Morgan Stanley Tax Free Daily Income Trust
Filed: 26 Apr 07, 12:00am
MORGAN STANLEY TAX-FREE DAILY INCOME TRUST 1221 Avenue of the Americas New York, NY 10020 April 26, 2007 Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549 Attention: Larry Greene, Division of Investment Management RE: MORGAN STANLEY TAX-FREE DAILY INCOME TRUST (FILE NOS. 2-67087 AND 811-3031) Dear Mr. Greene: Thank you for your telephonic comments regarding the registration statement on Form N-1A for Morgan Stanley Tax-Free Daily Income Trust (the "Fund") filed with the Securities and Exchange Commission on February 23, 2007. Below, we provide any responses to or any supplemental explanations of such comments, as requested. GENERAL COMMENTS TO FORM N-1A ----------------------------- COMMENT 1. PLEASE FILE A RESPONSE LETTER TO THESE COMMENTS VIA EDGAR, INCLUDING THE "TANDY" PROVISION. Response 1. This response letter addressing the Staff's comments has been filed via EDGAR correspondence, including the "Tandy" provision, separate from the corresponding Post-Effective Amendment. COMMENTS TO THE PROSPECTUS -------------------------- COMMENT 2. PLEASE INDICATE WHETHER THE FUND IS CURRENT WITH ITS 40-17G FILINGS. Response 2. The Fund is current with such filings. COMMENT 3. IN THE "FEES AND EXPENSES" SECTION OF THE PROSPECTUS, CONSIDER MOVING THE FOOTNOTES TO AFTER THE EXAMPLE. Response 3. We respectfully acknowledge the comment, but believe the current placement of the footnotes is appropriate. We believe that to move the footnotes to below the Example would diminish the impact of the information and could result in a shareholder being unable to locate the footnotes. 1 COMMENT 4. DOES THE INVESTMENT ADVISER OR ANY OF ITS AFFILIATES HAVE THE ABILITY TO RECOUP ANY FEES THAT IT WAIVED OR REIMBURSED IN SUBSEQUENT YEARS? Response 4. The investment adviser does not have the ability to recoup any fees that are waived or reimbursed in subsequent years. COMMENTS TO THE SAI ------------------- COMMENT 5. IN CONNECTION WITH THE FUND'S INVESTMENT IN WHEN-ISSUED AND DELAYED DELIVERY SECURITIES, PLEASE CONFIRM THAT THERE IS ADEQUATE DISCLOSURE REGARDING "SEGREGATING ASSETS". Response 5. The referenced disclosure is contained in the subsection of the SAI entitled "When-Issued and Delayed Delivery Securities". COMMENT 6. WITH RESPECT TO THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION RELATING TO CONCENTRATION (#5), EXPLAIN THE BASIS FOR NOT APPLYING THIS RESTRICTION TO OBLIGATIONS ISSUED OR GUARANTEED BY THE U.S. GOVERNMENT, ITS AGENCIES OR INSTRUMENTALITIES OR TO CASH EQUIVALENTS. Response 6. We believe this carve out is consistent with the Staff's position stated in Investment Company Act Release No. 9011 (October 30, 1975), that money market funds "may declare an investment policy on industry concentration reserving freedom of action to concentrate their investments in government securities, as defined in the Investment Company Act of 1940 and certain bank instruments issued by domestic banks..." As you have requested and consistent with SEC Release 2004-89, the Fund hereby acknowledges that: o the Fund is responsible for the adequacy and accuracy of the disclosure in the filings; o the Staff's comments or changes to disclosure in response to Staff comments in the filings reviewed by the Staff do not foreclose the Commission from taking any action with respect to the filings; and o the Fund may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. If you would like to discuss any of these responses in further detail or if you have any questions, please feel free to contact me at (212) 762-7546. Thank you. Sincerely, /s/ Alice J. Gerstel Alice J. Gerstel 2