107/634/607
503/502 A 974
[LOGO]
COMSTOCK PARTNERS
FUNDS, INC.
------------------------------------------------
COMSTOCK PARTNERS
STRATEGY FUND
COMSTOCK PARTNERS
CAPITAL VALUE FUND
ANNUAL REPORT
APRIL 30, 1997
<PAGE>
COMSTOCK PARTNERS FUNDS, INC.
COMSTOCK PARTNERS STRATEGY FUND
COMSTOCK PARTNERS CAPITAL VALUE FUND
993 Lenox Drive, Suite 106
Lawrenceville, NJ 08648
INVESTMENT ADVISER
COMSTOCK PARTNERS, INC.
993 Lenox Drive, Suite 106
Lawrenceville, NJ 08648
SUB-INVESTMENT ADVISER (STRATEGY FUND)
THE DREYFUS CORPORATION
200 Park Avenue
New York, NY 10166
SUB-INVESTMENT ADVISER AND
ADMINISTRATOR (CAPITAL VALUE FUND)
THE DREYFUS CORPORATION
200 Park Avenue
New York, NY 10166
CUSTODIAN--DOMESTIC
THE BANK OF NEW YORK
90 Washington Street
New York, NY 10286
CUSTODIANS--INTERNATIONAL
BROWN BROTHERS HARRIMAN & CO. (STRATEGY FUND)
40 Water Street
Boston, MA 02109
THE BANK OF NEW YORK (CAPITAL VALUE FUND)
90 Washington Street
New York, NY 10286
ADMINISTRATOR (STRATEGY FUND)
PRINCETON ADMINISTRATORS, L.P.
P.O. Box 9095
Princeton, NJ 08543-9095
DISTRIBUTOR
PREMIER MUTUAL FUND SERVICES, INC.
60 State Street, Suite 1300
Boston, MA 02109
Tel. 1-800-221-7930, 1-617-557-3400
TRANSFER AGENT AND DIVIDEND
DISBURSING AGENT
DREYFUS TRANSFER, INC.
P.O. Box 9671
Providence, RI 02940-9671
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
787 Seventh Avenue
New York, NY 10019
LEGAL COUNSEL
SIMPSON THACHER & BARTLETT
(a partnership which includes
professional corporations)
425 Lexington Avenue
New York, NY 10017-3909
OFFICERS & DIRECTORS
Charles L. Minter,
Chief Executive Officer and
Chairman of the Board
M. Bruce Adelberg, Director
Sven B. Karlen, Jr., Director
E. W. Kelley, Director
Robert M. Smith, Director
W. Troy Hottenstein, Secretary
Robert C. Ringstad, Vice President,
Treasurer, Chief Financial Officer
and Assistant Secretary
- --------------------------------------------------------------------------------
General information regarding a Fund's portfolio, updated semi-monthly, is
available by calling the Fund's Distributor (see above).
This report is not authorized for use in connection with an offer of sale
or a solicitation of an offer to buy shares of a Fund unless accompanied or
preceded by a Fund's current prospectus. Past performance results shown in this
report should not be considered a representation of future performance.
Investment return and principal value of shares will fluctuate so that shares,
when redeemed, may be worth more or less than their original cost.
SHAREHOLDER INQUIRIES TEL. 1-800-645-6561
<PAGE>
DEAR FELLOW SHAREHOLDER:
For the year ended April 30, 1997, the Comstock Partners Strategy Fund's Class
O, A, and C shares posted total returns of -4.85%, -5.10%, and -5.94%,
respectively, and the Comstock Partners Capital Value Fund's Class A, B, C, and
R shares posted total returns of -12.97%, -13.69%, -13.47%, and -12.83%,
respectively, based upon net asset value per share*, while the Standard & Poor's
500 Composite Stock Price Index (S&P 500) rose 25.09% and the Lehman Brothers
Government/ Corporate Bond Index rose 6.72%. The main reason we underperformed
the indexes over the last 12 months was because both Funds were positioned to
benefit from declining US equity prices. During that time period the S&P 500
Index rose sharply and both Funds' investments in S&P 500 put options declined
in value. Additionally, the Capital Value Fund's positions in short sales of
individual equities and S&P 500 futures contracts also declined in value.
Bear markets have occurred on average about once every four years over the past
century with the last one taking place in 1990. We believe that the US stock
market is due for a bear market and that the typical signs of a peak in equity
prices are evident now. In our view, the conditions for a peak in equity prices
are (1) an economy that is expanding while the Federal Reserve is tightening,
(2) excessive speculation, (3) high valuations relative to earnings and
dividends, and (4) the market up strongly but losing momentum.
Both of the Funds currently have positions in S&P 500 Index put options, while
the Capital Value Fund is short S&P 500 Index futures and individual equities.
The gold shares have begun to reach levels that we believe offer better value.
The market's psychology toward the metal has reached what we believe are
excessively bearish readings. The stocks may be bottoming. For these reasons we
continue to monitor the gold mining shares closely and for the first time in two
years have added to those positions that we feel warrant accumulation.
The dollar has appreciated greatly against most other currencies. From a trading
perspective, we believe that too many investors have come to recognize this and
thus, the sentiment has turned overly optimistic. In addition, fundamentally the
dollar appears to us to be overvalued relative to inflation levels, trade flows
and net debtor status.
We believe that the fixed-income markets offer trading opportunities to the
Funds from time to time and we have tried to take advantage of this. Again, we
have found it useful to focus on the market's psychological state to guide our
trading. Presently, the Funds hold a small position in 30-year US Treasury
bonds.
<PAGE>
In summary, the Funds' positions are still geared to benefit from a US equity
market decline and also positioned to benefit if the dollar declines and/or the
gold shares rise. Note that, consistent with the Funds' prospectus and our
investment approach, we have the flexibility to change these positions when we
believe conditions warrant. Our trading strategies can alter the Funds' exposure
to any market very quickly.
Sincerely,
Comstock Partners, Inc.
Investment Policy Committee
Lawrenceville, New Jersey
May 13, 1997
* PERFORMANCE INFORMATION:
Total return assumes the reinvestment of dividends and excludes the effect of
sales loads.
The Lehman Brothers Government/Corporate Bond Index is a widely accepted
unmanaged index of bond market performance which includes fixed rate issues
rated investment grade or higher; all returns are market value weighted
inclusive of accrued interest. The Standard & Poor's 500 Composite Stock Price
Index is a widely accepted unmanaged index of stock market performance which
reflects the reinvestment of income dividends and, where applicable, capital
gain distributions.
Investors should note that there can be no assurance that the markets will
perform according to the investment adviser's expectations or that the
adviser's investment approach will achieve its objectives.
- --------------------------------------------------------------------------------
You may now obtain current information about Comstock Partners Strategy
Fund and Comstock Partners Capital Value Fund and our investment strategy
through the Funds' internet web site
www.comstockfunds.com
and a telephone information line 201-332-4422. Please save this
information for future reference.
- --------------------------------------------------------------------------------
<PAGE>
TOTAL RETURN BASED ON A $10,000 INVESTMENT -- COMSTOCK PARTNERS STRATEGY FUND
CLASS O SHARES*
<TABLE>
<CAPTION>
Date Class O* S&P 500 Lehman Brothers**** Blended
Index*** Govt/Corp Bond Index Index*****
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
May 26, 88 9550 10000 10000 10000
4/89 10824 12205 10858 11329
4/90 12242 13486 11767 12362
4/91 13302 15853 13513 14314
4/92 14577 18084 14968 16022
4/93 15409 19748 17139 18049
4/94 16970 20798 17336 18520
4/95 17375 24411 18536 20479
4/96 17837 31788 20139 23797
4/97 16972 39764 21492 26926
<FN>
* The total return for Class O shares is based upon a hypothetical
investment in Class O shares at the Fund's inception on 5/26/88 restated
to reflect the maximum initial sales load charged when the Fund last
offered Class O shares. Total return for Class O shares prior to August 1,
1991 reflects performance of the Fund as a closed-end fund; as an open-end
fund the Fund incurs certain additional expenses as a result of the
continuous offering and redemption of its shares. Total return for Class
O shares assumes the reinvestment of dividends and capital gains
distributions.
** Fund's inception.
*** This unmanaged broad-based Index is comprised of common stocks.
**** This unmanaged broad-based Index is comprised of US Government Agency and
Treasury securities and investment grade corporate debt.
***** The blended Index contains 65% of Lehman Govt./Corp. Bond Index and 35%
S&P 500 Index.
Past performance is not predictive of future performance.
</TABLE>
AVERAGE ANNUAL TOTAL RETURN+
<TABLE>
<CAPTION>
% RETURN WITHOUT % RETURN WITH
SALES CHARGE SALES CHARGE
<S> <C> <C>
- --------------------------------------------------------------
CLASS O SHARES
- --------------------------------------------------------------
Year Ended 4/30/97 -4.85% -9.14%
- --------------------------------------------------------------
Five Years Ended
4/30/97 +3.09% +2.14%
- --------------------------------------------------------------
Fund's inception
(5/26/88)
through 4/30/97 +6.65% +6.10%
- --------------------------------------------------------------
</TABLE>
Investors should note that the performance information presented in the
following tables and graphs for Class A and Class C shares of the Strategy Fund
prior to the dates these classes were introduced is based on historical
expenses of a predecessor class or classes of the Fund and does not reflect how
Class A and Class C shares would have performed on a relative basis.
Accordingly, this information may be used in assessing the Fund's performance
history but should not be utilized in evaluating whether Class A or Class C
shares would best suit an investor's needs.
+ See the footnote to the preceding graph for a discussion of the presentation
of total return.
<PAGE>
TOTAL RETURN BASED ON A $10,000 INVESTMENT -- COMSTOCK PARTNERS STRATEGY FUND
CLASS A SHARES*
<TABLE>
<CAPTION>
Date Class A S&P 500 Lehman Brothers Govt/Corp Blended
Index*** Bond Index**** Index*****
- --------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
May 26, 88 9550 10000 10000 10000
4/89 10824 12205 10858 11329
4/90 12242 13486 11767 12362
4/91 13302 15853 13513 14314
4/92 14577 18084 14968 16022
4/93 15367 19748 17139 18049
4/94 16890 20798 17336 18520
4/95 17218 24411 18536 20479
4/96 17630 31788 20139 23797
4/97 16732 39764 21492 26926
<FN>
* The total return for Class A shares is based upon a hypothetical investment
in Class A shares at the Fund's inception on 5/26/88, restated to reflect
the current 4.5% maximum initial sales load for Class A shares. Total
return for Class A shares prior to August 1, 1991 reflects performance of
the Fund as a closed-end fund; as an open-end fund the Fund incurs certain
additional expenses as a result of the continuous offering and redemption
of its shares. Because Class A shares were not actually introduced until
July 15, 1992, total return for Class A shares for the period prior to July
15, 1992 does not reflect service and distribution fees
borne by Class A shares, which, if reflected, would reduce the total return
presented. Total return for Class A shares assumes the reinvestment of
dividends and capital gains distributions.
** Fund's inception.
*** This unmanaged broad-based Index is comprised of common stocks.
**** This unmanaged broad-based Index is comprised of US Government Agency and
Treasury securities and investment grade corporate debt.
***** The blended index contains 65% of Lehman Govt./Corp. Bond Index and 35%
S&P 500 Index.
Past performance is not predictive of future performance.
</TABLE>
AVERAGE ANNUAL TOTAL RETURN+
<TABLE>
<CAPTION>
% RETURN WITHOUT % RETURN WITH
SALES CHARGE SALES CHARGE
<S> <C> <C>
- --------------------------------------------------------------
CLASS A SHARES
- --------------------------------------------------------------
Year Ended 4/30/97 -5.10% -9.37%
- --------------------------------------------------------------
Five Years Ended
4/30/97 +2.80% +1.85%
- --------------------------------------------------------------
Fund's inception
(5/26/88)
through 4/30/97 +2.64% +1.66%
- --------------------------------------------------------------
</TABLE>
+ See the footnote to the preceding graph for a discussion of the presentation
of total return.
<PAGE>
TOTAL RETURN BASED ON A $10,000 INVESTMENT--COMSTOCK PARTNERS STRATEGY FUND
CLASS C SHARES*
<TABLE>
<CAPTION>
Date Strategy Fund S&P 500 Lehman Brothers Govt/Corp Blended Index
Class C* Index*** Bond Index****
- --------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
May 26, 88 10000 10000 10000 10000
4/89 11334 12205 10858 11329
4/90 12819 13486 11767 12362
4/91 13929 15853 13513 14314
4/92 15264 18084 14968 16022
4/93 16091 19748 17139 18049
4/94 17685 20798 17336 18520
4/95 18029 24411 18536 20479
4/96 18381 31788 20139 23797
4/97 17290 39764 21492 26926
<FN>
* The total return for Class C shares is based upon a hypothetical investment
in Class A shares at the Fund's inception on 5/26/88, restated to reflect
the applicable contingent deferred sales charge for Class C shares. Total
return for Class C shares prior to August 1, 1991 reflects performance of
the Fund as a closed-end fund; as an open-end fund the Fund incurs certain
additional expenses as a result of the continuous offering and redemption of
its shares. Because Class C shares were not actually introduced until August
1, 1995, total return for Class C shares for the period prior to August 1,
1995 does not reflect higher service and distribution fees and certain
administrative expenses borne by Class C shares, which, if reflected, would
reduce the total return presented. Total return for Class C shares assumes
the reinvestment of dividends and capital gains distributions.
** Fund's inception.
*** This unmanaged broad-based Index is comprised of common stocks.
**** This unmanaged broad-based Index is comprised of US Government Agency and
Treasury securities and investment grade corporate debt.
***** The blended Index contains 65% of Lehman Govt./Corp. Bond Index and 35%
S&P 500 Index.
Past performance is not predictive of future performance.
</TABLE>
AVERAGE ANNUAL TOTAL RETURN+
<TABLE>
<CAPTION>
% RETURN WITHOUT % RETURN WITH
CDSC CDSC++
<S> <C> <C>
- --------------------------------------------------------------
CLASS C SHARES
- --------------------------------------------------------------
Year Ended 4/30/97 -5.94% -6.82%
- --------------------------------------------------------------
Five Years Ended
4/30/97 +2.52% +2.52%
- --------------------------------------------------------------
Fund's inception
(5/26/88)
through 4/30/97 -2.50% -2.50%
- --------------------------------------------------------------
</TABLE>
+ See the footnote to the preceding graph for a discussion of the presentation
of total return.
++ Assuming payment of the maximum contingent deferred sales
charges. A contingent deferred sales charge of 1% is imposed on
redemptions made within one year of purchase.
<PAGE>
TOTAL RETURN BASED ON A $10,000 INVESTMENT--COMSTOCK PARTNERS CAPITAL VALUE
FUND**** CLASS A SHARES*
<TABLE>
<CAPTION>
S&P 500 Index*** Capital Value Fund
Class A Shares*
<C> <C> <C>
10/10/85 10000 9552
4/30/86 13223 13366
4/30/87 16728 15148
4/30/88 15641 17453
4/30/89 19221 19476
4/30/90 21243 22353
4/30/91 24978 22984
4/30/92 28475 23822
4/30/93 31100 24328
4/30/94 32752 24299
4/30/95 38464 23929
4/30/96 50068 23596
4/30/97 62646 20535
<FN>
* The total return for Class A shares is based upon a hypothetical investment
in Class A shares at the Fund's inception on 10/10/85 restated to reflect
the maximum initial sales load charged. Total return for Class A shares
assumes the reinvestment of dividends and capital gains distributions.
** Fund's inception.
*** This unmanaged broad-based Index is comprised of common stocks.
**** On July 25, 1996, the Comstock Partners Capital Value Fund became the
successor to the Dreyfus Capital Value Fund. Performance data prior to this
date reflects the performance of the Dreyfus Capital Value Fund.
Past performance is not predictive of future performance.
</TABLE>
AVERAGE ANNUAL TOTAL RETURN+
<TABLE>
<CAPTION>
% RETURN WITHOUT % RETURN WITH
SALES CHARGE SALES CHARGE
<S> <C> <C>
- --------------------------------------------------------------
CLASS A SHARES
- --------------------------------------------------------------
Year Ended 4/30/97 -12.97% -16.91%
- --------------------------------------------------------------
Five Years Ended
4/30/97 -2.93% -3.82%
- --------------------------------------------------------------
Ten Years Ended
4/30/97 +3.02% +2.55%
- --------------------------------------------------------------
Policy inception
(4/28/87)* through
4/30/97 +3.09% +2.61%
- --------------------------------------------------------------
Fund's inception
(10/10/85) through
4/30/97 +6.85% +6.42%
- --------------------------------------------------------------
</TABLE>
* On April 28, 1987, Comstock Partners, Inc., the Capital Value Fund's
Investment Adviser, assumed investment responsibilities and the Fund changed
its investment objective to the current investment objective.
+ See the footnote to the preceding graph for a discussion of the presentation
of total return.
Investors should note that the performance information presented in the
following tables and graphs for Class B, Class C and Class R shares of the
Capital Value Fund prior to the dates these classes were introduced is based
on historical expenses of a predecessor class or classes of the Fund and does
not reflect how Class B, Class C and Class R shares would have performed on a
relative basis. Accordingly, this information may be used in assessing the
Fund's performance history but should not be utilized in evaluating whether
Class B, Class C or Class R shares would best suit an investor's needs.
<PAGE>
TOTAL RETURN BASED ON A $10,000 INVESTMENT--COMSTOCK PARTNERS CAPITAL VALUE
FUND**** CLASS B SHARES*
<TABLE>
<CAPTION>
S&P 500 Index*** Capital Value Fund
Class B Shares*
<C> <C> <C> <C>
10/10/85 10000 10000
4/30/86 13223 13993
4/30/87 16728 15966
4/30/88 15641 18272
4/30/89 19221 20389
4/30/90 21243 23401
4/30/91 24978 24062
4/30/92 28475 24940
4/30/93 31100 25361
4/30/94 32752 25105
4/30/95 38464 24529
4/30/96 50068 24015
4/30/97 62646 20727
<FN>
* The total return for Class B shares is based upon a hypothetical investment
in Class A shares at the Fund's inception on 10/10/85. Because Class B
shares were not actually introduced until January 15, 1993, total return for
Class B shares for the period prior to January 15, 1993 does not reflect
higher service and distribution fees and certain administrative expenses
borne by Class B shares, which, if reflected, would reduce the total return
presented. Total return for Class B shares assumes the reinvestment of
dividends and capital gains distributions.
** Fund's inception.
*** This unmanaged broad-based Index is comprised of common stocks.
**** On July 25, 1996, the Comstock Partners Capital Value Fund became the
successor to the Dreyfus Capital Value Fund. Performance data prior to this
date reflects the performance of the Dreyfus Capital Value Fund.
Past performance is not predictive of future performance.
</TABLE>
AVERAGE ANNUAL TOTAL RETURN+
<TABLE>
<CAPTION>
% RETURN WITHOUT % RETURN WITH
CDSC CDSC++
<S> <C> <C>
- --------------------------------------------------------------
CLASS B SHARES
- --------------------------------------------------------------
Year Ended 4/30/97 -13.69% -16.95%
- --------------------------------------------------------------
Five Years Ended
4/30/97 -3.63% -3.95%
- --------------------------------------------------------------
Ten Years Ended
4/30/97 +2.64% --
- --------------------------------------------------------------
Policy inception
(4/28/87)* through
4/30/97 +2.71% --
- --------------------------------------------------------------
Fund's inception
(10/10/85) through
4/30/97 +6.51% --
- --------------------------------------------------------------
</TABLE>
<TABLE>
<C> <S>
* On April 28, 1987, Comstock Partners, Inc., the
Capital Value Fund's Investment Adviser, assumed
investment responsibilities and the Fund changed
its investment objective to the current investment
objective.
+ See the footnote to the preceding graph for a
discussion of the presentation of total return.
++ Assuming payment of the maximum contingent deferred
sales charge. Maximum contingent deferred sales
charge for Class B shares is 4% and is reduced to
0% after six years.
</TABLE>
<PAGE>
TOTAL RETURN BASED ON A $10,000 INVESTMENT--COMSTOCK PARTNERS CAPITAL VALUE
FUND**** CLASS C SHARES*
<TABLE>
<CAPTION>
S&P 500 Index*** Capital Value Fund
Class C Shares*
<C> <C> <C>
10/10/85 10000 10000
4/30/86 13223 13993
4/30/87 16728 15966
4/30/88 15641 18272
4/30/89 19221 20389
4/30/90 21243 23401
4/30/91 24978 24062
4/30/92 28475 24940
4/30/93 31100 25361
4/30/94 32752 25105
4/30/95 38464 24529
4/30/96 50068 23979
4/30/97 62646 20750
<FN>
* The total return for Class C shares is based upon a hypothetical investment
in Class A shares from the Fund's inception on 10/10/85 through 1/15/93, and
Class B shares from 1/15/93 through 8/22/95. Class C shares were not actually
introduced until August 22, 1995. Total return prior to January 15, 1993 does
not reflect the higher level of service and distribution fees and certain
administrative expenses borne by Class C shares, which, if reflected, would
reduce the total return presented. Total return for Class C shares assumes the
reinvestment of dividends and capital gains distributions.
** Fund's inception.
*** This unmanaged broad-based Index is comprised of common stocks.
**** On July 25, 1996, the Comstock Partners Capital Value Fund became the
successor to the Dreyfus Capital Value Fund. Performance data prior to this
date reflects the performance of the Dreyfus Capital Value Fund.
Past performance is not predictive of future performance.
</TABLE>
AVERAGE ANNUAL TOTAL RETURN+
<TABLE>
<CAPTION>
% RETURN WITHOUT % RETURN WITH
CDSC CDSC++
<S> <C> <C>
- --------------------------------------------------------------
CLASS C SHARES
- --------------------------------------------------------------
Year Ended 4/30/97 -13.47% -14.28%
- --------------------------------------------------------------
Five Years Ended
4/30/97 -3.61% --
- --------------------------------------------------------------
Ten Years Ended
4/30/97 +2.66% --
- --------------------------------------------------------------
Policy inception
(4/28/87)* through
4/30/97 +2.72% --
- --------------------------------------------------------------
Fund's inception
(10/10/85) through
4/30/97 +6.52% --
- --------------------------------------------------------------
</TABLE>
<TABLE>
<C> <S>
* On April 28, 1987, Comstock Partners, Inc., the
Capital Value Fund's Investment Adviser, assumed
investment responsibilities and the Fund changed
its investment objective to the current investment
objective.
+ See the footnote to the preceding graph for a
discussion of the presentation of total return.
++ Assuming payment of the maximum contingent deferred
sales charge. A contingent deferred sales charge of
1% is imposed on redemptions made within one year
of purchase.
</TABLE>
<PAGE>
TOTAL RETURN BASED ON A $10,000 INVESTMENT--COMSTOCK PARTNERS CAPITAL VALUE
FUND**** CLASS R SHARES*
<TABLE>
<CAPTION>
S&P 500 Index*** Capital Value Fund
Class R Shares*
<C> <C> <C>
10/10/85 10000 10000
4/30/86 13223 13993
4/30/87 16728 15966
4/30/88 15641 18272
4/30/89 19221 20389
4/30/90 21243 23401
4/30/91 24978 24062
4/30/92 28475 24940
4/30/93 31100 25469
4/30/94 32752 25439
4/30/95 38464 25051
4/30/96 50068 24763
4/30/97 62646 21586
<FN>
* The total return for Class R shares is based upon a hypothetical investment
in Class A shares at the Fund's inception on 10/10/85. Because Class R
shares were not actually introduced until August 22, 1995, total return for
Class R shares for the period prior to August 22, 1995 reflects the
performance information for Class A of the Capital Value Fund. Total return
for Class R shares assumes the reinvestment of dividends and capital gains
distributions.
** Fund's inception.
*** This unmanaged broad-based Index is comprised of common stocks.
**** On July 25, 1996, the Comstock Partners Capital Value Fund became the
successor to the Dreyfus Capital Value Fund. Performance data prior to this
date reflects the performance of the Dreyfus Capital Value Fund.
Past performance is not predictive of future performance.
</TABLE>
AVERAGE ANNUAL TOTAL RETURN+
<TABLE>
<CAPTION>
AVERAGE
ANNUAL TOTAL
RETURN AT
NET ASSET VALUE
<S> <C>
- -----------------------------------------
CLASS R SHARES
- -----------------------------------------
Year Ended 4/30/97 -12.83%
- -----------------------------------------
Five Years Ended
4/30/97 -2.85%
- -----------------------------------------
Ten Years Ended
4/30/97 +3.06%
- -----------------------------------------
Policy inception
(4/28/87)* through
4/30/97 +3.13%
- -----------------------------------------
Fund's inception
(10/10/85) through
4/30/97 +6.88%
- -----------------------------------------
</TABLE>
* On April 28, 1987, Comstock Partners, Inc., the Capital Value Fund's
Investment Adviser, assumed investment responsibilities and the Fund changed
its investment objective to the current investment objective.
+ See the footnote to the preceding graph for a discussion of the presentation
of total return.
<PAGE>
- --------------------------------------------------------------------------------
Comstock Partners Funds, Inc.
Strategy Fund Schedule of Investments As of April 30, 1997
<TABLE>
<CAPTION>
S&P MOODY'S SHARES HELD/ VALUE
RATING* RATING* FACE AMOUNT ISSUE (NOTE 1A)
<S> <C> <C> <C> <C> <C> <C>
BONDS
Corporate
Convertible Bonds
- -- 4.8% UNR UNR $ 3,850,000 Ashanti Capital, Ltd. 5.500% due 3/15/2003 $ 3,152,188
UNR UNR 1,741,000 Bema Gold Corp. 7.500% due 2/28/2000 6,093,500
------------
9,245,688
------------
US Government Federal National Mortgage Association
Agency Interest-Only Stripped Security Series
Obligations -- 267 Class 2 8.500% due
2.7% AAA Aaa 15,537,434 10/01/2024 5,146,775
------------
US Government
Obligations -- United States Treasury Notes:
51.7% UNR Aaa 54,425,000 8.875% due 11/15/1997 (b) 55,300,902
UNR Aaa 41,735,000 8.875% due 11/15/1998 (b) 43,384,837
------------
98,685,739
------------
Foreign Government
Obligations --
23.5% AAA UNR AUD 8,800,000 Australian Government 12.000% due 11/15/2001 8,141,333
UNR Aaa DEM 11,900,000 Bundesrepublik Deutschland 9.000% due 10/20/2000 7,893,937
UNR Aa1 CHF 11,000,000 Kingdom of Denmark 4.250% due 9/30/1999 7,822,471
BBB+ UNR SAR 67,460,000 Republic of South Africa 12.500% due 12/21/2006 13,294,682
UNR Aaa GBP 4,100,000 United Kingdom Treasury 13.000% due 7/14/2000 7,748,713
------------
44,901,136
------------
Foreign Corporate
Obligations --
0.4% UNR UNR CAD 1,000,000 William Resources, Inc. 9.660% due 1/23/02 747,924
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN BONDS (Cost $155,489,551) -- 83.1% 158,727,262
- ----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS
Country Funds --
1.6% 127,000 Fleming Russia Securities Fund (a) 2,190,750
77,600 Lazard Vietnam Fund, Ltd. (a) 776,000
------------
2,966,750
------------
Mining -- 2.9% 20,468 Avgold Ltd., ADR l 333,884
74,900 East Rand Gold & Uranium Company, Ltd., ADR l 116,095
147,600 Free State Consolidated Gold Mines, Ltd., ADR l 1,005,525
163,800 Harmony Gold Mining, Ltd., ADR l (a) 1,146,600
177,100 Kloof Gold Mining, Ltd., ADR l 1,217,563
218,074 Randfontein Estates Gold Mining Company
Witwatersrand, Ltd., ADR l 790,518
38,800 Western Deep Levels, Ltd., ADR l 965,150
------------
5,575,335
------------
Real Estate
Investment
Trusts -- 2.4% 56,200 Essex Property Trust, Inc. 1,643,850
105,000 G & L Realty Corp. 1,706,250
69,000 RFS Hotel Investors, Inc. 1,242,000
------------
4,592,100
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN COMMON STOCKS (Cost $13,521,989)-- 6.9% 13,134,185
- ---------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCK
Mining -- 1.5% 55,000 Amax Gold, Inc. $3.75 convertible pfd. 2,853,125
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT IN PREFERRED STOCK (Cost $2,758,000)-- 1.5% 2,853,125
- ---------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM
SECURITIES**
US Government United States Treasury Bills:
Obligations -- 615,000
0.6% UNR Aaa 4.930% due 6/26/97 610,228
UNR Aaa 400,000 5.025% due 6/26/97 396,897
UNR Aaa 215,000 5.040% due 6/26/97 213,332
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SHORT-TERM SECURITIES (Cost $1,220,471) -- 0.6% 1,220,457
- ---------------------------------------------------------------------------------------------------------------------------------
Total investments (cost $172,990,011) -- 92.1% 175,935,029
Put options purchased (cost $20,998,309) -- 3.6%+ 6,902,344
Variation margin on open futures contracts purchased -- 0.2%++ 436,000
Unrealized appreciation on foreign exchange contracts -- 0.0%+++ 9,545
Other assets less liabilities -- 4.1% 7,782,824
------------
Net Assets -- 100.0% $191,065,742
------------
------------
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
Comstock Partners Funds, Inc.
Strategy Fund Schedule of Investments (concluded) As of April 30, 1997
+ Put options purchased as of April 30, 1997 are as follows:
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION DATE/ VALUE
CONTRACTS ISSUE EXERCISE PRICE (NOTE 1A)
<C> <C> <S> <C>
100 S&P 500 Index Jun. 97/550 $ 0
2,470 S&P 500 Index Jun. 97/600 30,875
1,785 S&P 500 Index Sep. 97/625 301,219
765 S&P 500 Index Sep. 97/650 239,063
465 S&P 500 Index Dec. 97/600 122,062
560 S&P 500 Index Dec. 97/625 210,000
430 S&P 500 Index Dec. 97/700 516,000
360 S&P 500 Index Dec. 97/825 1,692,000
350 S&P Flex Index Sep. 97/700 249,375
830 S&P Flex Index Dec. 97/600 228,250
645 S&P Flex Index Dec. 97/700 757,875
500 S&P Flex Index Mar. 98/775 1,600,000
550 S&P Flex Index Jun. 98/700 955,625
-----------
Total put options purchased
(Cost $20,998,309) $ 6,902,344
-----------
-----------
</TABLE>
++ Open futures contracts purchased as of April 30, 1997 are as follows:
<TABLE>
<CAPTION>
NUMBER OF VALUE UNREALIZED
CONTRACTS ISSUE EXPIRATION DATE (NOTE 1A) APPRECIATION
<C> <C> <S> <C> <C>
165 S&P 500 Index Jun. 97 $ 66,231,000 $1,457,450
------------ ------------
------------ ------------
</TABLE>
+++ Foreign exchange contracts as of April 30, 1997 are as follows:
<TABLE>
<CAPTION>
EXPIRATION CURRENCY CURRENCY VALUE
DATE PURCHASED COST SOLD (NOTE 1A)
<S> <C> <C> <C> <C>
May 1997 US Dollar $ 3,970,542 4/5502,531,693 $ 3,960,997
----------- -----------
----------- -----------
<FN>
l American Depositary Receipt (ADR).
UNR Unrated by Standard & Poor's or Moody's.
* Ratings shown have not been audited by Ernst & Young LLP.
These securities are traded on a discount basis; the interest rates shown are the discount rates paid at the time of
** purchase by the Fund.
(a) Non-income producing.
(b) Partially held by the custodian in a segregated account as collateral for open futures positions.
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
Comstock Partners Funds, Inc.
Capital Value Fund Schedule of Investments As of April 30, 1997
<TABLE>
<CAPTION>
S&P MOODY'S SHARES HELD/ VALUE
RATING* RATING* FACE AMOUNT ISSUE (NOTE 1A)
<S> <C> <C> <C> <C> <C> <C>
BONDS
Federal National Mortgage Association
US Government Interest-Only Stripped Security Series
Agency 267 Class 2 8.50% due 10/01/2024 $ 5,918,275
Obligations -- -------------
2.5% AAA Aaa $ 17,866,490
Foreign Government
Obligations --
24.9% AAA UNR AUD 10,400,000 Australian Government 12.00% due 11/15/2001 9,621,575
AAA Aaa CHF 4,100,000 Republic of Austria 4.50% due 2/12/2000 2,954,616
UNR Aa1 CHF 15,000,000 Kingdom of Denmark 4.25% due 9/30/1999 10,667,006
UNR Aaa DEM 14,000,000 Bundesrepublik Deutschland 9.00% due 10/20/2000 9,286,985
UNR Aaa GBP 5,100,000 United Kingdom Treasury 13.00% due 7/14/2000 9,638,643
80,000,000 Lesotho Highlands Water 13.00% due 9/15/2010
UNR UNR ZAR (b) 15,713,803
-------------
57,882,628
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN BONDS (Cost $63,633,186) --27.4% 63,800,903
- ----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS
Country Funds --
2.0% 220,765 Fleming Russia Securities Fund (a) 3,808,196
87,000 Lazard Vietnam Fund, Ltd. (a) 870,000
-------------
4,678,196
-------------
Mining -- 10.9% 329,500 Ashanti Goldfields, GDR +++ 3,912,813
29,572 Avgold, Ltd., ADR l 482,393
25,500 East Rand Gold & Uranium Company, Ltd., ADR l 39,525
166,400 Free State Consolidated Gold Mines, Ltd., ADR l 1,133,600
124,200 Getchell Gold (a) 4,766,175
192,600 Harmony Gold Mining Ltd., ADR l (a) 1,348,200
206,100 Kloof Gold Mining Ltd., ADR l 1,416,938
201,412 Randfontein Estates Gold Mining Company
Witwatersrand, Ltd., ADR l 730,119
1,559,900 Royal Oak Mines (a) 3,899,750
344,082 Santa Fe Pacific Gold 5,075,209
262,000 TVX Gold (a) 1,473,750
49,000 Western Deep Levels, Ltd., ADR l 1,218,875
-------------
25,497,347
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN COMMON STOCKS (Cost $39,862,588)-- 12.9% 30,175,543
- ----------------------------------------------------------------------------------------------------------------------------------
SHORT - TERM
SECURITIES**
US Government United States Treasury Bills:
Obligations --
51.9% UNR Aaa 977,000 5.16% due 5/1/97 977,000
UNR Aaa 31,937,000 4.98% due 5/8/97 (c) 31,907,937
UNR Aaa 1,653,000 4.96% due 5/15/97 1,649,991
UNR Aaa 13,511,000 4.97% due 5/22/97 13,473,845
UNR Aaa 24,223,000 5.05% due 5/29/97 (c)(d) 24,132,406
UNR Aaa 48,203,000 5.17% due 7/24/97 47,634,205
UNR Aaa 822,000 5.22% due 8/07/97 810,508
UNR Aaa 203,000 5.24% due 8/14/97 199,929
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SHORT-TERM SECURITIES (Cost $120,764,518) -- 51.9% 120,785,821
- ----------------------------------------------------------------------------------------------------------------------------------
Total investments (cost $224,260,292) -- 92.2% 214,762,267
Put options purchased (cost $18,703,758) -- 2.2%+ 5,069,750
Variation margin on open futures contracts -- 0.1%++ 305,250
Other assets less liabilities -- 5.5% 12,754,951
-------------
Net Assets -- 100.0% $232,892,218
-------------
-------------
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
Comstock Partners Funds, Inc.
Capital Value Fund Schedule of Investments (concluded) As of April 30, 1997
+ Put options purchased as of April 30, 1997 are as follows:
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION DATE/ VALUE
CONTRACTS ISSUE EXERCISE PRICE (NOTE 1A)
<C> <C> <S> <C>
740 S&P 500 Index Jun. 97/550 $ 0
2,310 S&P 500 Index Jun. 97/600 28,875
1,870 S&P 500 Index Sep. 97/625 315,563
525 S&P 500 Index Dec. 97/600 137,812
700 S&P 500 Index Dec. 97/625 262,500
500 S&P 500 Index Dec. 97/700 600,000
100 S&P Flex Index Sep. 97/700 71,250
980 S&P Flex Index Dec. 97/600 269,500
750 S&P Flex Index Dec. 97/700 881,250
565 S&P Flex Index Mar. 98/775 1,808,000
400 S&P Flex Index Jun. 98/700 695,000
-------------
Total Put Options Purchased
(cost $18,703,758) $ 5,069,750
-------------
-------------
</TABLE>
++ Open futures contracts as of April 30, 1997 are as follows:
<TABLE>
<CAPTION>
UNREALIZED
NUMBER OF VALUE APPRECIATION
CONTRACTS ISSUE EXPIRATION DATE (NOTE 1A) (DEPRECIATION)
<C> <C> <S> <C> <C> <C>
FUTURES PURCHASED: 360 S&P 500 Index Jun. 97 $144,504,000 $3,797,825
FUTURES SOLD: 75 S&P 500 Index Sept. 97 (30,405,000) (827,500)
200 S&P 500 Index Dec. 97 (81,960,000) (2,185,000)
90 S&P 500 Index Mar. 98 (37,305,000) (1,487,308)
------------ ------------
$ (5,166,000) $ (701,983)
------------ ------------
------------ ------------
<FN>
+++ Global Depositary Receipt (GDR)
l American Depositary Receipt (ADR).
UNR Unrated by Standard & Poor's or Moody's.
* Ratings shown have not been audited by Ernst & Young LLP.
These securities are traded on a discount basis; the interest rates shown are the discount rates paid at the time of
** purchase by the Fund.
(a) Non-income producing.
(b) Guaranteed by the Republic of South Africa.
(c) Partially held by broker as collateral for open short positions.
(d) Partially held by the custodian in a segregated account as collateral for open futures positions.
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
Comstock Partners Funds, Inc.
Capital Value Fund Statement of Securities Sold Short As of April 30, 1997
<TABLE>
<CAPTION>
VALUE
COMMON STOCKS SHARES ISSUE (NOTE 1A)
<S> <C> <C> <C> <C> <C> <C>
Finance -- 0.3% 24,000 Advanta $ 570,000
-------------
Manufacturing --
15.5% 51,300 AMP 1,840,388
30,800 Allergan 823,900
42,000 Analog Devices 1,123,500
37,800 Bard (C.R.) 1,200,150
26,000 Bausch & Lomb 1,049,750
29,300 Black & Decker 981,550
51,000 Boise Cascade 1,695,750
42,600 Cabot 937,200
22,800 Champion International 1,060,200
80,000 Cooper Tire & Rubber 1,760,000
12,900 Dow Chemical 1,094,888
19,200 Eastman Chemical 979,200
17,800 General Motors, CL. H 956,750
29,000 Great Lakes Chemical 1,228,875
29,200 IMC Global 1,076,750
40,000 International Flavors & Fragrances 1,685,000
50,000 International Paper 2,112,500
24,200 Kellogg 1,687,950
40,000 Komag 1,130,000
40,000 Louisiana Pacific 745,000
23,800 Morton International 996,625
24,800 Polaroid 1,202,800
20,000 Readers Digest Association, Cl. A 460,000
60,300 Rubbermaid 1,447,200
33,500 Safeguard Scientifics 745,375
35,300 Scientific-Atlanta 564,800
44,100 Silicon Valley Group 906,806
22,600 Tenneco 901,175
33,400 UST 872,575
36,000 VLSI Technology 715,500
32,100 Westvaco 898,800
25,200 Whirlpool 1,178,100
-------------
36,059,057
-------------
Retail -- 2.9% 43,400 AutoZone 1,063,300
35,000 Dillard Department Stores, Cl. A 1,080,625
26,800 Fastenal 1,045,200
33,400 Just For Feet 530,225
47,900 PETsMART 805,319
40,700 Toys R Us 1,159,950
32,100 Winn-Dixie Stores 1,115,475
-------------
6,800,094
-------------
Services -- 4.3% 46,300 BTG 694,500
31,000 Ceridian 1,034,625
31,600 Circus Circus Enterprises 762,350
28,500 Express Scripts, Cl. A 1,047,375
47,900 Gaylord Entertainment, Cl. A 1,011,888
52,800 Harrah's Entertainment 844,800
42,000 Health Management Systems 231,000
35,000 Medic Computer Systems 546,875
30,300 Molten Metal Technology 170,437
35,400 Multicare 659,325
20,000 PRI Automation 1,025,000
21,300 Shared Medical Systems 897,262
8,000 Synopsys 255,000
31,200 WMX Technologies 916,500
-------------
10,096,937
-------------
Transportation & Communication --
1.8% 54,700 Brightpoint 1,196,563
114,000 Hong Kong Telecommunications, ADR l 1,952,250
78,000 NEXTEL Communications, CL. A 1,028,625
-------------
4,177,438
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES SOLD SHORT (Proceeds $64,174,238) -- 24.8% $57,703,526
- ----------------------------------------------------------------------------------------------------------------------------------
<FN>
l American Depositary Receipt (ADR).
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
Comstock Partners Funds, Inc. Statements of Assets and Liabilities
As of April 30, 1997
<TABLE>
<CAPTION>
STRATEGY CAPITAL
FUND VALUE FUND
<S> <C> <C>
------------ ------------
ASSETS:
Investments at value (cost $172,990,011 and
$224,260,292, respectively) (Note 1a)............. $175,935,029 $214,762,267
Put options purchased (cost $20,998,309 and
$18,703,758, respectively) (Note 1a).............. 6,902,344 5,069,750
Cash................................................ -- 45,155
Receivable from brokers for proceeds on securities
sold short........................................ -- 64,174,238
Receivables:
Interest........................................ 6,011,714 1,982,664
Capital stock sold.............................. 638,670 127,367
Securities sold................................. 3,960,997 4,616,727
Variation margin on open futures contracts...... 436,000 305,250
Dividends....................................... 51,563 960,638
Unrealized appreciation on foreign exchange
contracts......................................... 9,545 --
Other assets........................................ 15,456 33,638
------------ ------------
Total assets.................................... 193,961,318 292,077,694
------------ ------------
LIABILITIES:
Payables:
Short sales (proceeds $64,174,238).............. -- 57,703,526
Dividends to shareholders (Note 1f)............. 1,214,760 --
Capital stock redeemed.......................... 1,260,620 748,077
Payable for forward foreign exchange contracts
-- closed..................................... 29,704 106,162
Investment advisory fees (Note 2)............... 72,854 79,861
Sub-investment advisory fees (Note 2)........... 24,284 69,878
Administrative fees (Note 2).................... 38,544 --
Service and Distribution Plan fees (Note 2)..... 20,881 95,602
Transfer agent fees (Note 2).................... 28,725 70,145
Securities purchased............................ -- 55,307
Accrued expenses and other liabilities.............. 205,204 256,918
------------ ------------
Total liabilities............................... 2,895,576 59,185,476
------------ ------------
NET ASSETS.......................................... $191,065,742 $232,892,218
------------ ------------
------------ ------------
NET ASSETS CONSIST OF:
Paid in capital................................. $235,281,121 $400,222,785
Undistributed net investment income............. 10,656,233 8,372,853
Accumulated net realized gain/(loss) on foreign
currency transactions........................... (4,680,706) 1,219,208
Accumulated net realized loss on investments,
put options purchased, futures and short sale
transactions.................................. (40,494,254) (159,526,276)
Net unrealized appreciation on short sale
transactions.................................... -- 6,470,712
Net unrealized depreciation on investments, put
options purchased and
futures transactions.......................... (9,693,497) (23,834,016)
Net unrealized depreciation on foreign currency
transactions.................................. (3,155) (33,048)
------------ ------------
NET ASSETS.......................................... $191,065,742 $232,892,218
------------ ------------
------------ ------------
SHARES OF COMMON STOCK OUTSTANDING:
Class O shares:
150 million of $0.001 par value authorized.... 17,339,751 --
------------ ------------
------------ ------------
Class A shares:
200 million of $0.001 par value authorized.... 5,578,788 --
------------ ------------
------------ ------------
125 million of $0.001 par value authorized.... -- 18,664,086
------------ ------------
------------ ------------
Class B shares:
125 million of $0.001 par value authorized.... -- 7,650,648
------------ ------------
------------ ------------
Class C shares:
200 million of $0.001 par value authorized.... 1,681,639 --
------------ ------------
------------ ------------
125 million of $0.001 par value authorized.... -- 875,473
------------ ------------
------------ ------------
Class R shares:
125 million of $0.001 par value authorized.... -- 13,569
------------ ------------
------------ ------------
NET ASSET VALUE PER SHARE:
Class O shares:
$134,719,169 / 17,339,751 shares.............. $ 7.77 --
------------ ------------
------------ ------------
Class A shares:
$43,326,763 / 5,578,788 shares and
$160,833,817 / 18,664,086 shares,
respectively................................ $ 7.77 $ 8.62
------------ ------------
------------ ------------
Class B shares:
$64,670,670 / 7,650,648 shares................ -- $ 8.45
------------ ------------
------------ ------------
Class C shares:
$13,019,810 / 1,681,639 shares and $7,270,826
/ 875,473 shares, respectively................ $ 7.74 $ 8.31
------------ ------------
------------ ------------
Class R shares:
$116,905 / 13,569 shares...................... -- $ 8.62
------------ ------------
------------ ------------
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
Comstock Partners Funds, Inc. Statements of Operations for the Year Ended
April 30, 1997
<TABLE>
<CAPTION>
STRATEGY CAPITAL
FUND VALUE FUND
<S> <C> <C>
------------ ------------
INVESTMENT INCOME (NOTE 1E):
Interest and discount earned........................ $ 18,186,195 $ 18,152,632
Dividends (net of withholding tax of $33,785 and
$26,177, respectively).............................. 816,374 4,311,372
------------ ------------
Total investment income......................... 19,002,569 22,464,004
------------ ------------
EXPENSES:
Investment advisory fees (Note 2)................... 1,072,398 1,161,510
Administrative fees (Note 2)........................ 551,621 --
Dividends on securities sold short.................. -- 1,414,030
Transfer agent fees (Note 2)........................ 472,873 360,405
Sub-investment advisory fees (Note 2)............... 357,466 946,711
Service and Distribution Plan fees (Note 2)......... 237,449 1,299,845
Printing and shareholder reports.................... 53,683 77,246
Registration fees................................... 38,368 64,289
Legal fees.......................................... 93,690 124,611
Insurance........................................... 58,646 5,190
Directors' fees and expenses........................ 48,008 40,528
Custodian fees...................................... 19,704 70,473
Audit fees.......................................... 32,000 50,675
Other operating expenses............................ 7,754 4,435
------------ ------------
Total expenses.................................. 3,043,660 5,619,948
------------ ------------
NET INVESTMENT INCOME............................... 15,958,909 16,844,056
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS (NOTES 1B, 1C, 1E & 3):
Net realized loss on investments, put options
purchased and futures transactions................ (16,069,197) (23,936,012)
Net realized loss on short sale transactions........ -- (15,283,826)
Net realized gain (loss) on foreign currency
transactions...................................... (6,194,936) 1,219,208
Change in net unrealized appreciation (depreciation)
on investments, put options purchased and
futures transactions............................ (5,330,396) (26,007,617)
Change in net unrealized appreciation on securities
short sale transactions........................... -- 8,515,695
Change in net unrealized depreciation on foreign
currency transactions............................. (67,194) (33,048)
------------ ------------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS....................... $(11,702,814) $(38,681,544)
------------ ------------
------------ ------------
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
Comstock Partners Funds, Inc. Statements of Changes in Net Assets
<TABLE>
<CAPTION>
STRATEGY FUND CAPITAL VALUE FUND
------------------------------------ ------------------------------------
FOR THE FOR THE FOR THE FOR THE SEVEN
YEAR ENDED YEAR ENDED YEAR ENDED MONTHS ENDED
APRIL 30, 1997 APRIL 30, 1996 APRIL 30, 1997 APRIL 30, 1996
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
OPERATIONS: Net investment income.......... $ 15,958,909 $ 21,479,096 $ 16,844,056 $ 6,879,172
Net realized gain (loss) on
investments, put options
purchased and futures
transactions................. (16,069,197) (6,887,974) (23,936,012) 24,598,637
Net realized loss on short sale
transactions................. -- -- (15,283,826) (3,510,946)
Net realized gain (loss) on
foreign currency
transactions................. (6,194,936) 5,554,446 1,219,208 (842,088)
Change in net unrealized
appreciation (depreciation)
on investments, put options
purchased and futures
transactions................. (5,330,396) (11,450,400) (26,007,617) (21,230,637)
Change in net unrealized
appreciation (depreciation)
on short sale transactions... -- -- 8,515,695 492,239
Change in net unrealized
appreciation (depreciation)
on foreign currency
transactions................. (67,194) (120,704) (33,048) 5,383,533
---------------- ---------------- ---------------- ----------------
Net increase (decrease) in net
assets resulting from
operations................... (11,702,814) 8,574,464 (38,681,544) 11,769,910
---------------- ---------------- ---------------- ----------------
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS: Investment income -- net
Class O shares............... (9,509,711) (16,495,114) -- --
Class A shares............... (2,663,922) (3,453,678) (11,184,613) (10,905,352)
Class B shares............... -- -- (4,074,703) (2,909,347)
Class C shares*.............. (629,042) (6,837) (351,412) (29,071)
Class R shares*.............. -- -- (1,757) (44)
Realized transaction gain --
net
Class O shares............... (3,149,588) -- -- --
Class A shares............... (757,462) -- -- --
Class C shares*.............. (133,166) -- -- --
---------------- ---------------- ---------------- ----------------
Net decrease in net assets
resulting from dividends and
distributions................ (16,842,891) (19,955,629) (15,612,485) (13,843,814)
---------------- ---------------- ---------------- ----------------
CAPITAL STOCK
TRANSACTIONS: Net proceeds from shares sold:
Class A shares............... 18,898,271 11,109,682 80,556,216 27,095,651
Class B shares............... -- -- 27,051,810 18,392,593
Class C shares*.............. 23,119,248 367,799 8,482,514 3,593,718
Class R shares*.............. -- -- 124,254 270
Dividends and distributions
reinvested:
Class O shares............... 2,306,043 2,440,189 -- --
Class A shares............... 1,072,115 1,062,696 7,737,035 6,964,456
Class B shares............... -- -- 2,459,697 1,653,446
Class C shares*.............. 136,605 875 130,312 29,071
Class R shares*.............. -- -- 1,757 44
Cost of shares redeemed:
Class O shares............... (70,907,354) (98,585,628) -- --
Class A shares............... (24,374,508) (22,354,127) (130,659,314) (61,921,614)
Class B shares............... -- -- (31,821,065) (25,781,438)
Class C shares*.............. (8,756,049) (41,285) (3,667,272) (62,459)
---------------- ---------------- ---------------- ----------------
Net decrease in net assets
resulting from capital stock
transactions................. (58,505,629) (105,999,799) (39,604,056) (30,036,262)
---------------- ---------------- ---------------- ----------------
Decrease in net assets......... (87,051,334) (117,380,964) (93,898,085) (32,110,166)
NET ASSETS: Beginning of period............ 278,117,076 395,498,040 326,790,303 358,900,469
---------------- ---------------- ---------------- ----------------
End of period.................. $191,065,742 $278,117,076 $232,892,218 $326,790,303
---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ----------------
Undistributed net investment
income....................... $ 10,656,233 $ 7,472,754 $ 8,372,853 $ 7,141,282
---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ----------------
<FN>
*Class C shares of Strategy Fund were introduced on August 1, 1995; Class C
shares and Class R shares of Capital Value Fund were introduced on
August 22, 1995.
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
Comstock Partners Funds, Inc. Statements of Changes in Net Assets
(concluded)
<TABLE>
<CAPTION>
STRATEGY FUND CAPITAL VALUE FUND
------------------------------------ ------------------------------------
FOR THE FOR THE FOR THE FOR THE SEVEN
YEAR ENDED YEAR ENDED YEAR ENDED MONTHS ENDED
APRIL 30, 1997 APRIL 30, 1996 APRIL 30, 1997 APRIL 30, 1996
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
CAPITAL STOCK
TRANSACTIONS: Shares sold:
Class A shares............... 2,270,514 1,245,317 8,386,923 2,562,332
Class B shares............... -- -- 2,817,342 1,768,677
Class C shares*.............. 2,704,967 40,733 916,595 347,688
Class R shares*.............. -- -- 13,254 26
Shares issued for dividends and
distributions reinvested:
Class O shares............... 277,417 273,782 -- --
Class A shares............... 128,972 119,302 848,331 688,868
Class B shares............... -- -- 274,214 165,676
Class C shares*.............. 16,697 99 14,775 2,948
Class R shares*.............. -- -- 193 4
Shares redeemed:
Class O shares............... (8,457,567) (10,995,465) -- --
Class A shares............... (2,931,757) (2,495,609) (13,484,994) (5,880,857)
Class B shares............... -- -- (3,322,387) (2,491,504)
Class C shares*.............. (1,076,210) (4,647) (400,566) (6,061)
---------------- ---------------- ---------------- ----------------
Net decrease in shares
outstanding.................. (7,066,967) (11,816,488) (3,936,320) (2,842,203)
---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ----------------
<FN>
*Class C shares of Strategy Fund were introduced on August 1, 1995; Class C
shares and Class R shares of Capital Value Fund were introduced on
August 22, 1995.
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
Comstock Partners Funds, Inc. Strategy Fund Financial Highlights
The following per share data and ratios have been derived from information
provided in the financial statements.
<TABLE>
<CAPTION>
FOR THE
YEAR
FOR THE YEAR FOR THE YEAR ENDED
ENDED ENDED APRIL
APRIL 30, 1997 APRIL 30, 1996 30, 1995
---------------------------------- --------------------------------- --------
CLASS O CLASS A CLASS C CLASS O CLASS A CLASS C++ CLASS O
-------- ------- ------- -------- ------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD...... $ 8.78 $ 8.78 $ 8.77 $ 9.10 $ 9.10 $ 9.00 $ 9.40
-------- ------- ------- -------- ------- --------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income..................... 0.78 0.54 0.45 0.76 0.57 0.37 0.66
Net realized and unrealized gain (loss) on
investments, put options purchased,
futures transactions and foreign currency
transactions............................. (1.19) (0.96) (0.95) (0.53) (0.36) (0.22) (0.44)
-------- ------- ------- -------- ------- --------- --------
Total from investment operations....... (0.41) (0.42) (0.50) 0.23 0.21 0.15 0.22
-------- ------- ------- -------- ------- --------- --------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income...... (0.47) (0.46) (0.41) (0.55) (0.53) (0.38) (0.52)
Dividends from realized gains on foreign
currency transactions.................... (0.13) (0.13) (0.12) -- -- -- --
-------- ------- ------- -------- ------- --------- --------
Total dividends........................ (0.60) (0.59) (0.53) (0.55) (0.53) (0.38) (0.52)
-------- ------- ------- -------- ------- --------- --------
NET ASSET VALUE, END OF PERIOD............ $ 7.77 $ 7.77 $ 7.74 $ 8.78 $ 8.78 $ 8.77 $ 9.10
-------- ------- ------- -------- ------- --------- --------
-------- ------- ------- -------- ------- --------- --------
Total investment return (1)............... (4.85)% (5.10)% (5.94)% 2.66% 2.40% 1.96%(3) 2.39%
-------- ------- ------- -------- ------- --------- --------
-------- ------- ------- -------- ------- --------- --------
RATIOS/SUPPLEMENTARY DATA
Net assets, end of period (000 omitted)... $134,719 $43,327 $13,020 $224,148 $53,652 $ 317 $329,624
-------- ------- ------- -------- ------- --------- --------
-------- ------- ------- -------- ------- --------- --------
Ratio of expenses to average net assets... 1.18% 1.43% 2.14% 1.23% 1.48% 2.28%(4) 1.14%
-------- ------- ------- -------- ------- --------- --------
-------- ------- ------- -------- ------- --------- --------
Ratio of net investment income to average
net assets............................... 6.80% 6.55% 5.81% 6.56% 6.33% 5.79%(4) 6.19%
-------- ------- ------- -------- ------- --------- --------
-------- ------- ------- -------- ------- --------- --------
Portfolio turnover rate................... 126% 126% 126% 96% 96% 96% 100%
-------- ------- ------- -------- ------- --------- --------
-------- ------- ------- -------- ------- --------- --------
Average commission rate paid (5).......... $ 0.0600 $0.0600 $0.0600 N/A N/A N/A N/A
-------- ------- ------- -------- ------- --------- --------
-------- ------- ------- -------- ------- --------- --------
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
APRIL 30, 1994 APRIL 30, 1993
-------------------- ---------------------
CLASS A CLASS O CLASS A CLASS O CLASS A+
------- -------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD...... $ 9.41 $ 9.27 $ 9.27 $ 9.56 $ 9.55
------- -------- ------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income..................... 0.52 0.77 0.68 0.90 0.64
Net realized and unrealized gain (loss) on
investments, put options purchased,
futures transactions and foreign currency
transactions............................. (0.34) 0.15 0.22 (0.39) (0.28 )
------- -------- ------- -------- --------
Total from investment operations....... 0.18 0.92 0.90 0.51 0.36
------- -------- ------- -------- --------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income...... (0.49) (0.77) (0.74) (0.75) (0.64 )
Dividends from realized gains on foreign
currency transactions.................... -- (0.02) (0.02) (0.05) --
------- -------- ------- -------- --------
Total dividends........................ (0.49) (0.79) (0.76) (0.80) (0.64 )
------- -------- ------- -------- --------
NET ASSET VALUE, END OF PERIOD............ $ 9.10 $ 9.40 $ 9.41 $ 9.27 $ 9.27
------- -------- ------- -------- --------
------- -------- ------- -------- --------
Total investment return (1)............... 1.94% 10.13% 9.91% 5.70% 5.42 %(2)
------- -------- ------- -------- --------
------- -------- ------- -------- --------
RATIOS/SUPPLEMENTARY DATA
Net assets, end of period (000 omitted)... $65,874 $464,937 $91,454 $548,514 $23,492
------- -------- ------- -------- --------
------- -------- ------- -------- --------
Ratio of expenses to average net assets... 1.46% 1.07% 1.40% 1.06% 1.41 %(4)
------- -------- ------- -------- --------
------- -------- ------- -------- --------
Ratio of net investment income to average
net assets............................... 5.83% 7.57% 6.85% 8.95% 8.74 %(4)
------- -------- ------- -------- --------
------- -------- ------- -------- --------
Portfolio turnover rate................... 100% 31% 31% 56% 56 %
------- -------- ------- -------- --------
------- -------- ------- -------- --------
Average commission rate paid (5).......... N/A N/A N/A N/A N/A
------- -------- ------- -------- --------
------- -------- ------- -------- --------
<FN>
+ Class A shares were introduced on July 15, 1992. Except as indicated below,
information is presented for the period from July 15, 1992 to April 30,
1993.
++ Class C shares were introduced on August 1, 1995. Except as indicated
below, information is presented for the period from August 1, 1995 to
April 30, 1996.
(1) Total investment returns exclude the effects of sales loads and assume
reinvestment of dividends and distributions. Total investment returns for
periods of less than one full year are not annualized.
(2) Total investment return is presented for the year ended April 30, 1993. For
the period prior to July 15, 1992, total investment return does not
reflect service and distribution fees because such fees were not paid
during that period.
(3) Total investment return is presented for the year ended April 30, 1996. For
the period prior to August 1, 1995, total investment return is based upon
the total investment return for Class A shares, and does not reflect the
greater service and distribution fees and certain other expenses borne by
Class C shares.
(4) Annualized.
(5) For fiscal years beginning after September 1, 1995, the Fund is required to
disclose its average commission rate paid per share for purchases and
sales of investment securities.
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
Comstock Partners Funds, Inc. Capital Value Fund Financial Highlights
The following per share data and ratios have been derived from information
provided in the financial statements.
<TABLE>
<CAPTION>
FOR THE SEVEN
FOR THE YEAR ENDED MONTHS ENDED
APRIL 30, 1997 APRIL 30, 1996
----------------------------------------------- ----------------------------------
CLASS A CLASS B CLASS C CLASS R CLASS A CLASS B CLASS C
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD............................. $ 10.54 $ 10.38 $ 10.24 $ 10.53 $ 10.61 $ 10.41 $ 10.41
-------- -------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income............... 0.59 0.54 0.57 0.82(4) 0.22 0.18 0.44
Net realized and unrealized gain
(loss) on investments, put options
purchased, futures transactions,
short sale transactions and foreign
currency transactions.............. (1.92) (1.93) (1.91) (2.13)(4) 0.17 0.16 (0.12)
-------- -------- -------- -------- -------- -------- --------
Total from investment
operations....................... (1.33) (1.39) (1.34) (1.31)(4) 0.39 0.34 0.32
-------- -------- -------- -------- -------- -------- --------
LESS DIVIDENDS
Dividends from net investment
income............................. (0.59) (0.54) (0.59) (0.60) (0.46) (0.37) (0.49)
-------- -------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD...... $ 8.62 $ 8.45 $ 8.31 $ 8.62 $ 10.54 $ 10.38 $ 10.24
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
Total investment return (1)......... (12.97%) (13.69%) (13.47%) (12.83%) 3.81% 3.36% 3.30%
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
RATIOS/SUPPLEMENTARY DATA
Net assets, end of period (000
omitted)........................... $160,834 $ 64,671 $ 7,271 $ 117 $241,472 $ 81,786 $ 3,531
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
Ratio of expenses to average net
assets............................. 1.28% 2.03% 2.07% 1.19% 0.75%(2) 1.18%(2) 1.28%(2)
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
Ratio of interest expense and
dividends on securities sold short
to average net assets.............. 0.51% 0.50% 0.47% 0.38% 0.18%(2) 0.19%(2) 0.18%(2)
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
Ratio of net investment income to
average net assets................. 6.16% 5.52% 6.02% 8.65% 2.13%(2) 1.70%(2) 1.71%(2)
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
Portfolio turnover rate............. 399% 399% 399% 399% 56%(2) 56%(2) 56%(2)
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
Average commission rate paid (3).... $ 0.0313 $ 0.0313 $ 0.0313 $ 0.0313 $ 0.0531 $ 0.0531 $ 0.0531
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
<CAPTION>
CLASS R
--------
<S> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD............................. $ 10.62
--------
INCOME FROM INVESTMENT OPERATIONS
Net investment income............... 0.30
Net realized and unrealized gain
(loss) on investments, put options
purchased, futures transactions,
short sale transactions and foreign
currency transactions.............. 0.09
--------
Total from investment
operations....................... 0.39
--------
LESS DIVIDENDS
Dividends from net investment
income............................. (0.48)
--------
NET ASSET VALUE, END OF PERIOD...... $ 10.53
--------
--------
Total investment return (1)......... 3.97%
--------
--------
RATIOS/SUPPLEMENTARY DATA
Net assets, end of period (000
omitted)........................... $ 1
--------
--------
Ratio of expenses to average net
assets............................. 0.61%(2)
--------
--------
Ratio of interest expense and
dividends on securities sold short
to average net assets.............. 0.17%(2)
--------
--------
Ratio of net investment income to
average net assets................. 2.28%(2)
--------
--------
Portfolio turnover rate............. 56%(2)
--------
--------
Average commission rate paid (3).... $ 0.0531
--------
--------
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
Comstock Partners Funds, Inc. Capital Value Fund Financial Highlights
(concluded)
The following per share data and ratios have been derived from information
provided in the financial statements.
<TABLE>
<CAPTION>
FOR THE
YEAR
FOR THE YEAR FOR THE YEAR ENDED
ENDED ENDED SEPTEMBER
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994 30, 1993
----------------------------------------------- --------------------- --------
CLASS A CLASS B CLASS C+ CLASS R+ CLASS A CLASS B CLASS A
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD............................. $ 11.88 $ 11.69 $ 10.64 $ 10.84 $ 11.42 $ 11.32 $ 12.41
-------- -------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income............... 0.36 0.31 0.02 0.04 0.24 0.23 0.24
Net realized and unrealized gain
(loss) on investments, put options
purchased, futures transactions,
short sale transactions and foreign
currency transactions.............. (1.37) (1.38) (0.25) (0.26) 0.46 0.38 (0.62)
-------- -------- -------- -------- -------- -------- --------
Total from investment
operations....................... (1.01) (1.07) (0.23) (0.22) 0.70 0.61 (0.38)
-------- -------- -------- -------- -------- -------- --------
LESS DIVIDENDS
Dividends from net investment
income............................. (0.26) (0.21) -- -- (0.24) (0.24) (0.61)
-------- -------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD...... $ 10.61 $ 10.41 $ 10.41 $ 10.62 $ 11.88 $ 11.69 $ 11.42
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
Total investment return (1)......... (8.58%) (9.27%) (2.26%) (2.03%) 6.14% 5.35% (2.70%)
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
RATIOS/SUPPLEMENTARY DATA
Net assets, end of period (000
omitted)........................... $271,052 $ 87,847 $ 1 $ 1 $402,708 $108,532 $412,316
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
Ratio of expenses to average net
assets............................. 1.24% 1.99% 0.26%(2) 0.14%(2) 1.21% 1.99% 1.23%
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
Ratio of interest expense and
dividends on securities sold short
to average net assets.............. 0.45% 0.45% 0.06%(2) 0.04%(2) 0.39% 0.40% 0.45%
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
Ratio of net investment income to
average net assets................. 3.61% 2.86% 0.23%(2) 0.38%(2) 2.06% 1.39% 1.94%
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
Portfolio turnover rate............. 55% 55% 55% 55% 46% 46% 42%
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
Average commission rate paid (3).... N/A N/A N/A N/A N/A N/A N/A
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
<CAPTION>
CLASS B+
----------
<S> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD............................. $ 10.58
----------
INCOME FROM INVESTMENT OPERATIONS
Net investment income............... 0.03
Net realized and unrealized gain
(loss) on investments, put options
purchased, futures transactions,
short sale transactions and foreign
currency transactions.............. 0.71
----------
Total from investment
operations....................... 0.74
----------
LESS DIVIDENDS
Dividends from net investment
income............................. --
----------
NET ASSET VALUE, END OF PERIOD...... $ 11.32
----------
----------
Total investment return (1)......... 6.99%
----------
----------
RATIOS/SUPPLEMENTARY DATA
Net assets, end of period (000
omitted)........................... $ 30,378
----------
----------
Ratio of expenses to average net
assets............................. 1.49%(2)
----------
----------
Ratio of interest expense and
dividends on securities sold short
to average net assets.............. 0.31%(2)
----------
----------
Ratio of net investment income to
average net assets................. 0.83%(2)
----------
----------
Portfolio turnover rate............. 42%
----------
----------
Average commission rate paid (3).... N/A
----------
----------
<FN>
(+) Class B shares were introduced on January 15, 1993; Class C shares and
Class R shares were introduced on August 22, 1995.
(1) Total investment returns exclude the effects of sales loads and assume
reinvestment of dividends and distributions. Total investment returns for
periods of less than one full year are not annualized.
(2) Not annualized.
(3) For fiscal years beginning after September 1, 1995, the Fund is required to
disclose its average commission rate paid per share for purchases and
sales of investment securities.
(4) Based on average shares outstanding.
</TABLE>
See notes to financial statements.
<PAGE>
COMSTOCK PARTNERS FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS:
1. SIGNIFICANT ACCOUNTING POLICIES:
Comstock Partners Funds, Inc. (the "Company") is registered under the Investment
Company Act of 1940 (the "1940 Act") as an open-end management investment
company offering shares in two separate portfolios: Comstock Partners Strategy
Fund (the "Strategy Fund") and Comstock Partners Capital Value Fund (the
"Capital Value Fund"). The Company accounts separately for the assets,
liabilities and operations of each Fund. The Strategy Fund is a non-diversified
portfolio with an investment objective to maximize total return over the
long-term investment horizon by investing primarily in a portfolio of debt
securities. The Capital Value Fund is a diversified portfolio with an investment
objective to maximize total return, consisting of capital appreciation and
current income. The Company originally commenced operations in May of 1988 as a
closed-end investment company, with the Strategy Fund as its only portfolio. At
a special meeting of shareholders on June 14, 1991, holders of a majority of the
Company's outstanding shares voted to approve the conversion of the Company to
an open-end investment company. The Company converted to open-end status on
August 1, 1991. On July 15, 1992, a second class of shares of the Strategy Fund,
Class A, was created and, on August 1, 1995, a third class of shares of the
Strategy Fund, Class C, was created. On February 8, 1996, (i) the Company
changed its name from Comstock Partners Strategy Fund, Inc., to Comstock
Partners Funds, Inc. (ii) the Strategy Fund, the Company's existing portfolio,
became a separate portfolio of the Company and (iii) the Capital Value Fund was
organized as a new portfolio of the Company. On July 25, 1996, the Capital Value
Fund acquired all of the assets and liabilities (whether contingent or
otherwise) of the Dreyfus Capital Value Fund in exchange for shares in the
Capital Value Fund. The Capital Value Fund offers Class A, Class B, Class C, and
Class R shares.
Premier Mutual Fund Services, Inc. (the "Distributor") acts as distributor of
the Funds' shares. Each Class O, Class A and Class C share of the Strategy Fund
and each Class A, Class B, Class C, and Class R share of the Capital Value Fund
represents an interest in the Strategy Fund or the Capital Value Fund, as the
case may be, in proportion to its net asset value, and has identical rights
except that Class A, B, and C shares of the Funds bear fees and expenses on an
ongoing basis pursuant to the Funds' Class A, Class B, and Class C Service and
Distribution Plans, respectively, and Class B and Class C shares bear additional
incremental shareholder administrative expenses resulting from deferred sales
charge arrangements. In addition, only the holders of Class A, Class B, and
Class C shares have voting rights with respect to matters pertaining to the
Class A, Class B, and Class C Service and Distribution Plans, respectively.
Class A shares of each Fund are subject to a sales charge imposed at the time of
purchase. Class B shares are subject to a contingent deferred sales charge
imposed at the time of redemption on redemptions made within six years of
purchase. Class C shares of each Fund are subject to a contingent deferred sales
charge imposed at the time of redemption on redemptions made within one year of
purchase. Class R shares are sold at net asset value per share only to
institutional investors. Class O shares are no longer issued by the Company
except in connection with the reinvestment of dividends on outstanding Class O
shares.
The following is a summary of significant accounting policies followed by the
Company:
Strategy Fund and Capital Value Fund:
(a) Valuation of investments--Securities listed on national securities exchanges
are valued at the last sale price as of the close of business on the day the
securities are being valued, or lacking any sales, at the mean between the
closing bid and asked prices, except for open short positions, where the asked
price is used for valuation purposes. Bid price is used when no asked price is
available.
Securities traded in the over-the-counter market are valued on the basis of the
mean between the bid and asked prices at the close of trading on such day by
dealers that make markets in such securities. Portfolio securities which are
traded both in the over-the-counter market and on a stock exchange are valued
based on prices or quotes obtained from the broadest and most representative
market.
Options purchased are valued at the last bid price in the case of
exchange-traded options or, in the case of options traded in the
over-the-counter market, the average of the last bid price as obtained from a
dealer.
Futures contracts are stated at market value or otherwise at the fair value at
which it is expected they may be resold, as determined in good faith by the
Board of Directors.
Short-term debt securities having a maturity of 60 days or less from the
valuation date are valued at amortized cost which approximates market value.
(b) Derivative financial instruments--The Funds may engage in various portfolio
strategies to seek to generate income or gains or as a hedge against its
portfolio against adverse movements in the equity, debt and currency markets.
Losses may arise due to changes in the value of the contract or if the
counterparty does not perform under the contract.
Forward foreign exchange contracts--The Funds are authorized to enter into
forward foreign exchange contracts to seek to generate income or gains or as a
hedge against either specific transactions or portfolio positions. Such
contracts are not entered on the Funds' records. However, the effect on
operations is recorded from the date the Fund enters into such contracts.
Financial futures contracts--The Funds may purchase or sell financial futures
contracts to seek to generate income or gains or as a hedge against adverse
changes in interest rates. A futures contract is an agreement between two
parties to buy or sell a security for a set price on a future date. Upon
entering into a contract, the Fund deposits and maintains as collateral such
initial margin as required by the exchange on which the transaction is effected.
Pursuant to the contract, the Fund agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in the value of the contract.
Such receipts or payments are known as variation margin and are recorded by the
Funds as unrealized gains or losses. When the contract is closed, the Fund
records a realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
(c) Foreign currency transactions--Transactions denominated in foreign
currencies are recorded at the exchange rate prevailing when recognized. Assets
and liabilities denominated in foreign currencies are valued at the exchange
rate at the end of the year. Foreign currency transactions are the result of
settling (realized) or valuing (unrealized) assets or liabilities expressed in
foreign currencies into US dollars. Realized and unrealized gains or losses from
investments include the effects of foreign exchange rates on investments.
(d) Income taxes--It is the policy of the Company 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
shareholders. Therefore, no Federal income tax provision is required. Under the
applicable foreign tax law, a withholding tax may be imposed on interest,
dividends and capital gains at various rates.
(e) Security transactions and investment income--Security transactions are
recorded on the dates the transactions are entered into (the trade dates).
Dividend income is recorded on the ex-dividend date. Interest income (including
amortization of discount) is recorded as earned. Realized gains and losses are
determined on the identified cost basis.
(f) Dividends and distributions--Dividends and distributions payable by the
Funds are accrued on the ex-dividend date.
(g) Expenses--Expenses directly attributable to each Fund are charged to that
Fund's operations; expenses which are applicable to both Funds are allocated
among them on a pro rata basis.
(h) Use of estimates--The Funds' financial statements are prepared in accordance
with generally accepted accounting principles which may require the use of
management estimates and assumptions. Actual results could differ from these
estimates.
<PAGE>
Strategy Fund:
(i) Reclassifications--During the year ended April 30, 1997, $27,245 was
reclassified from accumulated net realized capital gains to undistributed net
investment income as a result of permanent book-to-tax differences. Net assets
were not affected by this reclassification.
2. INVESTMENT ADVISORY, SUB-INVESTMENT ADVISORY, ADMINISTRATION AGREEMENTS AND
TRANSACTIONS WITH AFFILIATES:
(a) The Company, on behalf of the Funds, has engaged Comstock Partners, Inc.
(the "Investment Adviser") to provide professional investment management for
each Fund. Under the terms of an Amended Investment Advisory Agreement between
the Company, on behalf of the Strategy Fund, and the Investment Adviser, the
Investment Adviser furnishes continuing investment supervision to the Strategy
Fund and is responsible for the management of the Strategy Fund's portfolio. It
furnishes office space, equipment and personnel to the Strategy Fund in
connection with the performance of its investment management responsibilities.
For its services, the Investment Adviser receives from the Company, on behalf of
the Strategy Fund, a monthly fee at an annual rate of .60% of the Strategy
Fund's average daily net assets.
Under the terms of an Investment Advisory Agreement between the Company, on
behalf of the Capital Value Fund, and the Investment Adviser, the Investment
Adviser has responsibility for investment decisions for, and the day-to-day
management of, that portfolio. For its services, the Investment Adviser is
entitled to receive an annual fee from the Company, on behalf of the Capital
Value Fund, computed daily and paid monthly at the following annual rates: .40%
of the first $300 million of the Capital Value Fund's average daily net assets,
.45% of the Capital Value Fund's average daily net assets between $300 million
and $750 million, .50% of the Capital Value Fund's average daily net assets
between $750 million and $1 billion and .55% of the Capital Value Fund's average
daily net assets in excess of $1 billion. During the period from July 26, 1996
to April 30, 1997, $823,026 was paid pursuant to the Investment Advisory
Agreement.
The Investment Adviser has engaged The Dreyfus Corporation (the "Sub-Investment
Adviser") to provide sub-investment advisory services with respect to each Fund.
Under the terms of a Sub-Investment Advisory Agreement relating to the Strategy
Fund, the Sub-Investment Adviser manages the short-term cash and cash equivalent
investments of the Strategy Fund and provides investment research and other
advice regarding the Strategy Fund's portfolio. The Sub-Investment Adviser also
provides general advice regarding economic factors and trends, including
statistical and other factual information. For such services, at no cost to the
Strategy Fund, the Investment Adviser pays the Sub-Investment Adviser a monthly
fee at an annual rate of .15% of the Strategy Fund's average daily net assets.
The Dreyfus Corporation also acts as the sub-investment adviser to the Capital
Value Fund pursuant to a separate Sub-Investment Advisory and Administration
Agreement between the Company, on behalf of the Fund, and the Sub-Investment
Adviser. Under that agreement, the Sub-Investment Adviser manages the short-term
cash and cash-equivalent investments of the Capital Value Fund and provides
investment research and other advice regarding the Capital Value Fund's
portfolio. In addition, the Sub-Investment Adviser provides general advice
regarding economic factors and trends and acts as administrator to the Capital
Value Fund. For its services under the Sub-Investment Advisory and
Administration Agreement relating to the Capital Value Fund, the Sub-Investment
Adviser is entitled to receive an annual fee computed daily and paid monthly by
the Company at the following annual rates: .35% of the first $300 million of the
Capital Value Fund's average daily net assets, .30% of the Capital Value Fund's
average daily net assets between $300 million and $750 million, .25% of the
Capital Value Fund's average daily net assets between $750 million and $1
billion and .20% of the Capital Value Fund's average daily net assets in excess
of $1 billion. During the period from July 26, 1996 to April 30, 1997, $720,146
was paid pursuant to the agreement. Prior to July 26, 1996, fees payable by the
Capital Value Fund pursuant to the provisions of an Investment Advisory
Agreement with the Dreyfus Corporation and a Sub-Investment Advisory Agreement
with Comstock Partners (together "Agreements") were paid monthly, computed on
the average daily value of the Capital Value Fund's net assets at the following
annual rates:
<TABLE>
<S> <C> <C>
AVERAGE NET ASSETS DREYFUS COMSTOCK PARTNERS
------------------------------------------------------- ----------- ------------------
0 up to $25 million.................................... .60 of 1% .15 of 1%
$25 up to $75 million.................................. .50 of 1% .25 of 1%
$75 up to $200 million................................. .45 of 1% .30 of 1%
$200 up to $300 million................................ .40 of 1% .35 of 1%
in excess of $300 million.............................. .375 of 1% .375 of 1%
</TABLE>
During the period from May 1, 1996 through July 25, 1996, $338,484 and $226,565
were paid to The Dreyfus Corporation and Comstock Partners, respectively.
Under the terms of an Administration Agreement between the Company, on behalf of
the Strategy Fund, and Princeton Administrators, L.P. ("Princeton"), Princeton
performs or arranges for the performance of certain administrative services
(i.e., services other than investment advice and related portfolio activities)
necessary for the operation of the Strategy Fund, including maintaining the
books and records of the Strategy Fund, preparing reports and other documents
required by United States federal, state and other applicable laws and
regulations to maintain the registration of the Strategy Fund and its shares and
providing the Strategy Fund with administrative office facilities. For the
services rendered to the Strategy Fund and the facilities furnished, the
Strategy Fund pays Princeton a monthly fee equal to the greater of (i) $300,000
per annum ($25,000 per month), or (ii) an annual rate equal to .25% of the
Strategy Fund's average daily net assets up to $100 million, .225% of the
Strategy Fund's average daily net assets on the next $100 million, .20% of the
Strategy Fund's average daily net assets on the next $400 million and .175% of
the Strategy Fund's average daily net assets in excess of $600 million.
The Company compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of the
Sub-Investment Adviser, under a transfer agency agreement for providing
personnel and facilities to perform transfer agency services for the Funds.
During the year ended April 30, 1997, such compensation amounted to $216,878 for
the Capital Value Fund and $121,223 for the Strategy Fund.
(b) Service and Distribution Plan -- Class A Shares
Under the Class A Service and Distribution Plan, the Company, at the expense of
the Class A shares of each Fund, (a) reimburses the Distributor for payments to
certain Service Agents (a securities dealer, financial institution or other
industry professional) for distributing such Fund's Class A shares and servicing
shareholder accounts, and (b) pays the Sub-Investment Adviser, Dreyfus Service
Corporation and any affiliate of either of them (collectively, "Dreyfus") for
advertising and marketing relating to the Class A shares of such Fund and for
shareholder servicing activities, at an aggregate annual rate of .25 of 1% of
the value of the average daily net assets of Class A of such Fund. During the
year ended April 30, 1997, $503,530 and $123,138 were charged to the Class A
shares of Capital Value Fund and Strategy Fund, respectively.
Service and Distribution Plans -- Class B Shares and Class C Shares
Under the Class B and Class C Service and Distribution Plans, the Company, at
the expense of the Class B shares of the Capital Value Fund and Class C shares
of each Fund, as the case may be, (a) pays the Distributor for distributing the
Capital Value Fund's Class B shares and each Fund's Class C shares at an annual
rate of .75 of 1% of the value of the average daily net assets of Class B or
Class C of the applicable Fund and (b) pays the Distributor for the provision of
certain services to the holders of Class B shares and Class C shares, as the
case may be, a fee at the annual rate of .25 of 1% of the value of the average
daily net assets of Class B or Class C of such Fund. During the year ended April
30, 1997, $556,548 and $40,688 were charged for distributing Capital Value
Fund's Class B and Class C shares, respectively, and $185,516 and $13,563 were
charged for shareholder servicing for Capital Value Fund's Class B and Class C
shares, respectively. For the same period, $85,733 and $28,578 were charged for
distributing and shareholder servicing, respectively, for Strategy Fund's Class
C shares.
(c) Certain officers and/or directors of the Company are officers and/or
directors of the Investment Adviser or Dreyfus. Each director who is not an
"affiliated person" as defined in the Act receives from the Company an annual
fee of $20,000 per year. Prior to July 26, 1996, each director who was not an
"affiliated
<PAGE>
person" as defined in the Act received from the Capital Value Fund an annual fee
of $4,500 and an attendance fee of $500 per meeting. The Chairman of the Board
received an additional 25% of such compensation and each director emeritus
received 50% of such compensation.
3. PURCHASES AND SALES OF INVESTMENTS:
Purchases and sales of investments, excluding short-term and US Government
securities, for the year ended April 30, 1997 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
-------------- --------------
<S> <C> <C>
Strategy Fund:...................................... $ 97,189,978 $148,521,785
-------------- --------------
-------------- --------------
Capital Value Fund:
Long transactions................................. $414,266,364 $453,671,132
Short sale transactions........................... 121,237,124 94,557,044
-------------- --------------
$535,503,488 $548,228,176
-------------- --------------
-------------- --------------
</TABLE>
Capital Value Fund: The Fund is engaged in short-selling which obligates the
Fund to replace the security borrowed by purchasing the security at current
market value. The Fund would incur a loss if the price of the security increases
between the date of the short sale and the date on which the Fund replaces the
borrowed security. The Fund would realize a gain if the price of the security
declines between those dates. Until the Fund replaces the borrowed security, the
Fund will maintain daily, a segregated account with a broker and/or custodian,
of cash and/or US Government securities sufficient to cover its short position.
Securities sold short at April 30, 1997 and their related market values and
proceeds are set forth in the Statement of Securities Sold Short.
Realized and unrealized gains (losses) as of April 30, 1997 were as follows:
Strategy Fund:
<TABLE>
<CAPTION>
REALIZED UNREALIZED
GAINS (LOSSES) GAINS (LOSSES)
-------------- --------------
<S> <C> <C>
Long-term investments............................... $ (1,822,622) $ 2,945,032
Short-term investments.............................. 4,814 (14)
Put options purchased............................... (16,523,373) (14,095,965)
Financial futures contracts......................... 2,271,984 1,457,450
Foreign currency transactions....................... (6,194,936) (3,155)
-------------- --------------
$(22,264,133) $ (9,696,652)
-------------- --------------
-------------- --------------
</TABLE>
Capital Value Fund:
<TABLE>
<CAPTION>
REALIZED UNREALIZED
GAINS (LOSSES) GAINS (LOSSES)
-------------- --------------
<S> <C> <C>
Long-term investments............................... $ 1,808,131 $ (9,519,329)
Short sale transactions............................. (15,283,826) 6,470,712
Short-term investments.............................. (3,448) 21,304
Put options purchased............................... (21,347,323) (13,634,008)
Financial futures contracts......................... (4,393,372) (701,983)
Foreign currency transactions....................... 1,219,208 (33,048)
-------------- --------------
$(38,000,630) $(17,396,352)
-------------- --------------
-------------- --------------
</TABLE>
As of April 30, 1997, the cost of investments of Capital Value Fund for Federal
income tax purposes was substantially the same as the cost for financial
reporting purposes. The cost of investments for Strategy Fund for Federal income
tax purposes was $195,175,590. The following summarizes the net unrealized
appreciation (depreciation) on investments, put options purchased, futures
transactions and short sale transactions for Federal income tax purposes for
each Fund at April 30, 1997:
<TABLE>
<CAPTION>
GROSS GROSS
APPRECIATION DEPRECIATION NET
------------ ------------ ------------
<S> <C> <C> <C>
Strategy Fund............................ $ 8,576,011 $(19,456,778) $(10,880,767)
Capital Value Fund....................... $15,003,126 $(32,366,430) $(17,363,304)
</TABLE>
The following summarizes the capital loss carry forwards of each Fund at April
30,1997:
<TABLE>
<CAPTION>
EXPIRING IN FISCAL YEAR STRATEGY FUND CAPITAL VALUE FUND
- ------------------------- ------------- ------------------
<S> <C> <C>
1999 -- $ 9,100,000
2000 $ 3,400,000 29,800,000
2001 8,800,000 17,800,000
2002 -- 56,700,000
2003 -- 9,200,000
2004 12,500,000 15,800,000
2005 14,900,000 14,200,000
------------- ------------------
Total $39,600,000 $152,600,000
------------- ------------------
------------- ------------------
</TABLE>
4. DIVIDENDS:
In May and June 1997 the Fund's Board of Directors declared ordinary income
dividends for the Strategy Fund's Class O, Class A and Class C shares as
follows:
<TABLE>
<CAPTION>
AMOUNT PER SHARE
- -----------------------------------
<C> <C> <C> <S> <C>
CLASS O CLASS A CLASS C PAYABLE DATE RECORD DATE
- --------- --------- --------- ------------------ ------------------
$0.05000 $0.04833 $0.04157 May 30, 1997 May 21, 1997
$0.05000 $0.04832 $0.04070 June 30, 1997 June 20, 1997
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Shareholders and Board of Directors
Comstock Partners Funds, Inc.
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments and statement of securities sold short,
of Comstock Partners Funds, Inc. (comprising, Comstock Partners Strategy Fund
and Comstock Partners Capital Value Fund) as of April 30, 1997, and the related
statements of operations for the year then ended, the statements of changes in
net assets for the periods indicated therein and financial highlights, with
respect to Comstock Partners Strategy Fund, for each of the two years in the
period then ended and with respect to Comstock Partners Capital Value Fund, for
each of the periods indicated therein. These financial statements and financial
highlights are the responsibility of the Funds' management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits. The financial highlights, with respect to Comstock
Partners Strategy Fund, for each of the three years in the period ended April
30, 1995 were audited by other auditors whose opinion dated May 31,1995
expressed an unqualified opinion on such financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of April 30, 1997 by correspondence with the custodians and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above and audited by us present fairly, in all material respects, the financial
position of each of the Funds constituting Comstock Partners Funds, Inc. at
April 30,1997, and the results of their operations for the year then ended and
the changes in their net assets and the financial highlights for each of the
indicated periods, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
New York, New York
June 10, 1997
- --------------------------------------------------------------------------------
Comstock Partners Funds, Inc. 1997
FEDERAL TAX INFORMATION (Unaudited)
Of the ordinary income distributions paid monthly by the Funds during the
fiscal year ended April 30, 1997, 5.86% and 1.66% qualify for the dividends
received deduction for corporations for Strategy Fund and Capital Value Fund,
respectively. Additionally, there were no long-term capital gains distributions
during the year.
The law varies in each state as to whether and what percentage of dividend
income attributable to Federal obligations is exempt from state income tax. We
recommend that you consult your tax adviser to determine if any portions of the
dividends you received is exempt from state income tax.
Listed below are the percentages of total assets invested in Federal
obligations for each Fund as of the end of each quarter of the fiscal year:
<TABLE>
<CAPTION>
PERCENTAGE OF FEDERAL OBLIGATIONS*
-------------------------------------
FUND QUARTER ENDED STRATEGY FUND CAPITAL VALUE FUND
- ------------------- ------------- ------------------
<S> <C> <C>
7/31/96 54.58 % 39.70 %
10/31/96 57.62 42.44
1/31/97 45.96 32.54
4/30/97 51.51 41.38
</TABLE>
Of each Fund's ordinary income distributions paid during the fiscal year ended
April 30, 1997, 32.73% and 33.81% was attributable to federal obligations for
Strategy Fund and Capital Value Fund, respectively. In calculating the
foregoing percentages, expenses of each Fund have been allocated on a pro rata
basis.
* For purposes of this calculation, Federal obligations include US Treasury
Notes, US Treasury Bills, and US Treasury Bonds. Also included are obligations
issued by the following agencies: Banks for Cooperatives, Federal Intermediate
Credit Banks, Federal Home Loan Banks and the Student Loan Marketing
Association. Repurchase agreements are not included in this calculation.
<PAGE>
- --------------------------------------------------------------------------------
Comstock Partners Funds, Inc.
SHAREHOLDER MEETING RESULTS
Comstock Partners Strategy Fund (the "Strategy Fund") and Comstock Partners
Capital Value Fund (the "Capital Value Fund" and, together with the Strategy
Fund, the "Funds") are separate series of Comstock Partners Funds, Inc. (the
"Company"). A special meeting of shareholders of the Company (the "Meeting")
was convened on December 20, 1996.
At the meeting, the shareholders of the Company elected all of the Directors of
the Company then in office. The Directors elected were Charles L. Minter, M.
Bruce Adelberg, E.W. Kelly, Sven B. Karlen, Jr., and Robert M. Smith.
Except as indicated, the shareholders of the Funds present at the Meeting, in
person or by proxy, each cast their votes on the following matters as follows
(all fractional shares rounded):
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OF THE STRATEGY FUND VOTED
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
1. Approval of a new investment advisory agreement
between the Company, on behalf of the Strategy
Fund, and Comstock Partners, Inc., containing
the same terms and conditions as the existing
investment advisory agreement between the
Company, on behalf of the Strategy Fund, and
Comstock Partners, Inc. 21,874,515 394,374 659,657
- ---------------------------------------------------------------------------------------------------
SHARES OF THE CAPITAL VALUE FUND VOTED
FOR AGAINST ABSTAIN
- ---------------------------------------------------------------------------------------------------
2. Approval of a new investment advisory agreement
between the Company, on behalf of the Capital
Value Fund, and Comstock Partners, Inc.,
containing the same terms and conditions as the
existing investment advisory agreement between
the Company, on behalf of the Capital Value
Fund, and Comstock Partners, Inc. 16,777,465 364,561 637,290
- ---------------------------------------------------------------------------------------------------
SHARES OF THE STRATEGY FUND VOTED
FOR AGAINST ABSTAIN
- ---------------------------------------------------------------------------------------------------
3. Approval of a new sub-investment advisory
agreement between the Company, on behalf of the
Strategy Fund, and The Dreyfus Corporation,
containing the same terms and conditions as the
existing sub-investment advisory agreement
between the Company, on behalf of the Strategy
Fund, and The Dreyfus Corporation. 21,820,219 417,664 690,663
- ---------------------------------------------------------------------------------------------------
SHARES OF THE COMPANY VOTED
FOR AGAINST ABSTAIN
- ---------------------------------------------------------------------------------------------------
4. Ratification of the selection of Ernst & Young
LLP as the
independent auditors of the Company for the
fiscal year ending
April 30, 1997. 46,610,622 338,356 776,546
- ---------------------------------------------------------------------------------------------------
</TABLE>
