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VAN KAMPEN AMERICAN CAPITAL
EXPLORER INSTITUTIONAL FUNDS
SUPPLEMENT DATED NOVEMBER 1, 1996, TO THE PROSPECTUS DATED APRIL 22, 1996,
AS PREVIOUSLY SUPPLEMENTED ON JULY 16, 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 Funds' investment adviser, Van Kampen American Capital
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 Funds held on October 23, 1996,
shareholders approved changes to the Funds' fundamental investment restrictions
to permit the Funds to invest their assets in shares of
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certain investment companies, consistent with their investment objectives and
policies, in excess of the investment limitations imposed by the Investment
Company Act of 1940, as amended (the "1940 Act"). The Funds believe that from
time to time they can more effectively and efficiently invest in certain types
of securities by pooling their assets for such securities with assets of other
investment companies managed by the Adviser and its affiliates. Prior to
engaging in such transactions, the Funds and their 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, each of the Funds 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 Funds' fundamental investment restrictions
regarding diversification, control, unseasoned issuers or restricted securities
may be deemed to preclude the Funds from taking full advantage of any exemptive
relief granted by the SEC, each of the Funds 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.
