diff --git a/src/testdir/test_startup.vim b/src/testdir/test_startup.vim
index 2b003c7..2185b4d 100644
--- a/src/testdir/test_startup.vim
+++ b/src/testdir/test_startup.vim
@@ -208,3 +208,16 @@
   let out = system(GetVimCommand() . '-u NONE -es -c''set verbose=1|h|exe "%norm\<c-y>\<c-d>"'' -c cq')
   call assert_notmatch('E315:', out)
 endfunc
+
+func Test_default_term()
+  if !has('unix') || has('gui_running')
+    " can't get output of Vim.
+    return
+  endif
+
+  let save_term = $TERM
+  let $TERM = 'unknown'
+  let out = system(GetVimCommand() . ' -c''set term'' -c cq')
+  call assert_match("defaulting to 'ansi'", out)
+  let $TERM = save_term
+endfunc
diff --git a/src/version.c b/src/version.c
index dc7cfb5..8de7e66 100644
--- a/src/version.c
+++ b/src/version.c
@@ -765,6 +765,8 @@
 static int included_patches[] =
 {   /* Add new patch number below this line */
 /**/
+    538,
+/**/
     537,
 /**/
     536,