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SUPPLEMENT DATED JULY 1, 1996
TO PROSPECTUS OF
COMMON SENSE(R) TRUST DATED FEBRUARY 8, 1996, AS SUPPLEMENTED APRIL 3, 1996
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 Asset Management, 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 between 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
exceptions, the approval of both the Trustees of the Trust and the shareholders
of the Trust 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 the 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.
The Trustees of the Trust approved an Agreement and Plan of Reorganization
between the Common Sense II Growth Fund, Common Sense II Growth and Income Fund
and Common Sense II Government Fund (individually the "Common Sense II Fund" or
collectively the "Common Sense II Funds") and the Common Sense Growth Fund,
Common Sense Growth and Income Fund and Common Sense Government Fund
(individually the "Common Sense Fund" or collectively the "Common Sense Funds"),
respectively, each of which is a separate series of the Trust, providing for the
transfer of assets of the Common Sense II Fund to the respective Common Sense
Fund in exchange for shares of the respective Common Sense Fund.
The reorganizations, which are currently scheduled to occur on or before July
30, 1996, is subject to approval by the holders of a majority of the outstanding
shares of each Common Sense II Fund. Further details of the proposed
reorganization were contained in the proxy material mailed to shareholders of
record on or about May 29, 1996.
Each Common Sense II Fund will continue its normal operations prior to the
reorganizations. Investors establishing new accounts after the record date of
May 21, 1996 will not receive proxy material and will not be entitled to vote on
any reorganization.
CST-II
