UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-03031 Morgan Stanley Tax-Free Daily Income Trust (Exact name of registrant as specified in charter) 1221 Avenue of the Americas, New York, New York 10020 (Address of principal executive offices) (Zip code) Ronald E. Robison 1221 Avenue of the Americas, New York, New York 10020 (Name and address of agent for service) Registrant's telephone number, including area code: 212-762-4000 Date of fiscal year end: December 31, 2004 Date of reporting period: June 30, 2004 Item 1 - Report to Shareholders


PRINCIPAL AMOUNT IN THOUSANDS			CURRENT RATE†			DEMAND DATE*		VALUE
		Short-Term Variable Rate Municipal Obligations (79.5%)
		Connecticut
$	1,200	Connecticut Health & Educational Facilities Authority, Quinnipiac University 2001 Ser F (Radian)		1.10	%		07/01/04	$	1,200,000
		Florida
	2,500	Collier County Health Facilities Authority, Cleveland Clinic Health System Ser 2003 C-1		1.10			07/01/04		2,500,000
	16,750	Dade County Industrial Development Authority, Dolphins Stadium Ser 1985 A		1.04			07/08/04		16,750,000
	2,000	Jacksonville Economic Development Commission, Florida Proton Therapy Institute Ser 2003 A		1.23			07/01/04		2,000,000
	10,000	Orlando Utilities Commission, Water & Electric Ser 2002 B		1.08			07/08/04		10,000,000
		Georgia
	7,700	Burke County Development Authority, Oglethorpe Power Co Ser 1993 A (FGIC) & 1994 A (FGIC)		1.04			07/08/04		7,700,000
	2,000	Georgia, PUTTERs Ser 440		1.12			07/08/04		2,000,000
	14,740	Private Colleges & Universities Authority, Emory University 2000 Ser B & 2001 Ser B		1.00			07/08/04		14,740,000
		Hawaii
	5,000	Hawaii, ROCs II-R Ser 6012		1.14			07/08/04		5,000,000
		Illinois
	14,000	Chicago, Ser 2002 B (FGIC)		1.09			07/08/04		14,000,000
	6,500	Chicago Metropolitan Water Reclamation District 2002 Ser E		1.02			07/08/04		6,500,000
	9,600	Illinois Educational Facilities Authority, Northwestern University Ser 1988		1.05			07/08/04		9,600,000
	5,000	Illinois Finance Authority, Revolving Fund, ROCs II-R 6015		1.14			07/08/04		5,000,000
	1,100	Illinois Health Facilities Authority, Northwestern Memorial Hospital Ser 2004 B Subser 2004B-1		1.10			07/01/04		1,100,000
	11,000	Oak Forest, Homewood South Suburban Mayors & Managers Association Ser 1989		1.08			07/08/04		11,000,000
		Kansas
	3,805	Kansas Department of Transportation, Highway Eagle #20041005 Class A		1.14			07/08/04		3,805,000
		Kentucky
	4,200	Breckinridge County, Kentucky Association of Counties Leasing Trust 2002 Ser A		1.10			07/01/04		4,200,000
	3,600	Louisville & Jefferson County Metropolitan Sewer District, Sewer and Drainage System Ser 2003 A (FSA)		1.05			07/08/04		3,600,000
		Louisiana
	3,900	New Orleans Aviation Board, Ser 1993 B (MBIA)		1.08			07/08/04		3,900,000

Item 2. Code of Ethics. Not applicable for semiannual reports. Item 3. Audit Committee Financial Expert. Not applicable for semiannual reports. Item 4. Principal Accountant Fees and Services Not applicable for semiannual reports. Item 5. Audit Committee of Listed Registrants. Not applicable for semiannual reports. Item 6. [Reserved.] Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable for semiannual reports. Item 8. [Reserved.] Item 9 - Controls and Procedures (a) The Fund's principal executive officer and principal financial officer have concluded that the Fund's disclosure controls and procedures are sufficient to ensure that information required to be disclosed by the Fund in this Form N-CSR was recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, based upon such officers' evaluation of these controls and procedures as of a date within 90 days of the filing date of the report. There were no significant changes or corrective actions with regard to significant deficiencies or material weaknesses in the Fund's internal controls or in other factors that could significantly affect the Fund's internal controls subsequent to the date of their evaluation. (b) There were no changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 10 Exhibits (a) Code of Ethics - Not applicable for semiannual reports. (b) A separate certification for each principal executive officer and principal financial officer of the registrant are attached hereto as part of EX-99.CERT. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Morgan Stanley Tax-Free Daily Income Trust /s/ Ronald E. Robison Ronald E. Robison Principal Executive Officer August 19, 2004 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated. /s/ Ronald E. Robison Ronald E. Robison Principal Executive Officer August 19, 2004 /s/ Francis Smith Francis Smith Principal Financial Officer August 19, 2004 3 EXHIBIT 10 B1 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER CERTIFICATIONS I, Ronald E. Robison, certify that: 1. I have reviewed this report on Form N-CSR of Morgan Stanley Tax-Free Daily Income Trust; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; [b) Omitted.] c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): 4 a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: August 19, 2004 /s/ Ronald E. Robison Ronald E. Robison Principal Executive Officer 5 EXHIBIT 10 B2 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER CERTIFICATIONS I, Francis Smith, certify that: 6. I have reviewed this report on Form N-CSR of Morgan Stanley Tax-Free Daily Income Trust; 7. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 8. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 9. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: b) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; [b) Omitted.] e) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and f) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 10. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): c) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and 6 d) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: August 19, 2004 /s/ Francis Smith Francis Smith Principal Financial Officer 7 SECTION 906 CERTIFICATION Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Morgan Stanley Tax-Free Daily Income Trust In connection with the Report on Form N-CSR (the "Report") of the above-named issuer for the period ended June 30, 2004 that is accompanied by this certification, the undersigned hereby certifies that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer. Date: August 19, 2004 /s/ Ronald E. Robison --------------------------- Ronald E. Robison Principal Executive Officer A signed original of this written statement required by Section 906 has been provided to Morgan Stanley Tax-Free Daily Income Trust and will be retained by Morgan Stanley Tax-Free Daily Income Trust and furnished to the Securities and Exchange Commission or its staff upon request. 8 SECTION 906 CERTIFICATION Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Morgan Stanley Tax-Free Daily Income Trust In connection with the Report on Form N-CSR (the "Report") of the above-named issuer for the period ended June 30, 2004 that is accompanied by this certification, the undersigned hereby certifies that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer. Date: August 19, 2004 /s/ Francis Smith ---------------------- Francis Smith Principal Financial Officer A signed original of this written statement required by Section 906 has been provided to Morgan Stanley Tax-Free Daily Income Trust and will be retained by Morgan Stanley Tax-Free Daily Income Trust and furnished to the Securities and Exchange Commission or its staff upon request. 9


MATURITY SCHEDULE
1 - 30 Days	77.2	%
31 - 60 Days	6.3
61 - 90 Days	6.0
91 - 120 Days	2.1
121+ Days	8.4


PRINCIPAL AMOUNT IN THOUSANDS			CURRENT RATE†			DEMAND DATE*		VALUE
		Massachusetts
$	6,000	Massachusetts Bay Transportation Authority, Ser 2000		1.02	%		07/08/04	$	6,000,000
		Michigan
	7,000	Detroit, Sewage Disposal System Senior Lien 2001 Ser C-1 (FSA)		1.08			07/08/04		7,000,000
	4,880	Holt Public Schools, Refg Ser 2002		1.06			07/08/04		4,880,000
	10,000	Michigan, Grant Anticipation Notes Ser 2001 A (FSA)		1.07			07/08/04		10,000,000
		Minnesota
	10,000	Minneapolis, Guthrie Theater on the River Ser 2003 A		1.08			07/08/04		10,000,000
	15,430	University of Minnesota Regents, Ser 1999 A & Ser 2001 A		1.09			07/08/04		15,430,000
		Mississippi
	6,000	Perry County, Leaf River Forest Products Inc Ser 2002		1.08			07/08/04		6,000,000
		Missouri
	5,000	Lee's Summit, Multifamily Housing Ser 2001 A		1.42			07/08/04		5,000,000
	1,000	Missouri Development Finance Board, Nelson Gallery Foundation Ser 2001 B (MBIA)		1.10			07/01/04		1,000,000
		Missouri Health and Educational Facilities Authority,
	1,000	Washington University Ser 1985 A		1.04			07/08/04		1,000,000
	8,300	Washington University Ser 2000 B		1.10			07/01/04		8,300,000
		Nebraska
	9,000	American Public Energy Agency, National Public Gas Agency 2003 Ser A		1.11			07/08/04		9,000,000
		New Jersey
	8,000	New Jersey Turnpike Authority, Ser 1991 D (FGIC)		1.05			07/08/04		8,000,000
		New York
	2,400	Long Island Power Authority, Electric Ser 7 Subser 7 B (MBIA)		1.00			07/08/04		2,400,000
		Nevada
	3,560	Clark County School District, PUTTERs Ser 398 (FSA)		1.12			07/08/04		3,560,000
		North Carolina
		Mecklenburg County,
	5,000	Public Improvement Ser C		1.08			07/08/04		5,000,000
	3,575	Ser 2001 COPs		1.08			07/08/04		3,575,000
		North Carolina,
	10,000	Ser 2002 C		1.05			07/08/04		10,000,000
	3,700	Ser 2002 D		1.00			07/08/04		3,700,000
		Ohio
	5,000	Cleveland, Water 2002 Ser L (FGIC)		1.08			07/08/04		5,000,000
	4,310	Ohio, Ser 2004 PT-2139		1.12			07/08/04		4,310,000
		Oklahoma
		Oklahoma Water Resources Board,
	3,485	State Loan Program Ser 1995		0.98			09/01/04		3,485,000
	4,215	State Loan Program Ser 1999		1.02			09/01/04		4,215,000


PRINCIPAL AMOUNT IN THOUSANDS			CURRENT RATE†			DEMAND DATE*		VALUE
		Oregon
$	5,000	Clackamas County Hospital Facility Authority, Legacy Health System Ser 2003		1.08	%		07/08/04	$	5,000,000
		Pennsylvania
	6,800	Pennsylvania Turnpike Commission, 2002 Ser A-2		1.04			07/08/04		6,800,000
	5,500	Washington County Authority, The Trustees of the University of Pennsylvania Ser 2004		1.08			07/08/04		5,500,000
		Rhode Island
	11,115	Rhode Island Convention Center Authority, Refg 2001 Ser A (MBIA)		1.08			07/08/04		11,115,000
		Tennessee
	3,800	Jackson Energy Authority, Gas System Ser 2002 (FSA)		1.05			07/08/04		3,800,000
	6,800	Montgomery County Public Building Authority, Pooled Financing Ser 1997 & Ser 1999		1.08			07/08/04		6,800,000
		Texas
	1,100	Bell County Health Facilities Development Corporation, Scott & White Memorial Hospital Ser 2001-2 (MBIA)		1.10			07/01/04		1,100,000
		Harris County Health Facilities Development Corporation,
	22,700	Methodist Hospital Ser 2002		1.10			07/01/04		22,700,000
	3,600	St Luke's Episcopal Hospital Ser 2001 B		1.10			07/01/04		3,600,000
	4,400	Harris County Industrial Development Corporation, Baytank Inc Ser 1998		1.04			07/08/04		4,400,000
	5,000	Lower Neches Valley Authority, Chevron USA Inc Ser 1987		0.95			08/16/04		5,000,000
	4,250	San Antonio, Water System Sub Lien Ser 2003 B (MBIA)		1.05			07/08/04		4,250,000
	4,900	Texas Municipal Gas Corporation, Senior Lien Ser 1998 (FSA)		1.06			07/08/04		4,900,000
		Utah
	8,400	Eagle Mountain, Gas & Electric Ser 2001		1.07			07/08/04		8,400,000
		Intermountain Power Agency,
	7,000	Power Supply 1985 Ser F (Ambac)		0.92			09/15/04		7,000,000
	7,100	Power Supply 1985 Ser F (Ambac)		1.25			12/01/04		7,100,000
		Washington
	5,490	Snohomish County, Public Utility District No1 ROCs II-R Ser 4059 (FSA)		1.14			07/08/04		5,490,000
	3,000	Washington Health Care Facilities Authority, Providence Services Ser 2002 A (MBIA)		1.10			07/01/04		3,000,000
		Puerto Rico
	3,000	Puerto Rico Highway and Transportation Authority, Transportation 1998 Ser A (Ambac)		1.00			07/08/04		3,000,000
		Total Short-Term Variable Rate Municipal Obligations (Cost $380,405,000)							380,405,000


PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE		YIELD TO MATURITY ON DATE OF PURCHASE			VALUE
		Tax-Exempt Commercial Paper (7.4%)
		Colorado
$	8,000	Regional Transportation District, Sub Lien Sales Tax Ser 2001 A		1.15	%		08/12/04		1.15	%	$	8,000,000
		Florida
	5,000	Jacksonville Electric Authority, Electric System 2000 Subser F		1.00			08/10/04		1.00			5,000,000
		Indiana
	4,324	Indiana State Office Building Commission, Hoosier Notes Ser A		1.10			09/09/04		1.10			4,324,000
		New York
	6,000	New York City, Fiscal 1994 Ser H Subser H-5 (MBIA)		1.12			08/25/04		1.12			6,000,000
		Texas
	7,000	San Antonio, Electric & Gas Ser 1995 A		0.95			07/14/04		0.95			7,000,000
	5,000	Texas Public Finance Authority, Ser 2003		1.07			07/19/04		1.07			5,000,000
		Total Tax-Exempt Commercial Paper (Cost $35,324,000)										35,324,000
		Short-Term Municipal Notes and Bonds (14.8%)
		California
	5,000	California School Cash Reserve Program Authority, 2003 Pool Ser A (Ambac), dtd 07/03/03		2.00			07/06/04		0.90			5,000,746
		Colorado
	7,000	Colorado, Education Loan Ser 2003 B TRANs, dtd 12/11/03		2.00			08/09/04		1.21			7,005,821
		Illinois
	5,000	Illinois, Certificates Ser 2004, dtd 06/23/04		2.00			10/22/04		1.15			5,013,028
	1,000	Illinois Finance Authority, Ser 2004-A School Notes, dtd 02/25/04		1.80			12/01/04		1.25			1,002,279
		Indiana
		Indiana Bond Bank,
	5,000	Advanced Funding Notes Ser 2004 A, dtd 01/29/04		2.00			01/25/05		1.10			5,025,282
	3,000	Midyear Funding Notes Ser 2004 A, dtd 06/24/04		2.50			01/26/05		1.38			3,018,984
	5,000	Indianapolis Local Improvement Bond Bank, Ser 2004 B Notes, dtd 01/14/04		2.00			07/06/04		1.00			5,000,679
		Kentucky
	4,000	Kentucky Association of Counties Advance Revenue Program, Ser 2004 A COPs TRANs, dtd 07/01/04 (WI)		3.00			06/30/05		1.68			4,051,760
		Michigan
	5,000	Michigan, Ser 2004 A, dtd 02/04/04		2.00			09/30/04		0.98			5,012,641


Assets:
Investments in securities, at value (cost $486,458,849)	$	486,458,849
Cash		133,613
Interest receivable		1,202,049
Prepaid expenses and other assets		58,796
Total Assets		487,853,307
Liabilities:
Payable for:
Investments purchased		6,058,700
Shares of beneficial interest redeemed		3,154,001
Investment management fee		167,794
Distribution fee		43,152
Accrued expenses and other payables		101,637
Total Liabilities		9,525,284
Net Assets	$	478,328,023
Composition of Net Assets:
Paid-in-capital	$	478,297,965
Accumulated undistributed net investment income		31,782
Accumulated net realized loss		(1,724	)
Net Assets	$	478,328,023
Net Asset Value Per Share,
478,329,449 shares outstanding (unlimited shares authorized $.01 par value)	$	1.00


Net Investment Income:
Interest Income	$	2,543,182
Expenses
Investment management fee		1,245,399
Distribution fee		246,126
Transfer agent fees and expenses		132,637
Registration fees		47,547
Professional fees		37,020
Shareholder reports and notices		26,861
Custodian fees		12,849
Trustees' fees and expenses		7,308
Other		9,357
Total Expenses		1,765,104
Less: amounts waived		(90,629	)
Less: expense offset		(12,640	)
Net Expenses		1,661,835
Net Investment Income	$	881,347


	FOR THE SIX MONTHS ENDED JUNE 30, 2004	FOR THE YEAR ENDED DECEMBER 31, 2003
	(unaudited)
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$881,347	$	2,048,929
Dividends to shareholders from net investment income	(881,459)		(2,048,675	)
Net decrease from transactions in shares of beneficial interest	(28,071,237)		(33,827,623	)
Net Decrease	(28,071,349)		(33,827,369	)
Net Assets:
Beginning of period	506,399,372		540,226,741
End of Period
(Including accumulated undistributed net investment income of $31,782 and $31,894, respectively)	$478,328,023	$	506,399,372


	FOR THE SIX MONTHS ENDED JUNE 30, 2004			FOR THE YEAR ENDED DECEMBER 31, 2003
	(unaudited)
Shares sold		597,639,940			1,275,824,200
Shares issued in reinvestment of dividends		881,459			2,048,675
		598,521,399			1,277,872,875
Shares redeemed		(626,592,636	)		(1,311,700,498	)
Net decrease in shares outstanding		(28,071,237	)		(33,827,623	)


	FOR THE SIX MONTHS ENDED JUNE 30, 2004			FOR THE YEAR ENDED DECEMBER 31,
	FOR THE SIX MONTHS ENDED JUNE 30, 2004			2003			2002			2001			2000			1999
		(unaudited	)
Selected Per Share Data:
Net asset value, beginning of period	$	1.00		$	1.00		$	1.00		$	1.00		$	1.00		$	1.00
Net investment income		0.002			0.004			0.008			0.021			0.033			0.025
Less dividends from net investment income		(0.002	)		(0.004	)		(0.008	)		(0.021	)		(0.033	)		(0.025	)
Net asset value, end of period	$	1.00		$	1.00		$	1.00		$	1.00		$	1.00		$	1.00
Total Return		0.18	% ⁽¹⁾		0.37	%		0.78	%		2.13	%		3.38	%		2.53	%
Ratios to Average Net Assets:
Expenses (before expense offset)		0.67	% ⁽²⁾⁽⁴⁾		0.68	%		0.68	%		0.68	%⁽³⁾		0.69	%		0.73	%⁽³⁾
Net investment income		0.35	% ⁽²⁾⁽⁴⁾		0.37	%		0.78	%		2.10	%		3.35	%		2.49	%
Supplemental Data:
Net assets, end of period, in thousands		$478,328			$506,399			$540,227			$563,914			$573,881			$480,121


Trustees Michael Bozic Charles A. Fiumefreddo Edwin J. Garn Wayne E. Hedien James F. Higgins Dr. Manuel H. Johnson Joseph J. Kearns Michael E. Nugent Fergus Reid Officers Charles A. Fiumefreddo Chairman of the Board Mitchell M. Merin President Ronald E. Robison Executive Vice President and Principal Executive Officer Barry Fink Vice President Joseph J. McAlinden Vice President Stefanie V. Chang Vice President Francis J. Smith Treasurer and Chief Financial Officer Thomas F. Caloia Vice President Mary E. Mullin Secretary Transfer Agent Morgan Stanley Trust Harborside Financial Center, Plaza Two Jersey City, New Jersey 07311 Independent Registered Public Accounting Firm Deloitte & Touche LLP Two World Financial Center New York, New York 10281 Investment Manager Morgan Stanley Investment Advisors Inc. 1221 Avenue of the Americas New York, New York 10020 The financial statements included herein have been taken from the records of the Fund without examination by the independent auditors and accordingly they do not express an opinion thereon. This report is submitted for the general information of the shareholders of the Fund. For more detailed information about the Fund, its fees and expenses and other pertinent information, please read its Prospectus. The Fund's Statement of Additional Information contains additional information about the Fund, including its trustees. It is available, without charge, by calling (800) 869-NEWS. This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective Prospectus. Read the Prospectus carefully before investing. Investments and services offered through Morgan Stanley DW Inc., member SIPC. Morgan Stanley Distributors Inc., member NASD. © 2004 Morgan Stanley RA04-00471P-Y06/04		MORGAN STANLEY FUNDS
		Morgan Stanley Tax-Free Daily Income Trust Semiannual Report June 30, 2004

PORTFOLIO COMPOSITION

Variable Rate Municipal Obligations

Municipal Notes and Bonds

Tax-Exempt Commercial Paper