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[COMMON SENSE TRUST LOGO]
FAMILY OF FUNDS
3120 Breckinridge Blvd. Duluth GA 30199-0200
July 5, 1996
Dear Common Sense II Shareholder:
We are writing to inform you of the following recent announcement:
On June 24, 1996, VK/AC Holding, Inc. announced it had entered into an
Agreement and Plan of Merger among Morgan Stanley Group Inc., MSAM Holdings II,
Inc. and MSAM Acquisition Inc., pursuant to which MSAM Acquisition Inc. will be
merged with and into VK/AC Holding, Inc. and VK/AC Holding, Inc. will be the
surviving corporation. Van Kampen American Capital, Inc. is a wholly owned
subsidiary of VK/AC Holding, Inc. The Trust's investment adviser, Van Kampen
American Capital, Inc. (the "Adviser"), is a wholly owned subsidiary of Van
Kampen American Capital, Inc.
The proposed transaction may be deemed to cause an assignment within the
meaning of the Investment Company Act of 1940 and the Investment Advisers Act of
1940, of the investment advisory agreement the Adviser and the Trust on behalf
of its Funds. Accordingly, the completion of the transaction is contingent upon,
among other things and subject to certain de minimis exception, the approval of
both the Trustees of the Trust and the Adviser of a new investment advisory
agreement between the Trust, on behalf of each Fund, and the Adviser and a new
investment subadvisory agreement between the Adviser and Smith Barney Mutual
Funds Management, Inc. with respect to the Common Sense II International Equity
Fund. Management of the Trust currently anticipates recommending to the Trust's
Trustees that a special meeting of shareholders be called to obtain such
approval and that the record date for such shareholder meeting be a date in late
August. Management of the Trust also anticipates that investment advisory fees
under the proposed new investment advisory agreement and proposed new investment
subadvisory agreement, if applicable, to be voted on at such meeting will be in
the same amount as those paid under the current investment advisory agreement
and investment subadvisory agreement.
MSAM Acquisition Inc. is a wholly owned subsidiary of MSAM Holdings II, Inc.
which in turn, is a wholly owned subsidiary of Morgan Stanley Group Inc.
Subject to a number of conditions being met, it is currently anticipated that a
closing will occur in late November. Thereafter, VK/AC Holding, Inc. and its
affiliated entities shall be part of Morgan Stanley Group Inc.
As shareholders of Growth, Growth and Income and Government, you are aware
that there is currently a proposal to merge such Funds into corresponding
series of Common Sense Trust. It is not anticipated that the events described
above will have an impact on such mergers.
If you have any questions, please call PFS Shareholder Services at
1-800-544-5445. Our representatives are available Monday through Friday from
9:00 a.m. to 6:00 p.m., Eastern Time, to assist you.
Thank you for your investment in the Common Sense II Fund.
Sincerely,
/s/ Don G. Powell
Don G. Powell
President
