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SUPPLEMENT DATED NOVEMBER 1, 1996, TO THE PROSPECTUS OF
COMMON SENSE(R) TRUST DATED MAY 20, 1996.
On October 31, 1996, VK/AC Holding, Inc. became a wholly owned indirect
subsidiary of Morgan Stanley Group Inc. pursuant to the closing of an Agreement
and Plan of Merger among Morgan Stanley Group Inc., MSAM Holdings II, Inc. and
MSAM Acquisition Inc., whereby MSAM Acquisition Inc. was merged with and into
VK/AC Holding, Inc. and VK/AC Holding, Inc. was the surviving corporation (the
"Acquisition"). As a result of the Acquisition, VK/AC Holding, Inc. became a
wholly owned subsidiary of MSAM Holdings II, Inc. which, in turn, is a wholly
owned subsidiary of Morgan Stanley Group Inc. VK/AC Holding, Inc. is the
indirect parent of the Fund's investment adviser, Van Kampen American Capital
Asset Management Inc. (the "Adviser").
Morgan Stanley Group Inc. and various of its directly or indirectly owned
subsidiaries, including Morgan Stanley Asset Management Inc., an investment
adviser ("MSAM"), Morgan Stanley & Co. Incorporated, a registered broker-dealer
and investment adviser, and Morgan Stanley International, are engaged in a wide
range of financial services. Their principal businesses include securities
underwriting, distribution and trading; merger, acquisition, restructuring and
other corporate finance advisory activities; merchant banking; stock brokerage
and research services; asset management; trading of futures, options, foreign
exchange commodities and swaps (involving foreign exchange, commodities, indices
and interest rates); real estate advice, financing and investing; and global
custody, securities clearance services and securities lending. As of September
30, 1996, MSAM, together with its affiliated investment advisory companies, had
approximately $103.5 billion of assets under management and fiduciary advice.
Prior to October 31, 1996, VK/AC Holding, Inc. was controlled, through the
ownership of a substantial majority of its common stock, by The Clayton &
Dubilier Private Equity Fund IV Limited Partnership. References in the attached
Prospectus to The Clayton & Dubilier Private Equity IV Limited Partnership and
its management are hereby deleted.
At a special meeting of shareholders of the Trust held on October 29, 1996,
shareholders of the Common Sense Municipal Bond Fund (the "Municipal Bond Fund")
approved changes to the Municipal Bond Fund's fundamental investment
restrictions to permit the Municipal Bond Fund to invest its assets in shares of
certain investment companies, consistent with
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its investment objectives and policies, in excess of the investment limitations
imposed by the Investment Company Act of 1940, as amended (the "1940 Act"). The
Municipal Bond Fund believes that from time to time it can more effectively and
efficiently invest in certain types of securities by pooling its assets for such
securities with assets of other investment companies managed by the Adviser and
its affiliates. Prior to engaging in such transactions, the Municipal Bond Fund
and its Adviser and affiliates together with other investment companies managed
by the Adviser and its affiliates will obtain exemptive relief from the
Securities and Exchange Commission ("SEC") to permit such transactions. In order
to take full advantage of any exemptive relief granted by the SEC, the Municipal
Bond Fund hereby restates its fundamental investment restriction, approved by
shareholders, regarding investment in other investment companies to state:
The Municipal Bond Fund may not invest in securities issued by other
investment companies except as part of a merger, reorganization or
other acquisition and except to the extent permitted by (i) the 1940
Act, as amended from time to time, (ii) the rules and regulations
promulgated by the SEC under the 1940 Act, as amended from time to
time, or (iii) an exemption or other relief from the provisions of the
1940 Act.
In addition, to the extent the Municipal Bond Fund's fundamental investment
restrictions regarding diversification, control, unseasoned issuers or
restricted securities may be deemed to preclude the Fund from taking full
advantage of any exemptive relief granted by the SEC, the Municipal Bond Fund
hereby adds the following exception, as approved by shareholders, to each
applicable restriction:
..., except that the Municipal Bond Fund may purchase securities of
other investment companies to the extent permitted by (i) the 1940
Act, as amended from time to time, (ii) the rules and regulations
promulgated by the SEC under the 1940 Act, as amended from time to
time, or (iii) an exemption or other relief from the provisions of the
1940 Act.
