<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders...................................................... 1
Performance Results......................................................... 3
Performance Perspective..................................................... 4
Portfolio Management Review................................................. 5
Your Diversified Portfolio.................................................. 7
Equity Management Philosophy................................................ 8
Portfolio of Investments.................................................... 9
Statement of Assets and Liabilities......................................... 13
Statement of Operations..................................................... 14
Statement of Changes in Net Assets.......................................... 15
Financial Highlights........................................................ 16
Notes to Financial Statements............................................... 18
Report of Independent Accountants........................................... 25
</TABLE>
PACE ARN 8/95
<PAGE>
LETTER TO SHAREHOLDERS
[PHOTO OF DENNIS J. MCDONNELL AND DON G. POWELL]
August 2, 1995
Dear Shareholder:
The first half of 1995 has been a very positive one for most investors. Both
the fixed-income and stock markets have made considerable gains for the period
ended June 30, 1995. This year has been particularly rewarding for investors
after weathering the difficult markets of 1994.
The first six months of 1995 serve as a reminder of just how quickly markets
can move, and how difficult it can be to predict the timing of those movements.
Moreover, this year reinforces the importance of maintaining a long-term per-
spective, and reaffirms the principle that it is time--not timing--that leads
to investment success.
ECONOMIC OVERVIEW
Due in large part to the Federal Reserve Board's efforts to tighten monetary
supply in 1994, the economy has slowed significantly this year. Evidence of
this guided slowdown was reflected in gross domestic product for the second
quarter, which grew at an annual rate of 0.5 percent, substantially lower than
its first quarter rate of 2.7 percent and fourth quarter 1994 rate of 5.1 per-
cent. While other key economic data, including unemployment rates and housing
starts, have shown mixed signs during recent weeks, the general trend for the
first half of the year suggested a "soft landing" scenario. Subsequently, con-
cern over inflation has subsided, as its annualized rate has run at a modest
pace of 3.2 percent year-to-date.
Financial markets, perceiving the Fed's monetary initiatives had taken hold
without driving the economy into a recession, rallied through the first six
months of the year. With slowing growth, interest rates declined and the value
of fixed-income investments rose. For example, the yield on 30-year Treasury
securities fell from 7.88 percent at the end of December to 6.62 percent at the
end of June, while price on the "long bond" rose 18 percent. Likewise, the
yield on the Bond Buyer's Municipal Bond Index fell from 7.28 percent to 6.37
percent during the same period.
Corporate earnings remained quite strong during the first half of the year,
helping push stocks to new highs. The Dow Jones Industrial Average and the S&P
500 Index gained nearly 19 percent during the period. The strongest performance
has been in the science & technology sector of the market--and in big "capital-
ization" stocks. As the U.S. dollar plunged against several international cur-
rencies, companies--typically large ones--which had diversified overseas were
able to capture additional earnings, while technology stocks benefited from
booming growth in computers and telecommunications throughout the world.
ECONOMIC OUTLOOK
Comfortable with the economy's rate of growth and level of inflation, the Fed
reversed course and lowered short-term interest rates on July 6. We believe the
Fed will move cautiously before easing again, waiting for further signs that
the economy has settled into a slow growth pattern. We anticipate that the
economy will grow at an annual rate between 2 and 3 percent in the second half
of the year and that inflation will run at an annualized rate between 3.3 and
3.5 percent. Based upon a generally slow growth and low inflation outlook, we
believe fixed-income markets will continue
(Continued on page two)
1
<PAGE>
to make positive gains as interest rates fall. We look for stocks to perform
well, but perhaps not as strongly as in the first half of the year, as some
companies may find it difficult to maintain their strong earnings momentum.
During recent months, debate over tax reform has dominated the agenda in
Washington. There has been varied speculation about the impact of reform, which
may have caused you to wonder how it might affect your investment goals. At
this point, no one knows for sure what will happen or when it might actually
take place. As various proposals come to the forefront, there may be short-term
market fluctuations, just as we saw during the debate over the U.S. health care
system. We will continue to keep a close watch over any new developments and
evaluate the potential impact that they may have on your investments.
Once again, it is important to remember that financial markets will inevita-
bly experience highs and lows, but by maintaining a long-term investment per-
spective, it may allow you to ride the ups and downs of the markets more easily
as you pursue your investment goals.
On the following pages, you can read about your Fund's performance for the
period, as well as portfolio management's outlook for the Fund in the coming
months. We hope that you will find the information contained in the question-
and-answer section helpful.
CORPORATE NEWS
Along with your Fund's shareholder report, we are pleased to introduce a new
shareholder publication called Your Portfolio. The purpose of this publication
is to provide you with additional information about your mutual fund invest-
ment, as well as offer helpful insights regarding long-term investment strate-
gies and trends in the marketplace. The publication will be mailed twice a year
with your June and December shareholder reports. This premier issue focuses on
our various shareholder services and privileges designed to make mutual fund
investing easier for you.
We appreciate your continued confidence in your investment with Van Kampen
American Capital, and we look forward to communicating with you again regarding
the performance of your Fund.
Sincerely,
/s/ Don G. Powell /s/ Dennis J. McDonnell
- --------------------------- ---------------------------
Don G. Powell Dennis J. McDonnell
Chairman President
Van Kampen American Capital Van Kampen American Capital
Asset Management, Inc. Asset Management, Inc.
2
<PAGE>
PERFORMANCE RESULTS FOR THE PERIOD ENDED JUNE 30, 1995
AMERICAN CAPITAL PACE FUND, INC.
<TABLE>
<CAPTION>
A SHARES B SHARES C SHARES
TOTAL RETURNS
<S> <C> <C> <C>
One-year total return based on NAV/1/................ 20.62% 19.73% 19.27%
One-year total return/2/............................. 13.72% 14.73% 18.27%
Five-year average annual total return/2/............. 8.47% N/A N/A
Ten-year average annual total return/2/.............. 10.69% N/A N/A
Life-of-Fund average annual total return/2/.......... 12.09% 6.74% 7.82%
Commencement Date.................................... 07/22/69 01/10/92 08/27/93
</TABLE>
N/A = Not Applicable
/1/Assumes reinvestment of all distributions for the period and does not
include payment of the maximum sales charge (5.75% for A shares) or contingent
deferred sales charge for early withdrawal (5% for B shares and 1% for C
shares).
/2/Standardized total return. Assumes reinvestment of all distributions for the
period and includes payment of the maximum sales charge (5.75% for A shares) or
contingent deferred sales charge for early withdrawal (5% for B shares and 1%
for C shares).
See the Prior Performance section of the current prospectus. Past performance
does not guarantee future results. Investment return and net asset value will
fluctuate with market conditions. Fund shares, when redeemed, may be worth more
or less than their original cost.
3
<PAGE>
PUTTING YOUR FUND'S PERFORMANCE IN PERSPECTIVE
As you evaluate your progress toward achieving your financial goals, it is
important to track your investment portfolio's performance at regular inter-
vals. A good starting point is a comparison of your investment holdings to an
applicable benchmark, such as a broad-based market index. Such a comparison
can:
. Illustrate the general market environment in which your investments are
being managed
. Reflect the impact of favorable market trends or difficult market condi-
tions
. Help you evaluate the extent to which your Fund's management team has re-
sponded to the opportunities and challenges presented to them over the pe-
riod measured
For these reasons, you may find it helpful to review the chart below, which
compares your Fund's performance to that of the Standard & Poor's 500 Stock
Index over time. As a broad-based, unmanaged statistical composite, this index
does not reflect any commissions or fees which would be incurred by an in-
vestor purchasing the securities it represents. Similarly, its performance
does not reflect any sales charges or other costs which would be applicable to
an actively managed portfolio, such as that of the Fund.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
American Capital Pace Fund vs. Standard & Poor's 500 Stock Index (June
1985 through June 1995)
[GRAPH APPEARS HERE]
American Capital Standard & Poor's
Pace - A Shares 500-Stock Index
---------------- -----------------
Jun-1985 9,423 10,000
Dec-1985 10,368 11,237
Dec-1986 11,506 13,329
Dec-1987 11,677 14,020
Dec-1988 13,089 16,332
Dec-1989 16,829 21,492
Dec-1990 15,851 20,822
Dec-1991 20,880 27,139
Dec-1992 21,796 29,203
Dec-1993 24,157 32,134
Dec-1994 23,265 32,570
Jun-1995 27,613 39,131
The above chart reflects the performance of Class A shares of the Fund. The
performance of Class A shares will differ from that of other share classes of
the Fund because of the difference in sales charges and/or expenses paid by
shareholders investing in the different share classes. The Fund's performance
assumes reinvestment of all distributions for the period ended June 30, 1995,
and includes payment of the maximum sales charge (5.75% for A shares).
While past performance is not indicative of future performance, the above
information provides a broader vantage point from which to evaluate the
discussion of the Fund's performance found in the following pages.
4
<PAGE>
PORTFOLIO MANAGEMENT REVIEW
AMERICAN CAPITAL PACE FUND, INC.
The following is an interview with the management team of American Capital Pace
Fund. The team is led by Stephen L. Boyd, portfolio manager, and Alan T.
Sachtleben, executive vice president, equity investments.
Q. WHAT FACTORS HAD THE MOST IMPACT ON THE FUND'S PERFORMANCE DURING THE PAST
YEAR?
A. After getting off to a rough start last summer, the Fund's performance be-
gan to turn around in the fourth quarter of 1994 and really picked up in
1995. During 1994, the Fund's performance was hurt by the impact of rising in-
terest rates. The Federal Reserve Board repeatedly raised short-term interest
rates to try to slow economic growth and, as a result, stock prices fell.
However, the first six months of this year were a different story. Interest
rates fell during most of the period, generating renewed enthusiasm among
investors. Stock prices rallied, in a broad-based recovery that was led by the
technology sector. In addition to our technology holdings, the Fund also
benefited from its "bottom-up" stock-picking philosophy, which resulted in our
owning stocks of several companies that were taken over or that were
restructured.
Q. WHAT INDUSTRIES PERFORMED WELL DURING THE PAST YEAR?
A. The technology sector continued to lead the market. Whether we look at the
performance for a three-month, six-month or one-year period, technology
stocks continue to generate strong returns. As a broadly diversified Fund, we
limit the percentage of our assets invested in any one sector, but we still
have more assets invested in technology than in any other sector. The chart be-
low shows the diversification of the portfolio as of June 30, 1995.
Some of the technology stocks owned by the Fund during the past year that
performed especially well included Hewlett-Packard, IBM, Applied Materials (a
semiconductor manufacturer) and 3Com (a telecommunications equipment
manufacturer). Other stocks in the portfolio that performed well were Dr.
Pepper/Seven Up and WestOne Bancorp, both of which were taken over during the
past year. Of course, not all of the stocks in the portfolio performed as well
as these, and past performance is no guarantee of future results.
Q. IN TERMS OF INDUSTRIES, WHAT CHANGES DID YOU MAKE TO THE PORTFOLIO TO
BENEFIT FROM THE CHANGING INTEREST-RATE ENVIRONMENT?
A. We reduced our holdings of energy stocks, while increasing our holdings of
financial services stocks. Companies in the financial sector usually bene-
fit from a lower interest-rate environment, although by the end of June many of
these stocks had become relatively expensive. Also, it is interesting to note
that within the technology sectors some of the companies in the portfolio whose
stock performed well during the past year were aerospace firms like Boeing,
Lockheed Marietta and McDonnell Douglas. A new cycle recently began in the
aerospace industry, boosting their financial performance.
[PIE CHART SHOWING PERCENTAGE OF NET ASSETS APPEARS HERE]
Technology - 24%
Producer Manufacturing - 9%
Raw Materials/Processing Industries - 6%
Energy - 5%
Other - 4%
HealthCare - 11%
Utilities - 3%
Finance - 14%
Consumer Services - 10%
Consumer Distribution - 5%
Consumer Non-Durables - 7%
Consumer Durables - 2%
5
<PAGE>
Q. HOW DID THE FUND PERFORM DURING THE TWELVE-MONTHS ENDED JUNE 30, 1995?
A. Class A shares of the Fund achieved a total return at net asset value of
20.62 percent/1/, including reinvestment of dividends totalling $0.1225 per
share and a capital gains distribution of $1.2975 per share. By comparison, the
Standard & Poor's 500-Stock Index, a broad-based, unmanaged index that reflects
general stock market performance, achieved a total return of 25.99 percent. The
S&P 500 does not reflect any commissions or fees that would be paid by an in-
vestor purchasing the securities it represents. (Please see the chart on page
three for additional Fund performance.)
Q. WHAT'S THE OUTLOOK FOR THE FUND IN THE NEXT SIX MONTHS?
A. The performance of the stock market during the remainder of the year will
depend, in large part, on what action the Fed takes with regard to short-
term interest rates. The stock market also will be dependent on the degree to
which the slowdown in economic activity that seems to be underway impacts cor-
porate earnings. The recent cut in rates should increase economic growth and
cause the stock market to continue to perform well. However, if economic growth
accelerates rapidly to the point of causing inflation, then stocks would not
perform as well.
Since our investment style is to normally remain fully invested and broadly
diversified, we will continue to focus on stock selection and pick stocks that
should do well regardless of changes in interest and economic growth rates. We
believe merger and restructuring activity will remain strong, which may help
the performance of stocks in the portfolio.
/s/ Alan T. Sachtleben /s/ Stephen L. Boyd
- ------------------------ ------------------------
Alan T. Sachtleben Stephen L. Boyd
Executive Vice President Portfolio Manager
Equity Investments
(Please see footnotes on page three)
6
<PAGE>
YOUR DIVERSIFIED PORTFOLIO
AMERICAN CAPITAL PACE FUND, INC.
Your investment in American Capital Pace Fund makes you a part owner of a
diversified portfolio of stocks. Here is a list of the 10 largest holdings in
the portfolio as of June 30, 1995, and a brief description of each holding.
TOP 10 HOLDINGS
<TABLE>
<CAPTION>
<S> <C> <C>
% OF FUND'S
% OF FUND'S NET ASSETS
NET ASSETS SIX MONTHS AGO
Intel Corp. 2.4 1.2
One of the world's leading producers of semiconductors for
computers and other technology applications.
American Capital Small Capitalization Fund 2.1 2.4
Closed-end mutual fund that invests primarily in the
stocks of smaller, aggressive growth companies.
Federal National Mortgage Association 2.0 1.0
Buys conventional and federally insured mortgages from
private lenders.
ITT Corp. 1.7 N/A
Major, international conglomerate with significant
telecommunications and hospitality operations.
Philip Morris Companies, Inc. 1.6 0.5
Major producer and distributor of food and tobacco
products.
Time Warner, Inc. 1.6 0.3
Diversified communications companies with major
publishing, cable television and entertainment operations.
Texas Instruments, Inc. 1.5 0.9
Develops, produces and distributes electronics products
for industrial, consumer and government markets.
International Business Machines 1.3 1.4
One of the world's leading manufacturers and distributors
of computers and information-technology equipment.
Motorola, Inc. 1.3 0.5
Major manufacturer of telecommunications equipment
including cellular products.
Honeywell, Inc. 1.3 N/A
Diversified company with major operations in aerospace and
aviation, commercial and residential building products,
and high-technology equipment for industry.
</TABLE>
N/A = Not Applicable
7
<PAGE>
MANAGING YOUR EQUITY INVESTMENT FOR LONG-TERM PERFORMANCE
AMERICAN CAPITAL PACE FUND, INC.
- --------------------------------------------------------------------------------
Do you ever wonder how a mutual fund invests your money? At Van Kampen American
Capital, we manage our equity funds using a four-step investment process
designed to produce consistently good results over shorter periods of time and
competitive long-term performance.
[_] FULLY INVESTED. The money you invest in one of our stock funds normally will
be fully invested in the market to seek to maximize your potential for long-term
returns. The importance of being fully invested is illustrated by the charts at
right. By missing fewer than 4 percent of the months during the past 68 years,
the value of $1 invested in 1926 was $11.57 at the end of 1994, compared to
$810.54 for $1 that was invested for the entire period. During the most recent
five-year period (1990-1994), the average annual total return for stocks, as
measured by the Standard & Poor's 500-Stock Index, a broad-based, unmanaged
index, was 8.87 percent. However, the average annual return for the S&P 500 for
the same period excluding the 20 best days for stock market performance, was
just 0.67 percent. Of course, past performance is no guarantee of future
performance.
[_] BROADLY DIVERSIFIED. A portfolio that is broadly diversified can help reduce
risk and increase relative stability.
[BAR GRAPH OF MARKET RETURNS 1926-1994, FOR $1
INVESTED IN 1926 APPEARS HERE]
Stock - $810.54
T-Bills - $12.18
Stocks (minus 30 best months) - $11.57
Since our goal is consistency, we emphasize stock funds that are broadly
diversified both in terms of the number of industries and the number of stocks
within each industry in which they invest. Generally, our stock funds invest in
12 broad economic sectors, and in many individual stocks within each sector.
[_] CLEARLY DEFINED STRUCTURE. Maintaining a fund's basic characteristics over
time is an important component in delivering consistent results. It also is
important to effective asset allocation. The basic characteristics of our funds
are determined by a pre-defined profile which remains constant over time. If
you buy a blue-chip stock fund today, it won't become a small-cap stock fund
tomorrow.
[_] BLENDED INVESTMENT STYLE. Market conditions are constantly changing, which
means the stocks that perform well should be expected to change. A rigid
investment style might cause an investor to suffer when certain types of stocks
lose favor with the market. The two most common investment styles are growth,
which emphasizes companies that are projected to experience rapid growth in
earnings, and value, which focuses on companies whose stock is selling for less
than the company's true worth. At Van
[BAR GRAPH OF MARKET RETURNS OF S&P 500 AVERAGE ANNUAL TOTAL RETURNS
(12/31/89-12/31/94) APPEARS HERE]
Fully Invested - 8.87%
Less 10 Best Days - 3.27%
Less 20 Best Days - (0.67%)
Kampen American Capital, our style is blended between growth and value on a
fund-specific basis.
We constantly evaluate the results of our approach and compare it to other
similar funds. Although past performance is no guarantee of future results, we
remain committed to our belief that this approach should help Van Kampen
American Capital shareholders achieve consistent, competitive, long-term
performance.
8
<PAGE>
PORTFOLIO OF INVESTMENTS
June 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares Market
(000) Description Value
- --------------------------------------------------------------------------------
<C> <S> <C>
Common Stock 96.0%
CONSUMER DISTRIBUTION 4.7%
500 Gap, Inc......................................... $ 17,437,500
*200 Kohl's Corp...................................... 9,125,000
*600 Kroger Co........................................ 16,125,000
380 May Department Stores Co. ....................... 15,817,500
250 Sears, Roebuck & Co. ............................ 14,968,750
400 Sysco Corp....................................... 11,800,000
225 Walgreen Co...................................... 11,278,125
500 Wal-Mart Stores, Inc............................. 13,375,000
----------------
TOTAL CONSUMER DISTRIBUTION...................... 109,926,875
----------------
CONSUMER DURABLES 1.6%
200 Eastman Kodak Co................................. 12,125,000
400 Echlin, Inc...................................... 13,900,000
250 General Motors Corp. ............................ 11,718,750
----------------
TOTAL CONSUMER DURABLES.......................... 37,743,750
----------------
CONSUMER NON-DURABLES 7.5%
215 Campbell Soup Co................................. 10,535,000
315 Colgate-Palmolive Co............................. 23,034,375
345 ConAgra, Inc..................................... 12,031,875
190 CPC International, Inc........................... 11,732,500
265 Heinz (H.J.) Co.................................. 11,759,375
350 Nabisco Holdings Corp., Class A.................. 9,450,000
260 PepsiCo, Inc..................................... 11,862,500
500 Philip Morris Companies, Inc..................... 37,187,500
325 Procter & Gamble Co.............................. 23,359,375
250 Ralston-Ralston Purina Group..................... 12,750,000
420 Sara Lee Corp.................................... 11,970,000
----------------
TOTAL CONSUMER NON-DURABLES...................... 175,672,500
----------------
CONSUMER SERVICES 9.7%
120 Capital Cities ABC, Inc.......................... 12,960,000
275 CBS, Inc......................................... 18,425,000
*350 Circus Circus Enterprises, Inc. ................. 12,337,500
*700 Cox Communications, Inc.......................... 13,562,500
265 Disney (Walt) Co................................. 14,740,625
360 Marriott International, Inc...................... 12,915,000
310 McDonald's Corp.................................. 12,128,750
600 News Corp. Ltd., ADR............................. 13,575,000
500 Service Corp. International...................... 15,812,500
*950 Tele-Communications, Inc., Class A............... 22,265,625
900 Time Warner, Inc................................. 37,012,500
200 Tribune Co....................................... 12,275,000
*400 Viacom, Inc., Class B............................ 18,550,000
*125 Wolters Kluwer, NV, ADR.......................... 11,031,250
----------------
TOTAL CONSUMER SERVICES.......................... 227,591,250
----------------
</TABLE>
9
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares Market
(000) Description Value
- -------------------------------------------------------------------------------
<C> <S> <C>
ENERGY 5.1%
720 Coastal Corp.................................... $ 21,870,000
175 Exxon Corp...................................... 12,359,375
120 Mobil Corp...................................... 11,520,000
950 Panhandle Eastern Corp.......................... 23,156,250
225 Repsol, SA, ADR................................. 7,115,625
200 Schlumberger, Ltd............................... 12,425,000
375 USX-Marathon Group.............................. 7,406,250
703 Williams Companies, Inc......................... 24,499,688
----------------
TOTAL ENERGY.................................... 120,352,188
----------------
FINANCE 13.5%
375 Ahmanson (H.F.) & Co............................ 8,250,000
American Capital Small Capitalization Fund, Inc.
4,333 (Cost $41,061,931, see Note 2).................. 48,138,802
143 American International Group, Inc............... 16,302,000
525 Bank of Boston Corp............................. 19,687,500
200 BankAmerica Corp................................ 10,525,000
350 BayBanks, Inc................................... 27,737,500
400 Chase Manhattan Corp............................ 18,800,000
250 Chemical Banking Corp........................... 11,812,500
200 Citicorp........................................ 11,575,000
485 Federal National Mortgage Association........... 45,771,875
275 First Chicago Corp.............................. 16,465,625
325 Great Western Financial Corp.................... 6,703,125
300 Green Tree Financial Corp....................... 13,312,500
700 Greenpoint Financial Corp....................... 16,537,500
275 Merrill Lynch & Co., Inc........................ 14,437,500
500 Midlantic Corp.................................. 20,000,000
100 Morgan Stanley Group, Inc....................... 8,100,000
----------------
TOTAL FINANCE................................... 314,156,427
----------------
HEALTH CARE 11.2%
185 American Home Products Corp..................... 14,314,375
*250 Amgen, Inc...................................... 20,109,375
*300 Astra AB, ADR, Series A......................... 9,225,000
225 Baxter International, Inc....................... 8,184,375
150 Becton, Dickinson & Co.......................... 8,737,500
750 Caremark International, Inc..................... 15,000,000
250 Johnson & Johnson............................... 16,906,250
155 Lilly (Eli) & Co................................ 12,167,500
225 Mallinckrodt Group, Inc......................... 7,987,500
100 Medtronic, Inc.................................. 7,712,500
500 Merck & Co., Inc................................ 24,500,000
400 Mylan Laboratories, Inc......................... 12,300,000
310 Pfizer, Inc..................................... 28,636,250
650 Schering-Plough Corp............................ 28,681,250
200 SmithKline Beecham, ADR......................... 9,050,000
175 St. Jude Medical, Inc........................... 8,771,875
315 Upjohn Co....................................... 11,930,625
200 Warner-Lambert Co............................... 17,275,000
----------------
TOTAL HEALTH CARE............................... 261,489,375
----------------
</TABLE>
10
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares Market
(000) Description Value
- --------------------------------------------------------------------------------
<C> <S> <C>
PRODUCER MANUFACTURING 8.7%
320 Browning-Ferris Industries, Inc.................. $ 11,560,000
133 Deere & Co....................................... 11,345,313
350 General Electric Co.............................. 19,731,250
700 Honeywell, Inc................................... 30,187,500
200 Illinois Tool Works, Inc......................... 11,000,000
330 ITT Corp......................................... 38,775,000
550 Philips Electronics NV, ADR...................... 23,512,500
400 Rockwell International Corp...................... 18,300,000
225 United Technologies Corp......................... 17,578,125
296 Wheelabrator Technologies, Inc................... 4,541,775
550 WMX Technologies, Inc............................ 15,606,250
----------------
TOTAL PRODUCER MANUFACTURING..................... 202,137,713
----------------
RAW MATERIALS/PROCESSING INDUSTRIES 6.3%
225 Air Products & Chemicals, Inc.................... 12,543,750
425 Champion International Corp...................... 22,153,125
150 Eastman Chemical Co.............................. 8,925,000
400 Freeport McMoran, Inc............................ 7,050,000
350 Grace (W.R.) & Co................................ 21,481,250
100 International Paper Co........................... 8,575,000
450 James River Corp................................. 12,431,250
325 Lubrizol Corp.................................... 11,496,875
150 Monsanto Co...................................... 13,518,750
400 Pall Corp........................................ 8,900,000
150 Scott Paper Co................................... 7,425,000
325 Sherwin Williams Co.............................. 11,588,812
----------------
TOTAL RAW MATERIALS/PROCESSING INDUSTRIES........ 146,088,812
----------------
TECHNOLOGY 24.0%
*295 Applied Materials, Inc........................... 25,554,375
185 Boeing Co........................................ 11,585,625
*450 Cisco Systems, Inc............................... 22,753,125
*600 Compaq Computer Corp............................. 27,225,000
*450 Cypress Semiconductor Corp....................... 18,225,000
*320 DSC Communications Corp.......................... 14,880,000
375 Hewlett-Packard Co............................... 27,937,500
900 Intel Corp....................................... 56,981,250
325 International Business Machines Corp............. 31,200,000
*90 KLA Instruments Corp............................. 6,952,500
300 Lockheed Martin Corp............................. 18,937,500
235 Loral Corp....................................... 12,161,250
250 McDonnell Douglas Corp........................... 19,187,500
*280 Microsoft Corp................................... 25,305,000
450 Motorola, Inc.................................... 30,206,250
*950 National Semiconductor Corp...................... 26,362,500
*425 Nokia Corp....................................... 25,340,625
150 Northrop Grumman Corp............................ 7,818,750
*300 Oracle System Corp............................... 11,587,500
*200 Silicon Graphics, Inc............................ 7,975,000
*650 Symantec Corp.................................... 18,768,750
*225 Teradyne Technologies, Inc....................... 14,709,375
</TABLE>
11
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares Market
(000) Description Value
- -------------------------------------------------------------------------------
<C> <S> <C>
270 Texas Instruments, Inc........................... $ 36,146,250
*160 3Com Corp........................................ 10,720,000
480 Varian Associates, Inc........................... 26,520,000
*840 VLSI Technology, Inc............................. 25,311,025
----------------
TOTAL TECHNOLOGY................................. 560,351,650
----------------
TRANSPORTATION 0.5%
200 Burlington Northern, Inc......................... 12,675,000
----------------
UTILITIES 3.2%
*290 ALC Communications Corp.......................... 13,086,250
*466 Cellular Communications, Inc., Class A........... 21,189,350
750 MCI Communications Corp.......................... 16,500,000
*850 WorldCom, Inc.................................... 22,950,000
----------------
TOTAL UTILITIES.................................. 73,725,600
----------------
TOTAL COMMON STOCK (Cost $1,973,639,217)......... 2,241,911,140
----------------
Principal
Amount
(000) SHORT-TERM INVESTMENTS 3.9%
- --------
REPURCHASE AGREEMENT 1.9%
$43,250 SBC Capital Markets, Inc., dated 6/30/95, 6.125%
due 7/3/95 (Collateralized by U.S. Government
obligations in a pooled cash account) repurchase
proceeds $43,272,076............................ 43,250,000
----------------
UNITED STATES AGENCY AND GOVERNMENT
OBLIGATIONS 2.0%
Federal Home Loan Mortgage Corp., 6.05% to 6.15%,
8,970 8/7/95 to 10/10/95............................... 8,874,031
Federal National Mortgage Association, 5.67% to
36,825 5.74%, 10/3/95 to 12/15/95....................... 36,163,280
2,000 United States Treasury Bills, 5.55%, 12/07/95.... 1,951,740
----------------
TOTAL UNITED STATES AGENCY AND GOVERNMENT
OBLIGATIONS...................................... 46,989,051
----------------
TOTAL SHORT-TERM INVESTMENTS (Cost
$90,244,754)..................................... 90,239,051
----------------
TOTAL INVESTMENTS (Cost $2,063,883,971) 99.9%.... 2,332,150,191
Other assets and liabilities, net 0.1%........... 2,424,637
----------------
NET ASSETS 100%.................................. $2,334,574,828
----------------
</TABLE>
*Non-income producing security.
See Notes to Financial Statements.
12
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments, at market value (Cost $2,063,883,971).............. $2,332,150,191
Cash............................................................ 4,465
Receivable for investments sold................................. 62,810,188
Dividends receivable............................................ 3,205,165
Receivable for Fund shares sold................................. 663,849
Other assets.................................................... 251,493
--------------
Total Assets................................................... 2,399,085,351
--------------
LIABILITIES
Payable for investments purchased............................... 51,271,663
Payable for Fund shares redeemed................................ 10,181,553
Due to Distributor.............................................. 1,291,136
Due to Adviser.................................................. 892,198
Due to shareholder service agent................................ 575,500
Deferred Directors' compensation................................ 145,031
Accrued expenses................................................ 153,442
--------------
Total Liabilities.............................................. 64,510,523
--------------
NET ASSETS, equivalent to $11.62 per share for Class A, $11.53
per share for Class B, and $11.52 per share for Class C shares. $2,334,574,828
--------------
NET ASSETS WERE COMPRISED OF:
Capital stock, at par; 196,211,415 Class A, 4,592,679 Class B,
and 193,762 Class C shares outstanding......................... $ 100,498,928
Capital surplus................................................. 1,798,956,195
Undistributed net realized gain on securities................... 151,712,168
Net unrealized appreciation of securities....................... 268,266,220
Undistributed net investment income............................. 15,141,317
--------------
NET ASSETS...................................................... $2,334,574,828
--------------
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
STATEMENT OF OPERATIONS
Year Ended June 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends......................................................... $ 37,492,288
Interest.......................................................... 12,437,627
------------
Investment income................................................ 49,929,915
------------
EXPENSES
Management fees................................................... 10,261,661
Shareholder service agent's fees and expenses..................... 6,786,288
Accounting services............................................... 284,101
Service fees--Class A............................................. 4,422,461
Distribution and service fees--Class B............................ 419,009
Distribution and service fees--Class C............................ 17,641
Directors' fees and expenses...................................... 55,553
Audit fees........................................................ 44,017
Custodian fees.................................................... 41,138
Legal fees........................................................ 16,328
Reports to shareholders........................................... 367,890
Registration and filing fees...................................... 122,034
Miscellaneous..................................................... 198,022
------------
Total expenses................................................... 23,036,143
------------
NET INVESTMENT INCOME............................................ 26,893,772
------------
REALIZED AND UNREALIZED GAIN ON SECURITIES
Net realized gain on investments.................................. 217,586,805
Net realized gain on futures contracts............................ 12,465,021
Net unrealized appreciation of investments during the period...... 153,313,792
Net unrealized appreciation of futures contracts during the
period........................................................... 6,789,075
------------
NET REALIZED AND UNREALIZED GAIN ON SECURITIES................... 390,154,693
------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................. $417,048,465
------------
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended June 30
------------------------------
1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
NET ASSETS, beginning of period................ $2,189,514,914 $2,473,920,030
-------------- --------------
OPERATIONS
Net investment income......................... 26,893,772 23,494,898
Net realized gain on securities............... 230,051,826 235,361,856
Net unrealized appreciation (depreciation) of
securities during the period................. 160,102,867 (265,562,923)
-------------- --------------
Increase (decrease) in net assets resulting
from operations............................. 417,048,465 (6,706,169)
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income
Class A...................................... (22,916,396) (24,273,814)
Class B...................................... (141,014) (50,746)
Class C...................................... (5,920) (2,996)
-------------- --------------
(23,063,330) (24,327,556)
-------------- --------------
Net realized gain on securities
Class A...................................... (242,510,817) (314,435,443)
Class B...................................... (5,629,695) (3,566,766)
Class C...................................... (236,324) (55,106)
-------------- --------------
(248,376,836) (318,057,315)
-------------- --------------
Total distributions.......................... (271,440,166) (342,384,871)
-------------- --------------
CAPITAL TRANSACTIONS
Proceeds from shares sold
Class A...................................... 800,964,139 575,629,932
Class B...................................... 152,874,778 136,091,283
Class C...................................... 14,211,717 4,759,679
-------------- --------------
968,050,634 716,480,894
-------------- --------------
Proceeds from shares issued for distributions
reinvested
Class A...................................... 242,657,855 309,712,281
Class B...................................... 4,892,097 3,364,645
Class C...................................... 176,726 51,108
-------------- --------------
247,726,678 313,128,034
-------------- --------------
Cost of shares redeemed
Class A...................................... (1,059,520,324) (834,638,575)
Class B...................................... (143,264,491) (126,789,572)
Class C...................................... (13,540,882) (3,494,857)
-------------- --------------
(1,216,325,697) (964,923,004)
-------------- --------------
Increase (decrease) in net assets resulting
from capital transactions................... (548,385) 64,685,924
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS.............. 145,059,914 (284,405,116)
-------------- --------------
NET ASSETS, end of period...................... $2,334,574,828 $2,189,514,914
-------------- --------------
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of capital stock outstanding throughout each of the
periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
--------------------------------------------------------------
Year Ended June 30
--------------------------------------------------------------
1995(/1/) 1994 1993 1992 1991
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
Net asset value,
beginning of period.... $ 11.05 $ 12.95 $ 13.21 $ 12.37 $ 12.69
----------- ----------- ---------- ----------- -----------
INCOME FROM OPERATIONS
Investment income...... .25 .26 .305 .335 .40
Expenses............... (.11) (.13) (.14) (.14) (.125)
----------- ----------- ---------- ----------- -----------
Net investment income... .14 .13 .165 .195 .275
Net realized and
unrealized gains or
losses on securities... 1.85 (.1475) 1.69 1.095 .1575
----------- ----------- ---------- ----------- -----------
Total from investment
operations............. 1.99 (.0175) 1.855 1.29 .4325
----------- ----------- ---------- ----------- -----------
LESS DISTRIBUTIONS FROM
Net investment income.. (.1225) (.135) (.145) (.2375) (.29)
Net realized gains on
securities............ (1.2975) (1.7475) (1.97) (.2125) (.4625)
----------- ----------- ---------- ----------- -----------
Total distributions..... (1.42) (1.8825) (2.115) (.45) (.7525)
----------- ----------- ---------- ----------- -----------
Net asset value, end of
period................. $ 11.62 $ 11.05 $ 12.95 $ 13.21 $ 12.37
----------- ----------- ---------- ----------- -----------
TOTAL RETURN(/2/)....... 20.62% (.64%) 15.20% 10.58% 4.31%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of
period (millions)...... $2,279.4 $2,152.5 $2,446.2 $2,350.2 $2,348.7
Average net assets
(millions)............. $2,146.7 $2,378.3 $2,409.9 $2,456.5 $2,275.2
Ratios to average net
assets
Expenses............... 1.04% 1.02% 1.06% 1.00% 1.01%
Net investment income.. 1.24% .99% 1.22% 1.38% 2.22%
Portfolio turnover rate. 248% 112% 113% 54% 40%
</TABLE>
(/1/)Based on average shares outstanding.
(/2/)Total return does not consider the effect of sales charges.
See Notes to Financial Statements.
16
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share of capital stock outstanding throughout each of the
periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B(/2/) Class C(/2/)
---------------------------------------- --------------------
January 10, August 27,
1992(/1/) Year 1993(/1/)
Year Ended June 30 through Ended through
--------------------------- June 30, June 30, June 30,
1995 1994 1993 1992 1995 1994
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
Net asset value,
beginning of period.... $10.96 $12.86 $13.13 $13.87 $10.99 $13.25
-------- -------- ------- ------ -------- --------
INCOME FROM OPERATIONS
Investment income...... .25 .25 .29 .15 .25 .17
Expenses............... (.20) (.22) (.26) (.10) (.20) (.15)
-------- -------- ------- ------ -------- --------
Net investment income... .05 .03 .03 .05 .05 .02
Net realized and
unrealized gains or
losses on securities... 1.85 (.1575) 1.705 (.79) 1.81 (.4375)
-------- -------- ------- ------ -------- --------
Total from investment
operations............. 1.90 (.1275) 1.735 (.74) 1.86 (.4175)
-------- -------- ------- ------ -------- --------
LESS DISTRIBUTIONS FROM
Net investment income.. (.0325) (.025) (.035) -- (.0325) (.095)
Net realized gains on
securities............ (1.2975) (1.7475) (1.97) -- (1.2975) (1.7475)
-------- -------- ------- ------ -------- --------
Total distributions..... (1.33) (1.7725) (2.005) -- (1.33) (1.8425)
-------- -------- ------- ------ -------- --------
Net asset value, end of
period................. $11.53 $10.96 $12.86 $13.13 $11.52 $10.99
-------- -------- ------- ------ -------- --------
TOTAL RETURN(/3/)....... 19.73% (1.46%) 12.84% (5.34%) 19.27% (3.70%)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of
period (millions)...... $53.0 $35.8 $27.7 $11.7 $ 2.2 $ 1.2
Average net assets
(millions)............. $41.9 $31.5 $16.8 $ 3.9 $ 1.8 $ 0.7
Ratios to average net
assets (annualized)
Expenses................ 1.84% 1.79% 1.98% 1.82% 1.84% 1.81%
Net investment income... .44% .21% .25% .56% .44% .24%
Portfolio turnover rate. 248% 112% 113% 54% 248% 112%
</TABLE>
(/1/)Commencement of offering of sales.
(/2/)Based on average shares outstanding.
(/3/)Total return for periods of less than one full year are not annualized.
Total return does not consider the effect of sales charges.
See Notes to Financial Statements.
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
American Capital Pace Fund, Inc. (the "Fund") is registered under the Invest-
ment Company Act of 1940, as amended, as a diversified open-end management in-
vestment company. The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its financial state-
ments.
A.INVESTMENT VALUATIONS
Securities, including options, listed or traded on a national securities
exchange or NASDAQ, are valued at the last sale price. Unlisted securities
and listed securities for which the last sale price is not available are
valued at the most recent bid price. Options are valued at the last sale
price or, if no sales are reported, at the mean between the bid and asked
prices.
Short-term investments with a maturity of 60 days or less when purchased
are valued at amortized cost, which approximates market value. Short-term
investments with a maturity of more than 60 days when purchased are valued
based on market quotations until the remaining days to maturity becomes
less than 61 days. From such time, until maturity, the investments are val-
ued at amortized cost.
B.OPTIONS AND FUTURES CONTRACTS
General--Transactions in options and futures contracts are utilized in
strategies to manage the market risk of the Fund's investments. The pur-
chase of a futures contract or call option (or the writing of a put option)
increases the impact on net asset value of changes in the market price of
investments. There is also a risk that the market movement of such instru-
ments may not be in the direction forecasted.
Call and Put Options--The Fund may write covered call options and collater-
alized put options. Options written on futures contracts require initial
margin deposits. Options purchased are recorded as investments; options
written (sold) are accounted for as liabilities. When an option expires,
the premium (original option value) is realized as a gain if the option was
written or realized as a loss if the option was purchased. When the exer-
cise of an option results in a cash settlement, the difference between the
premium and the settlement proceeds is realized as a gain or loss. When se-
curities are acquired or delivered upon exercise of an option, the acquisi-
tion cost or sale proceeds are adjusted by the amount of the premium. When
an option is closed, the difference between the premium and the cost to
close the position is realized as a gain or loss.
Futures Contracts--Upon entering into futures contracts, the Fund main-
tains, in a segregated account with its custodian, securities with a value
equal to its obligation under the futures contracts. A portion of these
funds are held as collateral in an account in the name of the broker, the
Fund's agent in acquiring the futures position. During the period the
futures contract is open, changes in the value of the contract ("various
margin") are recognized by marking the contracts to market on a daily ba-
sis. As unrealized gains or losses are incurred, variation margin payments
are received from or made to the broker. Upon the closing or cash settle-
ment of a contract, gains or losses are realized. The cost of securities
acquired through delivery under a contract is adjusted by the unrealized
gain or loss on the contract.
C.REPURCHASE AGREEMENTS
A repurchase agreement is a short-term investment in which the Fund ac-
quires ownership of a debt security and the seller agrees to repurchase the
security at a future time and specified price. The Fund may invest indepen-
dently in repurchase agreements, or transfer uninvested cash balances into
a pooled cash account along with other investment companies advised by Van
Kampen American Capital Asset Management, Inc. (the "Adviser"), the daily
aggregate of which is invested in repurchase agreements. Repurchase agree-
ments are collateralized by the underlying debt security. The Fund will
make payment for such securities only upon physical delivery or evidence of
book entry transfer to the account of the custodian bank. The seller is re-
quired to maintain the value of the underlying security at not less than
the repurchase proceeds due the Fund.
D.FEDERAL INCOME TAXES
No provision for federal income taxes is required because the Fund has
elected to be taxed as a "regulated investment company" under the Internal
Revenue Code and intends to maintain this qualification by annually dis-
tributing all of its taxable net investment income and taxable net realized
gains on investments to its shareholders.
E.INVESTMENT TRANSACTIONS AND RELATED INVESTMENT INCOME
Investment transactions are accounted for on the trade date. Realized gains
and losses on investments are determined on the basis of identified cost.
Dividend income is recorded on the ex-dividend date. Interest income is ac-
crued daily.
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
F.DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the record
date. The Fund distributes tax basis earnings in accordance with the mini-
mum distribution requirements of the Internal Revenue Code, which may dif-
fer from generally accepted accounting principles. Such dividends or
distributions may exceed financial statement earnings.
NOTE 2-MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Adviser serves as investment manager of the Fund. Management fees are paid
monthly, based on the average daily net assets of the Fund at an annual rate of
.50% of the first $1 billion, .45% of the next $1 billion, .40% of the next $1
billion, and .35% of the amount in excess of $3 billion.
Accounting services include the salaries and overhead expenses of the Fund's
Treasurer and the personnel operating under his direction. Charges are allo-
cated among investment companies advised by the Adviser. For the period, these
charges included $38,348 as the Fund's share of the employee costs attributable
to the Fund's accounting officers. A portion of the accounting services expense
was paid to the Adviser in reimbursement of personnel, facilities and equipment
costs attributable to the provision of accounting services to the Fund. The
services provided by the Adviser are at cost.
ACCESS Investor Services, Inc., an affiliate of the Adviser, serves as the
Fund's shareholder service agent. These services are provided at cost plus a
profit. For the period, the fees for such services were $6,091,417.
The Fund has been advised that Van Kampen American Capital Distributors, Inc.
(the "Distributor") and Advantage Capital Corporation (the "Retail Dealer"),
both affiliates of the Adviser, received $230,879 and $114,516, respectively,
as their portion of the commissions charged on sales of Fund shares during the
period.
During the period, the Fund paid brokerage commissions of $195,347 to companies
which are deemed affiliates of the Adviser's parent because it owns more than
5% of the companies' outstanding voting securities.
Under the Distribution Plans, each class of shares pays up to .25% per annum of
its average net assets to reimburse the Distributor for expenses and service
fees incurred. Class B and Class C shares pay an additional fee of up to .75%
per annum of their average net assets to reimburse the Distributor for its
distribution expenses. Actual distribution expenses incurred by the Distributor
for Class B and Class C shares may exceed the amounts reimbursed to the
Distributor by the Fund. At the end of the period, the unreimbursed expenses
incurred by the Distributor under the Class B and Class C plans aggregated
approximately $1.7 million and $19,000, respectively, and may be carried
forward and reimbursed through either the collection of the contingent deferred
sales charges from share repurchases or, subject to the annual renewal of the
plans, future Fund reimbursements of distribution fees.
Legal fees were for services rendered by O'Melveny & Myers, counsel for the
Fund. Lawrence J. Sheehan, of counsel to that firm, is a director of the Fund.
Certain officers and directors of the Fund are officers and directors of the
Adviser, the Distributor, the Retail Dealer, and the shareholder service agent.
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
At the end of the period, the Fund owned approximately 50% of the American Cap-
ital Small Capitalization Fund, Inc. ("Small Cap"), an investment company man-
aged by the Adviser. Small Cap comprised approximately 2% of the Fund's total
net assets. Small Cap's portfolio consisted of the following securities:
<TABLE>
<CAPTION>
Number Market
of Shares Value
- --------------------------------------------------------------------------------
<C> <S> <C>
Common Stock
CONSUMER DISTRIBUTION
9,000 Arbor Drugs, Inc....................................... $ 148,500
20,000 Barnes & Noble, Inc.................................... 677,500
13,000 Big B, Inc............................................. 185,250
5,000 Books-A-Million, Inc................................... 77,500
3,000 Carson Pirie Scott & Co................................ 49,125
4,000 CDW Computer Centers, Inc.............................. 206,000
21,000 Circuit City Stores, Inc............................... 674,625
42,000 Claire's Stores, Inc................................... 761,250
12,000 CompUSA, Inc........................................... 388,500
26,000 Fingerhut Companies, Inc............................... 406,250
7,000 Food Lion, Inc......................................... 42,438
23,000 General Nutrition Companies, Inc....................... 782,000
16,000 Gymboree Corp.......................................... 470,000
4,000 Haggar Corp............................................ 78,000
11,000 Health Management, Inc................................. 119,625
2,000 Hills Stores Co........................................ 48,000
14,000 MacFrugals Bargains Closeouts.......................... 248,500
4,000 Medicine Shoppe International, Inc..................... 137,000
6,000 Men's Wearhouse, Inc................................... 165,000
15,000 Micro Wholesale, Inc................................... 675,000
4,000 Nine West Group, Inc................................... 146,500
39,900 Pier 1 Imports, Inc.................................... 364,088
5,000 Proffitts, Inc......................................... 145,000
5,000 Rex Stores Corp........................................ 68,750
3,000 Richfood Holdings, Inc................................. 66,750
7,000 Ross Stores, Inc....................................... 82,250
12,500 Rykoff-Sexton, Inc..................................... 215,625
5,000 Shoe Carnival, Inc..................................... 27,813
22,800 Stop & Shop Companies, Inc............................. 589,950
20,000 Sunglass Hut International, Inc........................ 695,000
3,000 Urban Outfitters, Inc.................................. 66,750
13,000 Viking Office Products, Inc............................ 476,125
39,000 Waban, Inc............................................. 580,125
3,000 Younkers, Inc.......................................... 51,000
12,000 Zale Corp.............................................. 160,500
-----------
TOTAL CONSUMER DISTRIBUTION........................... 10,076,289
-----------
CONSUMER DURABLES
11,000 Aldila, Inc............................................ 56,375
11,000 Automotive Industries Holdings, Inc., Class A.......... 299,750
3,000 Borg Warner Automotive, Inc............................ 85,875
10,000 Breed Technologies, Inc................................ 238,750
8,000 Champion Enterprises, Inc.............................. 126,000
35,000 Clayton Homes, Inc..................................... 564,375
16,000 Echlin, Inc............................................ 552,000
5,000 Fleetwood Enterprises, Inc............................. 98,125
8,000 Harman International Industries, Inc................... 320,000
11,000 Leggett & Platt, Inc................................... 478,500
7,000 Libbey, Inc............................................ 146,125
32,000 Masland Corp........................................... 412,000
</TABLE>
<TABLE>
<CAPTION>
Number Market
of Shares Value
- --------------------------------------------------------------------------------
<C> <S> <C>
41,000 Maytag Co............................................... $ 645,750
12,000 Outboard Marine Corp.................................... 234,000
7,000 Smith (A.O.) Corp....................................... 163,625
3,000 Strattec Security Corp.................................. 36,375
12,000 Toro Co................................................. 334,500
33,000 Winnebago Industries, Inc............................... 280,500
-----------
TOTAL CONSUMER DURABLES................................ 5,072,625
-----------
CONSUMER NON-DURABLES
15,000 American Greetings Corp., Class A....................... 440,625
5,000 Armor All Products Corp................................. 83,750
6,000 Barefoot, Inc........................................... 82,500
7,000 Fieldcrest Cannon, Inc.................................. 147,000
9,000 Fossil, Inc............................................. 169,875
15,000 Griffon Corp............................................ 118,125
13,000 IBP, Inc................................................ 563,875
14,000 Nautica Enterprises, Inc................................ 504,000
5,000 Nu-kote Holdings, Inc., Class A......................... 156,250
11,000 Phillips-Van Heusen Corp................................ 163,625
3,000 Scotts Co., Class A..................................... 65,625
9,000 Smithfield Foods, Inc................................... 191,813
14,000 Springs Industries, Inc................................. 514,500
4,000 Starbucks Corp.......................................... 141,500
8,000 St. John Knits, Inc..................................... 356,000
56,000 Topps, Inc.............................................. 350,000
1,000 Unifi, Inc.............................................. 24,225
9,000 Universal Foods Corp.................................... 290,250
14,000 Westpoint Stevens, Inc.................................. 246,750
5,000 Whitman Corp............................................ 96,875
18,000 Wolverine World Wide, Inc............................... 369,000
-----------
TOTAL CONSUMER NON-DURABLES............................ 5,076,163
-----------
CONSUMER SERVICES
4,000 Advo, Inc............................................... 73,000
4,000 American Media, Inc., Class A........................... 26,000
5,000 Banta Corp.............................................. 169,375
12,000 Belo (A.H.) Corp........................................ 366,000
25,000 Bowne & Co., Inc........................................ 428,125
1,000 Central Newspapers, Inc., Class A....................... 29,000
3,500 Club Med, Inc........................................... 111,563
19,000 Equifax, Inc............................................ 634,125
5,000 Hospitality Franchise Systems, Inc...................... 174,375
3,000 Jones Intercable, Inc., Class A......................... 41,625
11,000 Kelly Services, Inc..................................... 283,250
1,000 Lee Enterprises, Inc.................................... 38,000
21,000 Lone Star Steakhouse & Saloon, Inc...................... 658,875
21,000 Mirage Resorts, Inc..................................... 645,750
27,760 Ogden Corp.............................................. 610,720
11,000 Olsten Corp............................................. 353,375
4,000 OmniCom Group, Inc...................................... 242,988
5,200 PHH Corp................................................ 230,100
25,500 Players International, Inc.............................. 513,188
11,000 Regal Cinemas, Inc...................................... 352,000
</TABLE>
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Market
of Shares Value
- --------------------------------------------------------------------------------
<C> <S> <C>
CONSUMER SERVICES-continued
8,000 Rio Hotel & Casino, Inc. .............................. $ 109,275
28,000 Robert Half International, Inc......................... 717,500
26,000 Sbarro, Inc............................................ 607,750
4,000 Scientific Games Holdings Corp......................... 110,350
13,500 Spelling Entertainment, Group I........................ 131,625
22,000 Wendy's International, Inc............................. 398,750
32,000 Westcott Communications, Inc........................... 560,000
-----------
TOTAL CONSUMER SERVICES............................... 8,616,684
-----------
ENERGY
5,000 Addington Resources, Inc............................... 71,250
17,000 BJ Services Co......................................... 388,875
5,000 Chesapeake Energy Corp................................. 125,625
22,000 Eastern Enterprises.................................... 657,250
19,000 El Paso Natural Gas Co................................. 543,875
19,000 KCS Energy, Inc........................................ 401,375
67,000 Nabors Industries, Inc................................. 561,125
9,000 NACCO Industries, Inc., Class A........................ 538,875
2,500 National Fuel Gas Co................................... 71,563
8,000 New Jersey Resources Corp.............................. 185,000
24,000 NICOR, Inc............................................. 636,000
16,000 Offshore Logistics, Inc................................ 220,000
14,400 ONEOK, Inc............................................. 307,800
3,000 Oryx Energy Co......................................... 41,250
19,000 Pacific Enterprises.................................... 460,750
7,000 Quaker State Corp...................................... 104,125
6,000 Smith International, Inc............................... 100,500
30,000 Varco International, Inc............................... 251,250
5,400 WICOR, Inc............................................. 152,550
188 Williams Companies, Inc................................ 6,486
-----------
TOTAL ENERGY.......................................... 5,825,524
-----------
FINANCE
12,000 Advanta Corp., Class A................................. 489,000
15,000 AMBAC, Inc............................................. 600,000
29,000 Bankers Life Holdings Corp............................. 547,375
8,000 BanPonce Corp.......................................... 282,000
8,000 Bear Stearns Companies, Inc............................ 175,775
6,000 Charter One Financial, Inc............................. 147,000
10,000 CMAC Investment Corp................................... 437,500
5,000 Comdisco, Inc.......................................... 151,875
11,000 Commercial Federal Corp................................ 301,125
2,000 Eaton Vance Corp....................................... 65,000
13,000 Finova Group, Inc...................................... 459,875
7,000 First American Corp.................................... 252,000
2,000 First Financial Corp................................... 34,000
13,000 First USA, Inc......................................... 570,375
14,000 Foothill Group, Inc., Class A.......................... 357,000
12,300 Fremont General Corp................................... 298,275
6,000 GATX Corp.............................................. 280,500
50,000 Hibernia Corp., Class A................................ 443,750
5,000 Inter-Regional Financial Group, Inc.................... 146,875
20,000 Mercury Finance Co..................................... 380,000
</TABLE>
<TABLE>
<CAPTION>
Number Market
of Shares Value
- --------------------------------------------------------------------------------
<C> <S> <C>
7,300 MGIC Investment Corp................................... $ 345,838
11,000 NorthFork Bancorporation............................... 196,175
2,000 Ohio Casualty Corp..................................... 63,000
20,000 Peoples Heritage Financial Group, Inc.................. 306,250
25,000 Protective Life Corp................................... 675,000
18,000 Regions Financial Corp................................. 667,125
25,000 Reliance Group Holdings, Inc........................... 162,500
17,000 Reliastar Financial Corp............................... 650,250
3,000 Roosevelt Financial Group, Inc......................... 49,500
28,000 SouthTrust Corp........................................ 651,000
14,300 Star Banc Corp......................................... 654,225
10,000 TCF Financial Corp..................................... 463,750
13,000 Web Del Corp........................................... 303,788
-----------
TOTAL FINANCE......................................... 11,607,701
-----------
HEALTH CARE
8,000 Abbey Healthcare Group, Inc............................ 310,800
24,000 AMSCO International, Inc............................... 333,000
12,000 Circa Pharmaceuticals, Inc............................. 364,500
6,000 Cognex Corp............................................ 240,750
1,000 Cordis Corp............................................ 65,500
4,000 Dentsply International, Inc............................ 143,000
13,000 Fox Meyer Health Corp.................................. 230,750
14,000 Genetic Therapy, Inc................................... 196,000
37,000 Gilead Sciences, Inc................................... 642,875
2,000 HBO & Co............................................... 106,250
8,000 Healthsouth Rehabilitation............................. 142,000
6,000 ICN Pharmaceuticals, Inc............................... 93,780
26,000 ICOS Corp.............................................. 152,750
9,000 Intergrated Health Services, Inc....................... 268,875
21,000 Lincare Holdings, Inc.................................. 561,750
1,000 Manor Care, Inc........................................ 29,125
1,000 Maxicare Health Plans, Inc............................. 14,938
19,000 Mylan Laboratories, Inc................................ 581,875
15,000 Nellcor, Inc........................................... 671,250
14,000 Oxford Health Plans, Inc............................... 658,000
6,000 Pacific Physician Services, Inc........................ 76,500
11,000 Pacificare Health Systems, Inc., Class A............... 552,750
3,000 Quintiles Transnational................................ 132,000
10,000 Renal Treatment Centers................................ 249,688
14,000 Steris Corp............................................ 686,000
3,000 Target Therapeutics, Inc............................... 129,000
17,000 Thermo Cardiosystems, Inc.............................. 624,750
2,000 United American Healthcare Corp........................ 34,750
3,000 Universal Health Services, Inc......................... 86,625
20,000 Vivra, Inc............................................. 542,500
15,000 Watsons Pharmaceuticals, Inc........................... 574,688
-----------
TOTAL HEALTH CARE..................................... 9,497,019
-----------
PRODUCER MANUFACTURING
16,000 AGCO Corp.............................................. 600,000
5,000 Ametek, Inc............................................ 89,375
9,600 Aptar Group, Inc....................................... 304,800
</TABLE>
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Market
of Shares Value
- --------------------------------------------------------------------------------
<C> <S> <C>
PRODUCER MANUFACTURING- continued
7,000 Blount, Inc., Class A.................................. $ 311,500
1,000 Briggs & Stratton Corp................................. 34,500
13,000 Cummins Engine Co., Inc................................ 572,000
8,000 Danaher Corp........................................... 246,000
20,000 Detroit Diesel Corp.................................... 422,500
11,000 Duracraft Corp......................................... 283,250
4,000 Granite Construction, Inc.............................. 88,500
17,500 IDEX Corp.............................................. 590,625
7,000 Indresco, Inc.......................................... 107,625
20,000 Juno Lighting, Inc..................................... 322,500
2,000 Kent Electronics Corp.................................. 76,000
8,000 Kulicke & Soffa Industries, Inc........................ 530,000
12,000 Mueller Industries, Inc................................ 588,000
2,000 National Service Industries, Inc....................... 58,250
9,000 Southdown, Inc......................................... 172,125
36,000 Sterling Chemicals, Inc................................ 418,500
28,300 Thermo Instrument Systems, Inc......................... 696,888
1,000 Timken Co.............................................. 46,038
8,000 United Waste Systems, Inc.............................. 268,000
8,000 Varity Corp............................................ 353,000
6,000 Watts Industries, Inc., Class A........................ 148,500
12,000 Wellman, Inc........................................... 324,000
6,000 Wolverine Tube Co...................................... 192,450
-----------
TOTAL PRODUCER MANUFACTURING.......................... 7,844,926
-----------
RAW MATERIALS/PROCESSING INDUSTRIES
9,900 Amcast Industrial Corp................................. 191,813
6,000 First Mississippi Corp................................. 201,750
19,000 Georgia Gulf Corp...................................... 627,000
24,000 Handy & Harman......................................... 375,000
8,000 Inland Steel Industries, Inc........................... 239,000
2,000 International Specialty Products, Inc.................. 16,750
14,000 Jefferson Smurfit Corp................................. 194,250
2,000 Justin Industries, Inc................................. 22,250
22,000 Longview Fibre Co...................................... 379,500
15,000 Lubrizol Corp.......................................... 528,750
24,000 Lyondell Petrochemical Co.............................. 609,000
20,000 Magma Copper Co., Class B.............................. 327,500
3,000 Medusa Corp............................................ 73,500
2,000 NCH Corp............................................... 112,000
12,000 Olin Corp.............................................. 618,000
49,000 Owens-Illinois, Inc.................................... 661,500
2,000 Pentair, Inc........................................... 87,250
10,000 Potlatch, Corp......................................... 418,750
10,000 Sealed Air Corp........................................ 441,250
15,000 Terra Industries, Inc.................................. 181,875
7,000 USG Corp............................................... 168,000
15,000 Vigoro Corp............................................ 622,500
4,000 Vulcan Materials Co.................................... 220,500
25,500 Worthington Industries, Inc............................ 522,750
-----------
TOTAL RAW MATERIALS/
PROCESSING INDUSTRIES................................ 7,840,438
-----------
</TABLE>
<TABLE>
<CAPTION>
Number Market
of Shares Value
- --------------------------------------------------------------------------------
<C> <S> <C>
TECHNOLOGY
4,000 Altera Corp............................................ $ 177,000
10,000 Aspect Telecommunications Corp......................... 445,000
4,000 Atmel Corp............................................. 222,500
1,000 Auspex Systems, Inc.................................... 44,500
13,400 Avnet, Inc............................................. 653,250
8,000 BMC Software, Inc...................................... 616,000
21,000 Credence Systems Corp.................................. 635,250
3,000 Digital Link Corp...................................... 87,750
12,000 Electroglas, Inc....................................... 693,000
12,000 Electronics For Imaging................................ 648,000
19,000 Filenet Corp........................................... 731,500
24,000 Frame Technology Corp.................................. 696,000
4,000 FTP Software, Inc...................................... 119,500
28,000 Gateway 2000, Inc...................................... 644,000
5,000 Harris Corp............................................ 258,125
4,200 Input/Output, Inc...................................... 149,625
10,000 Integrated Device Technology, Inc...................... 466,250
14,000 International Rectifier Corp........................... 451,500
3,000 Komag, Inc............................................. 157,125
10,000 Lam Research Corp...................................... 642,500
1,000 Littelfuse, Inc........................................ 32,000
9,500 Novellus Systems, Inc.................................. 660,250
3,000 Pioneer Standard Electronics, Inc...................... 74,250
5,000 Quantum Corp........................................... 116,875
5,000 Read-Rite Corp......................................... 137,500
4,000 Recoton Corp........................................... 76,000
19,000 S3, Inc................................................ 672,125
14,000 Seagate Technology..................................... 554,750
1,000 Solectron Corp......................................... 33,875
1,000 Symbol Technologies, Inc............................... 39,125
9,000 Synopsys, Inc.......................................... 563,625
10,000 Teradyne, Inc.......................................... 640,000
6,000 3Com Corp.............................................. 405,750
5,737 U.S. Robotics Corp..................................... 641,827
5,000 VLSI Technology, Inc................................... 150,000
8,000 Wonderware Corp........................................ 336,500
7,000 Xilinx, Inc............................................ 673,750
-----------
TOTAL TECHNOLOGY...................................... 14,346,577
-----------
TRANSPORTATION
45,000 Arkansas Best Corp..................................... 393,750
8,000 Arnold Industries, Inc................................. 145,000
6,800 Consolidated Freightways, Inc.......................... 148,750
1,000 Continental Airlines, Inc., Class B.................... 21,213
18,000 Illinois Central Corp.................................. 632,250
22,000 M.S. Carriers, Inc..................................... 418,000
12,000 Northwest Airlines, Inc., Class A...................... 397,500
19,000 Pittston Co. Services Group............................ 451,250
-----------
TOTAL TRANSPORTATION.................................. 2,607,713
-----------
UTILITIES
29,100 Boston Edison Co....................................... 756,600
3,000 C-TEC Corp............................................. 74,625
</TABLE>
22
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Market
of Shares Value
- --------------------------------------------------------------------------------
<C> <S> <C>
UTILITIES-continued
4,300 Central Hudson Gas & Electric Corp.................... $ 116,650
2,000 Cilcorp, Inc.......................................... 72,750
31,000 Delmarva Power & Lighting Co.......................... 635,500
17,000 DQE, Inc.............................................. 410,125
8,000 Eastern Utilities Associates.......................... 181,000
26,000 Illinova Corp......................................... 650,000
35,000 Lincoln Telecommunications Co......................... 551,250
9,500 Oklahoma Gas & Electric Co............................ 333,688
3,000 Orange & Rockland Utilities, Inc...................... 100,500
27,000 Pinnacle West Capital Corp............................ 661,500
28,000 Portland General Corp................................. 612,500
16,000 Public Services Co. of New Mexico..................... 224,000
14,200 Southern New England Telecommunications............... 498,775
------------
TOTAL UTILITIES...................................... 5,879,463
------------
TOTAL COMMON STOCK................................... 94,291,122
------------
</TABLE>
<TABLE>
<CAPTION>
Number Market
of Shares Value
- --------------------------------------------------------------------------------
<C> <S> <C> <C>
Convertible Preferred Stock
1,600 FHP International, $1.25, Series A................ $ 38,000
-----------
<CAPTION>
Principal
Amount
(000)
--------- Repurchase Agreement
<C> <S> <C> <C>
$4,625 SBC Capital Markets, Inc., 5.94%, 7/03/95......... 4,625,000
-----------
TOTAL INVESTMENTS................................. 98,954,122
Other assets and liabilities, net................. (3,149,264)
-----------
NET ASSETS........................................ $95,804,858
-----------
</TABLE>
NOTE 3-INVESTMENT ACTIVITY
During the period, the cost of purchases and proceeds from sales of invest-
ments, excluding short-term investments, were $5,029,949,410 and
$5,021,042,319.
For federal income tax purposes, the identified cost of investments owned at
the end of the period was $2,066,802,866, net unrealized appreciation of in-
vestments aggregated $265,347,325, gross unrealized appreciation of investments
aggregated $276,013,332 and gross unrealized depreciation of investments aggre-
gated $10,666,007.
NOTE 4-DIRECTOR COMPENSATION
Fund directors who are not affiliated with the Adviser are compensated by the
Fund at the annual rate of $4,150 plus a fee of $105 per day for Board and Com-
mittee meetings attended. The Chairman receives additional fees from the Fund
at the annual rate of $1,560. During the period, such fees aggregated $49,015.
The directors may participate in a voluntary Deferred Compensation Plan (the
"Plan"). The Plan is not funded and obligations under the Plan will be paid
solely out of the Fund's general accounts. The Fund will not reserve or set
aside funds for the payment of its obligations under the Plan by any form of
trust or escrow. Each director covered under the Plan elects to be credited
with an earnings component or amounts deferred equal to the income earned by
the Fund on its short-term investments or equal to the total return of the
Fund.
NOTE 5-CAPITAL
The Fund offers three classes of shares at their respective net asset values
per share, plus a sales charge which is imposed either at the time of purchase
(the Class A shares) or at the time of redemption on a contingent deferred ba-
sis (the Class B shares and Class C shares). All classes of shares have the
same rights, except that Class B shares and Class C shares bear the cost of
distribution fees and certain other class specific expenses. Realized and
unrealized gains or losses, investment income, and expenses (other than class
specific expenses) are allocated daily to each class of shares based upon the
relative proportion of net assets of each class. Class B shares and Class C
shares automatically convert to Class A shares six years and ten years after
purchase, respectively, subject to certain conditions.
23
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
The Fund has 600 million Class A and 300 million each of Class B and Class C
shares of $.50 par value capital stock authorized. Transactions in shares of
capital stock were as follows:
<TABLE>
<CAPTION>
Year ended June 30
-------------------------
1995 1994
------------ -----------
<S> <C> <C>
Shares sold
Class A....................................... 73,542,303 48,584,035
Class B....................................... 14,291,211 11,172,261
Class C....................................... 1,350,739 405,848
------------ -----------
89,184,253 60,162,144
------------ -----------
Shares issued for distributions reinvested
Class A....................................... 25,119,379 27,048,575
Class B....................................... 507,973 294,834
Class C....................................... 18,312 4,467
------------ -----------
25,645,664 27,347,876
------------ -----------
Shares redeemed
Class A....................................... (97,327,563) (69,697,790)
Class B....................................... (13,469,993) (10,358,193)
Class C....................................... (1,284,346) (301,258)
------------ -----------
(112,081,902) (80,357,241)
------------ -----------
Increase in shares outstanding................ 2,748,015 7,152,779
------------ -----------
</TABLE>
NOTE 6-FUND REORGANIZATION
On July 21, 1995, the shareholders approved the reorganization of the Fund to a
Delaware Business Trust and the election of fourteen trustees.
24
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF AMERICAN CAPITAL PACE FUND, INC.
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all mate-
rial respects, the financial position of American Capital Pace Fund, Inc. at
June 30, 1995, the results of its operations, the changes in its net assets and
the financial highlights for each of the fiscal periods presented, in confor-
mity with generally accepted accounting principles. These financial statements
and financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted au-
diting standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of mate-
rial misstatement. An audit includes examining, on a test basis, evidence sup-
porting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at June 30, 1995 by corre-
spondence with the custodian and brokers, provide a reasonable basis for the
opinion expressed above.
PRICE WATERHOUSE LLP
Houston, Texas
August 2, 1995
25
<PAGE>
FUNDS DISTRIBUTED BY VAN KAMPEN AMERICAN CAPITAL
GLOBAL AND INTERNATIONAL
Global Equity Fund
Global Government Securities Fund
Global Managed Assets Fund
Short-Term Global Income Fund
Strategic Income Fund
EQUITY
Growth
Emerging Growth Fund
Enterprise Fund
Pace Fund
Growth & Income
Balanced Fund
Comstock Fund
Equity Income Fund
Growth and Income Fund
Harbor Fund
Real Estate Securities Fund
Utility Fund
FIXED INCOME
Corporate Bond Fund
Government Securities Fund
High Income Corporate Bond Fund
High Yield Fund
Limited Maturity Government Fund
Prime Rate Income Trust
Reserve Fund
U.S. Government Fund
U.S. Government Trust for Income
TAX-FREE
California Insured Tax Free Fund
Florida Insured Tax Free Income Fund
High Yield Municipal Fund
Insured Tax Free Income Fund
Limited Term Municipal Income Fund
Municipal Income Fund
New Jersey Tax Free Income Fund
New York Tax Free Income Fund
Pennsylvania Tax Free Income Fund
Tax Free High Income Fund
Tax Free Money Fund
Texas Tax Free Income Fund
THE GOVETT FUNDS
Emerging Markets Fund
Global Government Income Fund
International Equity Fund
Latin America Fund
Pacific Strategy Fund
Smaller Companies Fund
Ask your investment representative for a prospectus containing more complete
information, including sales charges and expenses. Please read it carefully
before you invest or send money. Or call us direct at 1-800-421-5666 weekdays
from 7:00 a.m. to 7:00 p.m. Central time.
26
<PAGE>
AMERICAN CAPITAL PACE FUND, INC.
BOARD OF DIRECTORS
J. MILES BRANAGAN
RICHARD E. CARUSO
ROGER HILSMAN
DON G. POWELL
DAVID REES
LAWRENCE J. SHEEHAN
FERNANDO SISTO*
WILLIAM S. WOODSIDE
*Chairman of the Board
OFFICERS
DON G. POWELL
President
CURTIS W. MORELL
Vice President and Treasurer
STEPHEN L. BOYD
DENNIS J. MCDONNELL
RONALD A. NYBERG
ALAN T. SACHTLEBEN
PAUL R. WOLKENBERG
Vice Presidents
TANYA M. LODEN
Vice President and Controller
NORI L. GABERT
Vice President and Secretary
J. DAVID WISE
Vice President and Assistant Secretary
PERRY F. FARRELL
M. ROBERT SULLIVAN
Assistant Treasurers
HUEY P. FALGOUT, JR.
Assistant Secretary
INVESTMENT MANAGER
VAN KAMPEN AMERICAN CAPITAL ASSET MANAGEMENT, INC.
2800 Post Oak Blvd.
Houston, Texas 77056
DISTRIBUTOR
VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
One Parkview Plaza
Oakbrook Terrace, IL 60181
SHAREHOLDER SERVICE AGENT
ACCESS INVESTOR SERVICES, INC.
P.O. Box 418256
Kansas City, Missouri 64141-9256
CUSTODIAN
STATE STREET BANK AND TRUST COMPANY
225 Franklin Street
Boston, Massachusetts 02110
COUNSEL
O'MELVENY & MYERS
400 South Hope Street
Los Angeles, California 90071
INDEPENDENT ACCOUNTANTS
PRICE WATERHOUSE LLP
1201 Louisiana
Houston, Texas 77002
(C)Van Kampen American Capital Distributors, Inc., 1995 All rights reserved.
/SM/ denotes a service mark of
Van Kampen American Capital Distributors, Inc.
- --------------------------------------------------------------------------------
The performance data quoted represents past performance which is not indicative
of future performance. Investment return and net asset value of an investment
will fluctuate so that an investor's shares, when redeemed, may be worth more
or less than their original cost.
- --------------------------------------------------------------------------------
This report is submitted for the general information of the shareholders of the
Fund. It is not authorized for distribution to prospective investors unless it
has been preceded or is accompanied by an effective prospectus of the Fund
which contains additional information on how to purchase shares, the sales
charge, and other pertinent data. If used for distribution to prospective
investors after 9/30/95, this annual report must be accompanied by an American
Capital Pace Fund performance update for the most recent quarter.
27
<PAGE>
AMERICAN CAPITAL PACE FUND, INC.
THIS PAGE INTENTIONALLY LEFT BLANK
28