<PAGE>
Dean Witter California Tax-Free Income Fund
Two World Trade Center
New York, New York 10048
Dear Shareholder:
- --------------------------------------------------------------------------------
We are pleased to present the annual report on the operations of Dean Witter
California Tax-Free Income Fund for the year ended December 31, 1993.
Market Conditions
Last year set records for municipals. Underwritings of new municipal bond issues
reached an all-time high. Yields fell to an all-time low of 5.41 percent in
October, as measured by THE BOND BUYER Revenue Bond Index. The Index began the
year at 6.40 percent and ended December at 5.52 percent. In addition, the
passage and signing during the summer of the Clinton administration's Revenue
Reconciliation Act made higher marginal taxes a reality. Demand for tax-exempt
bonds was stimulated by the new top federal tax rate of 39.6 percent (36% + a
3.6% surtax).
New-issue underwriting totaled $290 billion
in 1993 increasing 23 percent over the
previous record of last year. Refunding
issues, which are used by state and local
governments to refinance higher coupon debt,
accounted for an unprecedented two-thirds of
total volume. Underwritings backed by
insurance shared 37 percent of the market.
With $38 billion, California was the top
state source of new issues, representing 13
percent of total offerings.
Performance
Dean Witter California Tax-Free Income
Fund's total return for the year ended
December 31, 1993 was 10.97 percent (not
including the deduction of the maximum
applicable contingent deferred sales charge;
see the chart for further details). The
Fund's net asset value per share increased
$0.61 from $12.70 on January 1, 1993 to
$13.31 at year end. Tax free distributions
totaling $0.67 per share were paid during
the year, a modest decline from 1992.
Realized capital gains of $0.09 per share
were also distributed. Net assets increased
by $202 million to $1.2 billion. The
accompanying chart illustrates the
performance of a $10,000 investment in the
Fund from inception (July 11, 1984) through
the fiscal year ended December 31, 1993
versus the performance of a similar
investment in the Lehman Brothers Municipal
Bond Index.
Investment Strategy
During the year, the Fund continued to meet
its investment objectives of attractive
current income -- free from California and
federal income taxes -- and preservation of
capital. The Fund was invested in long-term
bonds throughout the year with only two to
five percent of assets in short-term
maturities. During the year, refunded and
other high coupon bonds with
<PAGE>
diminished call protection were sold. This reduced the Fund's exposure to bonds
with redemption risk in 1995 and 1996 from 28 percent to 18 percent of the
portfolio. New purchases emphasized quality with a preference for
investment-grade issues rated "A" or better. The Fund's average credit rating
remained "Aa" as rated by Moody's Investors Service, Inc. or "AA" as rated by
Standard & Poor's Corp. The Trust's average maturity and call protection were 18
years and 6 years, respectively.
The three largest municipal sectors represented in the portfolio, water & sewer,
electric and transportation revenue bonds, comprised 41 percent of net assets.
Bonds subject to the federal alternative minimum tax (AMT) represented 7 percent
of net assets.
Looking Ahead
In 1994, the amount of municipal bonds outstanding is expected to decline.
New-issue volume is estimated to drop by 30 percent to $200 billion as state and
local governments offer fewer refundings. Bond maturities and redemptions are
expected to exceed new issuance by more than $60 billion. This relative lack of
supply should strengthen municipal performance relative to U.S. Treasury
securities.
The Fund plans to sell older, higher-coupon bonds with diminished call
protection. Purchases are expected to favor high-grade general obligations and
essential-purpose revenue bonds such as electric, water & sewer and
transportation issues.
Over the past several years, the Fund's level of dividend payments has trended
lower as interest rates have declined. This dividend pattern is expected to
extend through 1994. However, the Fund should continue to provide attractive
tax-free distribution yields as it has historically.
We appreciate your support of Dean Witter California Tax-Free Income Fund and
look forward to continuing to serve your investment needs.
Very truly yours,
Charles A. Fiumefreddo
CHAIRMAN OF THE BOARD
<PAGE>
Dean Witter California Tax-Free Income Fund
Portfolio of Investments DECEMBER 31, 1993
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- ----------- --------- ---------------
<C> <S> <C> <C> <C>
CALIFORNIA EXEMPT MUNICIPAL BONDS (94.0%)
GENERAL OBLIGATION (6.3%)
California,
$ 5,000 Ser 1990......................................................... 7.00 % 8/ 1/07 $ 5,988,100
5,000 Ser 1990......................................................... 7.00 8/ 1/08 5,991,700
2,000 Ser AT........................................................... 9.50 2/ 1/10 2,929,360
20,000 Various Purpose Dtd 4/1/93 (FSA Insured)......................... 5.50 4/ 1/19 20,114,800
5,000 San Diego Open Space Park Facilities District #1, Ser 86A.......... 7.60 1/ 1/07 5,470,600
Santa Margarita Water District
6,000 Impr Dists #3&4 Refg Ser 1986.................................... 7.50 11/ 1/05 6,565,380
12,000 Impr Dist #4 1978 Ser E.......................................... 7.40 7/ 1/15 13,056,600
3,500 Impr Dist #4A 1984 Ser A......................................... 7.75 8/ 1/06 3,841,495
Puerto Rico, Pub Impr
5,000 Refg Ser 1987 A.................................................. 5.00 7/ 1/05 4,991,300
5,085 Ser 1991 (Prerefunded)........................................... 7.30 7/ 1/20 6,064,980
- ----------- ---------------
68,585 75,014,315
- ----------- ---------------
EDUCATIONAL FACILITIES REVENUE (5.5%)
California Educational Facilities Authority,
1,750 Loyola Marymount University Ser 1992 B........................... 6.55 10/ 1/12 1,909,355
2,300 Loyola Marymount University Ser 1992 B........................... 6.60 10/ 1/22 2,507,253
2,500 1985 Pooled (USF&G Insured) (Prerefunded)........................ 8.00 11/ 1/10 2,766,150
3,000 Stanford University Ser I........................................ 6.75 1/ 1/13 3,338,670
3,000 Stanford University Ser I........................................ 6.00 1/ 1/18 3,132,120
3,500 University of Southern California Ser 1989 A..................... 7.20 10/ 1/15 3,912,545
California Public Works Board,
8,000 State University 1992 Ser A...................................... 6.70 10/ 1/17 8,699,840
7,000 University of California 1990 Ser A (Prerefunded)................ 7.00 9/ 1/15 8,236,130
University of California, Multiple Purpose
11,000 Refg Ser A....................................................... 6.875 9/ 1/16 12,103,630
20,000 Refg Ser 1993 C (AMBAC Insured).................................. 5.125 9/ 1/18 19,385,800
- ----------- ---------------
62,050 65,991,493
- ----------- ---------------
ELECTRIC REVENUE (12.2%)
2,000 Kings River Conservation District, Pine Flat Power Ser D........... 6.00 1/ 1/17 2,083,200
Los Angeles Department of Water & Power,
3,450 Refg Issue of 1993............................................... 5.375 9/ 1/23 3,377,067
15,000 Second Issue of 1993............................................. 5.40 11/15/13 15,195,900
9,500 Refg Second Issue of 1993........................................ 5.40 11/15/31 9,333,845
Northern California Power Agency,
15,000 Geothermal #3 1985 Ser A (Crossover Refunded).................... 7.00 7/ 1/10 15,684,450
7,000 Hydro #1 1993 Refg Ser A (MBIA insured).......................... 5.50 7 1/16 7,071,260
10,000 Northern California Transmission Agency, California-Oregon 1990
Ser A (MBIA Insured)(Prerefunded)................................ 7.00 5/ 1/24 11,662,100
5,000 Redding, Ser 1989 A COPs (MBIA Insured) (Prerefunded).............. 7.125 7/ 1/14 5,655,350
13,000 Sacramento Municipal Utility District, Refg 1992 Ser A INFLOS
(FGIC Insured)................................................... 9.875+ 8/15/18 15,047,500
Southern California Public Power Authority,
16,000 Multiple Projects 1989 Ser....................................... 6.00 7/ 1/18 16,362,080
8,000 Power 1993 Refg Ser A............................................ 5.00 7/ 1/15 7,634,880
3,000 Power Refg Ser C 1992 (AMBAC Insured) (Prerefunded).............. 5.75 7/ 1/17 3,285,180
8,000 Southern Transmission Sub Crossover Refg Ser 1992................ 5.75 7/ 1/21 8,113,280
7,000 Transmission Refg Ser 1988 (FGIC Insured)........................ 0.00 7/ 1/06 3,771,110
10,000 Transmission 1986 Refg Ser B..................................... 5.50 7/ 1/23 9,884,800
Puerto Rico Electric Power Authority,
3,000 Power Ser N...................................................... 5.00 7/ 1/12 2,901,540
9,000 Power Ser O...................................................... 5.00 7/ 1/12 8,704,620
- ----------- ---------------
143,950 145,768,162
- ----------- ---------------
</TABLE>
<PAGE>
Dean Witter California Tax-Free Income Fund
Portfolio of Investments DECEMBER 31, 1993 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- ----------- --------- ---------------
<C> <S> <C> <C> <C>
HOSPITAL REVENUE (11.5%)
$ 7,100 Antelope Valley Hospital District, Ser 1989 COPs........... 7.35% 1/ 1/20 $ 7,809,148
Bakersfield, Bakersfield Memorial Hospital
1,750 Ser 1992 A............................................... 6.375 1/ 1/12 1,863,803
2,000 Ser 1992 A............................................... 6.50 1/ 1/22 2,131,640
Berkeley,
7,600 Alta Bates Hospital 1995 Ser A........................... 6.50 12/ 1/11 7,833,092
3,110 Alta Bates Hospital 1985 Ser B (Prerefunded)............. 7.65 12/ 1/15 3,671,479
California Health Facilities Financing Authority,
4,350 Downey Community Hospital Ser 1993....................... 5.625 5/15/08 4,406,202
10,000 Kaiser Permanente 1983 Ser............................... 5.45 10/ 1/13 9,999,000
8,000 Kaiser Permanente 1985 Ser A............................. 9.125 10/ 1/15 8,818,800
3,500 Kaiser Permanente 1991 Ser A............................. 6.25 3/ 1/21 3,671,255
3,500 Merrit Peralta Medical Center 1985 Ser A................. 9.00 5/ 1/15 3,616,095
5,000 St Joseph Health Ser 1991 A (Prerefunded)................ 6.75 7/ 1/21 5,861,500
5,000 Sutter Community Hospitals of Sacramento Ser A (Crossover
Refunded)................................................ 9.25 1/ 1/13 5,361,650
Desert Hospital District, Desert Hospital Corp
5,000 Ser 1990 COPs (Prerefunded).............................. 8.00 7/ 1/10 6,150,350
3,000 Ser 1990 COPs (Prerefunded).............................. 8.10 7/ 1/20 3,707,160
10,000 Ser 1992 COPs MVRICS (Capital Guaranty Insured).......... 9.659+ 7/28/20 11,700,000
4,000 Duarte, City of Hope National Medical Center COPs.......... 6.25 4/ 1/23 4,060,800
6,000 Eden Township Hospital District, Ser 1989.................. 7.40 11/ 1/19 6,373,860
5,000 Hemet Valley Hospital District, Moreno Valley Regional
Medical Center 1988 Ser A................................ 8.50 7/ 1/18 5,400,800
5,000 Los Angeles, Hollywood Presbyterian Hospital/Olmstead
Memorial
Ser 1985 COPs (State Insured)............................ 9.00 7/ 1/13 5,441,600
1,250 Rancho Mirage Joint Powers Financing Authority, Eisenhower
Memorial Hospital COPs................................... 7.00 3/ 1/22 1,357,738
4,000 Riverside, Kaiser Permanente 1985 Ser A.................... 9.00 12/ 1/15 4,440,960
5,000 Santa Rosa, Kaiser Permanente 1985 Ser A................... 9.00 12/ 1/15 5,550,150
2,000 Stockton, Dameron Hospital Assn Refg Ser 1988.............. 8.25 12/ 1/00 2,240,920
6,000 Stockton, St Joseph Medical Center of Stockton 1993 Ser A
(MBIA Insured)(a)........................................ 5.50 6/ 1/23 6,036,120
8,500 University of California, UCLA Medical Center Ser 1986..... 6.90 12/ 1/16 9,220,120
- ---------- -------------
125,660 136,724,242
- ---------- -------------
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE (5.6%)
2,500 California Alternative Energy Source Financing Authority,
SRI International Cogeneration Ser 1985 (b).............. 9.75 12/ 1/05 1,250,000
California Pollution Control Financing Authority,
5,000 Atlantic Richfield Co Ser 1985........................... 9.125 11/ 1/04 5,590,550
6,000 Pacific Gas & Electric Co 1987 Ser B (AMT)............... 8.875 1/ 1/10 7,119,240
5,000 Southern California Edison Co 1988 Ser A (AMT)........... 6.90 9/ 1/06 5,512,750
10,000 Southern California Edison Co Ser D...................... 6.85 12/ 1/08 11,109,800
10,000 Southern California Edison Co 1992 Ser B (AMT)........... 6.40 12/ 1/24 10,739,100
5,000 Waste Management Inc 1991 Ser A (AMT).................... 7.15 2/ 1/11 5,637,200
1,400 Intermodal Container Transfer Facility Joint Powers
Authority, Southern Pacific Transportation Co 1989 Ser
A........................................................ 7.70 11/ 1/14 1,641,962
San Diego,
5,000 San Diego Gas & Electric Co Ser A 1992................... 6.40 9/ 1/18 5,338,200
6,000 San Diego Gas & Electric Co 1986 Ser B (AMT)............. 7.375 12/ 1/21 6,692,340
5,000 San Diego Gas & Electric Co 1987 Ser A (AMT)............. 8.75 3/ 1/23 5,839,800
- ---------- -------------
60,900 66,470,942
- ---------- -------------
</TABLE>
<PAGE>
Dean Witter California Tax-Free Income Fund
Portfolio of Investments DECEMBER 31, 1993 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- ----------- --------- ---------------
<C> <S> <C> <C> <C>
MORTGAGE REVENUE -- SINGLE FAMILY (2.5%)
$ 585 California Department of Veterans Affairs, 1984 Ser A...... 10.50% 8/ 1/10 $ 605,721
California Housing Finance Agency,
12,620 Home 1989 Ser A.......................................... 7.75 8/ 1/17 13,772,206
750 Home 1991 Ser B (AMT).................................... 7.55 8/ 1/20 785,003
10,000 Home 1991 Ser G (AMT).................................... 7.05 8/ 1/27 10,386,900
125 Huntington Beach, Home 1983 Ser A.......................... 9.60 3/ 1/14 133,104
80 Newark Redevelopment Agency, 1984 Residential.............. 10.00 9/ 1/11 85,516
12,605 San Francisco Redevelopment Agency, Residential 1984 Issue
A........................................................ 0.00 4/ 1/17 1,054,156
475 Southern California Home Financing Authority, GNMA &
FNMA-Backed 1991 Issue A (AMT)........................... 7.35 9/ 1/24 517,774
Puerto Rico Housing Finance Corporation,
1,695 Portfolio One GNMA-Backed Ser B.......................... 7.65 10/15/22 1,823,701
1,000 Portfolio One GNMA-Backed Ser C.......................... 6.85 10/15/23 1,080,930
- ---------- -------------
39,935 30,245,011
- ---------- -------------
PUBLIC FACILITIES REVENUE (7.9%)
10,000 Alameda County Public Facilities Corporation, 1991
Financing COPs........................................... 6.15 9/ 1/21 10,405,000
5,000 Beverly Hills, Civic Center Impr Refg COPs................. 7.00 6/ 1/15 5,540,550
4,000 California Public Works Board, Corrections 1986 Ser A
(Prerefunded)............................................ 7.375 11/ 1/05 4,493,800
9,000 El Cajon-San Diego County Civic Center Authority, East
County Regional Center 1986 Refg (Prerefunded)........... 6.70 12/ 1/07 9,954,180
Los Angeles Convention & Exhibition Center Authority,
10,000 Ser 1985 COPs (Prerefunded).............................. 9.00 12/ 1/10 13,950,500
12,500 Ser 1993 A (MBIA Insured)................................ 5.375 8/15/18 12,473,625
14,000 Ser 1985 COPs (Prerefunded).............................. 9.00 12/ 1/20 19,530,700
5,500 Los Angeles County-West Covina Civic Center Authority, 1987
Refg COPs................................................ 6.875 9/ 1/14 5,837,590
5,000 North City West School Facilities Financing Authority,
Community Facs Dist #1 Spl Tax Ser 1989 A................ 7.85 9/ 1/19 5,359,950
5,000 San Jose Financing Authority, Convention Center Refg 1993
Ser C.................................................... 6.40 9/ 1/17 5,368,350
1,200 Puerto Rico Infrastructure Financing Authority, Spl Tax Ser
1988 A................................................... 7.90 7/ 1/07 1,383,648
- ---------- -------------
81,200 94,297,893
- ---------- -------------
RESOURCE RECOVERY REVENUE (0.5%)
5,000 Stanislaus Waste Energy Financing Agency, Ogden Martin
Systems of Stanislaus Inc Refg Ser 1990.................. 7.625 1/ 1/10 5,581,700
-------------
TAX ALLOCATION (7.7%)
5,000 Fountain Valley Agency For Community Development,
Industrial Area 1985..................................... 9.10 1/ 1/15 5,562,400
Garden Grove Community Development Agency,
5,000 Refg Issue of 1993....................................... 5.70 10/ 1/13 5,046,350
7,000 Refg Issue of 1993....................................... 5.875 10/ 1/23 7,085,120
Industry Urban Development Agency,
10,000 Civic Rec-Ind Redev Proj #1 Sub Refg Ser 1987 A.......... 7.30 5/ 1/06 10,934,700
2,160 Civic Rec-Ind Redev Proj #1 Sub Refg Ser 1987 B.......... 7.375 5/ 1/15 2,369,628
6,840 Civic Rec-Ind Redev Proj #1 Sub Refg Ser 1987 B
(Prerefunded)............................................ 7.375 5/ 1/15 7,755,466
Long Beach Financing Authority,
25,500 Ser 1992 (AMBAC Insured)................................. 6.00 11/ 1/17 27,933,720
2,000 Ser 1992 (AMBAC Insured)................................. 5.50 11/ 1/22 2,008,160
3,750 Long Beach Redevelopment Agency, Downtown Refg
Ser 1988 B (Prerefunded)................................. 8.30 11/ 1/10 4,456,837
5,000 Los Angeles Community Redevelopment Agency, Central
Business
Dist Ser E (Prerefunded)................................. 8.85 7/ 1/10 5,517,600
7,000 Norwalk Redevelopment Agency, Proj #1 1987 Refg............ 7.15 12/ 1/15 7,435,750
3,000 Oakland Redevelopment Agency, 1985 Ser A COPs
(Prerefunded)............................................ 9.25 8/ 1/16 3,342,420
2,000 Pleasanton Joint Powers Financing Authority, Reassessment
1993 Ser A............................................... 6.15 9/ 2/12 2,034,760
- ---------- -------------
84,250 91,482,911
- ---------- -------------
</TABLE>
<PAGE>
Dean Witter California Tax-Free Income Fund
Portfolio of Investments DECEMBER 31, 1993 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- ----------- --------- ---------------
<C> <S> <C> <C> <C>
TRANSPORTATION FACILITIES REVENUE (11.6%)
Long Beach,
$ 11,000 Harbor Ser 1989 A (AMT).................................. 7.375% 5/15/09 $ 12,352,560
10,000 Harbor Ser 1989 A (AMT).................................. 7.25 5/15/19 11,096,600
Los Angeles,
5,000 Department of Airports Refg 1989 Ser C................... 7.00 5/ 1/10 5,544,300
6,000 Harbor Department Issue of 1985.......................... 8.70 9/ 1/15 6,564,060
Los Angeles County Transportation Commission,
20,000 Sales Tax Ser 1991 B..................................... 6.50 7/ 1/13 21,804,400
5,000 Sales Tax Ser 1986 A..................................... 6.25 7/ 1/16 5,115,650
10,000 Sales Tax Ser 1987 A (Prerefunded)....................... 6.75 7/ 1/19 11,813,200
2,650 Sales Tax Ser 1989 A..................................... 7.00 7/ 1/19 2,991,718
Orange County Airport,
2,000 Refg Ser 1993 (AMT) (MBIA Insured)....................... 5.50 7/ 1/13 2,013,540
2,100 Ser 1987 (AMT) (Prerefunded)............................. 6.625 7/ 1/18 2,294,859
4,900 Ser 1987 (AMT)........................................... 6.625 7/ 1/18 5,209,239
3,000 San Diego County Regional Transportation Commission, Sales
Tax
1989 Ser A (Prerefunded)................................. 7.375 4/ 1/06 3,509,610
5,000 San Francisco Airports Commission, San Francisco Int'l
Airport
Second Ser Refg Issue 4 (MBIA Insured)................... 6.00 5/ 1/20 5,338,800
San Francisco Bay Area Rapid Transit District,
5,000 Sales Tax Ser 1990 (AMBAC Insured)....................... 6.75 7/ 1/09 5,597,100
10,000 Sales Tax Ser 1985 (Prerefunded)......................... 9.00 7/ 1/11 11,152,600
13,000 Puerto Rico Highway Authority, Ser Q (Prerefunded)......... 7.75 7/ 1/10 15,835,950
10,000 Puerto Rico Highway & Transportation Authority, Refg Ser
X........................................................ 5.25 7/ 1/21 9,606,500
- ---------- -------------
124,650 137,840,686
- ---------- -------------
WATER & SEWER REVENUE (17.1%)
California Department of Water Resources,
4,000 Central Valley Ser F..................................... 6.00 12/ 1/11 4,121,400
9,500 Central Valley Ser J-2................................... 6.125 12/ 1/13 10,036,845
2,000 Central Valley Ser J-2................................... 6.00 12/ 1/20 2,083,920
10,000 Central Coast Water Authority, Ser 1992 (AMBAC Insured).... 6.50 10/ 1/14 11,113,000
Contra Costa Water Authority,
3,400 Water Treatment 1990 Ser A (Prerefunded)................. 7.25 10/ 1/10 4,059,498
5,000 Water Treatment 1990 Ser A (Prerefunded)................. 6.875 10/ 1/20 5,860,600
East Bay Municipal Utility District,
8,000 Water Refg Ser 1986 (Prerefunded)........................ 7.00 3/ 1/08 8,784,160
8,000 Water Refg Ser 1992...................................... 6.00 6/ 1/20 8,339,200
4,000 Eastern Municipal Water District, Water & Sewer Ser 1991
COPs..................................................... 6.00 7/ 1/23 4,113,640
3,600 Goleta Water District, Refg Ser 1993 COPs (FGIC Insured)... 5.50 12/ 1/12 3,653,244
Los Angeles,
5,745 Wastewater Ser 1990...................................... 7.10 6/ 1/18 6,522,069
5,000 Wastewater Ser 1990-A (Prerefunded)...................... 7.00 2/ 1/20 5,813,300
17,000 Wastewater Ser 1990-B (Prerefunded)...................... 7.15 6/ 1/20 19,928,590
20,500 Los Angeles County Sanitation Districts Financing
Authority, 1993 Ser A.................................... 5.375 10/ 1/13 20,411,645
5,000 Los Angeles Department of Water & Power, Water Works Issue
of 1991 (Crossover Refunded)............................. 7.00 4/ 1/31 5,872,200
3,600 Moulton Niguel Water District, 1993 Refg (MBIA Insured).... 5.25 9/ 1/13 3,582,252
10,000 Orange County Sanitation Districts #1, 2 & 3, Joint
Facilities COPs (Prerefunded)............................ 7.10 8/ 1/11 11,080,000
5,045 Riverside, Water Ser 1985 (Prerefunded).................... 8.60 10/ 1/10 5,661,751
15,000 San Diego, Sewer 1993 Ser A................................ 5.25 5/15/20 14,359,350
San Diego County Water Authority,
11,000 Water Ser 1989 A COPs (Prerefunded)...................... 7.30 5/ 1/09 12,446,500
4,000 Water Ser 1991 B COPs CARS (MBIA Insured)................ 9.78+ 4/ 8/21 4,860,000
5,750 San Francisco Public Utilities Commission, Water 1992 Refg
Ser A.................................................... 6.00 11/ 1/15 6,072,000
8,250 West & Central Basin Financing Authority, Water Basin Refg
Ser 1993 A (AMBAC Insured)............................... 5.00 8/ 1/16 7,915,380
Puerto Rico Aqueduct & Sewer Authority,
5,000 Ser 1988 A............................................... 7.90 7/ 1/07 5,765,200
9,450 Ser 1988 A............................................... 7.875 7/ 1/17 10,886,683
- ---------- -------------
187,840 203,342,427
- ---------- -------------
</TABLE>
<PAGE>
Dean Witter California Tax-Free Income Fund
Portfolio of Investments DECEMBER 31, 1993 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- ----------- --------- ---------------
<C> <S> <C> <C> <C>
OTHER REVENUE (5.6%)
$ 3,500 CSAC Finance Corp, Contra Costa County Project III Ser 1986
COPs (Prerefunded)....................................... 7.50% 10/ 1/09 $ 4,012,540
Campell Redevelopment Agency,
1,875 1991 Financing COPs...................................... 6.75 10/ 1/17 3,676,563
3,125 1991 Financing COPs (Prerefunded)........................ 6.75 10/ 1/17 2,035,762
5,560 Grossmont Union High School District, Land Acquisition
Convertible
Cap Apprec COPs (FSA Insured)............................ 0.00 9/ 1/25 4,934,500
Los Angeles County,
2,750 1991 Master Refg RIBS COPs............................... 10.447+ 5/ 1/15 3,148,750
10,000 Pension Obligations Certificates Ser A................... 6.875 6/30/07 10,795,700
9,500 Public Properties Refg of 1987 COPs...................... 0.00 4/ 1/04 5,720,710
6,500 Nevada County, Western Nevada County Solid Waste Mgmt 1991
COPs..................................................... 7.50 6/ 1/21 7,289,035
5,000 Orange County Community Facilities District #86-2, Rancho
Santa Margarita Series A of 1990......................... 7.65 8/15/17 5,420,950
1,000 Orange County Community Facilities District #87-3, Mission
Viejo
Ser A of 1990............................................ 7.80 8/15/15 1,158,240
3,500 Poway Redevelopment Agency, 1986 Cap Impr COPs............. 7.875 8/ 1/11 3,831,905
10,000 Stanislaus County Capital Improvements Financing Authority,
Refg Ser 1990 COPs....................................... 7.55 4/ 1/18 10,813,400
3,000 University of California, Los Angeles Campus Parking Ser C
(Prerefunded)............................................ 7.75 11/ 1/15 3,400,440
- ---------- -------------
65,310 66,238,495
- ---------- -------------
1,049,330 TOTAL CALIFORNIA EXEMPT MUNICIPAL BONDS
(Identified Cost $1,001,388,452)....................... 1,118,998,277
-------------
SHORT-TERM CALIFORNIA EXEMPT MUNICIPAL OBLIGATIONS (4.0%)
10,000 California Health Facilities Financing Authority,
St Francis Memorial Hospital Ser 1993 B (Tender
1/3/94).................................................. 4.75* 11/ 1/19 10,000,000
5,000 California School Cash Reserve Program Authority, 1993 Pool
Ser A.................................................... 3.40 7/ 5/94 5,031,950
5,000 Loma Linda, Loma Linda University Medical Center Ser 1985 C
(Tender 1/6/94).......................................... 2.85* 12/21/15 5,000,000
9,750 Los Angeles County, Ser B TRANs TECP....................... 2.50 1/11/94 9,750,000
12,500 Newport Beach, Hoag Memorial Hospital Presbyterian Ser 1992
(Tender 1/3/94).......................................... 3.05* 10/ 1/22 12,500,000
5,000 Sacramento County Administration Center & Courthouse, Ser
1990 COPS (Tender 1/6/94)................................ 2.85* 6/ 1/20 5,000,000
- ---------- -------------
47,250 TOTAL CALIFORNIA EXEMPT SHORT-TERM MUNICIPAL OBLIGATIONS
(Identified Cost $47,262,291).......................... 47,281,950
- ---------- -------------
$1,096,580 TOTAL INVESTMENTS (Identified Cost $1,048,650,743) (c)..... 98.0% 1,166,280,227
- ----------
- ----------
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES............. 2.0 23,547,601
----------- -------------
NET ASSETS................................................. 100.0 % $1,189,827,828
----------- -------------
----------- -------------
<FN>
- ---------------
+ Current coupon rate for residual interest bonds. This rate resets
periodically as the auction rate on the related short-term securities
fluctuates.
* Variable or floating rate securities. Coupon rates shown reflect current
rate.
(a) Security purchased on a when issued basis.
(b) Security in default. Partial interest paid. Interest income is recorded as
received.
(c) The aggregate cost for federal income tax purposes is $1,048,650,743; the
aggregate gross unrealized appreciation is $119,410,424 and the aggregate
gross unrealized depreciation is $1,780,940, resulting in net unrealized
appreciation of $117,629,484.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
Dean Witter California Tax-Free Income Fund
Financial Statements
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
DECEMBER 31, 1993
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $1,048,650,743)
(Note 1)............................ $ 1,166,280,227
Cash.................................. 11,368,930
Receivables for:
Interest............................ 20,817,516
Shares of beneficial interest
sold.............................. 2,522,191
Investments sold.................... 1,728,608
Prepaid expenses...................... 20,051
---------------
Total Assets.................. 1,202,737,523
---------------
LIABILITIES:
Payables for:
Investments purchased............... 5,859,670
Shares of beneficial interest
repurchased....................... 856,377
Plan of distribution fee payable (Note
3).................................. 706,436
Investment management fee payable
(Note 2)............................ 524,467
Dividends and distributions to
shareholders........................ 4,786,179
Accrued expenses (Note 4)............. 176,566
---------------
Total Liabilities............. 12,909,695
---------------
NET ASSETS:
Paid in capital....................... 1,070,194,384
Accumulated undistributed realized
gain on investments -- net.......... 2,006,279
Unrealized appreciation on investments
-- net.............................. 117,629,484
Distributions in excess of net
investment income................... (2,319)
---------------
Total Net Assets.............. $ 1,189,827,828
---------------
---------------
Net Asset Value Per Share, 89,424,792
shares outstanding (unlimited
authorized shares of $.01 par
value).............................. $13.31
------
------
</TABLE>
Statement of Operations
FOR THE YEAR ENDED DECEMBER 31, 1993
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income........................ $ 69,526,656
------------
Expenses
Plan of distribution fee (Note 3).... 7,693,113
Investment management fee (Note 2)... 5,806,822
Transfer agent fees and expenses
(Note 4)........................... 285,535
Professional fees.................... 54,425
Shareholder reports and notices...... 54,212
Registration fee..................... 45,877
Trustees' fees and expenses (Note
4)................................. 36,071
Other................................ 46,573
------------
Total Expenses................... 14,022,628
------------
Investment Income--Net......... 55,504,028
------------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS -- NET (Note 1):
Realized gain on investments --
net................................ 10,170,859
Change in unrealized appreciation on
investments -- net................. 46,376,952
------------
Net Gain on Investments.......... 56,547,811
------------
Net Increase in Net Assets
Resulting from Operations.... $112,051,839
------------
------------
</TABLE>
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 1993 DECEMBER 31, 1992
------------------ ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Investment income -- net........................................... $ 55,504,028 $ 49,423,435
Realized gain on investments -- net................................ 10,170,859 1,674,559
Change in unrealized appreciation on investments -- net............ 46,376,952 18,197,043
------------------ ------------------
Net increase in net assets resulting from operations........... 112,051,839 69,295,037
------------------ ------------------
Dividends and distributions to shareholders from:
Investment income -- net........................................... (55,504,028 ) (49,423,435 )
Realized gain on investments -- net................................ (8,123,876 ) (1,686,572 )
------------------ ------------------
Total dividends and distributions.............................. (63,627,904 ) (51,110,007 )
------------------ ------------------
Transactions in shares of beneficial interest -- net increase (Note
5).................................................................. 153,955,199 135,635,179
------------------ ------------------
Total increase................................................. 202,379,134 153,820,209
NET ASSETS:
Beginning of period.................................................. 987,448,694 833,628,485
------------------ ------------------
End of period (including distributions in excess of net investment
income of $2,319 and $2,319, respectively).......................... $ 1,189,827,828 $ 987,448,694
------------------ ------------------
------------------ ------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
Dean Witter California Tax-Free Income Fund
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Organization and Accounting Policies -- Dean Witter California Tax-Free
Income Fund (the "Fund") is registered under the Investment Company Act of 1940,
as amended (the "Act"), as a diversified, open-end management investment company
and was organized on April 9, 1984 as a Massachusetts business trust. The Fund
commenced operations on July 11, 1984.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- Portfolio securities are valued for the Fund
by an outside independent pricing service approved by the Fund's Trustees.
The pricing service has informed the Fund that in valuing the Fund's
portfolio securities, it uses both a computerized grid matrix of tax-exempt
securities and evaluations by its staff, in each case based on information
concerning market transactions and quotations from dealers which reflect the
bid side of the market each day. The Fund's portfolio securities are thus
valued by reference to a combination of transactions and quotations for the
same or other securities believed to be comparable in quality, coupon,
maturity, type of issue, call provisions, trading characteristics and other
features deemed to be relevant.
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 on the identified cost
method. Net investment income includes amortization of premiums and original
issue discounts. Additionally, with respect to market discount on bonds
purchased after April 30, 1993, a portion of any capital gain realized upon
disposition is recharacterized as taxable investment income. Interest income
is accrued daily except where collection is not expected.
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 non-taxable 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 its shareholders on the record date. The
amount of dividends and distributions from net investment income and net
realized capital gains are determined in accordance with federal income tax
regulations, which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such
amounts are reclassified within the capital accounts based on their federal
tax-basis treatment; temporary differences do not require reclassifications.
Dividends and distributions which exceed net investment income and net
realized capital gains for financial reporting purposes but not for tax
purposes are reported as dividends in excess of net investment income or
distributions in excess of net realized capital gains. To the extent they
exceed net investment income and net realized capital gains for tax
purposes, they are reported as distributions of paid-in-capital.
2. Investment Management Agreement -- Pursuant to an Investment Management
Agreement (the "Agreement") with Dean Witter InterCapital Inc. (the "Investment
Manager"), the Fund pays its 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: 0.55 of 1% of the
portion of the daily net assets not exceeding $500 million; 0.525 of 1% of the
portion of the
<PAGE>
Dean Witter California Tax-Free Income Fund
Notes to Financial Statements (CONTINUED)
- --------------------------------------------------------------------------------
daily net assets exceeding $500 million but not exceeding $750 million; 0.50 of
1% of the portion of the daily net assets exceeding $750 million but not
exceeding $1 billion; and 0.475 of 1% of the portion of the daily net assets
exceeding $1 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 office space and 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 -- Shares of the Fund are distributed by Dean Witter
Distributors Inc. (the "Distributor") an affiliate of the Investment Manager,
through its own sales organization. To compensate the Distributor, the Fund has
adopted a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act
pursuant to which the Fund pays the Distributor compensation accrued daily and
payable monthly at the annual rate of .75 of 1% of the lesser of: (a) the
average daily aggregate gross sales of the Fund's shares since the inception of
the Fund (not including reinvestments of dividends or capital gains
distributions), less the average daily aggregate net asset value of the Fund's
shares redeemed since the Fund's inception upon which a contingent deferred
sales charge has been imposed or upon which such charge has been waived, or (b)
the Fund's average daily net assets. Amounts paid under the Plan are paid to the
Distributor to compensate it for the services provided and the expenses borne by
it and others in the distribution of the Fund's shares, including the payment of
commissions for sales of the Fund's shares and incentive compensation to and
expenses of the account executives of Dean Witter Reynolds Inc., an affiliate of
the Investment Manager, and other employees or selected dealers who engage in or
support distribution of the Fund's shares or who service shareholder accounts,
including overhead and telephone expenses; printing and distribution of
prospectuses and reports used in connection with the offering of the Fund's
shares; and preparation, printing and distribution of sales literature and
advertising material. In addition, the Distributor may be compensated under the
Plan for its opportunity costs in advancing such amounts, which compensation
would be in the form of a carrying charge on any unrecovered expenses incurred
by the Distributor.
Provided that the Plan continues in effect, any cumulative expenses incurred
by the Distributor, but not yet recovered, may be recovered through future
distribution fees from the Fund and contingent deferred sales charges from the
Fund's shareholders.
The Distributor has informed the Fund that it received approximately
$1,072,000 in deferred sales charges from certain redemptions of the Fund's
shares of beneficial interest during the year ended December 31, 1993. The
Fund's shareholders pay such charges which are not expenses of the Fund.
4. Security Transactions and Transactions with Affiliates -- The cost of
purchases and the proceeds from sales of portfolio securities for the year ended
December 31, 1993, excluding short-term investments, aggregated $219,644,352 and
$101,025,656, respectively.
On April 1, 1991 the Fund established 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 year ended
<PAGE>
Dean Witter California Tax-Free Income Fund
Notes to Financial Statements (CONTINUED)
- --------------------------------------------------------------------------------
December 31, 1993, included in Trustees' fees and expenses in the Statement of
Operations, amounted to $12,231. At December 31, 1993, the Fund had an accrued
pension liability of $39,298 which is included in accrued expenses in the
Statement of Assets and Liabilities.
Dean Witter Trust Company, an affiliate of the Investment Manager and the
Distributor, is the Fund's transfer agent. During the year ended December 31,
1993, the Fund incurred transfer agent fees and expenses of $285,535, of which
$40,173 was payable at December 31, 1993.
5. Shares of Beneficial Interest -- Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 1993 DECEMBER 31, 1992
-------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C>
Sold........................... 20,116,156 $ 264,871,259 18,442,556 $ 231,137,820
Reinvestment of dividends and
distributions................. 2,852,146 37,675,586 2,393,695 30,022,451
-------------- ---------------- -------------- ----------------
22,968,302 302,546,845 20,836,251 261,160,271
Repurchased.................... (11,273,363) (148,591,646) (10,009,007) (125,525,092)
-------------- ---------------- -------------- ----------------
Net increase................... 11,694,939 $ 153,955,199 10,827,244 $ 135,635,179
-------------- ---------------- -------------- ----------------
-------------- ---------------- -------------- ----------------
</TABLE>
1993 FEDERAL TAX NOTICE (UNAUDITED)
During the year ended December 31, 1993 the Fund paid to shareholders $0.665
per share from net investment income. All of the Fund's dividends from net
investment income were exempt interest dividends, excludable from gross
income for Federal income tax purposes. For the year ended December 31,
1993, the Fund paid to shareholders $0.092 per share from long-term capital
gains.
<PAGE>
Dean Witter California Tax-Free Income Fund
Financial Highlights
- --------------------------------------------------------------------------------
Selected data and ratios for a share of beneficial interest outstanding
throughout each period:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------------------------
1993 1992 1991 1990 1989 1988 1987 1986 1985
---------- ---------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Per share operating performance:
Net asset value, beginning of
period....................... $12.70 $12.46 $11.99 $12.05 $11.68 $11.19 $12.25 $11.41 $10.31
---------- ---------- -------- -------- -------- -------- -------- -------- --------
Investment income -- net.... 0.67 0.69 0.71 0.72 0.71 0.72 0.72 0.77 0.80
Realized and unrealized gain
(loss) on investments...... 0.70 0.26 0.48 (0.06) 0.37 0.50 (1.06) 1.24 1.10
---------- ---------- -------- -------- -------- -------- -------- -------- --------
Total from investment
operations................... 1.37 0.95 1.19 0.66 1.08 1.22 (0.34) 2.01 1.90
---------- ---------- -------- -------- -------- -------- -------- -------- --------
Less dividends and
distributions:
Dividends from net
investment income.......... (0.67) (0.69) (0.71) (0.72) (0.71) (0.72) (0.72) (0.77) (0.80)
Distributions from realized
gain on investments........ (0.09) (0.02) (0.01) -0- -0- (0.01) -0- (0.40) -0-
---------- ---------- -------- -------- -------- -------- -------- -------- --------
Total dividends and
distributions................ (0.76) (0.71) (0.72) (0.72) (0.71) (0.73) (0.72) (1.17) (0.80)
---------- ---------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of
period....................... $13.31 $12.70 $12.46 $11.99 $12.05 $11.68 $11.19 $12.25 $11.41
---------- ---------- -------- -------- -------- -------- -------- -------- --------
---------- ---------- -------- -------- -------- -------- -------- -------- --------
Total Investment Return+........ 10.97% 7.83% 10.18% 5.69% 9.54% 11.23% (2.70)% 18.38% 19.03%
Ratios/Supplemental Data:
Net assets, end of period (in
thousands)................... $1,189,828 $ 987,449 $833,628 $677,270 $567,191 $430,148 $365,414 $358,939 $184,168
Ratio of expenses to average
net assets................... 1.27% 1.32% 1.28% 1.30% 1.32% 1.34% 1.35% 1.32% 1.41%
Ratio of net investment income
to average net assets........ 5.03% 5.45% 5.78% 5.98% 6.00% 6.31% 6.27% 6.34% 7.22%
Portfolio turnover rate....... 10% 6% 3% 16% 13% 13% 23% 31% 47%
<CAPTION>
JULY 11, 1984*
THROUGH
DECEMBER 31, 1984
------------------
<S> <C>
Per share operating performance:
Net asset value, beginning of
period....................... $10.00
-------
Investment income -- net.... 0.39
Realized and unrealized gain
(loss) on investments...... 0.31
-------
Total from investment
operations................... 0.70
-------
Less dividends and
distributions:
Dividends from net
investment income.......... (0.39)
Distributions from realized
gain on investments........ -0-
-------
Total dividends and
distributions................ (0.39)
-------
Net asset value, end of
period....................... $10.31
-------
-------
Total Investment Return+........ 7.10%(1)
Ratios/Supplemental Data:
Net assets, end of period (in
thousands)................... $ 57,474
Ratio of expenses to average
net assets................... 0.23%(2)(3)
Ratio of net investment income
to average net assets........ 8.96%(2)(3)
Portfolio turnover rate....... 29%
<FN>
- -----------------
* COMMENCEMENT OF OPERATIONS.
+ DOES NOT REFLECT THE DEDUCTION OF SALES LOAD.
(1) NOT ANNUALIZED.
(2) ANNUALIZED.
(3) IF THE FUND HAD BORNE ALL ITS EXPENSES THAT WERE ASSUMED OR WAIVED BY THE
INVESTMENT MANAGER AND THE DISTRIBUTOR, THE EXPENSE RATIO WOULD HAVE BEEN
1.85% AND THE NET INVESTMENT INCOME RATIO WOULD HAVE BEEN 7.34%.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
Dean Witter California Tax-Free Income Fund
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Shareholders and Trustees of Dean Witter California Tax-Free Income Fund
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Dean Witter California Tax-Free
Income Fund (the "Fund") at December 31, 1993, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended and the financial highlights for each of the nine years in
the period then ended and for the period July 11, 1984 (commencement of
operations) through December 31, 1984, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities owned at December 31, 1993 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE
New York, New York
February 14, 1994
<PAGE>
TRUSTEES
- ---------------------------------------
Jack F. Bennett
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. John E. Jeuck Dean Witter
Dr. Manuel H. Johnson California
Paul Kolton Tax-Free
Michael E. Nugent Income Fund
Albert T. Sommers
Edward R. Telling
OFFICERS
- ---------------------------------------
Charles A. Fiumefreddo
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
Sheldon Curtis
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
James F. Willison
VICE PRESIDENT
Thomas F. Caloia
TREASURER
TRANSFER AGENT
- ---------------------------------------
Dean Witter Trust Company
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
LEGAL COUNSEL
- ---------------------------------------
Sheldon Curtis
Two World Trade Center
New York, New York 10048
INDEPENDENT ACCOUNTANTS
- ---------------------------------------
Price Waterhouse
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
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.
[LOGO]
Annual Report
December 31, 1993
<PAGE>
DEAN WITTER CALIFORNIA TAX-FREE INCOME FUND
GROWTH OF $10,000
($ IN THOUSANDS)
<TABLE>
<CAPTION>
LEHMAN MUNI BOND
DATE TOTAL INDEX
---- ----- ----------------
<S> <C> <C>
July 31, 1984 $10,000 $10,000
December 31, 1984 $10,611 $10,630
December 31, 1985 $12,630 $12,759
December 31, 1986 $14,952 $15,223
December 31, 1987 $14,548 $15,453
December 31, 1988 $16,182 $17,023
December 31, 1989 $17,725 $18,860
December 31, 1990 $18,733 $20,235
December 31, 1991 $20,640 $22,691
December 31, 1992 $22,256 $24,692
December 31, 1993 $24,698(3) $27,725
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS LIFE OF FUND
------- -------- ------------
<S> <C> <C> <C>
Non-Standard 10.97(1) 8.82(1) 10.12(1)
Standard (-CDSC) 5.97(2) 8.54(2) 10.12(2)
Fund Lehman (4)
------ ------
Past performance is not predictive of future returns.
<FN>
- -----------------------------
(1) Figure shown assumes reinvestment of all distributions and does not reflect
the deduction of any sales charges.
(2) Figure shown assumes reinvestment of all distributions and the deduction of
the maximum applicable contingent deferred sales charge (CDSC) (1 year-5%,
5 years-2%, since inception-0%). See the Fund's current prospectus for
complete details on fees and sales charges.
(3) Closing value, assuming a complete redemption on December 31, 1993.
(4) The Lehman Brothers Municipal Bond Index tracks the performance of
municipal bonds with maturities of 2 years or greater and a minimum credit
rating of Baa or BBB, as rated by Moody's Investors Service, Inc. or
Standard & Poor's Corp. The Index does not include any expenses, fees, or
charges.
</TABLE>
