<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders...................... 1
Portfolio of Investments.................... 3
Statement of Assets and Liabilities......... 5
Statement of Operations..................... 6
Statement of Changes in Net Assets.......... 7
Financial Highlights........................ 8
Notes to Financial Statements............... 9
</TABLE>
EXCH SAR 8/95
<PAGE>
LETTER TO SHAREHOLDERS
[PHOTO OF DENNIS J. MCDONNELL AND DON G. POWELL]
August 3, 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 the gross domestic product for the second
quarter, which grew at an annual rate of 0.5 percent, substantially slower 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.
Corporate earnings remained quite strong during the first half of the year,
helping to push stocks to new levels. The Dow Jones Industrial Average and the
S&P 500 Index gained nearly 19 percent. The strongest performance has been in
the science & technology sector of the market--and in big "capitalization"
stocks. As the U.S. dollar plunged against several international currencies,
companies--typically large ones--which had diversified overseas were able to
capture additional earnings, while technology stocks benefited from the booming
growth in computers and telecommunications throughout the world.
PERFORMANCE SUMMARY
For the first six months of 1995, the American Capital Exchange Fund gener-
ated a total return at net asset value of 25.85 percent. This strong return re-
flects an increase in net asset value from $115.36 on December 31, 1994 to
$144.45 on June 30, 1995. By comparison, the Standard & Poor's 500 Stock Index
generated a total return of 20.15 percent for the same period. The Index is a
broad-based, unmanaged index that reflects general stock market performance. It
does not reflect any commissions or fees that would be paid by an investor pur-
chasing the securities it represents.
(Continued on page two)
1
<PAGE>
The Fund's success is due in large part to the performance of Intel, the
Fund's largest holding, which doubled in price during the first half of the
year. Intel is the leading manufacturer of microprocessors, the main operating
chip in computers. The company is far ahead of their competitors in terms of
development of the next generation of microprocessors.
Pharmaceutical stocks also contributed significantly to the Fund's perfor-
mance. American Home Products, Johnson & Johnson and Merck were each up 20 per-
cent or more during the period. These companies continue to develop new drugs
which have been well received in the marketplace. In addition, the weakness of
the U.S. dollar has been very positive for these companies, which earn a large
part of their profits in foreign markets. Of course, not all of the Fund's se-
curities have performed as well, and past performance does not guarantee future
results.
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
that 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 be-
tween 3.3 and 3.5 percent. 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 will 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.
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>
PORTFOLIO OF INVESTMENTS
June 30, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares Description Market Value
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCK 98.1%
CONSUMER DISTRIBUTION 7.8%
44,404 Alco Standard Corp. ................................ $ 3,546,770
--------------
CONSUMER DURABLES 0.8%
13,677 Dana Corp. ......................................... 391,504
--------------
CONSUMER NON-DURABLES 8.4%
49,712 International Flavors & Fragrance, Inc. ............ 2,473,172
64,000 McCormick & Co., Inc. .............................. 1,376,000
--------------
TOTAL CONSUMER NON-DURABLES......................... 3,849,172
--------------
CONSUMER SERVICES 0.8%
17,912 Luby's Cafeterias, Inc.............................. 360,479
--------------
ENERGY 14.3%
21,200 Amerada Hess Corp. ................................. 1,036,150
12,800 Amoco Corp. ........................................ 852,800
13,146 Apache Corp. ....................................... 359,871
25,634 Baker Hughes, Inc. ................................. 525,497
30,320 Dresser Industries, Inc. ........................... 674,620
10,900 Kerr-McGee Corp. ................................... 584,513
20,131 Mobil Corp. ........................................ 1,932,576
*6,318 Oryx Energy Co. .................................... 86,873
8,040 Schlumberger, Ltd................................... 499,485
--------------
TOTAL ENERGY........................................ 6,552,385
--------------
FINANCE 4.1%
6,588 American International Group, Inc. ................. 751,032
22,800 Household International, Inc. ...................... 1,128,600
--------------
TOTAL FINANCE....................................... 1,879,632
--------------
HEALTH CARE 18.5%
14,000 American Home Products Corp. ....................... 1,083,250
5,000 Baxter International, Inc. ......................... 181,875
27,216 Johnson & Johnson................................... 1,840,482
25,188 Merck & Co., Inc. .................................. 1,234,212
51,304 Schering-Plough Corp. .............................. 2,263,789
21,215 Warner-Lambert Co. ................................. 1,832,446
--------------
TOTAL HEALTH CARE................................... 8,436,054
--------------
PRODUCER MANUFACTURING 2.1%
6,264 Allied Signal, Inc.................................. 278,748
12,831 Fluor Corp.......................................... 667,212
--------------
TOTAL PRODUCER MANUFACTURING........................ 945,960
--------------
</TABLE>
See Notes to Financial Statements
3
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares Description Market Value
- -------------------------------------------------------------------------------
<C> <S> <C>
RAW MATERIALS/PROCESSING INDUSTRIES 21.0%
54,545 Air Products & Chemicals, Inc...................... $ 3,040,883
25,136 Alcan Aluminium, Ltd............................... 760,364
18,688 Georgia Pacific Corp............................... 1,621,184
43,400 Loctite Corp....................................... 1,974,700
30,000 Louisiana Pacific Corp............................. 787,500
39,714 Lubrizol Corp...................................... 1,404,883
--------------
TOTAL RAW MATERIALS/PROCESSING INDUSTRIES 9,589,514
--------------
TECHNOLOGY 20.3%
20,000 General Signal Corp................................ 795,000
128,358 Intel Corp......................................... 8,126,665
3,754 International Business Machines Corp............... 360,384
--------------
TOTAL TECHNOLOGY................................... 9,282,049
--------------
TOTAL COMMON STOCK (Cost $8,094,852)............... 44,833,519
--------------
<CAPTION>
Principal
Amount
<C> <S> <C>
--------
COMMERCIAL PAPER 1.8%
$820,000 Associates Corp. of North America, 6.15%,
7/03/95 (Cost $819,580)............................ 819,580
--------------
</TABLE>
<TABLE>
<S> <C>
TOTAL INVESTMENTS (Cost $8,914,432) 99.9%....................... 45,653,099
OTHER ASSETS AND LIABILITIES, NET 0.1%.......................... 38,372
--------------
NET ASSETS 100%................................................. $ 45,691,471
--------------
</TABLE>
*Non-income producing security
See Notes to Financial Statements
4
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments, at market value (Cost $8,914,432).................... $45,653,099
Cash.............................................................. 1,573
Receivable for investments sold................................... 180,175
Interest and dividends receivable................................. 71,890
Other assets...................................................... 679
-----------
Total Assets..................................................... 45,907,416
-----------
LIABILITIES
Payable for Fund shares redeemed.................................. 180,221
Due to Adviser.................................................... 18,747
Accrued expenses.................................................. 16,977
-----------
Total Liabilities................................................ 215,945
-----------
Net Assets, equivalent to $144.45 per unit on 316,324 units of
partnership interest outstanding................................. $45,691,471
-----------
NET ASSETS WERE COMPRISED OF:
311,308 units of limited partnership interest..................... $44,966,934
4,482 units of non-managing general partnership interest.......... 647,403
534 units of managing general partnership interest................ 77,134
-----------
NET ASSETS........................................................ $45,691,471
-----------
</TABLE>
See Notes to Financial Statements
5
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended June 30, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends........................................................... $ 410,317
Interest............................................................ 25,048
----------
Total income....................................................... 435,365
----------
EXPENSES
Management fees..................................................... 103,973
Managing general partners' fees and expenses........................ 17,707
Shareholder service agent's fees and expenses....................... 9,653
Accounting services................................................. 27,547
Audit fees.......................................................... 7,050
Custodian fees...................................................... 2,390
Legal fees.......................................................... 2,691
Reports to partners................................................. 7,559
Miscellaneous....................................................... 217
----------
Total expenses..................................................... 178,787
----------
NET INVESTMENT INCOME.............................................. 256,578
----------
REALIZED AND UNREALIZED GAIN ON SECURITIES
Net realized gain on securities..................................... 875,401
Net unrealized appreciation of securities during the period......... 8,406,764
----------
NET REALIZED AND UNREALIZED GAIN ON SECURITIES..................... 9,282,165
----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................... $9,538,743
----------
</TABLE>
See Notes to Financial Statements
6
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1995 December 31, 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
NET ASSETS, beginning of period.......... $37,739,070 $38,532,413
----------- -----------
Operations
Net investment income................... 256,578 543,160
Net realized gain on securities......... 875,401 1,518,082
Net unrealized appreciation
(depreciation) of securities during the
period................................. 8,406,764 (294,738)
----------- -----------
Increase in net assets resulting from
operations.............................. 9,538,743 1,766,504
----------- -----------
Distributions to partners from net
investment income........................ (206,652) (429,153)
----------- -----------
Partnership unit transactions
Proceeds from units issued for
distributions reinvested................ 25,985 54,187
Cost of units redeemed.................. (1,405,675) (2,184,881)
----------- -----------
Decrease in net assets resulting from
partnership unit transactions........... (1,379,690) (2,130,694)
----------- -----------
Increase (decrease) in Net Assets........ 7,952,401 (793,343)
----------- -----------
NET ASSETS, end of period (including
undistributed net investment income of
$2,312,017 and $2,262,091).............. $45,691,471 $37,739,070
----------- -----------
CHANGE IN PARTNERSHIP UNITS OUTSTANDING
Units issued for distributions
reinvested............................... 206 483
Units redeemed........................... (11,024) (19,486)
----------- -----------
Decrease in partnership units
outstanding............................. (10,818) (19,003)
----------- -----------
</TABLE>
See Notes to Financial Statements
7
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a unit of partnership interest outstanding throughout each of
the periods indicated (Unaudited).
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year ended December 31
June 30, ------------------------------------------
1995 1994 1993 1992 1991 1990
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE (/1/)
Net asset value,
beginning of period..... $115.36 $111.32 $104.40 $101.56 $ 80.29 $82.32
------- ------- ------- ------- ------- ------
INCOME FROM INVESTMENT
OPERATIONS
Investment income...... 1.36 2.62 2.49 2.48 2.56 2.54
Expenses............... (.56) (1.00) (1.00) (.88) (.755) (.62)
------- ------- ------- ------- ------- ------
Net investment income... .80 1.62 1.49 1.60 1.805 1.92
Net realized and
unrealized gains or
losses on securities... 28.93 3.70 6.71 2.83 21.515 (.35)
------- ------- ------- ------- ------- ------
Total from investment
operations.............. 29.73 5.32 8.20 4.43 23.32 1.57
------- ------- ------- ------- ------- ------
LESS DISTRIBUTIONS FROM
Net investment income.. (.64) (1.28) (1.28) (1.59) (1.77) (1.96)
Taxable net realized
capital gains......... -- -- -- -- (.28) (1.64)
------- ------- ------- ------- ------- ------
Total distributions..... (.64) (1.28) (1.28) (1.59) (2.05) (3.60)
------- ------- ------- ------- ------- ------
Net asset value, end of
period.................. $144.45 $115.36 $111.32 $104.40 $101.56 $80.29
------- ------- ------- ------- ------- ------
TOTAL RETURN (/2/) ..... 25.85% 4.82% 7.91% 4.42% 29.39% 2.23%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of
period (millions)....... $45.7 $37.7 $38.5 $38.7 $42.0 $34.7
Average net assets
(millions).............. $41.6 $37.6 $38.9 $40.0 $38.6 $38.4
Ratios to average net
assets (annualized)
Expenses............... .86% .89% .93% .87% .83% .78%
Net investment income.. 1.23% 1.45% 1.38% 1.59% 1.98% 2.42%
Portfolio turnover rate. 0% 0% 0% 0% 0% 1%
</TABLE>
(1) Based on average month-end shares outstanding.
(2) Total return for a period of less than one full year is not annualized.
See Notes to Financial Statements
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
- --------------------------------------------------------------------------------
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
American Capital Exchange Fund, a California limited partnership (the "Fund"),
is a partnership registered under the Investment Company Act of 1940, as amend-
ed, as a diversified, open-end management investment company. The following is
a summary of the significant accounting policies consistently followed by the
Fund in the preparation of its financial statements.
A. INVESTMENT VALUATIONS-Securities listed or traded on a national securities
exchange are valued at the last sale price. Unlisted securities and listed se-
curities for which the last sale price is not available are valued at the mean
between the last reported bid and asked price.
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. REPURCHASE AGREEMENTS-A repurchase agreement is a short-term investment in
which a Fund acquires ownership of a debt security and the seller agrees to re-
purchase the security at a future time and specified price. The Fund may invest
independently 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 ag-
gregate of which is invested in repurchase agreements. Repurchase agreements
are collateralized by the underlying debt securities. The Fund will make pay-
ment for such securities only upon physical delivery or evidence of book entry
transfer to the account of the custodian bank. The seller is required to main-
tain the value of the underlying security at not less than the repurchase pro-
ceeds due the Fund.
C. FEDERAL INCOME TAXES-The Fund has met the qualifications to be classified as
a partnership for federal income tax purposes and intends to maintain this
qualification in the future. A partnership is not subject to federal income
tax.
D. INVESTMENT TRANSACTIONS AND RELATED INVESTMENT INCOME-Investment transac-
tions are accounted for on the trade date. Realized gains and losses on invest-
ments are determined on the basis of identified cost. Dividend income is
recorded on the ex-dividend date. Interest income is accrued daily.
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
- -------------------------------------------------------------------------------
E. DISTRIBUTIONS AND TAX ALLOCATIONS-Distributions to partners are recorded on
the record date. Net investment income is allocated daily to each partner,
relative to the total number of units held. Capital gains or losses will be
allocated equally among units outstanding on the day recognized.
NOTE 2--MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Adviser serves as the investment manager of the Fund. Management fees are
calculated monthly, based on the average daily net assets of the Fund at an
annual rate of .50%.
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 $4,382 as the Fund's share of the employee costs attributable
to the Fund's accounting officers. A portion of the accounting services ex-
pense was paid to the Adviser in reimbursement of personnel, facilities and
equipment costs attributable to the provisions 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 $9,000.
Certain officers and managing general partners of the Fund are officers and
directors of the Adviser and the shareholder service agent.
The Adviser and Van Kampen American Capital Exchange Corp., as non-managing
general partners of the Fund, owned 351 and 4,131 units of partnership inter-
est, respectively, at the end of the period.
NOTE 3--INVESTMENT ACTIVITY
During the period, the proceeds from sales of investments, excluding short-
term investments, was $1,261,396 which were for securities returned to various
partners as consideration for their partnership units redeemed by the Fund.
Such transactions, resulting in a realized gain of $875,401 for financial re-
porting purposes, are not considered taxable transactions for federal income
tax purposes. There were no purchases during the period.
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
- --------------------------------------------------------------------------------
For federal income tax purposes, the identified cost of investments owned at
the end of the period was $3,953,692. Net unrealized appreciation of invest-
ments aggregated $41,699,407, gross unrealized appreciation of investments ag-
gregated $41,809,497 and gross unrealized depreciation of investments
aggregated $110,090.
NOTE 4--MANAGING GENERAL PARTNER COMPENSATION
Managing general partners of the Fund who are not affiliated with the Adviser
are compensated by the Fund at the annual rate of $5,000 plus a fee of $750 per
Board meeting attended. During the period, such fees aggregated $17,500.
11
<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 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.
12
<PAGE>
AMERICAN CAPITAL EXCHANGE FUND, INC.
(A California Limited Partnership)
MANAGING GENERAL PARTNERS
DR. NORMAN HACKERMAN
F. ROBERT PAULSEN
DON G. POWELL
ALAN B. SHEPARD, JR.
MILLER UPTON
OFFICERS
DON G. POWELL
Chairman and Chief Executive Officer
ALAN T. SACHTLEBEN
Chief Investment Officer
STEPHEN L. BOYD
Investment Officer
CURTIS W. MORELL
Principal Financial and Accounting Officer
DENNIS J. MCDONNELL
RONALD A. NYBERG
Vice Presidents
TANYA M. LODEN
Financial Officer
NORI L. GABERT
Legal Officer and Secretary
HUEY P. FALGOUT, JR.
Assistant Secretary
PERRY F. FARRELL
M. ROBERT SULLIVAN
Assistant Financial Officers
INVESTMENT ADVISER
VAN KAMPEN AMERICAN CAPITAL
ASSET MANAGEMENT, INC.
2800 Post Oak Blvd.
Houston, Texas 77056
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
NON-MANAGING GENERAL PARTNERS
VAN KAMPEN AMERICAN CAPITAL
EXCHANGE CORP.
2800 Post Oak Blvd.
Houston, Texas 77056
VAN KAMPEN AMERICAN CAPITAL
ASSET MANAGEMENT, INC.
2800 Post Oak Blvd.
Houston, Texas 77056
(C) Van Kampen American Capital Distributors, Inc., 1995 All rights reserved.
SM denotes a service mark of Van Kampen American Capital Distributors, Inc.
Nationally distributed by Van Kampen American Capital Distributors, Inc.
13
<PAGE>
AMERICAN CAPITAL EXCHANGE FUND, INC.
THIS PAGE INTENTIONALLY LEFT BLANK
14
<PAGE>
AMERICAN CAPITAL EXCHANGE FUND, INC.
THIS PAGE INTENTIONALLY LEFT BLANK
15
<PAGE>
AMERICAN CAPITAL EXCHANGE FUND, INC.
THIS PAGE INTENTIONALLY LEFT BLANK
16
