-----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, Wia0W6i+wVdH6IfUljv4EX1FomWmlS53s55SE2coWQuDevXTsRDVWtIcks4bSNu/ kaLA6S6uLWMGuEITm+92Dw== 0000950123-08-002739.txt : 20080310 0000950123-08-002739.hdr.sgml : 20080310 20080310113505 ACCESSION NUMBER: 0000950123-08-002739 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20071231 FILED AS OF DATE: 20080310 DATE AS OF CHANGE: 20080310 EFFECTIVENESS DATE: 20080310 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: 08676612 BUSINESS ADDRESS: STREET 1: 522 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10036 BUSINESS PHONE: 800-869-6397 MAIL ADDRESS: STREET 1: 522 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10036 0000877243 S000004036 ACTIVE ASSETS CALIFORNIA TAX FREE TRUST C000011321 ACTIVE ASSETS CALIFORNIA TAX FREE TRUST aacxx N-CSRS 1 y46374nvcsrs.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) 522 Fifth Avenue, New York, New York 10036 (Address of principal executive offices) (Zip code)
Ronald E. Robison 522 Fifth Avenue, New York, New York 10036 (Name and address of agent for service) Registrant's telephone number, including area code: 212-296-6990 Date of fiscal year end: June 30, 2008 Date of reporting period: December 31, 2007 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, 2007 MARKET CONDITIONS The latter half of 2007 was marked by market turmoil and uncertainty. The dislocations stemming from subprime mortgage woes permeated all sectors of the fixed income markets, leading to a significant contraction in credit and liquidity. Growing losses and mark-to-market writedowns announced by major financial institutions had a crippling effect on the transaction of business. The monoline bond insurers -- insurance companies that provide guarantees to issuers that enhance their credit and which have played a significant role in the municipal bond market in recent years -- were also caught up in the crisis. Furthermore, state and local governments began to feel the effects of the slowing housing market as incoming tax receipts lagged behind projections. At the same time, signs began to emerge in the fourth quarter of the year that the problems in the markets were beginning to slow economic growth. In an effort to spur the economy and ease the liquidity crunch, the Federal Open Market Committee (the "Fed") lowered the target federal funds rate a total of one percent in three separate moves between September and year end, bringing the rate to 4.25 percent. The troubling events had an impact on tax-exempt money market interest rates as well. Dealers became reluctant to carry large inventories and in an effort to appeal to non-traditional investors, kept rates for variable-rate instruments at attractive levels compared to taxable alternatives. As a result, the Securities Industry and Financial Markets Association (SIFMA) Index of weekly municipal variable-rate yields dropped only 31 basis points from 3.73 percent to 3.42 percent during the second half of the year, which did not fully reflect the 100 basis point cut in the federal funds rate target. At the same time, tax-free money market funds experienced steady cash inflows. The result was an odd combination of relatively high municipal money market rates amid tight supply conditions. PERFORMANCE ANALYSIS As of December 31, 2007, Active Assets California Tax-Free Trust had net assets of approximately $2.49 billion and an average portfolio maturity of 31 days. For the six-month period ended December 31, 2007, the Fund provided a total return of 1.54 percent. For the seven-day period ended December 31, 2007, the Fund provided an effective annualized yield of 2.85 percent and a current yield of 2.81 percent, while its 30-day moving average yield for December was 2.79 percent. Past performance is no guarantee of future results. Given the unsettling events and uncertain market conditions during the reporting period, daily and weekly variable-rate securities remained the dominant investments in the Fund's portfolio. In the latter months of the period, however, prospects for declining short-term interest rates led us to seek opportunities to lock in attractive yields through investments in longer-term fixed-rate instruments. We selectively added to holdings in notes in the six-to- 12 month range and commercial paper in the 30-to-90 day range. A light financing calendar, however, limited opportunities to extend the weighted average maturity of the Fund's portfolio. Growing evidence of a softening economy called for a strong focus on credit review and analysis. We will continue to proceed with caution as we await a more stable market environment. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. 2
PORTFOLIO COMPOSITION Variable Rate Municipal Obligations 84.0% Municipal Notes & Bonds 10.0 Tax-Exempt Commercial Paper 6.0
MATURITY SCHEDULE 1 - 30 Days 84.0% 31 - 60 Days 2.7 61 - 90 Days 2.1 91 - 120 Days 1.2 121 + Days 10.0
Data as of December 31, 2007. 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 PERSONAL 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. THE SEMIANNUAL REPORTS AND THE ANNUAL REPORTS ARE FILED ELECTRONICALLY WITH THE SECURITIES AND EXCHANGE COMMISSION (SEC) ON FORM N-CSRS AND FORM N-CSR, RESPECTIVELY. 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 3 ACCESSING THE SEC'S WEB SITE, 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) 869-NEWS, 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 07/01/07 - 12/31/07. 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* ------------- ------------- -------------- 07/01/07 - 07/01/07 12/31/07 12/31/07 ------------- ------------- -------------- Actual (1.54% return).......................... $1,000.00 $1,015.40 $2.66 Hypothetical (5% annual return before expenses).................................... $1,000.00 $1,022.71 $2.67
- --------- * Expenses are equal to the Fund's annualized expense ratio of 0.52% multiplied by the average account value over the period, multiplied by 185**/365 (to reflect the one-half year period). ** Adjusted to reflect non-business days accruals. 5 Active Assets California Tax-Free Trust PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2007 (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, $ 5,900 Elder Care Alliance of San Francisco Ser 2006 A.................................. 3.35% 01/08/08 $ 5,900,000 12,750 Eskaton Village - Placerville Ser 2007.. 3.59 01/08/08 12,750,000 11,735 Eskaton Village - Roseville Ser 2006.... 3.42 01/08/08 11,735,000 22,000 Oshman Family Jewish Community Center Ser 2007................................ 3.46 01/02/08 22,000,000 13,855 Anaheim Public Financing Authority, Distribution System ROCs II-R Ser 6021 (MBIA Insd)............................. 3.48 01/08/08 13,855,000 Austin Trust, Irvine Unified School District No 07-1, 22,695 Ser 2007 A Custody Receipts Ser 2007 - 314.............................. 3.46 01/08/08 22,695,000 10,000 Ser 2007 B Custody Receipts Ser 2007 - 315.............................. 3.48 01/08/08 10,000,000 18,730 Bakersfield, Wastewater Ser 2007 B (FSA Insd)................................... 3.39 01/08/08 18,730,000 Bay Area Toll Authority, 69,800 San Francisco Bay Area Toll Bridge 2001 Ser A (AMBAC Insd)...................... 3.22 01/08/08 69,800,000 13,900 San Francisco Bay Area Toll Bridge 2006 Ser A-2 (XLCA Insd)..................... 3.22 01/08/08 13,900,000 28,000 San Francisco Bay Area Toll Bridge 2007 Ser D-2 (AMBAC Insd).................... 3.18 01/08/08 28,000,000 29,525 California, Economic Recovery Ser 2004 C- 4....................................... 3.53 01/02/08 29,525,000 California Department of Water Resources, 20,750 Power Supply Ser 2002 B Subser B-2...... 3.54 01/02/08 20,750,000 3,600 Power Supply Ser 2002 B Subser B-3...... 3.50 01/02/08 3,600,000 16,000 Power Supply Ser 2002 C Subser C-16 & C- 18...................................... 3.30 01/08/08 16,000,000 21,100 Power Supply Ser 2002 C Subser G-5...... 3.33 01/08/08 21,100,000 21,500 Power Supply Ser 2005 G Subser G-12 (FGIC Insd)............................. 3.35 01/08/08 21,500,000 67,040 Power Supply Ser 2005 G Subser G-14 (FGIC Insd)............................. 3.45 01/08/08 67,040,000 California Educational Facilities Authority, 72,500 California Institute of Technology Ser 1994 & 2006 Ser A....................... 3.27 01/08/08 72,500,000 5,465 California Lutheran University Ser 2004 A....................................... 3.60 01/08/08 5,465,000 California Health Facilities Financing Authority, 40,025 Catholic Healthcare West Ser 2005....... 3.35 01/08/08 40,025,000 46,740 Kaiser Permanente Ser 2006 C............ 3.41 01/08/08 46,740,000 34,700 Northern California Presbyterian Homes & Services Ser 2004....................... 3.28 01/08/08 34,700,000 33,195 Sisters of Charity of Leavenworth Health System Ser 2003......................... 3.35 01/08/08 33,195,000 California Housing Finance Agency, 11,000 Home Mortgage 2002 Ser J (MBIA Insd) (AMT)................................... 3.67 01/02/08 11,000,000 36,000 Home Mortgage 2005 Ser D (AMT).......... 3.38 01/08/08 36,000,000 16,115 Multifamily Ser 2000 A (AMT)............ 3.67 01/02/08 16,115,000 18,050 Multifamily Ser 2006 A (AMT)............ 3.67 01/02/08 18,050,000 5,750 California Infrastructure & Economic Development Bank, Le Lycee Francais de Los Angeles Ser 2006.................... 3.35 01/08/08 5,750,000 California Statewide Communities Development Authority, 20,700 American Baptist Homes of the West Ser 2006.................................... 3.32 01/08/08 20,700,000 26,300 Azusa Pacific University Project........ 3.38 01/08/08 26,300,000
See Notes to Financial Statements 6 Active Assets California Tax-Free Trust PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2007 (UNAUDITED) continued
PRINCIPAL AMOUNT IN COUPON DEMAND THOUSANDS RATE+ DATE* VALUE - ------------------------------------------------------------------------------------------ $ 5,820 Chabad of California Ser 2004........... 3.33% 01/08/08 $ 5,820,000 14,000 Front Porch Communities & Services Ser 2007 B.................................. 3.33 01/08/08 14,000,000 58,600 Kaiser Permanente Ser 2003 B & Ser 2004 J & L................................... 3.41 01/08/08 58,600,000 61,360 SWEEP Loan Program Ser 2007 A........... 3.36 01/08/08 61,360,000 12,000 University of San Diego Ser 2005........ 3.38 01/08/08 12,000,000 50,000 Western University of Health Sciences Ser 2007 A.............................. 3.39 01/08/08 50,000,000 6,730 Cerritos Community College District, Ser 2005 P-FLOATs PT-2934 (AMBAC Insd)...... 3.60 01/08/08 6,730,000 6,700 Corona - Norco Unified School District, Ser 2005 COPs........................... 3.28 01/08/08 6,700,000 25,400 East Bay Municipal Utility District, Wastewater Sub Ser 2003 B (XLCA Insd)... 3.40 01/08/08 25,400,000 2,990 East Side Union High School District, Santa Clara County Ser 2006 B MERLOTs Ser B 28 (MBIA Insd).................... 3.78 01/08/08 2,990,000 8,340 Eastern Municipal Water District, Water & Sewer Ser 1993 B COPs (FGIC Insd)....... 3.28 01/08/08 8,340,000 71,450 Enhanced Return Puttable Floating Option Tax-Exempt Receipts, California P-FLOATs Ser EC-1011 & EC-1017................... 3.82 01/08/08 71,450,000 46,755 Fresno, Sewer System Sublien Ser 2000 A (FGIC Insd)............................. 3.28 01/08/08 46,755,000 10,500 Glendale Financing Authority, 2000 Police Building COPs........................... 3.35 01/08/08 10,500,000 2,400 Grant Joint Union High School District, School Facility Bridge Funding Ser 2005 COPs (FSA Insd)......................... 3.28 01/08/08 2,400,000 6,195 Hacienda - La Puenta Unified School District, 2000 Ser B P-FLOATs PT-1988 (FSA Insd).............................. 3.60 01/08/08 6,195,000 23,945 Hemet Unified School District, Ser 2006 COPs (AMBAC Insd)....................... 3.40 01/08/08 23,945,000 17,100 Hillsborough, Water & Sewer System Ser 2003 A & 2006 A COPs.................... 3.37 01/08/08 17,100,000 9,100 Irvine Assessment District #93-14, Improvement Bond Act 1915............... 3.50 01/02/08 9,100,000 4,210 J P Morgan Chase & Co, Los Angeles Unified School District Ser 2007 A-1 I-PUTTERs Ser 1711P (FSA Insd).................... 3.54 01/08/08 4,210,000 10,000 Los Angeles, Single Family Mortgage 2004 Ser A (AMT)............................. 3.38 01/08/08 10,000,000 10,550 Los Angeles County Housing Authority, Multifamily Malibu Meadows 1998 Ser B... 3.33 01/08/08 10,550,000 Los Angeles County Metropolitan Transportation Authority, 4,300 Prop C Sales Tax Ser 1993-A (MBIA Insd)................................... 3.28 01/08/08 4,300,000 6,000 Prop C Sales Tax Ser 2004-A ROCs II-R Ser 12037 (MBIA Insd)................... 3.54 01/08/08 6,000,000 1,000 Los Angeles County Transportation Commission, Sales Tax Ser 1992-A (FGIC Insd)................................... 3.33 01/08/08 1,000,000 Los Angeles Department of Water & Power, 33,400 Power System 2001 Ser B Subser B-5...... 3.30 01/08/08 33,400,000 10,200 Water System 2001 Ser B Subser B-1...... 3.31 01/08/08 10,200,000 10,875 Los Angeles Unified School District, P- FLOATs PT-1855 (FSA Insd)............... 3.46 01/08/08 10,875,000
See Notes to Financial Statements 7 Active Assets California Tax-Free Trust PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2007 (UNAUDITED) continued
PRINCIPAL AMOUNT IN COUPON DEMAND THOUSANDS RATE+ DATE* VALUE - ------------------------------------------------------------------------------------------ MACON Trust, $14,200 Irvine Unified School District Community Facilities District No 06-1 Ser 2007 B Variable Ser 2007 - 317................. 3.48% 01/08/08 $ 14,200,000 22,685 Tustin Unified School District Community Facilities District No 07-1 Ser 2007 Variable Ser 2007 - 336................. 3.48 01/08/08 22,685,000 8,700 Madera Irrigation Financing Authority, Water Ser 2005 A (XLCA Insd)............ 3.70 01/02/08 8,700,000 4,300 Menlo Park Community Development Agency, Las Pulgas Community Development Tax Allocation Ser 2006 (AMBAC Insd)........ 3.68 01/02/08 4,300,000 Metropolitan Water District of Southern California, 6,500 Waterworks 1996 Ser A (AMBAC Insd)...... 3.25 01/08/08 6,500,000 47,800 Waterworks 1999 Ser B & C............... 3.28 01/08/08 47,800,000 32,700 Waterworks 2000 Ser B-2................. 3.28 01/08/08 32,700,000 13,300 Mountain View, Villa Mariposa Multifamily 1985 Ser A.............................. 3.37 01/08/08 13,300,000 14,080 Northern California Gas Authority No 1, Gas Project Ser 2007 B Floaters Ser 2007 - 98............................... 3.47 01/08/08 14,080,000 12,410 Northern California Power Agency, Hydroelectric No 1 Ser 2002 B (MBIA Insd)................................... 3.28 01/08/08 12,410,000 50,950 Oakland - Alameda County Coliseum Authority, Oakland Coliseum 2000 Refg Ser C-2................................. 3.30 01/08/08 50,950,000 15,665 Oakland Joint Powers Transit Authority, Fruitvale Transit Village Ser 2001 A.... 3.35 01/08/08 15,665,000 4,320 Paramount Unified School District, School Facility Bridge Funding Ser 2001 COPs... 3.28 01/08/08 4,320,000 12,000 Pasadena, City Hall & Park Improvement Ser 2003 COPs (AMBAC Insd).................. 3.28 01/08/08 12,000,000 2,300 Pittsburg Redevelopment Agency, Los Medanos Community Development Sub 2004 Ser A (AMBAC Insd)...................... 3.68 01/02/08 2,300,000 17,200 Pleasanton, Assisted Living Facility Ser 2005.................................... 3.33 01/08/08 17,200,000 9,500 Pomona Redevelopment Agency, Park & Plaza Apartments Ser 1998 A................... 3.32 01/08/08 9,500,000 3,800 Poway Unified School District, Ser 2004 COPs (FSA Insd)......................... 3.28 01/08/08 3,800,000 Puttable Floating Option Tax-Exempt Receipts, 6,000 California Ser 2003 P-FLOATs PT-4211.... 3.46 01/08/08 6,000,000 50,900 California Ser 2007 P-FLOATs EC-1177.... 3.82 01/08/08 50,900,000 31,450 California Ser 2007 P-FLOATs PT-4022 (AMBAC Insd)............................ 3.52 01/08/08 31,450,000 15,000 Los Angeles Community College District Ser 2006 E P-FLOATs PT-4328 (FSA Insd).. 3.52 01/08/08 15,000,000 13,000 San Bernardino Community College District Ser 2006 C P-FLOATs PT-4317 (FSA Insd).............................. 3.52 01/08/08 13,000,000 5,500 San Jose Redevelopment Agency Ser 2006 C P-FLOATs PA-1505 (MBIA Insd)............ 3.60 01/08/08 5,500,000
See Notes to Financial Statements 8 Active Assets California Tax-Free Trust PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2007 (UNAUDITED) continued
PRINCIPAL AMOUNT IN COUPON DEMAND THOUSANDS RATE+ DATE* VALUE - ------------------------------------------------------------------------------------------ $ 6,320 Rescue Union School District, Ser 2001 COPs (FSA Insd)......................... 3.39% 01/08/08 $ 6,320,000 9,540 Riverside County, 2005 Ser A & B COPs P- FLOATs PT-2704 (FGIC Insd).............. 3.52 01/08/08 9,540,000 9,100 San Bernardino County Housing Authority, Multifamily Raintree Apartments Ser 2005 A....................................... 3.33 01/08/08 9,100,000 8,150 San Diego County, Ser 2004 COPs........... 3.37 01/08/08 8,150,000 San Francisco City & County Airport Commission, 35,780 2006 Second Ser 33-B (XLCA Insd) (AMT).. 3.28 01/08/08 35,780,000 26,700 2006 Second Ser 33-G (XLCA Insd) (AMT).. 3.41 01/08/08 26,700,000 San Francisco City & County Redevelopment Agency, 21,000 Bayside Village Multifamily Ser 1985 A.. 3.33 01/08/08 21,000,000 13,400 Multifamily Mercy Terrace Ser 2005 A.... 3.33 01/08/08 13,400,000 8,920 San Francisco City & County Finance Corporation, Moscone Center Ser 2004 P- FLOATs PT-2249 (AMBAC Insd)............. 3.52 01/08/08 8,920,000 Santa Clara, 2,800 Electric Ser 1985 C (AMBAC Insd)........ 3.28 01/08/08 2,800,000 10,500 Multifamily The Grove Garden Apartments Ser 1997 A.............................. 3.33 01/08/08 10,500,000 15,700 Santa Clara Valley Transportation Authority, Sales Tax Ser 2005 B (AMBAC Insd)................................... 3.33 01/08/08 15,700,000 2,200 Snowline Joint Unified School District, Ser 2005 COPs (FSA Insd)................ 3.28 01/08/08 2,200,000 Southern California Public Power Authority, 58,410 Magnolia Power Project A Refg Ser 2007-1 (MBIA Insd)............................. 3.34 01/08/08 58,410,000 15,950 Transmission 1991 Refg Ser (AMBAC Insd)................................... 3.34 01/08/08 15,950,000 18,900 Transmission Refg Ser 2001 A (FSA Insd)................................... 3.28 01/08/08 18,900,000 26,700 Transmission Ser 1996 B (FSA Insd)...... 3.30 01/08/08 26,700,000 5,000 Torrance, Little Company of Mary Hospital - Torrance Memorial Medical Center Ser 1992......................... 3.42 01/08/08 5,000,000 7,075 Tulare - Porterville Schools Financing Authority, Ser 2002 COPs (FSA Insd)..... 3.45 01/08/08 7,075,000 7,360 Turlock Irrigation District, Ser 1988 A... 3.35 01/08/08 7,360,000 9,400 Vallejo Housing Authority, Multifamily Housing Crow - Western Phase II 1985 Ser C....................................... 3.59 01/08/08 9,400,000 28,900 Vernon Natural Gas Financing Authority, Vernon Gas Ser 2006 C (MBIA Insd)....... 3.34 01/08/08 28,900,000 9,900 Whittier, Whittier College Ser 2004....... 3.49 01/08/08 9,900,000 -------------- Total California Tax-Exempt Short-Term Variable Rate Municipal Obligations (Cost $2,077,305,000)............................. 2,077,305,000 --------------
See Notes to Financial Statements 9 Active Assets California Tax-Free Trust PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2007 (UNAUDITED) continued
YIELD TO PRINCIPAL MATURITY AMOUNT IN COUPON MATURITY ON DATE OF THOUSANDS RATE DATE PURCHASE VALUE - ---------------------------------------------------------------------------------------------------------------------------- California Tax-Exempt Commercial Paper (6.0%) $30,000 Los Angeles Department of Airports, Los Angeles International Airport Ser A............................................... 2.98% 04/03/08 2.98 % $ 30,000,000 31,000 Los Angeles Department of Water & Power, Power System......... 3.40 02/07/08 3.40 31,000,000 San Diego Water Authority, 30,000 Ser 1....................................................... 3.47 02/12/08 3.47 30,000,000 38,000 Ser 3....................................................... 3.40 03/06/08 3.40 38,000,000 14,000 Ser 3....................................................... 3.42 03/12/08 3.42 14,000,000 5,500 Turlock Irrigation District, Sub Ser 2006 A................... 3.40 02/14/08 3.40 5,500,000 -------------- Total California Tax-Exempt Commercial Paper (Cost $148,500,000)................................................. 148,500,000 -------------- California Tax-Exempt Short-Term Municipal Notes and Bonds (9.9%) 60,000 California, Ser 2007-2008 RANs, dtd 11/01/07.................. 4.00 06/30/08 3.37 60,183,543 California Communities Tax & Revenue Anticipation Note Program, 35,000 Certain Local Agencies Ser 2007 A-1 Note Participations, dtd 07/02/07.................................................... 4.50 06/30/08 3.64 35,143,582 35,000 Riverside County Ser 2007 A-3 Note Participations, dtd 07/02/07.................................................... 4.50 06/30/08 3.62 35,146,888 18,000 California Community College Financing Authority, Community College League Ser 2007 A TRANs, dtd 07/02/07............... 4.50 06/30/08 3.67 18,071,246 20,000 Kern County, Ser 2007-2008 TRANs, dtd 07/02/07................ 4.50 06/30/08 3.615 20,084,434 13,000 Los Angeles County, 2007-2008 Ser TRANs, dtd 07/02/07......... 4.50 06/30/08 3.63 13,053,977 7,000 Los Angeles County Schools Pooled Financing Program, Pooled 2007-2008 Ser A TRANs, dtd 07/02/07......................... 4.50 06/30/08 3.62 7,029,378 37,000 Los Angeles Unified School District, Ser 2007 A TRANs, dtd 12/11/07.................................................... 4.00 12/29/08 3.176 37,294,852 20,000 Sacramento County, 2007 Ser A TRANs, dtd 07/03/07............. 4.25 07/09/08 3.67 20,058,532 -------------- Total California Tax-Exempt Short-Term Municipal Notes and Bonds (Cost $246,066,432)............ 246,066,432 -------------- Total Investments (Cost $2,471,871,432) (a)........................................ 99.4% 2,471,871,432 Other Assets in Excess of Liabilities.............................................. 0.6 14,190,879 ----- -------------- Net Assets......................................................................... 100.0% $2,486,062,311 ===== ==============
See Notes to Financial Statements 10 Active Assets California Tax-Free Trust PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2007 (UNAUDITED) continued - ---------- AMT Alternative Minimum Tax. COPs Certificates of Participation. I - PUTTERs Income Puttable Tax-Exempt Receipt. MERLOTs Municipal Exempt Receipts - Liquidity Option Tender. P-FLOATs Puttable Floating Option Tax-Exempt Receipts. RANs Revenue Anticipation Notes. ROCs Reset Option Certificates. TRANs Tax and Revenue Anticipation Notes. + Rate shown is the rate in effect at December 31, 2007. * 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. 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, 2007 (unaudited) Assets: Investments in securities, at value (cost $2,471,871,432)..... $2,471,871,432 Cash.......................................................... 56,432 Interest receivable........................................... 15,219,656 Prepaid expenses and other assets............................. 39,801 -------------- Total Assets............................................... 2,487,187,321 -------------- Liabilities: Payable for: Investment advisory fee.................................... 675,988 Distribution fee........................................... 206,906 Administration fee......................................... 103,453 Shares of beneficial interest redeemed..................... 7,034 Accrued expenses and other payables........................... 131,629 -------------- Total Liabilities.......................................... 1,125,010 -------------- Net Assets................................................. $2,486,062,311 ============== Composition of Net Assets: Paid-in-capital............................................... $2,485,985,890 Accumulated undistributed net investment income............... 8,703 Accumulated undistributed net realized gain................... 67,718 -------------- Net Assets................................................. $2,486,062,311 ============== Net Asset Value Per Share 2,485,953,737 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, 2007 (unaudited) Net Investment Income: Interest Income................................................. $38,439,950 ----------- Expenses Investment advisory fee......................................... 3,670,573 Distribution fee................................................ 1,089,916 Administration fee.............................................. 544,958 Transfer agent fees and expenses................................ 189,793 Custodian fees.................................................. 44,413 Registration fees............................................... 35,384 Professional fees............................................... 29,295 Shareholder reports and notices................................. 28,280 Trustees' fees and expenses..................................... 16,315 Other........................................................... 65,834 ----------- Total Expenses............................................... 5,714,761 Less: expense offset............................................ (45,097) ----------- Net Expenses................................................. 5,669,664 ----------- Net Investment Income........................................ 32,770,286 Net Realized Gain............................................ 20,473 ----------- Net Increase.................................................... $32,790,759 ===========
See Notes to Financial Statements 13 Active Assets California Tax-Free Trust FINANCIAL STATEMENTS continued Statements of Changes in Net Assets
FOR THE SIX FOR THE YEAR MONTHS ENDED ENDED DECEMBER 31, 2007 JUNE 30, 2007 ----------------- -------------- (unaudited) Increase (Decrease) in Net Assets: Operations: Net investment income............................. $ 32,770,286 $ 48,752,522 Net realized gain................................. 20,473 47,313 -------------- -------------- Net Increase................................... 32,790,759 48,799,835 Dividends to shareholders from net investment income.......................................... (32,768,233) (48,753,391) Net increase from transactions in shares of beneficial interest............................. 700,543,237 468,446,364 -------------- -------------- Net Increase................................... 700,565,763 468,492,808 Net Assets: Beginning of period............................... 1,785,496,548 1,317,003,740 -------------- -------------- End of Period (Including accumulated undistributed net investment income of $8,703 and $6,650, respectively)..................................... $2,486,062,311 $1,785,496,548 ============== ==============
See Notes to Financial Statements 14 Active Assets California Tax-Free Trust NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 2007 (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, in accordance with Rule 2a-7 under the Act. 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 and are included in interest income. Interest income is accrued daily. C. Federal Income Tax Policy -- It is the Fund's policy to comply with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no provision for federal income taxes is required. The Fund files tax returns with the U.S. Internal Revenue Service and New York. The Fund adopted the provisions of the Financial Accounting Standards Board ("FASB") Interpretation No. 48 ("FIN 48") Accounting for Uncertainty in Income Taxes on June 29, 2007. FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in other expenses in the Statement of Operations. Each of the tax years in the four year period ended December 31, 2007, remains subject to examination by taxing authorities. 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. 15 Active Assets California Tax-Free Trust NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 2007 (UNAUDITED) continued 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 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. Under an agreement between the Administrator and State Street Bank and Trust Company ("State Street"), State Street provides certain administrative services to the Fund. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund. 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, 2007, the distribution fee was accrued at the annual rate of 0.10%. 16 Active Assets California Tax-Free Trust NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 2007 (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, 2007, aggregated $3,919,948,608 and $3,398,402,477, 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, 2007, included in Trustees' fees and expenses in the Statement of Operations amounted to $2,560. At December 31, 2007, the Fund had an accrued pension liability of $55,987 which is included in accrued expenses in the Statement of Assets and Liabilities. 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 or she 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, 2007 JUNE 30, 2007 ----------------- -------------- (unaudited) Shares sold........................................ 5,876,737,889 8,610,185,532 Shares issued in reinvestment of dividends......... 32,753,694 48,742,933 -------------- -------------- 5,909,491,583 8,658,928,465 Shares redeemed.................................... (5,208,948,346) (8,190,482,101) -------------- -------------- Net increase in shares outstanding................. 700,543,237 468,446,364 ============== ==============
17 Active Assets California Tax-Free Trust NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 2007 (UNAUDITED) continued 6. Expense Offset The expense offset represents a reduction of the fees and expenses for interest earned on cash balances maintained by the Fund with the transfer agent and custodian. 7. Accounting Pronouncement In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures. 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 2007 2007 2006 2005 2004 2003 ------------- ---------- ---------- -------- -------- -------- (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........ 0.015 0.030 0.023 0.012 0.003 0.006 Less dividends from net investment income.... (0.015) (0.030) (0.023) (0.012) (0.003) (0.006) ------- ------- ------- ------- ------- ------- Net asset value, end of period............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ====== ====== ====== ====== ====== ====== Total Return................................. 1.54%(1) 3.02% 2.37% 1.17% 0.35% 0.63% Ratios to Average Net Assets: Total expenses (before expense offset)....... 0.52%(2) 0.55% 0.59%(3) 0.62%(3) 0.61% 0.60% Net investment income........................ 3.00%(2) 2.99% 2.42% 1.16% 0.35% 0.63% Supplemental Data: Net assets, end of period, in thousands...... $2,486,062 $1,785,497 $1,317,004 $704,291 $687,800 $762,448
- ---------- (1) Not annualized. (2) Annualized. (3) Does not reflect the effect of expense offset of 0.01%.
19 TRUSTEES Frank L. Bowman Michael Bozic Kathleen A. Dennis James F. Higgins Dr. Manuel H. Johnson Joseph J. Kearns Michael F. Klein Michael E. Nugent W. Allen Reed Fergus Reid OFFICERS Michael E. Nugent Chairperson of the Board Ronald E. Robison President and Principal Executive Officer J. David Germany Vice President Dennis F. Shea Vice President Amy R. Doberman Vice President Carsten Otto Chief Compliance Officer Stefanie V. Chang Yu Vice President Francis J. Smith Treasurer and Chief Financial Officer 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 LEGAL COUNSEL Clifford Chance US LLP 31 West 52nd Street New York, New York 10019 COUNSEL TO THE INDEPENDENT TRUSTEES Kramer Levin Naftalis & Frankel LLP 1177 Avenue of the Americas New York, New York 10036 INVESTMENT ADVISER Morgan Stanley Investment Advisors Inc. 522 Fifth Avenue New York, New York 10036 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. Morgan Stanley Distributors Inc., member FINRA (c) 2007 Morgan Stanley [MORGAN STANLEY LOGO] MORGAN STANLEY FUNDS Active Assets California Tax-Free Trust Semiannual Report December 31, 2007 AACSAN IU08-00775P-Y 12/07 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 second fiscal quarter of the period covered by this 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 15, 2008 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 15, 2008 /s/ Francis Smith Francis Smith Principal Financial Officer February 15, 2008 3 EX-99.CERT 2 y46374exv99wcert.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 second fiscal quarter of the period covered by this 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 15, 2008 /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 second fiscal quarter of the period covered by this 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 15, 2008 /s/ Francis Smith Francis Smith Principal Financial Officer 7 EX-99.906CERT 3 y46374exv99w906cert.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, 2007 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 15, 2008 /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, 2007 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 15, 2008 /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-----