COMSTOCK FUNDS, INC.
SEMI-ANNUAL REPORT
OCTOBER 31, 2000
TO OUR SHAREHOLDERS,
The potential bear market that we discussed in our April 30 letter has now
become a reality. At the recent market low, the Nasdaq Composite was down 50%
from its peak and the S&P 500 was down 16%. Earlier this year, the stock market
exhibited the signs of a classic major top, characterized by extremely high
valuation, an overheating economy, labor shortages, creeping inflation, tight
monetary policy and poor breadth. Furthermore, the massive movement of the
general public into equities marked one of the great historical financial manias
in history, ranking with the U.S. market in 1929, the Japanese market in 1989,
as well as other great manias of past centuries. Despite the decline witnessed
to date, we believe the bear market still has a long way to go.
INVESTMENT PERFORMANCE*
For the six months ended October 31, 2000, the Comstock Capital Value
Fund's Class A, B, C and R shares posted total returns of 1.10%, 1.11%, 0.77%
and 1.85%, respectively. The Comstock Strategy Fund's Class O, A and C shares
declined 2.94%, 3.06%, and 3.44%, respectively. The Standard & Poor's ("S&P")
500 Index and the Lehman Brothers Government/Corporate Bond ("LBG/C") Index had
a total return of 1.02% and 2.04%, respectively, over the same six-month period.
Each index is an unmanaged indicator of investment performance. The Comstock
Capital Value Fund's Class A, B, C and R shares declined 12.29%, 12.92%, 13.20%,
and 11.66%, respectively, over the trailing twelve-month period. The Comstock
Strategy Fund's Class O, A and C shares declined 8.24%, 8.48%, and 8.79%,
respectively, over the same twelve-month period. The S&P 500 and the LGB/C Index
rose 6.08% and 7.13%, respectively, over the same twelve-month period.
COMMENTARY
Although the market has come down recently, it is still highly overvalued
by historic standards. For 71 years between 1926 and 1997, the S&P 500 sold at a
price-earnings ("PE") ratio between 7 on the low side and 21 on the high end
(excluding recessions or depressions), with an overall average of about 15. By
earlier this year, however, the PE ratio reached an astounding 32, a full 50%
higher than the
<PAGE>
peak during any previous bull market. Even now, the S&P 500 sells at a PE ratio
of 25, a level that is 19% higher than any previous bull market top and an
amazing 67% above its 74-year average. The Nasdaq Composite, with a much higher
percentage of technology stocks, is even more grossly overvalued. Until 1997, it
had never traded at a PE ratio of more than 45, and had earlier sold between 18
and 28 times earnings. The Nasdaq then exploded in a parabolic rise that carried
the PE ratio to 280 early this year, and even after a substantial decline, saw a
PE ratio of about 105 times earnings at its recent lows.
Six Federal Reserve Board tightenings totaling 175 basis points between
June 1999 and May 2000 have succeeded in slowing down the economy. In addition,
some 150 central bank interest rate hikes worldwide over the same period are now
slowing down the global economy as well. We are now witnessing either declining
rates of growth or outright declines in consumer spending, capital expenditures,
industrial production and employment. Corporate earnings estimates are coming
down rapidly. The downgrades are widespread, including both technology and the
old economy. The slowdown in technology is particularly significant, since this
area has been the main driver of economic growth in recent years. In the past
two months alone the estimated increases in S&P 500 fourth quarter earnings
estimates have dropped from 15% to 8%, and a slew of new downgrades appear
daily. Although most economists are still counting on a soft landing, the odds
of a hard landing are increasing rapidly. A study of history indicates that a
hard landing is a strong possibility that should not be easily dismissed. Eight
of the ten past periods of Federal Reserve Board tightening were followed by
recessions, and only two by soft landings. Indeed, soft landings have been a
rare occurrence in U.S. financial history. Economists estimate that the lag
between a hike in interest rates and its negative effect on the economy is about
a year. Therefore the rate increases initiated in the first five months of the
year are likely to keep hitting the economy well into 2001. With industrial
production and retail sales already declining, it is entirely possible that we
are in a recession now.
As a result of the weak economy, the Fed is now shifting away from its
tightening bias, and will eventually ease if the economy continues to
deteriorate. Unfortunately, however, it often takes two or more easing moves to
get the market moving on an upward path. The S&P 500 fell 27% after the Fed
started to ease in 1974 and fell 16% after they began to ease in 1981. This
happens because the deteriorating conditions that finally convince the Fed to
ease are extremely harmful to corporate earnings. An easier monetary policy will
eventually revive the market, but only after the majority of investors
capitulate and bring stocks down to either cheap or reasonable values.
That investors have not yet capitulated is indicated by their continuing
bullish attitude toward stocks. The prevalence of high PE ratios cited above is
one important indication of this attitude. Another is the Investor's
Intelligence survey showing a continued high preponderance of bulls over bears.
Historically, bull market peaks have been marked by a high ratio of bulls to
bears, while the opposite is true at bottoms. Currently the bull-bear ratio is
much more indicative of a market top than a bottom.
2
<PAGE>
CONCLUSION
In summary, we believe that the bear market will continue until stocks
sell at reasonable values and reflect the reduced expectations for the economy
and corporate earnings. Since the S&P 500 and the Nasdaq Composite are still
selling far above fair value, the decline from this point could be severe. The
Comstock Funds are positioned to benefit from a continuing market downturn with
a combination of index puts and shorts of individual stocks and index futures.
We have also added a position in 30-year Treasuries, which should benefit from
falling long rates in a softer economy.
Sincerely,
/S/ SIGNATURE /S/ SIGNATURE
CHARLES L. MINTER MARTIN WEINER, CFA
Portfolio Manager Portfolio Manager
and Director and President
December 15, 2000
* PERFORMANCE INFORMATION:
Total return assumes the reinvestment of dividends and distributions and
excludes the effect of sales loads. See Standardized Performance on Page 4.
Past performance is no guarantee of future results. Investment returns and the
principal value of an investment will fluctuate. Shares, when redeemed, may be
worth more or less than their original cost. Returns reflect changes in share
price, reinvested dividends and capital gains and are net of expenses. The
prospectus contains more complete information, including fees and expenses.
Read it carefully before you invest or send money.
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 Comstock Strategy Fund and 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.
--------------------------------------------------------------------------------
3
<PAGE>
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED OCTOBER 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE FUND'S
COMSTOCK STRATEGY FUND, INC. (A) ONE YEAR FIVE YEARS TEN YEARS INCEPTION (5/26/88)
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS O
Without sales charge........................... (8.24)% (9.27)% (1.87)% 0.88%
With sales charge (c).......................... (12.37)% (10.10)% (2.32)% 0.51%
---------------------------------------------------------------------------------------------------------------------------
CLASS A
Without sales charge........................... (8.48)% (9.51)% (2.10)% 0.69%
With sales charge (c).......................... (12.60)% (10.34)% (2.55)% 0.32%
---------------------------------------------------------------------------------------------------------------------------
CLASS C
Without contingent deferred sales charge....... (8.79)% (10.15)% (2.45)% 0.39%
With contingent deferred sales charge (d)...... (9.71)% (10.15)% (2.45)% 0.39%
---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SINCE POLICY SINCE FUND'S
COMSTOCK CAPITAL VALUE FUND, INC. (B) ONE YEAR FIVE YEARS TEN YEARS INCEPTION (E) INCEPTION (10/10/85)
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS A
Without sales charge.................... (12.29)% (17.50)% (9.87)% (3.86)% (0.87)%
With sales charge (c)................... (16.24)% (18.26)% (10.28)% (4.15)% (1.18)%
-----------------------------------------------------------------------------------------------------------------------------
CLASS B
Without contingent deferred sales charge (12.92)% (18.14)% (10.44)% (4.27)% (1.29)%
With contingent deferred sales charge (f) (16.40)% (18.47)% (10.44)% (4.27)% (1.29)%
-----------------------------------------------------------------------------------------------------------------------------
CLASS C
Without contingent deferred sales charge (13.20)% (18.10)% (10.43)% (4.26)% (1.28)%
With contingent deferred sales charge (d) (14.07)% (18.10)% (10.43)% (4.26)% (1.28)%
-----------------------------------------------------------------------------------------------------------------------------
CLASS R.................................. (11.66)% (17.21)% (9.70)% (3.74)% (0.75)%
-----------------------------------------------------------------------------------------------------------------------------
<FN>
(a)The total return reflects the deduction of the maximum initial sales charge
of 4.5% when the Fund last offered Class O shares. 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.
(b)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. 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.
(c)Assuming maximum initial sales charge of 4.5%
(d)Assuming payment of the maximum contingent deferred sales charge (CDSC). A
CDSC of 1% is imposed on redemptions made within one year of purchase.
(e)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.
(f)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.
</FN>
</TABLE>
4
<PAGE>
COMSTOCK STRATEGY FUND, INC.
SCHEDULE OF INVESTMENTS -- OCTOBER 31, 2000 (UNAUDITED)
-----------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COST VALUE
------ ---- -----
U.S. GOVERNMENT OBLIGATIONS -- 96.1%
U.S. TREASURY BILLS -- 1.3%
345,000 U.S. Treasury Bill,
6.34%++, 01/25/01 .. 339,978 339,974
----------- -----------
U.S. TREASURY NOTES -- 94.8%
U.S. Treasury Notes,
$ 2,664,000 8.50%, 11/15/00 ... $ 2,670,699 $ 2,665,769
5,260,000 6.38%, 01/31/02 ... 5,243,523 5,269,194
11,600,000 6.38%, 04/30/02 ... 11,531,838 11,645,831
5,400,000 6.00%, 08/15/09 ... 5,225,643 5,457,764
----------- -----------
24,671,703 25,038,558
----------- -----------
TOTAL U.S. GOVERNMENT
OBLIGATIONS ....... 25,011,681 25,378,532
----------- -----------
TOTAL
INVESTMENTS -- 96.1%$25,011,681 25,378,532
===========
OTHER ASSETS AND
LIABILITIES (NET) -- 3.9% ...... 1,037,495
-----------
NET ASSETS -- 100.0%
(6,852,489 shares outstanding) $26,416,027
===========
NUMBER OF EXPIRATION DATE/ MARKET
CONTRACTS ISSUE EXERCISE PRICE VALUE
--------- ----- ---------------- -----
PUT OPTIONS PURCHASED
25 S & P 500 Index ...... Dec. 00/1275 $ 15,625
280 S & P 500 Index ...... Dec. 00/1300 231,000
120 S & P 500 Index ...... Mar. 01/1300 265,500
50 S & P 500 Index ...... June 01/1300 409,500
--------
Total Put Options Purchased (Cost $1,874,385) $921,625
========
------------------------
++ Represents annualized yield at date of purchase.
See accompanying notes to financial statements.
5
<PAGE>
COMSTOCK CAPITAL VALUE FUND, INC.
SCHEDULE OF INVESTMENTS -- OCTOBER 31, 2000 (UNAUDITED)
-------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COST VALUE
------ ---- -----
U.S. GOVERNMENT OBLIGATIONS -- 85.9%
U.S. TREASURY BILLS -- 85.9%
$31,776,000 U.S. Treasury Bills,
6.13% to 6.25%++,
due 11/02/00 to 01/04/01 $31,444,589 $31,439,410
----------- -----------
TOTAL
INVESTMENTS -- 85.9% $31,444,589 31,439,410
===========
OTHER ASSETS AND
LIABILITIES (NET) -- 14.1% .................. 5,152,777
-----------
NET ASSETS -- 100.0%
(13,343,306 shares outstanding) ............. $36,592,187
===========
MARKET
COMMON STOCKS SHARES PROCEEDS VALUE
------------- ------ -------- -----
SECURITIES SOLDSHORT
Amazon.com Inc. 9,400 $ 607,572 $ 344,275
Apple Computer Inc 9,800 451,032 191,712
Applied Materials Inc. 6,000 521,623 318,750
Ariba Inc. 3,300 372,475 417,037
Avaya Inc. 750 29,403 10,078
Broadcom Co. 1,500 344,524 333,563
Cisco Systems Inc. 7,300 501,037 393,287
CMGI Inc. 5,400 577,848 91,125
CNET Networks Inc. 9,000 481,096 283,500
Dell Computer Corp. 10,000 477,509 295,000
Disney (Walt) Co. 10,000 345,738 358,125
Electronic Data
Systems Corp. 6,500 401,849 305,094
EMC Corp. 4,500 381,700 400,781
Global Crossing Ltd. 11,500 482,409 271,688
Hewlett Packard Co. 14,000 742,868 650,125
Internet Capital Group
Inc. 6,300 569,029 83,475
Level 3 Communications
Inc. 5,600 591,200 267,050
Lucent Technologies Inc. 9,000 460,643 209,813
Micron Technology Inc. 9,000 686,237 312,750
Nasdaq 100 Trust 18,000 1,592,609 1,472,625
Oracle Corp. 13,000 506,252 429,000
PMCS 1,800 363,367 305,100
Sanchez Computer
Associates Inc. 13,800 464,182 221,663
SDL Inc 1,300 377,394 337,025
Sun Microsystems 3,200 352,196 354,800
Xilinx Inc. 10,000 699,515 724,375
Yahoo! Inc. 3,200 566,221 187,600
---------- ----------
TOTAL SECURITIES
SOLD SHORT $13,947,528 $9,569,416
=========== ==========
NUMBER OF EXPIRATION DATE/ MARKET
CONTRACTS ISSUE EXERCISE PRICE VALUE
--------- ----- ---------------- -----
PUT OPTIONS PURCHASED
75 S & P 500 Index ...... Dec. 00/1275 $ 46,875
410 S & P 500 Index ...... Dec. 00/1300 338,250
180 S & P 500 Index ...... Mar. 01/1300 398,250
80 S & P 500 Index ...... June 01/1300 273,000
----------
Total Put Options Purchased (Cost $2,498,695) $1,056,375
==========
UNREALIZED
APPRECIATION
------------
FUTURE CONTRACTS -- SHORT POSITION
40 S&P 500 Index Futures ....... 12/15/00 $549,000
========
------------------------
++ Represents annualized yield at date of purchase.
See accompanying notes to financial statements.
6
<PAGE>
COMSTOCK FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STRATEGY CAPITAL VALUE
FUND FUND
------------ -------------
<S> <C> <C>
ASSETS:
Investments at value (Cost $25,011,681 and $31,444,589, respectively)............. $ 25,378,532 $ 31,439,410
Put options purchased (Cost $1,874,385 and $2,498,695, respectively).............. 921,625 1,056,375
Cash.............................................................................. 1,017 2,396
Interest receivable............................................................... 260,059 213,390
Receivable for Fund shares sold................................................... 18,963 --
Receivable for investments sold................................................... -- 13,947,528
Prepaid expenses.................................................................. 10,597 17,025
------------ ------------
TOTAL ASSETS...................................................................... 26,590,793 46,676,124
------------ ------------
LIABILITIES:
Securities sold short (proceeds $13,947,528)...................................... -- 9,569,416
Dividend payable on securities sold short......................................... -- 5,418
Payable for Fund shares redeemed.................................................. 1,199 101,796
Payable for investment advisory fees.............................................. 19,840 28,047
Payable for distribution fees..................................................... 778 14,458
Variation margin.................................................................. -- 290,000
Other accrued expenses............................................................ 152,949 74,802
------------ ------------
TOTAL LIABILITIES................................................................. 174,766 10,083,937
------------ ------------
NET ASSETS........................................................................ $ 26,416,027 $ 36,592,187
============ ============
NET ASSETS CONSIST OF:
Paid in capital................................................................... $124,812,066 $299,232,262
Accumulated undistributed net investment income................................... 75,810 3,755,403
Accumulated net realized loss on investments, put options purchased,
futures and short sale transactions............................................. (97,885,940) (269,875,091)
Net unrealized appreciation on short sale transactions............................ -- 4,378,112
Net unrealized depreciation on investments, put options purchased
and futures transactions........................................................ (585,909) (898,499)
------------ ------------
NET ASSETS........................................................................ $ 26,416,027 $ 36,592,187
============ ============
SHARES OF COMMON STOCK OUTSTANDING:
CLASS O:
Net Asset Value, offering and redemption price per share
(6,076,947 shares outstanding) ............................................... $ 3.85
======
CLASS A:
Net Asset Value and redemption price per share
(733,306 and 9,777,697 shares outstanding, respectively)...................... $ 3.85 $ 2.75
====== ======
Maximum offering price per share (NAV (divide) 0.955 based on maximum sales charge
of 4.50% of the offering price at October 31, 2000)........................... $ 4.03 $ 2.88
====== ======
CLASS B:
Net Asset Value and offering price per share (2,742,081 shares outstanding)..... $ 2.74(a)
======
CLASS C:
Net Asset Value and offering price per share
(42,236 and 822,939 shares outstanding, respectively)......................... $ 3.87(a) $ 2.63(a)
====== ======
CLASS R:
Net Asset Value, offering and redemption price per share (588 shares
outstanding) ................................................................. $ 2.76
======
<FN>
--------------------------------
(a) Redemption price varies based on length of time held.
</FN>
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
COMSTOCK FUNDS, INC.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED OCTOBER 31, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STRATEGY CAPITAL VALUE
FUND FUND
------------ -------------
<S> <C> <C>
INVESTMENT INCOME:
Interest.......................................................................... $ 811,094 $ 1,689,379
---------- -----------
TOTAL INVESTMENT INCOME........................................................... 811,094 1,689,379
---------- -----------
EXPENSES:
Investment advisory fees.......................................................... 125,109 213,186
Distribution fees................................................................. 5,113 93,261
Shareholder services fees......................................................... 116,854 66,075
Legal and audit fees.............................................................. 35,178 33,348
Registration fees................................................................. 22,899 19,100
Shareholder communications expenses............................................... 12,065 21,179
Directors' fees................................................................... 7,702 10,950
Custodian fees.................................................................... 1,035 3,303
Dividends on securities sold short................................................ -- 5,418
Miscellaneous expenses............................................................ 14,944 24,970
---------- -----------
TOTAL EXPENSES.................................................................... 340,899 490,790
LESS:
Expense reimbursements.......................................................... -- (42,535)
---------- -----------
TOTAL NET EXPENSES................................................................ 340,899 448,255
---------- -----------
NET INVESTMENT INCOME................................................................ 470,195 1,241,124
---------- -----------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS,
PUT OPTIONS AND FUTURES TRANSACTIONS:
Net realized loss on investments, put options and futures transactions............ (1,999,624) (3,650,679)
Net realized loss on securities sold short transactions........................... -- (1,854,144)
Net change in net unrealized depreciation on investments, put options
and futures transactions ...................................................... 698,014 133,122
Net change in net unrealized appreciation on securities sold short transactions... -- 2,636,367
---------- -----------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS, PUT OPTIONS
AND FUTURES TRANSACTIONS........................................................ (1,301,610) (2,735,334)
---------- -----------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS.............................. $ (831,415) $(1,494,210)
========== ===========
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
COMSTOCK FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STRATEGY FUND CAPITAL VALUE FUND
------------------------------- -------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED
OCTOBER 31, 2000 YEAR ENDED OCTOBER 31, 2000 YEAR ENDED
(UNAUDITED) APRIL 30, 2000 (UNAUDITED) APRIL 30, 2000
---------------- -------------- ---------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income............................ $ 470,195 $ 1,864,404 $ 1,241,124 $ 2,514,309
Net realized loss on investments,
put options and futures transactions........... (1,999,624) (11,682,811) (3,650,679) (15,365,820)
Net realized loss on short sale transactions..... -- -- (1,854,144) (6,539,009)
Net change in net unrealized depreciation on
investments, put options and futures transactions 698,014 3,061,143 1,231,122 2,042,595
Net change in net unrealized appreciation
on short sale transactions..................... -- -- 2,636,367 1,556,390
----------- ----------- ----------- -----------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS...................... (831,415) (6,757,264) (396,210) (15,791,535)
----------- ----------- ----------- -----------
DIVIDENDS TO SHAREHOLDERS:
Net investment income
Class O........................................ (469,440) (1,610,240) --
Class A........................................ (56,170) (233,701) (851,889)
Class B........................................ -- -- (11,654)
Class C........................................ (2,286) (15,205) --
Class R........................................ -- -- (340)
----------- ----------- -----------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS.............. (527,896) (1,859,146) (863,883)
----------- ----------- -----------
CAPITAL STOCK TRANSACTIONS:
Proceeds from shares sold:
Class O........................................ 172,401 -- -- --
Class A........................................ 521,665 444,503 2,367,675 32,351,340
Class B........................................ -- -- 1,409,015 4,853,966
Class C........................................ 888 414,162 69,028 2,438,625
Class R........................................ -- -- 550 --
----------- ----------- ----------- -----------
694,954 858,665 3,846,268 39,643,931
----------- ----------- ----------- -----------
Proceeds from reinvestment of dividends:
Class O........................................ 134,456 414,230 --
Class A........................................ 23,129 94,722 491,960
Class B........................................ -- -- 6,822
Class C........................................ 1,263 4,230 --
Class R........................................ -- -- 334
----------- ----------- -----------
158,848 513,182 499,116
----------- ----------- -----------
Class O........................................ (3,536,688) (11,005,330) -- --
Class A........................................ (1,354,513) (3,445,035) (14,074,497) (39,944,149)
Class B........................................ -- -- (1,906,601) (8,005,008)
Class C........................................ (42,144) (820,862) (292,082) (4,140,687)
Class R........................................ -- -- (3,347) (20,765)
----------- ----------- ----------- -----------
(4,933,345) (15,271,227) (16,276,527) (52,110,609)
----------- ----------- ----------- -----------
Net decrease in net assets
from capital stock transactions................ (4,079,543) (13,899,380) (12,430,259) (11,967,562)
----------- ----------- ----------- -----------
NET DECREASE IN NET ASSETS....................... (5,438,854) (22,515,790) (12,826,469) (28,622,980)
----------- ----------- ----------- -----------
NET ASSETS:
Beginning of period.............................. 31,854,881 54,370,671 (49,418,656) 78,041,636
----------- ----------- ----------- -----------
End of period.................................... $26,416,027 $31,854,881 $36,592,187 $49,418,656
=========== =========== =========== ===========
Undistributed net investment income.............. $ 75,810 $ 133,511 $ 3,755,403 $ 2,514,279
=========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
COMSTOCK FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
1. ORGANIZATION. Comstock Funds, Inc. (the "Company"), formerly known as
Comstock Partners Funds, Inc., 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 Strategy Fund (the "Strategy Fund")
and Comstock 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.
Each Class O, Class A and Class C share of the Strategy Fund and each Class A,
Class B, Class C, andClass 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 offered for sale except for reinvestment of dividends.
2. SIGNIFICANT ACCOUNTING POLICIES. The preparation of financial statements in
accordance with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
SECURITY VALUATION. Portfolio securities listed or traded on a nationally
recognized securities exchange, quoted by the National Association of Securities
Dealers Automated Quotations, Inc. ("Nasdaq") or traded on foreign exchanges are
valued at the last sale price on that exchange as of the close of business on
the day the securities are being valued (if there were no sales that day, the
security is valued at the average of the closing bid and asked prices or, if
there were no asked prices quoted on that day, then the security is valued at
the closing bid price on that day). All other portfolio securities for which
over-the-counter market quotations are readily available are valued at the
latest average of the bid and asked prices. Portfolio securities traded on more
than one national securities exchange or market are valued according to the
broadest and most representative market, as determined by Gabelli Funds, LLC
(the "Adviser"). Securities and assets for which market quotations are not
readily available are valued at their fair value as determined in good faith
under procedures established by and under the general supervision of the Board
of Directors. Short term debt securities with remaining
10
<PAGE>
COMSTOCK FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
--------------------------------------------------------------------------------
maturities of 60 days or less are valued at amortized cost, unless the Directors
determine such does not reflect the securities' fair value, in which case these
securities will be valued at their fair value as determined by the Directors.
Debt instruments having a maturity greater than 60 days are valued at the
highest bid price obtained from a dealer maintaining an active market in those
securities.
REPURCHASE AGREEMENTS. Each Fund may enter into repurchase agreements with
primary government securities dealers recognized by the Federal Reserve Board,
with member banks of the Federal Reserve System or with other brokers or dealers
that meet credit guidelines established by the Adviser and reviewed by the Board
of Directors. Under the terms of a typical repurchase agreement, a Fund takes
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase, and a Fund to resell, the obligation at an agreed-upon
price and time, thereby determining the yield during a Fund's holding period. A
Fund will always receive and maintain securities as collateral whose market
value, including accrued interest, will be at least equal to 100% of the dollar
amount invested by the Fund in each agreement. The Fund will make payment for
such securities only upon physical delivery or upon evidence of book entry
transfer of the collateral to the account of the custodian. To the extent that
any repurchase transaction exceeds one business day, the value of the collateral
is marked-to-market on a daily basis to maintain the adequacy of the collateral.
If the seller defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited.
OPTIONS. Each Fund may purchase or write call or put options on securities or
indices. As a writer of put options, a Fund receives a premium at the outset and
then bears the risk of unfavorable changes in the price of the financial
instrument underlying the option. A Fund would incur a loss if the price of the
underlying financial instrument decreases between the date the option is written
and the date on which the option is terminated. A Fund would realize a gain, to
the extent of the premium, if the price of the financial instrument increases
between those dates.
As a purchaser of put options, a Fund pays a premium for the right to sell to
the seller of the put option the underlying security at a specified price. The
seller of the put has the obligation to purchase the underlying security upon
exercise at the exercise price. If the price of the underlying security
declines, a Fund would realize a gain upon sale or exercise. If the price of the
underlying security increases, a Fund would realize a loss upon sale or at
expiration date, but only to the extent of the premium paid.
FUTURES CONTRACTS. Each Fund may engage in futures contracts for the purpose of
hedging against changes in the value of its portfolio securities and in the
value of securities it intends to purchase. Upon entering into a futures
contract, a Fund is required to deposit with the broker an amount of cash or
cash equivalents equal to a certain percentage of the contract amount. This is
known as the "initial margin." Subsequent payments ("variation margin") are made
or received by a Fund each day, depending on the daily fluctuation of the value
of the contract. The daily changes in the contract are included in unrealized
gains or losses. A Fund recognizes a realized gain or loss when the contract is
closed.
There are several risks in connection with the use of futures contracts as a
hedging device. The change in value of futures contracts primarily corresponds
with the value of their underlying instruments, which may not
11
<PAGE>
COMSTOCK FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
--------------------------------------------------------------------------------
correlate with the change in value of the hedged investments. In addition, there
is the risk that a Fund may not be able to enter into a closing transaction
because of an illiquid secondary market.
SECURITIES SOLD SHORT. A short sale involves selling a security which the Fund
does not own. The proceeds received for short sales are recorded as liabilities
and a Fund records an unrealized gain or loss to the extent of the difference
between the proceeds received and the value of the open short position on the
day of determination. A Fund records a realized gain or loss when the short
position is closed out. By entering into a short sale, a Fund bears the market
risk of an unfavorable change in the price of the security sold short. Dividends
on short sales are recorded as an expense by a Fund on the ex-dividend date and
interest expense is recorded on the accrual basis.
FORWARD FOREIGN EXCHANGE CONTRACTS. The Funds may engage in forward foreign
exchange contracts for hedging a specific transaction with respect to either the
currency in which the transaction is denominated or another currency as deemed
appropriate by the Adviser. Forward foreign exchange contracts are valued at the
forward rate and are marked-to-market daily. The change in market value is
included in unrealized appreciation/depreciation on investments and foreign
currency transactions. When the contract is closed, the Funds record 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.
The use of forward foreign exchange contracts does not eliminate fluctuations in
the underlying prices of the Fund's portfolio securities, but it does establish
a rate of exchange that can be achieved in the future. Although forward foreign
exchange contracts limit the risk of loss due to a decline in the value of the
hedged currency, they also limit any potential gain/(loss) that might result
should the value of the currency increase. In addition, the Funds could be
exposed to risks if the counterparties to the contracts are unable to meet the
terms of their contracts.
FOREIGN CURRENCY TRANSLATION. The books and records of the Funds are maintained
in United States (U.S.) dollars. Foreign currencies, investments and other
assets and liabilities are translated into U.S. dollars at the exchange rates
prevailing at the end of the period, and purchases and sales of investment
securities, income and expenses are translated at the exchange rate prevailing
on the respective dates of such transactions. Unrealized gains and losses, which
result from changes in foreign exchange rates and/or changes in market prices of
securities, have been included in unrealized appreciation/depreciation on
investments and foreign currency transactions. Net realized foreign currency
gains and losses resulting from changes in exchange rates include foreign
currency gains and losses between trade date and settlement date on investment
securities transactions, foreign currency transactions and the difference
between the amounts of interest and dividends recorded on the books of the Funds
and the amounts actually received. The portion of foreign currency gains and
losses related to fluctuation in exchange rates between the initial trade date
and subsequent sale trade date is included in realized gain/(loss) on
investments.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
accounted for on the trade date with realized gain or loss on investments
determined by using the identified cost method. Interest income (including
amortization of premium and accretion of discount) is recorded as earned.
Dividend income is recorded on the ex-dividend date.
12
<PAGE>
COMSTOCK FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
--------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders are recorded on the ex-dividend date. Income distributions and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Funds, timing differences and
differing characterization of distributions made by the Funds.
PROVISION FOR INCOME TAXES. Each Fund intends to continue to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended. As a result, a Federal income tax provision is not required.
EXPENSES. Certain administrative expenses are common to, and allocated among,
the Portfolios. Such allocations are made on the basis of each Portfolio's
average net assets or other criteria directly affecting the expenses as
determined by the Adviser.
3. INVESTMENT ADVISORY AGREEMENT. Through May 22, 2000, the Company, on behalf
of the Funds, had 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 furnished
continuing investment supervision to the Strategy Fund and was 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 received 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 had responsibility for investment decisions for, and the day-to-day
management of, that portfolio. For its services, the Investment Adviser received
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.
Gabelli Funds LLC ("Gabelli") serves as Investment Adviser and Administrator for
both Funds. As compensation for services and related expenses, the Strategy Fund
pays Gabelli an annual fee of 0.85% of the Fund's daily average net assets,
computed daily and payable monthly. The Capital Value Fund pays 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 until May 2002, to the extent necessary, in order to
maintain the Fund's expense ratio during 1999 based on asset levels as of May
22, 2000.
Prior to May 22, 2000, 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 performed or arranged 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
13
<PAGE>
COMSTOCK FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
--------------------------------------------------------------------------------
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 paid 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.
Through May 22, 2000, the Company compensated 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,
2000, such compensation amounted to $371 for the Capital Value Fund and $151 for
the Strategy Fund. Dreyfus Transfer, Inc. is a wholly-owned subsidiary of The
Dreyfus Corporation.
4. DISTRIBUTION PLAN. The Funds' Board of Directors has adopted a distribution
plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act. For the six months
ended October 31, 2000, the Capital Value Fund incurred distribution costs of
$37,532, $33,905 and $9,614 for Class A, Class B and Class C, respectively, and
the Strategy Fund incurred distribution costs of $3,662 and $771 for Class A and
Class C, respectively, payable to Gabelli and Company, Inc., an affiliate of the
Adviser. Through May 22, 2000, Premier Mutual Fund Services acted as distributor
of the Funds' shares. Under the Class A Service and Distribution Plan, the
Company, at the expense of the Class A shares of each Fund, (a) reimbursed 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) paid 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, 2000, $5,988
and $557 were charged to the Class A shares of Capital Value Fund and Strategy
Fund, respectively.
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, 2000, $3,604 and $1,063 were charged for distributing Capital Value
Fund's Class B and Class C shares, respectively, and $1,201 and $354 were
charged for shareholder servicing for Capital Value Fund's Class B and Class C
shares, respectively. For the same period, $92 and $31 were charged for
distributing and shareholder servicing, respectively, for Strategy Fund's Class
C shares.
14
<PAGE>
COMSTOCK FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
--------------------------------------------------------------------------------
5. PORTFOLIO SECURITIES: Purchases and sales of securities for the six months
ended October 31, 2000, other than short-term securities, were as follows:
PURCHASES SALES
----------- -----------
Strategy Fund: ......................... $12,400,913 $17,178,397
=========== ===========
Capital Value Fund:
Long transactions ................... $ -- $ 114,840
Short sale transactions ............. 11,047,043 6,302,188
----------- -----------
$11,047,043 $ 6,417,028
=========== ===========
6. CAPITAL STOCK TRANSACTIONS. Transactions in shares of capital stock were as
follows:
<TABLE>
<CAPTION>
STRATEGY FUND CAPITAL VALUE FUND
------------------------------ -------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED
OCTOBER 31, 2000 YEAR ENDED OCTOBER 31, 2000 YEAR ENDED
(UNAUDITED) APRIL 30, 2000 (UNAUDITED) APRIL 30, 2000
--------------- -------------- ---------------- --------------
<S> <C> <C> <C> <C>
CLASS O:
Shares sold......................................... 43,707 --
Shares issued upon reinvestment of dividends........ 34,672 94,459
Shares redeemed..................................... (897,750) (2,473,941)
-------- ----------
Net decrease in Class O shares................... (819,371) (2,379,482)
======== ==========
CLASS A:
Shares sold......................................... 134,729 97,794 838,110 9,753,239
Shares issued upon reinvestment of dividends........ 5,851 21,364 -- 167,904
Shares redeemed..................................... (345,271) (772,651) (5,461,499) (12,484,941)
-------- ---------- ---------- -----------
Net decrease in Class A shares................... (204,691) (653,493) (4,623,389) (2,563,798)
======== ========== ========== ===========
CLASS B:
Shares sold......................................... 547,840 1,464,663
Shares issued upon reinvestment of dividends........ -- 2,321
Shares redeemed..................................... (728,910) (2,511,093)
---------- -----------
Net decrease in Class B shares................... (181,070) (1,044,109)
========== ===========
CLASS C:
Shares sold......................................... 222 89,073 27,919 756,546
Shares issued upon reinvestment of dividends........ 318 951 -- --
Shares redeemed..................................... (10,518) (181,581) (112,400) (1,358,811)
-------- ---------- ---------- -----------
Net decrease in Class C shares................... (9,978) (91,557) (84,481) (602,265)
======== ========== ========== ===========
CLASS R:
Shares sold......................................... 217 --
Shares issued upon reinvestment of dividends........ -- 115
Shares redeemed..................................... (1,248) (6,897)
---------- -----------
Net decrease in Class R shares................... (1,031) (6,782)
========== ===========
</TABLE>
15
<PAGE>
COMSTOCK FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
--------------------------------------------------------------------------------
7. FEDERAL INCOME TAX INFORMATION. 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
=========== ============
16
<PAGE>
COMSTOCK FUNDS, INC.
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS DISTRIBUTIONS
----------------------------------------------- ----------------------------------
Net
Net Asset Realized and Total Net Net Asset
Period Value, Net Unrealized from Net Realized Value,
Ended Beginning Investment Gain (Loss)on Investment Investment Gain on Total End of Total
April 30 of Period Income(b) Investments Operations Income Investments Distributions Period Return(c)
-------- --------- --------- ----------- ---------- ------ ----------- ------------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STRATEGY FUND
CLASS O
2000 (a) $4.04 $0.06 $(0.18) $(0.12) $(0.07) -- $(0.07) $3.85 (2.94)%
2000 4.94 0.20 (0.90) (0.70) (0.20) -- (0.20) 4.04 (14.35)
1999 6.06 0.30 (0.94) (0.64) (0.48) -- (0.48) 4.94 (11.32)
1998 7.77 0.43 (1.54) (1.11) (0.60) -- (0.60) 6.06 (14.88)
1997 8.78 0.78 (1.19) (0.41) (0.47) (0.13) (0.60) 7.77 (4.85)
1996 9.10 0.76 (0.53) 0.23 (0.55) -- (0.55) 8.78 2.66
CLASS A
2000 (a) 4.04 0.07 (0.19) (0.12) (0.07) -- (0.07) 3.85 (3.06)
2000 4.94 0.19 (0.90) (0.71) (0.19) -- (0.19) 4.04 (14.58)
1999 6.06 0.29 (0.95) (0.66) (0.46) -- (0.46) 4.94 (11.56)
1998 7.77 0.42 (1.55) (1.13) (0.58) -- (0.58) 6.06 (15.11)
1997 8.78 0.54 (0.96) (0.42) (0.46) (0.13) (0.59) 7.77 (5.10)
1996 9.10 0.57 (0.36) 0.21 (0.53) -- (0.53) 8.78 2.40
CLASS C
2000 (a) 4.04 0.04 (0.16) (0.12) (0.05) -- (0.05) 3.87 (3.44)
2000 4.94 0.15 (0.90) (0.75) (0.15) -- (0.15) 4.04 (14.89)
1999 6.06 0.26 (0.97) (0.71) (0.41) -- (0.41) 4.94 (12.42)
1998 7.74 0.37 (1.54) (1.17) (0.51) -- (0.51) 6.06 (15.61)
1997 8.77 0.45 (0.95) (0.50) (0.41) (0.12) (0.53) 7.74 (5.94)
1996+ 9.00 0.37 (0.22) 0.15 (0.38) -- (0.38) 8.77 1.96 (d)
<CAPTION>
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
-------------------------------------------------------------------
Decrease
Net Reflected in
Net Assets Investment Operating Expense Ratios
Period End of Income to Expenses to Due to Portfolio
Ended Period Average Average Net Administrative Turnover
April 30 (in 000's) Net Assets Assets Fee Waiver Rate
-------- ---------- ---------- ------ ---------- ----
<S> <C> <C> <C> <C> <C>
STRATEGY FUND
CLASS O
2000 (a) $23,426 3.23%(e) 2.28%(e) -- 44%
2000 27,854 4.55 2.23 -- 112
1999 45,803 5.59 1.49 0.14% 130
1998 71,692 6.01 1.31 0.01 227
1997 134,719 6.80 1.18 -- 126
1996 224,148 6.56 1.23 -- 96
CLASS A
2000 (a) 2,826 2.98(e) 2.53(e) -- 44
2000 3,789 4.28 2.46 -- 112
1999 7,858 5.05 1.75 0.14 130
1998 17,871 5.79 1.55 0.01 227
1997 43,327 6.55 1.43 -- 126
1996 53,652 6.33 1.48 -- 96
CLASS C
2000 (a) 164 2.23(e) 3.28(e) -- 44
2000 212 3.51 3.16 -- 112
1999 710 4.14 2.48 0.14 130
1998 1,780 5.08 2.29 0.01 227
1997 13,020 5.81 2.14 -- 126
1996+ 317 5.79(e) 2.28(e) -- 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.
(a) For the period ended October 31, 2000; unaudited.
(b) Based on average shares outstanding.
(c) Total investment returns exclude the effects of sales loads and assume
reinvestment of dividends and distributions.
(d) 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.
(e) Annualized.
</FN>
</TABLE>
See accompanying notes to financial statements.
17
<PAGE>
COMSTOCK FUNDS, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS DISTRIBUTIONS
------------------------------------------------ -----------------------
Net Asset Net Realized Total Net Asset
Period Value, Net and Unrealized from Net Value,
Ended Beginning Investment Gain (Loss) on Investment Investment Total End of Total
April 30 of Period Income(b) Investmernts Operations Income Distributions Period Return(c)
-------- --------- --------- ------------ ---------- ------ ------------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CAPITAL VALUE FUND
CLASS A
2000 (a) $2.72 $0.08 $(0.05) $0.03 -- -- $2.75 1.10%
2000 3.49 0.12 (0.84) (0.72) $(0.05) $(0.05) 2.72 (20.70)
1999 5.06 0.14 (1.40) (1.26) (0.31) (0.31) 3.49 (25.80)
1998 8.62 0.31 (2.91) (2.60) (0.96) (0.96) 5.06 (31.48)
1997 10.54 0.59 (1.92) (1.33) (0.59) (0.59) 8.62 (12.97)
1996 10.61 0.22 0.17 0.39 (0.46) (0.46) 10.54 3.81
CLASS B
2000 (a) 2.71 0.07 (0.04) 0.03 -- -- 2.74 1.11
2000 3.47 0.10 (0.86) (0.76) --** -- 2.71 (21.82)
1999 4.99 0.11 (1.38) (1.27) (0.25) (0.25) 3.47 (26.19)
1998 8.45 0.25 (2.85) (2.60) (0.86) (0.86) 4.99 (32.01)
1997 10.38 0.54 (1.93) (1.39) (0.54) (0.54) 8.45 (13.69)
1996 10.41 0.18 0.16 0.34 (0.37) (0.37) 10.38 3.36
CLASS C
2000 (a) 2.61 0.07 (0.05) 0.02 -- -- 2.63 0.77
2000 3.32 0.09 (0.80) (0.71) -- -- 2.61 (21.39)
1999 4.80 0.10 (1.32) (1.22) (0.26) (0.26) 3.32 (26.22)
1998 8.31 0.23 (2.78) (2.55) (0.96) (0.96) 4.80 (32.10)
1997 10.24 0.57 (1.91) (1.34) (0.59) (0.59) 8.31 (13.47)
1996 10.41 0.44 (0.12) 0.32 (0.49) (0.49) 10.24 3.30
CLASS R
2000 (a) 2.71 0.09 (0.04) 0.05 -- -- 2.76 1.85
2000 3.48 0.14 (0.85) (0.71) (0.06) (0.06) 2.71 (20.49)
1999 5.05 0.15 (1.40) (1.25) (0.32) (0.32) 3.48 (25.67)
1998 8.62 0.33 (2.91) (2.58) (0.99) (0.99) 5.05 (31.28)
1997 10.53 0.82(b) (2.13) (1.31) (0.60) (0.60) 8.62 (12.83)
1996 10.62 0.30 0.09 0.39 (0.48) (0.48) 10.53 3.97
<CAPTION>
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
------------------------------------------------------------
Interest Expense
Net and Dividends
Net Assets Investment Operating on Securities
Period End of Income to Expenses to Sold Short Portfolio
Ended Period Average Average to Average Turnover
April 30 (in 000's) Net Assets Net Assets Net Assets Rate
-------- ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
CAPITAL VALUE FUND
CLASS A
2000 (a) $ 26,907 5.71%(e) 2.03%(e) 0.02%(e) 0%
2000 39,112 3.82 2.01 0.28 --
1999 59,246 3.31 1.47 0.72 465
1998 64,452 4.49 1.35 0.24 359
1997 160,834 6.16 1.28 0.51 399
1996 241,472 2.13(d) 0.75 0.18(d) 56
CLASS B
2000 (a) 7,516 4.96(e) 2.78(e) 0.02(e) --
2000 7,936 3.04 2.78 0.28 --
1999 13,752 2.46 2.21 0.85 465
1998 26,235 3.74 2.10 0.24 359
1997 64,671 5.52 2.03 0.50 399
1996 81,786 1.70(d) 1.18(d) 0.19(d) 56
CLASS C
2000 (a) 2,167 4.96(e) 2.78(e) 0.02(e) --
2000 2,366 3.07 2.71 0.28 --
1999 5,014 2.54 2.18 0.78 465
1998 8,029 3.70 2.08 0.21 359
1997 7,271 6.02 2.07 0.47 399
1996 3,531 1.71(d) 1.28(d) 0.18(d) 56
CLASS R
2000 (a) 2 5.96(e) 1.78(e) 0.02(e) --
2000 5 4.13 1.61 0.23 --
1999 29 3.56 1.24 0.72 465
1998 28 4.73 1.11 0.26 359
1997 117 8.65 1.19 0.38 399
1996 1 2.28(d) 0.61(d) 0.17(d) 56
--------------------------------
<FN>
(a) For ther period ended October 31, 2000; unaudited.
(b) Based on average shares outstanding.
(c) 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.
(d) Not annualized.
(e) Annualized.
** Amount is less than $0.01 per share.
</FN>
</TABLE>
See accompanying notes to financial statements.
18
<PAGE>
GABELLI FAMILY OF FUNDS
GABELLI ASSET FUND _____________________________________________________________
Seeks to invest primarily in a diversified portfolio of common stocks selling at
significant discounts to their private market value. The Fund's primary
objective is growth of capital. (CLASS AAA-NO-LOAD)
PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
GABELLI GROWTH FUND ____________________________________________________________
Seeks to invest primarily in large cap stocks believed to have favorable, yet
undervalued, prospects for earnings growth. The Fund's primary objective is
capital appreciation.
(CLASS AAA-NO-LOAD)
PORTFOLIO MANAGER: HOWARD F. WARD, CFA
GABELLI WESTWOOD EQUITY FUND ___________________________________________________
Seeks to invest primarily in the common stock of seasoned companies believed to
have proven records and above average historical earnings growth. The Fund's
primary objective is capital appreciation. (MULTICLASS)
PORTFOLIO MANAGER: SUSAN M. BYRNE
GABELLI BLUE CHIP VALUE FUND____________________________________________________
Seeks long-term growth of capital through investment primarily in the common
stocks of well-established, high quality companies that have market
capitalizations of greater than $5 billion. (CLASS AAA-NO-LOAD)
PORTFOLIO MANAGER: BARBARA MARCIN, CFA
GABELLI SMALL CAP GROWTH FUND___________________________________________________
Seeks to invest primarily in common stock of smaller companies (market
capitalizations less than $500 million) believed to have rapid revenue and
earnings growth potential. The Fund's primary objective is capital appreciation.
(CLASS AAA-NO-LOAD)
PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
GABELLI WESTWOOD SMALLCAP EQUITY FUND___________________________________________
Seeks to invest primarily in smaller capitalization equity securities - market
caps of $1 billion or less. The Fund's primary objective is long-term capital
appreciation. (MULTICLASS)
PORTFOLIO MANAGER: LYNDA CALKIN, CFA
GABELLI WESTWOOD INTERMEDIATE BOND FUND_________________________________________
Seeks to invest in a diversified portfolio of bonds with various maturities. The
Fund's primary objective is total return. (MULTICLASS)
PORTFOLIO MANAGER: PATRICIA FRAZE
GABELLI EQUITY INCOME FUND______________________________________________________
Seeks to invest primarily in equity securities with above market average yields.
The Fund pays quarterly dividends and seeks a high level of total return with an
emphasis on income.
(CLASS AAA-NO-LOAD)
PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
GABELLI WESTWOOD BALANCED FUND__________________________________________________
Seeks to invest in a balanced and diversified portfolio of stocks and bonds. The
Fund's primary objective is both capital appreciation and current income.
(MULTICLASS)
PORTFOLIO MANAGERS: SUSAN M. BYRNE & PATRICIA FRAZE
GABELLI WESTWOOD REALTY FUND____________________________________________________
Seeks to invest in securities that are primarily engaged in or related to the
real estate industry. The Fund's primary objective is long-term capital
appreciation. (CLASS AAA-NO-LOAD)
PORTFOLIO MANAGER: SUSAN M. BYRNE
GABELLI WESTWOOD MIGHTY MITESSM FUND____________________________________________
Seeks to invest in micro-cap companies that have market capitalizations of $300
million or less. The Fund's primary objective is long-term capital appreciation.
(MULTICLASS)
TEAM MANAGED: MARIO J. GABELLI, CFA,
MARC J. GABELLI, LAURA K. LINEHAN AND WALTER K. WALSH
GABELLI VALUE FUND______________________________________________________________
Seeks to invest in securities of companies believed to be undervalued. The
Fund's primary objective is long-term capital appreciation. (MULTICLASS)
PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
GABELLI UTILITIES FUND__________________________________________________________
Seeks to provide a high level of total return through a combination of capital
appreciation and current income. (CLASS AAA-NO-LOAD)
PORTFOLIO MANAGER: TIMOTHY O'BRIEN, CFA
GABELLI ABC FUND________________________________________________________________
Seeks to invest in securities with attractive opportunities for appreciation or
investment income. The Fund's primary objective is total return in various
market conditions without excessive risk of capital loss. (NO-LOAD)
PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
GABELLI MATHERS FUND____________________________________________________________
Seeks long-term capital appreciation in various market conditions without
excessive risk of capital loss. (CLASS AAA-NO-LOAD)
PORTFOLIO MANAGER: HENRY VAN DER EB, CFA
GABELLI U.S. TREASURY MONEY MARKET FUND_________________________________________
Seeks to invest exclusively in short-term U.S. Treasury securities. The Fund's
primary objective is to provide high current income consistent with the
preservation of principal and liquidity. (NO-LOAD)
PORTFOLIO MANAGER: JUDITH A. RANERI
GABELLI CASH MANAGEMENT CLASS OF
THE TREASURER'S FUND____________________________________________________________
Three money market portfolios designed to generate superior returns without
compromising portfolio safety. U.S. Treasury Money Market seeks to invest in
U.S. Treasury bills, notes and bonds. Tax Exempt Money Market seeks to invest in
municipal securities. Domestic Prime Money Market seeks to invest in prime
quality, domestic money market instruments. (NO-LOAD)
PORTFOLIO MANAGER: JUDITH A. RANERI
AN INVESTMENT IN THE ABOVE MONEY MARKET FUNDS IS NEITHER INSURED NOR GUARANTEED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY GOVERNMENT AGENCY. ALTHOUGH
THE FUNDS SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT
IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUNDS. GLOBAL SERIES
GABELLI GLOBAL TELECOMMUNICATIONS FUND
Seeks to invest in telecommunications companies throughout the world -
targeting undervalued companies with strong earnings and cash flow dynamics.
The Fund's primary objective is capital appreciation. (MULTICLASS)
TEAM MANAGED
GABELLI GLOBAL CONVERTIBLE SECURITIES FUND
Seeks to invest principally in bonds and preferred stocks which are
convertible into common stock of foreign and domestic companies. The Fund's
primary objective is total return through a combination of current income and
capital appreciation. (MULTICLASS)
TEAM MANAGED
GABELLI GLOBAL GROWTH FUND
Seeks capital appreciation through a disciplined investment program focusing
on the globalization and interactivity of the world's marketplace. The Fund
invests in companies at the forefront of accelerated growth. The Fund's
primary objective is capital appreciation. (MULTICLASS) TEAM MANAGED
GABELLI GLOBAL OPPORTUNITY FUND
Seeks to invest in common stock of companies which have rapid growth in
revenues and earnings and potential for above average capital appreciation or
are undervalued. The Fund's primary objective is capital appreciation.
(MULTICLASS) TEAM MANAGED
GABELLI GOLD FUND_______________________________________________________________
Seeks to invest in a global portfolio of equity securities of gold mining and
related companies. The Fund's objective is long-term capital appreciation.
Investment in gold stocks is considered speculative and is affected by a variety
of world-wide economic, financial and political factors. (CLASS AAA-NO-LOAD)
PORTFOLIO MANAGER: CAESAR BRYAN
GABELLI INTERNATIONAL GROWTH FUND_______________________________________________
Seeks to invest in the equity securities of foreign issuers with long-term
capital appreciation potential. The Fund offers investors global
diversification. (MULTICLASS)
PORTFOLIO MANAGER: CAESAR BRYAN
THE SIX FUNDS ABOVE INVEST IN FOREIGN SECURITIES WHICH INVOLVES RISKS NOT
ORDINARILY ASSOCIATED WITH INVESTMENTS IN DOMESTIC ISSUES, INCLUDING CURRENCY
FLUCTUATION, ECONOMIC AND POLITICAL RISKS. THE FUNDS LISTED ABOVE ARE
DISTRIBUTED BY GABELLI & COMPANY, INC.
COMSTOCK CAPITAL VALUE FUND_____________________________________________________
Seeks capital appreciation and current income. The Fund may use either long or
short positions to achieve its objective. (MULTICLASS)
PORTFOLIO MANAGER: MARTIN WEINER, CFA
COMSTOCK STRATEGY FUND__________________________________________________________
The Fund emphasizes investments in debt securities, which maximize total return
in light of credit risk, interest rate risk, and the risk associated with the
length of maturity of the debt instrument. (MULTICLASS)
PORTFOLIO MANAGER: MARTIN WEINER. CFA
--------------------------------------------------------------------------------
TO RECEIVE A PROSPECTUS, CALL 1-800-GABELLI (422-3554). THE PROSPECTUS GIVES A
MORE COMPLETE DESCRIPTION OF THE FUND, INCLUDING FEES AND EXPENSES. READ THE
PROSPECTUS CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
VISIT OUR WEBSITE AT:
WWW.GABELLI.COM OR, CALL: 1-800-GABELLI
1-800-422-3554 [BULLET] 914-921-5100 [BULLET] FAX: 914-921-5118
[BULLET] [email protected]
ONE CORPORATE CENTER, RYE, NEW YORK 10580
<PAGE>
THE COMSTOCK FUNDS, INC.
Comstock Strategy Fund
Comstock Capital Value Fund
One Corporate Center
Rye, New York 10580-1434
1-800-GABELLI
[1-800-422-3554]
FAX: 1-914-921-5118
HTTP://WWW.GABELLI.COM
E-MAIL: [email protected]
(Net Asset Value may be obtained daily
by calling 1-800-GABELLI after
6:00 P.M.)
BOARD OF DIRECTORS
M. Bruce Adelberg Werner J. Roeder, MD
CONSULTANT MEDICAL DIRECTOR
MBA RESEARCH GROUP LAWRENCE HOSPITAL
Anthony J. Colavita Robert M. Smith
ATTORNEY-AT-LAW PRESIDENT AND DIRECTOR
ANTHONY J. COLAVITA, P.C. SMITH ADVISORS, LTD.
Vincent D. Enright Henry G. Van der Eb
FORMER SENIOR VICE PRESIDENT CHAIRMAN
AND CHIEF FINANCIAL OFFICER, THE COMSTOCK FUNDS, INC.
KEYSPAN ENERGY CORP.
Charles L. Minter Anthony R. Pustorino
FORMER CHAIRMAN AND CERTIFIED PUBLIC ACCOUNTANT
CHIEF EXECUTIVE OFFICER PROFESSOR, PACE UNIVERSITY
COMSTOCK PARTNERS, INC.
OFFICERS
Henry G. Van der Eb Martin Weiner, CFA
CHAIRMAN PORTFOLIO MANAGER
AND PRESIDENT
Bruce N. Alpert Charles L. Minter
EXECUTIVE VICE PRESIDENT PORTFOLIO MANAGER
AND TREASURER AND DIRECTOR
James E. McKee Carolyn Matlin
SECRETARY VICE PRESIDENT
Gus Coutsouros
VICE PRESIDENT
DISTRIBUTOR
Gabelli & Company, Inc.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
State Street Bank and Trust Company
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom LLP
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
GABCOMSA00SR
THE
COMSTOCK
FUNDS,
INC.
Comstock Capital Value Fund
Comstock Strategy Fund
SEMI-ANNUAL REPORT
OCTOBER 31, 2000