diff --git a/Filelist b/Filelist
index 5223754..1dc7fd0 100644
--- a/Filelist
+++ b/Filelist
@@ -481,6 +481,7 @@
 # runtime files for all distributions
 RT_ALL =	\
 		README.txt \
+		README.md \
 		runtime/bugreport.vim \
 		runtime/doc/*.awk \
 		runtime/doc/*.pl \
diff --git a/README.md b/README.md
new file mode 100644
index 0000000..384c4ec
--- /dev/null
+++ b/README.md
@@ -0,0 +1,112 @@
+`README.md` for version 7.4 of Vim: Vi IMproved.
+
+
+## What is VIM ##
+
+Vim is an almost compatible version of the UNIX editor Vi.  Many new features
+have been added: multi-level undo, syntax highlighting, command line history,
+on-line help, spell checking, filename completion, block operations, etc.
+There is also a Graphical User Interface (GUI) available.  See
+`runtime/doc/vi_diff.txt` for differences with Vi.
+
+This editor is very useful for editing programs and other plain text files.
+All commands are given with normal keyboard characters, so those who can type
+with ten fingers can work very fast.  Additionally, function keys can be
+defined by the user, and the mouse can be used.
+
+Vim runs under Amiga DOS, MS-DOS, MS-Windows (95, 98, Me, NT, 2000, XP, Vista,
+7), Atari MiNT, Macintosh, BeOS, VMS, RISC OS, OS/2 and almost all flavours of
+UNIX.  Porting to other systems should not be very difficult.
+
+
+## Distribution ##
+
+There are separate distributions for Unix, PC, Amiga and some other systems.
+This `README.md` file comes with the runtime archive.  It includes the
+documentation, syntax files and other files that are used at runtime.  To run
+Vim you must get either one of the binary archives or a source archive.
+Which one you need depends on the system you want to run it on and whether you
+want or must compile it yourself.  Check http://www.vim.org/download.php for
+an overview of currently available distributions.
+
+
+## Documentation ##
+
+The vim tutor is a one hour training course for beginners.  Mostly it can be
+started as `vimtutor`.  See `:help tutor` for more information.
+
+The best is to use `:help` in Vim.  If you don't have an executable yet, read
+`runtime/doc/help.txt`.  It contains pointers to the other documentation
+files.  The User Manual reads like a book and is recommended to learn to use
+Vim.  See `:help user-manual`.
+
+
+## Copying ##
+
+Vim is Charityware.  You can use and copy it as much as you like, but you are
+encouraged to make a donation to help orphans in Uganda.  Please read the file
+`runtime/doc/uganda.txt` for details (do `:help uganda` inside Vim).
+
+Summary of the license: There are no restrictions on using or distributing an
+unmodified copy of Vim.  Parts of Vim may also be distributed, but the license
+text must always be included.  For modified versions a few restrictions apply.
+The license is GPL compatible, you may compile Vim with GPL libraries and
+distribute it.
+
+
+## Sponsoring ##
+
+Fixing bugs and adding new features takes a lot of time and effort.  To show
+your appreciation for the work and motivate Bram and others to continue
+working on Vim please send a donation.
+
+Since Bram is back to a paid job the money will now be used to help children
+in Uganda.  See `runtime/doc/uganda.txt`.  But at the same time donations
+increase Bram's motivation to keep working on Vim!
+
+For the most recent information about sponsoring look on the Vim web site:
+	http://www.vim.org/sponsor/
+
+
+## Compiling ##
+
+If you obtained a binary distribution you don't need to compile Vim.  If you
+obtained a source distribution, all the stuff for compiling Vim is in the
+`src` directory.  See `src/INSTALL` for instructions.
+
+
+## Installation ##
+
+See one of these files for system-specific instructions:
+
+	README_ami.txt		Amiga
+	README_unix.txt		Unix
+	README_dos.txt		MS-DOS and MS-Windows
+	README_os2.txt		OS/2
+	README_mac.txt		Macintosh
+	README_vms.txt		VMS
+
+There are more `README_*.txt` files, depending on the distribution you used.
+
+
+## Information ##
+
+The latest news about Vim can be found on the Vim home page:
+	http://www.vim.org/
+
+If you have problems, have a look at the Vim documentation or tips:
+	http://www.vim.org/docs.php
+	http://vim.wikia.com/wiki/Vim_Tips_Wiki
+
+If you still have problems or any other questions, use one of the mailing
+lists to discuss them with Vim users and developers:
+	http://www.vim.org/maillist.php
+
+If nothing else works, report bugs directly:
+	Bram Moolenaar <Bram@vim.org>
+
+
+## Main author ##
+
+Send any other comments, patches, flowers and suggestions to:
+	Bram Moolenaar <Bram@vim.org>
diff --git a/src/version.c b/src/version.c
index ddc8658..df00f5b 100644
--- a/src/version.c
+++ b/src/version.c
@@ -742,6 +742,8 @@
 static int included_patches[] =
 {   /* Add new patch number below this line */
 /**/
+    777,
+/**/
     776,
 /**/
     775,