<PAGE> PAGE 1
000 B000000 09/30/96
000 C000000 747678
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001 A000000 AARP TAX FREE INCOME TRUST
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002 A000000 TWO INTERNATIONAL PLACE
002 B000000 BOSTON
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020 A000002 FIRST CHICAGO CORP.
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022 A000001 SMITH BARNEY SHEARSON INC.
022 C000001 170368
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022 A000002 LEHMAN BROTHERS SECURITIES
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022 A000003 PAINE WEBBER
022 C000003 67791
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022 A000004 BELLE HAVEN
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022 C000005 83458
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<PAGE> PAGE 2
022 A000006 JP MORGAN SECURITIES INC.
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022 A000007 PRAGER, MCCARTHY & LEWIS
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022 A000010 WR HOUGH
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023 C000000 855863
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080 A00AA00 ICI MUTUAL INSURANCE COMPANY
080 B00AA00 NATIONAL UNION FIRE INSURANCE COMPANY
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<PAGE> PAGE 3
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SIGNATURE THOMAS F. MCDONOUGH
TITLE VICE PRESIDENT
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial
information extracted from the AARP High
Quality Tax Free Money Fund Annual
Report for the fiscal year ended
September 30, 1996 and is qualified in
its entirety by reference to such
financial statements.
</LEGEND>
<SERIES>
<NUMBER>1
<NAME> AARP High Quality Tax Free Money Fund
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> $110,537,355
<INVESTMENTS-AT-VALUE> $110,537,355
<RECEIVABLES> $934,299
<ASSETS-OTHER> $95,903
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> $111,567,557
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> $302,829
<TOTAL-LIABILITIES> $302,829
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> $112,090,701
<SHARES-COMMON-STOCK> 111,270,214
<SHARES-COMMON-PRIOR> 119,753,010
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> ($825,973)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> $111,264,728
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> $4,174,016
<OTHER-INCOME> 0
<EXPENSES-NET> $982,761
<NET-INVESTMENT-INCOME> $3,191,255
<REALIZED-GAINS-CURRENT> $1,553
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> $3,192,808
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> $3,191,255
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 30,976,787
<NUMBER-OF-SHARES-REDEEMED> 42,004,745
<SHARES-REINVESTED> 2,545,162
<NET-CHANGE-IN-ASSETS> ($8,481,243)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> ($1,226,724)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> $453,559
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> $982,761
<AVERAGE-NET-ASSETS> $115,266,632
<PER-SHARE-NAV-BEGIN> $1.00
<PER-SHARE-NII> $0.028
<PER-SHARE-GAIN-APPREC> 0
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<EXPENSE-RATIO> 0.85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial
information extracted from the AARP
Insured Tax Free General Bond Fund
Annual Report for the fiscal year ended
September 30, 1996 and is qualified in
its entirety by reference to such
financial statements.
</LEGEND>
<SERIES>
<NUMBER>2
<NAME> AARP Insured Tax Free General Bond Fund
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> $1,661,512,280
<INVESTMENTS-AT-VALUE> $1,740,393,909
<RECEIVABLES> $26,116,736
<ASSETS-OTHER> $38,624
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> $1,766,549,269
<PAYABLE-FOR-SECURITIES> $6,074,420
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> $5,062,627
<TOTAL-LIABILITIES> $11,137,047
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> $1,689,034,498
<SHARES-COMMON-STOCK> 98,088,821
<SHARES-COMMON-PRIOR> 101,872,699
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> ($10,611,830)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> $76,989,554
<NET-ASSETS> $1,755,412,222
<DIVIDEND-INCOME> 0
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<OTHER-INCOME> 0
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<APPREC-INCREASE-CURRENT> ($2,417,538)
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<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
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<NUMBER-OF-SHARES-REDEEMED> 13,666,268
<SHARES-REINVESTED> 2,918,782
<NET-CHANGE-IN-ASSETS> ($51,635,100)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> ($28,924,305)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> $8,665,253
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> $11,772,281
<AVERAGE-NET-ASSETS> $1,791,541,119
<PER-SHARE-NAV-BEGIN> $17.74
<PER-SHARE-NII> $0.87
<PER-SHARE-GAIN-APPREC> $0.16
<PER-SHARE-DIVIDEND> $0.87
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> $17.90
<EXPENSE-RATIO> 0.66
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
160 Federal Street Telephone 617 439 4390
Boston, MA 02110
Price Waterhouse LLP
November 14, 1996
To the Trustees of
AARP Tax Free Income Trust
In planning and performing our audits of the financial statements of AARP High
Quality Tax Free Money Fund and AARP Insured Tax Free General Bond Fund (the
"Funds"), constituting AARP Tax Free Income Trust, for the year ended September
30, 1996, we considered their internal control structure, including procedures
for safeguarding securities, in order to determine our auditing procedures for
the purposes of expressing our opinion on the financial statements and to comply
with requirements of Form N-SAR, and not to provide assurance on the internal
control structure.
The management of the Funds is responsible for establishing and maintaining an
internal control structure. In fulfilling this responsibility, estimates and
judgments by management are required to assess the expected benefits and related
costs of internal control structure policies and procedures. Two of the
objectives of an internal control structure are to provide management with
reasonable, but not absolute, assurance that assets are safeguarded against loss
from unauthorized use or disposition and that transactions are executed in
accordance with management's authorization and recorded properly to permit
preparation of financial statements in conformity with generally accepted
accounting principles.
Because of inherent limitations in any internal control structure, errors or
irregularities may occur and not be detected. Also, projection of any evaluation
of the structure to future periods is subject to the risk that it may become
inadequate because of changes in conditions or that the effectiveness of the
design and operation may deteriorate.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design or
operation of the specific internal control structure elements does not reduce to
a relatively low level the risk that errors or irregularities in amounts that
would be material in relation to the financial statements being audited may
occur and not be detected within a timely period by employees in the normal
course of performing their assigned functions. However, we noted no matters
involving the internal controls structure, including procedures for safeguarding
securities, that we consider to be material weaknesses as defined above as of
September 30, 1996.
This report is intended solely for the information and use of management and the
Securities and Exchange Commission.
/s/Price Waterhouse LLP
