COMSTOCK PARTNERS
FUNDS, INC.
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COMSTOCK PARTNERS
STRATEGY FUND
COMSTOCK PARTNERS
CAPITAL VALUE FUND
ANNUAL REPORT
APRIL 30, 1999
<PAGE>
DEAR FELLOW SHAREHOLDER:
For the year ended April 30, 1999, the Comstock Partners Strategy Fund's
Class O, A and C shares posted total returns of -11.32%, -11.56% and -12.42%,
respectively, and the Comstock Partners Capital Value Fund's Class A, B, C and R
shares posted total returns of -25.80%, -26.19%, -26.22% and -25.67%,
respectively, based upon net asset value per share. During the same period, the
Standard & Poor's 500 Index (S&P 500) posted a total return of 21.82% and the
Lehman Brothers Government/ Corporate Bond Index rose 6.28%.*
As you are aware from past shareholder correspondence, both Funds have been
positioned to benefit from a severe deflationary bear market in US stocks. The
unfavorable results described in the preceding paragraph are a result of
positioning these two funds to benefit from lower US Treasury bond yields and a
decline in the US stock market. We continue to believe that a bear market
started in July 1998 and will resume before the end of 1999. The rally from the
bear market low has surprised us in its magnitude and duration. We believe this
extreme move developed as a result of the strength in the US economy as well as
a perceived global economic rebound. There is no question that there has been a
substantial rise in industrial production in many of the emerging markets,
especially those that were in so much trouble in the third quarter of 1998.
However, we believe that most of these rebounds are a result of the
International Monetary Fund bailouts and government spending rather than
underlying demand from consumers and business. In addition, most of these
nations have not undertaken the restructuring and writedowns required for a
sustained recovery.
The stabilization of world currencies and stock markets and the rise in oil
prices have caused an increase in long term US bond yields and a rise in the
Consumer Price Index. In view of these factors the Federal Reserve has recently
announced a bias toward raising interest rates. We believe the increase in both
interest rates and inflation will be short lived since global overcapacity will
continue to act as a depressant on prices. Also acting as an anchor on inflation
is the second largest economy in the world, Japan, which remains mired in a deep
recession. In addition, the oil price increase was artificially created through
supply cutbacks while demand remains weak. With the existence of ample excess
capacity there is a great temptation for oil producers to cheat on their output
quotas at these higher prices. In sum, worldwide deflation still seems more
likely than inflation.
Because of our belief that deflation is more of a risk than inflation, we
have maintained our Funds' negative posture. The Capital Value Fund is
positioned with equity shorts, put options and S&P 500 Index futures shorts and
a position of approximately 10% of assets in US Treasury bonds. The Strategy
Fund also has a position in put options to enable it to benefit from a future
decline in equities. However, the Strategy Fund's US Treasury bond position has
been increased from 25% to approximately 80% of assets while US Treasury bonds
represent only about 10% of the Capital Value Fund. We believe these US Treasury
bond holdings will also increase in value if the deflationary environment we
anticipate unfolds. Please note that, consistent with the Funds' prospectus and
our investment approach, we have the flexibility to change these positions when
we believe conditions warrant.
In our opinion, extreme market overvaluation continues to be a major risk.
Current reported annual earnings of the S&P 500 is 38 dollars per share. If
these earnings continue to grow at the long-term annual average rate of 6%
compounded, earnings ten years from now would amount to 68 dollars per share. If
the S&P 500 ever reverted back to its historical average price to earnings
multiple (PE) of 14.5 times during this ten-year period, we believe that the US
stock market would have to decline substantially. In fact, even if it reverted
back to this same historical PE in the year 2009, with 68 dollars of earnings we
estimate that the S&P 500 would be 986 which is about 26% below the current
level.
Due to the bearish stance we have taken over the past few years, each of
the Funds has accumulated a substantial capital loss carryforward (CLCF). As of
April 30, 1999, the CLCF in the Capital Value Fund was approximately $250
million and the CLCF in the Strategy Fund was approximately $80 million. These
CLCFs may be considered as an important asset of each Fund and its respective
shareholders. Although there are certain restrictions on their use, they would
allow the Funds to shelter from tax capital gains that may be realized, up to
the amounts and subject to the expiration dates of the CLCFs. To the extent the
CLCFs are utilized
<PAGE>
by a Fund to shelter capital gains, the Fund will not be required to pay out
these gains as a taxable distribution to shareholders. Furthermore, the amounts
of any such undistributed gains would be available to the Funds for
reinvestment. (An expiration schedule with respect to the CLCFs of each Fund is
outlined in Note 3 to the financial statements.)
Effective August 31, 1999, The Dreyfus Corporation will no longer provide
sub-investment advisory services to either of the Funds and will no longer act
as administrator to the Capital Value Fund. At the same time, Princeton
Administrators, L.P., the current administrator to the Strategy Fund, will also
assume administrative responsibility for the Capital Value Fund. As a result of
these changes, effective August 31, 1999, the Capital Value Fund will no longer
be obligated for the payment of fees to The Dreyfus Corporation for
sub-investment advisory or administrative services, which are currently 0.35% of
net assets. However, the Capital Value Fund will pay a fee of 0.25% of net
assets to Princeton Administrators for the provision of administrative services
to the Capital Value Fund.
Distributions are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles. As a result of
year-end tax adjustments, distributions for the Strategy Fund for the months of
June, July and August 1999 will be reduced to a level which will reflect these
adjustments. We anticipate that subsequent distributions should return to
previous levels.
We understand the frustration associated with the Funds' disappointing
returns at a time when the US stock market appears to be rallying but we do
believe that we are close to a climax and expect a decline to commence during
calendar year 1999. Thank you for your continued support.
Sincerely,
Comstock Partners, Inc.
Investment Policy Committee
Lawrenceville, New Jersey
June 18, 1999
*PERFORMANCE INFORMATION:
Total return assumes the reinvestment of dividends and distributions and
excludes the effect of sales loads.
The Standard & Poor's 500 Index is a widely accepted unmanaged index of stock
market performance which reflects the reinvestment of income dividends and,
where applicable, capital gain distributions. 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.
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.
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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.
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<PAGE>
TOTAL RETURN BASED ON A $10,000 INVESTMENT -- COMSTOCK PARTNERS STRATEGY FUND
CLASS A SHARES*
S&P 500 Lehman Govt/
Date Class A* Index*** Corp Bond**** Blended Index*****
5/26/88** 9550 10000 10000 10000
4/89 10824 12554 10858 11452
4/90 12242 13879 11767 12498
4/91 13302 16324 13513 14475
4/92 14577 18615 14968 16199
4/93 15367 21334 17139 18249
4/94 16890 21416 17336 18726
4/95 17218 25156 18536 20712
4/96 17630 32756 20139 24066
4/97 16732 40989 21492 27235
4/98 14203 57823 23927 33154
4/99 12562 70441 25430 37040
* The total return is based upon a hypothetical investment in
Class O shares at the Fund's inception on 5/26/88 until the
introduction of Class A shares on 7/15/92, assuming the
current 4.5% maximum initial sales charge for Class A
shares. The ending value of investments in the Fund's Class
O shares (reflecting the deduction of the maximum initial
sales charge of 4.5% when the Fund last offered Class O
shares) and Class C shares (based on a hypothetical
investment in Class O shares at the Fund's inception on
5/26/88 until 7/15/92 and Class A shares from 7/15/92 until
8/01/95) over the same time period would have been $12,811
and $12,779, respectively. Total return prior to 8/01/91
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 and Class C shares were not
actually introduced until 7/15/92 and 8/01/95, respectively,
total return for the period prior to the introduction of
each such class (i) reflects the performance information for
Class O shares and Class A shares, as appropriate (ii) does
not reflect service and distribution fees borne by Class A
shares and Class C shares, which, if reflected, would reduce
the total return presented. Total return assumes the
reinvestment of dividends and capital gains distributions.
** Fund's inception.
*** This unmanaged broad-based index is comprised of common
stocks. The index does not reflect the deduction of sales
charges and expenses that are borne by mutual fund
investors.
**** This unmanaged broad-based index is comprised of US
Government Agency and Treasury securities and investment
grade corporate debt. The index does not reflect the
deduction of sales charges and expenses that are borne by
mutual fund investors.
***** The blended index contains 65% of Lehman Brothers
Govt./Corp. Bond Index and 35% of S&P 500 Index.
Past performance is not predictive of future performance.
AVERAGE ANNUAL TOTAL RETURNS (FOR PERIODS ENDED APRIL 30, 1999)+
<TABLE>
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SINCE FUND'S
INCEPTION
ONE YEAR FIVE YEARS TEN YEARS (5/26/88)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMSTOCK PARTNERS STRATEGY FUND CLASS O
Without sales charge -11.32% -5.47% 1.70% 2.72%
With sales charge++ -15.31% -6.33% 1.23% 2.29%
- --------------------------------------------------------------------------------------------------------------------------
COMSTOCK PARTNERS STRATEGY FUND CLASS A
Without sales charge -11.56% -5.74% 1.50% 2.54%
With sales charge++ -15.54% -6.61% 1.03% 2.11%
- --------------------------------------------------------------------------------------------------------------------------
COMSTOCK PARTNERS STRATEGY FUND CLASS C
Without contingent deferred sales charge -12.42% -6.29% 1.21% 2.27%
With contingent deferred sales charge+++ -13.23% -6.29% 1.21% 2.27%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ See first footnote to the preceding graph for a discussion
of the presentation of total return.
++ Assuming maximum initial sales charge of 4.5%.
+++ Assuming payment of the maximum contingent deferred sales
charge (CDSC). A CDSC 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*
S&P 500 Index*** Capital Value Fund Class A Shares*
10/10/85 10000 9552
4/86 13223 13366
4/87 16728 15148
4/88 15641 17453
4/89 19221 19476
4/90 21243 22353
4/91 24978 22984
4/92 28475 23822
4/93 31100 24328
4/94 32752 24299
4/95 38464 23929
4/96 50068 23596
4/97 62646 20535
4/98 88371 14070
4/99 107661 10440
* The total return is based upon a hypothetical investment in
Class A shares at the Fund's inception on 10/10/85, assuming
the current 4.5% maximum initial sales charge for Class A
shares. The ending value of investments in the Fund's Class
B shares (based on a hypothetical investment in Class A
shares at the Fund's inception on 10/10/85 until the
introduction of Class B shares on 1/15/93), Class C shares
(based upon a hypothetical investment in Class A shares at
the Fund's inception on 10/10/85 until 1/15/93, and Class B
shares from 1/15/93 until the introduction of Class C shares
on 8/22/95) and Class R shares (based on a hypothetical
investment in Class A shares at the Fund's inception on
10/10/85 until the introduction of Class R shares on
8/22/95) over the same time period would have been $10,402,
$10,395 and $11,027, respectively. Because Class B shares
were not actually introduced until
1/15/93 and Class C shares and Class R shares were not
actually introduced until 8/22/95, total return for the
period prior to the introduction of each such class (i) in
the case of Class B shares and Class R shares, reflects the
performance information for Class A shares (ii) in the case
of Class C shares, reflects the performance information for
Class A shares and Class B shares, as appropriate and
(iii) in the case of Class B shares and Class C shares, does
not reflect higher service and distribution fees and certain
administrative expenses borne by Class B shares and Class C
shares, which, if reflected, would reduce the total return
presented. Total return assumes the reinvestment of
dividends and capital gains distributions.
** Fund's inception.
*** This unmanaged broad-based index is comprised of common
stocks. The index does not reflect the deduction of sales
charges and expenses that are borne by mutual fund
investors.
**** 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.
AVERAGE ANNUAL TOTAL RETURNS (FOR PERIODS ENDED APRIL 30, 1999)+
<TABLE>
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SINCE FUND'S
SINCE POLICY INCEPTION
ONE YEAR FIVE YEARS TEN YEARS INCEPTION++ (10/10/85)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
COMSTOCK PARTNERS CAPITAL VALUE FUND CLASS A
Without sales charge -25.80% -15.55% -6.04% -3.05% 0.66%
With sales charge+++ -29.16% -16.32% -6.48% -3.42% 0.32%
- ------------------------------------------------------------------------------------------------------------------------------
COMSTOCK PARTNERS CAPITAL VALUE FUND CLASS B
Without contingent deferred sales charge -26.19% -16.16% -6.51% -3.45% 0.29%
With contingent deferred sales charge++++ -28.97% -16.40% N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------
COMSTOCK PARTNERS CAPITAL VALUE FUND CLASS C
Without contingent deferred sales charge -26.22% -16.17% -6.52% -3.45% 0.29%
With contingent deferred sales charge+++++ -26.91% N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------
COMSTOCK PARTNERS CAPITAL VALUE FUND CLASS R -25.67% -15.39% -5.96% -2.98% 0.72%
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ See first footnote to the preceding graph for a discussion
of the presentation of total return.
++ 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.
+++ Assuming maximum initial sales charge of 4.5%.
++++ Assuming payment of the maximum contingent deferred sales
charge (CDSC). The maximum CDSC for Class B shares is 4% and
is reduced to 0% after six years.
+++++ Assuming payment of the maximum CDSC. A CDSC of 1% is
imposed on redemptions of Class C shares made within one
year of purchase.
<PAGE>
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Comstock Partners Funds, Inc.
Strategy Fund Schedule of Investments As of April 30, 1999
<TABLE>
<CAPTION>
S&P MOODY'S SHARES HELD/ VALUE
RATING* RATING* FACE AMOUNT ISSUE (NOTE 1A)
<S> <C> <C> <C> <C> <C>
BONDS
US Government US Treasury Bonds:
Obligations --
96.4% AAA Aaa $ 9,000,000 6.250% due 8/15/2023 $ 9,374,067
AAA Aaa 3,000,000 6.500% due 11/15/2026 3,241,875
AAA Aaa 5,000,000 6.625% due 2/15/2027 5,495,315
AAA Aaa 19,350,000 6.375% due 8/15/2027 20,631,937
-----------
38,743,194
-----------
AAA Aaa 13,540,000 US Treasury Notes 8.000% due 8/15/1999 13,671,176
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN BONDS (cost $53,656,934)-- 96.4% 52,414,370
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
COMMON STOCKS
Country Funds --
0.6% 77,600 Lazard Vietnam Fund, Ltd. (a) 131,920
324,915 Vietnam Enterprise Investment Fund, Ltd., Class R
(a)(b) 224,191
-----------
356,111
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN COMMON STOCKS (cost $489,062) -- 0.6% 356,111
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Total investments (cost $54,145,996) -- 97.0% 52,770,481
Put options purchased (cost $4,270,389) -- 2.4%+ 1,300,838
Other assets less liabilities -- 0.6% 299,352
-----------
Net Assets -- 100.0% $54,370,671
-----------
-----------
</TABLE>
+ Put options purchased as of April 30, 1999 are as follows:
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION DATE/ VALUE
CONTRACTS ISSUE EXERCISE PRICE (NOTE 1A)
<C> <C> <S> <C>
316 S&P 500 Index Jun. 99/1100 $ 118,500
277 S&P 500 Index Jun. 99/1125 145,425
163 S&P 500 Index Jun. 99/1150 110,025
47 S&P 500 Index Sep. 99/1200 160,388
168 S&P 500 Index Sep. 99/1250 766,500
-----------
Total put options purchased
(cost $4,270,389) $ 1,300,838
-----------
-----------
</TABLE>
* Ratings shown have not been audited by Ernst & Young LLP.
(a) Non-income producing.
(b) Security exempt from registration under Rule 144A of the Securities Act of
1933, as amended. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At April 30,
1999 this security amounted to $224,191, or 0.41% of net assets.
See notes to financial statements.
<PAGE>
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Comstock Partners Funds, Inc.
Capital Value Fund Schedule of Investments As of April 30, 1999
<TABLE>
<CAPTION>
SHARES
S&P MOODY'S HELD/ VALUE
RATING* RATING* FACE AMOUNT ISSUE (NOTE 1A)
<S> <C> <C> <C> <C> <C>
BONDS
US Government
Obligations --
12.0% AAA Aaa $8,825,000 US Treasury Bonds 6.375% due 8/15/2027 $ 9,409,656
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN BONDS (cost $9,929,363) -- 12.0% 9,409,656
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
COMMON STOCKS
Country Funds --
0.5% 87,000 Lazard Vietnam Fund, Ltd. (a) 147,900
324,915 Vietnam Enterprise Investment Fund, Ltd., Class R
(a)(b) 224,191
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN COMMON STOCKS (cost $491,162) -- 0.5% 372,091
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
SHORT-TERM
SECURITIES (C)
US Government US Treasury Bills:
Obligations --
84.7% AAA Aaa $14,182,000 4.23% due 6/10/99 (d)(e) 14,113,444
AAA Aaa 973,000 4.34% due 6/24/99 966,593
AAA Aaa 51,282,000 4.37% due 7/22/99 50,766,872
AAA Aaa 252,000 4.39% due 7/29/99 (e) 249,301
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SHORT-TERM SECURITIES (cost $66,115,944) -- 84.7% 66,096,210
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Total investments (cost $76,536,469) -- 97.2% 75,877,957
Put options purchased (cost $4,865,517) -- 1.8%+ 1,420,163
Variation margin on open futures contracts -- 0.3%++ 233,750
Other assets less liabilities -- 0.7% 509,766
-------------
Net Assets -- 100.0% $ 78,041,636
-------------
-------------
</TABLE>
+ Put options purchased as of April 30, 1999 are as follows:
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION DATE/ VALUE
CONTRACTS ISSUE EXERCISE PRICE (NOTE 1A)
<C> <C> <S> <C>
360 S&P 500 Index Jun. 99/1100 $ 135,000
250 S&P 500 Index Jun. 99/1125 131,250
362 S&P 500 Index Jun. 99/1150 244,350
70 S&P 500 Index Sep. 99/1200 238,875
147 S&P 500 Index Sep. 99/1250 670,688
-----------
Total put options purchased
(cost $4,865,517) $ 1,420,163
-----------
-----------
</TABLE>
++ Open futures contracts as of April 30, 1999 are as follows:
<TABLE>
<CAPTION>
NUMBER OF VALUE UNREALIZED
CONTRACTS ISSUE EXPIRATION DATE (NOTE 1A) DEPRECIATION
<C> <C> <S> <C> <C> <C>
FUTURES SOLD: 85 S&P 500 Index Jun 99 $(28,400,625) $ (68,350)
------------ ----------
------------ ----------
</TABLE>
* Ratings shown have not been audited by Ernst & Young LLP.
(a) Non-income producing.
(b) Security exempt from registration under Rule 144A of the Securities Act of
1933, as amended. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At April 30,
1999, this security amounted to $224,191, or 0.29% of net assets.
(c) 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.
(d) Partially held by the broker as collateral for open short positions.
(e) Partially held by the custodian in a segregated account as collateral for
open futures positions.
See notes to financial statements.
<PAGE>
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Comstock Partners Funds, Inc.
Capital Value Fund Statement of Securities Sold Short As of April 30, 1999
<TABLE>
<CAPTION>
VALUE
COMMON STOCKS SHARES ISSUE (NOTE 1A)
<S> <C> <C> <C>
Consumer -- 1.9% 22,400 Coca-Cola $ 1,523,200
------------
Domestic Index -- 3.0% 22,000 NASDAQ-100 Shares 2,362,250
------------
Finance -- 2.6% 30,000 Edwards (A.G.) 1,050,000
42,000 United Asset Management 947,625
------------
1,997,625
------------
Foreign Index -- 1.1% 20,000 WEBS, France Index Series 433,750
20,000 WEBS, Germany Index Series 425,000
------------
858,750
------------
Manufacturing -- 2.8% 19,300 Kerr-McGee 817,838
48,600 Lubrizol 1,345,612
------------
2,163,450
------------
Retail -- 1.6% 48,700 Mattel 1,260,113
------------
Technology -- 6.2% 23,800 Citrix Systems 1,011,500
15,000 Infoseek 765,936
11,600 Intel 709,775
15,000 KLA-Tencor 744,375
10,200 Network Solutions, Cl. A 793,050
4,500 Yahoo 786,094
------------
4,810,730
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES SOLD SHORT (proceeds $15,161,473)-- 19.2% $14,976,118
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
Comstock Partners Funds, Inc. Statements of Assets and Liabilities
As of April 30, 1999
<TABLE>
<CAPTION>
STRATEGY CAPITAL VALUE
FUND FUND
<S> <C> <C>
------------ ------------
ASSETS:
Investments at value (cost $54,145,996 and $76,536,469,
respectively) (Note 1a)................................... $ 52,770,481 $ 75,877,957
Put options purchased (cost $4,270,389 and $4,865,517,
respectively) (Note 1a)................................... 1,300,838 1,420,163
Cash........................................................ 15,560 --
Receivable from brokers for proceeds on securities sold
short..................................................... -- 15,161,473
Receivables:
Variation margin on open futures contracts.............. -- 233,750
Interest................................................ 755,120 135,487
Capital stock sold...................................... 121,194 787,572
Other assets................................................ 5,882 6,944
------------ ------------
Total assets............................................ 54,969,075 93,623,346
------------ ------------
LIABILITIES:
Payables:
Short sales (proceeds $15,161,473)...................... -- 14,976,118
Dividends to shareholders (Note 1f)..................... 238,948 --
Capital stock redeemed.................................. 158,755 177,765
Investment advisory fees (Note 2)....................... 27,648 48,581
Sub-investment advisory fees (Note 2)................... -- 23,258
Administrative fees (Note 2)............................ 11,520 --
Service and Distribution Plan fees (Note 2)............. 2,296 28,846
Due to Dreyfus Transfer, Inc. (Note 2).................. 34,300 4,100
Securities purchased.................................... -- 145,879
Cash overdraft due to Custodian......................... -- 88,477
Accrued expenses and other liabilities...................... 124,937 88,686
------------ ------------
Total liabilities....................................... 598,404 15,581,710
------------ ------------
NET ASSETS.................................................. $ 54,370,671 $ 78,041,636
------------ ------------
------------ ------------
NET ASSETS CONSIST OF:
Paid in capital......................................... $146,135,651 $353,495,635
Undistributed net investment income..................... 128,253 850,950
Accumulated net realized loss on investments, put
options, futures, short sale transactions and foreign
currency transactions................................. (87,548,167) (272,318,088)
Net unrealized appreciation on short sale
transactions.......................................... -- 185,355
Net unrealized depreciation on investments, put options
purchased and futures transactions.................... (4,345,066) (4,172,216)
------------ ------------
NET ASSETS.................................................. $ 54,370,671 $ 78,041,636
------------ ------------
------------ ------------
SHARES OF COMMON STOCK OUTSTANDING:
Class O shares:
150 million of $0.001 par value authorized............ 9,275,800 --
------------ ------------
------------ ------------
Class A shares:
200 million of $0.001 par value authorized............ 1,591,490 --
------------ ------------
------------ ------------
125 million of $0.001 par value authorized............ -- 16,964,884
------------ ------------
------------ ------------
Class B shares:
125 million of $0.001 par value authorized............ -- 3,967,260
------------ ------------
------------ ------------
Class C shares:
200 million of $0.001 par value authorized............ 143,771 --
------------ ------------
------------ ------------
125 million of $0.001 par value authorized............ -- 1,509,685
------------ ------------
------------ ------------
Class R shares:
125 million of $0.001 par value authorized............ -- 8,401
------------ ------------
------------ ------------
NET ASSET VALUE PER SHARE:
Class O shares:
$45,803,414 / 9,275,800 shares........................ $ 4.94 --
------------ ------------
------------ ------------
Class A shares:
$7,857,657 / 1,591,490 shares and $59,245,837 /
16,964,884 shares, respectively..................... $ 4.94 $ 3.49
------------ ------------
------------ ------------
Class B shares:
$13,752,710 / 3,967,260 shares........................ -- $ 3.47
------------ ------------
------------ ------------
Class C shares:
$709,600 / 143,771 shares and $5,013,828 / 1,509,685
shares, respectively.................................. $ 4.94 $ 3.32
------------ ------------
------------ ------------
Class R shares:
$29,261 / 8,401 shares................................ -- $ 3.48
------------ ------------
------------ ------------
</TABLE>
See notes to financial statements.
<PAGE>
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Comstock Partners Funds, Inc.
Statements of Operations for the Year Ended April 30, 1999
<TABLE>
<CAPTION>
STRATEGY CAPITAL
FUND VALUE FUND
<S> <C> <C>
------------ ------------
INVESTMENT INCOME (NOTE 1E):
Interest and discount earned................................ $ 5,165,833 $ 5,364,895
Dividends (net of withholding tax of $1,350 and $1,728,
respectively)............................................. 45,292 33,422
------------ ------------
Total investment income................................. 5,211,125 5,398,317
------------ ------------
EXPENSES:
Investment advisory fees (Note 2)........................... 460,751 392,277
Administrative fees (Note 2)................................ 300,000 --
Dividends on securities sold short.......................... -- 740,329
Transfer agent fees (Note 2)................................ 300,444 235,992
Sub-investment advisory fees (Note 2)....................... -- 343,244
Service and Distribution Plan fees (Note 2)................. 56,304 464,150
Professional fees........................................... 87,577 93,665
Printing and shareholder reports............................ 34,985 8,029
Registration fees........................................... 23,078 51,466
Insurance................................................... 16,584 13,619
Directors' fees and expenses................................ 28,484 35,932
Custodian fees.............................................. 3,004 13,847
Other operating expenses.................................... 1,263 1,729
------------ ------------
Total expenses.......................................... 1,312,474 2,394,279
Waiver of administrative fees (Note 2).................. (108,020) --
------------ ------------
Net expenses............................................ 1,204,454 2,394,279
------------ ------------
NET INVESTMENT INCOME....................................... 4,006,671 3,004,038
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...................................... (18,605,800) (36,312,815)
Net realized loss on short sale transactions................ -- (4,513,603)
Net realized gain (loss) on foreign currency transactions... (258,095) 232
Change in net unrealized depreciation
on investments, put options purchased and futures
transactions............................................ 6,462,751 10,410,516
Change in net unrealized appreciation on short sale
transactions.............................................. -- (3,337,189)
Change in net unrealized appreciation (depreciation) on
foreign currency transactions............................. 85 (229)
------------ ------------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS............................... $ (8,394,388) $(30,749,050)
------------ ------------
------------ ------------
</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
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
APRIL 30, 1999 APRIL 30, 1998 APRIL 30, 1999 APRIL 30, 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
OPERATIONS: Net investment income.............. $ 4,006,671 $ 8,077,426 $ 3,004,038 $ 6,544,573
Net realized loss on investments,
put options purchased and
futures transactions........ (18,605,800) (27,577,080) (36,312,815) (62,173,921)
Net realized loss on short sale
transactions................ -- -- (4,513,603) (12,832,985)
Net realized gain (loss) on foreign
currency transactions....... (258,095) (740,328) 232 527,134
Change in net unrealized
depreciation on investments,
put options purchased and
futures transactions........ 6,462,751 (1,114,320) 10,410,516 9,251,284
Change in net unrealized
appreciation on short sale
transactions................ -- -- (3,337,189) (2,948,168)
Change in net unrealized
appreciation (depreciation)
on foreign currency
transactions................ 85 3,070 (229) 33,277
------------ ------------ ------------ ------------
Net decrease in net assets
resulting from operations... (8,394,388) (21,351,232) (30,749,050) (61,598,806)
------------ ------------ ------------ ------------
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS: Net investment income
Class O shares............. (5,160,678) (8,610,093) -- --
Class A shares............. (1,164,003) (2,388,760) (4,670,703) (12,466,331)
Class B shares............. -- -- (1,055,304) (4,682,782)
Class C shares............. (161,582) (318,865) (424,045) (1,564,172)
Class R shares............. -- -- (2,791) (3,942)
------------ ------------ ------------ ------------
Net decrease in net assets
resulting from dividends and
distributions............... (6,486,263) (11,317,718) (6,152,843) (18,717,227)
------------ ------------ ------------ ------------
CAPITAL STOCK
TRANSACTIONS: Net proceeds from shares sold:
Class A shares............. 6,709,067 8,461,712 72,881,288 89,446,461
Class B shares............. -- -- 9,536,857 7,876,880
Class C shares............. 3,427,816 2,009,142 6,171,123 13,818,333
Class R shares............. -- -- 15,615 6,595
Dividends and distributions
reinvested:
Class O shares............. 1,057,662 1,697,713 -- --
Class A shares............. 456,571 819,637 2,493,441 8,919,796
Class B shares............. -- -- 785,985 3,073,203
Class C shares............. 43,829 75,612 299,295 530,907
Class R shares............. -- -- 2,758 3,840
Cost of shares redeemed:
Class O shares............. (15,458,293) (40,070,923) -- --
Class A shares............. (14,435,471) (27,719,716) (53,055,530) (140,910,685)
Class B shares............. -- -- (16,164,345) (28,090,811)
Class C shares............. (3,893,287) (12,326,541) (6,762,314) (8,437,377)
Class R shares............. -- -- (4,488) (69,483)
------------ ------------ ------------ ------------
Net increase (decrease) in net
assets resulting from
capital stock
transactions................ (22,092,106) (67,053,364) 16,199,685 (53,832,341)
------------ ------------ ------------ ------------
Decrease in net assets............. (36,972,757) (99,722,314) (20,702,208) (134,148,374)
NET ASSETS: Beginning of year.................. 91,343,428 191,065,742 98,743,844 232,892,218
------------ ------------ ------------ ------------
End of year........................ $ 54,370,671 $ 91,343,428 $ 78,041,636 $ 98,743,844
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Undistributed net investment
income...................... $ 448,815 $ 2,928,407 $ 850,950 $ 3,999,755
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</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
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
APRIL 30, 1999 APRIL 30, 1998 APRIL 30, 1999 APRIL 30, 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
CAPITAL STOCK
TRANSACTIONS: Shares sold:
Class A shares............. 1,143,386 1,196,510 14,850,897 13,723,148
Class B shares............. -- -- 1,946,743 1,254,106
Class C shares............. 544,088 275,260 1,308,333 2,123,191
Class R shares............. -- -- 3,367 1,138
Shares issued for dividends and
distributions reinvested:
Class O shares............. 188,009 243,622 -- --
Class A shares............. 80,055 118,404 609,643 1,554,110
Class B shares............. -- -- 193,117 541,057
Class C shares............. 7,462 10,533 76,743 95,751
Class R shares............. -- -- 678 672
Shares redeemed:
Class O shares............. (2,738,860) (5,756,722) -- --
Class A shares............. (2,580,491) (3,945,162) (11,235,997) (21,201,003)
Class B shares............. -- -- (3,428,678) (4,189,733)
Class C shares............. (701,666) (1,673,545) (1,546,743) (1,423,063)
Class R shares............. -- -- (1,111) (9,912)
------------ ------------ ------------ ------------
Net increase (decrease) in shares
outstanding................. (4,058,017) (9,531,100) 2,776,992 (7,530,538)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</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
ENDED ENDED
APRIL 30, 1999 APRIL 30, 1998
------------------------------ ------------------------------
CLASS O CLASS A CLASS C CLASS O CLASS A CLASS C
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
YEAR..................... $ 6.06 $ 6.06 $ 6.06 $ 7.77 $ 7.77 $ 7.74
-------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income (1)...... 0.30 0.29 0.26 0.43 0.42 0.37
Net realized and unrealized
gain (loss) on
investments, put options
purchased, futures
transactions and foreign
currency transactions.... (0.94) (0.95) (0.97) (1.54) (1.55) (1.54)
-------- -------- -------- -------- -------- --------
Total from investment
operations........... (0.64) (0.66) (0.71) (1.11) (1.13) (1.17)
-------- -------- -------- -------- -------- --------
LESS DIVIDENDS AND
DISTRIBUTIONS
Dividends from net investment
income................... (0.48) (0.46) (0.41) (0.60) (0.58) (0.51)
Distributions from realized
gains on foreign currency
transactions............. -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total dividends
and distributions.... (0.48) (0.46) (0.41) (0.60) (0.58) (0.51)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF YEAR... $ 4.94 $ 4.94 $ 4.94 $ 6.06 $ 6.06 $ 6.06
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Total investment return (2).... (11.32)% (11.56)% (12.42)% (14.88)% (15.11)% (15.61)%
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
RATIOS/SUPPLEMENTARY DATA
Net assets, end of year (000
omitted)................. $ 45,803 $ 7,858 $ 710 $ 71,692 $ 17,871 $ 1,780
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Ratio of expenses to average
net assets............... 1.49% 1.75% 2.48% 1.31% 1.55% 2.29%
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Decrease reflected in above
expense ratios due to
waiver of administrative
fees..................... 0.14% 0.14% 0.14% 0.01% 0.01% 0.01%
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Ratio of net investment income
to average net assets.... 5.29% 5.05% 4.14% 6.01% 5.79% 5.08%
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Portfolio turnover rate........ 130% 130% 130% 227% 227% 227%
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
<CAPTION>
FOR THE YEAR
ENDED
APRIL 30, 1997
--------------------------------
CLASS O CLASS A CLASS C
---------- -------- --------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
YEAR..................... $ 8.78 $ 8.78 $ 8.77
---------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income (1)...... 0.78 0.54 0.45
Net realized and unrealized
gain (loss) on
investments, put options
purchased, futures
transactions and foreign
currency transactions.... (1.19) (0.96) (0.95)
---------- -------- --------
Total from
investment
operations........... (0.41) (0.42) (0.50)
---------- -------- --------
LESS DIVIDENDS AND
DISTRIBUTIONS
Dividends from net investment
income................... (0.47) (0.46) (0.41)
Distributions from realized
gains on foreign currency
transactions............. (0.13) (0.13) (0.12)
---------- -------- --------
Total dividends
and distributions.... (0.60) (0.59) (0.53)
---------- -------- --------
NET ASSET VALUE, END OF YEAR... $ 7.77 $ 7.77 $ 7.74
---------- -------- --------
---------- -------- --------
Total investment return (2).... (4.85)% (5.10)% (5.94)%
---------- -------- --------
---------- -------- --------
RATIOS/SUPPLEMENTARY DATA
Net assets, end of year (000
omitted)................. $ 134,719 $ 43,327 $ 13,020
---------- -------- --------
---------- -------- --------
Ratio of expenses to average
net assets............... 1.18% 1.43% 2.14%
---------- -------- --------
---------- -------- --------
Decrease reflected in above
expense ratios due to
waiver of administrative
fees..................... -- -- --
---------- -------- --------
---------- -------- --------
Ratio of net investment income
to average net assets.... 6.80% 6.55% 5.81%
---------- -------- --------
---------- -------- --------
Portfolio turnover rate........ 126% 126% 126%
---------- -------- --------
---------- -------- --------
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
Comstock Partners Funds, Inc. Strategy 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
ENDED ENDED
APRIL 30, 1996 APRIL 30, 1995
------------------------------ -------------------
CLASS O CLASS A CLASS C+ CLASS O CLASS A
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR.................. $ 9.10 $ 9.10 $ 9.00 $ 9.40 $ 9.41
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (1)........................... 0.76 0.57 0.37 0.66 0.52
Net realized and unrealized gain (loss) on
investments, put options purchased, futures
transactions and foreign currency
transactions.................................. (0.53) (0.36) (0.22) (0.44) (0.34)
-------- -------- -------- -------- --------
Total from investment operations...... 0.23 0.21 0.15 0.22 0.18
-------- -------- -------- -------- --------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income................ (0.55) (0.53) (0.38) (0.52) (0.49)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF YEAR........................ $ 8.78 $ 8.78 $ 8.77 $ 9.10 $ 9.10
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total investment return (2)......................... 2.66% 2.40% 1.96%(3) 2.39% 1.94%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
RATIOS/SUPPLEMENTARY DATA
Net assets, end of year (000 omitted)............... $224,148 $ 53,652 $ 317 $329,624 $ 65,874
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Ratio of expenses to average net assets............. 1.23% 1.48% 2.28%(4) 1.14% 1.46%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Ratio of net investment income to average net
assets........................................ 6.56% 6.33% 5.79%(4) 6.19% 5.83%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Portfolio turnover rate............................. 96% 96% 96% 100% 100%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>
+ 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) Based on average shares outstanding.
(2) Total investment returns exclude the effects of sales loads
and assume reinvestment of dividends and distributions.
(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.
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 YEAR ENDED
APRIL 30, 1999
--------------------------------------
CLASS A CLASS B CLASS C CLASS R
------- ------- ------- --------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD............................. $ 5.06 $ 4.99 $ 4.80 $ 5.05
------- ------- ------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)........ 0.14(1) 0.11(1) 0.10(1) 0.15(1)
Net realized and unrealized gain
(loss) on investments, put options
purchased, futures transactions,
short sale transactions and foreign
currency transactions.............. (1.40) (1.38) (1.32) (1.40)
------- ------- ------- --------
Total from investment
operations....................... (1.26) (1.27) (1.22) (1.25)
------- ------- ------- --------
LESS DIVIDENDS
Dividends from net investment
income............................. (0.31) (0.25) (0.26) (0.32)
------- ------- ------- --------
NET ASSET VALUE, END OF PERIOD...... $ 3.49 $ 3.47 $ 3.32 $ 3.48
------- ------- ------- --------
------- ------- ------- --------
Total investment return (2)......... (25.80)% (26.19)% (26.22)% (25.67)%
------- ------- ------- --------
------- ------- ------- --------
RATIOS/SUPPLEMENTARY DATA
Net assets, end of period (000
omitted)........................... $59,246 $13,752 $ 5,014 $ 29
------- ------- ------- --------
------- ------- ------- --------
Ratio of expenses to average
net assets......................... 1.47% 2.21% 2.18% 1.24%
------- ------- ------- --------
------- ------- ------- --------
Ratio of interest expense and
dividends on securities sold short
to average net assets.............. 0.72% 0.85% 0.78% 0.72%
------- ------- ------- --------
------- ------- ------- --------
Ratio of net investment income to
average net assets................. 3.31% 2.46% 2.54% 3.56%
------- ------- ------- --------
------- ------- ------- --------
Portfolio turnover rate............. 465% 465% 465% 465%
------- ------- ------- --------
------- ------- ------- --------
<CAPTION>
FOR THE YEAR ENDED
APRIL 30, 1998
-----------------------------------------
CLASS A CLASS B CLASS C CLASS R
---------- ------- -------- -------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD............................. $ 8.62 $ 8.45 $ 8.31 $ 8.62
---------- ------- -------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)........ 0.31(1) 0.25(1) 0.23(1) 0.33(1)
Net realized and unrealized gain
(loss) on investments, put options
purchased, futures transactions,
short sale transactions and foreign
currency transactions.............. (2.91) (2.85) (2.78) (2.91)
---------- ------- -------- -------
Total from investment
operations....................... (2.60) (2.60) (2.55) (2.58)
---------- ------- -------- -------
LESS DIVIDENDS
Dividends from net investment
income............................. (0.96) (0.86) (0.96) (0.99)
---------- ------- -------- -------
NET ASSET VALUE, END OF PERIOD...... $ 5.06 $ 4.99 $ 4.80 $ 5.05
---------- ------- -------- -------
---------- ------- -------- -------
Total investment return (2)......... (31.48)% (32.01)% (32.10)% (31.28)%
---------- ------- -------- -------
---------- ------- -------- -------
RATIOS/SUPPLEMENTARY DATA
Net assets, end of period (000
omitted)........................... $ 64,452 $26,235 $ 8,029 $ 28
---------- ------- -------- -------
---------- ------- -------- -------
Ratio of expenses to average
net assets......................... 1.35% 2.10% 2.08% 1.11%
---------- ------- -------- -------
---------- ------- -------- -------
Ratio of interest expense and
dividends on securities sold short
to average net assets.............. 0.24% 0.24% 0.21% 0.26%
---------- ------- -------- -------
---------- ------- -------- -------
Ratio of net investment income to
average net assets................. 4.49% 3.74% 3.70% 4.73%
---------- ------- -------- -------
---------- ------- -------- -------
Portfolio turnover rate............. 359% 359% 359% 359%
---------- ------- -------- -------
---------- ------- -------- -------
<CAPTION>
FOR THE YEAR ENDED
APRIL 30, 1997
-----------------------------------------
CLASS A CLASS B CLASS C CLASS R
---------- -------- ------- -------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD............................. $ 10.54 $ 10.38 $ 10.24 $ 10.53
---------- -------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)........ 0.59 0.54 0.57 0.82(1)
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)
---------- -------- ------- -------
Total from investment
operations....................... (1.33) (1.39) (1.34) (1.31)
---------- -------- ------- -------
LESS DIVIDENDS
Dividends from net investment
income............................. (0.59) (0.54) (0.59) (0.60)
---------- -------- ------- -------
NET ASSET VALUE, END OF PERIOD...... $ 8.62 $ 8.45 $ 8.31 $ 8.62
---------- -------- ------- -------
---------- -------- ------- -------
Total investment return (2)......... (12.97)% (13.69)% (13.47)% (12.83)%
---------- -------- ------- -------
---------- -------- ------- -------
RATIOS/SUPPLEMENTARY DATA
Net assets, end of period (000
omitted)........................... $ 160,834 $ 64,671 $ 7,271 $ 117
---------- -------- ------- -------
---------- -------- ------- -------
Ratio of expenses to average
net assets......................... 1.28% 2.03% 2.07% 1.19%
---------- -------- ------- -------
---------- -------- ------- -------
Ratio of interest expense and
dividends on securities sold short
to average net assets.............. 0.51% 0.50% 0.47% 0.38%
---------- -------- ------- -------
---------- -------- ------- -------
Ratio of net investment income to
average net assets................. 6.16% 5.52% 6.02% 8.65%
---------- -------- ------- -------
---------- -------- ------- -------
Portfolio turnover rate............. 399% 399% 399% 399%
---------- -------- ------- -------
---------- -------- ------- -------
</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 SEVEN
MONTHS ENDED
APRIL 30, 1996
--------------------------------------------------
CLASS A CLASS B CLASS C CLASS R
-------- ------- ------- -------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD................. $ 10.61 $ 10.41 $ 10.41 $ 10.62
-------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income...... 0.22 0.18 0.44 0.30
Net realized and unrealized
gain (loss) on
investments, put options
purchased, futures
transactions, short sale
transactions and foreign
currency transactions..... 0.17 0.16 (0.12) 0.09
-------- ------- ------- -------
Total from investment
operations.............. 0.39 0.34 0.32 0.39
-------- ------- ------- -------
LESS DIVIDENDS
Dividends from net
investment income......... (0.46) (0.37) (0.49) (0.48)
-------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD.................... $ 10.54 $ 10.38 $ 10.24 $ 10.53
-------- ------- ------- -------
-------- ------- ------- -------
Total investment return
(2)....................... 3.81% 3.36% 3.30% 3.97%
-------- ------- ------- -------
-------- ------- ------- -------
RATIOS/SUPPLEMENTARY DATA
Net assets, end of period
(000 omitted)............. $241,472 $81,786 $ 3,531 $ 1
-------- ------- ------- -------
-------- ------- ------- -------
Ratio of operating expenses
to average net assets..... 0.75%(3) 1.18%(3) 1.28%(3) 0.61%(3)
-------- ------- ------- -------
-------- ------- ------- -------
Ratio of interest expense
and dividends on
securities sold short to
average net assets........ 0.18%(3) 0.19%(3) 0.18%(3) 0.17%(3)
-------- ------- ------- -------
-------- ------- ------- -------
Ratio of net investment
income to average net
assets.................... 2.13%(3) 1.70%(3) 1.71%(3) 2.28%(3)
-------- ------- ------- -------
-------- ------- ------- -------
Portfolio turnover rate.... 56%(3) 56%(3) 56%(3) 56%(3)
-------- ------- ------- -------
-------- ------- ------- -------
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994
------------------------------------------------------ -----------------------
CLASS A CLASS B CLASS C+ CLASS R+ CLASS A CLASS B
---------- ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD................. $ 11.88 $ 11.69 $ 10.64 $ 10.84 $ 11.42 }$ 11.32
---------- ------- ------- ------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income...... 0.36 0.31 0.02 0.04 0.24 0.23
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
---------- ------- ------- ------- -------- --------
Total from investment
operations.............. (1.01) (1.07) (0.23) (0.22) 0.70 0.61
---------- ------- ------- ------- -------- --------
LESS DIVIDENDS
Dividends from net
investment income......... (0.26) (0.21) -- -- (0.24) (0.24)
---------- ------- ------- ------- -------- --------
NET ASSET VALUE, END OF
PERIOD.................... $ 10.61 $ 10.41 $ 10.41 $ 10.62 $ 11.88 $ 11.69
---------- ------- ------- ------- -------- --------
---------- ------- ------- ------- -------- --------
Total investment return
(2)....................... (8.58)% (9.27)% (2.26)% (2.03)% 6.14% 5.35%
---------- ------- ------- ------- -------- --------
---------- ------- ------- ------- -------- --------
RATIOS/SUPPLEMENTARY DATA
Net assets, end of period
(000 omitted)............. $ 271,052 $87,847 $ 1 $ 1 $402,708 $108,532
---------- ------- ------- ------- -------- --------
---------- ------- ------- ------- -------- --------
Ratio of operating expenses
to average net assets..... 1.24% 1.99% 0.26%(3) 0.14%(3) 1.21% 1.99%
---------- ------- ------- ------- -------- --------
---------- ------- ------- ------- -------- --------
Ratio of interest expense
and dividends on
securities sold short to
average net assets........ 0.45% 0.45% 0.06%(3) 0.04%(3) 0.39% 0.40%
---------- ------- ------- ------- -------- --------
---------- ------- ------- ------- -------- --------
Ratio of net investment
income to average net
assets.................... 3.61% 2.86% 0.23%(3) 0.38%(3) 2.06% 1.39%
---------- ------- ------- ------- -------- --------
---------- ------- ------- ------- -------- --------
Portfolio turnover rate.... 55% 55% 55% 55% 46% 46%
---------- ------- ------- ------- -------- --------
---------- ------- ------- ------- -------- --------
</TABLE>
+ Class C shares and Class R shares were introduced on August
22, 1995.
(1) Based on average shares outstanding.
(2) 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.
(3) Not annualized.
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, Inc. 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 and in certain cases, contingent deferred sales charges. 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 and distributions 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 two
or more dealers. Options written are valued at the last asked price.
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 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.
Options--The Funds are authorized to write and purchase call and put options.
When a Fund writes an option, an amount equal to the premium received by the
Fund is reflected as an asset and an equivalent liability. The amount of the
liability is subsequently marked to market to reflect the current market value
of the option written. When a security is purchased or sold through an exercise
of an option, the related premium paid (or received) is added to (or deducted
from) the basis of the security acquired or deducted from (or added to) the
proceeds of the security sold. When an option expires (or the Fund enters into a
closing transaction), the Fund realizes a gain or loss on the option to the
extent of the premiums received or paid (or gain or loss to the extent the cost
of the closing transaction exceeds the premium paid or received). Written and
purchased options are non-income producing investments.
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 transaction gains (losses) 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.
<PAGE>
(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. Under the terms of the custody
agreement, the Strategy Fund and the Capital Value Fund received net earnings
credits of $3,259 and $85, respectively, during the year ended April 30, 1999
based on available cash balances left on deposit. Income earned under this
arrangement is included in interest income.
(f) Dividends and distributions--Dividends and distributions payable by the
Funds are accrued on the ex-dividend date.
(g) Reclassification of net assets--During the year ended April 30, 1999, the
Capital Value Fund reclassified $9,094,494 between accumulated net realized
losses and paid in capital and the Strategy Fund reclassified $320,562 between
accumulated net realized losses and undistributed net investment income. These
reclassifications were the result of permanent book to tax differences,
primarily from foreign currency transactions and passive foreign investment
companies with respect to the Strategy Fund and the expiration of capital loss
carryforwards for the Capital Value Fund. The results of operations and net
assets were not affected by these reclassifications.
(h) 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.
(i) Use of estimates--The Funds' financial statements are prepared in
accordance with generally accepted accounting principles which may require the
use of estimates and assumptions. Actual results could differ from these
estimates.
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 receives
from the Company, on behalf of the Capital Value Fund, a monthly fee 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.
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, which is effective through August 30, 1999, 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, which is effective through August 30, 1999, 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 receives 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. Effective August 31, 1999, Princeton
Administrators L.P. ("Princeton") will assume all administrative responsibility
for the Capital Value Fund.
Under the terms of an Administration Agreement between the Company, on behalf of
the Strategy Fund, and 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. Princeton agreed to voluntarily reduce through December
31, 1999 the minimum fee to $125,000 per annum.
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. For
the year ended April 30, 1999, such compensation amounted to $156,943 for the
Capital Value Fund and $93,620 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, 1999, $172,081 and $34,816 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
<PAGE>
Class C shares of such Fund. During the year ended April 30, 1999, $160,017 and
$59,035 were charged for distributing Capital Value Fund's Class B and Class C
shares, respectively, and $53,339 and $19,678 were charged for shareholder
servicing for Capital Value Fund's Class B and Class C shares, respectively.
For the same period, $16,116 and $5,372 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. Each director who is not an "affiliated
person" as defined in the 1940 Act receives from the Company an annual fee of
$20,000 per year.
3. PURCHASES AND SALES OF INVESTMENTS:
Purchases and sales of investments, excluding short-term and US Government
securities, for the year ended April 30, 1999 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
-------------- --------------
<S> <C> <C>
Strategy Fund:...................................... $ 9,040,606 $ 14,156,820
------------ ------------
------------ ------------
Capital Value Fund:
Long transactions........................... $ 9,843,168 $ 14,538,261
Short sale transactions..................... 95,645,385 87,045,587
------------ ------------
$105,488,553 $101,583,848
------------ ------------
------------ ------------
</TABLE>
The Capital Value Fund engages 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, 1999 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, 1999 were as follows:
Strategy Fund:
<TABLE>
<CAPTION>
REALIZED UNREALIZED
GAINS (LOSSES) LOSSES
-------------- --------------
<S> <C> <C>
Long-term investments............................... $ (6,583,387) $ (1,375,515)
Short-term investments.............................. (13,812) --
Put options purchased............................... (12,256,910) (2,969,551)
Put options written................................. 64,819 --
Financial futures contracts......................... 183,490 --
Foreign currency transactions....................... (258,095) --
------------ ------------
$(18,863,895) $ (4,345,066)
------------ ------------
------------ ------------
</TABLE>
Capital Value Fund:
<TABLE>
<CAPTION>
REALIZED UNREALIZED
GAINS (LOSSES) GAINS (LOSSES)
-------------- --------------
<S> <C> <C>
Long-term investments............................... $ (7,746,098) $ (638,778)
Short sale transactions............................. (4,513,603) 185,355
Short-term investments.............................. 81,890 (19,734)
Put options purchased............................... (22,097,902) (3,445,354)
Put options written................................. 189,578 --
Financial futures contracts......................... (6,740,283) (68,350)
Foreign currency transactions....................... 232 --
------------ ------------
$(40,826,186) $ (3,986,861)
------------ ------------
------------ ------------
</TABLE>
In addition, the following tables summarize the Strategy Fund's and the Capital
Value Fund's call options written for the period ended April 30, 1999.
<TABLE>
<CAPTION>
OPTIONS TERMINATED
----------------------------
NUMBER OF PREMIUMS NET REALIZED
STRATEGY FUND CONTRACTS RECEIVED COST GAIN
------------- --------- -------- ------- ------------
<S> <C> <C> <C> <C>
Contracts Outstanding April 30,
1998......................... -- --
Contracts Written.............. 93 $64,819
Contracts Terminated:
Expired................ 93 64,819 -- $ 64,819
------- -------- ------- --------
Contracts Outstanding April 30,
1999........................... -- -- -- $ 64,819
------- -------- ------- --------
------- -------- ------- --------
</TABLE>
<TABLE>
<CAPTION>
CAPITAL VALUE FUND
------------------
<S> <C> <C> <C> <C>
Contracts Outstanding April 30,
1998......................... -- --
Contracts Written.............. 272 $189,578
Contracts Terminated:
Expired................ 272 189,578 -- $189,578
------- -------- ------- --------
Contracts Outstanding April 30,
1999........................... -- -- -- $189,578
------- -------- ------- --------
------- -------- ------- --------
</TABLE>
<PAGE>
As of April 30, 1999, the cost of investments of each Fund for Federal income
tax purposes was substantially the same as the cost for financial reporting
purposes. The following summarizes the net unrealized appreciation
(depreciation) on investments, put options purchased, futures transactions and
short sale transactions for each Fund at April 30, 1999:
<TABLE>
<CAPTION>
GROSS GROSS
APPRECIATION DEPRECIATION NET
------------ ------------ ------------
<S> <C> <C> <C>
Strategy Fund............................ -- $(4,345,066) $ (4,345,066)
Capital Value Fund....................... $ 683,545 $(4,670,406) $ (3,986,861)
</TABLE>
The following summarizes the capital loss carryforwards of each Fund at April
30, 1999:
<TABLE>
<CAPTION>
EXPIRING IN FISCAL YEAR STRATEGY FUND CAPITAL VALUE FUND
- ----------------------- ---------------- ------------------
<S> <C> <C>
2000 $ 3,345,000 $ 29,800,000
2001 8,777,000 17,800,000
2002 -- 56,700,000
2003 -- 9,200,000
2004 12,520,000 15,800,000
2005 14,913,000 14,200,000
2006 14,076,000 57,400,000
2007 26,320,000 48,900,000
----------- ------------
$79,951,000 $249,800,000
----------- ------------
----------- ------------
</TABLE>
4. SUBSEQUENT EVENTS:
In May 1999 the Company's Board of Directors declared ordinary income dividends
for the Strategy Fund as follows:
<TABLE>
<CAPTION>
AMOUNT PER SHARE
- ------------------------------
<S> <C> <C> <C> <C>
CLASS O CLASS A CLASS C PAYABLE DATE RECORD DATE
- -------- --------- --------- ----------------- -----------------
$0.02115 $0.02006 $0.01686 May 28, 1999 May 20, 1999
</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, respectively, Comstock Partners
Strategy Fund and Comstock Partners Capital Value Fund) as of April 30, 1999,
and the related statements of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period
then ended and financial highlights, with respect to Comstock Partners Strategy
Fund, for each of the four 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 the year 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, 1999 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, 1999, the results of their operations for the year then ended, the
changes in their net assets for each of the two years in the period then ended,
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 11, 1999
<PAGE>
- --------------------------------------------------------------------------------
Comstock Partners Funds, Inc. 1999
FEDERAL TAX INFORMATION (Unaudited)
Of the ordinary income distributions paid by the Funds during the fiscal year
ended April 30, 1999, 1.45% and 0.76% qualify for the dividends received
deduction for corporations for the Strategy Fund and the 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:
PERCENTAGE OF FEDERAL OBLIGATIONS*
--------------------------------------
FUND QUARTER ENDED STRATEGY FUND CAPITAL VALUE FUND
- ------------------ ------------- ------------------
7/31/98 87.56% 70.44%
10/31/98 79.47 62.64
1/31/99 92.11 76.16
4/30/99 95.35 80.84
Of each Fund's ordinary income distributions paid during the fiscal year ended
April 30, 1999, 80.23% and 74.24% was attributable to federal obligations for
the Strategy Fund and the 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.
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
425 Lexington Avenue
New York, NY 10017-3909
OFFICERS & DIRECTORS
Charles L. Minter,
Chief Executive Officer and
Chairman of the Board
Martin Weiner, President
M. Bruce Adelberg, Director
Robert M. Smith, Director
Robert C. Ringstad, Vice President,
Treasurer, Chief Financial Officer
and 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>
Comstock Partners Funds, Inc.
993 Lenox Drive
Suite 106
Lawrenceville, NJ 08648
107/634/607
503/502 A 994
