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VAN KAMPEN AMERICAN CAPITAL
EQUITY INCOME FUND
SUPPLEMENT DATED NOVEMBER 1, 1996, TO THE PROSPECTUS DATED APRIL 29, 1996,
AS PREVIOUSLY SUPPLEMENTED ON JUNE 1, 1996 AND JULY 1, 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. In addition, item (2) under the subheading
"Other Purchase Programs -- NAV Purchase Options" is hereby amended and restated
in its entirety to state:
"(2) Current or retired directors, officers and employees of Morgan
Stanley Group Inc. and any of its subsidiaries, employees
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of an investment subadviser to any fund described in (1) above or
an affiliate of such subadviser; and such persons' families and their
beneficial accounts."
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 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.
