<PAGE>
Morgan Stanley Dean Witter California Tax-Free Two World Trade Center,
Daily Income Trust New York, New York 10048
Letter to the Shareholders June 30, 2000
DEAR SHAREHOLDER:
The U.S. economic expansion stayed on course during the six-month period ended
June 30, 2000. Real personal consumption accelerated and unemployment reached a
30-year low. At the same time, a surge in oil prices heightened the risk of
inflation. In response, the Federal Reserve Board took added steps toward a more
restrictive monetary policy. The Fed raised the federal funds rate target three
times, by a total of 100 basis points, since February 2000, bringing the rate to
a nine-year high of 6.50 percent.
MUNICIPAL MONEY MARKET OVERVIEW
The rise in tax-free money market yields continued over the first half of 2000,
though at a slower pace than during the latter half of 1999. Yields for both
variable-rate and fixed-rate municipal money market instruments increased by
some 50 basis points on average from the previous six-month period. However, the
movement of yields was subject to the usual fluctuations stemming from seasonal
changes in the direction of cash flows. The trend toward higher interest rates
was interrupted in early January when heavy demand from new cash in the market
caused rates to drop temporarily. The rise in yields resumed when demand
subsided later in the month. Another marked departure from the measured pace
toward higher yields occurred in conjunction with the tax-payment season,
lasting from late April into early May, when yields took an exaggerated spike
upward.
The Bond Buyer One Year Note Index, a benchmark indicator for the longest
maturities in the tax-free money market sector, dropped modestly from 3.97
percent to 3.91 percent, its low for the first half of the year, during the
first week of January. The Index moved upward moderately to a level of 4.10
percent in mid April but then rose more than 50 basis points over the next
several weeks to a high of 4.64 percent in mid May. The Index settled down again
over the balance of the second quarter to end June at 4.29 percent for a net
increase of 32 basis points over the
<PAGE>
Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
Letter to the Shareholders June 30, 2000, continued
six-month period. Over the 12-month period beginning in June 1999, when the
Federal Reserve Board first embarked on a less accommodative monetary policy,
the Index increased by 90 basis points, from 3.39 percent to 4.29 percent.
Although yields for daily and weekly variable rate demand obligations (VRDOs)
also rose, their yield swings were much more pronounced because these
instruments are the ones utilized most frequently to meet changing cash flows.
Weekly VRDO yields moved over a range of nearly 300 basis points during the
six-month period, from a low of 2.95 percent in early January to a high of 5.85
percent in early May. In a year-over-year comparison, the average yield for
weekly VRDOs rose from 3.30 percent in June 1999 to 4.40 percent in June 2000.
PORTFOLIO MANAGEMENT AND PERFORMANCE
Morgan Stanley Dean Witter California Tax-Free Daily Income Trust's annualized
net investment income was 2.62 percent for the six-month period ended June 30,
2000. The Fund's 30-day moving average yield was 3.08 percent as of June 30,
2000.
On June 30, the Fund's net assets totaled $273 million with 68 percent of the
Fund's portfolio invested in VRDOs. California tax-exempt commercial paper and
municipal notes, the two other types of securities utilized in the portfolio,
accounted for 24 percent and 8 percent of the portfolio, respectively. 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 our investments.
At the end of June the Fund's average maturity was 38 days, up from 37 days at
the end of December. The Fund's average maturity is typically extended at
midyear with the purchase of newly issued one-year tax and revenue anticipation
notes (TRANs). However, our investments in TRANs were made more selectively this
year. Healthy municipal government balance sheets reduced the available supply
of cash flow notes. At the same time, a bias toward higher short-term interest
rates made commitments to longer fixed-rate notes less desirable.
LOOKING AHEAD
We expect the Federal Reserve Board to maintain its vigilant stance in its
efforts to contain inflation. Additional increases in short-term interest rates
remain a possibility if the central bank feels that economic momentum is not
slowing sufficiently. In this climate the Fund's average maturity is expected to
remain within a short to moderate range.
2
<PAGE>
Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
Letter to the Shareholders June 30, 2000, continued
We appreciate your ongoing support of Morgan Stanley Dean Witter California
Tax-Free Daily Income Trust and look forward to continuing to serve your
investment needs.
Very truly yours,
/s/ Charles A. Fiumefreddo /s/ Mitchell M. Merin
-------------------------- ----------------------
CHARLES A. FIUMEFREDDO MITCHELL M. MERIN
Chairman of the Board President
3
<PAGE>
Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
Portfolio of Investments June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON DEMAND
THOUSANDS RATE+ DATE* VALUE
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CALIFORNIA TAX-EXEMPT SHORT-TERM VARIABLE RATE MUNICIPAL OBLIGATIONS (70.3%)
$ 4,000 ABAG Finance Authority for Nonprofit Corporations, Episcopal Homes
Foundation Ser 2000 COPs ................................................... 4.40% 07/10/00 $ 4,000,000
4,525 Alameda-Contra Costa Schools Financing Authority, Capital Improvements
Ser F COPs ................................................................. 4.40 07/10/00 4,525,000
California Educational Facilities Authority,
10,300 California Institute of Technology Ser 1994 ................................ 4.30 07/10/00 10,300,000
8,275 Stanford University Ser L-2 ................................................ 4.30 07/10/00 8,275,000
California Health Facilities Financing Authority,
9,000 Adventist Health System/West 1998 Ser B (MBIA) ............................. 4.00 07/03/00 9,000,000
8,000 Memorial Health Services 1994 Ser** ........................................ 4.40 07/10/00 8,000,000
1,705 St Joseph Health System Ser 1985A .......................................... 4.15 07/03/00 1,705,000
California Pollution Control Financing Authority,
1,175 Chevron USA Inc Ser 1983 ................................................... 3.80 11/15/00 1,175,165
5,000 Chevron USA Inc Ser 1984B .................................................. 4.25 06/15/01 5,000,692
5,400 Pacific Gas & Electric Co 1996 Ser F & 1997 Ser A .......................... 4.00 07/03/00 5,400,000
10,000 California Public Capital Improvements Financing Authority, Pooled
Ser 1988 C ................................................................. 4.00 09/15/00 10,000,000
California Statewide Communities Development Authority,
3,025 House Ear Institute 1993 Ser A COPs ........................................ 4.00 07/03/00 3,025,000
5,000 St Joseph Health System COPs ............................................... 4.35 07/10/00 5,000,000
5,000 Eastern Municipal Water District, Water & Sewer Ser 1993B COPs (FGIC) ........ 4.25 07/10/00 5,000,000
2,900 Irvine, Assessment District No. 87-8 Improvement Bond Act 1915 ............... 4.15 07/03/00 2,900,000
2,500 Irvine Ranch Water District, 1986 Capital Improvement COPs ................... 3.50 07/03/00 2,500,000
9,330 Los Angeles, Multi-Family 1985 Ser K ......................................... 4.40 07/10/00 9,330,000
4,990 Los Angeles County Metropolitan Transportation Authority, Prop C Sales
Tax Refg Ser 1993-A (MBIA)** ............................................... 4.25 07/10/00 4,990,000
10,000 Los Angeles Department of Water & Power, Electric Plant Second Issue of
2000 Ser A ................................................................. 4.25 07/10/00 10,000,000
6,000 Metropolitan Water District of Southern California, Water 1998 Ser C ......... 4.15 07/10/00 6,000,000
5,500 Monterey County Financing Authority, 1995 Ser A .............................. 4.30 07/10/00 5,500,000
9,500 Newport Beach, Hoag Memorial Hospital Presbyterian Ser 1992 &
1996 Ser B ................................................................. 4.25 07/03/00 9,500,000
9,600 Oakland-Alameda County Coliseum Authority, Oakland Coliseum
2000 Refg Ser C-2 .......................................................... 4.30 07/10/00 9,600,000
5,000 Oakland Joint Powers Financing Authority, 1998 Ser A-2 (FSA) ................. 4.25 07/10/00 5,000,000
6,000 Rancho California Water District Financing Authority, Ser of 1998A (FGIC) 4.25 07/10/00 6,000,000
7,900 Sacramento County, Administration Center & Courthouse 1990 COPs .............. 4.35 07/10/00 7,900,000
9,000 Southern California Public Power Authority, Transmission 1991 Sub Refg
Ser (AMBAC) ................................................................ 4.30 07/10/00 9,000,000
5,000 Stanislaus Waste-to-Energy Financing Agency, Ogden Martin Systems Inc.
Ser 2000 (MBIA) ............................................................ 4.35 07/10/00 5,000,000
10,000 West Basin Municipal Water District, Ser 1997B COPs .......................... 4.25 07/10/00 10,000,000
</TABLE>
See Notes to Financial Statements
4
<PAGE>
Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
Portfolio of Investments June 30, 2000 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON DEMAND
THOUSANDS RATE+ DATE* VALUE
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PUERTO RICO
$ 8,500 Puerto Rico Highway & Transportation Authority, Transportation 1998
Ser A (AMBAC) ................................................... 4.25% 07/10/00 $ 8,500,000
------------
TOTAL CALIFORNIA TAX-EXEMPT SHORT-TERM VARIABLE RATE MUNICIPAL OBLIGATIONS
(Cost $192,125,857) ....................................................................... 192,125,857
------------
</TABLE>
<TABLE>
<CAPTION>
YIELD TO
MATURITY
COUPON MATURITY ON DATE OF
RATE DATE PURCHASE
---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
CALIFORNIA TAX-EXEMPT COMMERCIAL PAPER (25.0%) .............
4,000 California Pollution Control Financing Authority,
Southern California Edison Co Ser 1985 A ................. 4.10 % 07/19/00 4.10% 4,000,000
3,500 East Bay Municipal Utility District, Water ................. 3.25 07/27/00 3.25 3,500,000
7,000 Los Angeles, Wastewater Ser 1997 ........................... 3.30 07/13/00 3.30 7,000,000
Los Angeles County Metropolitan Transportation Authority,
5,000 Sales Tax Ser A .......................................... 4.20 08/09/00 4.20 5,000,000
5,000 Sales Tax Ser A .......................................... 3.85 09/07/00 3.85 5,000,000
San Diego,
5,000 San Diego Gas & Electric Co 1995 Ser B ................... 4.20 08/10/00 4.20 5,000,000
2,500 San Diego Gas & Electric Co 1995 Ser B ................... 3.80 09/12/00 3.80 2,500,000
4,000 San Diego Gas & Electric Co 1995 Ser B ................... 3.95 10/16/00 3.95 4,000,000
San Diego County Regional Transportation Commission,
6,300 Ser A .................................................... 3.30 07/11/00 3.30 6,300,000
6,300 Ser A .................................................... 3.35 08/10/00 3.35 6,300,000
San Diego County Water Authority,
4,700 Ser # 1 .................................................. 3.95 08/14/00 3.95 4,700,000
6,000 Ser # 1 .................................................. 3.80 09/12/00 3.80 6,000,000
5,000 University of California Regents, Ser A .................... 3.20 07/20/00 3.20 5,000,000
PUERTO RICO
4,000 Puerto Rico Government Development Bank, Ser 1996 .......... 3.35 08/17/00 3.35 4,000,000
---------
TOTAL CALIFORNIA TAX-EXEMPT COMMERCIAL PAPER
(Cost $68,300,000) ............................................................................. 68,300,000
----------
CALIFORNIA TAX-EXEMPT SHORT-TERM MUNICIPAL NOTES (8.4%)
3,000 Alameda County, Ser 1999-2000 TRANs, dtd 07/08/99 .......... 4.00 07/07/00 3.32 3,000,324
California School Cash Reserve Program Authority,
10,000 1999 Pool Ser A (AMBAC), dtd 07/02/99 .................... 4.00 07/03/00 3.10 10,000,477
10,000 2000 Pool Ser A (AMBAC), dtd 07/03/00 (WI) ............... 5.25 07/03/01 4.27 10,093,900
----------
TOTAL CALIFORNIA TAX-EXEMPT SHORT-TERM MUNICIPAL NOTES
(Cost $23,094,701) ............................................................................. 23,094,701
----------
</TABLE>
See Notes to Financial Statements
5
<PAGE>
Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
Portfolio of Investments June 30, 2000 (unaudited) continued
<TABLE>
<CAPTION>
VALUE
--------------------------------------------------------------------------------
<S> <C> <C> <C>
TOTAL INVESTMENTS (Cost $283,520,558) (a) 103.7 % $283,520,558
LIABILITIES IN EXCESS OF OTHER ASSETS .. (3.7) (10,139,964)
----- ------------
NET ASSETS ............................. 100.0 % $273,380,594
===== ============
</TABLE>
---------------
COPs Certificates of Participation.
TRANs Tax Revenue Anticipation Notes.
WI Security purchased on a "when-issued" basis.
+ Rate shown is rate in effect at June 30, 2000.
* Date on which the principal amount can be recovered through demand.
** All or a portion of these securities are segregated in connection with
the purchase of a "when-issued" security.
(a) Cost is the same for federal income tax purposes.
Bond Insurance:
---------------
AMBAC AMBAC Assurance Corporation.
FGIC Financial Guaranty Insurance Company.
FSA Financial Security Assurance Inc.
MBIA Municipal Bond Investors Assurance Corporation.
See Notes to Financial Statements
6
<PAGE>
Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000 (unaudited)
ASSETS:
Investments in securities, at value
(cost $283,520,558) .................................... $283,520,558
Cash ..................................................... 590,441
Interest receivable ...................................... 1,816,784
Prepaid expenses and other assets ........................ 12,451
------------
TOTAL ASSETS ........................................... 285,940,234
------------
LIABILITIES:
Payable for:
Investments purchased ................................. 10,093,900
Shares of beneficial interest repurchased ............. 2,227,398
Investment management fee ............................. 115,267
Plan of distribution fee .............................. 23,053
Accrued expenses ......................................... 100,022
------------
TOTAL LIABILITIES ..................................... 12,559,640
------------
NET ASSETS ............................................... $273,380,594
============
COMPOSITION OF NET ASSETS:
Paid-in-capital .......................................... $273,387,543
Accumulated undistributed net investment income .......... 97
Accumulated net realized loss ............................ (7,046)
------------
NET ASSETS ............................................ $273,380,594
============
NET ASSET VALUE PER SHARE,
273,387,543 shares outstanding
(unlimited shares authorized of $.01 par value)......... $1.00
=====
See Notes to Financial Statements
7
<PAGE>
Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
Financial Statements, continued
STATEMENT OF OPERATIONS
For the six months ended June 30, 2000 (unaudited)
NET INVESTMENT INCOME:
INTEREST INCOME ............................................... $4,635,471
----------
EXPENSES
Investment management fee ..................................... 695,237
Plan of distribution fee ...................................... 137,888
Transfer agent fees and expenses .............................. 69,030
Professional fees ............................................. 31,974
Shareholder reports and notices ............................... 31,343
Trustees' fees and expenses ................................... 9,277
Custodian fees ................................................ 7,267
Other ......................................................... 3,102
----------
TOTAL EXPENSES ............................................. 985,118
Less: expense offset .......................................... (7,257)
----------
NET EXPENSES ............................................... 977,861
----------
NET INVESTMENT INCOME ...................................... 3,657,610
NET REALIZED LOSS .......................................... (7,046)
----------
NET INCREASE .................................................. $3,650,564
==========
See Notes to Financial Statements
8
<PAGE>
Morgan Stanley Dean Witter California 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, 2000 DECEMBER 31, 1999
--------------- ------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ........................................ $ 3,657,610 $ 6,141,124
Net realized loss ............................................ (7,046) -
------------ ------------
NET INCREASE .............................................. 3,650,564 6,141,124
Dividends to shareholders from net investment income ......... (3,657,558) (6,141,182)
Net decrease from transactions in shares of beneficial
interest ................................................... (8,153,009) (1,841,695)
------------ ------------
NET DECREASE .............................................. (8,160,003) (1,841,753)
NET ASSETS:
Beginning of period .......................................... 281,540,597 283,382,350
------------ ------------
END OF PERIOD
(Including undistributed net investment income of
$97 and $45, respectively) ................................ $273,380,594 $281,540,597
============ ============
</TABLE>
See Notes to Financial Statements
9
<PAGE>
Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
Notes to Financial Statements June 30, 2000 (unaudited)
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley Dean Witter California 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 and California income tax, consistent with stability of principal and
liquidity. The Fund was organized as a Massachusetts business trust on April 25,
1988 and commenced operations on July 22, 1988.
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 Morgan Stanley Dean Witter
Advisors 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 the
daily net assets exceeding $1 billion but not exceeding $1.5 billion; 0.325% to
the
10
<PAGE>
Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
Notes to Financial Statements June 30, 2000 (unaudited) continued
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.
3. PLAN OF DISTRIBUTION
Morgan Stanley 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.
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 during the month. Expenses incurred by the Distributor pursuant
to the Plan in any fiscal year will not be reimbursed by the Fund through
payments accrued in any subsequent fiscal year. For the six months ended June
30, 2000, 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, 2000 aggregated $314,948,900 and $311,470,650,
respectively.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At June 30, 2000, the Fund had
transfer agent fees and expenses payable of approximately $1,500.
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, 2000
included in Trustees' fees and expenses in the Statement of Operations amounted
to $2,970. At June 30, 2000, the Fund had an accrued pension liability of
$51,839 which is included in accrued expenses in the Statement of Assets and
Liabilities.
11
<PAGE>
Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
Notes to Financial Statements June 30, 2000 (unaudited) continued
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, 2000 DECEMBER 31, 1999
----------------- ------------------
(unaudited)
<S> <C> <C>
Shares sold ........................................ 288,012,090 466,839,199
Shares issued in reinvestment of dividends ......... 3,657,558 6,141,182
----------- -----------
291,669,648 472,980,381
Shares repurchased ................................. (299,822,657) (474,822,076)
------------ ------------
Net decrease in shares outstanding ................. (8,153,009) (1,841,695)
============ ============
</TABLE>
12
<PAGE>
Morgan Stanley Dean Witter California 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, 2000 1999 1998 1997 1996 1995
------------------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA:
Net asset value, beginning of period ......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------
Net income from investments operations ....... 0.013 0.023 0.025 0.028 0.026 0.030
Less dividends from net investment income .... (0.013) (0.023) (0.025) (0.028) (0.026) (0.030)
------ ------ ------ ------ ------ ------
Net asset value, end of period ............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ====== ======
TOTAL RETURN ................................. 1.32%(1) 2.28% 2.54% 2.83% 2.68% 3.04%
RATIOS TO AVERAGE NET ASSETS:
Expenses ..................................... 0.71%(2)(3) 0.72%(3) 0.70%(3) 0.72%(3) 0.72%(3) 0.75%(3)
Net investment income ........................ 2.62%(2) 2.25% 2.50% 2.79% 2.63% 3.00%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ...... $273,381 $281,541 $283,382 $287,001 $259,590 $254,376
</TABLE>
-------------
(1) Not annualized.
(2) Annualized.
(3) Does not reflect the effect of expense offset of 0.01%.
See Notes to Financial Statements
13
<PAGE>
Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
Change in Independent Accountants
On July 1, 2000 PricewaterhouseCoopers LLP resigned as independent accountants
of the Fund.
The reports of PricewaterhouseCoopers LLP on the financial statements of the
Fund for the past two fiscal years contained no adverse opinion or disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope or
accounting principle.
In connection with its audits for the two most recent fiscal years and through
July 1, 2000, there have been no disagreements with PricewaterhouseCoopers LLP
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements if not resolved
to the satisfaction of PricewaterhouseCoopers LLP would have caused them to make
reference thereto in their report on the financial statements for such years.
The Fund, with the approval of its Board of Trustees and its Audit Committee,
engaged Deloitte & Touche LLP as its new independent accountants as of July 1,
2000.
14
<PAGE>
TRUSTEES
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
Wayne E. Hedien
James F. Higgins
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Mitchell M. Merin
President
Barry Fink
Vice President, Secretary and General Counsel
Katherine H. Stromberg
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Morgan Stanley Dean Witter Trust FSB
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Deloitte & Touche LLP
Two World Financial Center
New York, New York 10281
INVESTMENT MANAGER
Morgan Stanley Dean Witter Advisors 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 an 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.
Read the prospectus carefully before investing.
Morgan Stanley Dean Witter Distributors Inc., member NASD.
MORGAN STANLEY
DEAN WITTER
CALIFORNIA
TAX-FREE DAILY
INCOME TRUST
[GRAPHIC OMITTED]
SEMIANNUAL REPORT
June 30, 2000
