DEAN WITTER TAX FREE DAILY INCOME TRUST
N-30D, 1997-08-21
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<PAGE>


                   DEAN WITTER TAX-FREE DAILY INCOME TRUST
                   LETTER TO THE SHAREHOLDERS June 30, 1997
               Two World Trade Center, New York, New York 10048

DEAR SHAREHOLDER: 

We are pleased to present the semiannual report on the operations of Dean 
Witter Tax-Free Daily Income Trust for the six-month period ended June 30, 
1997. 

The most noteworthy news for the tax-free money market during the first half 
of 1997 was the Federal Reserve Board's 25 basis point increase in the 
federal-funds rate. That move came midway through the period, following the 
Federal Open Market Committee's meeting in late March. During the second 
quarter, however, favorable inflation reports and moderate economic growth 
kept the Federal Reserve on the sidelines. In the absence of outside 
influences, the movement of tax-free money market interest rates was driven 
primarily by seasonal changes in supply and demand. 

Yields moved higher for securities maturing in six months to one year, the 
long end of the municipal money market. The Bond Buyer One Year Note Index, a 
benchmark indicator of longer-term municipal money market yields, rose from 
3.51 percent at the end of December to 3.85 percent at the end of March. 
During the second quarter, the Index peaked at 3.96 percent in late April 
when pressures related to the tax payment season caused all municipal money 
market yields to increase. At the end of June, the Index stood at 3.85 
percent, unchanged from the end of the first quarter. 

By the end of June, the ratio of the One Year Note Index to the yield for 
one-year U.S. Treasury Bills was 68 percent, up from 64 percent at the end of 
1996. This higher ratio indicates that yields in this sector of the municipal 
money market became more attractive in relation to Treasuries with comparable 
maturities. 

At the short end of the tax-free money market maturity range, variable rate 
demand obligations (VRDOs) with daily and weekly rate changes conformed to 
the recurring pattern of wide interest rate swings and the predictable timing 
of highs and lows. The low for weekly VRDO yields was set at 2.85 percent 
during the first week of January when positive cash flows were the strongest. 
The high yield of 4.50 percent came at the end of April along with the heavy 
seasonal outflows associated with tax payments. Improved cash inflow in May 
and early June caused weekly VRDO yields to drop to 3.35 percent by the first 
week of June before rising again to 4.125 percent in late June. 

<PAGE>
                   DEAN WITTER TAX-FREE DAILY INCOME TRUST
             LETTER TO THE SHAREHOLDERS June 30, 1997, continued

PORTFOLIO MANAGEMENT AND PERFORMANCE 

Dean Witter Tax-Free Daily Income Trust produced a total return of 1.45 
percent for the six-month period ended June 30, 1997. Thirty-day yields for 
the Fund ranged from a low of 2.67 percent for the month of March to a high 
of 3.16 percent for May. 

On June 30, the Fund's net assets exceeded $520 million, with 65 percent of 
the Fund's portfolio invested in VRDOs. Tax-exempt commercial paper and 
municipal notes, the two other types of securities utilized in the portfolio, 
comprised 24 percent and 11 percent of the portfolio, respectively. The Fund 
was broadly diversified geographically, with holdings in 33 states. 

Portfolio holdings are continuously reviewed to maintain or improve 
creditworthiness. Particular effort is devoted to monitoring the credit 
quality of institutions that provide credit enhancement and liquidity 
facilities for money market investments. 

The Fund's weighted average maturity moved within a range of 34 to 56 days 
during the six-month period. Normally, seasonal purchases of new one-year tax 
and revenue anticipation notes (TRANs) cause the average maturity to extend 
during the month of June. However, because attractive yields were available 
for shorter maturities and new one-year financings were aggressively priced, 
the incentive to extend maturities was reduced this year. At the end of June, 
the Fund's weighted average maturity was 54 days. 

LOOKING FORWARD 

The economy has enjoyed steady growth with low inflation for a prolonged 
period, which has produced a tightened labor market. If this low unemployment 
continues, it could produce wage pressures and threaten price stability. In 
the months ahead, we anticipate that the Federal Reserve will be watchful for 
any signs of accelerating wage and price increases, which could prompt 
further tightening of monetary policy. In such an environment, the weighted 
average maturity for the Fund's portfolio would be held in a moderate range, 
to maintain investment flexibility. 

We appreciate your support of Dean Witter Tax-Free Daily Income Trust and 
look forward to continuing to serve your investment needs and objectives. 

Sincerely, 

/s/ Charles A. Fiumefreddo 
- -------------------------- 
    CHARLES A. FIUMEFREDDO 
    Chairman of the Board 

<PAGE>
DEAN WITTER TAX-FREE DAILY INCOME TRUST
RESULTS OF SPECIAL MEETING (unaudited)

On May 21, 1997, a special meeting of the shareholders of Dean Witter 
Tax-Free Daily Income Trust was held for the purpose of voting on four 
separate matters, the results of which are as follows: 

(1) APPROVAL OF A NEW INVESTMENT MANAGEMENT AGREEMENT BETWEEN THE FUND AND 
    DEAN WITTER INTERCAPITAL INC. IN CONNECTION WITH THE MERGER OF MORGAN 
    STANLEY GROUP INC. WITH DEAN WITTER, DISCOVER & CO.: 

<TABLE>
<CAPTION>
<S>                                       <C>
For .......................................  286,077,114 
Against  ..................................   12,854,767 
Abstain  ..................................   19,793,918 
</TABLE>

(2) ELECTION OF TRUSTEES: 

<TABLE>
<CAPTION>
<S>                                       <C>
Michael Bozic 
For .......................................  302,807,852 
Withheld ..................................   15,917,947 

Charles A. Fiumefreddo 
For .......................................  302,781,080 
Withheld ..................................   15,944,719 

Edwin J. Garn 
For .......................................  302,225,317 
Withheld ..................................   16,500,482 

John R. Haire 
For .......................................  302,904,184 
Withheld ..................................   15,821,615 

Wayne E. Hedien 
For .......................................  302,992,034 
Withheld ..................................   15,733,765 

Dr. Manuel H. Johnson 
For .......................................  302,099,623 
Withheld...................................   16,626,176 

Michael E. Nugent 
For .......................................  302,745,444 
Withheld ..................................   15,980,355 

Philip J. Purcell 
For .......................................  303,073,864 
Withheld ..................................   15,651,935 

John L. Schroeder 
For .......................................  303,034,176 
Withheld ..................................   15,691,623 
</TABLE>

(3) APPROVAL OF A NEW INVESTMENT POLICY WITH RESPECT TO INVESTMENTS IN 
    CERTAIN OTHER INVESTMENT COMPANIES: 

<TABLE>
<CAPTION>
<S>                                       <C>
For .......................................  271,287,980 
Against  ..................................   22,608,452 
Abstain  ..................................   24,829,367 
</TABLE>

(4) RATIFICATION OF THE SELECTION OF PRICE WATERHOUSE LLP AS THE FUND'S 
    INDEPENDENT ACCOUNTANTS: 

<TABLE>
<CAPTION>
<S>                                       <C>
For .......................................  299,862,704 
Against  ..................................    3,379,196 
Abstain  ..................................   15,483,899 
</TABLE>

<PAGE>
                   DEAN WITTER TAX-FREE DAILY INCOME TRUST
              PORTFOLIO OF INVESTMENTS June 30, 1997 (unaudited)

<TABLE>
<CAPTION>
 PRINCIPAL 
 AMOUNT IN                                                                    CURRENT    DEMAND 
 THOUSANDS                                                                     RATE+      DATE*        VALUE 
- ---------------------------------------------------------------------------------------------------------------- 
<S>         <C>                                                                <C>      <C>       <C>
            SHORT-TERM VARIABLE RATE MUNICIPAL OBLIGATIONS (65.8%) 
            CALIFORNIA 
            California Pollution Control Financing Authority, 
   $7,800    Pacific Gas & Electric Co 1997 Ser A ...........................   3.85%   07/01/97    $7,800,000 
    4,000    Southern California Edison Co 1986 Ser A .......................   5.20    07/01/97     4,000,000 
    2,500    Southern California Edison Co 1986 Ser C .......................   5.20    07/01/97     2,500,000 
    8,000   California Public Capital Improvements Financing Authority, 
             Pooled Ser 1988 C  .............................................   3.85    09/15/97     8,000,000 
    4,000   Newport Beach, Hoag Memorial Hospital/Presbyterian Ser 1992 & 
             1996 Ser A .....................................................   4.00    07/01/97     4,000,000 
    4,200   Southern California Public Power Authority, Transmission 1991 
             Refg (AMBAC)  ..................................................   3.90    07/08/97     4,200,000 
            COLORADO 
    9,000   Colorado Health Facilities Authority, Kaiser Permanente 1994 Ser 
             A ..............................................................   4.10    07/08/97     9,000,000 
            CONNECTICUT 
   10,000   Connecticut Special Assessment, Unemployment Compensation 1993 
             Ser C (FGIC) ...................................................   3.90    07/01/98    10,000,000 
            DISTRICT OF COLUMBIA 
    4,800   District of Columbia, The American University Ser 1985 ..........   4.20    07/08/97     4,800,000 
            FLORIDA 
    9,800   Dade County, Water & Sewer Ser 1994 (FGIC) ......................   4.15    07/08/97     9,800,000 
   17,900   Dade County Industrial Development Authority, Dolphins Stadium 
             Ser 1985 A .....................................................   4.15    07/08/97    17,900,000 
    9,100   University Athletic Association, University of Florida Ser 1990 .   4.00    07/01/97     9,100,000 
            GEORGIA 
   11,800   Burke County Development Authority, Ogelthorpe Power Co Ser 1994 
             A (FGIC) .......................................................   4.15    07/08/97    11,800,000 
   12,000   Georgia Municipal Association, Pool Ser 1990 COPs (MBIA) ........   4.15    07/08/97    12,000,000 
            HAWAII 
    5,000   Hawaii Department of Budget & Finance, Kaiser Permanente 
             Semiannual Tender Ser 1984 B  ..................................   3.50    09/02/97     5,000,000 
            IDAHO 
    1,000   Idaho Health Facilities Authority, St. Luke's Regional Medical 
             Center Ser 1995  ...............................................   4.10    07/01/97     1,000,000 
            ILLINOIS 
    7,000   Chicago, Tender Notes Ser 1996 ..................................   3.55    10/31/97     7,000,000 
   10,000   Illinois Educational Facilities Authority, Northwestern 
             University Ser 1988  ...........................................   4.30    07/08/97    10,000,000 
    7,100   Illinois Health Facilities Authority, Northwestern Memorial 
             Hospital Ser 1995  .............................................   4.25    07/01/97     7,100,000 

                       SEE NOTES TO FINANCIAL STATEMENTS

<PAGE>
                   DEAN WITTER TAX-FREE DAILY INCOME TRUST
         PORTFOLIO OF INVESTMENTS June 30, 1997 (unaudited) continued

 PRINCIPAL 
 AMOUNT IN                                                                    CURRENT    DEMAND 
 THOUSANDS                                                                     RATE+      DATE*        VALUE 
- ---------------------------------------------------------------------------------------------------------------- 
   $10,000  Illinois Toll Highway Authority, Refg Ser 1993-B (MBIA) .........  4.15 %   07/08/97    $10,000,000 
    10,000  Oak Forest, Homewood South Suburban Mayors & Managers Assn 
             Ser 1989 .......................................................  4.15     07/08/97     10,000,000 
            INDIANA 
    10,000  Indiana Hospital Equipment Financing Authority, Ser 1985 A 
             (MBIA) .........................................................  4.25     07/08/97     10,000,000 
            KENTUCKY 
     9,150  Mason County, East Kentucky Power Co-op Inc Ser 1984 (NRU-CFC 
             Gtd)  ..........................................................  4.20     07/08/97      9,150,000 
            LOUISIANA 
     1,000  East Baton Rouge Parish, Exxon Corp Ser 1993  ...................  4.05     07/01/97      1,000,000 
     4,100  Louisiana Public Facilities Authority, Kenner Hotel Ltd 
             Partnership Ser 1985 ...........................................  4.15     07/01/97      4,100,000 
    10,000  New Orleans Aviation Board, Ser 1993 B (MBIA) ...................  4.15     07/08/97     10,000,000 
            MASSACHUSETTS 
     7,000  Massachusetts Bay Transportation Authority, 1984 Ser A ..........  3.45     09/02/97      7,000,000 
     5,000  Massachusetts Municipal Wholesale Electric Company, Power Supply 
             1994 Ser C .....................................................  4.10     07/08/97      5,000,000 
            MINNESOTA 
     1,900  Beltrami County, Environmental Northwood Panelboard Co Ser 1991 .  4.10     07/01/97      1,900,000 
     4,700  Minneapolis & St Paul Housing & Redevelopment Authority, 
             Childrens' Health Care Ser 1995 B (FSA)  .......................  4.30     07/01/97      4,700,000 
            MISSOURI 
            Missouri Health & Educational Facilities Authority, 
    10,000   Sisters of Mercy Health System St Louis Inc Ser 1989 A  ........  4.15     07/08/97     10,000,000 
     5,000   Washington University Ser 1996 C ...............................  4.10     07/01/97      5,000,000 
            NEW JERSEY 
     4,000  Gloucester County, Mobil Oil Refining Corp Ser 1993 A ...........  3.75     07/08/97      4,000,000 
            New Jersey Economic Development Authority, 
     2,500   Toys "R" Us Inc  ...............................................  3.75     07/01/97      2,500,000 
     3,100   United Water New Jersey Inc Ser 1996 B (AMBAC) .................  3.75     07/01/97      3,100,000 
            NEW YORK 
       300  New York State Dormitory Authority, Cornell University Ser 1990 
             B  .............................................................  4.00     07/01/97        300,000 
            NORTH CAROLINA 
     6,000  Asheville, Ser 1993 A COPs ......................................  4.05     07/08/97      6,000,000 
     5,000  North Carolina Medical Care Commission, Duke University Hospital 
             Ser 1985 B .....................................................  4.075    07/08/97      5,000,000 
            OHIO 
     9,900  Columbus, Unlimited Tax Ser 1995-1 ..............................  4.10     07/08/97      9,900,000 
     2,100  Ohio Air Quality Development Authority, Mead Co 1986 Ser A ......  4.00     07/01/97      2,100,000 

                       SEE NOTES TO FINANCIAL STATEMENTS

<PAGE>
                   DEAN WITTER TAX-FREE DAILY INCOME TRUST
         PORTFOLIO OF INVESTMENTS June 30, 1997 (unaudited) continued

 PRINCIPAL 
 AMOUNT IN                                                                    CURRENT    DEMAND 
 THOUSANDS                                                                     RATE+      DATE*        VALUE 
- ---------------------------------------------------------------------------------------------------------------- 
            OKLAHOMA 
   $11,695  Oklahoma Water Resources Board, State Loan Prog Ser 1994 A & Ser 
             1995 ...........................................................   3.50%   09/02/97    $11,695,000 
            OREGON 
     3,500  Oregon, Ser 73 G ................................................   4.05    07/08/97      3,500,000 
            PENNSYLVANIA 
     2,500  Delaware County Industrial Development Authority, United Parcel 
             Service of America Ser 1985  ...................................   4.00    07/01/97      2,500,000 
     5,000  Pennsylvania Higher Education Facilities Authority, Thomas 
             Jefferson University 1992 Ser C  ...............................   3.85    09/23/97      5,000,000 
            SOUTH CAROLINA 
            York County, 
     8,000   North Carolina Electric Membership Corp, Ser 1984 N-5 (NRU-CFC 
             Gtd)  ..........................................................   3.55    09/15/97      8,000,000 
     8,815   Saluda River Electric Co-op Inc Ser 1984 E-1 & E-2 (NRU-CFC 
             Gtd) ...........................................................   3.50    08/15/97      8,815,000 
            TENNESSEE 
     5,000  Metropolitan Nashville Airport Authority, American Airlines Refg 
             Ser 1995 A .....................................................   4.10    07/01/97      5,000,000 
            TEXAS 
    10,000  Texas, Veterans' Housing Assistance Fund I Ser 1995 .............   4.15    07/08/97     10,000,000 
            UTAH 
     7,000  Intermountain Power Agency, 1985 Ser F ..........................   3.55    09/15/97      7,000,000 
            WEST VIRGINIA 
     5,000  Pleasants County Commission, American Cyanamid Co Ser 1985 ......   4.25    07/08/97      5,000,000 
            WISCONSIN 
    10,000  Wisconsin Health & Educational Facilities Authority, Franciscan 
             Health Care Inc Ser 1985 A-1  ..................................   4.15    07/08/97     10,000,000 
                                                                                                    ----------- 
            TOTAL SHORT-TERM VARIABLE RATE MUNICIPAL OBLIGATIONS 
            (Amortized Cost $342,260,000) ...................................                       342,260,000 
                                                                                                    ----------- 

</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS

<PAGE>
                   DEAN WITTER TAX-FREE DAILY INCOME TRUST
         PORTFOLIO OF INVESTMENTS June 30, 1997 (unaudited) continued

<TABLE>
<CAPTION>
                                                                                                   YIELD TO 
 PRINCIPAL                                                                                         MATURITY 
 AMOUNT IN                                                                    COUPON   MATURITY   ON DATE OF 
 THOUSANDS                                                                     RATE      DATE      PURCHASE        VALUE 
- -------------------------------------------------------------------------------------------------------------------------- 
<S>         <C>                                                                <C>     <C>        <C>          <C>
            TAX-EXEMPT COMMERCIAL PAPER (24.6%) 
            ALABAMA 
   $6,200   Montgomery Industrial Development Board, General Electric Co Ser 
             1990 A .........................................................  3.65%   08/07/97      3.65%      $6,200,000 
            ARIZONA 
    6,450   Maricopa County Pollution Control Corporation, Southern 
             California Edison Co 1985 Ser C ................................  3.35    07/10/97      3.35        6,450,000 
            FLORIDA 
    5,500   Palm Beach County Health Facilities Authority, Hospital Pooled 
             Loan (MBIA)  ...................................................  3.60    07/23/97      3.60        5,500,000 
            GEORGIA 
            Georgia Municipal Gas Authority, 
    5,000    Southern Portfolio I Ser D .....................................  3.70    07/24/97      3.70        5,000,000 
    6,400    TRANSCO Portfolio I Ser B-2  ...................................  3.75    09/17/97      3.75        6,400,000 
            HAWAII 
    6,200   Hawaii Department of Budget & Finance, Citizens Utilities Co Ser 
             1985 ...........................................................  3.85    08/11/97      3.85        6,200,000 
            LOUISIANA 
    8,200   Plaquemines Port Harbor & Terminal District, Electric-Coal 
             Transfer Co Ser 1985 B .........................................  3.75    10/08/97      3.75        8,200,000 
            MARYLAND 
            Baltimore County, 
    5,000    Ser 1995 BANs ..................................................  3.80    08/06/97      3.80        5,000,000 
    6,000    Ser 1995 BANs ..................................................  3.70    09/09/97      3.70        6,000,000 
    8,000    Metro District Ser 1995 BANs ...................................  3.80    09/11/97      3.80        8,000,000 
            MINNESOTA 
    4,500   Rochester, Mayo Foundation/Mayo Medical Center Ser 1992 B .......  3.80    08/20/97      3.80        4,500,000 
            OHIO 
    5,000   Ohio Air Quality Development Authority, Cleveland Electric 
             Illuminating Co 1988 Ser B (FGIC)  .............................  3.70    08/06/97      3.70        5,000,000 
            PENNSYLVANIA 
            Pennsylvania, 
    5,000    Ser 1997 A BANs ................................................  3.75    08/12/97      3.75        5,000,000 
    4,900    Ser 1997 A BANs ................................................  3.75    08/19/97      3.75        4,900,000 

                       SEE NOTES TO FINANCIAL STATEMENTS

<PAGE>
                   DEAN WITTER TAX-FREE DAILY INCOME TRUST
         PORTFOLIO OF INVESTMENTS June 30, 1997 (unaudited) continued

                                                                                                   YIELD TO 
 PRINCIPAL                                                                                         MATURITY 
 AMOUNT IN                                                                    COUPON   MATURITY   ON DATE OF 
 THOUSANDS                                                                     RATE      DATE      PURCHASE        VALUE 
- --------------------------------------------------------------------------------------------------------------------------- 
            TEXAS 
   $11,000  Houston, 1993 Ser A .............................................  3.75 %  09/16/97      3.75%     $ 11,000,000 
            San Antonio, 
     6,000   Electric & Gas Ser 1995 A ......................................  3.75    07/29/97      3.75         6,000,000 
     6,000   Electric & Gas Ser 1995 A ......................................  3.75    08/28/97      3.75         6,000,000 
            WASHINGTON 
            Seattle, 
     9,000   Municipal Light & Power Ser 1991 B .............................  3.70    07/22/97      3.70         9,000,000 
     3,000   Municipal Light & Power Ser 1991 B .............................  3.70    08/26/97      3.70         3,000,000 
            WISCONSIN 
            Wisconsin, 
     5,665   1997 Ser A .....................................................  3.60    08/26/97      3.60         5,665,000 
     5,000   Transportation Notes 1997 Ser A ................................  3.65    08/14/97      3.65         5,000,000 
                                                                                                              ------------- 
            TOTAL TAX-EXEMPT COMMERCIAL PAPER (Amortized Cost $128,015,000) .                                   128,015,000 
                                                                                                              ------------- 
            SHORT-TERM MUNICIPAL NOTES (11.4%) 
            COLORADO 
     5,000  Colorado, Ser 1997 A TRANs, dtd 07/01/97 (WI) ...................  4.50    06/26/98      3.86         5,030,350 
            IDAHO 
     5,000  Idaho, Ser 1997 TANs, dtd 07/01/97 (WI)  ........................  4.625   06/30/98      3.89         5,035,750 
            INDIANA 
     5,000  Indiana Bond Bank, Advance Funding Ser 1997 A-2, dtd 02/04/97 ...  4.25    01/21/98      3.70         5,014,850 
     3,025  Indianapolis Local Improvement Bond Bank, Ser 1997 C Notes, 
             dtd 06/19/97 ...................................................  4.375   01/08/98      3.76         3,034,535 
            IOWA 
     5,570  Iowa School Corporations, Warrant Certificates Ser A 1997-98 
             (FSA), dtd 06/26/97 ............................................  4.50    06/26/98      3.89         5,602,226 
            MICHIGAN 
    10,000  Michigan, Notes, dtd 02/12/97 ...................................  4.50    09/30/97      3.47        10,025,242 
    10,000  Michigan Municipal Bond Authority, Ser 1996 A Notes, dtd 
             07/03/96 .......................................................  4.50    07/03/97      3.90        10,000,316 
            PENNSYLVANIA 
     4,000  Temple University, Ser 1997, dtd 05/19/97 .......................  4.75    05/18/97      3.90         4,028,749 
            TEXAS 
     5,000  Texas, Ser 1996 TRANs, dtd 08/30/96  ............................  4.75    08/29/97      3.97         5,006,062 
            UTAH 
     2,750  Davis County, Ser 1997 TRANs, dtd 06/30/97 ......................  4.25    12/31/97      3.75         2,756,701 

                       SEE NOTES TO FINANCIAL STATEMENTS

<PAGE>
                   DEAN WITTER TAX-FREE DAILY INCOME TRUST
         PORTFOLIO OF INVESTMENTS June 30, 1997 (unaudited) continued

                                                                                                   YIELD TO 
 PRINCIPAL                                                                                         MATURITY 
 AMOUNT IN                                                                    COUPON   MATURITY   ON DATE OF 
 THOUSANDS                                                                     RATE      DATE      PURCHASE        VALUE 
- --------------------------------------------------------------------------------------------------------------------------- 
            WISCONSIN 
   $3,800   Wisconsin, Operating Notes of 1997, dtd 07/01/97 (WI)  ..........  4.50%   06/15/98      3.85 %      $3,822,762 
                                                                                                              ------------- 
            TOTAL SHORT-TERM MUNICIPAL NOTES (Amortized Cost $59,357,543) ...                                    59,357,543 
                                                                                                              ------------- 
            TOTAL INVESTMENTS (Amortized Cost $529,632,543)(a)  .............                       101.8 %     529,632,543 
            LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS  .................                        (1.8)       (9,597,102) 
                                                                                                              ------------- 
            NET ASSETS  .....................................................                       100.0 %    $520,035,441 
                                                                                                    =======   ============= 

</TABLE>

- ------------ 
BANs    Bond Anticipation Notes. 
COPs    Certificates of Participation. 
TANs    Tax Anticipation Notes. 
TRANs   Tax and Revenue Anticipation Notes. 
WI      Security purchased on a when issued basis. 
+       Rate shown is the rate in effect at June 30, 1997. 
*       Date in which the principal amount can be recovered through demand. 
(a)     Cost is the same for federal income tax purposes. 

Bond Insurance: 
- --------------- 
AMBAC   AMBAC Indemnity Corporation. 
FGIC    Financial Guaranty Insurance Company. 
FSA     Financial Security Assurance Inc. 
MBIA    Municipal Bond Investors Assurance Corporation. 

                       SEE NOTES TO FINANCIAL STATEMENTS

<PAGE>
                   DEAN WITTER TAX-FREE DAILY INCOME TRUST
                             FINANCIAL STATEMENTS

STATEMENTS OF ASSETS AND LIABILITIES 
June 30, 1997 (unaudited) 

<TABLE>
<CAPTION>
<S>                                      <C>
ASSETS: 
Investments in securities, at value 
 (amortized cost $529,632,543)...........  $529,632,543 
Cash.....................................     3,938,342 
Receivable for: 
  Investment sold........................    10,000,000 
  Interest ..............................     3,434,231 
Prepaid expenses and other assets .......        83,645 
                                         -------------- 
  TOTAL ASSETS...........................   547,088,761 
                                         -------------- 
LIABILITIES: 
Payable for: 
  Investments purchased..................    23,888,862 
  Shares of beneficial interest 
   repurchased...........................     2,814,038 
  Investment management fee..............       219,984 
  Plan of distribution fee...............        44,267 
Accrued expenses and other payables .....        86,169 
                                         -------------- 
  TOTAL LIABILITIES......................    27,053,320 
                                         -------------- 
NET ASSETS: 
Paid-in-capital..........................   520,037,420 
Accumulated undistributed net investment 
 income..................................           529 
Accumulated net realized loss............        (2,508)
                                         -------------- 
  NET ASSETS.............................  $520,035,441 
                                         ============== 
NET ASSET VALUE PER SHARE, 
 520,037,420 shares outstanding 
 (unlimited shares authorized of $.01 
 par value)..............................         $1.00 
                                                  ===== 
</TABLE>

STATEMENT OF OPERATIONS 
For the six months ended June 30, 1997 (unaudited) 

<TABLE>
<CAPTION>
<S>                                      <C>
NET INVESTMENT INCOME: 
INTEREST INCOME..........................  $  9,682,356 
                                         -------------- 
EXPENSES 
Investment management fee................     1,329,196 
Plan of distribution fee.................       257,292 
Transfer agent fees and expenses.........       194,109 
Shareholder reports and notices .........        33,513 
Registration fees........................        31,942 
Professional fees........................        26,848 
Custodian fees...........................        13,735 
Trustees' fees and expenses .............         8,285 
Other....................................         3,860 
                                         -------------- 
  TOTAL EXPENSES ........................     1,898,780 
  LESS: EXPENSE OFFSET ..................       (13,735)
                                         -------------- 
  NET EXPENSES...........................     1,885,045 
                                         -------------- 
NET INVESTMENT INCOME AND NET INCREASE...  $  7,797,311 
                                         ============== 
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS

<PAGE>
                   DEAN WITTER TAX-FREE DAILY INCOME TRUST
                       FINANCIAL STATEMENTS, continued

STATEMENT OF CHANGES IN NET ASSETS 

<TABLE>
<CAPTION>
                                                          FOR THE SIX     FOR THE YEAR 
                                                         MONTHS ENDED         ENDED 
                                                         JUNE 30, 1997  DECEMBER 31, 1996 
- ----------------------------------------------------------------------------------------- 
                                                          (UNAUDITED) 
<S>                                                    <C>             <C>
INCREASE (DECREASE) IN NET ASSETS: 
OPERATIONS: 
Net investment income .................................  $  7,797,311     $ 15,359,674 
Net realized gain .....................................       --                12,513 
                                                         ------------     ------------ 
  NET INCREASE ........................................     7,797,311       15,372,187 
Dividends from net investment income...................    (7,797,388)     (15,359,493) 
Net increase (decrease) from transactions in shares of 
 beneficial interest...................................    (1,843,835)         214,584 
                                                         ------------     ------------ 
  NET INCREASE (DECREASE)..............................    (1,843,912)         227,278 
NET ASSETS: 
Beginning of period....................................   521,879,353      521,652,075 
                                                         ------------     ------------ 
  END OF PERIOD 
  (Including undistributed net investment income of 
  $529 and $606, respectively).........................  $520,035,441     $521,879,353 
                                                         ============     ============ 
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS

<PAGE>
                   DEAN WITTER TAX-FREE DAILY INCOME TRUST
           NOTES TO FINANCIAL STATEMENTS June 30, 1997 (unaudited)

1. ORGANIZATION AND ACCOUNTING POLICIES 

Dean Witter Tax-Free Daily Income Trust (the "Fund") is registered under the 
Investment Company Act of 1940, as amended (the "Act"), as a diversified, 
open-end management investment company. The Fund's investment objective is to 
provide a high level of daily income which is exempt from federal income tax, 
consistent with stability of principal and liquidity. The Fund was incorporated
in Maryland in 1980, commenced operations on February 20, 1981 and reorganized 
as a Massachusetts business trust on April 30, 1987. 

The preparation of financial statements in accordance with generally accepted 
accounting principles requires management to make estimates and assumptions 
that affect the reported amounts and disclosures. Actual results could differ 
from those estimates. 

The following is a summary of significant accounting policies: 

A. VALUATION OF INVESTMENTS -- Portfolio securities are valued at amortized 
cost, which approximates market value. 

B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on 
the trade date (date the order to buy or sell is executed). Realized gains 
and losses on security transactions are determined by the identified cost 
method. The Fund amortizes premiums and accretes discounts over the life of 
the respective securities. Interest income is accrued daily. 

C. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the 
requirements of the Internal Revenue Code applicable to regulated investment 
companies and to distribute all of its taxable and nontaxable income to its 
shareholders. Accordingly, no federal income tax provision is required. 

D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends 
and distributions to shareholders as of the close of each business day. 

2. INVESTMENT MANAGEMENT AGREEMENT 

Pursuant to an Investment Management Agreement with Dean Witter InterCapital 
Inc. (the "Investment Manager"), the Fund pays the Investment Manager a 
management fee, accrued daily and payable monthly, by applying the following 
annual rates to the net assets of the Fund determined as of the close of each 
business day: 0.50% to the portion of the daily net assets not exceeding $500 
million; 0.425% to the portion of the daily net assets exceeding $500 million 
but not exceeding $750 million; 0.375% to the portion of the daily net assets 
exceeding $750 million but not exceeding $1 billion; 0.35% to the portion of 

<PAGE>
                   DEAN WITTER TAX-FREE DAILY INCOME TRUST
      NOTES TO FINANCIAL STATEMENTS June 30, 1997 (unaudited) continued

the daily net assets exceeding $1 billion but not exceeding $1.5 billion; 
0.325% to the portion of the daily net assets exceeding $1.5 billion but not 
exceeding $2 billion; 0.30% to the portion of the daily net assets exceeding 
$2 billion but not exceeding $2.5 billion; 0.275% to the portion of the daily 
net assets exceeding $2.5 billion but not exceeding $3 billion; and 0.25% to 
the portion of the daily net assets exceeding $3 billion. 

Under the terms of the Agreement, in addition to managing the Fund's 
investments, the Investment Manager maintains certain of the Fund's books and 
records and furnishes, at its own expense, office space, facilities, equipment,
clerical, bookkeeping and certain legal services and pays the salaries of all 
personnel, including officers of the Fund who are employees of the Investment 
Manager. The Investment Manager also bears the cost of telephone services, 
heat, light, power and other utilities provided to the Fund. 

3. PLAN OF DISTRIBUTION 

Dean Witter Distributors Inc. (the "Distributor"), an affiliate of the 
Investment Manager, is the distributor of the Fund's shares and, in accordance 
with a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act, 
finances certain expenses in connection therewith. 

Under the Plan, the Distributor bears the expense of all promotional and 
distribution related activities on behalf of the Fund, except for expenses 
that the Trustees determine to reimburse, as described below. The following 
activities and services may be provided by the Distributor and other 
broker-dealers under the Plan: (1) compensation to, and expenses of, the 
Distributor and other broker-dealers; (2) sales incentives and bonuses to sales
representatives and to marketing personnel in connection with promoting sales 
of the Fund's shares; (3) expenses incurred in connection with promoting sales 
of the Fund's shares; (4) preparing and distributing sales literature; and (5) 
providing advertising and promotional activities, including direct mail 
solicitation and television, radio, newspaper, magazine and other media 
advertisements. 

The Fund is authorized to reimburse the Distributor for specific expenses the 
Distributor incurs or plans to incur in promoting the distribution of the 
Fund's shares. The amount of each monthly reimbursement payment may in no 
event exceed an amount equal to a payment at the annual rate of 0.15% of the 
Fund's average daily net assets. For the six months ended June 30, 1997, the 
distribution fee was accrued at the annual rate of 0.10%. 

4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES 

The cost of purchases and proceeds from sales/maturities of portfolio 
securities for the six months ended June 30, 1997 aggregated $588,695,268 and 
$579,495,000, respectively. 

<PAGE>
                   DEAN WITTER TAX-FREE DAILY INCOME TRUST
      NOTES TO FINANCIAL STATEMENTS June 30, 1997 (unaudited) continued

Dean Witter Trust Company, an affiliate of the Investment Manager and 
Distributor, is the Fund's transfer agent. At June 30, 1997, the Fund had 
transfer agent fees and expenses payable of approximately $12,600. 

The Fund has an unfunded noncontributory defined benefit pension plan covering 
all independent Trustees of the Fund who will have served as independent 
Trustees for at least five years at the time of retirement. Benefits under this
plan are based on years of service and compensation during the last five years 
of service. Aggregate pension costs for the six months ended June 30, 1997 
included in Trustees' fees and expenses in the Statement of Operations amounted
to $1,224. At June 30, 1997, the Fund had an accrued pension liability of 
$47,415 which is included in accrued expenses in the Statement of Assets and 
Liabilities. 

5. SHARES OF BENEFICIAL INTEREST 

Transactions in shares of beneficial interest, at $1.00 per share, were as 
follows: 

<TABLE>
<CAPTION>
                                                 FOR THE SIX       FOR THE YEAR 
                                                MONTHS ENDED           ENDED 
                                                JUNE 30, 1997    DECEMBER 31, 1996 
                                                -------------   ------------------ 
                                                 (UNAUDITED) 
<S>                                           <C>               <C>
Shares sold ..................................   565,061,486       1,127,357,086 
Shares issued in reinvestment of dividends  ..     7,797,388          15,359,493 
                                                ------------    ---------------- 
                                                 572,858,874       1,142,716,579 
Shares repurchased ...........................  (574,702,709)     (1,142,501,995) 
                                                ------------    ---------------- 
Net increase (decrease) in shares 
 outstanding..................................    (1,843,835)            214,584 
                                                ============    ================ 
</TABLE>

6. FEDERAL INCOME TAX STATUS 

At December 31, 1996, the Fund had a net capital loss carryover of 
approximately $2,500 which will be available through December 31, 2002 to 
offset future capital gains to the extent provided by regulations. 

<PAGE>
                   DEAN WITTER TAX-FREE DAILY INCOME TRUST
                             FINANCIAL HIGHLIGHTS

Selected ratios and per share data for a share of beneficial interest 
outstanding throughout each period: 

<TABLE>
<CAPTION>
                                          FOR THE SIX            FOR THE YEAR ENDED DECEMBER 31 
                                         MONTHS ENDED   ------------------------------------------------ 
                                         JUNE 30, 1997     1996      1995      1994      1993     1992   
   ----------------------------------------------------------------------------------------------------- 
                                          (UNAUDITED) 
<S>                                    <C>             <C>       <C>       <C>       <C>       <C>
PER SHARE OPERATING PERFORMANCE: 
Net asset value, beginning of period ..     $  1.00      $  1.00   $  1.00   $  1.00   $  1.00   $  1.00 
                                            -------      -------   -------   -------   -------   ------- 
Net investment income..................       0.014        0.028     0.032     0.022     0.018     0.024 
Less dividends from net income.........      (0.014)      (0.028)   (0.032)   (0.022)   (0.018)   (0.024) 
                                            -------      -------   -------   -------   -------   ------- 
Net asset value, end of period.........     $  1.00      $  1.00   $  1.00   $  1.00   $  1.00   $  1.00 
                                            =======      =======   =======   =======   =======   ======= 
TOTAL INVESTMENT RETURN+ ..............        1.45% (1)    2.83%     3.22%     2.25%     1.85%     2.39% 
RATIOS TO AVERAGE NET ASSETS: 
Expenses...............................        0.71% (2)(3)   0.71%   0.72%     0.71%     0.71%     0.68% 
Net investment income..................        2.90% (2)    2.76%     3.16%     2.22%     1.83%     2.37% 
SUPPLEMENTAL DATA: 
Net assets, end of period, in 
 millions..............................        $520         $522      $522      $544      $568      $670 
<FN>
- ------------ 
 +     Calculated based on the net asset value as of the last business day of 
       the period. 
(1)    Not annualized. 
(2)    Annualized. 
(3)    Does not reflect the effect of expense offset of 0.01%. 
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS

<PAGE>

                                DEAN WITTER
                               TAX-FREE DAILY
                                INCOME TRUST

                              Semiannual Report
                                June 30, 1997


TRUSTEES
- --------
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder

OFFICERS
- --------
Charles A. Fiumefreddo
Chairman and Chief Executive Officer

Barry Fink
Vice President, Secretary and General Counsel

Katherine H. Stromberg
Vice President

Thomas F. Caloia
Treasurer

TRANSFER AGENT
- --------------
Dean Witter Trust Company
Harborside Financial Center -- Plaza Two
Jersey City, New Jersey 07311

INDEPENDENT ACCOUNTANTS
- -----------------------
Price  Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036

INVESTMENT MANAGER
- ------------------
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048

The financial statements included herein have been taken from the records of 
the Fund without examination by the independent accountants and accordingly 
they do not express and opinion thereon.

This report is submitted for the general information of shareholders of the 
Fund.  For more detailed information about the Fund, its officers and 
trustees, fees, expenses and other pertinent information, please see the 
prospectus of the Fund.

This report is not authorized for distribution to prospective investors in 
the Fund unless preceded or accompanied by an effective prospectus.



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