<PAGE> PAGE 1
000 B000000 11/30/98
000 C000000 0000949513
000 D000000 Y
000 E000000 NF
000 F000000 Y
000 G000000 N
000 H000000 N
000 I000000 3.0.a
000 J000000 U
001 A000000 TAX-FREE INCOME TRUST
001 B000000 811-7397
001 C000000 6126713800
002 A000000 IDS TOWER 10
002 B000000 MINNEAPOLIS
002 C000000 MN
002 D010000 55440
002 D020000 0010
003 000000 N
004 000000 N
005 000000 N
006 000000 N
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007 C010100 1
007 C020100 TAX-FREE HIGH YIELD PORTFOLIO
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022 A000001 J.P. MORGAN SECURITIES INC.
022 B000001 13-3224016
022 C000001 608905
022 D000001 695798
022 A000002 PAINEWEBBER INC
022 B000002 13-2638166
022 C000002 558037
022 D000002 522796
022 A000003 MORGAN STANLEY & CO., INC.
022 B000003 13-2655998
022 C000003 526516
022 D000003 481729
022 A000004 GOLDMAN SACHS & CO.
022 B000004 13-5108880
022 C000004 420308
022 D000004 353990
<PAGE> PAGE 2
022 A000005 LEHMAN BROTHERS INC.
022 B000005 13-2581466
022 C000005 285575
022 D000005 322740
022 A000006 SMITH BARNEY INC.
022 B000006 13-1912900
022 C000006 310672
022 D000006 286099
022 A000007 MERRILL LYNCH & CO., INC.
022 B000007 13-5674085
022 C000007 137952
022 D000007 236100
022 A000008 PIPER JAFFRAY INC.
022 B000008 41-0953246
022 C000008 48971
022 D000008 31529
022 A000009 MORGAN KEEGAN & CO., INC.
022 B000009 64-0474907
022 C000009 42478
022 D000009 0
022 A000010 DAIN BOSWORTH INC.
022 B000010 41-0212020
022 C000010 23184
022 D000010 19060
023 C000000 3187846
023 D000000 3059777
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<PAGE> PAGE 3
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<PAGE> PAGE 4
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<PAGE> PAGE 5
080 A000100 RELIANCE INSURANCE COMPANY
080 C000100 2500
081 A000100 N
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084 B000100 0
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SIGNATURE LESLIE L. OGG
TITLE GENERAL COUNSEL
EXHIBIT 77D
For Tax Free Income Trust
At a Board of Directors' meeting held on October 7-8, 1998, the following
investment policies were eliminated:
The Portfolio will not pledge or mortgage its assets beyond 15% of total
assets.
The Portfolio will not invest more than 5% of its total assets in
securities whose issuer or guarantor of principal and interest has
been in operation for less than three years.
The Portfolio will not invest more than 5% of its net assets in warrants.
The Portfolio will not invest in exploration or development programs
such as oil, gas or mineral leases.
The Portfolio will not purchase securities of an issuer if the board
members and officers of the Portfolio and of AEFC hold more than a
certain percentage of the issuer's outstanding securities. If the
holdings of all board members and officers of the Portfolio and of AEFC
who own more than 0.5% of an issuer's securities are added together,
and if in total they own more than 5%, the Portfolio will not
purchase securities of that issuer.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> TAX-FREE HIGH YIELD PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-END> NOV-30-1998
<INVESTMENTS-AT-COST> 5285205796
<INVESTMENTS-AT-VALUE> 5904062280
<RECEIVABLES> 113317009
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6017379289
<PAYABLE-FOR-SECURITIES> 10599592
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1084739
<TOTAL-LIABILITIES> 11684331
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 6005694958
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 375334322
<OTHER-INCOME> 0
<EXPENSES-NET> 26799018
<NET-INVESTMENT-INCOME> 348535304
<REALIZED-GAINS-CURRENT> (5,085,468)
<APPREC-INCREASE-CURRENT> 61787273
<NET-CHANGE-FROM-OPS> 405237109
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 17295463
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 26484165
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 26800668
<AVERAGE-NET-ASSETS> 5986258444
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
Independent Auditors' Report on Internal Accounting Control
The Board of Trustees
Tax Free Income Trust:
In planning and performing our audit of the financial statements of Tax
Free High Yield Portfolio (a portfolio within Tax Free Income Trust)
for the year ended November 30, 1998, we considered their internal control,
including control activities for safeguarding securities, in order to
determine our auditing procedures for the purpose of expressing our opinion
on the financial statements and to comply with the requirements of Form
N-SAR, not to provide assurance on the internal control.
The management of Tax Free Income Trust is responsible for establishing and
maintaining internal control. In fulfilling this responsibility,
estimates and judgments by management are required to assess the expected
benefits and related costs of controls. Generally, controls that are
relevant to an audit pertain to the entity's objective of preparing financial
statements for external purposes that are fairly presented in conformity
with generally accepted accounting principles. Those controls include
the safeguarding of assets against unauthorized acquisition, use or
disposition.
Because of inherent limitations in internal control, errors or
irregularities may occur and not be detected. Also, projection of any
evaluation of internal control 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 would not necessarily disclose
all matters in the internal control 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 one or more of the internal control components 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 control and its
operation, including controls for safeguarding securities, that we
consider to be a material weakness as defined above.
This report is intended solely for the information and use of management,
the Board of Trustees of Tax Free Income Trust, and the Securities
and Exchange Commission and is not intended to be and should not be
used by anyone other than these specified parties.
KPMG PeatMarwick LLP
Minneapolis, Minnesota
January 8, 1999
