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VAN KAMPEN AMERICAN CAPITAL
LIFE INVESTMENT TRUST
SUPPLEMENT DATED APRIL 1, 1997, TO THE PROSPECTUS DATED
MARCH 6, 1996, AS PREVIOUSLY SUPPLEMENTED ON JULY 1, 1996,
NOVEMBER 1, 1996 AND FEBRUARY 11, 1997.
FOR THE GLOBAL EQUITY PORTFOLIO ONLY:
The section of the Prospectus entitled "THE TRUST AND ITS MANAGEMENT -- THE
SUBADVISER" is hereby amended with the following:
At a special meeting of shareholders of the Fund held on October 25, 1996,
shareholders approved a new subadvisory agreement with Morgan Stanley Asset
Management Inc. ("MSAM" or the "Subadviser") to commence on April 1, 1997.
Effective March 31, 1997, the sub-advisory agreement with John Govett & Co.
Limited ("Govett") terminated.
The MSAM subadvisory agreement is similar to the Govett subadvisory
agreement, except that the MSAM subadvisory agreement permits the Adviser and
MSAM to allocate to MSAM responsibility for selecting investments in domestic
securities as well as foreign securities. Effective April 1, 1997, MSAM has
assumed the responsibility for advising the Fund with respect to investments in
domestic securities.
The section of the Prospectus entitled "THE TRUST AND ITS MANAGEMENT --
PORTFOLIO MANAGEMENT" is hereby amended with the following:
Effective April 1, 1997, Barton M. Biggs, Madhav Dhar, Francine J. Bovich
and Ann D. Thivierge have assumed the primary responsibility for the day-to-day
management of the Fund's portfolio.
Since 1980, Mr. Biggs has been Chairman and a director of the Subadviser,
and a Managing Director of the Subadviser and Morgan Stanley & Co. Incorporated
since 1975. Mr. Biggs is a director of Morgan Stanley Group, Inc. and a director
and chairman of other investment companies of the Subadviser. Mr. Biggs holds a
B.A. from Yale University and an M.B.A. from New York University.
Mr. Dhar is Managing Director of the Subadviser and Morgan Stanley & Co.
Incorporated. He has been with the Subadviser since 1984. Mr. Dhar is a co-head
of the Subadviser's emerging markets group, and has been involved in the
launching of the Subadviser's country funds. Mr. Dhar holds a B.S. from St.
Stephens College in Delhi University (India) and an M.B.A. from Carnegie-Mellon
University.
Ms. Bovich has been with the Subadviser since 1993. She is responsible for
portfolio management and communication of MSAM's asset allocation strategy to
institutional investor clients. Prior to 1993, Ms. Bovich was a Principal and
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Executive Vice President of Westwood Management Corp. Prior to that, Ms. Bovich
was a Managing Director of Citicorp Investment Management, Inc. where she was
responsible for the Institutional Investment Management group. Ms. Bovich holds
a B.A. in Economics from Connecticut College and an M.B.A. in Finance from New
York University.
Ms. Thivierge is a Principal of the Subadviser. She is a member of MSAM
asset allocation committee, primarily representing the Total Fund Management
team since its inception in 1991. Ms. Thivierge has been with the Subadviser
since 1986. Prior to 1986, Ms. Thivierge was with Edgewood Management Company.
Ms. Thivierge holds a B.A. in International Relations from James Madison
College, Michigan State University, and an M.B.A. in Finance from New York
University.
The section of the Prospectus entitled "INVESTMENT OBJECTIVE AND POLICIES --
GLOBAL EQUITY PORTFOLIO" is hereby amended with the following:
The Subadviser utilizes a "top-down" approach in selecting investments for
the Fund that emphasizes country selection and weighting rather than individual
stock selection. This approach reflects the Subadviser's philosophy that a
diversified selection of securities representing exposure to world markets based
upon the economic outlook and current valuation levels for each country is an
effective way to maximize the return and minimize the risk associated with
global investment.
The Subadviser determines country allocations for the Fund on an ongoing
basis within policy ranges dictated by each country's market capitalization and
liquidity. The Fund will invest in the United States and other industrialized
countries throughout the world that comprise the Morgan Stanley Capital
International World Index. These countries currently are Australia, Austria,
Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Italy, Japan, the
Netherlands, New Zealand, Norway, Singapore/Malaysia, Spain, Sweden,
Switzerland, the United Kingdom and the United States. In addition, the Fund may
invest a portion of its assets in emerging country equity securities. The Fund
currently intends to invest in some or all of the following countries:
Argentina, Indonesia, Portugal, South Africa, Brazil, Malaysia, Philippines,
Thailand, India, Mexico, South Korea and Turkey.
By analyzing a variety of macroeconomic and political factors, the
Subadviser develops fundamental projections on interest rates, currencies,
corporate profits and economic growth for each country. These country
projections are then used to determine what the Subadviser believes to be a fair
value for the stock market of each country. Discrepancies between actual value
and fair value, as determined by the Subadviser, provide an expected return for
each stock market. The expected return is adjusted by currency return
expectations derived from the Subadviser's purchasing-power parity exchange rate
model to arrive at an expected total return in
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U.S. Dollars. The final country allocation decision is then reached by
considering the expected total return in light of various country specific
considerations such as market size, volatility, liquidity and country risk.
Within a particular country, investments are made through the purchase of
common stocks which, in the aggregate, replicate a broad market index, which in
most cases will be the Morgan Stanley Capital International ("MSCI") Index for
the particular country. The MSCI Indices measure the performance of stock
markets worldwide. The various MSCI Indices are based on the share prices of
companies listed on the local stock exchange of the specified country or
countries within a specified region. The combined market capitalization of
companies in these indices represent approximately 60 percent of the aggregate
market value of the covered stock exchanges. Companies included in the MSCI
country index replicate the industry composition of the local market and are a
representative sampling of large, medium and small companies, subject to
liquidity. Non-domiciled companies traded on the local exchange and companies
with restricted float due to dominant shareholders or cross-ownership are
avoided. The Subadviser may overweight or underweight an industry segment of a
particular index if it concludes this would be advantageous to the Fund.
