<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders...................... 1
Performance Results......................... 3
Portfolio Management Review................. 4
Portfolio of Investments.................... 6
Statement of Assets and Liabilities......... 11
Statement of Operations..................... 12
Statement of Changes in Net Assets.......... 13
Financial Highlights........................ 14
Notes to Financial Statements............... 17
</TABLE>
PACE SAR 2/96
<PAGE>
LETTER TO SHAREHOLDERS
[PHOTO OF DENNIS J. MCDONNELL AND DON G. POWELL]
January 24, 1996
Dear Shareholder,
For most investors, it would be hard to surpass the success enjoyed during
the second half of 1995. After getting off to a strong start in the first half
of the year, the stock and bond markets continued to achieve substantial
gains, driven by a combination of continuing economic growth and low infla-
tion. The strength of equity and fixed-income securities throughout 1995 was
particularly impressive because it followed a year in which both markets de-
clined. People who remained invested during 1995 generally shared in the
growth of the markets, while those investors who retreated after 1994's down-
turn may have missed out on the double-digit returns.
The rebound in the markets last year reinforces the importance of maintain-
ing a long-term perspective for your investments. While the environment for
stocks and bonds remains positive, it is unlikely that 1996 will see a repeat
of the markets' strong 1995 performance. However, over the long-term, stocks
have outperformed virtually all other types of investments, and bonds have met
the needs of investors who seek capital preservation and regular income.
ECONOMIC OVERVIEW
The rate of economic growth slowed during the second half of 1995, as mea-
sured by the gross domestic product (the value of all goods and services pro-
duced in the United States). GDP grew at an annual rate of more than 4.2
percent in the third quarter of 1995, but slowed to an estimated 2 to 3 per-
cent in the fourth quarter, with retail and auto sales particularly sluggish.
The slower growth rate eased concerns about a rise in inflation and allowed
the Federal Reserve Board in late December to lower short-term interest rates
by a quarter- percentage point. The reduction in rates during the latter half
of 1995 is expected to help generate moderate economic growth in 1996, just as
the Fed's raising of short-term rates in 1994 helped slow economic growth in
1995.
The cut in short-term rates, combined with modest growth forecasts, was
viewed by the financial markets as a positive event, pushing up both stock and
bond prices. For the six months ended December 31, 1995, the Standard & Poor's
500-Stock Index achieved a total return of 14.40 percent. The yield on 10-year
Treasury notes was 5.57 percent on December 31, compared to 6.20 percent on
June 30. Bond prices and yields move in opposite directions, so bond prices
rose. Many observers expect the Fed to cut rates further if Congress and the
President are able to reach an agreement on the federal budget, provided eco-
nomic conditions justify further easing.
With a low inflation, low interest rate environment, corporate earnings re-
mained quite strong during the year, helping to push stocks to new highs. The
strongest sectors were
Continued on page two
1
<PAGE>
technology and finance, as these stocks benefited from the impact of the
Internet, telecommunications deregulation and bank mergers. U.S. companies with
global operations also did well, aided by a declining U.S. dollar.
ECONOMIC OUTLOOK
Looking ahead, we are cautiously optimistic. We expect the economy to grow at
a rate of 2 to 3 percent throughout 1996, with growth stronger in the second
half of the year as the full impact of the Fed's rate cuts take effect. Lower
rates will have the greatest impact on interest-sensitive industries, such as
housing. Although inflation appears to be under control, there probably will be
some cyclical upward pressure in 1996.
The current economic conditions are ideal for stocks, especially those of
smaller companies, because they tend to be affected less by economic cycles.
The outlook for the fixed-income market--including municipal bonds--is posi-
tive, too. In the near-term, we believe domestic markets will benefit from a
stable U.S. dollar and increased business activity driven in part by a number
of strategic reorganizations of some of the nation's blue chip industry lead-
ers.
During recent months, debate over tax reform and the federal deficit has dom-
inated the agenda in Washington. Now that we are in a presidential election
year, tax reform likely will replace the budget battle as the top issue in
Washington. There has been varied speculation about the impact of these issues
on the economy and on various types of investments. We are following the tax
reform debate very closely, and we will keep you updated on this issue through-
out the year. See the winter issue of Your Portfolio for a detailed discussion
of tax reform.
On the following pages, you can read about your Fund's performance in 1995,
as well as the portfolio management team's outlook for the Fund in the coming
months. We hope that you will find this information helpful.
CORPORATE NEWS
As part of our commitment to helping you achieve your investment goals, Van
Kampen American Capital strives to provide shareholders with the best service
in the mutual fund industry. That is why we are especially pleased to have re-
ceived the 1995 Quality Tested Service Seal, which is awarded annually by
DALBAR, Inc., an independent research firm.The Seal, which symbolizes the
achievement of the highest tier of service in the mutual fund industry, was
awarded to American Capital annually from 1990 to 1994 and we are honored
that the service provided by Van Kampen American Capital has achieved the same
level of excellence.
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 DECEMBER 31, 1995
VAN KAMPEN AMERICAN CAPITAL PACE FUND
<TABLE>
<CAPTION>
A SHARES B SHARES C SHARES
TOTAL RETURNS
<S> <C> <C> <C>
Six-month total return based on NAV/1/............... 11.88% 11.45% 11.55%
Six-month total return/2/............................ 5.44% 6.67% 10.59%
One-year total return/2/............................. 25.13% 26.79% 30.39%
Five-year average annual total return/2/............. 12.94% N/A N/A
Ten-year average annual total return/2/.............. 10.87% N/A N/A
Life-of-Fund average annual total return/2/.......... 12.32% 8.84% 11.12%
Commencement Date.................................... 07/22/69 01/10/92 08/27/93
</TABLE>
N/A = Not Applicable
1Assumes 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).
2Standardized total return. Assumes reinvestment of all distributions for the
period and includes payment of the maximum sales charge (A shares) or
contingent deferred sales charge for early withdrawal (B and 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>
PORTFOLIO MANAGEMENT REVIEW
VAN KAMPEN AMERICAN CAPITAL PACE FUND
We recently spoke with the management team of the Van Kampen American Capital
Pace Fund about the key events and economic forces which shaped the markets
during the past fiscal year. The team includes Stephen L. Boyd, portfolio
manager, and Alan T. Sachtleben, executive vice president, equity investments.
The following excerpts reflect their views on the Fund's performance during
the six-month period ended December 31, 1995.
Q THE STOCK MARKET ENJOYED STRONG RETURNS DURING THE SECOND HALF OF 1995.
WHAT FACTORS HAD THE MOST IMPACT ON THE FUND'S PERFORMANCE DURING THE
PAST SIX MONTHS?
A The stock market as a whole benefited from continued--although slower--
economic growth that generated strong corporate profits without experi-
encing increased inflation. The Fund benefited from being heavily invested in
technology and finance stocks, which were two of the strongest sectors during
the reporting period. While the Fund benefited from technology's strong per-
formance during the third quarter, our insistence on being diversified limited
our investment in technology stocks, which benefited the Fund in the fourth
quarter when the technology sector began to show some signs of weakness. We
reduced the Fund's technology holdings toward year-end, when their valuations
had reached very high levels.
We continue to focus on stock selection, identifying those companies that we
believe were poised to benefit from a restructuring or repositioning. The
Fund's diversification at the end of the year is illustrated by the chart be-
low.
[LOGO/ART APPEARS HERE]
[Pie Chart of Portfolio Holdings by Sector
as of December 31, 1995 appears here.]
Energy................................... 8%
Raw Materials/Processing Industries...... 4%
Producer Manufacturing................... 8%
Technology............................... 14%
Consumer Non-Durables.................... 9%
Consumer Distribution.................... 5%
Consumer Services........................ 5%
Finance.................................. 17%
Health Care.............................. 11%
Utilities................................ 6%
Other.................................... 13%
Q CAN YOU GIVE A FEW EXAMPLES OF STOCKS THE FUND OWNED DURING THE REPORTING
PERIOD THAT INCREASED IN PRICE AS A RESULT OF A RESTRUCTURING, MERGER OR
OTHER SIGNIFICANT EVENT?
A In the financial services area, we owned shares of BayBanks, which was
acquired by Bank of Boston, and we owned stock in Chase Manhattan and
Chemical Bank, which merged. In the insurance industry, the Fund owned shares
of Travelers, which purchased the property and casualty division of Aetna, re-
sulting in an increase in the stock price. Finally,
4
<PAGE>
among industrial companies, the Fund benefited from changes at Dr. Pepper, ITT
and Scott Paper that pushed up the stock price of all three companies.
Of course, not all of the securities in the portfolio performed as well and
past performance is no guarantee of future performance.
Q WHAT CHANGES DID YOU MAKE TO THE PORTFOLIO DURING THE PAST SIX MONTHS?
A As we've already discussed, we reduced the Fund's holdings of technology
stocks and invested those assets in retail, drug and energy stocks. Re-
tail stocks were beaten down last year and may be poised for a recovery this
year if the economy continues to grow. Drug and energy stocks are impacted
less by changing economic conditions, so we expect they should help the Fund's
performance in almost any economy. The health care and energy sectors were the
strongest performers in the fourth quarter of the year.
Q HOW DID THE FUND PERFORM DURING THE SIX MONTHS ENDED DECEMBER 31, 1995?
A Class A shares of the Fund achieved a total return at net asset value of
11.88 percent/1/, including reinvestment of dividends totaling $0.15 per
share and a capital gains distribution of $1.76 per share. By comparison, the
Standard & Poor's 500-Stock Index, a broad-based, unmanaged index that re-
flects general stock market performance, achieved a total return of 14.40 per-
cent for the period. The Lipper Growth Fund Index, which represents the
average performance of the largest growth funds, achieved a total return of
10.76 percent. Neither index reflects any commissions or fees that would be
paid by an investor purchasing the securities it represents. (Please refer to
the chart on page three for additional Fund performance results.)
Q WHAT IS THE OUTLOOK FOR STOCKS?
A The outlook is excellent, which is not to say that a correction could not
occur in the near-term. However, some very positive forces are present:
moderate economic growth, low inflation and acceptable levels of interest
rates. These should limit any decline to a modest one. Looking further into
the future, these three conditions--aided by the Federal Reserve Board's deci-
sion in December to lower short-term interest rates--should lead to increasing
corporate profits which, in turn, should lead to higher stock prices.
/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.
5
<PAGE>
PORTFOLIO OF INVESTMENTS
December 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares
(000) Description Market Value
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCK 89.2%
CONSUMER DISTRIBUTION 5.3%
240 Dayton Hudson Corp.................................... $18,000,000
*475 Eckerd Corp........................................... 21,196,875
165 Gap, Inc.............................................. 6,930,000
*375 General Nutrition Companies, Inc...................... 8,625,000
300 Home Depot, Inc....................................... 14,362,500
*775 Kroger Co............................................. 29,062,500
265 May Department Stores Co.............................. 11,196,250
350 Sears, Roebuck & Co................................... 13,650,000
375 Wal-Mart Stores, Inc.................................. 8,390,625
------------
131,413,750
------------
CONSUMER DURABLES 1.4%
135 Chrysler Corp......................................... 7,475,625
120 Eastman Kodak Co...................................... 8,040,000
385 General Motors Corp................................... 20,356,875
------------
35,872,500
------------
CONSUMER NON-DURABLES 8.8%
*102 Adidas, ADS........................................... 2,707,763
500 ConAgra, Inc.......................................... 20,625,000
190 CPC International, Inc................................ 13,038,750
350 Dial Corp............................................. 10,368,750
215 General Mills, Inc.................................... 12,416,250
190 Gillette Co........................................... 9,903,750
786 Nabisco Holdings Corp., Class A....................... 25,643,250
270 PepsiCo, Inc.......................................... 15,086,250
500 Philip Morris Companies, Inc.......................... 45,250,000
150 Procter & Gamble Co................................... 12,450,000
400 Ralston-Purina Group.................................. 24,950,000
250 RJR Nabisco Holdings Corp., Inc....................... 7,718,750
325 Sara Lee Corp......................................... 10,359,375
200 Tambrands, Inc........................................ 9,550,000
------------
220,067,888
------------
CONSUMER SERVICES 4.5%
120 Capital Cities ABC, Inc............................... 14,805,000
*500 Cox Communications, Inc............................... 9,750,000
130 Disney (Walt) Co...................................... 7,670,000
200 Harcourt General, Inc................................. 8,375,000
360 Marriott International, Inc........................... 13,770,000
550 Service Corp. International........................... 24,200,000
</TABLE>
See Notes to Financial Statements
6
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares
(000) Description Market Value
- -------------------------------------------------------------------------------
<C> <S> <C>
*480 Tele-Communications International, Class A........... $ 10,920,000
350 Time Warner, Inc..................................... 13,256,250
*185 Viacom, Inc., Class B................................ 8,764,375
------------
111,510,625
------------
ENERGY 7.7%
365 Amoco Corp........................................... 26,234,375
250 Chevron Corp......................................... 13,125,000
175 Exxon Corp........................................... 14,021,875
275 Mobil Corp........................................... 30,800,000
560 Occidental Petroleum Corp............................ 11,970,000
480 Panhandle Eastern Corp............................... 13,380,000
295 Royal Dutch Petroleum Co., ADR....................... 41,631,875
350 Texaco, Inc.......................................... 27,475,000
320 Williams Companies, Inc.............................. 14,040,000
------------
192,678,125
------------
FINANCE 17.3%
300 Ahmanson (H. F.) & Co................................ 7,950,000
200 Allmerica Financial Corp............................. 5,400,000
320 Allstate Corp........................................ 13,160,000
250 American Express Co.................................. 10,343,750
275 American International Group, Inc.................... 25,437,500
400 Bank of Boston Corp.................................. 18,500,000
110 BankAmerica Corp..................................... 7,122,500
350 Bankers Trust New York Corp.......................... 23,275,000
300 BayBanks, Inc........................................ 29,475,000
225 Chemical Banking Corp................................ 13,218,750
68 Citicorp............................................. 4,599,900
200 CoreStates Financial Corp............................ 7,575,000
43 Donaldson, Lufkin & Jenrette, Inc.................... 1,350,000
375 Federal National Mortgage Association................ 46,546,875
70 First Interstate Bancorp............................. 9,555,000
700 Greenpoint Financial Corp............................ 18,725,000
83 General Re Corp...................................... 12,865,000
900 Green Tree Financial Corp............................ 23,737,500
120 Merrill Lynch & Co., Inc............................. 6,120,000
248 Morgan (J P) & Co., Inc.............................. 19,861,875
75 Morgan Stanley Group, Inc............................ 6,046,875
100 NationsBank Corp..................................... 6,962,500
250 Travelers Group, Inc................................. 15,718,750
8,273 Van Kampen American Small Capitalization Fund (See
Note 2).............................................. 100,356,577
------------
433,903,352
------------
</TABLE>
See Notes to Financial Statements
7
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares
(000) Description Market Value
- --------------------------------------------------------------------------------
<C> <S> <C>
HEALTH CARE 10.8%
130 American Home Products Corp......................... $ 12,610,000
*250 Amgen, Inc.......................................... 14,843,750
300 Astra, AB, Series A, ADR............................ 11,887,500
188 Becton Dickinson & Co............................... 14,130,000
145 Bristol-Myers Squibb Co............................. 12,451,875
850 Caremark International, Inc......................... 15,406,250
*120 Genzyme Corp........................................ 7,485,000
200 Guidant Corp........................................ 8,450,000
140 Johnson & Johnson................................... 11,987,500
400 Lilly (Eli) & Co.................................... 22,500,000
160 Medtronic, Inc...................................... 8,940,000
190 Merck & Co., Inc.................................... 12,492,500
*165 Nellcor Puritan Bennett, Inc........................ 9,570,000
325 Pharmacia & Upjohn, Inc............................. 12,593,750
475 Schering-Plough Corp................................ 26,006,250
235 SmithKline Beecham, ADR............................. 13,042,500
475 U. S. Healthcare, Inc............................... 22,087,500
200 United Healthcare Corp.............................. 13,100,000
210 Warner Lambert Co................................... 20,396,250
--------------
269,980,625
--------------
PRODUCER MANUFACTURING 7.5%
100 Caterpillar, Inc.................................... 5,875,000
550 Corning, Inc........................................ 17,600,000
230 Deere & Co.......................................... 8,107,500
150 Fluor Corp.......................................... 9,900,000
300 General Electric Co................................. 21,600,000
375 Honeywell, Inc...................................... 18,234,375
175 Illinois Tool Works, Inc............................ 10,325,000
*100 ITT Corp............................................ 5,300,000
*100 ITT Industries, Inc................................. 2,400,000
190 Minnesota Mining & Manufacturing Co................. 12,587,500
250 Rockwell International Corp......................... 13,218,750
125 TRW, Inc............................................ 9,687,500
265 United Technologies Corp............................ 25,141,875
900 WMX Technologies, Inc............................... 26,887,500
--------------
186,865,000
--------------
</TABLE>
See Notes to Financial Statements
8
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares
(000) Description Market Value
- --------------------------------------------------------------------------------
<C> <S> <C>
RAW MATERIALS/PROCESSING INDUSTRIES 4.5%
100 Aluminum Co. of America.............................. $ 5,287,500
225 Du Pont (E.I.) de Nemours & Co., Inc................. 15,721,875
300 Freeport-McMoRan, Inc., Copper & Gold, Series B ..... 8,437,500
80 Georgia-Pacific Corp................................. 5,490,000
150 Grace (W.R.) & Co.................................... 8,868,750
1,000 James River Corp..................................... 24,125,000
225 Kimberly Clark Corp.................................. 18,618,750
165 Monsanto Co.......................................... 20,212,500
150 Union Carbide Corp................................... 5,625,000
-------------
112,386,875
-------------
TECHNOLOGY 13.8%
250 Adobe Systems, Inc................................... 15,500,000
*200 Analog Devices, Inc.................................. 7,075,000
65 Ascend Communications, Inc........................... 5,273,125
*270 Bay Networks, Inc.................................... 11,103,750
285 Boeing Co............................................ 22,336,875
*120 Cabletron Systems, Inc............................... 9,720,000
*65 Cascade Communications Corp.......................... 5,566,825
*160 Cisco Systems, Inc................................... 11,940,000
265 Computer Associates International, Inc............... 15,071,875
*200 Digital Equipment Corp............................... 12,825,000
*414 DST Systems, Inc..................................... 11,781,900
330 General Motors Corp., Class H........................ 16,211,250
400 Hewlett-Packard Co................................... 33,500,000
270 International Business Machines Corp................. 24,772,500
470 Loral Corp........................................... 16,626,250
240 McDonnell Douglas Corp............................... 22,080,000
*90 Microsoft Corp....................................... 7,897,500
150 Northrop Grumman Corp................................ 9,600,000
*350 Oracle Corp.......................................... 14,831,250
*550 Sun Microsystems, Inc................................ 25,093,750
150 Tektronix, Inc....................................... 7,368,750
*320 3Com Corp............................................ 14,920,000
*65 U.S. Robotics Corp................................... 5,703,750
140 Xerox Corp........................................... 19,180,000
-------------
345,979,350
-------------
TRANSPORTATION 1.3%
*105 AMR Corp............................................. 7,796,250
150 Burlington Northern, Inc............................. 11,700,000
*450 Canadian National Railway............................ 6,750,000
105 Conrail, Inc......................................... 7,350,000
-------------
33,596,250
-------------
</TABLE>
See Notes to Financial Statements
9
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares
(000) Description Market Value
- -------------------------------------------------------------------------------
<C> <S> <C>
UTILITIES 6.3%
230 Ameritech Corp..................................... $ 13,570,000
435 AT&T Corp.......................................... 28,166,250
190 Bellsouth Corp..................................... 8,265,000
*200 Cellular Communications, Inc., Class A............. 9,950,000
475 Frontier Corp...................................... 14,250,000
950 MCI Communications Corp............................ 24,818,750
200 NYNEX Corp......................................... 10,800,000
*131 PT Telekomuniskasi Indonesia, ADR.................. 3,307,750
250 Sprint Corp........................................ 9,968,750
200 Telefonica de Espana, SA, ADR...................... 8,375,000
475 Telefonos de Mexico, SA, ADR....................... 15,140,625
*300 WorldCom, Inc...................................... 10,575,000
--------------
157,187,125
--------------
TOTAL COMMON STOCK (Cost $1,933,409,270).......... 2,231,441,465
--------------
Par
Amount
(000)
- --------
SHORT-TERM INVESTMENTS 9.2%
REPURCHASE AGREEMENT 3.6%
**$90,510 Lehman Govenment Securities, Inc., dated 12/29/95,
5.85%, due 1/02/96 (collateralized by U.S.
Government obligations in a pooled cash account)
repurchase proceeds $90,568,832................... 90,510,000
--------------
UNITED STATES AGENCY AND GOVERNMENT
OBLIGATIONS 5.6%
Federal Home Loan Banks, 5.505% to 5.609%, 2/22/96
**48,900 to 5/17/96........................................ 48,018,742
Federal Home Loan Mortgage Corp., 5.606% to 5.754%,
**85,000 1/02/96 to 1/04/96................................ 84,946,272
Federal National Mortgage Association, 5.576%,
**1,200 1/03/96........................................... 1,199,443
**5,000 United States Treasury Bills, 5.497%, 3/14/96...... 4,947,850
--------------
139,112,307
--------------
TOTAL SHORT-TERM INVESTMENTS (Cost $229,606,307).. 229,622,307
--------------
TOTAL INVESTMENTS (Cost $2,163,015,577) 98.4%................. 2,461,063,772
OTHER ASSETS AND LIABILITIES, NET 1.6%........................ 40,572,284
--------------
NET ASSETS 100%............................................... $2,501,636,056
--------------
</TABLE>
*Non-income producing security
**Securities with a market value of $206.2 million were placed as collateral
for futures contracts (see Note 1B).
See Notes to Financial Statements
10
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments, at market value (Cost $2,163,015,577)............. $2,461,063,772
Cash........................................................... 31,560
Receivable for investments sold................................ 53,985,664
Receivable for Fund shares sold................................ 20,687,347
Dividends and interest receivable.............................. 3,730,983
Due from broker-variation margin............................... 210,601
Other assets................................................... 115,426
--------------
Total Assets.................................................. 2,539,825,353
--------------
LIABILITIES
Payable for investments purchased.............................. 18,724,196
Payable for Fund shares redeemed............................... 10,522,671
Dividends Payable.............................................. 5,739,265
Due to Distributor............................................. 1,233,390
Due to Adviser................................................. 949,867
Due to shareholder service agent............................... 428,567
Deferred trustees' compensation................................ 165,937
Accrued expenses............................................... 425,404
--------------
Total Liabilities............................................. 38,189,297
--------------
NET ASSETS, equivalent to $11.07 per share for Class A, $11.02
per share for Class B and Class C shares...................... $2,501,636,056
--------------
NET ASSETS WERE COMPRISED OF:
Shares of beneficial interest, at par; 220,612,205 Class A,
5,185,913 Class B, and 221,377 Class C shares outstanding..... $ 2,260,195
Capital surplus................................................ 2,159,111,362
Undistributed net realized gain on securities.................. 42,137,443
Net unrealized appreciation (depreciation) of securities
Investments................................................... 298,048,195
Futures contracts............................................. (1,301,269)
Undistributed net investment income............................ 1,380,130
--------------
NET ASSETS..................................................... $2,501,636,056
--------------
</TABLE>
See Notes to Financial Statements
11
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended December 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends........................................................ $ 22,104,933
Interest......................................................... 4,059,948
------------
Investment income............................................... 26,164,881
------------
EXPENSES
Management fees.................................................. 5,657,667
Shareholder service agent's fees and expenses.................... 2,421,617
Accounting services.............................................. 119,066
Service fees--Class A............................................ 2,435,661
Distribution and service fees--Class B........................... 278,586
Distribution and service fees--Class C........................... 13,062
Trustees' fees and expenses...................................... 44,253
Audit fees....................................................... 22,253
Custodian fees................................................... 57,638
Legal fees....................................................... 5,833
Reports to shareholders.......................................... 180,000
Registration and filing fees..................................... 152,146
Miscellaneous.................................................... 70,192
------------
Total expenses.................................................. 11,457,974
------------
NET INVESTMENT INCOME............................................ 14,706,907
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON SECURITIES
Net realized gain on securities
Investments..................................................... 224,995,729
Future contracts................................................ 4,892,850
Net unrealized appreciation (depreciation) of securities during
the period
Investments..................................................... 29,781,975
Future contracts................................................ (1,301,269)
------------
NET REALIZED AND UNREALIZED GAIN ON SECURITIES................... 258,369,285
------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................. $273,076,192
------------
</TABLE>
See Notes to Financial Statements
12
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended December Year Ended
31, 1995 June 30, 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
NET ASSETS, beginning of period................ $2,334,574,828 $2,189,514,914
-------------- --------------
OPERATIONS
Net investment income......................... 14,706,907 26,893,772
Net realized gain on securities............... 229,888,579 230,051,826
Net unrealized appreciation of securities
during the period............................. 28,480,706 160,102,867
-------------- --------------
Increase in net assets resulting from
operations.................................... 273,076,192 417,048,465
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income
Class A....................................... (28,236,387) (22,916,396)
Class B....................................... (222,457) (141,014)
Class C....................................... (9,250) (5,920)
-------------- --------------
(28,468,094) (23,063,330)
-------------- --------------
Net realized gain on securities
Class A....................................... (331,307,004) (242,510,817)
Class B....................................... (7,830,692) (5,629,695)
Class C....................................... (325,608) (236,324)
-------------- --------------
(339,463,304) (248,376,836)
-------------- --------------
Total distributions........................... (367,931,398) (271,440,166)
-------------- --------------
CAPITAL TRANSACTIONS
Proceeds from shares sold
Class A....................................... 616,305,358 800,964,139
Class B....................................... 122,386,325 152,874,778
Class C....................................... 17,527,383 14,211,717
-------------- --------------
756,219,066 968,050,634
-------------- --------------
Proceeds from shares issued for distributions
reinvested
Class A....................................... 332,414,158 242,657,855
Class B....................................... 7,439,206 4,892,097
Class C....................................... 294,813 176,726
-------------- --------------
340,148,177 247,726,678
-------------- --------------
Cost of shares redeemed
Class A....................................... (693,535,309) (1,059,520,324)
Class B....................................... (123,333,325) (143,264,491)
Class C....................................... (17,582,175) (13,540,882)
-------------- --------------
(834,450,809) (1,216,325,697)
-------------- --------------
Increase (decrease) in net assets resulting
from capital transactions..................... 261,916,434 (548,385)
-------------- --------------
INCREASE IN NET ASSETS......................... 167,061,228 145,059,914
-------------- --------------
NET ASSETS, end of period (including
undistributed net investment income of
$1,380,130 and $15,141,317, respectively).... $2,501,636,056 $2,334,574,828
-------------- --------------
</TABLE>
See Notes to Financial Statements
13
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each of
the periods indicated.(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
------------------------------------------------------------------
Six Months Ended Year Ended June 30
December 31, -------------------------------------------------
1995 1995(/1/) 1994 1993 1992 1991
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
Net asset value,
beginning of period..... $11.62 $11.05 $12.95 $13.21 $12.37 $12.69
-------- -------- -------- -------- -------- --------
INCOME FROM OPERATIONS
Investment income...... .14 .25 .26 .305 .335 .40
Expenses............... (.06) (.11) (.13) (.14) (.14) (.125)
-------- -------- -------- -------- -------- --------
Net investment income... .08 .14 .13 .165 .195 .275
Net realized and
unrealized gain (loss)
on securities......... 1.28 1.85 (.1475) 1.69 1.095 .1575
-------- -------- -------- -------- -------- --------
Total from investment
operations.............. 1.36 1.99 (.0175) 1.855 1.29 .4325
-------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS FROM
Net investment income.. (.15) (.1225) (.135) (.145) (.2375) (.29)
Net realized gain on
securities............. (1.76) (1.2975) (1.7475) (1.97) (.2125) (.4625)
-------- -------- -------- -------- -------- --------
Total distributions..... (1.91) (1.42) (1.8825) (2.115) (.45) (.7525)
-------- -------- -------- -------- -------- --------
Net asset value, end of
period.................. $11.07 $11.62 $11.05 $12.95 $13.21 $12.37
-------- -------- -------- -------- -------- --------
TOTAL RETURN (/2/)...... 11.88% 20.62% (.64%) 15.20% 10.58% 4.31%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of
period (millions)....... $2,442.0 $2,279.4 $2,152.5 $2,446.2 $2,350.2 $2,348.7
Average net assets
(millions).............. $2,395.5 $2,146.7 $2,378.3 $2,409.9 $2,456.5 $2,275.2
Ratios to average net
assets (annualized)
Expenses............... .91% 1.04% 1.02% 1.06% 1.00% 1.01%
Net investment income.. 1.22% 1.24% .99% 1.22% 1.38% 2.22%
Portfolio turnover rate. 105% 248% 112% 113% 54% 40%
</TABLE>
(1)Based on average shares outstanding.
(2) Total return for a period of less than one full year is not annualized and
does not consider the effect of sales charges.
See Notes to Financial Statements
14
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share of beneficial interest outstanding throughout each of
the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B(/2/)
----------------------------------------------------
January 10,
Six Months 1992(/1/)
Ended Year Ended June 30 through
December 31, ------------------------- June 30,
1995 1995 1994 1993 1992
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
Net asset value, beginning
of period................. $11.53 $10.96 $12.86 $13.13 $13.87
------ ------- ------- ------- ------
INCOME FROM OPERATIONS
Investment income........ .13 .25 .25 .29 .15
Expenses................. (.11) (.20) (.22) (.26) (.10)
------ ------- ------- ------- ------
Net investment income..... .02 .05 .03 .03 .05
Net realized and
unrealized gain (loss) on
securities................ 1.28 1.85 (.1575) 1.705 (.79)
------ ------- ------- ------- ------
Total from investment
operations................ 1.30 1.90 (.1275) 1.735 (.74)
------ ------- ------- ------- ------
LESS DISTRIBUTIONS FROM
Net investment income.... (.05) (.0325) (.025) (.035) --
Net realized gain on
securities............... (1.76) (1.2975) (1.7475) (1.97) --
------ ------- ------- ------- ------
Total distributions....... (1.81) (1.33) (1.7725) (2.005) --
------ ------- ------- ------- ------
Net asset value, end of
period.................... $11.02 $11.53 $10.96 $12.86 $13.13
------ ------- ------- ------- ------
TOTAL RETURN (/3/)........ 11.45% 19.73% (1.46%) 12.84% (5.34%)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(millions)................ $57.2 $53.0 $35.8 $27.7 $11.7
Average net assets
(millions)................ $55.7 $41.9 $31.5 $16.8 $3.9
Ratios to average net
assets (annualized)
Expenses................. 1.73% 1.84% 1.79% 1.98% 1.82%
Net investment income.... .43% .44% .21% .25% .56%
Portfolio turnover rate... 105% 248% 112% 113% 54%
</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 and
does not consider the effect of sales charges.
See Notes to Financial Statements
15
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share of beneficial interest outstanding throughout each of
the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C(/2/)
-----------------------------------------------
August 27,
1993(/1/)
Six Months Ended Year Ended through
December 31, 1995 June 30, 1995 June 30, 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
Net asset value, beginning of
period........................ $11.52 $10.99 $13.25
------ ------- -------
INCOME FROM OPERATIONS
Investment income............ .13 .25 .17
Expenses..................... (.11) (.20) (.15)
------ ------- -------
Net investment income......... .02 .05 .02
Net realized and unrealized
gain (loss) on securities..... 1.29 1.81 (.4375)
------ ------- -------
Total from investment
operations.................... 1.31 1.86 (.4175)
------ ------- -------
LESS DISTRIBUTIONS FROM
Net investment income........ (.05) (.0325) (.095)
Net realized gain on
securities................... (1.76) (1.2975) (1.7475)
------ ------- -------
Total distributions........... (1.81) (1.33) (1.8425)
------ ------- -------
Net asset value, end of
period........................ $11.02 $11.52 $10.99
------ ------- -------
TOTAL RETURN (/3/)............ 11.55% 19.27% (3.70%)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(millions).................... $2.4 $2.2 $1.2
Average net assets (millions). $2.6 $1.8 $0.7
Ratios to average net assets
(annualized)
Expenses..................... 1.73% 1.84% 1.81%
Net investment income........ .35% .44% .24%
Portfolio turnover rate....... 105% 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 and
does not consider the effect of sales charges.
See Notes to Financial Statements
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
- -------------------------------------------------------------------------------
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
Van Kampen American Capital Pace Fund (the "Fund", formerly American Capital
Pace Fund, Inc.) is registered under the Investment Company Act of 1940, as
amended, as a diversified open-end management investment company. The Fund
seeks growth of capital by investing principally in common stocks.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The prep-
aration of financial statements in conformity with generally accepted account-
ing principles requires management to make estimates and assumptions that
affect the amounts reported. Actual amounts may differ from the estimates.
A. INVESTMENT VALUATIONS--Securities, including options, listed or traded on a
national securities exchange or NASDAQ, are valued at the last sale price. Un-
listed 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 invest-
ments 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 valued 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 purchase 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 instruments may not be in the direction forecasted. Note 3-Investment Ac-
tivity contains additional information.
Call and Put Options--The Fund may write covered call options and collater-
alized put options. Options written on futures contracts require initial mar-
gin 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 re-
alized as a loss if the option was purchased. When the exercise of an option
results in a cash settlement, the difference between the premium and the set-
tlement proceeds is realized as a gain or loss. When securities are acquired
or delivered upon exercise of an option, the acquisition cost or sale proceeds
are adjusted by the amount of the premium. When
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
- -------------------------------------------------------------------------------
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 maintains,
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 ac-
quiring the futures position. During the period the futures contract is open,
changes in the value of the contract ("variation margin") are recognized by
marking the contracts to market on a daily basis. As unrealized gains or
losses are incurred, variation margin payments are received from or made to
the broker. Upon the closing or cash settlement of a contract, gains or losses
are realized. The cost of securities acquired through delivery under a con-
tract 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 acquires ownership of a debt security and the seller agrees to
repurchase the security at a future time and specified price. The Fund may in-
vest independently in repurchase agreements, or transfer uninvested cash bal-
ances 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
agreements 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 be-
cause the Fund has elected to be taxed as a "regulated investment company" un-
der the Internal Revenue Code and intends to maintain this qualification by
annually distributing 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 transac-
tions are accounted for on the trade date. Realized gains and losses on in-
vestments are determined on the basis of identified cost. Dividend income is
recorded on the ex-dividend date. Interest income is accrued daily.
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 minimum distribution requirements of the Internal Revenue
Code, which may differ from
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
- -------------------------------------------------------------------------------
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 $14,640 as the Fund's share of the employee costs attribut-
able 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 $2,230,271.
The Fund has been advised that Van Kampen American Capital Distributors,
Inc. (the "Distributor") and Advantage Capital Corporation (the "Retail Deal-
er"), both affiliates of the Adviser, received $108,827 and $38,647, respec-
tively, as their portion of the commissions charged on sales of Fund shares
during the period.
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 serv-
ice fees incurred. Class B and 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 Distribu-
tor for Class B and C shares may exceed the amounts reimbursed to the Distrib-
utor by the Fund. At the end of the period, the unreimbursed expenses incurred
by the Distributor under the Class B and C plans aggregated approximately $2.0
million and $17,000, 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 during the period were for services rendered by former counsel of
the Fund, O'Melveny & Myers. A former trustee was of counsel to that firm.
Certain officers and directors of the Fund are officers and trustees of the
Adviser, the Distributor, the Retail Dealer, and the shareholder service
agent.
At the end of the period, the Fund owned approximately 48% of the Van Kampen
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
- -------------------------------------------------------------------------------
American Capital Small Capitalization Fund ("Small Cap"), an investment com-
pany managed by the Adviser. Small Cap comprised approximately 4% of the
Fund's total net assets. Small Cap's portfolio consisted of the following se-
curities:
<TABLE>
<CAPTION>
Number Market
of Shares Value
- -----------------------------------------------------------
<C> <S> <C>
COMMON STOCK
CONSUMER DISTRIBUTION
22,000 Big B, Inc. $ 220,000
25,000 Books-A-Million, Inc. 321,875
18,460 Cardinal Health, Inc. 1,010,685
3,000 Carson Pirie Scott & Co. 60,000
4,000 CDW Computer Centers, Inc. 159,000
21,000 Circuit City Stores, Inc. 582,750
42,000 Claire's Stores, Inc. 740,250
12,000 CompUSA, Inc. 379,500
14,000 Consolidated Stores Corp. 304,500
9,800 Eckerd Corp. 431,200
52,000 Fingerhut Companies, Inc. 728,000
46,000 General Nutrition Companies, Inc. 1,040,750
29,000 Gymboree Corp. 590,875
11,000 Health Management, Inc. 143,000
2,000 Hills Stores Co. 19,500
10,000 Lear Seating Corp. 291,250
14,000 MacFrugals Bargains Closeouts 187,250
9,000 Mens Wearhouse, Inc. 238,500
15,000 Micro Warehouse, Inc. 663,750
38,000 OfficeMax, Inc. 826,500
83,900 Pier 1 Imports, Inc. 943,874
5,000 Proffitts, Inc. 132,500
11,000 Revco D.S., Inc. 310,750
6,000 Rexel, Inc. 81,000
3,000 Richfood Holdings, Inc. 81,375
7,000 Ross Stores, Inc. 135,625
25,000 Staples, Inc. 609,375
42,800 Stop & Shop Companies, Inc. 973,700
40,000 Sunglass Hut International, Inc. 950,000
4,000 Tiffany & Co. 201,000
25,000 Viking Office Products, Inc. 1,153,125
47,000 Waban, Inc. 887,125
6,000 Whole Foods Market, Inc. 83,250
3,000 Younkers, Inc. 75,000
32,000 Zale Corp. 512,000
------------
16,068,834
------------
</TABLE>
<TABLE>
<CAPTION>
Number Market
of Shares Value
- ---------------------------------------------------------------
<C> <S> <C>
CONSUMER DURABLES
3,000 Borg Warner Automotive, Inc. $ 96,000
50,000 Breed Technologies, Inc. 950,000
49,000 Brunswick Corp. 1,108,625
9,000 Callaway Golf Co. 201,375
21,000 Champion Enterprises, Inc. 643,125
43,750 Clayton Homes, Inc. 962,500
23,000 Cobra Golf, Inc. 819,375
9,000 Department 56, Inc. 345,375
24,000 Echlin, Inc. 876,000
5,000 Fleetwood Enterprises, Inc. 130,000
14,000 Gencorp, Inc. 168,000
8,400 Harman International Industries, Inc. 336,000
46,000 Leggett & Platt, Inc. 1,121,250
7,000 Lennar Corp. 177,625
14,000 Outboard Marine Corp. 287,000
7,000 Smith (A.O.) Corp. 142,625
6,000 Snap-On-Tools, Inc. 270,750
22,000 Toro Co. 720,500
------------
9,356,125
------------
CONSUMER NON-DURABLES
1,000 Alberto Culver Co., Class B 34,625
34,000 American Greetings Corp., Class A 941,375
29,000 Barefoot, Inc. 293,625
6,000 Dean Foods Co. 165,000
4,500 Fossil, Inc. 34,312
2,000 Hormel (G.A.) & Co. 49,250
13,000 IBP, Inc. 661,375
41,000 Liz Clairborne, Inc. 1,117,250
23,000 Nautica Enterprises, Inc. 1,017,750
10,000 Nu-Kote Holdings, Inc., Class A 162,500
11,000 Phillips-Van Heusen Corp. 104,500
8,000 St. John Knits, Inc. 425,000
7,000 Smithfield Foods, Inc. 224,875
15,000 Springs Industries, Inc. 618,750
42,000 Starbucks Corp. 879,375
56,000 Topps, Inc. 294,000
1,000 Unifi, Inc. 22,500
</TABLE>
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Market
of Shares Value
- ----------------------------------------------------------
<C> <S> <C>
9,000 Universal Foods Corp. $ 360,000
18,000 Westpoint Stevens, Inc. 355,500
25,000 Whitman Corp. 562,500
18,000 Wolverine World Wide, Inc. 564,750
-----------
8,888,812
-----------
CONSUMER SERVICES
4,000 Advo, Inc. 103,500
10,000 Banta Corp. 440,000
12,000 Belo (A.H.) Corp. 415,500
14,000 Boston Chicken, Inc. 448,000
30,000 Bowne & Co., Inc. 600,000
11,000 Boyd Gaming Corp. 123,750
38,000 Equifax, Inc. 821,750
8,000 Gartner Group, Inc. 368,000
9,000 HFS, Inc. 736,875
30,000 Kelly Services, Inc. 847,500
25,000 King World Productions, Inc. 978,125
4,000 La Quinta Inns, Inc. 107,500
21,000 Lone Star Steakhouse Saloon, Inc. 811,125
9,000 Media General, Inc., Class A 270,000
21,000 Mirage Resorts, Inc. 711,375
19,000 New York Times Co., Class A 548,625
27,760 Ogden Corp. 593,370
16,000 Olsten Corp. 620,000
34,000 Omnicom Group 1,262,250
29,000 Outback Steakhouse, Inc. 1,036,750
3,000 Papa John's International, Inc. 123,000
13,200 PHH Corp. 618,750
31,500 Players International, Inc. 346,500
1,000 Pulitzer Publishing Co. 47,875
28,500 Regal Cinemas, Inc. 826,500
17,000 Reynolds & Reynolds Co. 660,875
23,000 Rio Hotel & Casino, Inc. 276,000
28,000 Robert Half International, Inc. 1,134,000
26,000 Sbarro, Inc. 559,000
12,500 Scientific Games Holdings Corp. 475,000
6,000 Sonic Corp. 111,000
24,000 Wendy's International, Inc. 510,000
16,000 Westcott Communications, Inc. 220,000
-----------
17,752,495
-----------
ENERGY
17,000 BJ Services Co. 493,000
13,000 Brooklyn United Gas Co. 372,125
24,100 Eastern Enterprises 852,538
38,000 El Paso Natural Gas Co. 1,092,500
25,000 KCS Energy, Inc. 368,750
12,000 K.N. Energy, Inc. 352,500
91,000 Nabors Industries, Inc. 1,023,750
14,000 NACCO Industries, Inc., Class A 784,000
2,500 National Fuel Gas Co. 83,125
24,000 NICOR, Inc. 666,000
</TABLE>
<TABLE>
<CAPTION>
Number Market
of Shares Value
- ---------------------------------------------------------------
<C> <S> <C>
15,000 Nuevo Energy Co. $ 339,375
8,000 Offshore Logistics, Inc. 100,000
14,400 ONEOK , Inc. 336,600
28,000 Pacific Enterprises 787,500
51,000 Smith International, Inc. 1,185,750
8,000 Tidewater, Inc. 249,000
25,000 Union Texas Petroleum Holdings, Inc. 478,125
12,000 United Meridan Corp. 208,500
31,000 Valero Energy Corp. 755,625
30,000 Varco International, Inc. 367,500
6,000 Washington Gas & Light Co. 124,500
2,500 Weatherford Enterra, Inc. 72,187
5,000 Western Atlas, Inc. 254,375
12,400 WICOR, Inc. 403,000
188 Williams Companies, Inc. 8,201
-------------
11,758,526
-------------
FINANCE
12,000 Advanta Corp., Class A 459,000
15,000 AMBAC, Inc. 695,625
34,000 American Financial Group, Inc. 1,037,000
25,000 American Re Corp. 1,021,875
29,000 Bankers Life Holding Corp. 580,000
33,000 Bear Stearns Companies, Inc. 647,625
24,000 California Federal Bank 378,000
6,000 CCB Financial Corp. 334,500
26,000 Charter One Financial, Inc. 794,625
58,000 City National Corp. 812,000
10,000 CMAC Investment Corp. 440,000
23,000 Commercial Federal Corp. 865,375
26,500 Countrywide Credit Industries, Inc. 569,750
23,000 Crestar Financial Corp. 1,354,125
41,000 Edwards (A.G.), Inc. 968,625
22,000 Finova Group, Inc. 1,028,500
7,000 First American Corp. 337,750
10,000 First Financial Corp. 230,000
19,000 First Tennessee National Corp. 1,149,500
13,000 First USA, Inc. 576,875
20,300 Fremont General Corp. 748,563
19,000 GATX Corp. 935,750
73,500 Mercury Financial Co. 964,688
7,300 MGIC Investment Corp. 395,113
9,000 North American Mortgage Co. 192,375
21,000 North Fork Bancorporation 525,000
22,000 Northern Trust Corp. 1,221,000
</TABLE>
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Market
of Shares Value
- ---------------------------------------------------------------------
<C> <S> <C>
80 Norwest Corp. $ 2,630
10,000 Penncorp Financial Group, Inc. 295,000
40,000 Peoples Heritage Financial Group 890,000
25,000 Protective Life Corp. 775,000
18,000 Regions Financial Corp. 774,000
116,000 Reliance Group Holding 1,015,000
17,000 Reliastar Financial Corp. 748,000
10,000 Republic New York Corp. 618,750
3,000 Roosevelt Financial Group, Inc. 57,750
38,000 Southtrust Corp. 978,500
7,000 Sovereign Bancorp, Inc. 70,875
19,300 Star Banc Corp. 1,143,525
32,000 TCF Financial Corp. 1,064,000
6,000 TIG Holdings, Inc. 171,000
6,000 Transatlantic Holdings, Inc. 440,250
28,000 Union Planters Corp. 885,500
5,000 Vesta Insurance Group, Inc. 270,000
38,000 Washington Mutual, Inc. 1,102,000
15,000 Webb (Dell) Corp. 296,250
9,000 Zions Bancorporation 726,750
------------
31,588,019
------------
HEALTH CARE
25,000 Amsco International, Inc. 375,000
24,000 Bausch & Lomb, Inc. 945,000
5,000 Bio Rad Labs, Inc., Class A 211,875
19,000 CNS, Inc. 287,375
65,000 Cor Therapeutics, Inc. 528,125
1,000 Cordis Corp. 101,250
29,000 Foundation Health Corp. 1,236,125
2,000 Genzyme Corp. 122,750
17,000 Haemonetics Corp. 299,625
2,000 HBO & Co. 152,500
13,000 Health Management Associates, Inc., Class A 331,500
20,000 Healthcare Compare Corp. 867,500
8,000 Healthsouth Rehabilitation 234,000
39,000 Horizon/CMS Healthcare 970,125
37,535 ICN Pharmaceuticals, Inc. 713,165
24,000 Integrated Health Services, Inc. 600,000
29,000 Lincare Holdings, Inc. 721,375
3,000 Manor Care, Inc. 105,750
1,000 Maxicare Health Plans 26,875
32,000 Medisense, Inc. 1,024,000
47,500 Mylan Labs, Inc. 1,098,438
</TABLE>
<TABLE>
<CAPTION>
Number Market
of Shares Value
- ------------------------------------------------------------------
<C> <S> <C>
16,000 Nellcor Puritan Bennett, Inc. $ 934,000
2,000 Orthofix International, NV 14,500
16,000 Oxford Health Plans, Inc. 1,172,000
6,000 Pacific Physician Services 107,250
6,000 Quintiles Transnational Corp. 243,000
17,000 Renal Treatment Centers, Inc. 745,875
6,000 Rexall Sundown, Inc. 131,250
14,000 Sybron Corp. 327,250
18,000 Thermo Cardiosystems, Inc. 1,352,250
2,000 United American Healthcare Corp. 20,250
12,000 Universal Health Services, Inc., Class B 531,000
30,000 Vivra, Inc. 746,250
25,320 Watsons Pharmaceuticals, Inc. 1,243,845
------------
18,521,073
------------
PRODUCER MANUFACTURING
16,000 Agco Corp. 798,000
3,000 Alliant Techsystems, Inc. 151,125
5,000 Ametek, Inc. 92,500
14,600 Aptar Group, Inc. 542,025
12,000 Blount International, Inc., Class A 316,500
21,000 Briggs & Stratton Corp. 918,750
12,000 Cognex Corp. 402,000
22,000 Cummins Engine Co., Inc. 814,000
26,000 Danaher Corp. 822,250
22,000 Detroit Diesel Corp. 420,750
11,000 Duracraft Corp. 277,750
5,000 Glenayre Technologies 310,000
7,000 Global Industrial Technology, Inc. 129,500
7,000 Granite Construction, Inc. 222,250
1,000 Harnischfeger Industries, Inc. 31,625
18,500 IDEX Corp. 763,125
1,000 Johnson Controls, Inc. 68,750
10,000 Juno Lighting, Inc. 160,000
1,000 Kennametal, Inc. 31,625
2,000 Kent Electrics Corp. 117,250
16,000 Kulicke & Sofa Industries, Inc. 378,000
24,000 Mueller Industries, Inc. 690,000
4,000 National Service Industries, Inc. 125,000
14,000 Navistar International Corp. 148,750
24,000 PACCAR, Inc. 1,038,000
30,000 Southdown, Inc. 585,000
</TABLE>
22
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Market
of Shares Value
- ----------------------------------------------------------------
<C> <S> <C>
90,000 Sterling Chemicals, Inc. $ 731,250
5,000 Tecumeseh Products Co., Class A 258,750
11,000 Teledyne, Inc. 280,500
28,300 Thermo Instrument Systems, Inc. 958,663
26,000 Timken Co. 1,001,000
8,000 United Waste Systems, Inc. 294,000
31,000 Varity Corp. 1,143,125
6,000 Watts Industries, Inc., Class A 139,500
32,000 Wellman, Inc. 732,000
9,000 Wolverine Tube, Inc. 324,000
------------
16,217,313
------------
RAW MATERIALS/PROCESSING INDUSTRIES
17,000 Cleveland Cliffs, Inc. 686,375
16,000 Cyprus Amax Minerals 416,000
4,000 Cytec Industries, Inc. 248,500
6,000 First Mississippi Corp. 154,500
14,000 Geon Co. 344,750
24,000 Georgia Gulf Corp. 741,000
15,000 Goodrich (B.F.) Co. 1,018,125
46,000 Handy & Harman 759,000
10,000 IMC Global, Inc. 405,000
8,000 Inland Steel Industries, Inc. 200,000
2,000 International Specialty Products, Inc. 21,500
51,000 J&L Specialty Steel, Inc. 949,875
62,000 Jefferson Smurfit Corp. 589,000
44,000 Longview Fibre Co. 709,500
8,000 Lubrizol Corp. 220,000
45,000 Lyondell Petrochemical Co. 1,029,375
49,000 Magma Copper Co., Class B 1,365,875
6,000 Medusa Corp. 160,500
3,000 NCH Corp. 172,125
14,000 Olin Corp. 1,029,000
51,000 Owens-Illinois, Inc. 739,500
12,000 Potlatch Corp. 477,000
3,000 Quanex Corp. 57,750
11,000 Rayonier, Inc. 367,125
69,000 Rexene Corp. 750,375
20,000 Sealed Air Corp. 550,000
14,000 Sigma-Aldrich Corp. 696,500
33,000 Sonoco Products Co. 866,250
43,000 Stone Container Corp. 607,375
50,000 Terra Industries, Inc. 700,000
</TABLE>
<TABLE>
<CAPTION>
Number Market
of Shares Value
- ------------------------------------------------------------
<C> <S> <C>
1,000 Texas Industries, Inc. $ 52,625
23,000 USG Corp. 687,125
6,000 Vulcan Materials Co. 339,000
41,500 Worthington Industries, Inc. 866,313
------------
18,976,938
------------
TECHNOLOGY
6,000 Adaptec, Inc. 244,500
20,000 Alantec Corp. 1,145,000
4,000 Altera Corp. 198,500
30,000 America Online, Inc. 1,121,250
3,000 Analysts International Corp. 90,000
10,000 Ascend Communications, Inc. 795,000
28,000 Aspect Telecommunications Corp. 941,500
19,000 Atmel Corp. 429,875
1,000 Auspex Systems, Inc. 18,000
21,400 Avnet, Inc. 949,625
20,000 BMC Industries, Inc. 467,500
58,000 Borland International, Inc. 949,750
36,000 Cadence Design Systems, Inc. 1,503,000
19,000 Cascade Communications, Inc. 1,567,500
2,000 Checkpoint Systems, Inc. 75,250
21,000 Cidco, Inc. 535,500
60,000 Conner Peripherals, Inc. 1,237,500
22,000 Credence Systems Corp. 500,500
1,000 Dallas Semiconductor Co. 21,000
13,000 Dovatron International, Inc. 419,250
22,000 Dynatech Corp. 374,000
24,000 Electroglas, Inc. 606,000
26,000 Electronics For Imaging, Inc. 1,131,000
34,000 Gateway 2000, Inc. 841,500
9,000 Harris Corp. 490,500
18,000 Hyperion Software Corp. 400,500
23,000 In Focus Systems, Inc. 816,500
44,000 Integrated Device Technology, Inc. 577,500
44,000 International Rectifier Corp. 1,094,500
37,000 Intervoice, Inc. 703,000
24,000 KLA Instruments Corp. 630,000
3,000 Komag, Inc. 144,000
13,000 Lam Research Corp. 601,250
3,000 Littelfuse, Inc. 109,500
4,000 Marcam Corp. 61,000
25,500 McAfee Associates, Inc. 1,039,124
10,000 Microchip Technology, Inc. 375,000
</TABLE>
23
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Market
of Shares Value
- ----------------------------------------------------------
<S> <C> <C>
9,000 Netmanage, Inc. $ 207,000
14,000 Network Equipment Technologies 386,750
22,000 Network General Corp. 731,500
12,500 Novellus Systems, Inc. 687,500
16,000 Peoplesoft, Inc. 682,000
4,500 Pioneer Standard Electronics, Inc. 59,344
23,000 Read-Rite Corp. 529,000
4,000 Recoton Corp. 75,000
14,000 Seagate Technology 666,750
21,800 Sequent Computer Systems, Inc. 318,825
25,000 Solectron Corp. 1,112,500
9,000 Sterling Software, Inc. 555,750
38,000 S3, Inc. 669,750
19,000 Symbol Technologies, Inc. 738,625
20,000 Teredyne, Inc. 505,000
12,000 3Com Corp. 547,500
19,000 Unitrode Corp. 536,750
11,474 U.S. Robotics Corp. 1,009,711
8,500 Varian Associates, Inc. 406,938
27,000 Vishay Intertechnology, Inc. 820,125
19,000 Wyle Electronics, Inc. 655,500
21,000 Xilinx, Inc. 640,500
-----------
35,747,192
-----------
TRANSPORTATION
53,000 Arkansas Best Corp. 377,625
32,000 Comair Holdings, Inc. 852,000
10,800 Consolidated Freightways, Inc. 287,550
1,000 Continental Airlines, Inc., Class B 43,125
12,000 Fritz Companies, Inc. 501,000
26,000 Illinois Central Corp. 994,500
20,000 MS Carriers, Inc. 390,000
12,000 Northwest Airlines, Inc., Class A 607,500
19,000 Pittston Co. Services Group 596,125
6,000 Stolt Nelsen, S.A. 173,250
11,000 TNT Freightways Corp. 214,500
30,000 ValuJet Airlines, Inc. 750,000
-----------
5,787,175
-----------
</TABLE>
<TABLE>
<CAPTION>
Number Market
of Shares Value
- ------------------------------------------------------------------------
<C> <S> <C>
UTILITIES
29,000 AES Corp. $ 670,625
26,000 AT&T Capital Corp. 988,000
34,100 Boston Edison Co. 1,001,688
12,000 California Energy, Inc. 226,500
39,000 Centerior Energy Corp. 351,000
4,300 Central Hudson Gas & Electric Corp. 131,149
8,000 Cincinnati Bell, Inc. 276,000
1,000 Colorado Public Service Co. 35,375
10,000 Comment Cellular, Inc. 291,250
5,500 C-Tec Corp. 170,500
38,000 Delmarva Power & Light Co. 864,500
17,000 DQE, Inc. 522,750
8,000 Eastern Utilities Association 190,000
42,000 Frontier Corp. 1,228,500
36,000 Illinova Corp. 1,071,000
41,000 Long Island Lighting Co. 656,000
33,000 New Mexico Public Service Co. 577,500
24,000 NIPSCO Industries, Inc. 918,000
9,500 Oklahoma Gas & Electric Co. 412,063
3,000 Orange & Rockland Utilities 109,500
27,000 Pinnacle West Capital Corp. 776,250
32,000 Portland General Corp. 920,000
14,200 Southern New England Telecommunications 562,675
23,000 U.S. Cellular Corp. 779,125
------------
13,729,950
------------
TOTAL COMMON STOCK 204,392,452
------------
<CAPTION>
Par
Amount
(000)
---------
<C> <S> <C>
REPURCHASE AGREEMENT
$ 4,370 Lehman Govt. Securities, Inc., 5.875%, 1/02/96 $ 4,370,000
------------
TOTAL INVESTMENTS 208,762,452
Other assets and liabilities, net 363,030
------------
NET ASSETS $209,125,482
------------
</TABLE>
24
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
- -------------------------------------------------------------------------------
NOTE 3-INVESTMENT ACTIVITY
During the period, the cost of purchases and proceeds from sales of invest-
ments, excluding short-term investments, were $2,413,498,809 and
$2,678,731,704.
For federal income tax purposes, the identified cost of investments owned at
the end of the period was $2,168,896,374, net unrealized appreciation of in-
vestments aggregated $292,167,398, gross unrealized appreciation of invest-
ments aggregated $310,204,293 and gross unrealized depreciation of investments
aggregated $18,036,895.
At the end of the period, the Fund held 658 long Standard & Poor's 500 Index
future contracts expiring in March 1996. The market value of such contracts
was $203,470,050, and the unrealized depreciation was $1,301,269.
NOTE 4-TRUSTEE COMPENSATION
Fund trustees who are not affiliated with the Adviser are compensated by the
Fund at the annual rate of $3,669 plus a fee of $105 per day for Board and
Committee meetings attended. During the period, such fees aggregated $41,521.
The trustees 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 trustee 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 and C shares). All classes of shares have the same rights,
except that Class B and C shares bear the cost of distribution fees and cer-
tain other class specific expenses. Realized and unrealized gains or losses,
investment income, and expenses (other than class specific expenses) are allo-
cated daily to each class of shares based upon the relative proportion of net
assets of each class. Class B and C shares automatically convert to Class A
shares six years and ten years after purchase, respectively, subject to cer-
tain conditions.
25
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
- -------------------------------------------------------------------------------
The Fund has unlimited number of shares of $.01 par value beneficial inter-
est authorized. Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
Six Months Ended Year ended
December 31, 1995 June 30, 1995
- -------------------------------------------------------------------------------
<S> <C> <C>
Shares sold
Class A..................................... 50,147,192 73,542,303
Class B..................................... 10,017,480 14,291,211
Class C..................................... 1,437,178 1,350,739
----------- ------------
61,601,850 89,184,253
----------- ------------
Shares issued for distributions reinvested
Class A..................................... 30,357,409 25,119,379
Class B..................................... 682,480 507,973
Class C..................................... 27,053 18,312
----------- ------------
31,066,942 25,645,664
----------- ------------
Shares redeemed
Class A..................................... (56,103,811) (97,327,563)
Class B..................................... (10,106,726) (13,469,993)
Class C..................................... (1,436,616) (1,284,346)
----------- ------------
(67,647,153) (112,081,902)
----------- ------------
Increase in shares outstanding.............. 25,021,639 2,748,015
----------- ------------
</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. On August 31,
1995, the reorganization became effective.
26
<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 Income Fund
International Equity Fund
Latin America Fund
Pacific Strategy Fund
Smaller Companies Fund
Ask your investment adviser 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.
27
<PAGE>
VAN KAMPEN AMERICAN CAPITAL PACE FUND
BOARD OF TRUSTEES
J. MILES BRANAGAN
LINDA HUTTON HEAGY
ROGER HILSMAN
R. CRAIG KENNEDY
DENNIS J. MCDONNELL
DONALD C. MILLER
JACK E. NELSON
DON G. POWELL
JEROME L. ROBINSON
FERNANDO SISTO*
WAYNE W. WHALEN
WILLIAM S. WOODSIDE
*Chairman of the Board
OFFICERS
DON G. POWELL
President and Chief Executive Officer
DENNIS J. MCDONNELL
Executive Vice President
RONALD A. NYBERG
Vice President and Secretary
EDWARD C. WOOD, III
Vice President and Chief Financial Officer
CURTIS W. MORELL
Vice President and Chief Accounting Officer
JOHN L. SULLIVAN
Treasurer
TANYA M. LODEN
Controller
WILLIAM N. BROWN
PETER W. HEGEL
ROBERT C. PECK, JR.
ALAN T. SACHTLEBEN
PAUL R. WOLKENBERG
Vice Presidents
INVESTMENT ADVISER
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, Illinois 60181
SHAREHOLDER SERVICE AGENT
ACCESS INVESTOR SERVICES, INC.
P.O. Box 418256,
Kansas City, Missouri 64141-9256
CUSTODIAN
STATE STREET BANK AND TRUST CO.
225 Franklin Street,
Boston, Massachusetts 02110
LEGAL COUNSEL
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
333 West Wacker Drive
Chicago, Illinois 60806
INDEPENDENT ACCOUNTANTS
PRICE WATERHOUSE LLP
1201 Louisiana
Houston, Texas 77002
(C)Van Kampen American Capital Distributors, Inc., 1996
All rights reserved.
SMdenotes a service mark of
Van Kampen American Capital Distributors, Inc.
This report is submitted for the general information of the shareholders of
the Fund. It is not authorized for distribution to prospective investors un-
less 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.
28
