-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, V10KlhDao4inUu/6N5d3s7uNdzrrvenrGrtNh3lUY+bfjwvn7yGL/sRn+L8wj1KN TOOdSIla2Yu0Ocjj/ME8/A== 0000950123-06-002756.txt : 20060308 0000950123-06-002756.hdr.sgml : 20060308 20060308113232 ACCESSION NUMBER: 0000950123-06-002756 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20051231 FILED AS OF DATE: 20060308 DATE AS OF CHANGE: 20060308 EFFECTIVENESS DATE: 20060308 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACTIVE ASSETS CALIFORNIA TAX FREE TRUST CENTRAL INDEX KEY: 0000877243 IRS NUMBER: 133622792 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-06350 FILM NUMBER: 06672061 BUSINESS ADDRESS: STREET 1: TWO WORLD TRADE CENTER STREET 2: C/O DEAN WITTER INTERCAPITAL INC CITY: NEW YORK STATE: NY ZIP: 10048 BUSINESS PHONE: 2123921520 MAIL ADDRESS: STREET 1: TWO WORLD TRADE CENTER STREET 2: C/O DEAN WITTER INTERCAPITAL INC CITY: NEW YORK STATE: NY ZIP: 10048 0000877243 S000004036 ACTIVE ASSETS CALIFORNIA TAX FREE TRUST C000011321 ACTIVE ASSETS CALIFORNIA TAX FREE TRUST aacxx N-CSRS 1 y16652nvcsrs.txt FORM N-CSR UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-06350 Active Assets California Tax-Free Trust (Exact name of registrant as specified in charter) 1221 Avenue of the Americas, New York, New York 10020 (Address of principal executive offices) (Zip code) Ronald E. Robison 1221 Avenue of the Americas, New York, New York 10020 (Name and address of agent for service) Registrant's telephone number, including area code: 212-762-4000 Date of fiscal year end: June 30, 2006 Date of reporting period: December 31, 2005 Item 1 - Report to Shareholders Welcome, Shareholder: In this report, you'll learn about how your investment in Active Assets California Tax-Free Trust performed during the semiannual period. We will provide an overview of the market conditions, and discuss some of the factors that affected performance during the reporting period. In addition, this report includes the Fund's financial statements and a list of Fund investments. THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A PROSPECTUS FOR THE FUND BEING OFFERED. MARKET FORECASTS PROVIDED IN THIS REPORT MAY NOT NECESSARILY COME TO PASS. THERE IS NO ASSURANCE THAT A MUTUAL FUND WILL ACHIEVE ITS INVESTMENT OBJECTIVE. AN INVESTMENT IN A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF AN INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. PLEASE SEE THE PROSPECTUS FOR MORE COMPLETE INFORMATION ON INVESTMENT RISKS. FUND REPORT For the six months ended December 31, 2005 MARKET CONDITIONS During the semiannual period ended December 31, 2005, the economy continued to grow at a good pace, despite soaring oil prices and the Gulf Coast hurricanes. Gains in employment were respectable, and consumer confidence and spending remained largely intact. Against this backdrop, the Federal Open Market Committee (the "Fed") continued to raise the federal funds target rate. Through a series of four increases of 25 basis points each, the Fed brought the target rate to 4.25 percent at the end of the period. Despite the Fed's steady course, yields in the tax-free money markets fluctuated during the period, with shorter-term variable rate demand obligations (VRDOs) demonstrating greater volatility than one-year notes. For the overall period, however, yields across the municipal money market sector ended sharply higher. The State of California enjoyed improving economic, fiscal and credit conditions throughout the period. Unemployment declined and the defense and high technology sectors experienced steady growth. These economic improvements helped to boost stronger state revenues. California also made progress in resolving some of its structural budget imbalances, spurring further investor interest in its municipal debt market. The State remained the leading issuer of debt, as financing for public infrastructure remained on the upswing under Governor Schwarzenegger. PERFORMANCE ANALYSIS As of December 31, 2005, Active Assets California Tax-Free Trust had net assets of approximately $1.07 billion and an average portfolio maturity of 33 days. For the six-month period ended December 31, 2005, the Fund provided a total return of 1.01 percent. For the seven-day period ended December 31, 2005, the Fund provided an effective annualized yield of 2.78 percent and a current yield of 2.74 percent, while its 30-day moving average yield for December was 2.47 percent. Past performance is no guarantee of future results. Throughout the period, we managed the portfolio according to our long-standing conservative discipline. Based on our view that short-term rates would continue to rise, the Fund was invested primarily in VRDOs. These securities offer daily or weekly reset features, which allowed the Fund to quickly benefit from rising short-term rates. To help offset the potential volatility associated with VRDOs without committing to the uncertainty of longer-dated municipal notes, we invested in fixed-rate tax-exempt commercial paper in the one- to three-month range. This strategy afforded us with the flexibility to invest in higher-yielding securities as they came to market. We used our research-intensive approach to seek out investments that would add value while meeting our conservative, risk-conscious criteria. These included financings for rural schools with attractive debt characteristics and the issues of certain smaller municipalities. Additionally, we were able to increase the Fund's yield by taking advantage of seasonal imbalances in supply and demand. Generally, we favored notes with maturities in the three- to six-month range, while paring exposure to notes in the one-year range. 2 There is no guarantee that any sectors mentioned will continue to perform well or that securities in such sectors will be held by the Fund in the future.
PORTFOLIO COMPOSITION Variable Rate Municipal Obligations 82.2% Tax-Exempt Commercial Paper 9.0 Municipal Notes & Bonds 8.8
MATURITY SCHEDULE 1 - 30 Days 88.7% 31 - 60 Days 0.9 61 - 90 Days -- 91 - 120 Days 1.1 121+ Days 9.3
Data as of December 31, 2005. Subject to change daily. All percentages for portfolio composition and maturity schedule are as a percentage of total investments. These data are provided for informational purposes only and should not be deemed a recommendation to buy or sell the securities mentioned. Morgan Stanley is a full-service securities firm engaged in securities trading and brokerage activities, investment banking, research and analysis, financing and financial advisory services. INVESTMENT STRATEGY THE FUND WILL INVEST IN HIGH QUALITY, SHORT-TERM SECURITIES THAT ARE NORMALLY MUNICIPAL OBLIGATIONS THAT PAY INTEREST EXEMPT FROM FEDERAL AND CALIFORNIA INCOME TAXES. THE FUND'S "INVESTMENT ADVISER," MORGAN STANLEY INVESTMENT ADVISORS INC., SEEKS TO MAINTAIN THE FUND'S SHARE PRICE AT $1.00. THE SHARE PRICE REMAINING STABLE AT $1.00 MEANS THAT THE FUND WOULD PRESERVE THE PRINCIPAL VALUE OF YOUR INVESTMENT. AN INVESTMENT IN THE FUND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. FOR MORE INFORMATION ABOUT PORTFOLIO HOLDINGS EACH MORGAN STANLEY FUND PROVIDES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS IN ITS SEMIANNUAL AND ANNUAL REPORTS WITHIN 60 DAYS OF THE END OF THE FUND'S SECOND AND FOURTH FISCAL QUARTERS BY FILING THE SCHEDULE ELECTRONICALLY WITH THE SECURITIES AND EXCHANGE COMMISSION (SEC). THE SEMIANNUAL REPORTS ARE FILED ON FORM N-CSRS AND THE ANNUAL REPORTS ARE FILED ON FORM N-CSR. MORGAN STANLEY ALSO DELIVERS THE SEMIANNUAL AND ANNUAL REPORTS TO FUND SHAREHOLDERS AND MAKES THESE REPORTS AVAILABLE ON ITS PUBLIC WEB SITE, WWW.MORGANSTANLEY.COM. EACH MORGAN STANLEY FUND ALSO FILES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS WITH THE SEC FOR THE FUND'S FIRST AND THIRD FISCAL QUARTERS ON FORM N-Q. MORGAN STANLEY DOES NOT DELIVER THE REPORTS FOR THE FIRST AND THIRD FISCAL QUARTERS TO SHAREHOLDERS, NOR ARE THE REPORTS POSTED TO THE MORGAN STANLEY PUBLIC WEB SITE. YOU MAY, HOWEVER, OBTAIN THE FORM N-Q FILINGS (AS WELL AS THE FORM N-CSR AND N-CSRS FILINGS) BY ACCESSING THE SEC'S WEB SITE, 3 HTTP://WWW.SEC.GOV. YOU MAY ALSO REVIEW AND COPY THEM AT THE SEC'S PUBLIC REFERENCE ROOM IN WASHINGTON, DC. INFORMATION ON THE OPERATION OF THE SEC'S PUBLIC REFERENCE ROOM MAY BE OBTAINED BY CALLING THE SEC AT (800) SEC-0330. YOU CAN ALSO REQUEST COPIES OF THESE MATERIALS, UPON PAYMENT OF A DUPLICATING FEE, BY ELECTRONIC REQUEST AT THE SEC'S E-MAIL ADDRESS (PUBLICINFO@SEC.GOV) OR BY WRITING THE PUBLIC REFERENCE SECTION OF THE SEC, WASHINGTON, DC 20549-0102. HOUSEHOLDING NOTICE TO REDUCE PRINTING AND MAILING COSTS, THE FUND ATTEMPTS TO ELIMINATE DUPLICATE MAILINGS TO THE SAME ADDRESS. THE FUND DELIVERS A SINGLE COPY OF CERTAIN SHAREHOLDER DOCUMENTS, INCLUDING SHAREHOLDER REPORTS, PROSPECTUSES AND PROXY MATERIALS, TO INVESTORS WITH THE SAME LAST NAME WHO RESIDE AT THE SAME ADDRESS. YOUR PARTICIPATION IN THIS PROGRAM WILL CONTINUE FOR AN UNLIMITED PERIOD OF TIME UNLESS YOU INSTRUCT US OTHERWISE. YOU CAN REQUEST MULTIPLE COPIES OF THESE DOCUMENTS BY CALLING (800) 350-6414, 8:00 A.M. TO 8:00 P.M., ET. ONCE OUR CUSTOMER SERVICE CENTER HAS RECEIVED YOUR INSTRUCTIONS, WE WILL BEGIN SENDING INDIVIDUAL COPIES FOR EACH ACCOUNT WITHIN 30 DAYS. 4 EXPENSE EXAMPLE As a shareholder of the Fund, you incur ongoing costs, including advisory fees; distribution and service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period 07/01/05 - 12/31/05. ACTUAL EXPENSES The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table below provides information about hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing cost of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the second line of the table is useful in comparing ongoing costs, and will not help you determine the relative total cost of owning different funds that have transactional costs, such as sales charges (loads), and redemption fees, or exchange fees.
BEGINNING ENDING EXPENSES PAID ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD * ------------- ------------- --------------- 07/01/05 - 07/01/05 12/31/05 12/31/05 ------------- ------------- --------------- Actual (1.01% return)....................................... $1,000.00 $1,010.10 $3.07 Hypothetical (5% annual return before expenses)............. $1,000.00 $1,022.01 $3.09
- ------------------ * Expenses are equal to the Fund's annualized expense ratio of 0.61% multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period). 5 Active Assets California Tax-Free Trust PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2005 (UNAUDITED)
PRINCIPAL AMOUNT IN COUPON DEMAND THOUSANDS RATE+ DATE* VALUE - -------------------------------------------------------------------------------------------------------- California Tax-Exempt Short-Term Variable Rate Municipal Obligations (83.5%) ABAG Finance Authority for Nonprofit Corporations, $12,500 Capitol Park Apartments Ser 2005 A (AMT)................ 3.35% 04/17/06 $ 12,500,000 8,000 Episcopal Homes Foundation Ser 2000 COPs................ 3.53 01/09/06 8,000,000 5,000 Jewish Home of San Francisco Ser 2005................... 3.70 01/03/06 5,000,000 5,000 Lease Purchase 2003 Ser A............................... 4.40 01/09/06 5,000,000 13,960 Anaheim Public Financing Authority, Distribution System ROCs II-R Ser 6021 (MBIA)............................... 3.55 01/09/06 13,960,000 20,000 Big Bear Lake, Southwest Gas Corp 1993 Ser A (AMT)........ 3.51 01/09/06 20,000,000 2,665 Cabrillo Community College District, 2004 Ser A ROCs II-R Ser 300 (MBIA)..................... 3.55 01/09/06 2,665,000 California, 3,200 Economic Recovery Ser 2004 C-4.......................... 3.70 01/03/06 3,200,000 12,000 Economic Recovery Ser 2004 C-11......................... 3.45 01/09/06 12,000,000 8,800 Economic Recovery Ser 2004 C-13 (XLCA).................. 3.55 01/09/06 8,800,000 15,400 Economic Recovery Ser 2004 C-14 (XLCA).................. 3.34 01/09/06 15,400,000 15,700 Economic Recovery Ser 2004 C-18 (XLCA).................. 3.50 01/09/06 15,700,000 5,900 Economic Recovery Ser 2004 C-21 (XLCA).................. 3.53 01/09/06 5,900,000 California, 22,490 Ser 2003 C-1 & Ser 2004 A-9............................. 3.50 01/09/06 22,490,000 1,000 Ser 2004 B-3............................................ 3.62 01/03/06 1,000,000 8,000 Ser 2005 B Subser B-1................................... 3.10 01/25/06 8,000,000 11,970 California Alternative Energy Source Finance Authority, General Electric Capital Corp-Arroyo Energy 1993 Ser B (AMT)................................................... 3.39 01/09/06 11,970,000 California Department of Water Resources, 16,745 Power Supply Ser 2002 B Subser B-1...................... 3.70 01/03/06 16,745,000 2,200 Power Supply Ser 2002 B Subser B-2...................... 3.75 01/03/06 2,200,000 11,800 Power Supply Ser 2002 B Subser B-5...................... 3.72 01/03/06 11,800,000 1,000 Power Supply Ser 2002 B Subser B-6...................... 3.62 01/03/06 1,000,000 3,950 Power Supply Ser 2002 C Subser C-3 (Ambac).............. 3.55 01/09/06 3,950,000 15,000 Power Supply Ser 2002 C Subser C-9...................... 3.45 01/09/06 15,000,000 10,000 Power Supply Ser 2002 C Subser C-16..................... 3.50 01/09/06 10,000,000 6,000 Power Supply Ser 2002 C Subser C-18..................... 3.46 01/09/06 6,000,000 California Educational Facilities Authority, 5,000 California Institute of Technology Ser 1994............. 3.45 01/09/06 5,000,000 5,465 California Lutheran University Ser 2004 A............... 3.48 01/09/06 5,465,000 7,000 University of San Francisco Ser 2003.................... 3.45 01/09/06 7,000,000 California Health Facilities Financing Authority, 5,800 Adventist Health System/West 1998 Ser A (MBIA), Ser B (MBIA) & Ser C (MBIA)........................... 3.70 01/03/06 5,800,000 18,100 Northern California Presbyterian Homes & Services Ser 2004.................................................... 3.34 01/09/06 18,100,000
See Notes to Financial Statements 6 Active Assets California Tax-Free Trust PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2005 (UNAUDITED) continued
PRINCIPAL AMOUNT IN COUPON DEMAND THOUSANDS RATE+ DATE* VALUE - -------------------------------------------------------------------------------------------------------- $ 900 Sisters of Charity of Leavenworth Health System Ser 2003.................................................... 3.55% 01/09/06 $ 900,000 9,100 California Housing Finance Agency, Home Mortgage 2001 Ser U (MBIA) (AMT).......................................... 3.78 01/03/06 9,100,000 3,480 California Infrastructure & Economic Development Bank, Bay Area Toll Bridges Ser 2005 SGB-56 (Ambac)............... 3.55 01/09/06 3,480,000 California Statewide Communities Development Authority, 6,000 Chabad of California Ser 2004........................... 3.52 01/09/06 6,000,000 12,165 Coventry Place Apartments 2002 Ser JJ (AMT)............. 3.34 01/09/06 12,165,000 9,250 Irvine Apartment Communities Ser W-2 (AMT).............. 3.60 01/09/06 9,250,000 4,200 Kaiser Permanente Ser 2004 L............................ 3.48 01/09/06 4,200,000 10,240 Multifamily Housing Martin Luther Tower 2005 Ser D (AMT)................................................... 3.55 01/09/06 10,240,000 12,000 University of San Diego Ser 2005........................ 3.47 01/09/06 12,000,000 2,700 University Retirement Community at Davis Inc Ser 2003 (Radian)................................................ 3.70 01/03/06 2,700,000 16,755 California Transit Finance Authority, Ser 1997 (FSA)...... 3.50 01/09/06 16,755,000 6,805 Cerritos Community College District, Ser 2005 P-FLOATs PT-2934 (Ambac)......................................... 3.53 01/09/06 6,805,000 10,000 Corona-Norco Unified School District, Ser 2005 COPs....... 3.34 01/09/06 10,000,000 15,000 East Bay Municipal Utility District, Wastewater Sub Ser 2005.................................................... 3.43 01/09/06 15,000,000 Fresno, 7,345 Multifamily Heron Pointe Apartments 2001 Ser A.......... 3.43 01/09/06 7,345,000 18,000 Sewer System Sub Lien Ser 2000 A (FGIC)................. 3.34 01/09/06 18,000,000 2,250 Hacienda-La Puenta Unified School District, 2000 Ser B P-FLOATs PT-1988 (FSA).................................. 3.53 01/09/06 2,250,000 1,400 Irvine Assessment District, No 04-20 Improvement Bond Act 1915 Ser 2005 A......................................... 3.62 01/03/06 1,400,000 9,745 Long Beach, Harbor PUTTERs Ser 444 (MBIA) (AMT)........... 3.54 01/09/06 9,745,000 3,900 Long Beach Community College District, 2002 Election Ser 2005 B ROCs II-R Ser 478 (FGIC)..................... 3.55 01/09/06 3,900,000 Los Angeles, 21,800 Wastewater System Ser 2001 B (FGIC)..................... 3.55 01/09/06 21,800,000 7,000 Wastewater System Ser 2005 A TOCs Ser 2005 TT (MBIA).... 3.54 01/09/06 7,000,000 22,700 Los Angeles Community Redevelopment Agency, Grand Promenade Ser 2002...................................... 3.43 01/09/06 22,700,000 Los Angeles County Metropolitan Transportation Authority, 6,000 Prop C Sales Tax 2nd Ser 2004-A Eagle #20040046 (MBIA).................................................. 3.55 01/09/06 6,000,000 5,880 Sales Tax Ser 1993 A (MBIA)............................. 3.34 01/09/06 5,880,000 Los Angeles Department of Water & Power, 10,000 Power System 2001 Ser B Subser B-1...................... 3.53 01/09/06 10,000,000 8,000 Power System 2002 Ser A Subser A-8...................... 3.50 01/09/06 8,000,000 8,300 Water System 2001 Ser B Subser B-1...................... 3.55 01/09/06 8,300,000 5,300 Water System 2001 Ser B Subser B-2...................... 3.62 01/03/06 5,300,000
See Notes to Financial Statements 7 Active Assets California Tax-Free Trust PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2005 (UNAUDITED) continued
PRINCIPAL AMOUNT IN COUPON DEMAND THOUSANDS RATE+ DATE* VALUE - -------------------------------------------------------------------------------------------------------- $16,760 Los Angeles Housing Authority, Multifamily 2004 Ser A..... 3.46% 01/09/06 $ 16,760,000 10,975 Los Angeles Unified School District, P-FLOATs PT-1855 (FSA)................................................... 3.53 01/09/06 10,975,000 5,705 Madera Irrigation Financing Authority, Water Ser 2005 A (XLCA).................................................. 3.75 01/03/06 5,705,000 Metropolitan Water District of Southern California, 16,200 Water 1999 Ser B & Ser C................................ 3.45 01/09/06 16,200,000 5,200 Water 2000 Ser B-1...................................... 3.62 01/03/06 5,200,000 6,000 Water 2000 Ser B-2...................................... 3.31 01/09/06 6,000,000 3,200 Waterworks 1996 Ser A (Ambac)........................... 3.34 01/09/06 3,200,000 6,300 Waterworks 2002 Ser A................................... 3.53 01/09/06 6,300,000 14,500 Monterey Peninsula Water Management District, Wastewater Ser 1992 COPs........................................... 3.55 01/09/06 14,500,000 13,300 Mountain View, Villa Mariposa Multifamily 1985 Ser A...... 3.51 01/09/06 13,300,000 Newport Beach, 1,500 Hoag Memorial Hospital Presbyterian 1992 Ser............ 3.70 01/03/06 1,500,000 4,930 Hoag Memorial Hospital Presbyterian 1996 Ser A, Ser B & Ser C........................................... 3.70 01/03/06 4,930,000 12,410 Northern California Power Agency, Hydroelectric No 1 Ser 2002 B (MBIA)....................................... 3.34 01/09/06 12,410,000 9,130 Orange County Housing Authority, Oasis Martinique Refg 1998 Issue I....................................... 3.44 01/09/06 9,130,000 14,895 Orange County Sanitation District, Ser 1993 COPs (Ambac), Ser 2000 A COPs & Ser 2000 B COPs....................... 3.62 01/03/06 14,895,000 7,000 Pasadena, City Hall & Park Improvement Ser 2003 COPs (Ambac)................................................. 3.47 01/09/06 7,000,000 900 Pittsburg Redevelopment Agency, Los Medanos Community Development Sub 2004 Ser A (Ambac)...................... 3.75 01/03/06 900,000 Pleasanton, 6,000 Assisted Living Facility Ser 2005....................... 3.52 01/09/06 6,000,000 10,850 Greenbriar Bernal Apartments Ser 2001 A (AMT)........... 3.55 01/09/06 10,850,000 4,500 Pomona Redevelopment Agency, Park & Plaza Apartments Ser 1998 A.................................................. 3.48 01/09/06 4,500,000 9,600 Poway Unified School District, Ser 2004 COPs (FSA)........ 3.34 01/09/06 9,600,000 8,800 Rancho Water District Financing Authority, Ser 2001 B (FGIC).................................................. 3.31 01/09/06 8,800,000 6,750 Redlands, Orange Village Apartments 1988 Ser A (AMT)...... 3.60 01/09/06 6,750,000 9,615 Riverside County, 2005 Ser A & B COPs P-FLOATs PT-2704 (FGIC).................................................. 3.53 01/09/06 9,615,000 Roaring Fork Municipal Products, 7,850 California Economic Recovery Class A Certificates Ser 2004-4 (FGIC)..................................... 3.51 01/09/06 7,850,000 8,485 San Diego Community College District Class A Certificates Ser 2005-22 (FSA)..................................... 3.51 01/09/06 8,485,000 3,500 Sacramento County Housing Authority, Seasons at Winter 2004 Ser C-2............................................ 3.34 01/09/06 3,500,000
See Notes to Financial Statements 8 Active Assets California Tax-Free Trust PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2005 (UNAUDITED) continued
PRINCIPAL AMOUNT IN COUPON DEMAND THOUSANDS RATE+ DATE* VALUE - -------------------------------------------------------------------------------------------------------- $ 4,000 San Bernardino County Housing Authority, Multifamily Raintree Apartments Ser 2005 A.......................... 3.54% 01/09/06 $ 4,000,000 7,875 San Diego County, COPs Ser 2005 ROCs II-R Ser 2175 (Ambac)................................................. 3.55 01/09/06 7,875,000 6,685 San Diego Unified Port District, 2004 Ser B P-FLOATs PT-2409 (MBIA).......................................... 3.53 01/09/06 6,685,000 1,740 San Diego Unified School District, 1998 Ser E-1 ROCs II-R Ser 1067 (MBIA)......................................... 3.55 01/09/06 1,740,000 11,275 San Francisco City & County, Folsom-Dore Apartments Ser 2002 A (AMT)........................................ 3.53 01/09/06 11,275,000 3,000 San Francisco City & County Finance Corporation, Moscone Center Ser 2000-1 (Ambac)............................... 3.53 01/09/06 3,000,000 San Francisco City & County Redevelopment Agency, 21,000 Bayside Village Multifamily Ser 1985 A.................. 3.45 01/09/06 21,000,000 6,000 Multifamily Housing Mercy Terrace Ser 2005 A............ 3.49 01/09/06 6,000,000 2,000 San Jose, Multifamily Almaden Lake Village Apartments Ser 2000 A (AMT)........................................ 3.56 01/09/06 2,000,000 4,900 San Jose Finance Authority, Civic Center Ser 2002 C (Ambac)................................................. 5.00 06/01/06 4,977,457 4,520 San Jose Redevelopment Agency, Merged Area 1996 Ser B..... 3.45 01/09/06 4,520,000 11,830 San Jose-Santa Clara Clean Water Financing Authority, Sewer Ser 2005 B (FSA).................................. 3.43 01/09/06 11,830,000 Santa Clara, 4,300 Electric Ser 1985 C (Ambac)............................. 3.34 01/09/06 4,300,000 12,400 Multifamily Briarwood Apartments Ser 1996 B............. 3.49 01/09/06 12,400,000 16,000 Santa Clara Valley Transportation Authority, Sales Tax Ser 2005 B (Ambac)............................ 3.44 01/09/06 16,000,000 2,580 Southern California Logistics Airport Authority, Ser 2005 P-FLOATs PA-1323 (Radian)............................... 3.55 01/09/06 2,580,000 Turlock Irrigation District, 1,000 2001 Ser A COPs......................................... 3.70 01/03/06 1,000,000 4,705 Ser 1988 A.............................................. 3.55 01/09/06 4,705,000 9,400 Vallejo Housing Authority, Multifamily Housing Crow-Western Phase II Ser 1985 C........................ 3.58 01/09/06 9,400,000 ------------ Total California Tax-Exempt Short-Term Variable Rate Municipal Obligations (Cost $896,002,457).......................................................... 896,002,457 ------------
See Notes to Financial Statements 9 Active Assets California Tax-Free Trust PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2005 (UNAUDITED) continued
YIELD TO PRINCIPAL MATURITY AMOUNT IN COUPON MATURITY ON DATE OF THOUSANDS RATE DATE PURCHASE VALUE - --------------------------------------------------------------------------------------------------------- California Tax-Exempt Commercial Paper (9.2%) $ 7,000 California Department of Water Resources, Ser 1.................................... 2.80% 01/30/06 2.80% $ 7,000,000 10,000 California Statewide Communities Development Authority, Kaiser Permanente Ser 2004 K............................... 2.80 01/11/06 2.80 10,000,000 3,400 East Bay Municipal Utility District, Water Ser 1988................................. 2.76 01/19/06 2.76 3,400,000 10,000 Riverside County, Teeter Obligation 2005 Ser B-1.................................. 3.04 01/23/06 3.04 10,000,000 San Diego County Water Authority, 11,500 Ser 1.................................... 3.00 01/27/06 3.00 11,500,000 10,000 Ser 1.................................... 3.18 02/14/06 3.18 10,000,000 San Francisco City & County Public Utility Commission, 10,000 Water Ser 2001.......................... 3.13 01/10/06 3.13 10,000,000 10,000 Water Ser 2001.......................... 2.87 01/18/06 2.87 10,000,000 10,000 Water Ser 2001.......................... 3.00 01/19/06 3.00 10,000,000 San Francisco County Transportation Authority, 4,000 2004 Ser A............................... 3.10 01/20/06 3.10 4,000,000 5,250 2004 Ser B............................... 2.80 01/18/06 2.80 5,250,000 7,000 University of California Regents, Ser A.... 2.78 01/11/06 2.78 7,000,000 -------------- Total California Tax-Exempt Commercial Paper (Cost $98,150,000)......................................................... 98,150,000 -------------- California Tax-Exempt Short-Term Municipal Notes & Bonds (8.9%) 4,460 Bassett Unified School District, Ser 2005 BANs, dtd 09/01/05....................... 4.20 09/01/06 2.85 4,499,117 22,250 California School Cash Reserve Program Authority, 2005 Pool Ser A, dtd 07/06/05................................. 4.00 07/06/06 2.60 22,374,112 8,500 Contra Costa County, Ser 2005 TRANs, dtd 12/08/05............................. 4.50 12/07/06 3.30 8,592,211 8,225 East Side Union High School District, Ser 2005 TRANs, dtd 10/25/05................. 4.25 10/25/06 2.95 8,309,746 7,000 Kern County, Ser 2005 TRANs, dtd 07/05/05................................. 4.00 06/30/06 3.03 7,031,781 25,000 Los Angeles Unified School District, Ser 2005 A TRANs, dtd 10/19/05............... 4.50 10/18/06 2.91 25,307,788 3,700 Placentia, Ser 2005 TRANs, dtd 07/01/05.... 3.75 06/30/06 2.80 3,716,945 1,750 Selma, Ser 2005 TRANs, dtd 07/01/05........ 4.00 06/30/06 2.80 1,760,129
See Notes to Financial Statements 10 Active Assets California Tax-Free Trust PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2005 (UNAUDITED) continued
YIELD TO PRINCIPAL MATURITY AMOUNT IN COUPON MATURITY ON DATE OF THOUSANDS RATE DATE PURCHASE VALUE - --------------------------------------------------------------------------------------------------------- $10,000 South Coast Local Education Agencies, Pooled TRANs Ser 2005 A, dtd 07/01/05.... 4.00% 06/30/06 3.21% $ 10,035,941 4,500 University of California Regents Ser 1998 F, dtd 06/15/98.......................... 5.00 09/01/06++ 3.04 4,601,742 -------------- Total California Tax-Exempt Short-Term Municipal Notes & Bonds (Cost $96,229,512)......................................................... 96,229,512 --------------
Total Investments (Cost $1,090,381,969) (a)......................................... 101.6% 1,090,381,969 Liabilities In Excess of Other Assets............................. (1.6) (16,888,439) ----- -------------- Net Assets........................................................ 100.0% $1,073,493,530 ===== ==============
- --------------------- AMT Alternative Minimum Tax. BANs Bond Anticipation Notes. COPs Certificates of Participation. P-FLOATs Puttable Floating Option Tax-Exempt Receipts. PUTTERs Puttable Tax-Exempt Receipts. ROCs Reset Option Certificates. TOCs Tender Option Certificates. TRANs Tax and Revenue Anticipation Notes. + Rate shown is the rate in effect at December 31, 2005. ++ Prerefunded to call date shown. Date on which the principal amount can be recovered through * demand. (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. Radian Radian Asset Assurance Inc. XLCA XL Capital Assurance Inc.
See Notes to Financial Statements 11 Active Assets California Tax-Free Trust FINANCIAL STATEMENTS Statement of Assets and Liabilities December 31, 2005 (unaudited) Assets: Investments in securities, at value (cost $1,090,381,969)..................................... $1,090,381,969 Cash........................................................ 92,942 Receivable for: Interest................................................ 4,745,228 Shares of beneficial interest sold...................... 6,586 Prepaid expenses and other assets........................... 27,569 -------------- Total Assets............................................ 1,095,254,294 -------------- Liabilities: Payable for: Investments purchased................................... 21,171,963 Investment advisory fee................................. 337,389 Distribution fee........................................ 85,089 Administration fee...................................... 42,544 Accrued expenses and other payables......................... 123,779 -------------- Total Liabilities....................................... 21,760,764 -------------- Net Assets.............................................. $1,073,493,530 ============== Composition of Net Assets: Paid-in-capital............................................. $1,073,488,722 Accumulated undistributed net investment income............. 4,808 -------------- Net Assets.............................................. $1,073,493,530 ============== Net Asset Value Per Share 1,073,469,396 shares outstanding (unlimited shares authorized of $.01 par value)............................... $1.00 ==============
See Notes to Financial Statements 12 Active Assets California Tax-Free Trust FINANCIAL STATEMENTS continued Statement of Operations For the six months ended December 31, 2005 (unaudited) Net Investment Income: Interest Income............................................. $11,102,345 ----------- Expenses Investment advisory fee..................................... 1,735,291 Distribution fee............................................ 419,001 Administration fee.......................................... 209,501 Transfer agent fees and expenses............................ 59,263 Professional fees........................................... 41,384 Registration fees........................................... 34,151 Custodian fees.............................................. 19,903 Shareholder reports and notices............................. 12,488 Trustees' fees and expenses................................. 7,641 Other....................................................... 19,912 ----------- Total Expenses.......................................... 2,558,535 Less: expense offset........................................ (19,535) ----------- Net Expenses............................................ 2,539,000 ----------- Net Investment Income....................................... $ 8,563,345 ===========
See Notes to Financial Statements 13 Active Assets California Tax-Free Trust FINANCIAL STATEMENTS continued Statement of Changes in Net Assets
FOR THE SIX FOR THE YEAR MONTHS ENDED ENDED DECEMBER 31, 2005 JUNE 30, 2005 ----------------- ------------- (unaudited) Increase (Decrease) in Net Assets: Operations: Net investment income....................................... $ 8,563,345 $ 8,234,325 Dividends to shareholders from net investment income........ (8,563,494) (8,234,061) Net increase from transactions in shares of beneficial interest.................................................. 369,202,577 16,490,532 -------------- ------------ Net Increase............................................ 369,202,428 16,490,796 Net Assets: Beginning of period......................................... 704,291,102 687,800,306 -------------- ------------ End of Period (Including accumulated undistributed net investment income of $4,808 and $4,957, respectively)......................... $1,073,493,530 $704,291,102 ============== ============
14 See Notes to Financial Statements Active Assets California Tax-Free Trust NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 2005 (UNAUDITED) 1. Organization and Accounting Policies Active Assets California Tax-Free 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 July 10, 1991 and commenced operations on November 12, 1991. 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. Discounts are accreted and premiums are amortized over the life of the respective securities. Interest income is accrued daily. C. Federal Income Tax Policy -- It is the Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially 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. E. Use of Estimates -- 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. 2. Investment Advisory/Administration Agreements Pursuant to an Investment Advisory Agreement with Morgan Stanley Investment Advisors Inc. (the "Investment Adviser"), the Fund pays the Investment Adviser an advisory 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: 0.45% to the portion of the daily net assets not exceeding $500 million; 0.375% to the portion of the daily net assets exceeding $500 million but not exceeding $750 million; 0.325% to the portion of the daily net assets exceeding $750 million but not exceeding $1 billion; 0.30% to the portion of the daily net assets exceeding $1 billion but not exceeding $1.5 billion; 0.275% to the portion of the daily net assets exceeding $1.5 billion but not exceeding $2 billion; 0.25% to the portion of the daily net assets exceeding $2 billion but not 15 Active Assets California Tax-Free Trust NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 2005 (UNAUDITED) continued exceeding $2.5 billion; 0.225% to the portion of the daily net assets exceeding $2.5 billion but not exceeding $3 billion; and 0.20% to the portion of the daily net assets exceeding $3 billion. Pursuant to an Administration Agreement with Morgan Stanley Services Company Inc. (the "Administrator"), an affiliate of the Investment Adviser, the Fund pays an administration fee, accrued daily and payable monthly, by applying the annual rate of 0.05% to the Fund's daily net assets. 3. Plan of Distribution Morgan Stanley Distributors Inc. (the "Distributor"), an affiliate of the Investment Adviser and Administrator, 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 with the promotion of sales of Fund shares. Reimbursements for these expenses are made in monthly payments by the Fund to the Distributor, which will 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 December 31, 2005, 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 December 31, 2005, aggregated $1,283,420,502 and $937,574,000, respectively. Morgan Stanley Trust, an affiliate of the Investment Adviser, Administrator and Distributor, is the Fund's transfer agent. The Fund has an unfunded noncontributory defined benefit pension plan covering certain 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 factors which include years of service and compensation. The Trustees voted to close the plan to new participants and eliminate the future benefits growth due to increases to compensation after July 31, 2003. Aggregate pension costs for the six months ended December 31, 2005, included in Trustees' fees and expenses in the Statement of Operations amounted to $3,303. At December 31, 2005, the Fund had an accrued pension liability of $57,153 which is included in accrued expenses in the Statement of Assets and Liabilities. 16 Active Assets California Tax-Free Trust NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 2005 (UNAUDITED) continued The Fund has an unfunded Deferred Compensation Plan (the "Compensation Plan") which allows each independent Trustee to defer payment of all, or a portion, of the fees he receives for serving on the Board of Trustees. Each eligible Trustee generally may elect to have the deferred amounts credited with a return equal to the total return on one or more of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the net asset value of the Fund. 5. Shares of Beneficial Interest Transactions in shares of beneficial interest, at $1.00 per share, were as follows:
FOR THE SIX FOR THE YEAR MONTHS ENDED ENDED DECEMBER 31, 2005 JUNE 30, 2005 ----------------- -------------- (unaudited) Shares sold................................................. 2,022,561,102 2,680,347,592 Shares issued in reinvestment of dividends.................. 8,563,494 8,234,061 -------------- -------------- 2,031,124,596 2,688,581,653 Shares redeemed............................................. (1,661,922,019) (2,672,091,121) -------------- -------------- Net increase in shares outstanding.......................... 369,202,577 16,490,532 ============== ==============
6. Expense Offset The expense offset represents a reduction of the custodian fees for earnings on cash balances maintained by the Fund. 7. Legal Matters The Investment Adviser, certain affiliates of the Investment Adviser, certain officers of such affiliates and certain investment companies advised by the Investment Adviser or its affiliates, including the Fund, are named as defendants in a consolidated class action. This consolidated action also names as defendants certain individual Trustees and Directors of the Morgan Stanley funds. The consolidated amended complaint, filed in the United States District Court Southern District of New York on April 16, 2004, generally alleges that defendants, including the Fund, violated their statutory disclosure obligations and fiduciary duties by failing properly to disclose (i) that the Investment Adviser and certain affiliates of the Investment Adviser allegedly offered economic incentives to brokers and others to recommend the funds advised by the Investment Adviser or its affiliates to investors rather than funds managed by other companies, and (ii) that the funds advised by the Investment Adviser or its affiliates, including the Fund, allegedly paid excessive commissions to 17 Active Assets California Tax-Free Trust NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 2005 (UNAUDITED) continued brokers in return for their efforts to recommend these funds to investors. The complaint seeks, among other things, unspecified compensatory damages, rescissionary damages, fees and costs. The defendants have moved to dismiss the action and intend to otherwise vigorously defend it. On March 9, 2005, Plaintiffs sought leave to supplement their complaint to assert claims on behalf of other investors. While the Fund and Adviser believe that each has meritorious defenses, the ultimate outcome of this matter is not presently determinable at this stage of the litigation, and no provision has been made in the Fund's financial statements for the effect, if any, of this matter. 18 Active Assets California Tax-Free Trust FINANCIAL HIGHLIGHTS Selected ratios and per share data for a share of beneficial interest outstanding throughout each period:
FOR THE SIX FOR THE YEAR ENDED JUNE 30, MONTHS ENDED --------------------------------------------------------- DECEMBER 2005 2005 2004 2003 2002 2001 ------------- --------- --------- --------- --------- --------- (unaudited) 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 investment operations..... 0.010 0.012 0.003 0.006 0.011 0.026 Less dividends from net investment income................................... (0.010) (0.012) (0.003) (0.006) (0.011) (0.026) --------- ------- ------- ------- ------- -------- Net asset value, end of period............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ========= ======= ======= ======= ======= ======== Total Return.............................. 1.01%(1) 1.17% 0.35% 0.63% 1.15% 2.68% Ratios to Average Net Assets: Expenses (before expense offset).......... 0.61%(2) 0.62%(3) 0.61% 0.60% 0.60% 0.59% Net investment income..................... 2.04%(2) 1.16% 0.35% 0.63% 1.14% 2.64% Supplemental Data: Net assets, end of period, in thousands... $1,073,494 $704,291 $687,800 $762,448 $762,656 $759,089
- --------------------- (1) Not annualized. (2) Annualized. (3) Does not reflect the effect of expense offset of 0.01%.
See Notes to Financial Statements 19 TRUSTEES Michael Bozic Charles A. Fiumefreddo Edwin J. Garn Wayne E. Hedien James F. Higgins Dr. Manuel H. Johnson Joseph J. Kearns Michael E. Nugent Fergus Reid OFFICERS Charles A. Fiumefreddo Chairman of the Board Ronald E. Robison President and Principal Executive Officer J. David Germany Vice President Dennis F. Shea Vice President Barry Fink Vice President Amy R. Doberman Vice President Carsten Otto Chief Compliance Officer Stefanie V. Chang Vice President Francis J. Smith Treasurer and Chief Financial Officer Thomas F. Caloia Vice President Mary E. Mullin Secretary TRANSFER AGENT Morgan Stanley Trust Harborside Financial Center, Plaza Two Jersey City, New Jersey 07311 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Deloitte & Touche LLP Two World Financial Center New York, New York 10281 INVESTMENT ADVISER Morgan Stanley Investment Advisors Inc. 1221 Avenue of the Americas New York, New York 10020 The financial statements included herein have been taken from the records of the Fund without examination by the independent auditors and accordingly they do not express an opinion thereon. This report is submitted for the general information of the shareholders of the Fund. For more detailed information about the Fund, its fees and expenses and other pertinent information, please read its Prospectus. The Fund's Statement of Additional Information contains additional information about the Fund, including its trustees. It is available, without charge, by calling (800) 869-NEWS. 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. Investments and services offered through Morgan Stanley DW Inc., member SIPC. Morgan Stanley Distributors Inc., member NASD. (c) 2005 Morgan Stanley [MORGAN STANLEY LOGO] MORGAN STANLEY FUNDS Active Assets California Tax-Free Trust Semiannual Report December 31, 2005 [MORGAN STANLEY LOGO] RA06-00096P-Y12/05 Item 2. Code of Ethics. Not applicable for semiannual reports. Item 3. Audit Committee Financial Expert. Not applicable for semiannual reports. Item 4. Principal Accountant Fees and Services Not applicable for semiannual reports. Item 5. Audit Committee of Listed Registrants. Not applicable for semiannual reports. Item 6. Refer to Item 1. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable for semiannual reports. Item 8. Portfolio Managers of Closed-End Management Investment Companies Applicable only to reports filed by closed-end funds. Item 9. Closed-End Fund Repurchases Applicable to reports filed by closed-end funds. Item 10. Submission of Matters to a Vote of Security Holders Not applicable. Item 11. Controls and Procedures (a) The Fund's principal executive officer and principal financial officer have concluded that the Fund's disclosure controls and procedures are sufficient to ensure that information required to be disclosed by the Fund in this Form N-CSR was recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, based upon such officers' evaluation of these controls and procedures as of a date within 90 days of the filing date of the report. (b) There were no changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 12. Exhibits (a) Code of Ethics - Not applicable for semiannual reports. (b) A separate certification for each principal executive officer and principal financial officer of the registrant are attached hereto as part of EX-99.CERT. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Active Assets California Tax-Free Trust /s/ Ronald E. Robison - ------------------------------------- Ronald E. Robison Principal Executive Officer February 9, 2006 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated. /s/ Ronald E. Robison - ------------------------------------- Ronald E. Robison Principal Executive Officer February 9, 2006 /s/ Francis Smith - ------------------------------------- Francis Smith Principal Financial Officer February 9, 2006 3 EX-99.CERT 2 y16652exv99wcert.txt CERTIFICATIONS EXHIBIT 12 B1 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER CERTIFICATIONS I, Ronald E. Robison, certify that: 1. I have reviewed this report on Form N-CSR of Active Assets California Tax-Free Trust; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): 4 a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: February 9, 2006 /s/ Ronald E. Robison ---------------------------------------- Ronald E. Robison Principal Executive Officer 5 EXHIBIT 12 B2 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER CERTIFICATIONS I, Francis Smith, certify that: 1. I have reviewed this report on Form N-CSR of Active Assets California Tax-Free Trust; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): 6 a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: February 9, 2006 /s/ Francis Smith ---------------------------------------- Francis Smith Principal Financial Officer 7 EX-99.906CERT 3 y16652exv99w906cert.txt CERTIFICATIONS SECTION 906 CERTIFICATION Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Active Assets California Tax-Free Trust In connection with the Report on Form N-CSR (the "Report") of the above-named issuer for the period ended December 31, 2005 that is accompanied by this certification, the undersigned hereby certifies that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer. Date: February 9, 2006 /s/ Ronald E. Robison ---------------------------------------- Ronald E. Robison Principal Executive Officer A signed original of this written statement required by Section 906 has been provided to Active Assets California Tax-Free Trust and will be retained by Active Assets California Tax-Free Trust and furnished to the Securities and Exchange Commission or its staff upon request. 8 SECTION 906 CERTIFICATION Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Active Assets California Tax-Free Trust In connection with the Report on Form N-CSR (the "Report") of the above-named issuer for the period ended December 31, 2005 that is accompanied by this certification, the undersigned hereby certifies that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer. Date: February 9, 2006 /s/ Francis Smith ---------------------------------------- Francis Smith Principal Financial Officer A signed original of this written statement required by Section 906 has been provided to Active Assets California Tax-Free Trust and will be retained by Active Assets California Tax-Free Trust and furnished to the Securities and Exchange Commission or its staff upon request. 9 -----END PRIVACY-ENHANCED MESSAGE-----