<PAGE> 1
ACTIVE ASSETS CALIFORNIA TAX-FREE TRUST Two World Trade Center, New York, New
York 10048
LETTER TO THE SHAREHOLDERS December 31, 1996
DEAR SHAREHOLDER:
We are pleased to present the semiannual report on the operations of Active
Assets California Tax-Free Trust for the six-month period ended December 31,
1996.
Tax-free money market interest rates edged lower during the second half of 1996,
but there was little change in yields for the calendar year. Following its
modest quarter-point nudge toward lower rates in late January, the Federal
Reserve Board remained on the sidelines for the balance of 1996. There appeared
to be little need to change monetary policy given the sporadic nature of
economic growth and the moderate rate of inflation. Fluctuations in municipal
money market rates stemmed largely from changes in supply and demand arising
from money fund cash flows.
The Bond Buyer One-Year Note Index, a benchmark indicator of long municipal
money market yields, declined 37 basis points from 3.88 percent at the end of
June to 3.51 percent at the end of December. For all of 1996, however, the net
change in the Index was just nine basis points and reflected the stable
short-term interest rate atmosphere. At the end of 1996, the ratio of the Index
yield to the yield for one-year U.S. Treasury bills was 64 percent, compared
with 69 percent at the end of 1995. The decline in the ratio meant municipal
note yields became less attractive relative to Treasuries as the year
progressed.
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 seasonal
timing of highs and lows. As in prior years, yields declined at the start of
each quarter when demand was strong and rose with each quarter end when cash
outflows were heavy. During the second half of the year, the low for weekly
VRDOs was set in early July at 2.35 percent and the high of 4.00 percent was
recorded at the end of December.
<PAGE> 2
ACTIVE ASSETS CALIFORNIA TAX-FREE TRUST
LETTER TO THE SHAREHOLDERS December 31, 1996, continued
PORTFOLIO MANAGEMENT AND PERFORMANCE
Active Assets California Tax-Free Trust's total return for the six-month period
ended December 31, 1996, was 1.40 percent. Thirty-day yields ranged from a low
of 2.44 percent for the month of July to a high of 2.84 percent for the month of
December.
The Trust's net assets totaled $437 million with 73 percent of the Trust's
portfolio invested in VRDOs. California-exempt commercial paper and municipal
notes, the two other types of securities utilized in the portfolio, comprised 17
percent and 10 percent of the portfolio, respectively.
Holdings are continuously reviewed to maintain the portfolio's high quality.
Particular effort is devoted to monitoring the creditworthiness of institutions
that provide credit enhancement and/or liquidity facilities to the debt
obligations.
In early July, the Trust's weighted average maturity extended beyond 60 days to
take advantage of the attractive yields available while the market digested a
heavy seasonal slate of new one-year note financings. As supply abated and
one-year yields moved to lower levels, the Trust's weighted average maturity
returned to a moderate range of approximately 40 to 60 days for the balance of
1996. At the end of December, the Trust's average maturity was 41 days.
LOOKING AHEAD
Market participants continue to express concern that prolonged economic strength
will eventually lead to an increase in the rate of inflation. The Federal
Reserve Board appears to be on the alert for price pressures that might call for
tightening of monetary policy. With market sentiment vacillating with the
release of each new economic statistic, the weighted average maturity of the
Trust's portfolio is expected to be maintained in the 30 - to 60 -day range for
flexibility.
We appreciate your support of Active Assets California Tax-Free Trust and look
forward to continuing to serve your investment needs and objectives.
Very truly yours,
/s/ C. FIUMEFREDDO
CHARLES A. FIUMEFREDDO
Chairman of the Board
<PAGE> 3
ACTIVE ASSETS CALIFORNIA TAX-FREE TRUST
PORTFOLIO OF INVESTMENTS December 31, 1996 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON DEMAND
THOUSANDS RATE+ DATE* VALUE
- --------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CALIFORNIA TAX-EXEMPT SHORT-TERM VARIABLE RATE MUNICIPAL OBLIGATIONS
(72.6%)
$ 4,000 Big Bear Lake, Southwest Gas Corp 1993 Ser A (AMT)...................... 4.00% 01/08/97 $ 4,000,000
11,970 California Alternative Energy Financing Authority, General Electric
Capital Corp -Arroyo Energy Ser 1993 B (AMT).......................... 4.05 01/08/97 11,970,000
California Educational Facilities Authority,
10,000 California Institute of Technology Ser 1994............................. 3.95 01/08/97 10,000,000
5,775 Stanford University Ser I-2............................................. 3.70 01/08/97 5,775,000
California Health Facilities Financing Authority,
2,600 Catholic HealthCare West 1988 Ser A..................................... 4.00 01/08/97 2,600,000
3,800 Childrens Hospital of Orange County Ser 1991 (MBIA)..................... 4.00 01/08/97 3,800,000
6,900 Kaiser Permanente Ser 1993 A............................................ 4.00 01/08/97 6,900,000
10,800 Memorial Health Services Ser 1994....................................... 4.00 01/08/97 10,800,000
9,900 St Francis Medical Center 1995 Ser E (MBIA)............................. 4.00 01/08/97 9,900,000
5,700 St Joseph Health System Ser 1991 B...................................... 5.10 01/02/97 5,700,000
16,200 Sutter/California Healthcare System Ser 1996 B.......................... 5.10 01/02/97 16,200,000
5,000 California Housing Finance Agency, Home Mtg 1996 Ser J (AMT)............ 4.00 07/24/97 5,000,000
California Pollution Control Financing Authority,
2,720 Chevron USA Inc Ser 1983................................................ 3.90 11/17/97 2,726,424
7,300 Chevron USA Inc Ser 1984 B.............................................. 3.70 06/16/97 7,305,780
1,750 Noranda-Grey Eagle Mines Inc 1984 Ser B................................. 3.60 01/08/97 1,750,000
10,000 Pacific Gas & Electric Co Ser 1996 B (AMT).............................. 4.00 01/08/97 10,000,000
9,000 Shell Oil Co 1996 Ser A (AMT)........................................... 4.70 01/02/97 9,000,000
14,000 Southern California Edison Co 1986 Ser A................................ 4.70 01/02/97 14,000,000
5,000 Stanislaus Inc Ser 1987 (AMT)........................................... 5.05 01/02/97 5,000,000
16,500 California Public Capital Improvements Financing Authority, Pooled Ser
1988 C................................................................. 3.65 03/17/97 16,500,000
California Statewide Communities Development Authority,
4,934 House Ear Institute 1993 Ser A COPs..................................... 4.80 01/02/97 4,934,000
9,000 Kaiser Permanente Ser 1995 COPs......................................... 4.00 01/08/97 9,000,000
5,000 Chula Vista, San Diego Gas & Electric Co Ser 1996 B (AMT)............... 4.75 01/02/97 5,000,000
16,000 Foothill/Eastern Transportation Corridor Agency, Toll Road Ser 1995 C... 3.90 01/08/97 16,000,000
10,000 Long Beach, Memorial Health Services Ser 1991........................... 4.00 01/08/97 10,000,000
Los Angeles, Multi-Family
2,900 1985 Ser K.............................................................. 3.55 01/08/97 2,900,000
3,300 1994 Ser A (AMT)........................................................ 5.25 01/02/97 3,300,000
8,000 Los Angeles County Metropolitan Transportation Authority, Prop C
Sales Tax Refg Ser 1993 A (MBIA)...................................... 4.00 01/08/97 8,000,000
20,200 Newport Beach, Hoag Memorial Presbyterian Ser 1992 & 1996C.............. 5.15 01/02/97 20,200,000
5,000 Northern California Power Agency, Geothermal No 3 1996 Ser A (AMBAC).... 3.85 01/08/97 5,000,000
4,600 Ontario Redevelopment Agency, Daisy XX Assoc Ltd Ser 1984............... 4.00 01/08/97 4,600,000
3,900 Redlands, Orange Village Apts 1988 Ser A (AMT).......................... 4.25 01/08/97 3,900,000
3,700 Redlands Public Improvement Corporation, 1993 Water COPs (FGIC)......... 4.00 01/08/97 3,700,000
15,000 Riverside County, 1996 -97 Ser B TRANs.................................. 3.90 01/08/97 15,000,000
5,400 Sacramento County, Administration Center & Courthouse Ser 1990 COPs..... 3.75 01/08/97 5,400,000
4,000 San Bernardino County, 1996 County Center Refinancing COPs.............. 4.00 01/08/97 4,000,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 4
ACTIVE ASSETS CALIFORNIA TAX-FREE TRUST
PORTFOLIO OF INVESTMENTS December 31, 1996 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON DEMAND
THOUSANDS RATE+ DATE* VALUE
- ------------
<C> <S> <C> <C> <C>
$ 6,900 Santa Clara County-El Camino Hospital District Hospital Facilities
Authority,
Valley Medical Center 1985 Ser A........................................ 2.70% 01/08/97 $ 6,900,000
5,600 Santa Clara County Financing Authority, Valley Medical Center 1994 Ser
B...................................................................... 4.00 01/08/97 5,600,000
Southern California Public Power Authority,
14,700 Transmission 1991 Refg Ser (AMBAC)...................................... 3.90 01/08/97 14,700,000
6,000 Transmission 1996 Refg Ser B (FSA)...................................... 4.00 01/08/97 6,000,000
4,310 Turlock, Irrigation District Ser 1988 A................................. 4.00 01/08/97 4,310,000
------------
TOTAL CALIFORNIA TAX-EXEMPT SHORT-TERM VARIABLE RATE MUNICIPAL
OBLIGATIONS (Amortized Cost $317,371,204)....................................................... 317,371,204
------------
</TABLE>
<TABLE>
<CAPTION>
YIELD TO
MATURITY
COUPON MATURITY ON DATE OF
RATE DATE PURCHASE
------- --------- ----------
<C> <S> <C> <C> <C> <C>
CALIFORNIA TAX-EXEMPT COMMERCIAL PAPER (16.6%)
California Pollution Control Financing Authority,
3,000 Southern California Edison Co Ser 1985 A.................. 3.40% 02/06/97 3.40% 3,000,000
2,100 Southern California Edison Co Ser 1985 B.................. 3.40 02/20/97 3.40 2,100,000
5,000 Thermal Energy Development Partnership Ser A (AMT)........ 3.60 02/13/97 3.60 5,000,000
5,000 Chula Vista, San Diego Gas & Electric Co Ser 1992 C
(AMT).................................................... 3.45 02/25/97 3.45 5,000,000
East Bay Municipal Utility District,
4,000 Water System.............................................. 3.40 01/30/97 3.40 4,000,000
5,000 Water System.............................................. 3.40 03/11/97 3.40 5,000,000
Los Angeles Department of Water & Power,
5,600 Electric.................................................. 3.55 02/10/97 3.55 5,600,000
4,000 Electric.................................................. 3.60 02/26/97 3.60 4,000,000
Sacramento Municipal Utility District,
5,000 Ser I..................................................... 3.30 01/28/97 3.30 5,000,000
5,000 Ser I..................................................... 3.30 02/28/97 3.30 5,000,000
6,700 San Diego, San Diego Gas & Electric Co Ser 1995 B......... 3.45 02/12/97 3.45 6,700,000
6,000 University of California Regents, Ser A................... 3.45 02/19/97 3.45 6,000,000
West & Central Basin Financing Authority,
2,500 West Basin Municipal Water District TRANs................. 3.30 02/11/97 3.30 2,500,000
4,000 West Basin Municipal Water District TRANs................. 3.40 02/11/97 3.40 4,000,000
Puerto Rico Government Development Bank,
4,500 Ser 1996.................................................. 3.50 03/07/97 3.50 4,500,000
5,000 Ser 1996.................................................. 3.35 03/12/97 3.35 5,000,000
----------
TOTAL CALIFORNIA TAX-EXEMPT COMMERCIAL PAPER
(Amortized Cost $72,400,000)...................................................................... 72,400,000
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 5
ACTIVE ASSETS CALIFORNIA TAX-FREE TRUST
PORTFOLIO OF INVESTMENTS December 31, 1996 (unaudited) continued
<TABLE>
<CAPTION>
YIELD TO
PRINCIPAL MATURITY
AMOUNT IN COUPON MATURITY ON DATE OF
THOUSANDS RATE DATE PURCHASE VALUE
<C> <S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
<C> <S> <C> <C> <C> <C>
CALIFORNIA TAX-EXEMPT SHORT-TERM MUNICIPAL NOTES (10.2%)
$13,000 Contra Costa County, 1996 -1997 TRANs, dtd 07/01/96....... 4.50% 07/03/97 3.75% $ 13,046,927
7,000 Riverside County, 1996 -97 Ser A TRANs, dtd 07/01/96...... 4.50 06/30/97 3.90 7,019,904
7,000 San Bernadino County, 1996 -97 TRANs, dtd 07/01/96........ 4.50 06/30/97 3.875 7,020,769
10,000 San Diego, 1996 -97 Ser A TANs, dtd 07/02/96.............. 4.50 07/02/97 3.75 10,036,001
7,500 Ventura County, Ser 1996 TRANs, dtd 07/02/96.............. 4.75 07/02/97 3.85 7,532,386
------------
TOTAL CALIFORNIA TAX-EXEMPT SHORT-TERM MUNICIPAL NOTES
(Amortized Cost $44,655,987)..................................................................... 44,655,987
------------
TOTAL INVESTMENTS (Amortized Cost $434,427,191) (a)......................................... 99.4% 434,427,191
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES............................................... 0.6 2,592,948
----- ------------
NET ASSETS..................................................................................100.0% $437,020,139
===== ============
</TABLE>
- ---------------------
<TABLE>
<C> <S>
AMT Alternative Minimum Tax.
COPs Certificates of Participation.
TANs Tax Anticipation Notes.
TRANs Tax and Revenue Anticipation Notes.
+ Rate shown is rate in effect at December 31, 1996.
* 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.
MBIA Municipal Bond Investors Assurance Corporation.
FSA Financial Security Assurance Inc.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 6
ACTIVE ASSETS CALIFORNIA TAX-FREE TRUST
FINANCIAL STATEMENTS
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1996 (unaudited)
ASSETS:
Investments in securities, at value
(amortized cost $434,427,191)........... $434,427,191
Cash..................................... 244,569
Interest receivable...................... 2,661,720
Prepaid expenses......................... 10,438
----------
TOTAL ASSETS......................... 437,343,918
------------
LIABILITIES:
Payable for:
Investment management fee............ 190,353
Plan of distribution fee............. 38,071
Shares of beneficial interest
repurchased......................... 501
Accrued expenses......................... 94,854
------------
TOTAL LIABILITIES.................... 323,779
------------
NET ASSETS:
Paid-in-capital.......................... 437,031,775
Accumulated undistributed net investment
income.................................. 228
Accumulated net realized loss............ (11,864)
------------
NET ASSETS........................... $437,020,139
============
NET ASSET VALUE PER SHARE,
437,031,775 shares outstanding
(unlimited shares authorized of $.01 par
value).................................. $1.00
====
STATEMENT OF OPERATIONS
For the six months ended December 31, 1996 (unaudited)
NET INVESTMENT INCOME:
INTEREST INCOME.......................... $ 7,206,685
----------
EXPENSES
Investment management fee................ 1,063,005
Plan of distribution fee................. 212,601
Transfer agent fees and expenses......... 37,880
Shareholder reports and notices.......... 25,499
Professional fees........................ 25,290
Registration fees........................ 21,648
Custodian fees........................... 15,693
Trustees' fees and expenses.............. 8,724
Organizational expenses.................. 3,487
Other.................................... 3,973
----------
TOTAL EXPENSES....................... 1,417,800
LESS: EXPENSE OFFSET................. (6,039)
----------
NET EXPENSES......................... 1,411,761
----------
NET INVESTMENT INCOME AND NET INCREASE... $ 5,794,924
==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 7
ACTIVE ASSETS CALIFORNIA TAX-FREE TRUST
FINANCIAL STATEMENTS, continued
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX
MONTHS ENDED FOR THE YEAR
DECEMBER 31, ENDED
1996 JUNE 30, 1996
- ---------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income............................. $ 5,794,924 $ 9,940,621
Net realized gain................................. -- 5,093
------------ -------------
NET INCREASE.................................. 5,794,924 9,945,714
Dividends from net investment income.............. (5,794,781) (9,940,586)
Net increase from transactions in shares of
beneficial interest.............................. 52,801,832 70,646,849
------------ -------------
NET INCREASE.................................. 52,801,975 70,651,977
NET ASSETS:
Beginning of period............................... 384,218,164 313,566,187
------------ ------------
END OF PERIOD
(Including undistributed net investment income
of $228 and $85, respectively)................ $437,020,139 $384,218,164
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 8
ACTIVE ASSETS CALIFORNIA TAX-FREE TRUST
NOTES TO FINANCIAL STATEMENTS December 31, 1996 (unaudited)
1. ORGANIZATION AND ACCOUNTING POLICIES
Active Assets California Tax-Free Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as a diversified,
open-end management investment company. The Trust'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 Trust was
organized as a Massachusetts business trust on July 10, 1991 and commenced
operations on November 12, 1991.
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 Trust 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 Trust'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 Trust records dividends
and distributions to shareholders as of the close of each business day.
E. ORGANIZATIONAL EXPENSES -- Dean Witter InterCapital Inc. (the "Investment
Manager") paid the organizational expenses of the Trust in the amount of
approximately $46,500 which have been reimbursed for the full amount thereof.
Such expenses were fully amortized as of November 12, 1996.
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement, the Trust pays the Investment
Manager a management fee, accrued daily and payable monthly, by applying the
following annual rates to the net assets of the Trust 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
<PAGE> 9
ACTIVE ASSETS CALIFORNIA TAX-FREE TRUST
NOTES TO FINANCIAL STATEMENTS December 31, 1996 (unaudited) continued
$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
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 Trust's
investments, the Investment Manager maintains certain of the Trust'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 Trust 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 Trust.
3. PLAN OF DISTRIBUTION
Dean Witter Distributors Inc. (the "Distributor"), an affiliate of the
Investment Manager, is the distributor of the Trust'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 Trust, 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 Trust's shares; (3) expenses incurred in connection with promoting sales of
the Trust'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 Trust is authorized to reimburse the Distributor for specific expenses the
Distributor incurs or plans to incur in promoting the distribution of the
Trust'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 Trust'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 Trust
through payments accrued in any subsequent fiscal year. For the six months ended
December 31, 1996, the distribution fee was accrued at the annual rate of 0.10%.
<PAGE> 10
ACTIVE ASSETS CALIFORNIA TAX-FREE TRUST
NOTES TO FINANCIAL STATEMENTS December 31, 1996 (unaudited) continued
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales/maturities of portfolio securities
for the six months ended December 31, 1996 aggregated $380,210,000 and
$376,396,000, respectively.
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Trust's transfer agent. At December 31, 1996, the Trust had
transfer agent fees and expenses payable of approximately $6,100.
The Trust has an unfunded noncontributory defined benefit pension plan covering
all independent Trustees of the Trust who will have served as an independent
Trustee 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 cost for the six months ended December 31, 1996
included in Trustees' fees and expenses in the Statement of Operations amounted
to $2,563. At December 31, 1996, the Trust had an accrued pension liability of
$32,390 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 YEAR
ENDED
JUNE 30, 1996
FOR THE SIX --------------
MONTHS ENDED
DECEMBER 31, 1996
-----------------
(unaudited)
<S> <C> <C>
Shares sold.......................................................................... 787,726,139 1,301,311,516
Shares issued in reinvestment of dividends........................................... 5,794,781 9,940,586
------------ --------------
793,520,920 1,311,252,102
Shares repurchased................................................................... (740,719,088) (1,240,605,253)
------------ --------------
Net increase in shares outstanding................................................... 52,801,832 70,646,849
============ ==============
</TABLE>
6. FEDERAL INCOME TAX STATUS
At June 30, 1996, the Trust had a capital loss carryover of approximately
$11,800 of which $10,900 will be available through June 30, 2002 and $900 will
be available through June 30, 2003 to offset future capital gains to the extent
provided by regulations. During the year ended June 30, 1996, the Trust had
utilized capital loss carryovers of approximately $5,100.
<PAGE> 11
ACTIVE ASSETS CALIFORNIA TAX-FREE 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 JUNE 30
MONTHS ENDED -------------------------------------
DECEMBER 31, 1996 1996 1995
- ----------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period......... $ 1.00 $ 1.00 $ 1.00
--------- ----- -----
Net investment income........................ 0.014 0.028 0.029
Less dividends from net investment income.... (0.014) (0.028) (0.029)
--------- ----- -----
Net asset value, end of period............... $ 1.00 $ 1.00 $ 1.00
========= ===== =====
TOTAL INVESTMENT RETURN+..................... 1.40%(1) 2.82% 2.89%
RATIOS TO AVERAGE NET ASSETS:
Expenses..................................... 0.67%(2)(4) 0.67% 0.67%
Net investment income........................ 2.73%(2) 2.79% 2.86%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands...... $437,020 $384,218 $313,566
<CAPTION>
FOR THE YEAR ENDED JUNE 30, FOR THE PERIOD
--------------------------- THROUGH
1994 1993 JUNE 30, 1992
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period......... $ 1.00 $ 1.00 $ 1.00
----- ----- ----------
Net investment income........................ 0.018 0.018 0.017
Less dividends from net investment income.... (0.018) (0.018) (0.017)
----- ----- ----------
Net asset value, end of period............... $ 1.00 $ 1.00 $ 1.00
===== ===== ==========
TOTAL INVESTMENT RETURN+..................... 1.78% 1.84% 1.66%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses..................................... 0.68% 0.71% 0.56%(2)(3)
Net investment income........................ 1.77% 1.82% 2.42%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands...... $288,506 $202,149 $170,364
</TABLE>
- ---------------------
* Commencement of operations.
+ Calculated based on the net asset value as of the last business day of the
period.
(1) Not annualized.
(2) Annualized.
(3) If the Trust had borne all expenses that were assumed or waived by the
Investment Manager, the above annualized expense and net investment income
ratios would have been 0.80% and 2.18%, respectively.
(4) The above ratio does not reflect the effect of expense offsets of 0.01%.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 12
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 Trust 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
Trust. For more detailed information about the Trust, its officers and trustees,
fees, expenses and other pertinent information, please see the prospectus of
the Trust.
This report is not authorized for distribution to prospective investors in the
Trust unless preceded or accompanied by an effective prospectus.
Active
Assets (R)
Account
Active Assets
California
Tax-Free Trust
SEMIANNUAL REPORT
DECEMBER 31, 1996
