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VAN KAMPEN AMERICAN CAPITAL
RESERVE FUND
SUPPLEMENT DATED NOVEMBER 1, 1996, TO THE PROSPECTUS DATED SEPTEMBER 28, 1996.
On October 31, 1996, VK/AC Holding, Inc. became a wholly owned indirect
subsidiary of Morgan Stanley Group Inc. pursuant to the closing of an Agreement
and Plan of Merger among Morgan Stanley Group Inc., MSAM Holdings II, Inc. and
MSAM Acquisition Inc., whereby MSAM Acquisition Inc. was merged with and into
VK/AC Holding, Inc. and VK/AC Holding, Inc. was the surviving corporation (the
"Acquisition"). As a result of the Acquisition, VK/AC Holding, Inc. became a
wholly owned subsidiary of MSAM Holdings II, Inc. which, in turn, is a wholly
owned subsidiary of Morgan Stanley Group Inc. VK/AC Holding, Inc. is the
indirect parent of the Fund's investment adviser, Van Kampen American Capital
Asset Management Inc. (the "Adviser").
Morgan Stanley Group Inc. and various of its directly or indirectly owned
subsidiaries, including Morgan Stanley Asset Management Inc., an investment
adviser ("MSAM"), Morgan Stanley & Co. Incorporated, a registered broker-dealer
and investment adviser, and Morgan Stanley International, are engaged in a wide
range of financial services. Their principal businesses include securities
underwriting, distribution and trading; merger, acquisition, restructuring and
other corporate finance advisory activities; merchant banking; stock brokerage
and research services; asset management; trading of futures, options, foreign
exchange commodities and swaps (involving foreign exchange, commodities, indices
and interest rates); real estate advice, financing and investing; and global
custody, securities clearance services and securities lending. As of September
30, 1996, MSAM, together with its affiliated investment advisory companies, had
approximately $103.5 billion of assets under management and fiduciary advice.
Prior to October 31, 1996, VK/AC Holding, Inc. was controlled, through the
ownership of a substantial majority of its common stock, by The Clayton &
Dubilier Private Equity Fund IV Limited Partnership. References in the attached
Prospectus to The Clayton & Dubilier Private Equity IV Limited Partnership and
its management are hereby deleted.
At a special meeting of shareholders of the Fund held on October 25, 1996,
shareholders approved changes to the Fund's fundamental investment restrictions
to permit the Fund to invest its assets in shares of certain investment
companies, consistent with its investment objectives and policies, in excess of
the investment limitations imposed by the Investment
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Company Act of 1940, as amended (the "1940 Act"). The Fund believes that from
time to time it can more effectively and efficiently invest in certain types of
securities by pooling its assets for such securities with assets of other
investment companies managed by the Adviser and its affiliates. Prior to
engaging in such transactions, the Fund and its Adviser and affiliates together
with other investment companies managed by the Adviser and its affiliates will
obtain exemptive relief from the Securities and Exchange Commission ("SEC") to
permit such transactions. In order to take full advantage of any exemptive
relief granted by the SEC, the Fund hereby restates its fundamental investment
restriction, approved by shareholders, regarding investment in other investment
companies to state:
The Fund may not invest in securities issued by other investment
companies except as part of a merger, reorganization or other
acquisition and except to the extent permitted by (i) the 1940 Act, as
amended from time to time, (ii) the rules and regulations promulgated
by the SEC under the 1940 Act, as amended from time to time, or (iii)
an exemption or other relief from the provisions of the 1940 Act.
In addition, to the extent the Fund's fundamental investment restrictions
regarding diversification, control, unseasoned issuers or restricted securities
may be deemed to preclude the Fund from taking full advantage of any exemptive
relief granted by the SEC, the Fund hereby adds the following exception, as
approved by shareholders, to each applicable restriction:
..., except that the Fund may purchase securities of other investment
companies to the extent permitted by (i) the 1940 Act, as amended from
time to time, (ii) the rules and regulations promulgated by the SEC
under the 1940 Act, as amended from time to time, or (iii) an
exemption or other relief from the provisions of the 1940 Act.
