VAN KAMPEN AMERICAN CAPITAL
NEW JERSEY TAX FREE INCOME FUND
Supplement dated September 5, 1996 to the Prospectus dated April 29, 1996,
as previously supplemented on June 1, 1996 and July 1, 1996.
On July 25, 1996, the Trustees of the Van Kampen American Capital New
Jersey Tax Free Income Fund (the "New Jersey Fund"), a series of the Van
Kampen American Capital Tax Free Trust (the "Tax Free Trust"),
approved an Agreement and Plan of Reorganization between the New Jersey Fund
and the Van Kampen American Capital Municipal Income Fund (the "Municipal
Fund"), also a series of the Tax Free Trust, a fund advised by Van Kampen
American Capital Investment Advisory Corp., providing for the transfer of
assets and liabilities of the New Jersey Fund to the Municipal Fund in
exchange for shares of beneficial interest of the Municipal Fund at its net
asset value per share (the "Reorganization").
Van Kampen American Capital Investment Advisory Corp. is a wholly owned
subsidiary of Van Kampen American Capital, Inc., which is a wholly owned
subsidiary of VK/AC Holding, Inc.
The Reorganization is subject to approval by the holders of a majority of
the outstanding shares of the New Jersey Fund. Further details of the proposed
Reorganization will be contained in the proxy statement/prospectus expected to
be mailed to shareholders in 1996.
The Municipal Fund's net assets as of June 30, 1996 were approximately
$1,007.8 million. Its objective is to provide investors with a high level of
current income exempt from federal income tax, consistent with preservation of
capital. The investment objective of the New Jersey Fund is to provide
investors a high level of current income exempt from federal income tax and
New Jersey gross income tax, consistent with preservation of capital. The
primary difference between the two investment objectives is that the New
Jersey Fund seeks income exempt from New Jersey state income tax, but the
Municipal Fund does not. The Trustees, however, believe that the benefits to
the New Jersey Fund shareholders from the Reorganization, including the
potentially lower operating costs and potentially higher yield from the
Municipal Fund relative to the New Jersey Fund, more than offset the loss of
the exemption from New Jersey state income tax.
The New Jersey Fund will continue its normal operations prior to the
Reorganization.
