<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 8/96
<PAGE>
LETTER TO SHAREHOLDERS
DENNIS J. MCDONNELL AND DON G. POWELL
August 15, 1996
Dear Shareholder,
The economy demonstrated an acceleration in growth during the six-month re-
porting period. After an anemic 0.3 percent growth rate in the last quarter of
1995, GDP (the nation's gross domestic product) rose by 2.0 percent in this
year's first quarter. And, as anticipated, 4.2 percent in the second quarter.
The strengthening economic growth was spurred by consumer spending, as retail
sales rose more than 5 percent in the first five months of this year versus the
comparable 1995 period. This brisk activity generated new fears of inflation,
which had been running at about 3 percent for several years. Investors began to
suspect that the Federal Reserve might tighten monetary policy in order to ward
off inflation.
During most of the first half of the year, interest rates on intermediate and
long-term bonds rose steadily. However, the stock market was relatively strong
for most of the period, with most major market averages posting all-time highs.
The Dow Jones Industrial Average rose 10.9 percent from 5095 to 5654, and the
NASDAQ Composite Index rose 12.6 percent from 1052 to 1185.
Corporate earnings, which were an important contributor to last year's strong
stock market, continued to move ahead during the period. Unexpectedly strong
economic activity helped lift reported profits above expectations for the peri-
od. Through the rest of 1996, we expect earnings will be supportive, but per-
haps not the primary factor in the movement of the major stock market averages.
PERFORMANCE SUMMARY
For the six-month period ended June 30, 1996, the Van Kampen American Capital
Exchange Fund (a California Limited Partnership), generated a total return at
net asset value of 10.36 percent. The Fund's return reflects an increase in net
asset value per share from $151.88 on December 31, 1995 to $166.94 on June 30,
1996. By comparison, the Standard & Poor's 500-Stock Index produced a total re-
turn of 10.08 percent for the same period. The index is a broad-based, unman-
aged index that reflects the general performance of the stock market. It does
not reflect any commissions or fees that would be paid by an investor purchas-
ing the securities it represents.
The Fund remains closed to new investors, and the portfolio continues to
maintain a large portion of its assets in technology and pharmaceutical stocks.
Some of the Fund's specific holdings include Intel, a manufacturer of semicon-
ductors and Alco Standard, an office and paper products distribution company.
Continued on page two
1
<PAGE>
OUTLOOK
We anticipate that reasonably strong economic growth will continue during the
balance of 1996, albeit at more moderate rates than the second quarter's swift
pace. While we expect rates of inflation to remain near current levels, the Fed
may begin to lean toward greater restraint in monetary policy in the coming
months. That suggests an upward bias for short-term interest rates and for
yields on long-term bonds to remain in a trading range around current levels.
It appears investors are taking a cautious approach to the stock market. We
do not anticipate a major market correction, but we do foresee a fairly flat
market trend for the remainder of 1996. In this type of market environment, in-
dividual stock selection--choosing what we feel may benefit the Fund most in
each sector--becomes increasingly important.
CORPORATE NEWS
As you may be aware, an agreement was reached in late June for VK/AC Holding,
Inc., the parent company of Van Kampen American Capital, Inc., to be acquired
by Morgan Stanley Group Inc. While this announcement may appear commonplace in
an ever-changing financial industry, we believe it represents an exciting op-
portunity for shareholders of our investment products.
With Morgan Stanley's global leadership in investment banking and asset man-
agement and Van Kampen American Capital's reputation for competitive long-term
performance and superior investor services, together we will offer a broader
range of investment opportunities.
The new ownership will not affect our commitment to pursuing excellence in
all aspects of our business. And, we expect very little change in the way your
mutual fund account is maintained and serviced.
A proxy will be mailed to you shortly explaining the acquisition and asking
for your vote of approval. Please read it carefully and return your response
for inclusion in the shareholder vote. We value our relationship with you and
look forward to communicating more details of this transaction, which is antic-
ipated to be completed in November.
Sincerely,
LOGO LOGO
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, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of Market
Shares Description Value
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCK 98.5%
CONSUMER DISTRIBUTION 7.9%
88,808 Alco Standard Corp....................................... $4,018,562
----------
CONSUMER DURABLES 0.8%
13,677 Dana Corp................................................ 423,987
----------
CONSUMER NON-DURABLES 7.3%
49,712 International Flavors & Fragrance Inc.................... 2,367,534
62,213 McCormick & Co Inc....................................... 1,376,463
----------
3,743,997
----------
CONSUMER SERVICES 0.8%
17,912 Luby's Cafeterias Inc.................................... 420,932
----------
ENERGY 15.3%
21,200 Amerada Hess Corp........................................ 1,136,850
12,800 Amoco Corp............................................... 926,400
11,406 Apache Corp.............................................. 374,972
25,634 Baker Hughes Inc......................................... 842,718
30,320 Dresser Industries Inc................................... 894,440
10,900 Kerr-McGee Corp.......................................... 663,537
20,131 Mobil Corp............................................... 2,257,188
*2,861 Oryx Energy Co........................................... 46,491
8,040 Schlumberger Ltd......................................... 677,370
----------
7,819,966
----------
FINANCE 3.0%
9,882 American International Group Inc......................... 974,612
7,124 Household International Inc.............................. 541,424
----------
1,516,036
----------
HEALTH CARE 23.0%
28,000 American Home Products Corp.............................. 1,683,500
5,000 Baxter International Inc................................. 236,250
54,432 Johnson & Johnson........................................ 2,694,384
25,188 Merck & Co Inc........................................... 1,627,774
51,304 Schering-Plough Corp..................................... 3,219,326
42,430 Warner Lambert Co........................................ 2,333,650
----------
11,794,884
----------
PRODUCER MANUFACTURING 2.3%
6,264 Allied Signal Inc........................................ 357,831
12,831 Fluor Corp............................................... 838,827
----------
1,196,658
----------
</TABLE>
See Notes to Financial Statements
3
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of Market
Shares Description Value
- -------------------------------------------------------------------------------
<C> <S> <C>
RAW MATERIALS/PROCESSING INDUSTRIES 17.7%
54,545 Air Products & Chemicals Inc.......................... $ 3,149,974
25,136 Alcan Aluminium Ltd................................... 766,648
18,688 Georgia Pacific Corp.................................. 1,326,848
43,400 Loctite Corp.......................................... 2,018,100
30,000 Louisiana Pacific Corp................................ 663,750
37,620 Lubrizol Corp......................................... 1,142,708
-----------
9,068,028
-----------
TECHNOLOGY 20.4%
20,000 General Signal Corp................................... 757,500
126,464 Intel Corp............................................ 9,287,200
3,754 International Business Machines Corp.................. 371,646
-----------
10,416,346
-----------
TOTAL COMMON STOCK (Cost $7,831,098).................. 50,419,396
-----------
<CAPTION>
Par
Amount
<C> <S> <C>
--------
COMMERCIAL PAPER 1.4%
$715,000 General Electric Capital Corp, 5.563%, 07/01/96 (Cost
$714,669)............................................. 714,669
-----------
TOTAL INVESTMENTS (Cost $8,545,767) 99.9%........................ 51,134,065
OTHER ASSETS AND LIABILITIES, NET 0.1%........................... 32,794
-----------
NET ASSETS 100%.................................................. $51,166,859
-----------
</TABLE>
*Non-income producing security
See Notes to Financial Statements
4
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments, at market value (Cost $8,545,767).................... $51,134,065
Cash.............................................................. 1,783
Dividends receivable.............................................. 79,818
Other assets...................................................... 173,339
-----------
Total Assets..................................................... 51,389,005
-----------
LIABILITIES
Trustee retirement plan........................................... 161,366
Due to Adviser.................................................... 21,706
Due to auditors................................................... 7,000
Payable for fund shares redeemed.................................. 5,457
Due to legal counsel.............................................. 3,000
Due to custodian.................................................. 2,925
Dividends payable................................................. 2,345
Due to other accounting services.................................. 2,300
Accrued expenses.................................................. 16,047
-----------
Total Liabilities................................................ 222,146
-----------
NET ASSETS, equivalent to $166.94 per unit on 306,499 units of
partnership interest outstanding................................. $51,166,859
-----------
NET ASSETS WERE COMPRISED OF:
302,529 units of limited partnership interest..................... $50,504,135
3,506 units of non-managing general partnership interest.......... 585,303
464 units of managing general partnership interest................ 77,421
-----------
NET ASSETS........................................................ $51,166,859
-----------
</TABLE>
See Notes to Financial Statements
5
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends........................................................... $ 451,509
Interest............................................................ 18,781
----------
Total income....................................................... 470,290
----------
EXPENSES
Management fees..................................................... 125,363
Managing general partners' fees and expenses........................ 27,850
Shareholder service agent's fees and expenses....................... 8,155
Accounting services................................................. 40,357
Audit fees.......................................................... 7,500
Custodian fees...................................................... 4,946
Legal fees.......................................................... 14,415
Reports to partners................................................. 13,692
Miscellaneous....................................................... 1,868
----------
Total expenses..................................................... 244,146
----------
NET INVESTMENT INCOME............................................... 226,144
----------
REALIZED AND UNREALIZED GAIN ON SECURITIES
Net realized gain on securities..................................... 974,284
Net unrealized appreciation of securities during the period......... 3,680,044
----------
NET REALIZED AND UNREALIZED GAIN ON SECURITIES...................... 4,654,328
----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................... $4,880,472
----------
</TABLE>
See Notes to Financial Statements
6
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
June 30, December 31,
1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
NET ASSETS, beginning of period..................... $47,754,672 $37,739,070
----------- -----------
OPERATIONS
Net investment income.............................. 226,144 516,078
Net realized gain on securities.................... 974,284 993,874
Net unrealized appreciation of securities during
the period........................................ 3,680,044 10,576,351
----------- -----------
Increase in net assets resulting from operations... 4,880,472 12,086,303
----------- -----------
DISTRIBUTIONS TO PARTNERS FROM NET INVESTMENT
INCOME.............................................. (198,535) (408,602)
----------- -----------
PARTNERSHIP UNIT TRANSACTIONS
Proceeds from units issued for distributions
reinvested......................................... 26,945 51,670
Cost of units redeemed............................. (1,296,695) (1,713,769)
----------- -----------
Decrease in net assets resulting from partnership
unit transactions.................................. (1,269,750) (1,662,099)
----------- -----------
INCREASE IN NET ASSETS.............................. 3,412,187 10,015,602
----------- -----------
NET ASSETS, end of period (including undistributed
net investment income of $2,397,177 and
$2,369,568)........................................ $51,166,859 $47,754,672
----------- -----------
CHANGE IN PARTNERSHIP UNITS OUTSTANDING
Units issued for distributions reinvested........... 169 377
Units redeemed...................................... (8,085) (13,104)
----------- -----------
Decrease in partnership units outstanding.......... (7,916) (12,727)
----------- -----------
</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 June Year ended December 31(/1/)
30, -------------------------------------------
1996(/1/) 1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
Net asset value,
beginning of period..... $151.88 $115.36 $111.32 $104.40 $101.56 $ 80.29
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS
Investment income...... 1.51 2.85 2.62 2.49 2.48 2.56
Expenses............... (.78) (1.23) (1.00) (1.00) (.88) (.755)
------- ------- ------- ------- ------- -------
Net investment income... .73 1.62 1.62 1.49 1.60 1.805
Net realized and
unrealized gain on
securities............. 14.97 36.18 3.70 6.71 2.83 21.515
------- ------- ------- ------- ------- -------
Total from investment
operations.............. 15.70 37.80 5.32 8.20 4.43 23.32
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS FROM
Net investment income.. (.64) (1.28) (1.28) (1.28) (1.59) (1.77)
Taxable net realized
capital gain.......... -- -- -- -- -- (.28)
------- ------- ------- ------- ------- -------
Total distributions..... (.64) (1.28) (1.28) (1.28) (1.59) (2.05)
------- ------- ------- ------- ------- -------
Net asset value, end of
period.................. $166.94 $151.88 $115.36 $111.32 $104.40 $101.56
------- ------- ------- ------- ------- -------
TOTAL RETURN ........... 10.36% 32.89% 4.82% 7.91% 4.42% 29.39%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of
period (millions)....... $51.2 $47.8 $37.7 $38.5 $38.7 $42.0
Average net assets
(millions).............. $50.1 $44.4 $37.6 $38.9 $40.0 $38.6
Ratios to average net
assets (annualized)
Expenses............... .97% .88% .89% .93% .87% .83%
Net investment income.. .90% 1.16% 1.45% 1.38% 1.59% 1.98%
Portfolio turnover rate. 0% 0% 0% 0% 0% 0%
</TABLE>
(1) Based on average shares outstanding.
See Notes to Financial Statements
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
- --------------------------------------------------------------------------------
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
Van Kampen American Capital Exchange Fund, a California limited partnership
(the "Fund"), is a partnership registered under the Investment Company Act of
1940, as amended, as a diversified, open-end management investment company. The
Fund seeks capital appreciation in a portfolio of common stock.
The following is a summary of the significant accounting policies consist-
ently followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted ac-
counting principles requires management to make estimates and assumptions that
affect the amounts reported. Actual amounts may differ from the estimates.
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, rel-
ative to the total number of units held. Capital gains or losses will be allo-
cated 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 an-
nual rate of .50%.
Accounting services include the salaries and overhead expenses of the Fund's
Chief Accounting Officer and the personnel operating under his direction.
Charges are allocated among investment companies advised by the Adviser. For
the period, these charges included $2,203 as the Fund's share of the employee
costs attributable to the Fund's accounting officers. A portion of the account-
ing services expense was paid to the Adviser in reimbursement of personnel, fa-
cilities 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 $7,500.
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 353 and 3,153 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, aggregated $1,235,586 which were for securities returned to vari-
ous partners as consideration for their partnership units redeemed by the Fund.
Such transactions, resulting in a realized gain of $974,284 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 $3,841,331. Net unrealized appreciation of invest-
ments aggregated $47,292,734, gross unrealized appreciation of investments ag-
gregated $47,393,440 and gross unrealized depreciation of investments
aggregated $100,706.
NOTE 4--MANAGING GENERAL PARTNER COMPENSATION
Managing general partners (the "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 aggre-
gated $17,500.
The Partners of the Fund instituted a Retirement Plan effective April 1,
1996. 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. For the current Partners not affiliated with the Adviser, the
annual retirement benefit payable per year for a ten year period is based upon
the highest total annual compensation received in any of the three calendar
years preceding retirement. Partners with more than five but less than ten
years service at retirement will receive a prorated reduced benefit. Under the
Plan, for the Partners retiring with the effectiveness of the Plan, the annual
retirement benefit payable per year for a ten year period is equal to 75% of
the total compensation received from the Fund during the 1995 calendar year.
Retirement plan expenses for the period aggregated $9,896.
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
Aggressive Growth Fund
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
Intermediate 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 1-800-341-2911 weekdays
from 7:00 a.m. to 7:00 p.m. Central time.
12
<PAGE>
VAN KAMPEN AMERICAN CAPITAL EXCHANGE FUND
(A California Limited Partnership)
MANAGING GENERAL PARTNERS
DONALD M. CARLTON
STEPHEN RANDOLPH GROSS
F. ROBERT PAULSEN
DON G. POWELL
ALAN B. SHEPARD, JR.
OFFICERS
DON G. POWELL
Chairman and Chief Executive Officer
DENNIS J. MCDONNELL
Executive Vice President
ALAN T. SACHTLEBEN
Chief Investment Officer
EDWARD C. WOOD, III
Vice President and Chief Financial Officer
CURTIS W. MORELL
Vice President and Chief Accounting Officer
WILLIAM BROWN
RONALD A. NYBERG
Vice Presidents
JOHN L. SULLIVAN
Treasurer
TANYA M. LODEN
Financial Officer
NORI L. GABERT
Principal Legal Officer and Secretary
STEVEN HILL
Assistant Treasurer
M. ROBERT SULLIVAN
Assistant Controller
HUEY P. FALGOUT, JR.
Legal Officer and Assistant Secretary
INVESTMENT ADVISER
VAN KAMPEN AMERICAN CAPITAL
ASSET MANAGEMENT, INC.
One Parkview Plaza
Oakbrook Terrace, IL 60181
SHAREHOLDER SERVICE AGENT
ACCESS INVESTOR
SERVICES, INC.
P.O. Box 418256
Kansas City, Missouri 64141-9256
CUSTODIAN
STATE STREET BANK AND TRUST 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., 1996 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
