[LOGO]
COMSTOCK PARTNERS
FUNDS, INC.
------------------------------------------------
COMSTOCK PARTNERS
STRATEGY FUND
COMSTOCK PARTNERS
CAPITAL VALUE FUND
SEMI-ANNUAL REPORT
OCTOBER 31, 1999
Comstock Partners Funds, Inc.
993 Lenox Drive
Suite 106
Lawrenceville, NJ 08648
107/634/607
503/502 A 9910
[LOGO] Printed on post-consumer recycled paper
<PAGE>
[LOGO]
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
CUSTODIAN
THE BANK OF NEW YORK
90 Washington Street
New York, NY 10286
ADMINISTRATOR
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 and
Chief Financial Officer
M. Bruce Adelberg, Director
Robert M. Smith, Director
Robert C. Ringstad, Vice President and
Treasurer
Carolyn Matlin, 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 six months ended October 31, 1999, the Comstock Partners Strategy
Fund's Class O, A and C shares posted total returns of -9.40%, -9.52% and
- -9.89%, respectively, and the Comstock Partners Capital Value Fund's Class A, B,
C and R shares posted total returns of -8.60%, -9.22%, -8.73% and -8.33%,
respectively, based upon net asset value per share. During the same period, the
Standard & Poor's 500 Composite Stock Price Index (S&P 500) posted a total
return of 2.74% and the Lehman Brothers Government/Corporate Bond Index fell
0.55%.*
As you are aware from past shareholder correspondence, both Funds have been
positioned to benefit from a severe bear market in U.S. stocks. The unfavorable
results described in the preceding paragraph are a result of positioning these
two funds to benefit from a decline in the U.S. stock market. We believe the
number of negative factors affecting the U.S. stock market has now become so
numerous that it is highly likely that a severe bear market is close at hand. We
begin with the view that, as measured by earnings and dividends, this is by far
the most overvalued market of the past century. In addition, breadth is
crumbling, interest rates are rising, inflation is stirring and sentiment
remains overly complacent. The S&P 500 peaked in July and although it just
recently surpassed that peak it has essentially gone nowhere since March. We
believe this negative mix is too great a burden for the market to bear and that
a major decline is imminent.
Comstock Partners has been bearish for a considerable period of time. The
main reasons for our early bearishness were perceived overvaluation, extreme
positive sentiment and excessive speculation. Based on historical evidence we
believe that this would have been enough to stop the market in its tracks and
cause a significant decline. What we underestimated, however, was investor
determination to participate in the market no matter what the valuation. For the
initial part of the great bull move there was good reason for the market rise,
but for the past few years we feel that stocks have risen on their own momentum
and fundamentals such as price-to-earnings ratios and dividend yields have been
virtually ignored.
We still believe that valuation, sentiment and speculation are important
signs that the stock market is unsustainably high, although in this cycle at
least these indicators have proven to be poor indicators in timing the peak.
More recently, however, in our view two other indicators have turned decidedly
negative: the direction of interest rates and overall monetary policy and the
internal condition of the market itself. In this connection we note that
interest rates have been rising for 13 months since October 1998, and that
monetary policy turned to a tightening mode in June 1999. In addition, since
April 1998 more stocks have been declining than advancing (resulting in negative
breadth). Declining breadth indicates that money flows into the market have
declined so much that only a small minority of stocks are continuing to climb.
When combined with rising interest rates, signs of inflation, high valuation,
complacent sentiment and excessive speculation, we consider it highly likely
that an important bear market is imminent.
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 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. The CLCFs are calculated annually at each Fund's
fiscal year-end. (An expiration schedule with respect to the CLCFs of each Fund
is outlined in Note 3 to the Financial Statements.)
<PAGE>
On December 14, 1999, the Board of Directors of Comstock Partners Funds,
Inc. (the "Company") unanimously approved proposals to engage affiliates of
Gabelli Asset Management Inc. as investment adviser and distributor for each of
the Funds, subject to shareholder approval at a special meeting of shareholders
to be held early in the year 2000. The Board's actions follow agreements
recently entered into by Comstock Partners, Inc., the Funds' investment adviser,
and Charles Minter, the owner of Comstock Partners, with Gabelli Funds, LLC,
under which Comstock Partners will sell substantially all of its assets to
Gabelli Funds, and Charles Minter and Martin Weiner will be employed by Gabelli
Funds and will continue to serve as co-portfolio managers of the Funds. The
proposed new investment advisory agreements would provide for a single fee
covering investment advisory and administrative services, which would be 0.85%
of average daily net assets for the Strategy Fund and 1.00% of average daily net
assets for the Capital Value Fund. Gabelli Funds would waive a portion of its
management fees for the first two years to maintain expense ratios for the Funds
at 1999 levels (other than extraordinary expenses) with respect to the amount of
assets held by each Fund at the time each new advisory agreement goes into
effect.
We strongly believe that the U.S. market is extremely overvalued. As a
result, the Funds have been and are currently structured to benefit from a U.S.
stock market decline. 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. Thank you for your continued support.
Sincerely,
Comstock Partners, Inc.
Lawrenceville, New Jersey
December 17, 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.
- --------------------------------------------------------------------------------
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>
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Comstock Partners Funds, Inc.
Strategy Fund Schedule of Investments (unaudited) As of October 31, 1999
<TABLE>
<CAPTION>
S&P MOODY'S SHARES HELD/ VALUE
RATING RATING FACE AMOUNT ISSUE (NOTE 1A)
<S> <C> <C> <C> <C> <C>
BONDS
U.S. Government U.S. Treasury Bonds:
Obligations -- 95.7% AAA Aaa $ 3,000,000 6.500% due 11/15/26 $ 3,034,689
AAA Aaa 5,000,000 6.625% due 2/15/27 5,139,065
AAA Aaa 9,950,000 6.375% due 8/15/27 9,915,802
-----------
18,089,556
-----------
AAA Aaa 20,500,000 U.S. Treasury Notes 8.500% due 11/15/00 21,095,792
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN BONDS (cost $41,517,109) -- 95.7% 39,185,348
- ----------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS
Country Funds -- 0.7% 77,600 Lazard Vietnam Fund, Ltd. (a) 54,320
324,915 Vietnam Enterprise Investment Fund, Ltd.,
Class R (a)(b) 220,942
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN COMMON STOCKS (cost $411,462) -- 0.7% 275,262
- ----------------------------------------------------------------------------------------------------------------------------
Total investments (cost $41,928,571) -- 96.4% 39,460,610
Put options purchased (cost $1,776,769) -- 1.9%+ 757,725
Other assets less liabilities -- 1.7% 716,687
-----------
Net Assets -- 100.0% $40,935,022
===========
<FN>
+ Put options purchased as of October 31, 1999 are as follows:
</FN>
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION DATE/ VALUE
CONTRACTS ISSUE EXERCISE PRICE (NOTE 1A)
<C> <C> <S> <C>
215 S&P 500 Index Dec. 99/1275 $ 274,125
83 S&P 500 Index Dec. 99/1300 141,100
100 S&P 500 Index Mar. 00/1175 215,000
50 S&P 500 Index Mar. 00/1200 127,500
----------
Total put options purchased
(cost $1,776,769) $ 757,725
==========
<FN>
(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 October 31,
1999, this security amounted to $220,942, or 0.54% of net assets.
</FN>
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
Comstock Partners Funds, Inc.
Capital Value Fund Schedule of Investments (unaudited) As of October 31, 1999
<TABLE>
<CAPTION>
SHARES
S&P MOODY'S HELD/ VALUE
RATING RATING FACE AMOUNT ISSUE (NOTE 1A)
<S> <C> <C> <C> <C> <C>
COMMON STOCKS
Country Funds -- 0.4% 87,000 Lazard Vietnam Fund, Ltd. (a) $ 60,900
324,915 Vietnam Enterprise Investment Fund, Ltd.,
Class R (a)(b) 220,942
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN COMMON STOCKS (cost $404,162) -- 0.4% 281,842
- ----------------------------------------------------------------------------------------------------------------------------
SHORT-TERM SECURITIES (C)
U.S. Government U.S. Treasury Bills:
Obligations -- 96.3% AAA Aaa $ 9,085,000 4.50% due 11/04/99 (d)(e) 9,079,341
AAA Aaa 9,464,000 4.59% due 11/04/99 9,458,105
AAA Aaa 166,000 4.39% due 11/12/99 165,729
AAA Aaa 796,000 4.61% due 11/18/99 794,114
AAA Aaa 2,126,000 4.79% due 11/26/99 2,118,817
AAA Aaa 5,000,000 4.47% due 12/23/99 (d)(e) 4,964,296
AAA Aaa 1,600,000 4.61% due 12/23/99 1,588,575
AAA Aaa 600,000 4.62% due 12/23/99 595,715
AAA Aaa 4,270,000 4.66% due 12/23/99 4,239,509
AAA Aaa 36,400,000 4.92% due 04/06/00 35,606,261
AAA Aaa 1,000,000 4.96% due 04/06/00 978,194
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SHORT-TERM SECURITIES (cost $69,612,469) -- 96.2% 69,588,656
- ----------------------------------------------------------------------------------------------------------------------------
Total investments (cost $70,016,631) -- 96.7% 69,870,498
Put options purchased (cost $5,082,612) -- 3.2%+ 2,368,525
Variation margin on open futures contracts -- (0.4%)++ (317,935)
Other assets less liabilities -- 0.5% 360,008
-----------
Net Assets -- 100.0% $72,281,096
===========
<FN>
+ Put options purchased as of October 31, 1999 are as follows:
</FN>
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION DATE/ VALUE
CONTRACTS ISSUE EXERCISE PRICE (NOTE 1A)
<C> <C> <S> <C>
880 S&P 500 Index Dec. 99/1275 $1,122,000
137 S&P 500 Index Dec. 99/1300 232,900
200 S&P 500 Index Mar. 00/1200 510,000
170 S&P 500 Index Mar. 00/1225 503,625
----------
Total Put Options Purchased
(cost $5,082,612) $2,368,525
==========
<FN>
++ Open futures contracts as of October 31, 1999 are as follows:
</FN>
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF VALUE UNREALIZED
CONTRACTS ISSUE EXPIRATION DATE (NOTE 1A) DEPRECIATION
<S> <C> <C> <C> <C> <C>
FUTURES PURCHASED: 18 Euro Currency Unit Dec. 99 $2,378,925 $ (49,500)
28 Swiss Franc Currency Unit Dec. 99 2,311,400 (33,600)
---------- ---------
Total Open Futures
Contracts
(cost $4,773,425) $4,690,325 $ (83,100)
========== =========
<FN>
(a) Non-income producing.
(b) Securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities
may be resold in transactions exempt from registration, normally to qualified institutional buyers. At October
31, 1999, this security amounted to $220,942 or 0.31% 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.
</FN>
</TABLE>
See notes to financial statements.
<PAGE>
- -----------------------------------------------------------------
Comstock Partners Funds, Inc.
Capital Value Fund Statement of Securities Sold Short (unaudited)
As of October 31, 1999
<TABLE>
<CAPTION>
VALUE
COMMON STOCKS SHARES ISSUE (NOTE 1A)
<S> <C> <C> <C>
Banking and Financial -- 10.3% 30,000 A.G. Edwards, Inc. $ 901,875
25,000 Ameritrade Holding Corporation, Class A 406,250
12,300 Bank of America Corporation 791,812
22,000 E* Trade Group, Inc. 523,875
15,000 First Union Corporation 640,313
19,542 Fleet Boston Corporation 852,520
18,000 National Discount Brokers Group, Inc. 430,875
36,000 The Bear Stearns Companies, Inc. 1,534,500
13,000 The Charles Schwab Corporation 506,187
42,000 United Asset Management Corporation 871,500
------------
7,459,707
------------
Consumer -- 3.9% 15,600 NIKE, Inc., Class B 880,425
18,600 PepsiCo, Inc. 645,187
22,400 The Coca-Cola Company 1,321,600
------------
2,847,212
------------
Foreign Index -- 1.3% 20,000 WEBS, France Index Series 482,500
20,000 WEBS, Germany Index Series 440,000
------------
922,500
------------
Retail -- 3.4% 8,600 Costco Wholesale Corporation 690,688
48,700 Mattel, Inc. 651,363
34,000 Office Depot, Inc. 422,875
28,000 Walgreen Co. 705,250
------------
2,470,176
------------
Technology -- 7.1% 26,000 Dell Computer Corporation 1,043,250
10,000 Intel Corporation 774,375
12,000 International Business Machines Corporation 1,180,500
17,000 Lucent Technologies Inc. 1,092,250
11,000 Microsoft Corporation 1,018,187
------------
5,108,562
------------
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES SOLD SHORT (proceeds $21,104,551)-- 26.0% $18,808,157
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
Comstock Partners Funds, Inc. Statements of Assets and Liabilities (unaudited)
As of October 31, 1999
<TABLE>
<CAPTION>
STRATEGY CAPITAL
FUND VALUE FUND
------------ ------------
<S> <C> <C>
ASSETS:
Investments at value (cost $41,928,571 and $70,016,631, respectively) (Note 1a)................ $ 39,460,610 $ 69,870,498
Put options purchased (cost $1,776,769 and $5,082,612, respectively) (Note 1a)................. 757,725 2,368,525
Cash........................................................................................... 152,358 128,970
Receivable from brokers for proceeds on securities sold short.................................. -- 20,619,460
Receivables:
Interest................................................................................... 1,099,698 29,726
Capital stock sold......................................................................... 81,918 37,973
Prepaid expenses and other assets.............................................................. 5,882 6,944
------------ ------------
Total assets............................................................................... 41,558,191 93,062,096
------------ ------------
LIABILITIES:
Payables:
Short sales (proceeds $21,104,551)......................................................... -- 18,808,157
Capital stock redeemed..................................................................... 300,769 1,406,925
Dividends to shareholders (Note 1f)........................................................ 150,434 --
Variation margin on open futures contracts................................................. -- 317,935
Investment advisory fees (Note 2).......................................................... 21,498 26,800
Administrative fees (Note 2)............................................................... 10,587 16,750
Service and Distribution Plan fees (Note 2)................................................ 1,567 27,990
Accrued expenses and other liabilities......................................................... 138,314 176,443
------------ ------------
Total liabilities.......................................................................... 623,169 20,781,000
------------ ------------
NET ASSETS..................................................................................... $ 40,935,022 $ 72,281,096
============ ============
NET ASSETS CONSIST OF:
Paid in capital............................................................................ $138,348,503 $354,732,080
Undistributed net investment income........................................................ 133,559 2,192,308
Accumulated net realized loss on investments, put options purchased, futures and
short sale transactions.................................................................. (94,060,035) (283,996,366)
Net unrealized appreciation on short sale transactions..................................... -- 2,296,394
Net unrealized depreciation on investments, put options purchased and
futures transactions..................................................................... (3,487,005) (2,943,320)
------------ ------------
NET ASSETS..................................................................................... $ 40,935,022 $ 72,281,096
============ ============
SHARES OF COMMON STOCK OUTSTANDING:
Class O shares:
150 million of $0.001 par value authorized............................................... 7,993,255 --
============ ============
Class A shares:
200 million of $0.001 par value authorized............................................... 1,258,228 --
============ ============
125 million of $0.001 par value authorized............................................... -- 17,556,765
============ ============
Class B shares:
125 million of $0.001 par value authorized............................................... -- 3,763,718
============ ============
Class C shares:
200 million of $0.001 par value authorized............................................... 86,888 --
============ ============
125 million of $0.001 par value authorized............................................... -- 1,426,368
============ ============
Class R shares:
125 million of $0.001 par value authorized............................................... -- 5,548
============ ============
NET ASSET VALUE PER SHARE:
Class O shares:
$35,039,091 / 7,993,255 shares........................................................... $ 4.38 --
============ ============
Class A shares:
$5,514,992 / 1,258,228 shares and $56,080,505 / 17,556,765 shares,
respectively........................................................................... $ 4.38 $ 3.19
============ ============
Class B shares:
$11,867,645 / 3,763,718 shares........................................................... -- $ 3.15
============ ============
Class C shares:
$380,939 / 86,888 shares and $4,315,244 / 1,426,368 shares,
respectively........................................................................... $ 4.38 $ 3.03
============ ============
Class R shares:
$17,702 / 5,548 shares................................................................... -- $ 3.19
============ ============
</TABLE>
See notes to financial statements.
<PAGE>
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Comstock Partners Funds, Inc.
Statements of Operations for the Six Months Ended October 31, 1999 (unaudited)
<TABLE>
<CAPTION>
STRATEGY CAPITAL
FUND VALUE FUND
------------ ------------
<S> <C> <C>
INVESTMENT INCOME (NOTE 1E):
Interest and discount earned........................ $ 1,511,985 $ 2,161,240
------------ ------------
Total investment income......................... 1,511,985 2,161,240
------------ ------------
EXPENSES:
Investment advisory fees (Note 2)................... 142,867 156,978
Transfer agent fees (Note 2)........................ 138,048 89,195
Professional fees................................... 96,910 100,762
Administrative fees (Note 2)........................ 62,842 32,671
Printing and shareholder reports.................... 16,358 22,234
Registration fees................................... 13,172 27,788
Service and Distribution Plan fees (Note 2)......... 11,320 163,785
Directors' fees and expenses........................ 9,481 9,990
Insurance........................................... 6,511 5,247
Custodian fees...................................... 2,621 5,944
Dividends on securities sold short.................. -- 112,632
Sub-investment advisory fees (Note 2)............... -- 91,617
Other operating expenses............................ 532 1,039
------------ ------------
Total expenses.................................. 500,662 819,882
------------ ------------
NET INVESTMENT INCOME............................... 1,011,323 1,341,358
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTES 1B, 1E & 3):
Net realized loss on investments, put options
purchased and futures
transactions.................................... (6,511,868) (8,255,612)
Net realized loss on short sale transactions........ -- (3,422,666)
Change in net unrealized depreciation
on investments, put options purchased and
futures transactions............................ 858,061 1,228,896
Change in net unrealized appreciation on short sale
transactions........................................ -- 2,111,039
------------ ------------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS....................... $ (4,642,484) $ (6,996,985)
============ ============
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
Comstock Partners Funds, Inc. Statements of Changes in Net Assets (unaudited)
<TABLE>
<CAPTION>
STRATEGY FUND CAPITAL VALUE FUND
--------------------------------- ---------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
OCTOBER 31, 1999 YEAR ENDED OCTOBER 31, 1999 YEAR ENDED
(UNAUDITED) APRIL 30, 1999 (UNAUDITED) APRIL 30, 1999
---------------- -------------- ---------------- --------------
<S> <C> <C> <C> <C> <C>
OPERATIONS: Net investment income.............. $ 1,011,323 $ 4,006,671 $ 1,341,358 $ 3,004,038
Net realized loss on investments,
put options purchased and
futures transactions........ (6,511,868) (18,605,800) (8,255,612) (36,312,815)
Net realized loss on short sale
transactions................ -- -- (3,422,666) (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........ 858,061 6,462,751 1,228,896 10,410,516
Change in net unrealized
appreciation on short sale
transactions................ -- -- 2,111,039 (3,337,189)
Change in net unrealized
appreciation (depreciation)
on foreign currency
transactions................ -- 85 -- (229)
------------ ------------ ------------ ------------
Net decrease in net assets
resulting from operations... (4,642,484) (8,394,388) (6,996,985) (30,749,050)
------------ ------------ ------------ ------------
DIVIDENDS TO
SHAREHOLDERS: Net investment income
Class O shares............. (863,132) (5,160,678) -- --
Class A shares............. (133,186) (1,164,003) -- (4,670,703)
Class B shares............. -- -- -- (1,055,304)
Class C shares............. (9,699) (161,582) -- (424,045)
Class R shares............. -- -- -- (2,791)
------------ ------------ ------------ ------------
Net decrease in net assets
resulting from dividends.... (1,006,017) (6,486,263) -- (6,152,843)
------------ ------------ ------------ ------------
CAPITAL STOCK
TRANSACTIONS: Net proceeds from shares sold:
Class A shares............. 297,160 6,709,067 26,533,555 72,881,288
Class B shares............. -- -- 3,855,812 9,536,857
Class C shares............. 369,002 3,427,816 2,090,122 6,171,123
Class R shares............. -- -- -- 15,615
Dividends reinvested:
Class O shares............. 208,507 1,057,662 -- --
Class A shares............. 55,410 456,571 -- 2,493,441
Class B shares............. -- -- -- 785,985
Class C shares............. 2,575 43,829 -- 299,295
Class R shares............. -- -- -- 2,758
Cost of shares redeemed:
Class O shares............. (6,184,671) (15,458,293) -- --
Class A shares............. (1,903,937) (14,435,471) (24,356,901) (53,055,530)
Class B shares............. -- -- (4,548,292) (16,164,345)
Class C shares............. (631,194) (3,893,287) (2,328,435) (6,762,314)
Class R shares............. -- -- (9,416) (4,488)
------------ ------------ ------------ ------------
Net increase (decrease) in net
assets resulting from
capital stock
transactions................ (7,787,148) (22,092,106) 1,236,445 16,199,685
------------ ------------ ------------ ------------
Decrease in net assets............. (13,435,649) (36,972,757) (5,760,540) (20,702,208)
NET ASSETS: Beginning of period................ 54,370,671 91,343,428 78,041,636 98,743,844
------------ ------------ ------------ ------------
End of period...................... $ 40,935,022 $ 54,370,671 $ 72,281,096 $ 78,041,636
============ ============ ============ ============
Undistributed net investment
income...................... $ 133,559 $ 128,253 $ 2,192,308 $ 850,950
============ ============ ============ ============
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
Comstock Partners Funds, Inc. Statements of Changes in Net Assets
(Concluded) (unaudited)
<TABLE>
<CAPTION>
STRATEGY FUND CAPITAL VALUE FUND
--------------------------------- ---------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
OCTOBER 31, 1999 YEAR ENDED OCTOBER 31, 1999 YEAR ENDED
(UNAUDITED) APRIL 30, 1999 (UNAUDITED) APRIL 30, 1999
---------------- -------------- ---------------- --------------
<S> <C> <C> <C> <C> <C>
CAPITAL STOCK
TRANSACTIONS: Shares sold:
Class A shares............. 63,618 1,143,386 7,775,419 14,850,897
Class B shares............. -- -- 1,127,248 1,946,743
Class C shares............. 78,579 544,088 632,810 1,308,333
Class R shares............. -- -- -- 3,367
Shares issued for dividends
reinvested:
Class O shares............. 44,997 188,009 -- --
Class A shares............. 11,923 80,055 -- 609,643
Class B shares............. -- -- -- 193,117
Class C shares............. 553 7,462 -- 76,743
Class R shares............. -- -- -- 678
Shares redeemed:
Class O shares............. (1,327,542) (2,738,860) -- --
Class A shares............. (408,803) (2,580,491) (7,183,528) (11,235,997)
Class B shares............. -- -- (1,330,790) (3,428,678)
Class C shares............. (136,015) (701,666) (716,127) (1,546,743)
Class R shares............. -- -- (2,853) (1,111)
------------ ------------ ------------ ------------
Net increase (decrease) in shares
outstanding................. (1,672,690) (4,058,017) 302,179 2,776,992
============ ============ ============ ============
</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 SIX MONTHS
ENDED FOR THE YEAR
OCTOBER 31, 1999 ENDED
(UNAUDITED) APRIL 30, 1999
------------------------------ ------------------------------
CLASS O CLASS A CLASS C CLASS O CLASS A CLASS C
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD........................ $ 4.94 $ 4.94 $ 4.94 $ 6.06 $ 6.06 $ 6.06
-------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income (1)...... 0.20 0.18 0.16 0.30 0.29 0.26
Net realized and unrealized
gain (loss) on investments,
put options purchased, futures
transactions and foreign
currency transactions......... (0.66) (0.65) (0.65) (0.94) (0.95) (0.97)
-------- -------- -------- -------- -------- --------
Total from investment
operations.................. (0.46) (0.47) (0.49) (0.64) (0.66) (0.71)
-------- -------- -------- -------- -------- --------
LESS DIVIDENDS AND
DISTRIBUTIONS
Dividends from net investment
income........................ (0.10) (0.09) (0.07) (0.48) (0.46) (0.41)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF
PERIOD........................ $ 4.38 $ 4.38 $ 4.38 $ 4.94 $ 4.94 $ 4.94
======== ======== ======== ======== ======== ========
Total investment return (2).... (9.40)% (9.52)% (9.89)% (11.32)% (11.56)% (12.42)%
======== ======== ======== ======== ======== ========
RATIOS/SUPPLEMENTARY DATA
Net assets, end of period (000
omitted)...................... $ 35,039 $ 5,515 $ 381 $ 45,803 $ 7,858 $ 710
======== ======== ======== ======== ======== ========
Ratio of expenses to average
net assets.................... 2.06%(3) 2.30%(3) 3.01%(3) 1.49% 1.75% 2.48%
======== ======== ======== ======== ======== ========
Decrease reflected in above
expense ratios due to waiver
of administrative fees........ -- -- -- 0.14% 0.14% 0.14%
======== ======== ======== ======== ======== ========
Ratio of net investment income
to average net assets......... 4.29%(3) 4.05%(3) 3.32%(3) 5.29% 5.05% 4.14%
======== ======== ======== ======== ======== ========
Portfolio turnover rate........ 59% 59% 59% 130% 130% 130%
======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR
ENDED
APRIL 30, 1998
--------------------------------
CLASS O CLASS A CLASS C
---------- -------- --------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD........................ $ 7.77 $ 7.77 $ 7.74
---------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income (1)...... 0.43 0.42 0.37
Net realized and unrealized
gain (loss) on investments,
put options purchased, futures
transactions and foreign
currency transactions......... (1.54) (1.55) (1.54)
---------- -------- --------
Total from investment
operations.................. (1.11) (1.13) (1.17)
---------- -------- --------
LESS DIVIDENDS AND
DISTRIBUTIONS
Dividends from net investment
income........................ (0.60) (0.58) (0.51)
---------- -------- --------
NET ASSET VALUE, END OF
PERIOD........................ $ 6.06 $ 6.06 $ 6.06
========== ======== ========
Total investment return (2).... (14.88)% (15.11)% (15.61)%
========== ======== ========
RATIOS/SUPPLEMENTARY DATA
Net assets, end of period (000
omitted)...................... $ 71,692 $ 17,871 $ 1,780
========== ======== ========
Ratio of expenses to average
net assets.................... 1.31% 1.55% 2.29%
========== ======== ========
Decrease reflected in above
expense ratios due to waiver
of administrative fees........ 0.01% 0.01% 0.01%
========== ======== ========
Ratio of net investment income
to average
net assets.................... 6.01% 5.79% 5.08%
========== ======== ========
Portfolio turnover rate........ 227% 227% 227%
========== ======== ========
</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 FOR THE YEAR
ENDED ENDED ENDED
APRIL 30, 1997 APRIL 30, 1996 APRIL 30, 1995
------------------------------ ------------------------------ -------------------
CLASS O CLASS A CLASS C CLASS O CLASS A CLASS C+ CLASS O CLASS A
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <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 $ 9.41
-------- -------- -------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income (1).... 0.78 0.54 0.45 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................ (1.19) (0.96) (0.95) (0.53) (0.36) (0.22) (0.44) (0.34)
-------- -------- -------- -------- -------- -------- -------- --------
Total from investment
operations................ (0.41) (0.42) (0.50) 0.23 0.21 0.15 0.22 0.18
-------- -------- -------- -------- -------- -------- -------- --------
LESS DIVIDENDS AND
DISTRIBUTIONS
Dividends from net investment
income...................... (0.47) (0.46) (0.41) (0.55) (0.53) (0.38) (0.52) (0.49)
Distributions from realized
gains on foreign currency
transactions................ (0.13) (0.13) (0.12) -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- --------
Total dividends and
distributions............. (0.60) (0.59) (0.53) (0.55) (0.53) (0.38) (0.52) (0.49)
-------- -------- -------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF
PERIOD...................... $ 7.77 $ 7.77 $ 7.74 $ 8.78 $ 8.78 $ 8.77 $ 9.10 $ 9.10
======== ======== ======== ======== ======== ======== ======== ========
Total investment return (2).. (4.85)% (5.10)% (5.94)% 2.66% 2.40% 1.96%(4) 2.39% 1.94%
======== ======== ======== ======== ======== ======== ======== ========
RATIOS/SUPPLEMENTARY DATA
Net assets, end of period
(000 omitted)............... $134,719 $ 43,327 $ 13,020 $224,148 $ 53,652 $ 317 $329,624 $ 65,874
======== ======== ======== ======== ======== ======== ======== ========
Ratio of expenses to average
net assets.................. 1.18% 1.43% 2.14% 1.23% 1.48% 2.28%(3) 1.14% 1.46%
======== ======== ======== ======== ======== ======== ======== ========
Ratio of net investment
income to average net
assets...................... 6.80% 6.55% 5.81% 6.56% 6.33% 5.79%(3) 6.19% 5.83%
======== ======== ======== ======== ======== ======== ======== ========
Portfolio turnover rate...... 126% 126% 126% 96% 96% 96% 100% 100%
======== ======== ======== ======== ======== ======== ======== ========
<FN>
+ 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. Total investment returns for periods of less than one full year are not annualized.
(3) Annualized.
(4) 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.
</FN>
</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 SIX MONTHS ENDED
OCTOBER 31, 1999 (UNAUDITED)
-------------------------------------
CLASS A CLASS B CLASS C CLASS R
------- ------- ------- -------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.... $ 3.49 $ 3.47 $ 3.32 $ 3.48
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (1)............... 0.06 0.05 0.05 0.07
Net realized and unrealized gain (loss)
on investments, put options purchased,
futures transactions, short sale
transactions and foreign currency
transactions........................... (0.36) (0.37) (0.34) (0.36)
------- ------- ------- -------
Total from investment operations..... (0.30) (0.32) (0.29) (0.29)
------- ------- ------- -------
LESS DIVIDENDS
Dividends from net investment income.... -- -- -- --
------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD.......... $ 3.19 $ 3.15 $ 3.03 $ 3.19
======= ======= ======= =======
Total investment return (2)............. (8.60)% (9.22)% (8.73)% (8.33)%
======= ======= ======= =======
RATIOS/SUPPLEMENTARY DATA
Net assets, end of period (000
omitted)............................... $56,081 $11,868 $ 4,315 $ 18
======= ======= ======= =======
Ratio of expenses to average net
assets................................. 1.92% 2.72% 2.62% 1.47%
======= ======= ======= =======
Ratio of interest expense and dividends
on securities sold short to average net
assets................................. 0.29% 0.29% 0.29% 0.20%
======= ======= ======= =======
Ratio of net investment income to
average net assets..................... 3.59% 2.79% 2.89% 4.05%
======= ======= ======= =======
Portfolio turnover rate................. 0% 0% 0% 0%
======= ======= ======= =======
</TABLE>
<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 (1)............... 0.14 0.11 0.10 0.15
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%
========== ======= ======= =======
</TABLE>
<TABLE>
<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 (1)............... 0.31 0.25 0.23 0.33
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%
========== ======= ======= =======
</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 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.............. 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>
<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 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% 56% 56% 56%
========== ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
SEPTEMBER 30, 1995
------------------------------------------
CLASS A CLASS B CLASS C+ CLASS R+
---------- ------- -------- --------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD............................ $ 11.88 $ 11.69 $ 10.64 $ 10.84
---------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income.............. 0.36 0.31 0.02 0.04
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)
---------- ------- ------- -------
Total from investment
operations...................... (1.01) (1.07) (0.23) (0.22)
---------- ------- ------- -------
LESS DIVIDENDS
Dividends from net investment
income............................ (0.26) (0.21) -- --
---------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD..... $ 10.61 $ 10.41 $ 10.41 $ 10.62
========== ======= ======= =======
Total investment return (2)........ (8.58)% (9.27)% (2.26)% (2.03)%
========== ======= ======= =======
RATIOS/SUPPLEMENTARY DATA
Net assets, end of period (000
omitted).......................... $ 271,052 $87,847 $ 1 $ 1
========== ======= ======= =======
Ratio of expenses to average net
assets............................ 1.24% 1.99% 0.26%(3) 0.14%(3)
========== ======= ======= =======
Ratio of interest expense and
dividends on securities sold short
to average net assets............. 0.45% 0.45% 0.06%(3) 0.04%(3)
========== ======= ======= =======
Ratio of net investment income to
average net assets................ 3.61% 2.86% 0.23%(3) 0.38%(3)
========== ======= ======= =======
Portfolio turnover rate............ 55% 55% 55% 55%
========== ======= ======= =======
<FN>
+ 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.
</FN>
</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 Strategy Fund offers Class A and Class C shares. 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 period. Foreign currency transaction gains (losses) are
the result of settling (realized) or valuing (unrealized) assets or liabilities
expressed in foreign currencies into U.S. 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
estimates and assumptions. Actual results could differ from these estimates.
<PAGE>
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.
Through August 31, 1999, the Investment Adviser 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 managed the short-term
cash and cash equivalent investments of the Strategy Fund and provided
investment research and other advice regarding the Strategy Fund's portfolio.
The Sub-Investment Adviser also provided 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 paid the
Sub-Investment Adviser a monthly fee at an annual rate of .15% of the Strategy
Fund's average daily net assets.
Through August 31, 1999, The Dreyfus Corporation also acted 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 managed the short-term cash and cash equivalent
investments of the Capital Value Fund and provided investment research and other
advice regarding the Capital Value Fund's portfolio. In addition, the
Sub-Investment Adviser provided general advice regarding economic factors and
trends and acted 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 received 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 September 1, 1999, Princeton
Administrators L.P. ("Princeton") assumed all administrative responsibility for
the Capital Value Fund.
Under the terms of an Amended and Restated Administration Agreement between the
Company, on behalf of the Strategy Fund and the Capital Value 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 Funds, including
maintaining certain of the books and records of both of the Funds, preparing
certain reports and other documents required by United States federal, state and
other applicable laws and regulations to maintain the registration of the Funds
and their shares and providing the Funds with administrative office facilities.
For the services rendered to the Funds and the facilities furnished, each Fund
pays Princeton a monthly fee equal to the greater of (i) $125,000 per annum or
(ii) an annual rate equal to .25% of each Fund's average daily net assets up to
$100 million, .225% of each Fund's average daily net assets on the next $100
million, .20% of each Fund's average daily net assets on the next $400 million
and .175% of each Fund's average daily net assets in excess of $600 million.
The Company compensates Dreyfus Transfer, Inc. under a transfer agency agreement
for providing personnel and facilities to perform transfer agency services for
the Funds. For the six months ended October 31, 1999, such compensation amounted
to $89,195 for the Capital Value Fund and $48,942 for the Strategy Fund. Dreyfus
Transfer, Inc. is a wholly-owned subsidiary of The Dreyfus Corporation.
(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 Dreyfus Service Corporation or any affiliate
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
six months ended October 31, 1999, $76,184 and $8,328 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 six months ended
October 31, 1999, $47,269 and $18,431 were charged for distributing Capital
Value Fund's Class B and Class C shares, respectively, and $15,757 and $6,144
were charged for shareholder servicing for Capital Value Fund's Class B and
Class C shares, respectively. For the same period, $2,244 and $748 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 six months ended October 31, 1999 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
-------------- --------------
<S> <C> <C>
Strategy Fund:...................................... $26,860,886 $37,050,009
=========== ===========
Capital Value Fund:
Long transactions................................. $ -- $ 8,925,660
Short sale transactions........................... 27,200,922 29,721,335
----------- -----------
$27,200,922 $38,646,995
=========== ===========
</TABLE>
<PAGE>
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 U.S. Government securities sufficient to cover its short
position. Securities sold short at October 31, 1999 and their related market
values and proceeds are set forth in the Statement of Securities Sold Short.
Realized and unrealized losses as of October 31, 1999 were as follows:
Strategy Fund:
<TABLE>
<CAPTION>
REALIZED UNREALIZED
LOSSES LOSSES
-------------- --------------
<S> <C> <C>
Long-term investments............................... $ (1,950,703) $ (2,467,961)
Put options purchased............................... (4,561,165) (1,019,044)
------------ ------------
$ (6,511,868) $ (3,487,005)
============ ============
</TABLE>
Capital Value Fund:
<TABLE>
<CAPTION>
REALIZED UNREALIZED
GAINS (LOSSES) GAINS (LOSSES)
-------------- --------------
<S> <C> <C>
Long-term investments............................... $ (1,003,070) $ (122,320)
Short sale transactions............................. (3,422,666) 2,296,394
Short-term investments.............................. (5,325) (23,813)
Put options purchased............................... (6,014,730) (2,714,087)
Financial futures contracts......................... (1,232,487) (83,100)
------------ ------------
$(11,678,278) $ (646,926)
============ ============
</TABLE>
As of October 31, 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 October 31, 1999:
<TABLE>
<CAPTION>
GROSS GROSS
APPRECIATION DEPRECIATION NET
------------ ------------ -----------
<S> <C> <C> <C>
Strategy Fund............................. -- $(3,487,005) $(3,487,005)
Capital Value Fund........................ $2,811,614 $(3,458,540) $ (646,926)
</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 November 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
- -------- --------- --------- ------------------ ------------------
$0.01496 $0.01391 $0.01069 November 30, 1999 November 19, 1999
</TABLE>
