<PAGE> 1
<TABLE>
<S> <C>
Table of Contents
OVERVIEW
LETTER TO PARTNERS 1
ECONOMIC SNAPSHOT 2
PERFORMANCE SUMMARY
RETURN HIGHLIGHTS 4
BY THE NUMBERS
YOUR FUND'S INVESTMENTS 5
FINANCIAL STATEMENTS 7
NOTES TO FINANCIAL STATEMENTS 11
VAN KAMPEN FUNDS
THE VAN KAMPEN FAMILY OF FUNDS 14
OFFICERS AND IMPORTANT ADDRESSES 15
RESULTS OF PARTNER VOTES 16
</TABLE>
It is times like these when money-management experience may make a difference.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
<PAGE> 2
OVERVIEW
LETTER TO PARTNERS
July 20, 2000
Dear Partner,
Regardless of how long you have been an investor, you are likely to have
questions and even some concerns about how recent market volatility has
affected your investment. We believe it is times like these when
money-management experience may make a difference. Toward that end, you
should know that Van Kampen is one of the nation's oldest investment-
management firms, with a history of money management dating back to 1926. Our
portfolio managers have invested in all types of market conditions--during
bull and bear markets, periods of inflation and rising interest rates, and
now a technology revolution. We have managed money long enough to understand
short-term market volatility and the value of investing for the long term.
As we move through the second half of 2000, count on us to continue to draw
on the wisdom of our 74 years of experience. Along those lines, Van Kampen's
"Generations of Experience" is the theme of a national
advertising campaign that we recently kicked off. The
message emphasizes our depth of investment-management
history, as well as our firm belief that with the right
investments, anyone can realize life's true wealth.
Sincerely,
[SIG]
Richard F. Powers, III
President and CEO
Van Kampen Investments
1
<PAGE> 3
ECONOMIC SNAPSHOT
ECONOMIC GROWTH
BEGINNING IN THE SECOND QUARTER OF 2000, EVIDENCE OF SLOWER ECONOMIC GROWTH IN
THE UNITED STATES EMERGED. HOWEVER, ANALYSTS BELIEVE IT MAY HAVE BEEN PREMATURE
TO ASSUME THAT THE U.S. ECONOMY HAS SLOWED TO A SUSTAINABLE, NONINFLATIONARY
PACE, WITH THE GROSS DOMESTIC PRODUCT (GDP), A MEASURE OF ECONOMIC GROWTH, UP
5.2 PERCENT ANNUALIZED IN THE SECOND QUARTER OF 2000.
CONSUMER SPENDING AND EMPLOYMENT
CONSUMER SPENDING REMAINED THE MAIN ENGINE OF GROWTH BEHIND THE U.S. ECONOMY.
LIVING STANDARDS AND SPENDING HABITS WERE BOOSTED BY STRONG GAINS IN REAL
INCOME, AND INDIVIDUAL WEALTH INCREASED SUBSTANTIALLY, PRIMARILY DUE TO A
BUOYANT STOCK MARKET. NONETHELESS, DATA RELEASED IN THE SECOND QUARTER OF 2000
REFLECTED A MINOR DECREASE IN THE SPENDING OF INDIVIDUALS. IN JUNE, THE CONSUMER
PRICE INDEX (CPI), THE LEADING INFLATION INDICATOR, ROSE HIGHER THAN
EXPECTED--0.6 PERCENT MORE THAN THE PREVIOUS MONTH. THAT HEIGHTENED CONCERNS
ABOUT INFLATION, AND THE PROSPECT OF ADDITIONAL FEDERAL RESERVE BOARD
INTEREST-RATE INCREASES.
THE U.S. LABOR MARKET WAS STILL ROBUST DURING THIS TIME, AND JOB INSECURITY
CONTINUED TO DECLINE. SOLID EMPLOYMENT GROWTH WAS ACCOMPANIED BY UNUSUALLY LARGE
GAINS IN PRODUCTIVITY, WHICH LIMITED THE RISE IN UNIT LABOR COSTS ACROSS THE
WHOLE ECONOMY. GIVEN THE HIGH EMPLOYMENT NUMBERS AND STRONG LEVELS OF
PRODUCTIVITY, ANALYSTS BELIEVE AN INCREASE IN INTEREST RATES TO WARD OFF
INFLATION AND FURTHER SLOW THE ECONOMY IS POSSIBLE.
INTEREST RATES AND INFLATION
DURING THE PAST FEW MONTHS, PERSISTENT STRENGTH IN CONSUMER SPENDING ACCOMPANIED
BY A VERY TIGHT LABOR MARKET, RESULTED IN SOME INFLATION. THE CPI REACHED A
LEVEL OF 2.7 PERCENT IN JANUARY 2000 AND 3.7 PERCENT IN JUNE 2000, CLEARLY
DEMONSTRATING SIGNS OF INFLATION.
SINCE JUNE 1999, THE FEDERAL RESERVE HAS INCREASED THE FEDERAL FUNDS RATE SIX
TIMES BY A TOTAL OF 175 BASIS POINTS TO LOWER ECONOMIC GROWTH AND DECREASE ANY
FUTURE FEARS OF INFLATION. THESE INCREASES IN INTEREST RATES HELPED SLOW THE
INTEREST-SENSITIVE AUTO AND HOUSING MARKETS.
MANY OBSERVERS BELIEVE INTEREST RATES COULD BE LIFTED FURTHER IN COMING MONTHS.
WHILE MARKETS HAVE EXPERIENCED MUCH SHORT-TERM VOLATILITY, THE MARKET'S OUTLOOK
COULD IMPROVE ONCE INTEREST-RATE HIKES CEASE.
2
<PAGE> 4
U.S. GROSS DOMESTIC PRODUCT
SEASONALLY ADJUSTED ANNUALIZED RATES
(June 30, 1998 -- June 30, 2000)
[BAR GRAPH]
<TABLE>
<CAPTION>
U.S. GROSS DOMESTIC PRODUCT
---------------------------
<S> <C>
Jun 98 2.1
Sep 98 3.8
Dec 98 5.9
Mar 99 3.5
Jun 99 2.5
Sep 99 5.7
Dec 99 8.3
Mar 00 4.8
Jun 00 5.2
</TABLE>
Source: Bureau of Economic Analysis
INTEREST RATES AND INFLATION
(June 30, 1998 -- June 30, 2000)
[LINE GRAPH]
<TABLE>
<CAPTION>
INTEREST RATES INFLATION
-------------- ---------
<S> <C> <C>
Jun 98 5.5 1.7
5.5 1.7
5.5 1.6
Sep 98 5.25 1.5
5.0 1.5
4.75 1.5
Dec 98 4.75 1.6
4.75 1.7
4.75 1.6
Mar 99 4.75 1.7
4.75 2.3
4.75 2.1
Jun 99 5.0 2.0
5.0 2.1
5.25 2.3
Sep 99 5.25 2.6
5.25 2.6
5.5 2.6
Dec 99 5.5 2.7
5.5 2.7
5.75 3.2
Mar 00 6.0 3.7
6.0 3.0
6.5 3.1
Jun 00 6.5 3.7
</TABLE>
Interest rates are represented by the closing midline federal funds target rate
on the last day of each month. Inflation is indicated by the annual percent
change of the Consumer Price Index for all urban consumers at the end of each
month.
3
<PAGE> 5
PERFORMANCE SUMMARY
RETURN HIGHLIGHTS
(as of June 30, 2000)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
<S> <C> <C>
Six-month total return(1) 30.26%
-----------------------------------------------------------------------
One-year total return(1) 36.72%
-----------------------------------------------------------------------
Five-year average total return(1) 26.41%
-----------------------------------------------------------------------
Ten-year average total return(1) 19.56%
-----------------------------------------------------------------------
Life-of-Fund average total return(1) 15.98%
-----------------------------------------------------------------------
Commencement date 12/16/76
-----------------------------------------------------------------------
</TABLE>
(1) Total return based on net asset value (NAV) assumes an investment at the
beginning of the period indicated, reinvestment of all distributions for the
period, and sale of all units of partnership interest at the end of the
period, all at NAV.
See the Comparative Performance section of the current prospectus. An
investment in the Fund is subject to investment risks, and you could lose
money on your investment in the Fund. Please review the Risk/Return Summary
of the Prospectus for further details on investment risks. Fund shares, when
redeemed, may be worth more or less than their original cost. Past
performance is no guarantee of future results. Investment return and net
asset value will fluctuate with market conditions.
Market forecasts provided in this report may not necessarily come to pass.
4
<PAGE> 6
BY THE NUMBERS
YOUR FUND'S INVESTMENTS
June 30, 2000 (Unaudited)
THE FOLLOWING PAGES DETAIL YOUR FUND'S PORTFOLIO OF INVESTMENTS AT THE END OF
THE REPORTING PERIOD.
<TABLE>
<CAPTION>
MARKET
DESCRIPTION SHARES VALUE
<S> <C> <C>
COMMON STOCKS 98.3%
AEROSPACE & DEFENSE 0.4%
Honeywell International, Inc. .............................. 12,528 $ 422,037
------------
CONSUMER DISTRIBUTION 0.4%
Cardinal Health, Inc. ...................................... 1,245 92,130
IKON Office Solutions, Inc. ................................ 86,993 337,098
------------
429,228
------------
CONSUMER DURABLES 1.0%
Dana Corp. ................................................. 13,677 289,781
SPX Corp. (a)............................................... 6,824 825,278
------------
1,115,059
------------
CONSUMER NON-DURABLES 2.6%
International Flavors & Fragrances, Inc. ................... 49,712 1,500,681
McCormick & Co., Inc. ...................................... 48,259 1,568,418
------------
3,069,099
------------
CONSUMER SERVICES 0.1%
Luby's Cafeterias, Inc. .................................... 13,367 106,936
------------
ENERGY 10.5%
Amerada Hess Corp. ......................................... 21,200 1,309,100
Apache Corp. ............................................... 11,406 670,815
Baker Hughes, Inc. ......................................... 25,634 820,288
BP Amoco PLC-ADR (United Kingdom)........................... 33,876 1,916,111
Exxon Mobil Corp. .......................................... 53,151 4,172,354
Halliburton Co. ............................................ 30,320 1,430,725
Kerr-McGee Corp. ........................................... 10,900 642,419
Schlumberger, Ltd. ......................................... 16,080 1,199,970
Transocean Sedco Forex, Inc. ............................... 3,113 166,351
------------
12,328,133
------------
FINANCE 3.5%
American International Group, Inc. ......................... 27,792 3,265,560
Household International, Inc. .............................. 21,372 888,274
------------
4,153,834
------------
HEALTHCARE 33.8%
American Home Products Corp. ............................... 56,000 3,290,000
Baxter International, Inc. ................................. 5,000 351,562
</TABLE>
See Notes to Financial Statements
5
<PAGE> 7
YOUR FUND'S INVESTMENTS
June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
MARKET
DESCRIPTION SHARES VALUE
<S> <C> <C>
HEALTHCARE (CONTINUED)
Edwards Lifesciences Corp. (a).............................. 1,000 $ 19,125
Johnson & Johnson, Inc. .................................... 54,432 5,545,260
Merck & Co., Inc. .......................................... 50,376 3,860,061
Pfizer, Inc. ............................................... 350,047 16,802,256
Schering-Plough Corp. ...................................... 195,374 9,866,387
------------
39,734,651
------------
PRODUCER MANUFACTURING 0.3%
Fluor Corp. ................................................ 12,831 405,780
------------
RAW MATERIALS/PROCESSING INDUSTRIES 5.2%
Air Products & Chemicals, Inc. ............................. 109,090 3,361,335
Alcan Aluminum, Ltd. ....................................... 10,774 333,994
Georgia Pacific Corp. ...................................... 37,376 981,120
Georgia Pacific Corp.--Timber Group......................... 18,688 404,128
Louisiana-Pacific Corp. .................................... 25,970 282,424
Lubrizol Corp. ............................................. 37,620 790,020
------------
6,153,021
------------
TECHNOLOGY 40.5%
Intel Corp. ................................................ 343,169 45,877,406
International Business Machines Corp. ...................... 15,016 1,645,190
------------
47,522,596
------------
TOTAL LONG-TERM INVESTMENTS 98.3%
(Cost $7,343,683).................................................. 115,440,374
REPURCHASE AGREEMENT 1.8%
Warburg Dillon Read ($2,128,000 par collaterized by U.S. Government
obligations in a pooled cash account, dated 06/30/00, to be sold on
07/03/00 at $2,129,163)
(Cost $2,128,000).................................................. 2,128,000
------------
TOTAL INVESTMENTS 100.1%
(Cost $9,471,683).................................................. 117,568,374
LIABILITIES IN EXCESS OF OTHER ASSETS (0.1%)........................ (168,773)
------------
NET ASSETS 100.0%................................................... $117,399,601
------------
</TABLE>
(a) Non-income producing security as this stock currently does not declare
dividends.
See Notes to Financial Statements
6
<PAGE> 8
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
June 30, 2000 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $9,471,683)......................... $117,568,374
Receivables:
Dividends................................................. 78,622
Interest.................................................. 388
Other....................................................... 64,805
------------
Total Assets............................................ 117,712,189
------------
LIABILITIES:
Payables:
Income Distributions...................................... 49,963
Investment Advisory Fee................................... 47,805
Shareholder Reports....................................... 35,432
Affiliates................................................ 7,297
Custodian Bank............................................ 463
Managing General Partners' Retirement Plan.................. 117,657
Accrued Expenses............................................ 53,971
------------
Total Liabilities....................................... 312,588
------------
NET ASSETS.................................................. $117,399,601
============
NET ASSETS WERE COMPRISED OF:
255,947 units of limited partnership interest............... $115,786,399
3,422 units of non-managing general partnership interest.... 1,548,059
144 units of managing general partnership interest.......... 65,143
------------
NET ASSETS.................................................. $117,399,601
============
NET ASSET VALUE PER UNIT ($117,399,601 divided by 259,513
units of partnership interest outstanding)................ $ 452.38
============
</TABLE>
See Notes to Financial Statements
7
<PAGE> 9
Statement of Operations
For the Six Months Ended June 30, 2000 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends................................................... $ 517,191
Interest.................................................... 64,682
------------
Total Income............................................ 581,873
------------
EXPENSES:
Investment Advisory Fee..................................... 266,289
Managing General Partners' Fees and Related Expenses........ 31,084
Shareholder Reports......................................... 30,275
Accounting.................................................. 13,285
Custody..................................................... 4,123
Legal....................................................... 898
Other....................................................... 37,593
------------
Total Expenses............................................ 383,547
------------
NET INVESTMENT INCOME....................................... $ 198,326
============
REALIZED AND UNREALIZED GAIN/LOSS
Net Realized Gain........................................... $ 3,974,927
------------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 84,367,221
End of the Period......................................... 108,096,691
------------
Net Unrealized Appreciation During the Period............... 23,729,470
------------
NET REALIZED AND UNREALIZED GAIN............................ $ 27,704,397
============
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 27,902,723
============
</TABLE>
See Notes to Financial Statements
8
<PAGE> 10
Statement of Changes in Net Assets
For the Six Months Ended June 30, 2000 and the Year Ended
December 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2000 DECEMBER 31, 1999
-------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income............................. $ 198,326 $ 487,860
Net Realized Gain................................. 3,974,927 1,777,935
Net Unrealized Appreciation During the Period..... 23,729,470 7,819,763
------------ -----------
Change in Net Assets from Operations.............. 27,902,723 10,085,558
------------ -----------
Distributions from Net Investment Income.......... (170,904) (352,177)
Distributions from Net Realized Gain.............. (144,772) (136,841)
------------ -----------
Total Distributions............................... (315,676) (489,018)
------------ -----------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES...................................... 27,587,047 9,596,540
------------ -----------
FROM PARTNERSHIP UNIT TRANSACTIONS:
Proceeds from Units Issued Through Dividend
Reinvestment.................................... 64,590 80,661
Cost of Units Repurchased......................... (4,456,935) (3,389,034)
------------ -----------
NET CHANGE IN NET ASSETS FROM
PARTNERSHIP UNIT TRANSACTIONS................... (4,392,345) (3,308,373)
------------ -----------
TOTAL INCREASE IN NET ASSETS...................... 23,194,702 6,288,167
NET ASSETS:
Beginning of the Period........................... 94,204,899 87,916,732
------------ -----------
End of the Period (Including accumulated
undistributed net investment income of
$2,988,489 and $2,961,067, respectively)........ $117,399,601 $94,204,899
============ ===========
CHANGE IN PARTNERSHIP UNITS OUTSTANDING:
Units Issued Through Dividend Reinvestment........ 166 245
Units Repurchased................................. (11,038) (10,219)
------------ -----------
Decrease in Partnership Units Outstanding..... (10,872) (9,974)
============ ===========
</TABLE>
See Notes to Financial Statements
9
<PAGE> 11
Financial Highlights
(Unaudited)
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE UNIT OF PARTNERSHIP
INTEREST OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31 (a)
JUNE 30, --------------------------------------------
2000 1999 1998 1997 1996
----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF THE PERIOD............. $348.410 $313.586 $243.538 $205.349 $ 151.88
-------- -------- -------- -------- --------
Net Investment Income..... .747 1.772 2.010 1.908 1.488
Net Realized and
Unrealized Gain......... 104.403 34.822 69.318 37.561 53.261
-------- -------- -------- -------- --------
Total from Investment
Operations................ 105.150 36.594 71.328 39.469 54.749
-------- -------- -------- -------- --------
Less:
Distributions from Net
Investment Income....... .640 1.280 1.280 1.280 1.280
Distributions from Net
Realized Gain........... .536 .490 -0- -0- -0-
-------- -------- -------- -------- --------
Total Distributions......... 1.176 1.770 1.280 1.280 1.280
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF THE
PERIOD.................... $452.384 $348.410 $313.586 $243.538 $205.349
======== ======== ======== ======== ========
Total Return (b)............ 30.26%* 11.48% 29.36% 19.23% 36.21%
Net Assets at End of the
Period (In millions)...... $ 117.4 $ 94.2 $ 87.9 $ 70.3 $ 61.8
Ratio of Expenses to Average
Net Assets................ .72% .75% .74% .75% .93%
Ratio of Net Investment
Income to Average Net
Assets.................... .37% .53% .73% .80% .87%
Portfolio Turnover.......... 0%* 0% 0% 0% 0%
</TABLE>
* Non-Annualized
(a) Based on average units outstanding.
(b) Total return based on net asset value (NAV) assumes an investment at the
beginning of the period indicated, reinvestment of all distributions for the
period, and sale of all units of partnership interest at the end of the
period, all at NAV.
See Notes to Financial Statements
10
<PAGE> 12
NOTES TO
FINANCIAL STATEMENTS
June 30, 2000 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Exchange Fund (the "Fund"), a California limited partnership, is a
partnership registered under the Investment Company Act of 1940, as amended, as
a diversified open-end investment management company. The Fund seeks capital
appreciation in a portfolio of common stock. The Fund commenced investment
operations on December 16, 1976.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. SECURITY VALUATION Investments in securities listed on a securities exchange
are valued at their sale price as of the close of such securities exchange.
Fixed income investments are stated at value using market quotations. Unlisted
securities and listed securities for which the last sales price is not available
are valued at the mean between the last reported bid and ask price. For those
securities where quotations or prices are not available, valuations are
determined in accordance with procedures established in good faith by the
Managing General Partners. Short-term securities with remaining maturities of 60
days or less are valued at amortized cost, which approximates market value.
B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis.
The Fund may invest in repurchase agreements which are short-term
investments whereby 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 invest independently in repurchase agreements, or transfer
uninvested cash balances into a pooled cash account along with other investment
companies advised by Van Kampen Asset Management Inc. (the "Adviser") or its
affiliates, the daily aggregate of which is invested in repurchase agreements.
Repurchase agreements are fully 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 required to maintain the value of the underlying security at not less than
the repurchase proceeds due the Fund.
11
<PAGE> 13
NOTES TO
FINANCIAL STATEMENTS
June 30, 2000 (Unaudited)
C. INVESTMENT INCOME Dividend income is recorded on the ex-dividend date and
interest income is recorded on an accrual basis. Discounts are accreted over the
life of each applicable security. Premiums on debt securities are not amortized.
D. 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.
At June 30, 2000, for federal income tax purposes the cost of long- and
short-term investments is $5,215,348; the aggregate gross unrealized
appreciation is $112,353,026 and the aggregate gross unrealized depreciation is
$0, resulting in net unrealized appreciation on long- and short-term investments
of $112,353,026.
E. DISTRIBUTION OF INCOME AND GAINS Quarterly 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.
2. INVESTMENT ADVISORY AGREEMENT AND
OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Fund's Investment Advisory Agreement, the Adviser will
provide facilities and investment advice to the Fund for an annual fee payable
monthly of .50% based on the average daily net assets of the Fund.
For the six months ended June 30, 2000, the Fund recognized expenses of
approximately $900 representing legal services provided by Skadden, Arps, Slate,
Meagher & Flom (Illinois), counsel to the Fund, of which a trustee of the Fund
is an affiliated person.
For the six months ended June 30, 2000, the Fund recognized expenses of
approximately $4,100 representing Van Kampen Inc.'s or its affiliates'
(collectively "Van Kampen") cost of providing accounting services to the Fund.
Van Kampen Investor Services Inc., an affiliate of the Adviser, serves as
the shareholder servicing agent for the Fund. For the six months ended June 30,
2000, the Fund recognized expenses of approximately $9,400. Transfer agency fees
are determined through negotiations with the Fund's Managing General Partners
and are based on competitive benchmarks.
Managing general partners of the Fund who are not affiliated with the
Adviser are compensated by the Fund at the annual rate of approximately $500
plus a fee of $250 per Board meeting attended.
The Managing General 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
12
<PAGE> 14
NOTES TO
FINANCIAL STATEMENTS
June 30, 2000 (Unaudited)
aside funds for the payment of its obligations under the Plan by any form of
trust or escrow. For the current Managing General 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. Managing General Partners with
more than five but less than ten years service at retirement will receive a
prorated reduced benefit. Under the Plan, for the Managing General 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.
At June 30, 2000, the Adviser and Van Kampen Exchange Corp., as non-
managing general partners of the Fund, owned 354 and 3,019 units of partnership
interest, respectively.
3. PARTNERSHIP UNIT TRANSACTIONS
Partners of the Fund may redeem units at any time. The net asset value of units
redeemed, other than redemptions under a systematic withdrawal plan, may be paid
in cash or securities, at the option of the Fund, and will ordinarily be paid in
whole or in part in securities. The Fund's valuation will determine the quantity
of securities tendered. The Fund will select securities for tender in
redemptions based on tax or investment considerations.
4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $-0- and $3,985,409, respectively.
13
<PAGE> 15
VAN KAMPEN FUNDS
THE VAN KAMPEN
FAMILY OF FUNDS
Growth
Aggressive Growth
American Value*
Emerging Growth
Enterprise
Equity Growth
Focus Equity
Growth
Mid Cap Growth
Pace
Select Growth
Small Cap Value
Tax Managed Equity Growth
Technology
Growth and Income
Comstock
Equity Income
Growth and Income
Harbor
Real Estate Securities
Utility
Value
Global/International
Asian Growth
Emerging Markets
European Equity
Global Equity
Global Equity Allocation
International Magnum
Latin American
Strategic Income
Tax Managed Global Franchise
Worldwide High Income
Income
Corporate Bond
Government Securities
High Income Corporate Bond
High Yield
High Yield & Total Return*
Limited Maturity Government
U.S. Government
U.S. Government Trust for Income
Capital Preservation
Reserve
Tax Free Money
Senior Loan
Prime Rate Income Trust
Senior Floating Rate
Tax Free
California Insured Tax Free
Florida Insured Tax Free Income
High Yield Municipal**
Insured Tax Free Income
Intermediate Term Municipal
Income
Municipal Income
New York Tax Free Income
Pennsylvania Tax Free Income
Tax Free High Income
To find out more about any of these funds, ask your financial advisor for a
prospectus, which contains more complete information, including sales charges,
risks, and ongoing expenses. Please read it carefully before you invest or send
money.
To view a current Van Kampen fund prospectus or to receive additional fund
information, choose from one of the following:
- visit our Web site at
WWW.VANKAMPEN.COM--
to view a prospectus, select
Download Prospectus [COMPUTER ICON]
- call us at 1-800-341-2911
weekdays from 7:00 a.m. to 7:00 p.m.
Central time. Telecommunications
Device for the Deaf users, call
1-800-421-2833.
[PHONE ICON]
- e-mail us by visiting
WWW.VANKAMPEN.COM and
selecting Contact Us
[MAIL ICON]
* Closed to new investors
** Open to new investors for a limited time
14
<PAGE> 16
OFFICERS AND IMPORTANT ADDRESSES
VAN KAMPEN EXCHANGE FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
MANAGING GENERAL PARTNERS
DAVID C. ARCH
ROD DAMMEYER
HOWARD J KERR
THEODORE A. MYERS
RICHARD F. POWERS, III* - Chairman
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN*
OFFICERS
RICHARD F. POWERS, III*
Chief Executive Officer
STEPHEN L. BOYD*
Executive Vice President and
Chief Investment Officer
A. THOMAS SMITH III*
Vice President, Principal Legal Officer and Secretary
JOHN L. SULLIVAN*
Vice President, Treasurer and
Chief Financial Officer
RICHARD A. CICCARONE*
JOHN R. REYNOLDSON*
MICHAEL H. SANTO*
JOHN H. ZIMMERMANN, III*
Vice Presidents
INVESTMENT ADVISER
VAN KAMPEN ASSET MANAGEMENT INC.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
SHAREHOLDER SERVICE AGENT
VAN KAMPEN INVESTOR
SERVICES INC.
P.O. Box 218256
Kansas City, Missouri 64121-8256
CUSTODIAN
STATE STREET BANK
AND TRUST CO.
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02105
NON-MANAGING GENERAL PARTNERS
VAN KAMPEN EXCHANGE CORP.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
VAN KAMPEN FUNDS INC.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
INDEPENDENT AUDITORS
DELOITTE & TOUCHE LLP
180 North Stetson Avenue
Chicago, Illinois 60601
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606
* "Interested persons" of the Fund, as defined in the Investment Company Act of
1940, as amended.
(C) Van Kampen Funds Inc., 2000. All rights reserved.
(SM) denotes a service mark of Van Kampen Funds Inc.
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<PAGE> 17
RESULTS OF
PARTNER VOTES
An Annual Meeting of the Partners of the Fund was held on June 21, 2000, where
partners voted on the election of Managing General Partners and the selection of
independent auditors.
1) With regard to the election of the following Managing General Partners
<TABLE>
<CAPTION>
# OF UNITS
----------------------------
IN FAVOR WITHHELD
<S> <C> <C>
David C. Arch........................................... 176,182 --
Rod Dammeyer............................................ 176,182 --
Howard J. Kerr.......................................... 176,182 --
Theodore A. Myers....................................... 176,182 --
Richard F. Powers, III.................................. 176,182 --
Hugo F. Sonnenschein.................................... 176,182 --
Wayne W. Whalen......................................... 176,182 --
</TABLE>
2) With regards to the ratification of Deloitte & Touche LLP as independent
auditors for the Fund, 176,182 units voted in favor of the proposal, 0 units
voted against, and 0 units abstained.
16
