AMERICAN CAPITAL EXCHANGE FUND, N-30D, 2000-02-23

AMERICAN CAPITAL EXCHANGE FUND
N-30D, 2000-02-23

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<PAGE> 1

TABLE OF CONTENTS

<TABLE>
<S> <C>
Letter to Partners............................... 1
Economic Snapshot................................ 2
Performance Results.............................. 3
Performance in Perspective....................... 4
Portfolio of Investments......................... 5
Statement of Assets and Liabilities.............. 7
Statement of Operations.......................... 8
Statement of Changes in Net Assets............... 9
Financial Highlights............................. 10
Notes to Financial Statements.................... 11
Report of Independent Accountants................ 14
</TABLE>

NOT FDIC INSURED. MAY LOSE VALUE. NO BANK GUARANTEE.
<PAGE> 2

LETTER TO PARTNERS

January 20, 2000

Dear Partner:

As we enter a new century--and millennium--it seems appropriate to take a
look back at the progress that's been made over the last 100 years and how the
world of investing has changed over the generations. Although rapid advances in
technology and science have dramatically altered the world that we live in
today, one of the greatest shifts we've seen is the increasing importance of
investing for many Americans.

Once considered primarily for the wealthy, investing in the stock market is
now available to most people. In fact, almost 79 million individuals--who
represent almost half of all U.S. households--own stocks either directly or
through mutual funds. This is even more impressive when considering that just 16
years earlier, only 19 percent of households owned stocks. Another important
shift has been the need for retirement planning beyond a pension plan or Social
Security. The Investment Company Institute, the leading mutual fund industry
association, reports that 77 percent of all mutual fund shareholders earmarked
retirement as their primary financial goal in 1998.

Through all the changes in the investment environment over the past century,
the general principles that have made generations of investors successful remain
the same. Some that have stood the test of time include:

- INVESTING FOR THE LONG-TERM

- BASING INVESTMENT DECISIONS ON SOUND RESEARCH

- BUILDING A DIVERSIFIED PORTFOLIO

- BELIEVING IN THE VALUE OF PROFESSIONAL INVESTMENT ADVICE

While no one can predict the future, at Van Kampen we believe that these
ideas will remain important tenets for investors well into this century. As we
continue to focus on these principles, we hope that our decades of investment
experience can help bring you closer to your financial goals as we welcome the
new millennium.

Sincerely,

/s/ Richard F. Powers, III /s/ Dennis J. McDonnell
Richard F. Powers, III Dennis J. McDonnell
Chairman President
Van Kampen Asset Management Inc. Van Kampen Asset Management Inc.
</TABLE>

1
<PAGE> 3

ECONOMIC SNAPSHOT

ECONOMIC GROWTH

The nation's brisk rate of economic growth continued throughout 1999,
bringing the United States to the verge of its longest economic expansion on
record. High levels of consumer spending, a host of new jobs, and increasing
productivity kept the economy strong. Gross domestic product, the primary
measure of economic growth, increased 4.2 percent for the year, including an
impressive annualized rate of 5.7 percent for the third quarter and 5.8 percent
in the fourth quarter.

EMPLOYMENT

The job market remained vibrant throughout the year, with more than 2.7
million U.S. jobs created in 1999. In addition, unemployment dropped to 4.1
percent in October--its lowest rate in three decades. With jobs plentiful and
wages on the rise, most Americans were optimistic about the future. At the end
of the year the consumer confidence index hit its highest level since 1968.
Although wage pressures caused some concerns about the potential erosion of
corporate profits, productivity gains helped keep those concerns muted through
the end of the year.

INFLATION AND INTEREST RATES

Although the Consumer Price Index continued to reflect historically low
inflation--rising only 2.7 percent during 1999--concerns about future increases
in inflation were prevalent throughout the reporting period. The Federal Reserve
Board remained active in guarding against inflation and trying to temper
economic growth. The Fed reversed its three interest-rate cuts from the fall of
1998 by raising rates in June, August, and November 1999.

U.S. GROSS DOMESTIC PRODUCT
Seasonally Adjusted Annualized Rates
Third Quarter 1997 through Fourth Quarter 1999
[BAR GRAPH]

Source: Bureau of Economic Analysis

2
<PAGE> 4

PERFORMANCE RESULTS FOR THE YEAR ENDED DECEMBER 31, 1999

VAN KAMPEN EXCHANGE FUND

<TABLE>
<S> <C>
TOTAL RETURNS
One-year total return(1)................................... 11.48%
Five-year average total return(1).......................... 25.50%
Ten-year average total return(1)........................... 17.14%
Life-of-Fund average total return(1)....................... 15.01%
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.

An investment should be made with an understanding of the risks that an
investment in equity securities entails. These include the risk that the
financial condition of the issuers of the securities in the portfolio, or the
condition of the stock market in general, may worsen and therefore, the value of
Fund shares may decline. 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.

Because the prices of common stocks and other securities fluctuate, the value of
an investment in the Fund will vary upon the Fund's investment performance.
Foreign securities may magnify volatility due to changes in foreign exchange
rates, the political and economic uncertainties in foreign countries, and the
potential lack of liquidity, government supervision, and regulation.

Market forecasts provided in this report may not necessarily come to pass.

3
<PAGE> 5

PUTTING YOUR FUND'S PERFORMANCE IN PERSPECTIVE

As you evaluate your progress toward achieving your financial goals, it is
important to track your investment performance at regular intervals. A
comparison of your Fund's performance to an applicable benchmark can:

- Illustrate the market environment in which your Fund is being managed.

- Reflect the impact of favorable market trends or difficult market
conditions.

- Help you evaluate how your Fund's management team has responded to
opportunities and challenges.

The following graph compares your Fund's performance to that of the Standard
& Poor's 500 Index over time. This index is a broad-based, statistical composite
that does not include any commissions or fees that would be paid by an investor
purchasing the securities it represents. Such costs would lower the performance
of the index. An investment cannot be made directly in an index.

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
Van Kampen Exchange Fund vs. the Standard & Poor's 500 Index (December 31,
1989, through December 31, 1999)
[INVESTMENT PERFORMANCE CHART]

<TABLE>
<CAPTION>
VAN KAMPEN EXCHANGE FUND STANDARD & POOR'S 500 INDEX
------------------------ ---------------------------
<S> <C> <C>
Dec 1989 10000 10000
9354 9312
9410 9391
9741 9698
9505 9437
10574 10305
10637 10305
10808 10251
9789 9284
9447 8895
9344 8836
10084 9365
Dec 1990 10223 9689
10617 10091
11534 10770
11574 11091
11592 11095
12062 11523
11429 11066
12017 11563
12367 11790
12086 11658
12473 11796
11884 11278
Dec 1991 13235 12628
13115 12376
13188 12495
12826 12310
13109 12653
13265 12666
12787 12545
13308 13038
13112 12726
13064 12940
13351 12967
13664 13359
Dec 1992 13814 13588
13731 13684
14037 13828
14233 14180
14307 13820
14693 14133
14346 14247
14007 14171
14798 14659
14493 14614
14684 14897
14616 14705
Dec 1993 14905 14952
15302 15438
15042 14974
14375 14390
14407 14555
14875 14736
14584 14451
15186 14906
15971 15467
15505 15157
15683 15474
15331 14863
Dec 1994 15620 15155
16178 15523
16907 16083
17582 16626
18265 17091
18820 17711
19663 18208
20150 18786
19778 18780
20197 19650
20596 19552
20861 20355
Dec 1995 20767 20829
20920 21509
21432 21658
21846 21946
22962 22241
23701 22749
22911 22929
22019 21880
22815 22291
24820 23632
26023 24249
28523 26029
Dec 1996 28285 25599
31569 27169
30131 27330
28938 26290
30312 27826
31695 29456
32408 30870
36796 33282
35054 31370
35998 33179
33951 32035
34380 33463
Dec 1997 33726 34128
35802 34474
38115 36903
38211 38878
38657 38231
37118 38493
37827 40158
38349 39692
33583 33905
37629 36171
39362 39076
42029 41386
Dec 1998 43629 43861
45369 45660
43169 44186
44086 46043
45747 47790
43215 46597
46387 49283
46676 47704
49268 47406
45820 46212
46281 49102
49413 50038
Dec 1999 48637 53078
</TABLE>

The above chart reflects the performance of the Fund. The Fund's performance
assumes reinvestment of all distributions and is shown at net asset value.

While past performance is not indicative of future performance, the above
information provides a broader vantage point from which to evaluate the
discussion of the Fund's performance found in the following pages.

4
<PAGE> 6

PORTFOLIO OF INVESTMENTS

December 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Description Shares Market Value
- ----------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS 97.4%
AEROSPACE & DEFENSE 0.8%
Honeywell International, Inc. ......................... 12,528 $ 722,709
-----------
CONSUMER DISTRIBUTION 0.7%
Cardinal Health, Inc. ................................. 1,245 59,604
IKON Office Solutions, Inc. ........................... 86,993 592,640
-----------
652,244
-----------
CONSUMER DURABLES 1.0%
Dana Corp.............................................. 13,677 409,455
SPX Corp. (a).......................................... 6,824 551,465
-----------
960,920
-----------
CONSUMER NON-DURABLES 3.5%
International Flavors & Fragrances, Inc. .............. 49,712 1,876,628
McCormick & Co., Inc. ................................. 48,259 1,435,705
-----------
3,312,333
-----------
CONSUMER SERVICES 0.2%
Luby's Cafeterias, Inc. ............................... 13,367 152,050
-----------
ENERGY 12.1%
Amerada Hess Corp. .................................... 21,200 1,203,100
Apache Corp. .......................................... 11,406 421,309
Baker Hughes Inc. ..................................... 25,634 539,916
BP Amoco PLC--ADR (United Kingdom)..................... 33,876 2,009,270
Exxon Mobil Corp. ..................................... 53,151 4,281,978
Halliburton Co. ....................................... 30,320 1,220,380
Kerr-McGee Corp. ...................................... 10,900 675,800
Schlumberger, Ltd...................................... 16,080 904,500
Transocean Sedco Forex, Inc. .......................... 3,113 104,872
-----------
11,361,125
-----------
FINANCE 4.0%
American International Group, Inc. .................... 27,792 3,005,010
Household International, Inc. ......................... 21,372 796,107
-----------
3,801,117
-----------
HEALTHCARE 31.5%
American Home Products Corp. .......................... 56,000 2,208,500
Baxter International, Inc. ............................ 5,000 314,063
</TABLE>

See Notes to Financial Statements

5
<PAGE> 7
PORTFOLIO OF INVESTMENTS (CONTINUED)

December 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Description Shares Market Value
- ----------------------------------------------------------------------------------
<S> <C> <C>
HEALTHCARE (CONTINUED)
Johnson & Johnson, Inc. ............................... 54,432 $ 5,068,980
Merck & Co., Inc. ..................................... 50,376 3,378,340
Schering-Plough Corp. ................................. 195,374 8,242,341
Warner-Lambert Co. .................................... 127,290 10,429,824
-----------
29,642,048
-----------
PRODUCER MANUFACTURING 0.6%
Fluor Corp. ........................................... 12,831 588,622
-----------
RAW MATERIALS/PROCESSING INDUSTRIES 8.5%
Air Products & Chemicals, Inc. ........................ 109,090 3,661,333
Alcan Aluminum, Ltd.................................... 10,774 443,754
Georgia Pacific Corp. ................................. 37,376 1,896,832
Georgia Pacific Corp.--Timber Group.................... 18,688 460,192
Louisiana Pacific Corp. ............................... 25,970 370,073
Lubrizol Corp. ........................................ 37,620 1,161,517
-----------
7,993,701
-----------
TECHNOLOGY 34.5%
Intel Corp. ........................................... 375,554 30,912,789
International Business Machines Corp. ................. 15,016 1,621,728
-----------
32,534,517
-----------
TOTAL LONG-TERM INVESTMENTS 97.4%
(Cost $7,354,165)............................................... 91,721,386
REPURCHASE AGREEMENT 1.7%
State Street Bank & Trust Co. ($1,640,000 par collateralized by
U.S. Government obligations in a pooled account, dated 12/31/99,
to be sold on 01/03/00 at $1,640,410) (Cost $1,640,000)......... 1,640,000
-----------
TOTAL INVESTMENTS 99.1%
(Cost $8,994,165)............................................... 93,361,386
OTHER ASSETS IN EXCESS OF LIABILITIES 0.9%....................... 843,513
-----------
NET ASSETS 100.0%................................................ $94,204,899
===========
</TABLE>

(a) Non-income producing security as this stock currently does not declare
dividends.

See Notes to Financial Statements

6
<PAGE> 8

STATEMENT OF ASSETS AND LIABILITIES

December 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $8,994,165)......................... $93,361,386
Cash........................................................ 943,873
Receivables:
Dividends................................................. 85,204
Interest.................................................. 137
Other....................................................... 77,052
-----------
Total Assets.......................................... 94,467,652
-----------
LIABILITIES:
Payables:
Investment Advisory Fee................................... 39,860
Income Distributions...................................... 31,260
Affiliates................................................ 3,951
Managing General Partners' Retirement Plan.................. 119,548
Accrued Expenses............................................ 68,134
-----------
Total Liabilities..................................... 262,753
-----------
NET ASSETS.................................................. $94,204,899
===========
NET ASSETS WERE COMPRISED OF:
266,754 units of limited partnership interest............... $92,939,686
3,411 units of non-managing general partnership interest.... 1,188,515
220 units of managing general partnership interest.......... 76,698
-----------
NET ASSETS.................................................. $94,204,899
===========
NET ASSET VALUE PER UNIT ($94,204,899 divided by 270,385
units of partnership interest outstanding)................ $ 348.41
===========
</TABLE>

See Notes to Financial Statements

7
<PAGE> 9

STATEMENT OF OPERATIONS

For the Year Ended December 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends................................................... $ 994,171
Interest.................................................... 180,739
-----------
Total Income............................................ 1,174,910
-----------
EXPENSES:
Investment Advisory Fee..................................... 457,835
Managing General Partners' Fees and Related Expenses........ 66,774
Shareholder Reports......................................... 62,922
Accounting.................................................. 32,248
Custody..................................................... 24,242
Legal....................................................... 2,395
Other....................................................... 40,677
-----------
Total Expenses............................................ 687,093
Less Credits Earned on Overnight Cash Balances............ 43
-----------
Net Expenses.............................................. 687,050
-----------
NET INVESTMENT INCOME....................................... $ 487,860
===========
REALIZED AND UNREALIZED GAIN/LOSS
Net Realized Gain........................................... $ 1,777,935
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 76,547,458
End of the Period......................................... 84,367,221
-----------
Net Unrealized Appreciation During the Period............... 7,819,763
-----------
NET REALIZED AND UNREALIZED GAIN............................ $ 9,597,698
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $10,085,558
===========
</TABLE>

See Notes to Financial Statements

8
<PAGE> 10

STATEMENT OF CHANGES IN NET ASSETS

For the Years Ended December 31, 1999 and 1998
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, 1999 December 31, 1998
- -------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income.......................... $ 487,860 $ 573,557
Net Realized Gain.............................. 1,777,935 2,475,843
Net Unrealized Appreciation During the
Period....................................... 7,819,763 17,188,549
----------- -----------
Change in Net Assets from Operations........... 10,085,558 20,237,949
----------- -----------
Distributions from Net Investment Income....... (352,177) (366,286)
Distributions from Net Realized Gain........... (136,841) -0-
----------- -----------
Total Distributions........................ (489,018) (366,286)
----------- -----------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES................................... 9,596,540 19,871,663
----------- -----------
FROM PARTNERSHIP UNIT TRANSACTIONS:
Proceeds from Units Issued Through Dividend
Reinvestment................................. 80,661 49,579
Cost of Units Repurchased...................... (3,389,034) (2,278,503)
----------- -----------
NET CHANGE IN NET ASSETS FROM
PARTNERSHIP UNIT TRANSACTIONS................ (3,308,373) (2,228,924)
----------- -----------
TOTAL INCREASE IN NET ASSETS................... 6,288,167 17,642,739
NET ASSETS:
Beginning of the Period........................ 87,916,732 70,273,993
----------- -----------
End of the Period (Including accumulated
undistributed net investment income of
$2,961,067 and $2,825,384, respectively)..... $94,204,899 $87,916,732
=========== ===========
CHANGE IN PARTNERSHIP UNITS OUTSTANDING:
Units Issued Through Dividend Reinvestment..... 245 180
Units Repurchased.............................. (10,219) (8,376)
----------- -----------
Decrease in Partnership Units
Outstanding.............................. (9,974) (8,196)
=========== ===========
</TABLE>

See Notes to Financial Statements

9
<PAGE> 11

FINANCIAL HIGHLIGHTS

The following schedule presents financial highlights for one unit of partnership
interest outstanding throughout the periods indicated.
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Year Ended December 31 (a)
---------------------------------------------------
1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of the Period............. $313.586 $243.538 $205.349 $ 151.88 $115.36
-------- -------- -------- -------- -------
Net Investment Income..... 1.772 2.010 1.908 1.488 1.62
Net Realized and
Unrealized Gain......... 34.822 69.318 37.561 53.261 36.18
-------- -------- -------- -------- -------
Total from Investment
Operations................ 36.594 71.328 39.469 54.749 37.80
-------- -------- -------- -------- -------
Less:
Distributions from Net
Investment Income....... 1.280 1.280 1.280 1.28 1.28
Distributions from Net
Realized Gain........... .490 -0- -0- -0- -0-
-------- -------- -------- -------- -------
Total Distributions......... 1.770 1.280 1.280 1.28 1.28
-------- -------- -------- -------- -------
Net Asset Value, End of the
Period.................... $348.410 $313.586 $243.538 $205.349 $151.88
======== ======== ======== ======== =======
Total Return................ 11.48% 29.36% 19.23% 36.21% 32.89%
Net Assets at End of the
Period (In millions)...... $ 94.2 $ 87.9 $ 70.3 $ 61.8 $ 47.8
Ratio of Expenses to Average
Net Assets................ .75% .74% .75% .93% .88%
Ratio of Net Investment
Income to Average Net
Assets.................... .53% .73% .80% .87% 1.16%
Portfolio Turnover.......... 0% 0% 0% 0% 0%
</TABLE>

(a) Based on average units outstanding.

See Notes to Financial Statements

10
<PAGE> 12

NOTES TO FINANCIAL STATEMENTS

December 31, 1999
- --------------------------------------------------------------------------------

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.

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.

11
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

December 31, 1999
- --------------------------------------------------------------------------------

The seller is required to maintain the value of the underlying security at not
less than the repurchase proceeds due the Fund.

C. INVESTMENT INCOME--Dividend income is recorded on the ex-dividend date and
interest income is recorded on an accrual basis. Discounts are amortized 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 December 31, 1999, for federal income tax purposes the cost of long- and
short-term investments is $4,727,379; the aggregate gross unrealized
appreciation is $88,634,007 and the aggregate gross unrealized depreciation is
$0, resulting in net unrealized appreciation on long- and short-term investments
of $88,634,007.

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.

F. EXPENSE REDUCTIONS--During the year ended December 31, 1999, the Fund's
custody fee was reduced by $43 as a result of credits earned on overnight cash
balances.

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 year ended December 31, 1999, the Fund recognized expenses of
approximately $2,400 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 year ended December 31, 1999, the Fund recognized expenses of
approximately $32,000 representing Van Kampen Inc.'s or its affiliates'
(collectively "Van Kampen") cost of providing accounting services to the Fund.

12
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

December 31, 1999
- --------------------------------------------------------------------------------

Van Kampen Investor Services Inc., an affiliate of the Adviser, serves as
the shareholder servicing agent for the Fund. For the year ended December 31,
1999, the Fund recognized expenses of approximately $15,000. 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 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 December 31, 1999, 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 $1,835,116, respectively.

13
<PAGE> 15

REPORT OF INDEPENDENT ACCOUNTANTS

The Board of Trustees and Shareholders of
Van Kampen Exchange Fund

We have audited the accompanying statement of assets and liabilities of Van
Kampen Exchange Fund (a California Limited Partnership), including the portfolio
of investments, as of December 31, 1999, the related statement of operations for
the year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
periods presented. These financial statements and financial highlights are the
responsibility of the Exchange Fund management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit it obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1999, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above preset fairly, in all material respects, the financial position of Van
Kampen Exchange Fund as of December 31, 1999, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended, and the financial highlights for each of the periods
presented, in conformity with generally accepted accounting principles.

KPMG LLP SIG
Chicago, Illinois
February 10, 2000

14
<PAGE> 16

VAN KAMPEN FUNDS

GROWTH
Aggressive Growth*
American Value*
Emerging Growth
Enterprise
Equity Growth
Focus Equity
Growth
Mid Cap Growth
Pace
Small Cap Value
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
Global Fixed Income*
Global Franchise
Global Government Securities*
Global Managed Assets*
International Magnum
Latin American
Strategic Income
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

- - 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.

- - e-mail us by visiting
WWW.VANKAMPEN.COM and
selecting Contact Us

* Closed to new investors
** Open to new investors for a
limited time

15
<PAGE> 17

VAN KAMPEN EXCHANGE FUND

(A California Limited Partnership)
- --------------------------------------------------------------------------------

MANAGING GENERAL PARTNERS

DAVID C. ARCH
ROD DAMMEYER
HOWARD J KERR
DENNIS J. MCDONNELL*
THEODORE A. MYERS
RICHARD F. POWERS, III*--Chairman
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN*

OFFICERS

RICHARD F. POWERS, III*
President

DENNIS J. MCDONNELL*
Executive Vice President and
Chief Investment Officer

A. THOMAS SMITH III*
Vice President and Secretary

JOHN L. SULLIVAN*
Vice President, Treasurer and
Chief Financial Officer

PETER W. HEGEL*
MICHAEL H. SANTO*
EDWARD C. WOOD, 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 ASSET MANAGEMENT INC.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, IL 60181-5555

INDEPENDENT ACCOUNTANTS

KPMG LLP
303 East Wacker Drive
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.

(SM) denotes a service mark of Van Kampen Funds Inc.

16
<PAGE> 18

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YEAR 2000 UPDATE

As we enter the new century, it's "business as usual" for Van Kampen.
Thank you for the confidence you showed in us during the changeover on
January 1, 2000, and for entrusting us with your investment portfolio. We
look forward to continuing to serve your investment needs.

- --------------------------------------------------------------------------------