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 | |||||||
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Active Assets California Tax Free Trust | ||||||||
(Exact name of registrant as specified in charter) | ||||||||
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522 Fifth Avenue, New York, New York |
| 10036 | ||||||
(Address of principal executive offices) |
| (Zip code) | ||||||
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Kevin Klingert 522 Fifth Avenue, New York, New York 10036 | ||||||||
(Name and address of agent for service) | ||||||||
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Registrant’s telephone number, including area code: | 201-830-8802 |
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Date of fiscal year end: | June 30, 2013 |
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Date of reporting period: | December 31, 2012 |
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Item 1 - Report to Shareholders
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
Kevin Klingert
President and Principal Executive Officer
Mary Ann Picciotto
Chief Compliance Officer
Stefanie V. Chang Yu
Vice President
Francis J. Smith
Treasurer and Principal Financial Officer
Mary E. Mullin
Secretary
Transfer Agent
Morgan Stanley Services Company Inc.
P.O. Box 219886
Kansas City, Missouri 64121
Custodian
State Street Bank and Trust Company
One Lincoln Street
Boston, Massachusetts 02111
Independent Registered Public Accounting Firm
Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116
Legal Counsel
Dechert LLP
1095 Avenue of the Americas
New York, New York 10036
Counsel to the Independent Trustees
Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036
Adviser
Morgan Stanley Investment Management 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. Please read the Prospectus carefully before investing.
Morgan Stanley Distribution, Inc., member FINRA.
© 2013 Morgan Stanley
MORGAN STANLEY FUNDS
Active Assets
California
Tax-Free Trust
Semiannual Report
December 31, 2012
AACSAN
IU13-00414P-Y12/12
Active Assets California Tax-Free Trust
Table of Contents
Welcome Shareholder | 3 | ||||||
Fund Report | 4 | ||||||
Expense Example | 8 | ||||||
Portfolio of Investments | 9 | ||||||
Statement of Assets and Liabilities | 19 | ||||||
Statement of Operations | 20 | ||||||
Statements of Changes in Net Assets | 21 | ||||||
Notes to Financial Statements | 22 | ||||||
Financial Highlights | 29 | ||||||
U.S. Privacy Policy | 30 |
2
Welcome Shareholder,
We are pleased to provide this semiannual report, in which you will learn how your investment in Active Assets California Tax-Free Trust performed during the latest six-month period. It includes an overview of the market conditions and discusses some of the factors that affected performance during the reporting period. In addition, the report contains financial statements and a list of portfolio holdings.
Morgan Stanley Investment Management is a client-centric, investor-led organization. Our global presence, intellectual capital, and breadth of products and services enable us to partner with investors to meet the evolving challenges of today's financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.
As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.
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.
3
Fund Report (unaudited)
For the six months ended December 31, 2012
Market Conditions
The fiscal health of U.S. municipalities continued to improve in the second half of 2012, though risks remain. The agreement passed by Congress in the final days of 2012 to keep federal income taxes from increasing on most U.S. workers in 2013 eased a threat to states and cities only recently emerging from the fiscal crisis brought on by the 18-month recession. An annual survey by the National Conference of State Legislatures found that half of all U.S. states have returned to peak tax-collection levels last seen before the recession five years ago, or will soon, and 57 percent of cities say they were "better able to meet financial needs" in 2012 than in 2011. It is the first time that most reported an improvement since before the 18-month recession began in 2007. Looking ahead, 12 states project their personal income-tax collections will exceed what they budgeted for the current fiscal year, while 15 states say they will come in on target, the survey said.
In all, states have closed about $593 billion in deficits over the past five years, according to the Center on Budget and Policy Priorities. This deficit reduction created a drag on the economy from late 2009 until the third quarter of 2012, when state and local government spending rose as revenue improved. The ongoing fiscal improvement of the states led to a fourth straight year of declines in defaults in the municipal market. If this pattern persists, municipal defaults could fall below 100 in 2013 for the first time since at least 2009, driven by a drop in failures among real-estate borrowings in Florida and California.
Not all signs are positive, however. Funding for U.S. state retirement plans fell for a fourth straight year as insufficient contributions and inadequate investment gains overwhelmed cuts that more than 40 legislatures have made to benefits since 2007. The median funding ratio was 71.7 percent for the year through June 2011, down from 74.3 percent the prior period.
California voters approved Governor Jerry Brown's sales and income-tax increases, handing the Democratic governor his biggest victory since he was elected two years ago and averting $5.5 billion of cuts to public schools.
California lawmakers approved the broadest rollback of public-employee pension benefits in the state's history after Governor Brown and Democrats who control the legislature struck a last-minute deal. The overhaul, which may save taxpayers as much as $55 billion over 30 years, would require new employees to pay half the cost of their benefits and work longer before they can retire. It also reduces formulas for calculating benefits and caps pension payments.
California's general obligation (GO) bond yields have tightened against top-rated municipal debt since the November election, partly amid investor speculation that the state's credit rating may be raised. The GO bonds are rated lowest of all state credits by Standard & Poor's and Fitch Ratings at A-minus, and one notch ahead of Illinois at A1 by Moody's Investors Service. The narrowing of California yields against the benchmark index is a trend that began around two years ago as the
4
state's budget process began improving after years of turmoil and investors chasing higher yields found opportunity in California bonds.
California's cash flow has improved enough to allow to the state to reduce the amount of money it had planned to hold back from schools, local governments and other programs. The state will release $1.8 billion of the backed payments one month ahead of schedule in December, and it will forgo more than $900 million of the so-called cash deferrals previously set for March, California finance officials said in December 2012.
Performance Analysis
As of December 31, 2012, Active Assets California Tax-Free Trust had net assets of approximately $2.3 billion and an average portfolio maturity of 26 days. For the six-month period ended December 31, 2012, the Fund provided a total return of 0.01 percent. For the seven-day period ended December 31, 2012, the Fund provided an effective annualized yield of 0.01 percent (subsidized) and –0.36 percent (non-subsidized) and a current yield of 0.01 percent (subsidized) and –0.36 percent (non-subsidized), while its 30-day moving average yield for December was 0.01 percent (subsidized) and –0.36 percent (non-subsidized). Yield quotations more closely reflect the current earnings of the Fund. The non-subsidized yield reflects what the yield would have been had a fee and/or expense waiver not been in place during the period shown. Past performance is no guarantee of future results.
In light of continuing market disruptions and ongoing concerns in the broader global economy, it is clearly a
time for careful diligence and diversification of investment portfolios. In the current uncertain market environment, our emphasis has been on maintaining high levels of liquidity and managing exposure to institutions under stress.
Recent economic data has shown some signs of improvement but many investors are likely to continue to tread cautiously. Barring any unexpected shocks to the market, rates are likely to remain low into 2014, in our view. During this period of continuing uncertainty, we will maintain a watchful eye on state and local economies.
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.
5
PORTFOLIO COMPOSITION as of 12/31/12 | |||||||
Weekly Variable Rate Bonds | 70.2 | % | |||||
Commercial Paper | 9.5 | ||||||
Daily Variable Rate Bonds | 9.0 | ||||||
Municipal Bonds & Notes | 7.6 | ||||||
Closed-End Investment Companies | 1.9 | ||||||
Put Option Bonds | 1.8 | ||||||
MATURITY SCHEDULE as of 12/31/12 | |||||||
1 - 30 Days | 82.9 | % | |||||
31 - 60 Days | 8.4 | ||||||
61 - 90 Days | 0.8 | ||||||
91 - 120 Days | 0.8 | ||||||
121 + Days | 7.1 |
Subject to change daily. Provided for informational purposes only and should not be deemed as a recommendation to buy or sell the securities mentioned above. Portfolio composition and maturity schedule are as a percentage of total investments.
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 Adviser seeks to maintain the Fund's share price at $1.00. The Adviser generally invests substantially all of the Fund's assets in California municipal obligations and the Fund has a fundamental policy of investing at least 80 percent of its net assets in securities the interest on which is exempt from federal and California personal income tax. This policy may not be changed without shareholder approval. In addition, the Fund may invest up to 20 percent of its net assets in securities that pay interest income subject to the "alternative minimum tax," and some taxpayers may have to pay tax on a Fund distribution of this income. For more information, see the "Tax Consequences" section beginning on page 26 of the Fund's Prospectus.
An investment in the Fund is not insured or guaranteed by the FDIC 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
6
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 and monthly holdings for each money market fund on Form N-MFP. Morgan Stanley does not deliver these reports to shareholders, nor are the first and third fiscal quarter reports posted to the Morgan Stanley public web site. However, the holdings for each money market fund are posted to the Morgan Stanley public web site. You may obtain the Form N-Q filings (as well as the Form N-CSR, N-CSRS and N-MFP filings) by 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 20549-1520.
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.
7
Expense Example (unaudited)
As a shareholder of the Fund, you incur costs, including advisory fees; administration 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.
This example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period 07/01/12 – 12/31/12.
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.
Please note that "Expenses Paid During Period" are grossed up to reflect Fund expenses prior to the effect of Expense Offset (See Note 8 in the Notes to Financial Statements). Therefore, the annualized net expense ratios may differ from the ratio of expenses to average net assets shown in the Financial Highlights.
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) or exchange fees.
Beginning Account Value | Ending Account Value | Expenses Paid During Period@ | |||||||||||||
07/01/12 | 12/31/12 | 07/01/12 – 12/31/12 | |||||||||||||
Actual (0.01% return) | $ | 1,000.00 | $ | 1,000.10 | $ | 0.81 | |||||||||
Hypothetical (5% annual return before expenses) | $ | 1,000.00 | $ | 1,024.53 | $ | 0.82 |
@ Expenses are equal to the Fund's annualized expense ratio of 0.16% multiplied by the average account value over the period, multiplied by 185/365 (to reflect the one-half year period). If the fund had borne all of its expenses, the annualized expense ratio would have been 0.51%.
8
Active Assets California Tax-Free Trust
Portfolio of Investments n December 31, 2012 (unaudited)
PRINCIPAL AMOUNT (000) | COUPON RATE (a) | DEMAND DATE (b) | MATURITY DATE | VALUE | |||||||||||||||||||
Weekly Variable Rate Bonds (70.1%) | |||||||||||||||||||||||
$ | 14,700 | Antelope Valley-East Kern Water Agency, CA, Ser 2008 A-2 COPs | 0.11 | % | 01/07/13 | 06/01/37 | $ | 14,700,000 | |||||||||||||||
Bay Area Toll Authority, CA, | |||||||||||||||||||||||
7,400 | San Francisco Bay Area Toll Bridge 2001 Ser A | 0.11 | 01/07/13 | 04/01/36 | 7,400,000 | ||||||||||||||||||
62,600 | San Francisco Bay Area Toll Bridge 2007 Ser A2 | 0.11 | 01/07/13 | 04/01/47 | 62,600,000 | ||||||||||||||||||
2,000 | San Francisco Bay Area Toll Bridge 2007 Ser B2 | 0.11 | 01/07/13 | 04/01/47 | 2,000,000 | ||||||||||||||||||
6,185 | BB&T Municipal Trust, CA, California Department of Water Resources 2008 Subser AE Floater Certificates Ser 28 (c) | 0.13 | 01/07/13 | 12/01/15 | 6,185,000 | ||||||||||||||||||
California, | |||||||||||||||||||||||
40,800 | Ser 2005 A Subser A-2-1 | 0.12 | 01/07/13 | 05/01/40 | 40,800,000 | ||||||||||||||||||
24,100 | Ser 2005 A Subser A-3 | 0.13 | 01/07/13 | 05/01/40 | 24,100,000 | ||||||||||||||||||
12,000 | Ser 2005 B Subser B-3 | 0.11 | 01/07/13 | 05/01/40 | 12,000,000 | ||||||||||||||||||
California Educational Facilities Authority, | |||||||||||||||||||||||
16,300 | California Institute of Technology 2006 Ser A | 0.10 | 01/07/13 | 10/01/36 | 16,300,000 | ||||||||||||||||||
11,000 | California Institute of Technology Ser 1994 | 0.10 | 01/07/13 | 01/01/24 | 11,000,000 | ||||||||||||||||||
5,465 | California Lutheran University Ser 2004 A | 0.15 | 01/07/13 | 10/01/29 | 5,465,000 | ||||||||||||||||||
4,150 | California Enterprise Development Authority, Robert Louis Stevenson School Ser 2011 | 0.11 | 01/07/13 | 01/01/41 | 4,150,000 | ||||||||||||||||||
California Health Facilities Financing Authority, | |||||||||||||||||||||||
8,450 | Catholic Healthcare West Ser 2011 B | 0.13 | 01/07/13 | 03/01/47 | 8,450,000 | ||||||||||||||||||
14,700 | Catholic Healthcare West Ser 2011 C | 0.10 | 01/07/13 | 03/01/47 | 14,700,000 | ||||||||||||||||||
20,000 | Scripps Health Ser 2008 D | 0.13 | 01/07/13 | 10/01/31 | 20,000,000 | ||||||||||||||||||
8,755 | Scripps Health Ser 2008 F | 0.10 | 01/07/13 | 10/01/31 | 8,755,000 | ||||||||||||||||||
12,000 | Scripps Health Ser 2010 C | 0.10 | 01/07/13 | 10/01/40 | 12,000,000 | ||||||||||||||||||
33,225 | Scripps Health Ser 2012 B | 0.10 | 01/07/13 | 10/01/42 | 33,225,000 | ||||||||||||||||||
16,235 | Sisters of Charity of Leavenworth Health System Ser 2003 | 0.12 | 01/07/13 | 12/01/17 | 16,235,000 | ||||||||||||||||||
11,110 | St. Joseph Health System Ser 2011 A | 0.12 | 01/07/13 | 07/01/41 | 11,110,000 | ||||||||||||||||||
29,200 | Stanford Hospital Ser 2008 B-1 | 0.10 | 01/07/13 | 11/15/45 | 29,200,000 | ||||||||||||||||||
2,100 | Sutter Health Ser 2011 B ROCs II-R Ser 11952 (c) | 0.14 | 01/07/13 | 08/15/18 | 2,100,000 |
See Notes to Financial Statements
9
Active Assets California Tax-Free Trust
Portfolio of Investments n December 31, 2012 (unaudited) continued
PRINCIPAL AMOUNT (000) | COUPON RATE (a) | DEMAND DATE (b) | MATURITY DATE | VALUE | |||||||||||||||||||
California Infrastructure & Economic Development Bank, | |||||||||||||||||||||||
$ | 6,000 | American National Red Cross Ser 2008 | 0.10 | % | 01/07/13 | 09/01/34 | $ | 6,000,000 | |||||||||||||||
5,390 | Le Lycee Francais de Los Angeles Ser 2006 | 0.13 | 01/07/13 | 09/01/36 | 5,390,000 | ||||||||||||||||||
California Statewide Communities Development Authority, | |||||||||||||||||||||||
32,010 | Gas Supply Sacramento Municipal Utility District Ser 2010 | 0.12 | 01/07/13 | 11/01/40 | 32,010,000 | ||||||||||||||||||
33,160 | Kaiser Permanente Ser 2003 C | 0.13 | 01/07/13 | 08/15/25 | 33,160,000 | ||||||||||||||||||
10,000 | Kaiser Permanente Ser 2009 C-2 | 0.13 | 01/07/13 | 04/01/46 | 10,000,000 | ||||||||||||||||||
18,000 | Rady Children's Hospital Ser 2008 C | 0.12 | 01/07/13 | 08/15/36 | 18,000,000 | ||||||||||||||||||
11,620 | The Master's College Ser 2002 | 0.12 | 01/07/13 | 02/01/32 | 11,620,000 | ||||||||||||||||||
39,685 | University of San Diego Ser 2005 | 0.12 | 01/07/13 | 10/01/45 | 39,685,000 | ||||||||||||||||||
23,260 | Castaic Lake Water Agency, CA, Ser 1994 A COPs | 0.11 | 01/07/13 | 08/01/20 | 23,260,000 | ||||||||||||||||||
8,000 | Deutsche Bank SPEARS, CA, California Health Facilities Financing Authority Dignity Health Ser 2012 A SPEARS Ser DBE-1083 (c) | 0.20 | 01/07/13 | 03/01/28 | 8,000,000 | ||||||||||||||||||
East Bay Municipal Utility District, CA, | |||||||||||||||||||||||
5,150 | Water System Sub Refg Ser 2008 A-1 | 0.10 | 01/07/13 | 06/01/38 | 5,150,000 | ||||||||||||||||||
17,020 | Water System Sub Refg Ser 2008 A-3 | 0.12 | 01/07/13 | 06/01/38 | 17,020,000 | ||||||||||||||||||
7,120 | Water System Sub Refg Ser 2008 B-3 | 0.12 | 01/07/13 | 06/01/26 | 7,120,000 | ||||||||||||||||||
Eastern Municipal Water District, CA, | |||||||||||||||||||||||
22,800 | Water & Sewer Ser 2008 B COPs | 0.11 | 01/07/13 | 07/01/35 | 22,800,000 | ||||||||||||||||||
27,980 | Water & Sewer Ser 2008 C COPs | 0.11 | 01/07/13 | 07/01/20 | 27,980,000 | ||||||||||||||||||
8,000 | Water & Sewer Ser 2008 D COPs (c) | 0.11 | 01/07/13 | 07/01/23 | 8,000,000 | ||||||||||||||||||
23,000 | Water & Sewer Ser 2008 E COPs | 0.11 | 01/07/13 | 07/01/33 | 23,000,000 | ||||||||||||||||||
37,400 | Water & Sewer Ser 2008 G COPs | 0.11 | 01/07/13 | 07/01/38 | 37,400,000 | ||||||||||||||||||
30,000 | Emeryville Redevelopment Agency, CA, Bay Street Apartments Ser 2002 A (AMT) | 0.17 | 01/07/13 | 10/15/36 | 30,000,000 | ||||||||||||||||||
12,600 | Golden Empire Schools Financing Authority, CA, Kern High School District Ser 2012 | 0.58 | 01/07/13 | 05/01/13 | 12,600,000 | ||||||||||||||||||
2,000 | Grossmont Union High School District, CA, 2010 Election of 2008 Ser B ROCs II-R Ser 11929 (c) | 0.14 | 01/07/13 | 08/01/38 | 2,000,000 | ||||||||||||||||||
Irvine Ranch Water District, CA, | |||||||||||||||||||||||
51,500 | Cons Ser 2008 A | 0.10 | 01/07/13 | 07/01/35 | 51,500,000 | ||||||||||||||||||
4,500 | Nos 105, 140, 240 & 250 | 0.11 | 01/07/13 | 01/01/21 | 4,500,000 |
See Notes to Financial Statements
10
Active Assets California Tax-Free Trust
Portfolio of Investments n December 31, 2012 (unaudited) continued
PRINCIPAL AMOUNT (000) | COUPON RATE (a) | DEMAND DATE (b) | MATURITY DATE | VALUE | |||||||||||||||||||
JP Morgan Chase & Co., CA, | |||||||||||||||||||||||
$ | 8,515 | Citrus Community College District Ser 2004 C PUTTERs Ser 3487 (c) | 0.19 | % | 01/07/13 | 06/01/17 | $ | 8,515,000 | |||||||||||||||
18,260 | San Diego Public Facilities Financing Authority Water Ser 2009 B PUTTERs Ser 3504 (c) | 0.14 | 01/07/13 | 02/01/33 | 18,260,000 | ||||||||||||||||||
4,850 | JP Morgan Chase & Co., CA, Grossmont Union High School District Election 2008 Ser 2010 B PUTTERs Ser 3801Z (c) | 0.16 | 01/07/13 | 08/01/18 | 4,850,000 | ||||||||||||||||||
43,550 | Long Beach, CA, Memorial Health Services Ser 1991 | 0.11 | 01/07/13 | 10/01/16 | 43,550,000 | ||||||||||||||||||
9,910 | Los Angeles Community College District, CA, Ser 2009 A ROCs II-R Ser 11773 (c) | 0.13 | 01/07/13 | 08/01/33 | 9,910,000 | ||||||||||||||||||
13,350 | Los Angeles County Housing Authority, CA, Multifamily Malibu Meadows 1998 Ser B | 0.12 | 01/07/13 | 04/15/28 | 13,350,000 | ||||||||||||||||||
Los Angeles Department of Water & Power, CA, | |||||||||||||||||||||||
18,000 | Power System 2001 Ser B Subser B-2 | 0.10 | 01/07/13 | 07/01/34 | 18,000,000 | ||||||||||||||||||
4,900 | Power System 2001 Ser B Subser B-5 | 0.10 | 01/07/13 | 07/01/34 | 4,900,000 | ||||||||||||||||||
26,000 | Power System 2001 Ser B Subser B-7 | 0.10 | 01/07/13 | 07/01/34 | 26,000,000 | ||||||||||||||||||
15,000 | Power System 2001 Ser B Subser B-8 | 0.12 | 01/07/13 | 07/01/34 | 15,000,000 | ||||||||||||||||||
12,050 | Power System 2002 Ser A Subser A-3 | 0.10 | 01/07/13 | 07/01/35 | 12,050,000 | ||||||||||||||||||
9,000 | Power System 2002 Ser A Subser A-6 | 0.09 | 01/07/13 | 07/01/35 | 9,000,000 | ||||||||||||||||||
20,000 | Power System 2002 Ser A Subser A-7 | 0.10 | 01/07/13 | 07/01/35 | 20,000,000 | ||||||||||||||||||
19,100 | Water System 2001 Ser B Subser B-1 | 0.10 | 01/07/13 | 07/01/35 | 19,100,000 | ||||||||||||||||||
Los Angeles, CA, | |||||||||||||||||||||||
10,750 | Wastewater System Subser 2008 B | 0.12 | 01/07/13 | 06/01/28 | 10,750,000 | ||||||||||||||||||
6,415 | Wastewater System Subser 2008 C | 0.12 | 01/07/13 | 06/01/28 | 6,415,000 | ||||||||||||||||||
Los Rios Community College District, CA, | |||||||||||||||||||||||
4,880 | Election 2002 Ser C PUTTERs Ser 2972 (AGM) (c) | 0.14 | 01/07/13 | 02/01/13 | 4,880,000 | ||||||||||||||||||
4,600 | Election 2008 Ser A ROCs II-R Ser 11953X (c) | 0.14 | 01/07/13 | 08/01/30 | 4,600,000 | ||||||||||||||||||
18,435 | Metropolitan Water District of Southern California, Water 2008 Ser A-2 | 0.12 | 01/07/13 | 07/01/37 | 18,435,000 | ||||||||||||||||||
15,255 | Morgan Hill Redevelopment Agency, CA, Ojo de Agua Tax Allocation Ser 2008 A | 0.13 | 01/07/13 | 09/01/33 | 15,255,000 |
See Notes to Financial Statements
11
Active Assets California Tax-Free Trust
Portfolio of Investments n December 31, 2012 (unaudited) continued
PRINCIPAL AMOUNT (000) | COUPON RATE (a) | DEMAND DATE (b) | MATURITY DATE | VALUE | |||||||||||||||||||
$ | 10,000 | Mountain View, CA, Villa Mariposa Multifamily 1985 Ser A | 0.12 | % | 01/07/13 | 02/15/17 | $ | 10,000,000 | |||||||||||||||
Newport Beach, CA, | |||||||||||||||||||||||
44,100 | Hoag Memorial Hospital Presbyterian Ser 2008 C | 0.10 | 01/07/13 | 12/01/40 | 44,100,000 | ||||||||||||||||||
9,850 | Hoag Memorial Hospital Presbyterian Ser 2008 E | 0.13 | 01/07/13 | 12/01/40 | 9,850,000 | ||||||||||||||||||
6,900 | Orange County Housing Authority, CA, Oasis Martinique Refg 1998 Issue I | 0.15 | 01/07/13 | 06/15/28 | 6,900,000 | ||||||||||||||||||
Orange County, CA, | |||||||||||||||||||||||
14,750 | WLCO LF Partners Issue G of 1998 Ser 2 | 0.12 | 01/07/13 | 11/15/28 | 14,750,000 | ||||||||||||||||||
12,550 | WLCO LF Partners Issue G of 1998 Ser 3 | 0.12 | 01/07/13 | 11/15/28 | 12,550,000 | ||||||||||||||||||
3,120 | Palo Alto, CA, Election of 2008-Ser A 2010 ROCs II R-11859 (c) | 0.16 | 01/07/13 | 02/01/18 | 3,120,000 | ||||||||||||||||||
23,225 | Rancho Water District Financing Authority, CA, Ser 2008 B | 0.11 | 01/07/13 | 08/15/31 | 23,225,000 | ||||||||||||||||||
RBC Municipal Products Trust, Inc., CA, | |||||||||||||||||||||||
9,000 | East Bay Municipal Utility District Water System Ser 2010 Floater Certificates Ser O-14 (c) | 0.12 | 01/07/13 | 06/01/36 | 9,000,000 | ||||||||||||||||||
2,680 | Long Beach Community College District 2008 Election Ser 2012 B Floater Certificates Ser O-55 (c) | 0.13 | 01/07/13 | 08/01/20 | 2,680,000 | ||||||||||||||||||
8,800 | Rib Floater Credit Enhanced Trust, CA, University of California Regents Ser G Trust Receipts Ser 2012 FR-12UX (c) | 0.14 | 01/07/13 | 05/15/37 | 8,800,000 | ||||||||||||||||||
Riverside County, CA, | |||||||||||||||||||||||
6,700 | 1985 Ser A COPs | 0.13 | 01/07/13 | 12/01/15 | 6,700,000 | ||||||||||||||||||
6,400 | 1985 Ser B COPs | 0.13 | 01/07/13 | 12/01/15 | 6,400,000 | ||||||||||||||||||
Sacramento County Housing Authority, CA, | |||||||||||||||||||||||
17,800 | Multifamily Logan Park Apartments Ser 2007 E (AMT) | 0.17 | 01/07/13 | 05/01/42 | 17,800,000 | ||||||||||||||||||
5,600 | Seasons at Winter 2004 Ser C-1 (AMT) | 0.17 | 01/07/13 | 08/01/34 | 5,600,000 | ||||||||||||||||||
9,400 | Sacramento County Sanitation Districts Financing Authority, CA, Sub Lien Ser 2000 C | 0.12 | 01/07/13 | 12/01/30 | 9,400,000 | ||||||||||||||||||
Sacramento Municipal Utility District, CA, | |||||||||||||||||||||||
16,500 | Sub Electric Ser 2012 L | 0.10 | 01/07/13 | 08/15/41 | 16,500,000 | ||||||||||||||||||
15,000 | Sub Electric Ser 2012 M | 0.10 | 01/07/13 | 08/15/41 | 15,000,000 |
See Notes to Financial Statements
12
Active Assets California Tax-Free Trust
Portfolio of Investments n December 31, 2012 (unaudited) continued
PRINCIPAL AMOUNT (000) | COUPON RATE (a) | DEMAND DATE (b) | MATURITY DATE | VALUE | |||||||||||||||||||
Sacramento Transportation Authority, CA, | |||||||||||||||||||||||
$ | 6,800 | Measure A Sales Tax Ser 2009 A | 0.08 | % | 01/07/13 | 10/01/38 | $ | 6,800,000 | |||||||||||||||
1,800 | Measure A Sales Tax Ser 2009 B | 0.13 | 01/07/13 | 10/01/38 | 1,800,000 | ||||||||||||||||||
San Diego County Regional Transportation Commission, CA, | |||||||||||||||||||||||
705 | Sales Tax 2008 Ser B | 0.11 | 01/07/13 | 04/01/38 | 705,000 | ||||||||||||||||||
12,725 | Sales Tax 2008 Ser C | 0.13 | 01/07/13 | 04/01/38 | 12,725,000 | ||||||||||||||||||
26,800 | San Francisco Airport Commission, CA, San Francisco International Airport Second Ser 2008 37C | 0.13 | 01/07/13 | 05/01/29 | 26,800,000 | ||||||||||||||||||
San Francisco City & County Airport Commission, CA, | |||||||||||||||||||||||
20,900 | 2009 Second Ser 36-A | 0.13 | 01/07/13 | 05/01/26 | 20,900,000 | ||||||||||||||||||
14,310 | 2009 Second Ser 36-B | 0.13 | 01/07/13 | 05/01/26 | 14,310,000 | ||||||||||||||||||
7,000 | San Francisco City & County Finance Corporation, CA, Moscone Center Ser 2008-2 | 0.10 | 01/07/13 | 04/01/30 | 7,000,000 | ||||||||||||||||||
46,000 | San Jose Financing Authority, CA, Civic Center Ser 2008 A | 0.10 | 01/07/13 | 06/01/39 | 46,000,000 | ||||||||||||||||||
25,000 | San Jose, CA, Almaden Lake Village Apartments Ser 1997 A (AMT) | 0.17 | 01/07/13 | 03/01/32 | 25,000,000 | ||||||||||||||||||
16,045 | Santa Clara County Financing Authority, CA, VMC Facility Replacement 1994 Ser B | 0.13 | 01/07/13 | 11/15/25 | 16,045,000 | ||||||||||||||||||
Santa Clara Valley Transportation Authority, CA, | |||||||||||||||||||||||
4,445 | Measure A Sales Tax Ser 2008 A | 0.11 | 01/07/13 | 04/01/36 | 4,445,000 | ||||||||||||||||||
15,565 | Measure A Sales Tax Ser 2008 C | 0.13 | 01/07/13 | 04/01/36 | 15,565,000 | ||||||||||||||||||
30,000 | Sales Tax Ser 2008 A | 0.10 | 01/07/13 | 06/01/26 | 30,000,000 | ||||||||||||||||||
4,465 | Sales Tax Ser 2008 B | 0.10 | 01/07/13 | 06/01/26 | 4,465,000 | ||||||||||||||||||
14,295 | Sales Tax Ser 2008 C | 0.11 | 01/07/13 | 06/01/26 | 14,295,000 | ||||||||||||||||||
10,800 | Santa Clara, CA, Multifamily The Grove Garden Apartments Ser 1997 A | 0.11 | 01/07/13 | 02/15/27 | 10,800,000 | ||||||||||||||||||
5,860 | Sequoia Union High School District, CA, Ser 2005 B PUTTERs (c) Ser 2905Z (AGM) (c) | 0.16 | 01/07/13 | 07/01/14 | 5,860,000 | ||||||||||||||||||
15,025 | West Hills Community College District, CA, Ser 2008 COPs | 0.11 | 01/07/13 | 07/01/33 | 15,025,000 | ||||||||||||||||||
10,000 | Western Municipal Water District Facilities Authority, CA, Ser 2012 A | 0.10 | 01/07/13 | 10/01/42 | 10,000,000 | ||||||||||||||||||
8,985 | Whittier, CA, Whittier College Ser 2008 | 0.12 | 01/07/13 | 12/01/38 | 8,985,000 | ||||||||||||||||||
Total Weekly Variable Rate Bonds (Cost $1,601,390,000) | 1,601,390,000 |
See Notes to Financial Statements
13
Active Assets California Tax-Free Trust
Portfolio of Investments n December 31, 2012 (unaudited) continued
PRINCIPAL AMOUNT (000) | COUPON RATE | YIELD TO MATURITY ON DATE OF PURCHASE | MATURITY DATE | VALUE | |||||||||||||||||||
Commercial Paper (9.5%) | |||||||||||||||||||||||
California Department of Water Resources, | |||||||||||||||||||||||
$ | 6,000 | Ser 1 | 0.14 | % | 0.14 | % | 02/07/13 | $ | 6,000,000 | ||||||||||||||
2,000 | Ser 1 | 0.17 | 0.17 | 02/06/13 | 2,000,000 | ||||||||||||||||||
California State University Institute, | |||||||||||||||||||||||
2,000 | Ser A | 0.16 | 0.16 | 02/05/13 | 2,000,000 | ||||||||||||||||||
2,000 | Ser A | 0.17 | 0.17 | 03/05/13 | 2,000,000 | ||||||||||||||||||
15,265 | Ser A | 0.17 | 0.17 | 03/05/13 | 15,265,000 | ||||||||||||||||||
California Statewide Communities Development Authority, | |||||||||||||||||||||||
14,580 | Kaiser Permanente Ser 2004 E | 0.21 | 0.21 | 02/21/13 | 14,580,000 | ||||||||||||||||||
25,800 | Kaiser Permanente Ser 2004 I | 0.21 | 0.21 | 02/21/13 | 25,800,000 | ||||||||||||||||||
8,000 | Kaiser Permanente Ser 2009 B-5 | 0.22 | 0.22 | 01/10/13 | 8,000,000 | ||||||||||||||||||
20,000 | Kaiser Permanente Ser 2009 B-5 | 0.22 | 0.22 | 01/10/13 | 20,000,000 | ||||||||||||||||||
27,500 | Golden Gate Bridge Highway & Transportation District, CA, Ser B | 0.14 | 0.14 | 02/21/13 | 27,500,000 | ||||||||||||||||||
4,850 | Los Angeles Municipal Improvement Corporation, CA, Lease Ser A-2 | 0.20 | 0.20 | 02/12/13 | 4,850,000 | ||||||||||||||||||
Sacramento Municipal Utility District, CA, | |||||||||||||||||||||||
50,000 | Ser K-1 | 0.20 | 0.20 | 02/12/13 | 50,000,000 | ||||||||||||||||||
5,000 | Ser L-1 | 0.16 | 0.16 | 02/12/13 | 5,000,000 | ||||||||||||||||||
13,000 | Ser L-1 | 0.20 | 0.20 | 01/11/13 | 13,000,000 | ||||||||||||||||||
20,000 | San Diego County Water Authority, CA, Ser 4 | 0.17 | 0.17 | 02/06/13 | 20,000,000 | ||||||||||||||||||
Total Commercial Paper (Cost $215,995,000) | 215,995,000 | ||||||||||||||||||||||
COUPON RATE (a) | DEMAND DATE (b) | ||||||||||||||||||||||
Daily Variable Rate Bonds (9.0%) | |||||||||||||||||||||||
3,490 | Alameda County Joint Powers Authority, CA, Juvenile Justice Ser 2008 A PUTTERs Ser 2927Z (AGM) (c) | 0.13 | % | 01/02/13 | 12/01/15 | 3,490,000 | |||||||||||||||||
8,980 | California Health Facilities Financing Authority, Adventist Health System/West Ser 2009 B | 0.07 | 01/02/13 | 09/01/38 | 8,980,000 | ||||||||||||||||||
California Infrastructure & Economic Development Bank, | |||||||||||||||||||||||
21,000 | Pacific Gas & Electric 2009 Ser A | 0.11 | 01/02/13 | 11/01/26 | 21,000,000 |
See Notes to Financial Statements
14
Active Assets California Tax-Free Trust
Portfolio of Investments n December 31, 2012 (unaudited) continued
PRINCIPAL AMOUNT (000) | COUPON RATE (a) | DEMAND DATE (b) | MATURITY DATE | VALUE | |||||||||||||||||||
$ | 14,785 | Pacific Gas & Electric 2009 Ser B | 0.11 | % | 01/02/13 | 11/01/26 | $ | 14,785,000 | |||||||||||||||
39,150 | Pacific Gas & Electric 2009 Ser C | 0.09 | 01/02/13 | 12/01/16 | 39,150,000 | ||||||||||||||||||
5,900 | Pacific Gas & Electric 2009 Ser D | 0.05 | 01/02/13 | 12/01/16 | 5,900,000 | ||||||||||||||||||
13,150 | California Municipal Finance Authority, ExxonMobil Corp., Ser 2007 (AMT) | 0.08 | 01/02/13 | 12/01/29 | 13,150,000 | ||||||||||||||||||
3,900 | California Pollution Control Financing Authority, ExxonMobil Ser 2001 (AMT) | 0.08 | 01/02/13 | 12/01/29 | 3,900,000 | ||||||||||||||||||
10,845 | California Statewide Communities Development Authority, Chevron USA, Inc., Ser 2002 | 0.09 | 01/02/13 | 05/15/24 | 10,845,000 | ||||||||||||||||||
3,750 | Irvine Assessment District No. 00-18, CA, Improvement Bond Act 1915 | 0.10 | 01/02/13 | 09/02/26 | 3,750,000 | ||||||||||||||||||
20,537 | Irvine Assessment District No. 93-14, CA, Improvement Bond Act 1915 | 0.13 | 01/02/13 | 09/02/25 | 20,537,000 | ||||||||||||||||||
6,285 | Irvine Assessment District No. 94-13, CA, Improvement Bond Act 1915 | 0.10 | 01/02/13 | 09/02/22 | 6,285,000 | ||||||||||||||||||
3,818 | Irvine Assessment District No. 94-15, CA, Improvement Bond Act 1915 | 0.10 | 01/02/13 | 09/02/20 | 3,818,000 | ||||||||||||||||||
5,331 | Irvine Assessment District No. 97-16, CA, Improvement Bond Act 1915 | 0.10 | 01/02/13 | 09/02/22 | 5,331,000 | ||||||||||||||||||
7,110 | JP Morgan Chase & Co., CA, Los Angeles Unified School District TRANs Ser 2012 A PUTTERs Ser 4252 (c) | 0.13 | 01/02/13 | 02/28/13 | 7,110,000 | ||||||||||||||||||
3,375 | Los Angeles County Metropolitan Transportation Authority, CA, Prop C Second Senior Sales Tax Ser 2009-A2 | 0.11 | 01/02/13 | 07/01/23 | 3,375,000 | ||||||||||||||||||
Los Angeles Department of Water & Power, CA, | |||||||||||||||||||||||
6,400 | Power System 2001 Ser B Subser B-6 | 0.11 | 01/02/13 | 07/01/34 | 6,400,000 | ||||||||||||||||||
24,500 | Water System 2001 Ser B Subser B-2 | 0.08 | 01/02/13 | 07/01/35 | 24,500,000 | ||||||||||||||||||
3,305 | University of California Regents, Medical Center Pooled Ser 2007 B-1 | 0.09 | 01/02/13 | 05/15/32 | 3,305,000 | ||||||||||||||||||
Total Daily Variable Rate Bonds (Cost $205,611,000) | 205,611,000 |
See Notes to Financial Statements
15
Active Assets California Tax-Free Trust
Portfolio of Investments n December 31, 2012 (unaudited) continued
PRINCIPAL AMOUNT (000) | COUPON RATE | YIELD TO MATURITY ON DATE OF PURCHASE | MATURITY DATE | VALUE | |||||||||||||||||||
Municipal Bonds & Notes (7.6%) | |||||||||||||||||||||||
California, | |||||||||||||||||||||||
$ | 565 | Ser 2003 (pre-refunded 08/01/13@100), dtd 12/03/12 | 5.25 | % | 0.32 | % | 08/01/13 | $ | 581,153 | ||||||||||||||
59,000 | Ser 2012-13 A-2 RANs, dtd 08/23/12 | 2.50 | 0.43 | 06/20/13 | 59,566,812 | ||||||||||||||||||
California Community College Financing Authority, | |||||||||||||||||||||||
10,000 | 2012-2013 Ser A-1 TRANs, dtd 08/16/12 | 2.00 | 0.37 | 06/28/13 | 10,079,311 | ||||||||||||||||||
14,500 | 2012-2013 Ser A-2 TRANs, dtd 08/16/12 | 2.00 | 0.45 | 06/28/13 | 14,609,284 | ||||||||||||||||||
California School Cash Reserve Program Authority, | |||||||||||||||||||||||
5,700 | 2012-2013 Ser A Senior, dtd 07/02/12 | 2.00 | 0.24 | 03/01/13 | 5,716,203 | ||||||||||||||||||
4,900 | 2012-2013 Ser B Senior, dtd 07/02/12 | 2.00 | 0.26 | 06/03/13 | 4,935,611 | ||||||||||||||||||
1,750 | 2012-2013 Ser K, dtd 07/02/12 | 2.00 | 0.50 | 05/01/13 | 1,758,594 | ||||||||||||||||||
2,550 | 2012-2013 Ser M, dtd 07/02/12 | 2.00 | 0.50 | 06/03/13 | 2,565,931 | ||||||||||||||||||
Los Angeles County Schools Pooled Financing Program, CA, | |||||||||||||||||||||||
2,850 | Pooled 2012-2013 Ser A-2 TRANs, dtd 07/02/12 | 2.00 | 0.28 | 01/31/13 | 2,853,998 | ||||||||||||||||||
11,250 | Pooled 2012-2013 Ser A-3 TRANs, dtd 07/02/12 | 2.00 | 0.25 | 02/28/13 | 11,281,000 | ||||||||||||||||||
1,500 | Pooled 2012-2013 Ser A-4 TRANs, dtd 07/02/12 | 2.00 | 0.45 | 02/28/13 | 1,503,657 | ||||||||||||||||||
2,250 | Pooled 2012-2013 Ser A-6 TRANs, dtd 07/02/12 | 2.00 | 0.23 | 05/31/13 | 2,266,358 | ||||||||||||||||||
1,500 | Pooled 2012-2013 Ser A-7 TRANs, dtd 07/02/12 | 2.00 | 0.38 | 06/30/13 | 1,511,931 | ||||||||||||||||||
12,000 | Pooled 2012-2013 Ser B-2 TRANs, dtd 12/14/12 | 2.00 | 0.43 | 11/29/13 | 12,170,515 | ||||||||||||||||||
4,000 | Pooled 2012-2013 Ser B-3 TRANs, dtd 12/14/12 | 2.00 | 0.38 | 11/29/13 | 4,058,660 | ||||||||||||||||||
4,000 | Pooled 2012-2013 Ser B-4 TRANs, dtd 12/14/12 | 2.00 | 0.25 | 10/01/13 | 4,052,236 | ||||||||||||||||||
18,000 | Riverside County, CA, Teeter Obligation 2012 Ser D, dtd 10/22/12 | 2.00 | 0.25 | 10/16/13 | 18,247,792 |
See Notes to Financial Statements
16
Active Assets California Tax-Free Trust
Portfolio of Investments n December 31, 2012 (unaudited) continued
PRINCIPAL AMOUNT (000) | COUPON RATE | YIELD TO MATURITY ON DATE OF PURCHASE | MATURITY DATE | VALUE | |||||||||||||||||||
$ | 775 | Sacramento County Sanitation Districts Financing Authority, CA, Ser 2010 A, dtd 11/21/12 | 3.00 | % | 0.38 | % | 12/01/13 | $ | 793,527 | ||||||||||||||
7,440 | San Diego County & School Districts, CA, Ser 2012 B-2 TRANs, dtd, 07/02/12 | 2.00 | 0.30 | 04/30/13 | 7,481,131 | ||||||||||||||||||
San Diego Unified School District, CA, | |||||||||||||||||||||||
4,000 | 2012-13 Ser A-1 TRANs, dtd 08/15/12 | 2.00 | 0.19 | 01/31/13 | 4,005,915 | ||||||||||||||||||
4,000 | 2012-13 Ser A-2 TRANs, dtd 08/15/12 | 2.00 | 0.23 | 06/28/13 | 4,034,477 | ||||||||||||||||||
Total Municipal Bonds & Notes (Cost $174,074,096) | 174,074,096 | ||||||||||||||||||||||
COUPON RATE (a) | DEMAND DATE (b) | ||||||||||||||||||||||
Closed-End Investment Companies (1.9%) | |||||||||||||||||||||||
7,000 | Nuveen California AMT-Free Municipal Income Fund VRDP Ser 4 (c) | 0.23 | 01/07/13 | 12/01/40 | 7,000,000 | ||||||||||||||||||
10,000 | Nuveen California Investment Quality Municipal Fund, Inc., VRDP Ser 2-100 (AMT) (c) | 0.23 | % | 01/07/13 | 12/01/42 | 10,000,000 | |||||||||||||||||
16,000 | Nuveen California Municipal Market Opportunity Fund, Inc., VRDP Ser 1-498 (AMT) (c) | 0.24 | 01/07/13 | 03/01/40 | 16,000,000 | ||||||||||||||||||
6,500 | Nuveen California Performance Plus Municipal Fund, Inc., VRDP Ser 1-810 (AMT) (c) | 0.23 | 01/07/13 | 12/01/40 | 6,500,000 | ||||||||||||||||||
5,000 | Nuveen California Select Quality Municipal Fund, Inc., VRDP Ser 1-1589 (AMT) (c) | 0.23 | 01/07/13 | 08/01/40 | 5,000,000 | ||||||||||||||||||
Total Closed-End Investment Companies (Cost $44,500,000) | 44,500,000 | ||||||||||||||||||||||
Put Option Bonds (1.8%) | |||||||||||||||||||||||
9,755 | East Bay Municipal Utility District, CA, Wastewater System Ser 2011 A | 0.13 | 02/01/13 | 06/01/38 | 9,755,000 | ||||||||||||||||||
20,185 | Metropolitan Water District of Southern California, Water 2009 Ser A-1 | 0.13 | 08/30/13 | 07/01/30 | 20,185,000 |
See Notes to Financial Statements
17
Active Assets California Tax-Free Trust
Portfolio of Investments n December 31, 2012 (unaudited) continued
PRINCIPAL AMOUNT (000) | COUPON RATE (a) | DEMAND DATE (b) | MATURITY DATE | VALUE | |||||||||||||||||||
$ | 11,300 | RBC Municipal Products Trust, Inc., CA, Los Angeles County Metropolitan Transportation Authority Ser 2008-A Floater Certificates Ser E-24 (c) | 0.17 | % | 04/01/13 | 07/01/31 | $ | 11,300,000 | |||||||||||||||
Total Put Option Bonds (Cost $41,240,000) | 41,240,000 | ||||||||||||||||||||||
Total Investments (Cost $2,282,810,096) | 99.9 | % | 2,282,810,096 | ||||||||||||||||||||
Other Assets in Excess of Liabilities | 0.1 | 1,309,944 | |||||||||||||||||||||
Net Assets | 100.0 | % | $ | 2,284,120,040 |
AMT Alternative Minimum Tax.
COPs Certificates of Participation.
PUTTERS Puttable Tax-Exempt Receipts.
RANs Revenue Anticipation Notes.
ROCs Reset Option Certificates.
TRANs Tax and Revenue Anticipation Notes.
VRDP Variable Rate Demand Preferred.
(a) Rate shown is the rate in effect at December 31, 2012.
(b) Date on which the principal amount can be recovered through demand.
(c) 144A security - Certain conditions for public sale may exist. Unless otherwise noted, these securities are deemed to be liquid.
Bond Insurance:
AGM Assured Guaranty Municipal Corporation.
See Notes to Financial Statements
18
Active Assets California Tax-Free Trust
Financial Statements
Statement of Assets and Liabilities
December 31, 2012 (unaudited)
Assets: | |||||||
Investments in securities, at value (cost $2,282,810,096) | $ | 2,282,810,096 | |||||
Cash | 251,262 | ||||||
Receivable for: | |||||||
Shares of beneficial interest sold | 36,334,378 | ||||||
Interest | 1,620,790 | ||||||
Prepaid expenses and other assets | 13,226 | ||||||
Total Assets | 2,321,029,752 | ||||||
Liabilities: | |||||||
Payable for: | |||||||
Shares of beneficial interest redeemed | 36,334,378 | ||||||
Transfer agent fee | 196,452 | ||||||
Advisory fee | 127,525 | ||||||
Administration fee | 96,488 | ||||||
Accrued expenses and other payables | 154,869 | ||||||
Total Liabilities | 36,909,712 | ||||||
Net Assets | $ | 2,284,120,040 | |||||
Composition of Net Assets: | |||||||
Paid-in-capital | $ | 2,283,975,004 | |||||
Dividends in excess of net investment income | (36,450 | ) | |||||
Accumulated undistributed net realized gain | 181,486 | ||||||
Net Assets | $ | 2,284,120,040 | |||||
Net Asset Value Per Share | |||||||
2,283,848,494 shares outstanding (unlimited shares authorized of $0.01 par value) | $ | 1.00 |
See Notes to Financial Statements
19
Active Assets California Tax-Free Trust
Financial Statements continued
Statement of Operations
For the six months ended December 31, 2012 (unaudited)
Net Investment Income: | |||||||
Interest Income | $ | 1,924,030 | |||||
Dividends from affiliate (Note 5) | 210 | ||||||
Total Income | 1,924,240 | ||||||
Expenses | |||||||
Advisory fee (Note 3) | 3,801,974 | ||||||
Distribution fee (Note 4) | 1,140,653 | ||||||
Administration fee (Note 3) | 570,326 | ||||||
Transfer agent fees and expenses | 118,120 | ||||||
Professional fees | 61,410 | ||||||
Custodian fees | 39,530 | ||||||
Trustees' fees and expenses | 27,461 | ||||||
Shareholder reports and notices | 18,500 | ||||||
Registration fees | 6,107 | ||||||
Other | 30,834 | ||||||
Total Expenses | 5,814,915 | ||||||
Less: amounts waived/reimbursed (Note 4) | (4,003,355 | ) | |||||
Less: rebate from Morgan Stanley affiliated cash sweep (Note 5) | (616 | ) | |||||
Net Expenses | 1,810,944 | ||||||
Net Investment Income | 113,296 | ||||||
Net Realized Gain | 181,486 | ||||||
Net Increase | $ | 294,782 |
See Notes to Financial Statements
20
Active Assets California Tax-Free Trust
Financial Statements continued
Statements of Changes in Net Assets
FOR THE SIX MONTHS ENDED DECEMBER 31, 2012 | FOR THE YEAR ENDED JUNE 30, 2012 | ||||||||||
(unaudited) | |||||||||||
Increase (Decrease) in Net Assets: Operations: | |||||||||||
Net investment income | $ | 113,296 | $ | 236,667 | |||||||
Net realized gain | 181,486 | 2,041 | |||||||||
Net Increase | 294,782 | 238,708 | |||||||||
Dividends and Distributions to Shareholders from: | |||||||||||
Net investment income | (114,056 | ) | (233,604 | ) | |||||||
Net realized gain | — | (1,965 | ) | ||||||||
Total Dividends and Distributions | (114,056 | ) | (235,569 | ) | |||||||
Net increase (decrease) from transactions in shares of beneficial interest | 89,489,985 | (177,838,501 | ) | ||||||||
Net Increase (Decrease) | 89,670,711 | (177,835,362 | ) | ||||||||
Net Assets: | |||||||||||
Beginning of period | 2,194,449,329 | 2,372,284,691 | |||||||||
End of Period (Including dividends in excess of net investment income of $36,450 and $35,690, respectively) | $ | 2,284,120,040 | $ | 2,194,449,329 |
See Notes to Financial Statements
21
Active Assets California Tax-Free Trust
Notes to Financial Statements n December 31, 2012 (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 exempt from federal and California personal income tax as is 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 fair value, in accordance with Rule 2a-7 under the Act. Investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value as of the close of each business day.
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 as earned.
C. Dividends and Distributions to Shareholders — Dividends and distributions to shareholders are recorded on the close of each business day.
D. Use of Estimates — The preparation of financial statements in accordance with generally accepted accounting principles in the United States ("GAAP") requires management to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those estimates.
E. Indemnifications — The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.
2. Fair Valuation Measurements
Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 820, Fair Value Measurements and Disclosures ("ASC 820"), defines fair value as the value that the Fund would receive to sell an investment or pay to transfer a liability in a timely transaction with an independent buyer in the principal market, or in the absence of a principal market the most advantageous market for the investment or liability. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs);
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Notes to Financial Statements n December 31, 2012 (unaudited) continued
and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund's investments. The inputs are summarized in the three broad levels listed below.
• Level 1 — unadjusted quoted prices in active markets for identical investments
• Level 2 — other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)
• Level 3 — significant unobservable inputs including the Fund's own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.
The following is a summary of the inputs used to value the Fund's investments as of December 31, 2012.
INVESTMENT TYPE | LEVEL 1 UNADJUSTED QUOTED PRICES | LEVEL 2 OTHER SIGNIFICANT OBSERVABLE INPUTS | LEVEL 3 SIGNIFICANT UNOBSERVABLE INPUTS | TOTAL | |||||||||||||||
Assets: | |||||||||||||||||||
Weekly Variable Rate Bonds | $ | — | $ | 1,601,390,000 | $ | — | $ | 1,601,390,000 | |||||||||||
Commercial Paper | — | 215,995,000 | — | 215,995,000 | |||||||||||||||
Daily Variable Rate Bonds | — | 205,611,000 | — | 205,611,000 | |||||||||||||||
Municipal Bonds & Notes | — | 174,074,096 | — | 174,074,096 | |||||||||||||||
Closed-End Investment Companies | — | 44,500,000 | — | 44,500,000 | |||||||||||||||
Put Option Bonds | — | 41,240,000 | — | 41,240,000 | |||||||||||||||
Total Assets | $ | — | $ | 2,282,810,096 | $ | — | $ | 2,282,810,096 |
Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Fund recognizes transfers between the levels as of the
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Notes to Financial Statements n December 31, 2012 (unaudited) continued
end of the period. As of December 31, 2012, the Fund did not have any investments transfer between investment levels.
3. Advisory/Administration Agreements
Pursuant to an Investment Advisory Agreement with Morgan Stanley Investment Management Inc. (the "Adviser"), the Fund pays the 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. For the six months ended December 31, 2012, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.08% of the Fund's daily net assets.
Pursuant to an Administration Agreement with Morgan Stanley Services Company Inc. (the "Administrator"), an affiliate of the 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 a Sub-Administration 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.
4. Plan of Distribution
Morgan Stanley Distribution, Inc. (the "Distributor"), an affiliate of the 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
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Notes to Financial Statements n December 31, 2012 (unaudited) continued
year. For the six months ended December 31, 2012, the distribution fee was accrued at the annual rate of 0.10%.
The Distributor, Adviser and Administrator have agreed to waive and/or reimburse all or a portion of the Fund's distribution fee, advisory fee and administration fee, respectively, to the extent that total expenses exceed total income of the Fund on a daily basis. For the six months ended December 31, 2012, the Distributor waived $1,140,653, and the Adviser waived $2,862,702. These fee waivers and/or expense reimbursements will continue for at least one year or until such time that the Fund's Board of Trustees acts to discontinue all or a portion of such waivers and/or expense reimbursements when it deems such action is appropriate.
5. Transactions with Affiliates
The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds – Government Portfolio (the "Liquidity Funds"), an open-end management investment company managed by the Adviser. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Funds. For the six months ended December 31, 2012, advisory fees paid were reduced by $616 relating to the Fund's investment in the Liquidity Funds.
A summary of the Fund's transactions in shares of the Liquidity Funds during the six months ended December 31, 2012 is as follows:
VALUE JUNE 30, 2012 | PURCHASES AT COST | SALES | DIVIDEND INCOME | VALUE DECEMBER 31, 2012 | |||||||||||||||
— | $ | 37,700,000 | $ | 37,700,000 | $ | 210 | — |
Morgan Stanley Services Company Inc., an affiliate of the Adviser 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, 2012, included in "Trustees' fees and expenses" in the Statement of Operations amounted to $2,078. At December 31, 2012, the Fund had an accrued pension liability of $57,879, which is included in "Accrued expenses and other payables" in the Statement of Assets and Liabilities.
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Active Assets California Tax-Free Trust
Notes to Financial Statements n December 31, 2012 (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 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.
6. Shares of Beneficial Interest
Transactions in shares of beneficial interest, at $1.00 per share, were as follows:
FOR THE SIX MONTHS ENDED DECEMBER 31, 2012 | FOR THE YEAR ENDED JUNE 30, 2012 | ||||||||||
(unaudited) | |||||||||||
Shares sold | 2,898,481,976 | 6,411,203,264 | |||||||||
Shares issued in reinvestment of dividends and distributions | 117,198 | 234,058 | |||||||||
2,898,599,174 | 6,411,437,322 | ||||||||||
Shares redeemed | (2,809,109,189 | ) | (6,589,275,823 | ) | |||||||
Net increase (decrease) in shares outstanding | 89,489,985 | (177,838,501 | ) |
7. Federal Income Tax Status
It is the Fund's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly, no provision for Federal income taxes is required in the financial statements.
Dividend income and distributions to shareholders are recorded on the ex-dividend date. Interest income is recognized on an accrual basis. Dividends from net investment income, if any, are declared and paid daily. Net realized capital gains, if any, are distributed at least annually.
FASB ASC 740-10, Income Taxes — Overall, 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. Management has concluded there are no significant uncertain tax positions that would require recognition in the 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. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Each of the tax years in the four-year period ended June 30, 2012, remains subject to examination by taxing authorities.
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Notes to Financial Statements n December 31, 2012 (unaudited) continued
The tax character of distributions paid may differ from the character of distributions shown in the Statements of Changes in Net Assets due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal 2012 and 2011 was as follows:
2012 DISTRIBUTIONS PAID FROM: | 2011 DISTRIBUTIONS PAID FROM: | ||||||||||||||||||
TAX-EXEMPT INCOME | ORDINARY INCOME | LONG-TERM CAPITAL GAIN | TAX-EXEMPT INCOME | ORDINARY INCOME | |||||||||||||||
$ | 233,008 | $ | 2,298 | $ | 263 | $ | 160,872 | $ | 252 |
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.
Temporary differences are attributable to differing book and tax treatments for the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.
Permanent differences, due to nondeductible expenses, resulted in the following reclassifications among the Fund's components of net assets at June 30, 2012:
DIVIDENDS IN EXCESS OF NET INVESTMENT INCOME | ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN | PAID-IN-CAPITAL | |||||||||
$ | 3,152 | $ | 263 | $ | (3,415 | ) |
At June 30, 2012, the component of distributable earnings for the Fund on a tax basis were as follows:
UNDISTRIBUTED TAX-EXEMPT INCOME | UNDISTRIBUTED LONG-TERM CAPITAL GAIN | ||||||
$ | 46,994 | — |
At December 31, 2012, the aggregate cost for federal income tax purposes is the same as the cost for book purposes.
On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the "Modernization Act") was signed into law. The Modernization Act modernizes several tax provisions related to Regulated Investment Companies ("RICs") and their shareholders. One key change made by the Modernization Act is that capital losses will generally retain their character as short-term or
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Active Assets California Tax-Free Trust
Notes to Financial Statements n December 31, 2012 (unaudited) continued
long-term and may be carried forward indefinitely to offset future gains. These losses are utilized before other capital loss carryforwards that expire. Generally, the Modernization Act is effective for taxable years beginning after December 22, 2010.
To the extent that capital loss carryforwards are used to offset any future capital gains realized during the carryover period as provided by U.S. Federal income tax regulations, no capital gains tax liability will be incurred by a Fund for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders. During the year ended June 30, 2012, the Fund utilized capital loss carryforwards for U.S. Federal income tax purposes of $339. At June 30, 2012, the Fund did not have any unused capital loss carryforward.
8. Expense Offset
The Fund has entered into an arrangement with State Street (the "Custodian"), whereby credits realized on uninvested cash balances may be used to offset a portion of the Fund's expenses. If applicable, these custodian credits are shown as "expense offset" in the Statement of Operations.
9. Accounting Pronouncement
In December 2011, FASB issued Accounting Standards Update ("ASU") 2011-11, Balance Sheet: Disclosures about Offsetting Assets and Liabilities. The pronouncement improves disclosures for recognized financial and derivative instruments that are either offset on the balance sheet in accordance with the offsetting guidance in ASC 210-20-45, Balance Sheet: Offsetting — Other Presentation Matters or ASC 815-10-45, Derivatives: Overall — Other Presentation Matters or are subject to enforceable master netting agreements or similar agreements. The Fund will be required to disclose information about rights to offset and related arrangements (such as collateral agreements) in order to enable financial statement users to understand the effect of those rights and arrangements on its financial position as well as disclose the following (1) gross amounts; (2) amounts offset in the statement of financial position; (3) any other amounts that can be offset in the event of bankruptcy, insolvency or default of any of the parties (including cash and noncash financial collateral); and (4) the Fund's net exposure. The requirements are effective for annual reporting periods beginning on or after January 1, 2013, and must be applied retrospectively. At this time, the Fund's management is evaluating the implications of ASU 2011-11 and its impact, if any, on the financial statements.
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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 31, 2012 | 2012 | 2011 | 2010^ | 2009^ | 2008^ | ||||||||||||||||||||||
(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 | 0.000 | (1) | 0.000 | (1) | 0.000 | (1) | 0.000 | (1) | 0.007 | 0.024 | |||||||||||||||||
Less dividends and distributions from net investment income | (0.000 | ) (1) | (0.000 | ) (1)(2) | (0.000 | ) (1) | (0.000 | ) (1) | (0.007 | ) (2) | (0.024 | ) (2) | |||||||||||||||
Net asset value, end of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | |||||||||||||||
Total Return | 0.01 | %(7) | 0.01 | % | 0.01 | % | 0.01 | % | 0.66 | % | 2.44 | % | |||||||||||||||
Ratios to Average Net Assets: | |||||||||||||||||||||||||||
Net expenses | 0.16 | %(3)(5)(8) | 0.14 | %(3)(5) | 0.25 | %(3)(5) | 0.25 | %(3)(4)(5) | 0.46 | %(3)(4)(5) | 0.50 | %(3) | |||||||||||||||
Net investment income | 0.01 | %(3)(5)(8) | 0.01 | %(3)(5) | 0.01 | %(3)(5) | 0.01 | %(3)(4)(5) | 0.75 | %(3)(4)(5) | 2.26 | %(3) | |||||||||||||||
Rebate from Morgan Stanley affiliate | 0.00 | %(6)(8) | 0.00 | %(6) | 0.00 | %(6) | 0.00 | %(6) | 0.01 | % | 0.00 | %(6) | |||||||||||||||
Supplemental Data: | |||||||||||||||||||||||||||
Net assets, end of period, in thousands | $ | 2,284,120 | $ | 2,194,449 | $ | 2,372,285 | $ | 1,447,175 | $ | 1,896,900 | $ | 3,309,720 |
^ Beginning with the year ended June 30, 2011, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm.
(1) Amount is less than $0.001.
(2) Includes capital gain distribution of less than $0.001.
(3) The ratios reflect the rebate of certain Fund expenses in connection with investments in a Morgan Stanley affiliate during the period. The effect of the rebate on the ratios is disclosed in the above table as "Rebate from Morgan Stanley affiliate."
(4) Reflects fees paid in connection with the U.S. Treasury's Temporary Guarantee Program for Money Market Funds. This fee had an effect of 0.02% and 0.04% for the year ended 2010 and 2009, respectively.
(5) If the Fund had borne all of its expenses that were reimbursed or waived by the Distributor, Adviser, and Administrator, the annualized expense and net investment income (loss) ratios, would have been as follows:
PERIOD ENDED | EXPENSE RATIO | NET INVESTMENT INCOME (LOSS) RATIO | |||||||||
December 31, 2012 | 0.51 | % | (0.34 | )% | |||||||
June 30, 2012 | 0.50 | (0.35 | ) | ||||||||
June 30, 2011 | 0.54 | (0.28 | ) | ||||||||
June 30, 2010 | 0.57 | (0.31 | ) | ||||||||
June 30, 2009 | 0.54 | 0.67 |
(6) Amount is less than 0.005%.
(7) Not annualized.
(8) Annualized.
See Notes to Financial Statements
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Active Assets California Tax-Free Trust
U.S. Privacy Policy (unaudited)
An Important Notice Concerning Our U.S. Privacy Policy
This privacy notice describes the U.S. privacy policy of Morgan Stanley Distribution, Inc., and the Morgan Stanley family of mutual funds ("us", "our", "we").
We are required by federal law to provide you with notice of our U.S. privacy policy ("Policy"). This Policy applies to both our current and former clients unless we state otherwise and is intended for individual clients who purchase products or receive services from us for personal, family or household purposes. This Policy is not applicable to partnerships, corporations, trusts or other non-individual clients or account holders, nor is this Policy applicable to individuals who are either beneficiaries of a trust for which we serve as trustee or participants in an employee benefit plan administered or advised by us. This Policy is, however, applicable to individuals who select us to be a custodian of securities or assets in individual retirement accounts, 401(k) accounts, or accounts subject to the Uniform Gifts to Minors Act.
This notice sets out our business practices to protect your privacy; how we collect and share personal information about you; and how you can limit our sharing or certain uses by others of this information. We may amend this Policy at any time, and will inform you of any changes to our Policy as required by law.
We Respect Your Privacy
We appreciate that you have provided us with your personal financial information and understand your concerns about your information. We strive to safeguard the information our clients entrust to us. Protecting the confidentiality and security of client information is an important part of how we conduct our business.
This notice describes what personal information we collect about you, how we collect it, when we may share it with others, and how certain others may use it. It discusses the steps you may take to limit our sharing of certain information about you with our affiliated companies, including, but not limited to our affiliated banking businesses, brokerage firms and credit service affiliates. It also discloses how you may limit our affiliates' use of shared information for marketing purposes.
Throughout this Policy, we refer to the nonpublic information that personally identifies you as "personal information." We also use the term "affiliated company" in this notice. An affiliated company is a company in our family of companies and includes companies with the Morgan Stanley name. These affiliated companies are financial institutions such as broker-dealers, banks, investment advisers and credit card issuers. We refer to any company that is not an affiliated company as a nonaffiliated third party. For purposes of Section 5 of this notice, and your ability to limit certain uses of personal information by our affiliates, this notice applies to the use of personal information by our affiliated companies.
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U.S. Privacy Policy (unaudited) continued
1. What Personal Information Do We Collect From You?
We may collect the following types of information about you: (i) information provided by you, including information from applications and other forms we receive from you, (ii) information about your transactions with us or our affiliates, (iii) information about your transactions with nonaffiliated third parties, (iv) information from consumer reporting agencies, (v) information obtained from our websites, and (vi) information obtained from other sources. For example:
• We collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through applications and other forms you submit to us.
• We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your dealings and transactions with us and other sources.
• We may obtain information about your creditworthiness and credit history from consumer reporting agencies.
• We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory requirements.
2. When Do We Disclose Personal Information We Collect About You?
We may disclose personal information we collect about you in each of the categories listed above to affiliated and nonaffiliated third parties.
a. Information We Disclose to Affiliated Companies. We may disclose personal information that we collect about you to our affiliated companies to manage your account(s) effectively, to service and process your transactions, and to let you know about products and services offered by us and affiliated companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from affiliated companies are developed under conditions designed to safeguard your personal information.
b. Information We Disclose to Third Parties. We may disclose personal information that we collect about you to nonaffiliated third parties to provide marketing services on our behalf or to other financial institutions with whom we have joint marketing agreements. We may also disclose all of the information we collect to other nonaffiliated third parties for our everyday business purposes, such as to process transactions, maintain account(s), respond to court orders and legal investigations, report to credit bureaus, offer our own products and services, protect against fraud, for institutional risk control, to perform services on our behalf, and as otherwise required or permitted by law.
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U.S. Privacy Policy (unaudited) continued
When we share personal information about you with a nonaffiliated third party, they are required to limit their use of personal information about you to the particular purpose for which it was shared and they are not allowed to share personal information about you with others except to fulfill that limited purpose or as may be permitted or required by law.
3. How Do We Protect The Security and Confidentiality Of Personal Information We Collect About You?
We maintain physical, electronic and procedural security measures that comply with applicable law and regulations to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information by employees. Third parties that provide support or marketing services on our behalf may also receive personal information about you, and we require them to adhere to appropriate security standards with respect to such information.
4. How Can You Limit Our Sharing Certain Personal Information About You With Our Affiliated Companies For Eligibility Determination?
By following the opt-out procedures in Section 6 below, you may limit the extent to which we share with our affiliated companies, personal information that was collected to determine your eligibility for products and services such as your credit reports and other information that you have provided to us or that we may obtain from third parties ("eligibility information"). Eligibility information does not include your identification information or personal information pertaining to our transactions or experiences with you. Please note that, even if you direct us not to share eligibility information with our affiliated companies, we may still share your personal information, including eligibility information, with our affiliated companies under circumstances that are permitted under applicable law, such as to process transactions or to service your account.
5. How Can You Limit the Use of Certain Personal Information About You by Our Affiliated Companies for Marketing?
By following the opt-out instructions in Section 6 below, you may limit our affiliated companies from marketing their products or services to you based on personal information we disclose to them. This information may include, for example, your income and account history with us. Please note that, even if you choose to limit our affiliated companies from using personal information about you that we may share with them for marketing their products and services to you, our affiliated companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the affiliated party has its own relationship with you.
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U.S. Privacy Policy (unaudited) continued
6. How Can You Send Us an Opt-Out Instruction?
If you wish to limit our sharing of eligibility information about you with our affiliated companies, or our affiliated companies' use of personal information for marketing purposes, as described in this notice, you may do so by:
• Calling us at (800) 548-7786
Monday–Friday between 8a.m. and 5p.m. (EST)
• Writing to us at the following address:
Morgan Stanley Services Company Inc.
c/o Privacy Coordinator
201 Plaza Two, 3rd Floor
Jersey City, New Jersey 07311
If you choose to write to us, your request should include: your name, address, telephone number and account number(s) to which the opt-out applies and whether you are opting out with respect to sharing of eligibility information (Section 4 above), or information used for marketing (Section 5 above), or both. Written opt-out requests should not be sent with any other correspondence. In order to process your request, we require that the request be provided by you directly and not through a third party. Once you have informed us about your privacy preferences, your opt-out preference will remain in effect with respect to this Policy (as it may be amended) until you notify us otherwise. If you are a joint account owner, we will accept instructions from any one of you and apply those instructions to the entire account.
Please understand that if you limit our sharing or our affiliated companies' use of personal information, you and any joint account holder(s) may not receive information about our affiliated companies' products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.
If you have more than one account or relationship with us, please specify the accounts to which you would like us to apply your privacy choices. If you have accounts or relationships with our affiliates, you may receive multiple privacy policies from them, and will need to separately notify those companies of your privacy choices for those accounts or relationships.
7. What if an affiliated company becomes a nonaffiliated third party?
If, at any time in the future, an affiliated company becomes a nonaffiliated third party, further disclosures of personal information made to the former affiliated company will be limited to those described in Section 2(b) above relating to nonaffiliated third parties. If you elected under Section 6 to limit disclosures we make to affiliated companies, or use of personal information by affiliated companies,
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U.S. Privacy Policy (unaudited) continued
your election will not apply to use by any former affiliated company of your personal information in their possession once it becomes a nonaffiliated third party.
Special Notice to Residents of Vermont
The following section supplements our Policy with respect to our individual clients who have a Vermont address and supersedes anything to the contrary in the above Policy with respect to those clients only.
The State of Vermont requires financial institutions to obtain your consent prior to sharing personal information that they collect about you with nonaffiliated third parties, or eligibility information with affiliated companies, other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with nonaffiliated third parties or eligibility information with affiliated companies, unless you provide us with your written consent to share such information.
Special Notice to Residents of California
The following section supplements our Policy with respect to our individual clients who have a California address and supersedes anything to the contrary in the above Policy with respect to those clients only.
In response to a California law, if your account has a California home address, your personal information will not be disclosed to nonaffiliated third parties except as permitted by applicable California law, and we will limit sharing such personal information with our affiliates to comply with California privacy laws that apply to us.
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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.
(a) Refer to Item 1.
(b) Not applicable.
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 annual 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.
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/ Kevin Klingert |
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Kevin Klingert |
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Principal Executive Officer |
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February 19, 2013 |
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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/ Kevin Klingert |
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Kevin Klingert |
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Principal Executive Officer |
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February 19, 2013 |
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/s/ Francis Smith |
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Francis Smith |
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Principal Financial Officer |
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February 19, 2013 |
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