GABELLI COMSTOCK FUNDS, INC.
ONE CORPORATE CENTER
RYE, NY 10580
[RECYCLE LOGO] Printed on post-consumer recycled paper
[LOGO]
GABELLI COMSTOCK
FUNDS, INC.
------------------------------------------------
GABELLI COMSTOCK
STRATEGY FUND
GABELLI COMSTOCK
CAPITAL VALUE FUND
ANNUAL REPORT
APRIL 30, 2000
<PAGE>
GABELLI COMSTOCK FUNDS, INC.
GABELLI COMSTOCK STRATEGY FUND
GABELLI COMSTOCK CAPITAL VALUE FUND
One Corporate Center
Rye, NY 10580
INVESTMENT ADVISER
GABELLI FUNDS, LLC
One Corporate Center
Rye, NY 10580
CUSTODIAN
THE BANK OF NEW YORK
90 Washington Street
New York, NY 10286
DISTRIBUTOR
GABELLI & COMPANY, INC.
One Corporate Center
Rye, NY 10580
TRANSFER AGENT AND DIVIDEND
DISBURSING AGENT
STATE STREET BANK AND TRUST COMPANY
125 Franklin Street
Boston, MA 02108
SHAREHOLDER SERVICING AGENT
BOSTON FINANCIAL DATA SERVICES, INC.
P.O. Box 8308
Boston, MA 02266-8308
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
787 Seventh Avenue
New York, NY 10019
LEGAL COUNSEL
SKADDEN, ARPS, SLATE, MEAGHER
& FLOM LLP
919 Third Avenue
New York, NY 10036
OFFICERS & DIRECTORS
Charles L. Minter,
Chief Executive Officer and
Director
Martin Weiner, President and
Chief Financial Officer
Robert C. Ringstad, Vice President and
Treasurer
Carolyn Matlin, Secretary
M. Bruce Adelberg, Director
Anthony J. Colavita, Director
Vincent D. Enright, Director
Anthony R. Pustorino, Director
Werner J. Roeder, Director
Robert M. Smith, Director
Henry G. Van der Eb, Director
--------------------------------------------------------------------------------
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-GABELLI
<PAGE>
DEAR FELLOW SHAREHOLDER:
We are pleased to announce that the shareholders have approved the
proposals to engage affiliates of Gabelli Asset Management Inc. (Gabelli) of
Rye, New York as investment adviser and distributor for your Funds. These
proposals have been structured to increase each Fund's potential to generate
shareholder value over the long term and strengthen their competitive position
within the mutual fund industry. In connection with this change, the Funds have
been renamed Gabelli Comstock Capital Value Fund and Gabelli Comstock Strategy
Fund and several independent directors of other Gabelli mutual funds have been
added to the board for these Funds. Gabelli is a New York Stock Exchange listed,
widely recognized and respected provider of investment advisory services.
Gabelli manages approximately $22 billion in assets of mutual funds, closed-end
funds, private advisory accounts and partnerships.
Martin Weiner and Charles Minter are now employed by Gabelli and continue
to be co-portfolio managers of the Funds. We expect to maintain the bearish
strategies based upon our continuing view that we have entered a bear market.
The secular bull market in effect since 1982 was propelled to extremes in
the last few years by a positive feedback effect of numerous factors interacting
and reinforcing one another. When the market reverses itself, as may now be the
case, these same factors are then likely to unravel, resulting in a negative
feedback effect and a market far lower than it is today.
For the initial phase of the long bull market, which started in 1982, there
was good reason for the market to rise. Inflation and interest rates were
declining from historically high levels, price-earnings ratios were at the low
end of their range, and the economy was emerging from recession. By 1995
investors were able to look back at 5, 10, and 15-year periods and notice that
annual average returns were far above the returns that were available anywhere
else. Since that time fundamentals such as price-earnings ratios and dividend
yields have been virtually ignored and stocks have been rising on their own
momentum. In other words, they kept going up because they were going up.
As stocks have climbed, more and more investors have hopped on board by
increasing their debt--margin debt, credit cards and mortgages. Margin debt has
soared, particularly in the last six months, while mortgage debt as a percentage
of house prices is far higher than a few years ago, despite the rise in house
prices. Indexing has also been a factor enhancing stock prices. Observing that
the major indices were outperforming the broad list of stocks, investors piled
into index funds at a rapid rate, thereby exaggerating the moves of those
sectors of the market that were already soaring. This helped large-cap and
so-called New Economy stocks rise even further at the expense of small-cap and
Old Economy stocks. Active mutual funds also reinforced this strategy as money
poured into the top-performing funds and fled the underperformers. Thus the
top-performing stocks were boosted even more while the underperformers continued
to languish. The long market climb also increased the return of fixed-
obligation corporate pension funds to a point where the companies no longer had
to make any more contributions, and, in many cases, got back part of the gains.
This alone has become a significant portion of corporate earnings growth and
therefore helped the stock market.
Another factor responsible for boosting corporate earnings is the large
amount of equity investments held by major companies and the inclusion of gains
from stock sales in ordinary income. How many are aware that about one-half of
Microsoft's recently reported income gain came from investments? Intel and Cisco
also reported significant gains from equity investments while Chase's Private
Equity Group was responsible for over 40% of the bank's fourth quarter earnings.
The extremely high levels of the market and associated investor enthusiasm
allowed for the explosion of IPOs in technology, particularly in the Internet
area. Thus, numerous newly public companies with negative profits and cash flow
were supplied with huge amounts of assets, which they spent on labor,
infrastructure, marketing and advertising which further sparked the general
economy. The roaring market also created a significant wealth effect among
consumers, who sharply reduced their savings rate in order to accommodate
increased spending. Over the past four years the correlation between the stock
market and retail sales has been virtually 100 percent. All of these beneficial
effects increased corporate profits, which further boosted the stock market.
<PAGE>
Now the market is in transition, if not already in a bear trend. The
current market is exhibiting the signs of a classic textbook peak. The probable
top is characterized by extremely high valuation, an overheating economy, labor
shortages, creeping inflation, tightening monetary policy, poor breadth and
investor complacency. As the market turns down, all of the factors cited above,
which combined to form a huge positive feedback effect, will no longer provide
support, but instead will probably reverse and become a massive negative
feedback effect. With the market so highly overvalued and speculative, the
eventual bottom could be a long way down.
Because this report covers periods prior to the transactions with Gabelli,
it covers the performance of the Funds as the Comstock Partners Funds prior to
these transactions. Future reports will reflect operations as Gabelli Comstock
Funds. For the year ended April 30, 2000, the Comstock Partners Strategy Fund's
class O, A, and C shares posted total returns of -14.35%, -14.58%, and -14.89%
respectively, and the Comstock Partners Capital Value Fund class A, B, C, and R
shares posted total returns of -20.70%, -21.82%, -21.39%, and -20.49%
respectively.*
Sincerely,
/s/ Charles L. Minter /s/ Martin Weiner
Charles L. Minter Martin Weiner
Lawrenceville, New Jersey
May 28, 2000
*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 obtain current information about Gabelli Comstock Strategy Fund
and Gabelli Comstock Capital Value Fund and our investment strategy
through our internet web site
www.comstockfunds.com
or call our telephone information line 1-800-GABELLI. Please save this
information for future reference.
--------------------------------------------------------------------------------
<PAGE>
TOTAL RETURN BASED ON A $10,000 INVESTMENT -- COMSTOCK PARTNERS STRATEGY FUND
CLASS O SHARES*
<TABLE>
<CAPTION>
CLASS O SHARES S&P 500 INDEX LEHMAN GOVT/CORP BOND INDEX BLENDED INDEX
-------------- ------------- --------------------------- --------------
<S> <C> <C> <C>
9550 10000 10000 10000
10824 12554 10858 11452
12242 13879 11767 12498
13302 16324 13513 14475
14577 18615 14968 16199
15409 21334 17139 18249
16970 21416 17336 18726
17375 25156 18536 20712
17837 32756 20139 24066
16972 40989 21492 27235
14446 57823 23927 33154
12811 70441 25430 37040
10973 77577 25672 38582
</TABLE>
* The total return reflects the deduction of the maximum initial sales
charge of 4.5% when the Fund last offered Class O shares. The ending
value of investments in the Fund's Class A shares (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) 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 $10,731
and $10,876, 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, 2000)+
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
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 -14.35% -8.78% -1.09% 1.17%
With sales charge++ -18.20% -9.61% -1.54% 0.78%
---------------------------------------------------------------------------------------------------------------------
COMSTOCK PARTNERS STRATEGY FUND CLASS A
Without sales charge -14.58% -9.02% -1.31% +0.98%
With sales charge++ -18.42% -9.85% -1.76% +0.59%
---------------------------------------------------------------------------------------------------------------------
COMSTOCK PARTNERS STRATEGY FUND CLASS C
Without contingent deferred sales charge -14.89% -9.61% -2.08% +0.32%
With contingent deferred sales charge+++ -15.71% -9.61% -2.08% +0.32%
---------------------------------------------------------------------------------------------------------------------
<FN>
+ 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.
</FN>
</TABLE>
<PAGE>
TOTAL RETURN BASED ON A $10,000 INVESTMENT--COMSTOCK PARTNERS CAPITAL VALUE
FUND**** CLASS A SHARES*
S&P 500 INDEX CLASS A SHARES
------------- --------------
10000 9550
13223 13363
16728 15145
15641 17449
19221 19472
21243 22348
24978 22979
28475 23817
31100 24323
32752 24294
38464 23924
50068 23591
62646 20531
88371 14067
107661 10438
118567 8277
* 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 $8,133, $8,172 and $8,767,
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, 2000)+
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
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 -20.70% -19.12% -9.45% -4.54% -0.98%
With sales charge+++ -24.27% -19.86% -9.86% -4.87% -1.29%
------------------------------------------------------------------------------------------------------------------------
COMSTOCK PARTNERS CAPITAL VALUE FUND CLASS B
Without contingent deferred sales charge -21.82% -19.80% -10.02% -5.0% -1.41%
With contingent deferred sales charge++++ -24.94% -19.93% -10.02% -5.0% -1.41%
------------------------------------------------------------------------------------------------------------------------
COMSTOCK PARTNERS CAPITAL VALUE FUND CLASS C
Without contingent deferred sales charge -21.39% -19.72% -9.98% -4.97% 1.38%
With contingent deferred sales charge+++++ -22.17% -19.72% -9.98% -4.97% 1.38%
------------------------------------------------------------------------------------------------------------------------
COMSTOCK PARTNERS CAPITAL VALUE FUND CLASS R -20.49% -18.92% -9.34% -4.45% 0.90%
------------------------------------------------------------------------------------------------------------------------
<FN>
+ 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.
</FN>
</TABLE>
<PAGE>
--------------------------------------------------------------------------------
Comstock Partners Funds, Inc.
Strategy Fund Schedule of Investments As of April 30, 2000
<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 United States Treasury Notes:
Obligations -- 93.7% AAA Aaa $ 19,000,000 8.500% due 11/15/00 $19,213,750
AAA Aaa 5,400,000 6.375% due 1/31/02 5,371,315
AAA Aaa 5,400,000 6.000% due 8/15/09 5,271,750
----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN BONDS (cost $30,181,789) -- 93.7% 29,856,815
----------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS
Country Funds -- 0.3% 77,600 Lazard Vietnam Fund, Ltd. (a) 93,120
----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN COMMON STOCKS (cost $155,212) -- 0.3% 93,120
----------------------------------------------------------------------------------------------------------------------------
Total investments (cost $30,337,001) -- 94.0% 29,949,935
Put options purchased (cost $2,014,795) -- 3.5%+ 1,117,938
Other assets less liabilities -- 2.5% 787,008
-----------
Net Assets -- 100.0% $31,854,881
===========
<FN>
+ Put options purchased as of April 30, 2000 are as follows:
</FN>
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION DATE/ VALUE
CONTRACTS ISSUE EXERCISE PRICE (NOTE 1A)
<C> <C> <S> <C>
125 S&P 500 Index Jun. 00/1300 $ 112,500
100 S&P 500 Index Sep. 00/1200 135,000
50 S&P 500 Index Sep. 00/1225 81,875
75 S&P 500 Index Sep. 00/1275 168,750
85 S&P 500 Index Sep. 00/1350 302,813
80 S&P 500 Index Dec. 00/1300 317,000
----------
Total put options purchased
(cost $2,014,795) $1,117,938
==========
<FN>
* Ratings shown have not been audited by Ernst & Young LLP.
(a) Non-income producing.
</FN>
</TABLE>
See notes to financial statements.
<PAGE>
--------------------------------------------------------------------------------
Comstock Partners Funds, Inc.
Capital Value Fund Schedule of Investments As of April 30, 2000
<TABLE>
<CAPTION>
SHARES
S&P MOODY'S HELD/ VALUE
RATINGS* RATINGS* FACE AMOUNT ISSUE (NOTE 1A)
<S> <C> <C> <C> <C> <C>
COMMON STOCKS
Country Funds -- 0.2% 87,000 Lazard Vietnam Fund, Ltd. (a) $ 104,400
--------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN COMMON STOCKS (cost $147,912) -- 0.2% 104,400
--------------------------------------------------------------------------------------------------------------------------
SHORT-TERM SECURITIES (B)
U.S. Government United States Treasury Bills:
Obligations -- 90.7% AAA Aaa $46,000,000 5.845% due 10/05/00 (c)(d) 44,836,476
--------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SHORT-TERM SECURITIES (cost $44,827,428) -- 90.7% 44,836,476
--------------------------------------------------------------------------------------------------------------------------
Total investments (cost $44,975,340) -- 90.9% 44,940,876
Put options purchased (cost $4,235,220) -- 4.1%+ 2,010,062
Variation margin on open futures contracts -- 0.1%++ 73,000
Other assets less liabilities -- 4.9% 2,394,718
-----------
Net Assets -- 100.0% $49,418,656
===========
<FN>
+ Put options purchased as of April 30, 2000 are as follows:
</FN>
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION DATE/ VALUE
CONTRACTS ISSUE EXERCISE PRICE (NOTE 1A)
<C> <C> <S> <C>
525 S&P 500 Index Jun. 00/1300 $ 472,500
80 S&P 500 Index Sep. 00/1200 108,000
175 S&P 500 Index Sep. 00/1225 286,562
75 S&P 500 Index Sep. 00/1275 168,750
140 S&P 500 Index Sep. 00/1350 498,750
120 S&P 500 Index Dec. 00/1300 475,500
----------
Total Put Options Purchased
(cost $4,235,220) $2,010,062
==========
<FN>
++ Open futures contracts sold as of April 30, 2000 are as follows:
</FN>
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF VALUE UNREALIZED
CONTRACTS ISSUE EXPIRATION DATE (NOTE 1A) APPRECIATION
<S> <C> <C> <C> <C> <C>
40 S&P 500 Index Jun. 00 $14,600,000 $130,000
=========== ========
<FN>
* Ratings shown have not been audited by Ernst & Young LLP.
(a) Non-income producing.
(b) 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.
(c) Partially held by the broker as collateral for open short positions.
(d) 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 As of April 30, 2000
<TABLE>
<CAPTION>
VALUE
COMMON STOCKS SHARES ISSUE (NOTE 1A)
<S> <C> <C> <C>
Banking and Financial -- 2.6% 5,200 Merrill Lynch & Co., Inc. $ 530,075
42,000 United Asset Management Corporation 756,000
------------
1,286,075
------------
Communications -- 4.3% 3,700 Brocade Communications Systems, Inc. 458,800
4,500 Exodus Communications, Inc. 397,969
11,500 Global Crossing Ltd. 362,250
5,600 Level 3 Communications, Inc. 498,400
9,000 MCI WorldCom Inc. 408,937
------------
2,126,356
------------
Retail -- 2.1% 9,400 Amazon.com, Inc. 518,762
18,000 Walgreen Co. 506,250
------------
1,025,012
------------
Technology -- 14.2% 7,300 Cisco Systems, Inc. 506,095
5,400 CMGI Inc. 384,750
9,000 CNET Networks, Inc. 311,063
6,500 Electronic Data Systems Corporation 446,875
4,400 i2 Technologies, Inc. 568,700
6,300 Internet Capital Group, Inc. 266,963
4,200 JDS Uniphase Corporation 435,488
2,400 Juniper Networks, Inc. 510,450
6,500 Oracle Corporation 519,594
13,800 Sanchez Computer Associates, Inc. 267,375
5,100 Siebel Systems, Inc. 626,662
5,000 Software.com, Inc. 404,375
8,000 Tellabs, Inc. 438,500
5,600 Vitesse Semiconductors Corporation 381,150
7,500 Xilinx, Inc. 549,375
3,200 Yahoo! Inc. 416,800
------------
7,034,215
------------
U.S. Index -- 2.5% 13,000 Nasdaq-100 Shares 1,222,000
------------
---------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES SOLD SHORT (proceeds $14,435,403)-- 25.7% $12,693,658
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
<PAGE>
--------------------------------------------------------------------------------
Comstock Partners Funds, Inc.
Statements of Assets and Liabilities As of April 30, 2000
<TABLE>
<CAPTION>
STRATEGY CAPITAL
FUND VALUE FUND
------------ ------------
<S> <C> <C>
ASSETS:
Investments at value (cost $30,337,001 and
$44,975,340, respectively) (Note 1a).............. $ 29,949,935 $ 44,940,876
Put options purchased (cost $2,014,795 and
$4,235,220, respectively) (Note 1a)............... 1,117,938 2,010,063
Cash................................................ 158,167 414,864
Receivable from brokers for proceeds on securities
sold short........................................ -- 14,354,343
Receivables:
Interest........................................ 899,095 81,096
Capital stock sold.............................. 75,388 504,628
Variation margin on open futures contracts...... -- 73,000
Prepaid expenses.................................... 10,597 17,025
------------ ------------
Total assets.................................... 32,211,120 62,395,895
------------ ------------
LIABILITIES:
Payables:
Short sales (proceeds $14,435,403).............. -- 12,693,658
Dividends to shareholders (Note 1f)............. 136,366 --
Capital stock redeemed.......................... 61,907 129,520
Investment advisory fees (Note 2)............... 15,944 16,370
Administrative fees (Note 2).................... 10,246 10,231
Service and Distribution Plan fees (Note 2)..... 981 16,726
Accrued expenses and other liabilities.............. 130,795 110,734
------------ ------------
Total liabilities............................... 356,239 12,977,239
------------ ------------
NET ASSETS.......................................... $ 31,854,881 $ 49,418,656
============ ============
NET ASSETS CONSIST OF:
Paid in capital................................. $128,891,609 $311,662,521
Undistributed net investment income............. 133,511 2,514,279
Accumulated net realized loss on investments,
put options purchased, futures and short sale
transactions.................................. (95,886,316) (264,370,268)
Net unrealized appreciation on short sale
transactions.................................. -- 1,741,745
Net unrealized depreciation on investments, put
options purchased and futures transactions.... (1,283,923) (2,129,621)
------------ ------------
NET ASSETS.......................................... $ 31,854,881 $ 49,418,656
============ ============
SHARES OF COMMON STOCK OUTSTANDING:
Class O shares:
150 million of $0.001 par value authorized.... 6,896,318 --
============ ============
Class A shares:
200 million of $0.001 par value authorized.... 937,997 --
============ ============
125 million of $0.001 par value authorized.... -- 14,401,086
============ ============
Class B shares:
125 million of $0.001 par value authorized.... -- 2,923,151
============ ============
Class C shares:
200 million of $0.001 par value authorized.... 52,214 --
============ ============
125 million of $0.001 par value authorized.... -- 907,420
============ ============
Class R shares:
125 million of $0.001 par value authorized.... -- 1,619
============ ============
NET ASSET VALUE PER SHARE:
Class O shares:
$27,853,875 / 6,896,318 shares................ $ 4.04 --
============ ============
Class A shares:
$3,789,059 / 937,997 shares and $39,111,983 /
14,401,086 shares, respectively............. $ 4.04 $ 2.72
============ ============
Class B shares:
$7,935,958 / 2,923,151 shares................. -- $ 2.71
============ ============
Class C shares:
$211,947 / 52,214 shares and $2,366,327 /
907,420 shares, respectively................ $ 4.06 $ 2.61
============ ============
Class R shares:
$4,388 / 1,619 shares......................... -- $ 2.71
============ ============
</TABLE>
See notes to financial statements.
<PAGE>
--------------------------------------------------------------------------------
Comstock Partners Funds, Inc.
Statements of Operations for the Year Ended April 30, 2000
<TABLE>
<CAPTION>
STRATEGY CAPITAL
FUND VALUE FUND
------------ ------------
<S> <C> <C>
INVESTMENT INCOME (NOTE 1E):
Interest and discount earned........................ $ 2,805,609 $ 4,012,188
------------ ------------
Total investment income......................... 2,805,609 4,012,188
------------ ------------
EXPENSES:
Transfer agent fees (Note 2)........................ 250,886 191,308
Investment advisory fees (Note 2)................... 248,618 275,381
Professional fees................................... 188,920 201,316
Administrative fees (Note 2)........................ 125,000 106,673
Registration fees................................... 37,905 54,043
Printing and shareholder reports.................... 32,422 46,262
Directors' fees and expenses........................ 19,517 20,389
Service and Distribution Plan fees (Note 2)......... 18,338 285,676
Insurance........................................... 11,502 8,865
Custodian fees...................................... 7,032 21,641
Dividends on securities sold short.................. -- 192,870
Sub-investment advisory fees (Note 2)............... -- 91,616
Other operating expenses............................ 1,065 1,839
------------ ------------
Total expenses.................................. 941,205 1,497,879
------------ ------------
NET INVESTMENT INCOME............................... 1,864,404 2,514,309
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTES 1B, 1E & 3):
Net realized loss on investments, put options
purchased and futures transactions.............. (11,682,811) (15,365,820)
Net realized loss on short sale transactions........ -- (6,539,009)
Change in net unrealized depreciation
on investments, put options purchased and
futures transactions............................ 3,061,143 2,042,595
Change in net unrealized appreciation on short sale
transactions.................................... -- 1,556,390
------------ ------------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS....................... $ (6,757,264) $(15,791,535)
============ ============
</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, 2000 APRIL 30, 1999 APRIL 30, 2000 APRIL 30, 1999
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
OPERATIONS: Net investment income.......... $ 1,864,404 $ 4,006,671 $ 2,514,309 $ 3,004,038
Net realized loss on
investments, put options
purchased and futures
transactions................. (11,682,811) (18,605,800) (15,365,820) (36,312,815)
Net realized loss on short sale
transactions................. -- -- -- (4,513,603)
Net realized gain (loss) on
foreign currency
transactions................. -- (258,095) (6,539,009) 232
Change in net unrealized
depreciation on investments,
put options purchased and
futures transactions......... 3,061,143 6,462,751 2,042,595 10,410,516
Change in net unrealized
appreciation on short sale
transactions................. -- -- 1,556,390 (3,337,189)
Change in net unrealized
appreciation (depreciation)
on foreign currency
transactions................. -- 85 -- (229)
------------ ------------ ------------ ------------
Net decrease in net assets
resulting from operations.... (6,757,264) (8,394,388) (15,791,535) (30,749,050)
------------ ------------ ------------ ------------
DIVIDENDS TO
SHAREHOLDERS: Net investment income
Class O shares............... (1,610,240) (5,160,678) -- --
Class A shares............... (233,701) (1,164,003) (851,889) (4,670,703)
Class B shares............... -- -- (11,654) (1,055,304)
Class C shares............... (15,205) (161,582) -- (424,045)
Class R shares............... -- -- (340) (2,791)
------------ ------------ ------------ ------------
Net decrease in net assets
resulting from dividends..... (1,859,146) (6,486,263) (863,883) (6,152,843)
------------ ------------ ------------ ------------
CAPITAL STOCK
TRANSACTIONS: Net proceeds from shares sold:
Class A shares............... 444,503 6,709,067 32,351,340 72,881,288
Class B shares............... -- -- 4,853,966 9,536,857
Class C shares............... 414,162 3,427,816 2,438,625 6,171,123
Class R shares............... -- -- -- 15,615
Dividends reinvested:
Class O shares............... 414,230 1,057,662 -- --
Class A shares............... 94,722 456,571 491,960 2,493,441
Class B shares............... -- -- 6,822 785,985
Class C shares............... 4,230 43,829 -- 299,295
Class R shares............... -- -- 334 2,758
Cost of shares redeemed:
Class O shares............... (11,005,330) (15,458,293) -- --
Class A shares............... (3,445,035) (14,435,471) (39,944,149) (53,055,530)
Class B shares............... -- -- (8,005,008) (16,164,345)
Class C shares............... (820,862) (3,893,287) (4,140,687) (6,762,314)
Class R shares............... -- -- (20,765) (4,488)
------------ ------------ ------------ ------------
Net increase (decrease) in net
assets resulting from capital
stock transactions........... (13,899,380) (22,092,106) (11,967,562) 16,199,685
------------ ------------ ------------ ------------
Decrease in net assets......... (22,515,790) (36,972,757) (28,622,980) (20,702,208)
NET ASSETS: Beginning of year.............. 54,370,671 91,343,428 78,041,636 98,743,844
------------ ------------ ------------ ------------
End of year.................... $ 31,854,881 $ 54,370,671 $ 49,418,656 $ 78,041,636
============ ============ ============ ============
Undistributed net investment
income....................... $ 133,511 $ 128,253 $ 2,514,279 $ 850,950
============ ============ ============ ============
</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, 2000 APRIL 30, 1999 APRIL 30, 2000 APRIL 30, 1999
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
CAPITAL STOCK
TRANSACTIONS: Shares sold:
Class A shares............... 97,794 1,143,386 9,753,239 14,850,897
Class B shares............... -- -- 1,464,663 1,946,743
Class C shares............... 89,073 544,088 756,546 1,308,333
Class R shares............... -- -- -- 3,367
Shares issued for dividends
reinvested:
Class O shares............... 94,459 188,009 -- --
Class A shares............... 21,364 80,055 167,904 609,643
Class B shares............... -- -- 2,321 193,117
Class C shares............... 951 7,462 -- 76,743
Class R shares............... -- -- 115 678
Shares redeemed:
Class O shares............... (2,473,941) (2,738,860) -- --
Class A shares............... (772,651) (2,580,491) (12,484,941) (11,235,997)
Class B shares............... -- -- (2,511,093) (3,428,678)
Class C shares............... (181,581) (701,666) (1,358,811) (1,546,743)
Class R shares............... -- -- (6,897) (1,111)
------------ ------------ ------------ ------------
Net increase (decrease) in
shares outstanding........... (3,124,532) (4,058,017) (4,216,954) 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 YEAR FOR THE YEAR
ENDED ENDED
APRIL 30, 2000 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
YEAR............................... $ 4.94 $ 4.94 $ 4.94 $ 6.06 $ 6.06 $ 6.06
-------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (1)........... 0.20 0.19 0.15 0.30 0.29 0.26
Net realized and unrealized gain
(loss) on investments, put options
purchased, futures transactions and
foreign currency transactions...... (0.90) (0.90) (0.90) (0.94) (0.95) (0.97)
-------- -------- -------- -------- -------- --------
Total from investment
operations....................... (0.70) (0.71) (0.73) (0.64) (0.66) (0.71)
-------- -------- -------- -------- -------- --------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment
income............................. (0.20) (0.19) (0.15) (0.48) (0.46) (0.41)
Dividends from realized gains on
foreign currency transactions...... -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total dividends and
distributions.................... (0.20) (0.19) (0.15) (0.48) (0.46) (0.41)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF YEAR........ $ 4.04 $ 4.04 $ 4.06 $ 4.94 $ 4.94 $ 4.94
======== ======== ======== ======== ======== ========
Total investment return (2)......... (14.35)% (14.58)% (14.89)% (11.32)% (11.56)% (12.42)%
======== ======== ======== ======== ======== ========
RATIOS/SUPPLEMENTARY DATA
Net assets, end of year (000
omitted)........................... $ 27,854 $ 3,789 $ 212 $ 45,803 $ 7,858 $ 710
======== ======== ======== ======== ======== ========
Ratio of expenses to average net
assets............................. 2.23% 2.46% 3.16% 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................. 4.55% 4.28% 3.51% 5.29% 5.05% 4.14%
======== ======== ======== ======== ======== ========
Portfolio turnover rate............. 112% 112% 112% 130% 130% 130%
======== ======== ======== ======== ======== ========
<CAPTION>
FOR THE YEAR
ENDED
APRIL 30, 1998
-------------------------------------
CLASS O CLASS A CLASS C
----------- -------- --------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
YEAR............................... $ 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)
Dividends from realized gains on
foreign currency transactions...... -- -- --
----------- -------- --------
Total dividends and
distributions.................... (0.60) (0.58) (0.51)
----------- -------- --------
NET ASSET VALUE, END OF YEAR........ $ 6.06 $ 6.06 $ 6.06
=========== ======== ========
Total investment return (2)......... (14.88)% (15.11)% (15.61)%
=========== ======== ========
RATIOS/SUPPLEMENTARY DATA
Net assets, end of year (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
ENDED ENDED
APRIL 30, 1997 APRIL 30, 1996
---------------------------------- ----------------------------------
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..... $ 8.78 $ 8.78 $ 8.77 $ 9.10 $ 9.10 $ 9.00
-------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income
(1)................... 0.78 0.54 0.45 0.76 0.57 0.37
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)
-------- -------- -------- -------- -------- --------
Total from
investment
operations.......... (0.41) (0.42) (0.50) 0.23 0.21 0.15
-------- -------- -------- -------- -------- --------
LESS DIVIDENDS AND
DISTRIBUTIONS
Dividends from net
investment income..... (0.47) (0.46) (0.41) (0.55) (0.53) (0.38)
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)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF
YEAR.................. $ 7.77 $ 7.77 $ 7.74 $ 8.78 $ 8.78 $ 8.77
======== ======== ======== ======== ======== ========
Total investment return
(2)................... (4.85)% (5.10)% (5.94)% 2.66% 2.40% 1.96%(3)
======== ======== ======== ======== ======== ========
RATIOS/SUPPLEMENTARY
DATA
Net assets, end of year
(000 omitted)......... $134,719 $ 43,327 $ 13,020 $224,148 $ 53,652 $ 317
======== ======== ======== ======== ======== ========
Ratio of expenses to
average net assets.... 1.18% 1.43% 2.14% 1.23% 1.48% 2.28%(4)
======== ======== ======== ======== ======== ========
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% 6.56% 6.33% 5.79%(4)
======== ======== ======== ======== ======== ========
Portfolio turnover
rate.................. 126% 126% 126% 96% 96% 96%
======== ======== ======== ======== ======== ========
<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.
(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.
</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
YEAR ENDED
APRIL 30, 2000
----------------------------------------------
CLASS A CLASS B CLASS C CLASS R
------- ------- ------- -------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR...... $ 3.49 $ 3.47 $ 3.32 $ 3.48
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (1)............... 0.12 0.10 0.09 0.14
Net realized and unrealized gain (loss)
on investments, put options purchased,
futures transactions, short sale
transactions and foreign currency
transactions........................... (0.84) (0.86) (0.80) (0.85)
------- ------- ------- -------
Total from investment operations..... (0.72) (0.76) (0.71) (0.71)
------- ------- ------- -------
LESS DIVIDENDS
Dividends from net investment income.... (0.05) --++ -- (0.06)
------- ------- ------- -------
NET ASSET VALUE, END OF YEAR............ $ 2.72 $ 2.71 $ 2.61 $ 2.71
======= ======= ======= =======
Total investment return (2)............. (20.70)% (21.82)% (21.39)% (20.49)%
======= ======= ======= =======
RATIOS/SUPPLEMENTARY DATA
Net assets, end of year (000 omitted)... $39,112 $ 7,936 $ 2,366 $ 5
======= ======= ======= =======
Ratio of expenses to average net
assets................................. 2.01% 2.78% 2.71% 1.61%
======= ======= ======= =======
Ratio of interest expense and dividends
on securities sold short to average net
assets................................. 0.28% 0.28% 0.28% 0.23%
======= ======= ======= =======
Ratio of net investment income to
average net assets..................... 3.82% 3.04% 3.07% 4.13%
======= ======= ======= =======
Portfolio turnover rate................. 0% 0% 0% 0%
======= ======= ======= =======
<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 YEAR...... $ 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 YEAR............ $ 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 year (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 YEAR...... $ 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 YEAR............ $ 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 year (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%
======== ======= ======= =======
<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%
=========== ======= ======= =======
<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>
(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.
+ Class C shares and Class R shares were introduced on August 22, 1995.
++ Amount is less than $0.01 per share.
</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 investment strategies to increase or decrease the level of risk to
which the Funds are exposed more quickly and efficiently than transactions in
other types of instruments. 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
<PAGE>
(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.
(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
credit of $3,983 and $3,659, respectively, during the year ended April 30, 2000
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, 2000, the
Strategy Fund reclassified $3,344,662 from accumulated net realized losses to
paid in capital. The Capital Value Fund decreased paid in capital by
$29,865,552, decreased accumulated net realized losses by $29,852,649 and
increased undistributed net investment income by $12,903. These
reclassifications were the result of permanent book to tax differences from the
expiration of capital loss carryforwards with respect to the Strategy Fund and,
primarily, foreign currency transactions 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 United States 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.
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 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
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
<PAGE>
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 year ended April 30, 2000, such compensation amounted to
$157,327 for the Capital Value Fund and $91,924 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
year ended April 30, 2000, $134,204 and $13,821 were charged to the Class A
shares of Capital Value Fund and Strategy Fund, respectively.
Service and Distribution Plans -- Class B Shares and Class C Shares
Under the Class B and Class C Service and Distribution Plans, the Company, at
the expense of the Class B shares of the Capital Value Fund and Class C shares
of each Fund, as the case may be, (a) pays the Distributor for distributing the
Capital Value Fund's Class B shares and each Fund's Class C shares at an annual
rate of .75 of 1% of the value of the average daily net assets of Class B or
Class C of the applicable Fund and (b) pays the Distributor for the provision of
certain services to the holders of Class B shares and Class C shares, as the
case may be, a fee at the annual rate of .25 of 1% of the value of the average
daily net assets of Class B or Class C of such Fund. During the year ended April
30, 2000, $83,681 and $29,923 were charged for distributing Capital Value Fund's
Class B and Class C shares, respectively, and $27,894 and $9,974 were charged
for shareholder servicing for Capital Value Fund's Class B and Class C shares,
respectively. For the same period, $3,388 and $1,129 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, 2000 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
-------------- --------------
<S> <C> <C>
Strategy Fund:................................... $ -- $ 194,949
============ ============
Capital Value Fund:
Long transactions.............................. $ -- $ 194,949
Short sale transactions........................ 72,584,152 65,319,073
------------ ------------
$ 72,584,152 $ 65,514,022
============ ============
</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 U.S. Government securities sufficient to cover its short
position. Securities sold short at April 30, 2000 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, 2000 were as follows:
Strategy Fund:
<TABLE>
<CAPTION>
REALIZED UNREALIZED
LOSSES LOSSES
-------------- --------------
<S> <C> <C>
Long-term investments............................ $ (4,672,726) $ (387,066)
Put options purchased............................ (7,010,085) (896,857)
------------ ------------
$(11,682,811) $ (1,283,923)
============ ============
</TABLE>
<PAGE>
Capital Value Fund:
<TABLE>
<CAPTION>
REALIZED UNREALIZED
LOSSES GAINS (LOSSES)
-------------- --------------
<S> <C> <C>
Long-term investments............................ $ (1,064,371) $ (43,512)
Short sale transactions.......................... (6,539,009) 1,741,745
Short-term investments........................... (9,355) 9,048
Put options purchased............................ (12,292,084) (2,225,157)
Financial futures contracts...................... (2,000,010) 130,000
------------ ------------
$(21,904,829) $ (387,876)
============ ============
</TABLE>
As of April 30, 2000, 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, 2000:
<TABLE>
<CAPTION>
GROSS GROSS
APPRECIATION DEPRECIATION NET
------------ ------------ -----------
<S> <C> <C> <C>
Strategy Fund.......................... $ 54,422 $(1,338,345) $(1,283,923)
Capital Value Fund..................... $2,163,770 $(2,551,646) $ (387,876)
</TABLE>
The following summarizes the capital loss carryforwards of each Fund at April
30, 2000:
EXPIRING IN FISCAL YEAR STRATEGY FUND CAPITAL VALUE FUND
------------------------- ---------------- ------------------
2001 $ 8,777,000 $ 17,716,000
2002 -- 56,799,000
2003 -- 9,145,000
2004 12,520,000 15,769,000
2005 14,913,000 14,169,000
2006 14,076,000 57,497,000
2007 26,320,000 48,938,000
2008 15,124,000 36,909,000
------------ ------------
$ 91,730,000 $256,942,000
============ ============
4. SUBSEQUENT EVENTS:
In May 2000 the Company's Board of Directors declared ordinary income dividends
for the Strategy Fund as follows:
AMOUNT PER SHARE
-------------------------------------
CLASS O CLASS A CLASS C PAYABLE DATE RECORD DATE
--------- ---------- ---------- ------------------- ---------------
$0.01736 $0.01649 $0.01343 May 31, 2000 May 22, 2000
Effective May 23, 2000, after shareholder approval, Gabelli Funds LLC
("Gabelli") assumed the role of Investment Adviser and Administrator for both
Funds. As compensation for services and related expenses, the Strategy Fund will
pay Gabelli an annual fee of 0.85% of the Fund's daily average net assets,
computed daily and payable monthly. The Capital Value Fund will pay Gabelli an
annual fee of 1.0% of the Fund's daily average net assets, computed daily and
payable monthly. Gabelli has agreed to waive a portion of their fee (0.19%) for
the Capital Value Fund for up to the first two years, to the extent necessary,
in order to maintain the Fund's 1999 expense ratio. Also, Gabelli and Company,
Inc. entered into a distribution agreement with each of the Funds.
With the change in Investment Adviser, the Funds' names were changed to Gabelli
Comstock Strategy Fund and Gabelli Comstock Capital Value Fund.
Gabelli will subcontract, at its own expense, administrative responsibilities
that are not performed by the Funds' custodian, transfer agent and dividend
disbursing agent.
Beginning in fiscal year 2001, directors will earn an annual retainer of $5,000
plus $1,000 per meeting attended.
<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, 2000,
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 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.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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, 2000 by correspondence with
the custodian 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 present fairly, in all material respects, the financial position of each
of the Funds constituting Comstock Partners Funds, Inc. at April 30, 2000, 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 accounting
principles generally accepted in the United States.
/s/ Ernst & Young LLP
New York, New York
June 9, 2000
<PAGE>
--------------------------------------------------------------------------------
Comstock Partners Funds, Inc. 2000
FEDERAL TAX INFORMATION (UNAUDITED)
Of the ordinary income distributions paid by the Funds during the fiscal year
ended April 30, 2000, 0.30% and 1.04% 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 distributed
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 advisor to determine if any portions of the
dividends you received is exempt from state income tax.
Listed below are the percentages of total assets invested in Federal
obligations for each Fund as of the end of each quarter of the fiscal year:
<TABLE>
<CAPTION>
PERCENTAGE OF FEDERAL OBLIGATIONS*
--------------------------------------------
FUND QUARTER ENDED STRATEGY FUND CAPITAL VALUE FUND
------------------------------------ -------------- -------------------
<S> <C> <C>
7/31/99............................. 91.31% 73.37%
10/31/99............................ 94.29% 74.78%
1/31/00............................. 93.18% 73.35%
4/30/00............................. 92.69% 71.86%
</TABLE>
Of each Fund's ordinary income distributions paid during the fiscal year ended
April 30, 2000, 99.70% 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 Land Banks, Federal Home Loan Banks, and
the Student Loan Marketing Association. Repurchase agreements are not
included in this calculation.
