financial Statements
16
<PAGE> 18
Statement of Changes in Net Assets
For the Six Months Ended June 30, 2000 and the Year Ended December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2000 DECEMBER 31, 1999
-------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income............................. $ 22,183,186 $ 34,926,767
Net Realized Gain................................. 57,687,149 251,901,846
Net Unrealized Depreciation During the Period..... (31,642,375) (251,157,434)
-------------- ---------------
Change in Net Assets from Operations.............. 48,227,960 35,671,179
-------------- ---------------
Distributions from Net Investment Income:
Class A Shares.................................. (15,292,276) (31,985,263)
Class B Shares.................................. (1,474,613) (3,026,318)
Class C Shares.................................. (311,574) (860,704)
-------------- ---------------
(17,078,463) (35,872,285)
-------------- ---------------
Distributions from Net Realized Gain:
Class A Shares.................................. (69,945,603) (183,355,610)
Class B Shares.................................. (12,418,358) (30,443,566)
Class C Shares.................................. (2,632,114) (9,259,250)
-------------- ---------------
(84,996,075) (223,058,426)
-------------- ---------------
Total Distributions............................... (102,074,538) (258,930,711)
-------------- ---------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES...................................... (53,846,578) (223,259,532)
-------------- ---------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold......................... 454,270,794 2,109,063,716
Net Asset Value of Shares Issued Through Dividend
Reinvestment.................................... 92,853,502 235,804,388
Cost of Shares Repurchased........................ (477,910,961) (1,912,609,872)
-------------- ---------------
NET CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS.................................... 69,213,335 432,258,232
-------------- ---------------
TOTAL INCREASE IN NET ASSETS...................... 15,366,757 208,998,700
NET ASSETS:
Beginning of the Period........................... 2,216,002,029 2,007,003,329
-------------- ---------------
End of the Period (Including accumulated
undistributed net investment income of
$7,124,073 and $2,019,350, respectively)........ $2,231,368,786 $ 2,216,002,029
============== ===============
</TABLE>
See Notes to Financial Statements
17
<PAGE> 19
Financial Highlights
(Unaudited)
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
CLASS A SHARES JUNE 30, -----------------------------------------
2000 1999 1998 1997 1996
------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF THE
PERIOD................................ $ 14.803 $ 16.394 $ 16.204 $ 14.785 $ 14.54
-------- -------- -------- -------- --------
Net Investment Income................. .157 .242 .268 .275 .264
Net Realized and Unrealized Gain...... .183 .105 2.875 3.966 2.828
-------- -------- -------- -------- --------
Total from
Investment Operations................. 0.340 0.347 3.143 4.241 3.092
-------- -------- -------- -------- --------
Less:
Distributions from and in Excess
of Net Investment Income............ 0.125 .290 .280 .250 .255
Distributions from Net Realized
Gain................................ 0.586 1.648 2.673 2.572 2.592
-------- -------- -------- -------- --------
Total Distributions..................... 0.711 1.938 2.953 2.822 2.847
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF THE PERIOD...... $ 14.432 $ 14.803 $ 16.394 $ 16.204 $ 14.785
======== ======== ======== ======== ========
Total Return (a)........................ 2.57%* 2.39% 20.12% 29.92% 22.34%
Net Assets at End of the Period (In
millions)............................. $1,814.1 $1,801.3 $1,752.4 $1,518.7 $1,240.9
Ratio of Expenses to Average Net
Assets (b)............................ .89% .89% .91% .94% 1.00%
Ratio of Net Investment Income to
Average Net Assets (b)................ 2.21% 1.73% 1.59% 1.71% 1.71%
Portfolio Turnover...................... 34%* 72% 102% 114% 176%
</TABLE>
* Non-Annualized
(a) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum sales charge of 5.75% or contingent deferred
sales charge ("CDSC"). On purchases of $1 million or more, a contingent
deferred sales charge of 1% may be imposed on certain redemptions made
within one year of purchase. If the sales charges were included, total
returns would be lower.
(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
(Unaudited)
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
CLASS B SHARES JUNE 30, -------------------------------------
2000 1999 1998 1997 1996
--------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF THE
PERIOD................................ $14.784 $16.383 $16.209 $14.802 $ 14.56
------- ------- ------- ------- -------
Net Investment Income................. .097 .124 .131 .145 .144
Net Realized and
Unrealized Gain..................... .202 .095 2.876 3.964 2.825
------- ------- ------- ------- -------
Total from
Investment Operations................. 0.299 0.219 3.007 4.109 2.969
------- ------- ------- ------- -------
Less:
Distributions from and in Excess of
Net Investment Income............... 0.065 .170 .160 .130 .135
Distributions from Net Realized
Gain................................ 0.586 1.648 2.673 2.572 2.592
------- ------- ------- ------- -------
Total Distributions..................... 0.651 1.818 2.833 2.702 2.727
------- ------- ------- ------- -------
NET ASSETS VALUE, END OF THE PERIOD..... $14.432 $14.784 $16.383 $16.209 $14.802
======= ======= ======= ======= =======
Total Return (a)........................ 2.29%* 1.57% 19.13% 28.88% 21.39%
Net Assets at End of the Period (In
millions)............................. $ 343.3 $ 319.6 $ 204.7 $ 123.1 $ 75.4
Ratio of Expenses to Average Net Assets
(b)................................... 1.65% 1.66% 1.70% 1.74% 1.80%
Ratio of Net Investment Income to
Average Net Assets (b)................ 1.45% 1.00% .79% .92% .91%
Portfolio Turnover...................... 34%* 72% 102% 114% 176%
</TABLE>
* Non-Annualized
(a) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum contingent deferred sales charge of 5%,
charged on certain redemptions made within one year of purchase and
declining thereafter to 0% after the fifth year. If the sales charge was
included, total returns would be lower.
(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
Financial Highlights
(Unaudited)
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
CLASS C SHARES JUNE 30, -------------------------------------
2000 1999 1998 1997 1996
--------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF THE
PERIOD................................ $14.785 $16.382 $16.210 $14.805 $ 14.56
------- ------- ------- ------- -------
Net Investment Income................. .084 .130 .127 .144 .151
Net Realized and Unrealized Gain...... .215 .091 2.878 3.963 2.821
------- ------- ------- ------- -------
Total from
Investment Operations................. 0.299 0.221 3.005 4.107 2.972
------- ------- ------- ------- -------
Less:
Distributions from and in Excess of
Net Investment Income............... 0.065 .170 .160 .130 .135
Distributions from Net Realized
Gain................................ 0.586 1.648 2.673 2.572 2.592
------- ------- ------- ------- -------
Total Distributions..................... 0.651 1.818 2.833 2.702 2.727
------- ------- ------- ------- -------
NET ASSET VALUE, END OF THE PERIOD...... $14.433 $14.785 $16.382 $16.210 $14.805
======= ======= ======= ======= =======
Total Return (a)........................ 2.22%* 1.64% 19.13% 28.89% 21.38%
Net Assets at End of the Period (In
millions)............................. $ 74.0 $ 95.1 $ 49.9 $ 10.9 $ 5.8
Ratio of Expenses to Average Net
Assets (b)............................ 1.65% 1.66% 1.71% 1.74% 1.80%
Ratio of Net Investment Income to
Average Net Assets (b)................ 1.45% 1.00% .78% .92% .92%
Portfolio Turnover...................... 34%* 72% 102% 114% 176%
</TABLE>
* Non-Annualized
(a) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum contingent deferred sales charge of 1%,
charged on certain redemptions made within one year of purchase. If the
sales charge was included, total returns would be lower.
(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
20
<PAGE> 22
NOTES TO
FINANCIAL STATEMENTS
June 30, 2000 (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 to seek 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, which approximates market value.
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 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
21
<PAGE> 23
NOTES TO
FINANCIAL STATEMENTS
June 30, 2000 (Unaudited)
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 Interest income is recorded on an accrual basis and
dividend income is recorded on the ex-dividend date. Discounts are accreted 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, 2000, for federal income tax purposes, cost of long- and
short-term investments is $2,194,959,884, the aggregate gross unrealized
appreciation is $213,830,729 and the aggregate gross unrealized depreciation is
$203,634,337, resulting in net unrealized appreciation on long- and short-term
investments of $10,196,392.
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.
F. EXPENSE REDUCTIONS During the six months ended June 30, 2000, the Fund's
custody fee was reduced by $28,504 as a result of credits earned on overnight
cash balances.
22
<PAGE> 24
NOTES TO
FINANCIAL STATEMENTS
June 30, 2000 (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 DAILY 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, 2000, the Fund recognized expenses of
approximately $42,800 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, 2000, the Fund recognized expenses of
approximately $60,400 representing Van Kampen Funds Inc. or its affiliates'
(collectively "Van Kampen") cost of providing accounting services to the Fund.
Van Kampen Investor Services Inc., an affiliate of the Adviser, serves as
the shareholder servicing agent for the Fund. For the six months ended June 30,
2000, the Fund recognized expenses of approximately $1,271,400. 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.
23
<PAGE> 25
NOTES TO
FINANCIAL STATEMENTS
June 30, 2000 (Unaudited)
3. CAPITAL TRANSACTIONS
At June 30, 2000, capital aggregated $1,688,712,482, $379,222,149 and
$90,506,489 for Classes A, B and C, respectively. For the six months ended June
30, 2000, transactions were as follows:
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
Sales:
Class A............................................... 21,461,585 $ 304,418,543
Class B............................................... 7,207,202 103,077,568
Class C............................................... 3,205,104 46,774,683
----------- -------------
Total Sales............................................. 31,873,891 $ 454,270,794
=========== =============
Dividend Reinvestment:
Class A............................................... 5,646,058 $ 77,388,618
Class B............................................... 948,839 12,967,922
Class C............................................... 182,677 2,496,962
----------- -------------
Total Dividend Reinvestment............................. 6,777,574 $ 92,853,502
=========== =============
Repurchases:
Class A............................................... (23,099,419) $(326,553,307)
Class B............................................... (5,991,428) (84,324,411)
Class C............................................... (4,687,826) (67,033,243)
----------- -------------
Total Repurchases....................................... (33,778,673) $(477,910,961)
=========== =============
</TABLE>
24
<PAGE> 26
NOTES TO
FINANCIAL STATEMENTS
June 30, 2000 (Unaudited)
At December 31, 1999, capital aggregated $1,633,458,628, $347,501,070 and
$108,268,087 for Classes A, B, and C, respectively. For the year ended December
31, 1999, transactions were as follows:
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
Sales:
Class A............................................ 104,803,333 $ 1,726,636,775
Class B............................................ 14,079,071 231,243,097
Class C............................................ 9,166,989 151,183,844
------------ ---------------
Total Sales.......................................... 128,049,393 $ 2,109,063,716
============ ===============
Dividend Reinvestment:
Class A............................................ 13,138,621 $ 195,571,775
Class B............................................ 2,103,746 30,982,716
Class C............................................ 627,947 9,249,897
------------ ---------------
Total Dividend Reinvestment.......................... 15,870,314 $ 235,804,388
============ ===============
Repurchases:
Class A............................................ (103,147,916) (1,694,913,965)
Class B............................................ (7,056,176) (113,376,802)
Class C............................................ (6,409,056) (104,319,105)
------------ ---------------
Total Repurchases.................................... (116,613,148) $(1,912,609,872)
============ ===============
</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 purchased
on or after June 1, 1996, and any dividend reinvestment Class B shares received
on such shares, automatically convert to Class A shares eight years after the
end of the calendar month in which the shares were purchased. Class B shares
purchased before June 1, 1996, and any dividend reinvestment plan Class B shares
received on such shares, automatically convert to Class A shares six years after
the end of the calendar month in which the shares were purchased. For the six
months ended June 30, 2000, 697,073 Class B shares automatically converted to
Class A shares and are shown in the above table as sales of Class A shares and
repurchases of Class B shares. Class C shares purchased before January 1, 1997,
and any dividend reinvestment plan C shares received on such shares,
automatically convert to Class A shares ten years after the end of the calendar
month in which the shares were purchased. Class C shares purchased on or after
January 1, 1997 do not possess a conversion feature. For the six months ended
June 30, 2000, no Class C shares converted to Class A shares. The CDSC for Class
B and C shares will be imposed on
25
<PAGE> 27
NOTES TO
FINANCIAL STATEMENTS
June 30, 2000 (Unaudited)
most redemptions made within five years of the purchase for Class B shares and
one year of the purchase for Class C shares 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>
For the six months ended June 30, 2000, Van Kampen, as Distributor for the
Fund, received commissions on sales of the Fund's Class A shares of
approximately $542,900 and CDSC on redeemed shares of approximately $413,700.
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 $694,620,251 and $799,529,464,
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.
The Fund may invest 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
26
<PAGE> 28
NOTES TO
FINANCIAL STATEMENTS
June 30, 2000 (Unaudited)
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 fund did not invest in futures transactions
during the six months ended June 30, 2000.
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, 2000, are payments retained by Van Kampen of
approximately $1,243,400.
7. BORROWINGS
In accordance with its investment policies, the Fund may borrow from banks for
temporary purposes and is subject to certain other customary restrictions.
Effective November 30, 1999, the Fund, in conjunction with certain other funds
of Van Kampen, has entered in to a $650,000,000 committed line of credit
facility with a group of banks which expires on November 28, 2000, but is
renewable with the consent of the participating banks. Each fund is permitted to
utilize the facility in accordance with the restrictions of its prospectus. In
the event the demand for the credit facility meets or exceeds $650 million on a
complex-wide basis, each fund will be limited to its pro-rata percentage based
on the net assets of each participating fund. Interest on borrowings is charged
under the agreement at a rate of 0.50% above the federal funds rate per annum.
An annual commitment fee of 0.09% per annum is charged on the unused portion of
the credit facility, which each fund incurs based on its pro-rata percentage of
quarterly net assets. The Fund has not borrowed against the credit facility
during the period.
27
<PAGE> 29
VAN KAMPEN FUNDS
THE VAN KAMPEN
FAMILY OF FUNDS
Growth
Aggressive Growth
American Value*
Emerging Growth
Enterprise
Equity Growth
Focus Equity
Growth
Mid Cap Growth
Pace
Select Growth
Small Cap Value
Tax Managed Equity Growth
Technology
Growth and Income
Comstock
Equity Income
Growth and Income
Harbor
Real Estate Securities
Utility
Value
Global/International
Asian Growth
Emerging Markets
European Equity
Global Equity
Global Equity Allocation
International Magnum
Latin American
Strategic Income
Tax Managed Global Franchise
Worldwide High Income
Income
Corporate Bond
Government Securities
High Income Corporate Bond
High Yield
High Yield & Total Return*
Limited Maturity Government
U.S. Government
U.S. Government Trust for Income
Capital Preservation
Reserve
Tax Free Money
Senior Loan
Prime Rate Income Trust
Senior Floating Rate
Tax Free
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
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 ongoing 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 [COMPUTER ICON]
- 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.
[PHONE ICON]
- e-mail us by visiting
WWW.VANKAMPEN.COM and
selecting Contact Us
[MAIL ICON]
* Closed to new investors
** Open to new investors for a limited time
28
<PAGE> 30
FUND OFFICERS AND IMPORTANT ADDRESSES
VAN KAMPEN COMSTOCK FUND
BOARD OF TRUSTEES
J. MILES BRANAGAN
JERRY D. CHOATE
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
MITCHELL M. MERIN*
JACK E. NELSON
RICHARD F. POWERS, III*
PHILLIP B. ROONEY
FERNANDO SISTO
WAYNE W. WHALEN* - Chairman
SUZANNE H. WOOLSEY
OFFICERS
RICHARD F. POWERS, III*
President
STEPHEN L. BOYD*
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
RICHARD A. CICCARONE*
JOHN R. REYNOLDSON*
MICHAEL H. SANTO*
JOHN H. ZIMMERMANN, 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 AUDITORS(1)
ERNST & YOUNG LLP
233 South Wacker Drive
Chicago, Illinois 60606
(1) Independent auditors for the Fund perform an annual audit of the Fund's
financial statements. The Board of Trustees has engaged Ernst & Young LLP
to be the Fund's independent auditors.
PricewaterhouseCoopers LLP has ceased being the Fund's independent auditors
effective May 18, 2000. The cessation of the client-auditor relationship
between the Fund and PricewaterhouseCoopers was based solely on a possible
future business relationship by PricewaterhouseCoopers with an affiliate of
the Fund's Investment Adviser.
* "Interested persons" of the Fund, as defined in the Investment Company Act of
1940, as amended.
(C) Van Kampen Funds Inc., 2000. 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 charges on
shares of the Fund, and other pertinent
data. After December 31, 2000, the report, if used with prospective investors,
must be accompanied by a quarterly performance update, if applicable.
29
