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VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST
SUPPLEMENT DATED NOVEMBER 1, 1996, TO THE PROSPECTUS DATED
NOVEMBER 13, 1995, AS PREVIOUSLY SUPPLEMENTED ON 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
Investment Advisory Corp. (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.
