Erm, I've done this loads of times in 8.5 for creating mailouts.
You need to insert the doc as an OLE object. Just browse for the file and that's it. Dead simple.
Even better - when inserting the doc as an OLE object, there is a 'link' checkbox. When ticked, this causes the file to be re-imported at runtime (using the path & filename of the original doc). So you can change the doc in Word or whatever, and the changes will propagate through to your report. Ruseful if you're doing it for a client:they don't have to send you the letter to embed as you can create a dummy one in c:\ or wherever, insert it, send the report off to the client and then let them know where they need to save their document.