UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-04222
Morgan Stanley New York Tax-Free Income Fund
(Exact name of registrant as specified in charter)
1221 Avenue of the Americas, New York, New York 10020
(Address of principal executive offices) (Zip code)
Ronald E. Robison
1221 Avenue of the Americas, New York, New York 10020
(Name and address of agent for service)
Registrant's telephone number, including area code: 212-762-4000
Date of fiscal year end: December 31, 2003
Date of reporting period: June 30, 2003
Item 1. Report to Shareholders
Welcome, Shareholder:
In this report, you'll learn about how your investment in Morgan Stanley New
York Tax-Free Income Fund performed during the semiannual period. The portfolio
management team will provide an overview of the market climate, and discuss some
of the factors that helped or hindered performance during the reporting period.
In addition, this report includes the Fund's financial statements and a list of
Fund investments, as well as other information.
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 the Fund will achieve its investment objective.
The Fund is subject to market risk, which is the possibility that the market
values of securities owned by the Fund will decline and, therefore, the value of
the Fund shares may be less than what you paid for them. Accordingly, you can
lose money investing in this Fund.
Fund Report
For the six-month period ended June 30, 2003
TOTAL RETURN FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2003
<Table>
<Caption>
LEHMAN LIPPER NY
BROTHERS MUNICIPAL
MUNICIPAL DEBT
BOND FUNDS
CLASS A CLASS B CLASS C CLASS D INDEX(1) INDEX(2)
2.94% 2.57% 2.65% 2.85% 3.81% 3.32%
</Table>
The performance of the Fund's four share classes varies because each has
different expenses. The Fund's total return figures assume the reinvestment of
all distributions, but do not reflect the deduction of any applicable sales
charges. Such costs would lower performance. Past performance is no guarantee of
future results. See Performance Summary for standardized performance
information.
MARKET CONDITIONS
The six-month period ended June 30, 2003, was a favorable time for the
fixed-income markets. The U.S. economy continued to recover but at a slow pace.
This led to investor concern that reaching the economy's full growth potential
would be delayed. The Federal Reserve Board shared this concern and cut the
federal funds rate in June. The reduction in the short-term borrowing rate was
felt across the yield curve and drove yields down to levels not seen in decades.
Several factors caused the rally in municipal bonds to lag Treasuries. First,
states and municipalities sold a record amount of debt to meet cash flow needs
and refinance higher cost issues. Municipal yields also adjusted to federal tax
legislation, which included acceleration of scheduled tax bracket reductions and
a lower tax on dividends. Finally, some credits were affected by potential
budget deficits. These factors caused the municipal market to establish yield
levels that attracted interest from crossover investors such as insurance
companies and hedge funds seeking value relative to taxable bonds. Heavy
underwriting volume by major New York issuers benefited from retail and
institutional crossover demand for state exemption.
PERFORMANCE ANALYSIS
The Fund's conservative portfolio structure underperformed the Lehman Brothers
Municipal Bond Index. The Lehman Brothers Municipal Bond Index is more heavily
weighted toward short and intermediate term securities and does not include
expenses. With rates at historically low levels, the market appeared to be
anticipating a prolonged, weak economic recovery. This assessment seemed unduly
pessimistic in light of monetary and fiscal policies seeking to stimulate
growth. Since this stimulus should eventually result in stronger economic growth
and higher interest rates, we maintained the Fund's lower-than-average duration.
We sought to preserve shareholder value by maintaining a high-grade portfolio
with nearly 80 percent of long-term holdings rated either double- or -triple
"A". The portfolio is structured with an above average weighting of premium
coupon bonds. These bonds are somewhat more defensive than current coupon (par)
bonds in a rising-rate environment. The Fund benefited by offering securities
with less favorable structure for sale to take advantage of demand for bonds
with New York tax-exemption.
Purchases at the sector level focused on high-grade revenue bonds backed by
electric, transportation and water & sewer projects. The Fund has maintained a
cautious stance toward the general obligation sector because a number of issuers
under budgetary stress face potential credit rating downgrades. The Fund also
benefited by our decision to avoid tobacco bonds.
2
<Table>
<Caption>
LONG-TERM CREDIT ANALYSIS
Aaa/AAA 48%
Aa/AA 30
A/A 14
Baa/BBB 3
Ba/BB or Less 2
Not Rated 3
</Table>
<Table>
<Caption>
LONG-TERM SECTORS
TRANSPORTATION 13%
OTHER 12
HEALTHCARE 12
EDUCATION 11
GENERAL OBLIGATION 6
</Table>
Subject to change daily. All percentages are as a percentage of long-term
investments. Provided for informational purposes only and should not be deemed
as a recommendation to buy 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
1. THE FUND SEEKS TO PROVIDE A HIGH LEVEL OF CURRENT INCOME EXEMPT FROM
FEDERAL, NEW YORK STATE AND NEW YORK CITY INCOME TAX, CONSISTENT WITH THE
PRESERVATION OF CAPITAL. THE FUND INVESTS PRINCIPALLY IN LONG-TERM, INVESTMENT
GRADE NEW YORK MUNICIPAL OBLIGATIONS THAT ARE RATED WITHIN THE FOUR HIGHEST
GRADES BY MOODY'S, STANDARD & POOR'S OR FITCH IBCA.
2. THE PORTFOLIO MANAGEMENT TEAM SEEKS TO DIVERSIFY CREDIT AND INTEREST-RATE
RISK BY INVESTING IN A MIX OF SECTORS AND INDIVIDUAL ISSUES THAT HAVE A VARIETY
OF COUPONS, MATURITIES, CALL FEATURES AND DURATIONS.
3
Call and Cost (Book) Yield Structure
PERCENT OF BONDS CALLABLE -- WEIGHTED AVERAGE CALL PROTECTION: 7 YEARS
(Based on Long-Term Portfolio) As of 6/30/03
[PERCENT OF BONDS CALLABLE BAR CHART]
<Table>
2003 7
2004 5
2005 5
2006 11
2007 1
2008 6
2009 4
2010 10
2011 7
2012 17
2013+ 27
</Table>
COST (BOOK) YIELD(a) -- WEIGHTED AVERAGE BOOK YIELD: 5.6%
(Based on Long-Term Portfolio) As of 6/30/03
[COST (BOOK) YIELD BAR CHART]
<Table>
2003 7.4
2004 5.8
2005 6.6
2006 6.5
2007 5.6
2008 5.3
2009 5.5
2010 5.6
2011 4.9
2012 4.9
2013+ 5.3
</Table>
(a) Cost or "book" yield is the annual income earned on a portfolio investment
based on its original purchase price before the Fund's operating expenses.
For example, the Fund is earning a book yield of 7.4% on 7% of the long-term
portfolio that is callable in 2003. Portfolio structure is subject to
change.
4
Performance Summary
AVERAGE ANNUAL TOTAL RETURNS -- PERIOD ENDED JUNE 30, 2003
<Table>
<Caption>
CLASS A SHARES* CLASS B SHARES** CLASS C SHARES(+) CLASS D SHARES(++)
(since 07/28/97) (since 04/25/85) (since 07/28/97) (since 07/28/97)
<Caption>
SYMBOL NYFAX NYFBX NYFCX NYFDX
1 YEAR 8.55%(3) 7.60%(3) 7.88%(3) 8.33%(3)
3.94(4) 2.60(4) 6.88(4)
5 YEARS 5.47(3) 4.79(3) 4.82(3) 5.51(3)
4.55(4) 4.46(4) 4.82(4)
10 YEARS 4.86(3)
4.86(4)
SINCE INCEPTION 5.53(3) 7.02(3) 4.91(3) 5.64(3)
4.76(4) 7.02(4) 4.91(4)
</Table>
Past performance is not predictive of future returns. Investment return and
principal value will fluctuate. When you sell fund shares, they may be worth
less than their original cost. The table does not reflect the deduction of taxes
that a shareholder would pay on fund distributions or the redemption of fund
shares. Performance for Class A, Class B, Class C, and Class D shares will vary
due to differences in sales charges and expenses.
- --------------------------------------------------------------------------------
Notes on Performance
(1) The Lehman Brothers Municipal Bond Index tracks the performance of
municipal bonds rated at least Baa or BBB by Moody's Investors Service,
Inc. or Standard Poor's Corporation, respectively and with maturities of 2
years or greater. Indexes are unmanaged and their returns do not include
any sales charges or fees. Such costs would lower performance. It is not
possible to invest directly in an index.
(2) The Lipper New York Municipal Debt Funds Index is an equally weighted
performance index of the largest qualifying funds (based on net assets) in
the Lipper New York Municipal Debt Funds classification. The Index is
adjusted for capital gains distributions and income dividends. There are
currently 30 funds represented in this Index. Indexes are unmanaged and
their returns do not include any sales charges or fees. Such costs would
lower performance. It is not possible to invest directly in an index.
(3) Figure shown assumes reinvestment of all distributions and does not reflect
the deduction of any sales charges.
(4) Figure shown assumes reinvestment of all distributions and the deduction of
the maximum applicable sales charge. See the Fund's current prospectus for
complete details on fees and sales charges.
* The maximum front-end sales charge for Class A is 4.25%.
** The maximum contingent deferred sales charge (CDSC) for Class B is 5.0%. The
CDSC declines to 0% after six years.
+ The maximum CDSC for Class C is 1% for shares redeemed within one year of
purchase.
++ Class D has no sales charge.
5
Morgan Stanley New York Tax-Free Income Fund
PORTFOLIO OF INVESTMENTS - JUNE 30, 2003 (UNAUDITED)
<Table>
<Caption>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------------
New York Tax-Exempt Municipal Bonds (95.5%)
General Obligation (5.8%)
$ 3,500 New York State, Ser 1995 B Refg........................... 5.70% 08/15/13 $ 3,798,655
4,550 Puerto Rico, Public Improvement Refg Ser 1987 A........... 3.00 07/01/06 4,553,686
- -------- ------------
8,050 8,352,341
- -------- ------------
Educational Facilities Revenue (10.0%)
500 Hempstead Industrial Development Agency, Hofstra
University Ser 1996 (MBIA).............................. 5.80 07/01/15 559,520
2,500 New York City Industrial Development Agency, Polytechnic
University 2000......................................... 6.00 11/01/20 2,290,750
New York State Dormitory Authority,
3,000 City University Ser 1993 A.............................. 5.75 07/01/09 3,499,410
1,000 Nassau County BOCES Ser 2001 A (FSA).................... 5.25 08/15/21 1,071,600
1,000 New York University Ser 1998 A (MBIA)................... 5.75 07/01/15 1,210,220
3,000 State University Ser 1989 B............................. 0.00 05/15/05 2,897,370
2,000 State University 1993 Ser A............................. 5.25 05/15/15 2,297,720
500 University of Rochester Ser 1993 A...................... 5.625 07/01/12 511,610
- -------- ------------
13,500 14,338,200
- -------- ------------
Electric Revenue (5.0%)
Long Island Power Authority,
5,000 Ser 2000 A (FSA)........................................ 0.00 06/01/18 2,592,950
1,345 Ser 2003 C.............................................. 5.50 09/01/21 1,425,525
1,000 Ser 1998 A (FSA)........................................ 5.125 12/01/22 1,047,180
2,000 New York State Power Authority, Ser 2000 A................ 5.25 11/15/40 2,102,240
- -------- ------------
9,345 7,167,895
- -------- ------------
Hospital Revenue (9.9%)
3,730 New York City Health & Hospital Corporation, Health 2003
Ser A (Ambac)........................................... 5.25 02/15/22 4,003,670
1,495 New York City Industrial Development Agency, Staten Island
University Hospital Ser B............................... 6.375 07/01/31 1,572,815
4,000 New York State Dormitory Authority, Memorial
Sloan-Kettering Cancer Center 2003 Ser I................ 5.00 07/01/23 4,195,840
4,155 New York State Medical Care Facilities Finance Agency,
Hospital & Nursing Home - FHA Insured Mtge 1993 Ser B... 5.50 02/15/22 4,320,951
- -------- ------------
13,380 14,093,276
- -------- ------------
</Table>
See Notes to Financial Statements
6
Morgan Stanley New York Tax-Free Income Fund
PORTFOLIO OF INVESTMENTS - JUNE 30, 2003 (UNAUDITED) continued
<Table>
<Caption>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------
Industrial Development/Pollution Control Revenue (7.2%)
New York City Industrial Development Agency, Airis JFK I
LLC
$ 1,000 Ser 2001A (AMT)......................................... 5.50% 07/01/28 $ 976,120
2,000 Brooklyn Navy Yard Cogeneration Partners LP Ser 1997
(AMT)................................................... 5.75 10/01/36 1,852,580
6,000 New York State Energy Research & Development Authority,
Brooklyn Union Gas Co 1991 Ser D........................ 12.403(++) 07/01/26 7,456,920
- -------- ------------
9,000 10,285,620
- -------- ------------
Mortgage Revenue - Multi-Family (7.4%)
New York City Housing Development Corporation,
1,985 East Midtown Project - FHA Ins Sec 223.................. 6.50 11/15/18 2,088,035
2,025 Ruppert Project - FHA Ins Sec 223....................... 6.50 11/15/18 2,130,393
5,850 New York State Housing Finance Agency, 1996 Ser A Refg
(FSA)................................................... 6.10 11/01/15 6,307,821
- -------- ------------
9,860 10,526,249
- -------- ------------
Nursing & Health Related Facilities Revenue (1.5%)
2,000 New York State Medical Care Facilities Finance Agency,
- -------- Mental Health Services 1993 Ser F Refg.................. 5.25 02/15/19 2,077,440
------------
Public Facilities Revenue (9.8%)
Empire State Development Corporation,
2,000 Personal Income Tax Ser 2002 A.......................... 5.375 03/15/19 2,200,420
1,750 Personal Income Tax Ser 2002 A.......................... 5.375 03/15/20 1,915,935
2,000 Personal Income Tax Ser 2002 C-1 (FGIC)................. 5.50 03/15/20 2,249,560
500 New York City Cultural Resources Trust, The New York
Botanical Garden Ser 1996 (MBIA)........................ 5.75 07/01/16 554,135
1,035 New York City Industrial Development Agency, Royal Charter
Properties - The New York & Presbyterian Hospital
Parking Ser 2001 (FSA).................................. 5.25 12/15/32 1,112,584
New York State Dormitory Authority,
4,000 School Districts Ser 2002 E (MBIA)...................... 5.50 10/01/17 4,556,199
1,300 School Districts Ser 2002 C (MBIA)...................... 5.25 04/01/21 1,408,862
- -------- ------------
12,585 13,997,695
- -------- ------------
Resource Recovery Revenue (0.4%)
500 Oneida-Herkimer Solid Waste Management Authority, Ser
1992.................................................... 6.65 04/01/05 511,940
- -------- ------------
Transportation Facilities Revenue (12.5%)
400 Buffalo & Fort Erie Public Bridge Authority, Toll Bridge
Ser 1995 (MBIA)......................................... 5.75 01/01/25 425,672
5,000 Metropolitan Transportation Authority, Dedicated Tax Fund
Refg Ser 2002 A (FSA)................................... 5.25 11/15/24 5,371,050
</Table>
See Notes to Financial Statements
7
Morgan Stanley New York Tax-Free Income Fund
PORTFOLIO OF INVESTMENTS - JUNE 30, 2003 (UNAUDITED) continued
<Table>
<Caption>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------------
New York State Thruway Authority,
$ 500 Highway & Bridge Trust Fund Ser 2001 B (MBIA)........... 5.25% 04/01/17 $ 546,715
3,000 Local Highway & Bridge Service Contract Ser 2001........ 5.25 04/01/20 3,218,550
1,000 Port Authority of New York & New Jersey, Cons 121 Ser
(MBIA).................................................. 5.125 10/15/30 1,038,290
3,000 Triborough Bridge & Tunnel Authority, Ser 2001 A.......... 5.00 01/01/32 3,107,160
Puerto Rico Highway & Transportation Authority,
2,000 Refg Ser X.............................................. 5.50 07/01/15 2,283,760
2,000 Ser 1998 A.............................................. 4.75 07/01/38 1,959,860
- -------- ------------
16,900 17,951,057
- -------- ------------
Water & Sewer Revenue (7.6%)
3,000 New York City Municipal Water Finance Authority, 2001 Ser
B....................................................... 5.125 06/15/31 3,127,260
3,010 New York State Environmental Facilities Corporation, Clean
Water Ser 2003 C........................................ 5.00 07/15/23 3,168,717
4,000 Suffolk Country Industrial Development Agency, Southwest
Sewer Ser 1994 (FGIC)................................... 6.00 02/01/08 4,648,720
- -------- ------------
10,010 10,944,697
- -------- ------------
Other Revenue (11.4%)
New York City Transitional Finance Authority,
2,000 2003 Ser D.............................................. 5.25 02/01/20 2,182,380
2,000 2001 Ser A.............................................. 5.375 02/15/22 2,341,360
2,000 2003 Ser A.............................................. 5.50# 11/01/26 2,304,120
3,500 Nassau County Interim Finance Authority, Ser 2001 A
(Ambac)................................................. 4.75 11/15/21 3,618,685
5,000 New York Local Government Assistance Corporation, Ser 1993
C....................................................... 5.50 04/01/17 5,839,200
- -------- ------------
14,500 16,285,745
- -------- ------------
Refunded (7.0%)
2,790 New York State Dormitory Authority, Suffolk County
Judicial Ser 1986 (ETM)................................. 7.375 07/01/16 3,602,950
2,000 Triborough Bridge & Tunnel Authority, Refg Ser 1998 A
(MBIA) (ETM)............................................ 4.75 01/01/24 2,130,280
4,000 Puerto Rico Infrastructure Financing Authority, 2000 Ser A
(ETM)................................................... 5.375 10/01/24 4,343,200
- -------- ------------
8,790 10,076,430
- -------- ------------
128,420 Total New York Tax-Exempt Municipal Bonds (Cost $124,940,703)................ 136,608,585
- -------- ------------
</Table>
See Notes to Financial Statements
8
Morgan Stanley New York Tax-Free Income Fund
PORTFOLIO OF INVESTMENTS - JUNE 30, 2003 (UNAUDITED) continued
<Table>
<Caption>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------------
Short-Term New York Tax-Exempt Municipal Obligations (2.3%)
$ 2,150 Jay Street Development Corporation, Courts Facility 2001
Ser A-2 (Demand 07/01/03)............................... 0.95*% 05/01/20 $ 2,150,000
1,200 New York City Industrial Development Agency, Lycee
Francais De New York 2002 Ser B (Demand 07/01/03)....... 0.98* 06/01/32 1,200,000
- -------- ------------
3,350 Total Short-Term New York Tax-Exempt Municipal Obligations (Cost
$3,350,000).................................................................. 3,350,000
- -------- ------------
$131,770 Total Investments (Cost $128,290,703) (a)............................ 97.8% 139,958,585
========
Other Assets in Excess of Liabilities................................ 2.2 3,081,029
------ ------------
Net Assets........................................................... 100.0% $143,039,614
====== ============
</Table>
- ---------------------------------------------------
<Table>
AMT Alternative Minimum Tax.
ETM Escrowed to maturity.
* Current coupon of variable rate demand obligation.
# Step up security; will convert to 14% on November 1, 2011.
++ Current coupon rate for residual interest bond. This rate
resets periodically as the auction rate on the related
short-term security fluctuates.
(a) The aggregate cost for federal income tax purposes
approximates the aggregate cost for book purposes. The
aggregate gross unrealized appreciation is $12,034,804 and
the aggregate gross unrealized depreciation is $366,922,
resulting in net unrealized appreciation of $11,667,882.
Bond Insurance:
- ---------------
Ambac Ambac Assurance Corporation.
FHA Federal Housing Administration.
FGIC Financial Guaranty Insurance Company.
FSA Financial Security Assurance Inc.
MBIA MBIA Insurance Corporation.
</Table>
Futures Contracts Open at June 30, 2003:
<Table>
<Caption>
NUMBER OF DESCRIPTION/DELIVERY UNDERLYING FACE UNREALIZED
CONTRACTS LONG/SHORT MONTH AND YEAR AMOUNT AT VALUE APPRECIATION
- --------- ---------- ------------------------- ------------------------ --------------
100 Short U.S. Treasury Notes 5 yr $(11,512,500) $12,344
September/2003
50 Short U.S. Treasury Notes 10 yr (5,871,875) 54,550
September/2003
-------
Total Unrealized Appreciation....................... $66,894
=======
</Table>
See Notes to Financial Statements
9
Morgan Stanley New York Tax-Free Income Fund
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
June 30, 2003 (unaudited)
<Table>
Assets:
Investments in securities, at value
(cost $128,290,703)....................................... $139,958,585
Cash........................................................ 42,574
Receivable for:
Interest................................................ 1,840,804
Shares of beneficial interest sold...................... 1,179,257
Investments sold........................................ 455,000
Prepaid expenses and other assets........................... 26,443
------------
Total Assets............................................ 143,502,663
------------
Liabilities:
Payable for:
Shares of beneficial interest redeemed.................. 114,616
Distribution fee........................................ 82,348
Dividends and distributions to shareholders............. 68,697
Investment management fee............................... 68,093
Accrued expenses............................................ 129,295
------------
Total Liabilities....................................... 463,049
------------
Net Assets.............................................. $143,039,614
============
Composition of Net Assets:
Paid-in-capital............................................. $130,404,274
Net unrealized appreciation................................. 11,734,776
Accumulated undistributed net investment income............. 135,615
Accumulated undistributed net realized gain................. 764,949
------------
Net Assets.............................................. $143,039,614
============
Class A Shares:
Net Assets.................................................. $6,585,395
Shares Outstanding (unlimited authorized, $.01 par value)... 552,837
Net Asset Value Per Share............................... $11.91
============
Maximum Offering Price Per Share,
(net asset value plus 4.44% of net asset value)....... $12.44
============
Class B Shares:
Net Assets.................................................. $119,650,253
Shares Outstanding (unlimited authorized, $.01 par value)... 10,074,922
Net Asset Value Per Share............................... $11.88
============
Class C Shares:
Net Assets.................................................. $5,020,426
Shares Outstanding (unlimited authorized, $.01 par value)... 422,566
Net Asset Value Per Share............................... $11.88
============
Class D Shares:
Net Assets.................................................. $11,783,540
Shares Outstanding (unlimited authorized, $.01 par value)... 995,960
Net Asset Value Per Share............................... $11.83
============
</Table>
See Notes to Financial Statements
10
Morgan Stanley New York Tax-Free Income Fund
FINANCIAL STATEMENTS continued
Statement of Operations
For the six months ended June 30, 2003 (unaudited)
<Table>
Net Investment Income:
Interest Income............................................. $3,768,465
----------
Expenses
Distribution fee (Class A shares)........................... 5,100
Distribution fee (Class B shares)........................... 451,079
Distribution fee (Class C shares)........................... 16,042
Investment management fee................................... 389,809
Shareholder reports and notices............................. 33,925
Transfer agent fees and expenses............................ 30,180
Professional fees........................................... 25,082
Trustees' fees and expenses................................. 10,929
Registration fees........................................... 7,778
Custodian fees.............................................. 6,769
Other....................................................... 6,484
----------
Total Expenses.......................................... 983,177
Less: expense offset........................................ (6,739)
----------
Net Expenses............................................ 976,438
----------
Net Investment Income................................... 2,792,027
----------
Net Realized and Unrealized Gain (Loss):
Net Realized Gain/Loss on:
Investments............................................. 1,157,824
Futures contracts....................................... (392,867)
----------
Net Realized Gain....................................... 764,957
----------
Net Change in Unrealized Appreciation on:
Investments............................................. 63,798
Futures contracts....................................... 66,894
----------
Net Appreciation........................................ 130,692
----------
Net Gain................................................ 895,649
----------
Net Increase................................................ $3,687,676
==========
</Table>
See Notes to Financial Statements
11
Morgan Stanley New York Tax-Free Income Fund
FINANCIAL STATEMENTS continued
Statement of Changes in Net Assets
<Table>
<Caption>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
JUNE 30, 2003 DECEMBER 31, 2002
------------- ------------------
(unaudited)
Increase (Decrease) in Net Assets:
Operations:
Net investment income....................................... $ 2,792,027 $ 5,569,509
Net realized gain........................................... 764,957 2,653,787
Net change in unrealized appreciation....................... 130,692 4,157,253
------------ ------------
Net Increase............................................ 3,687,676 12,380,549
------------ ------------
Dividends and Distributions to Shareholders from:
Net investment income
Class A shares.......................................... (117,993) (144,852)
Class B shares.......................................... (2,311,431) (4,671,373)
Class C shares.......................................... (81,632) (133,930)
Class D shares.......................................... (269,992) (554,643)
Net realized gain
Class A shares.......................................... (116) (118,438)
Class B shares.......................................... (1,046) (2,788,076)
Class C shares.......................................... (53) (80,757)
Class D shares.......................................... (103) (286,792)
------------ ------------
Total Dividends and Distributions....................... (2,782,366) (8,778,861)
------------ ------------
Net increase (decrease) from transactions in shares of
beneficial interest....................................... (1,244,690) 5,331,906
------------ ------------
Net Increase (Decrease)................................. (339,380) 8,933,594
Net Assets:
Beginning of period......................................... 143,378,994 134,445,400
------------ ------------
End of Period
(Including accumulated undistributed net investment income
of $135,615 and $124,636, respectively)..................... $143,039,614 $143,378,994
============ ============
</Table>
See Notes to Financial Statements
12
Morgan Stanley New York Tax-Free Income Fund
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 2003 (UNAUDITED)
1. Organization and Accounting Policies
Morgan Stanley New York Tax-Free Income Fund (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 current income which is exempt from federal, New York
State and New York City income tax, consistent with the preservation of capital.
The Fund was organized as a Massachusetts business trust on January 17, 1985 and
commenced operations on April 25, 1985. On July 28, 1997, the Fund converted to
a multiple class share structure.
The Fund offers Class A shares, Class B shares, Class C shares and Class D
shares. The four classes are substantially the same except that most Class A
shares are subject to a sales charge imposed at the time of purchase and some
Class A shares, and most Class B shares and Class C shares are subject to a
contingent deferred sales charge imposed on shares redeemed within one year, six
years and one year, respectively. Class D shares are not subject to a sales
charge. Additionally, Class A shares, Class B shares and Class C shares incur
distribution expenses.
The following is a summary of significant accounting policies:
A. Valuation of Investments -- (1) portfolio securities are valued by an outside
independent pricing service approved by the Trustees. The pricing service uses
both a computerized grid matrix of tax-exempt securities and evaluations by its
staff, in each case based on information concerning market transactions and
quotations from dealers which reflect the bid side of the market each day. The
portfolio securities are thus valued by reference to a combination of
transactions and quotations for the same or other securities believed to be
comparable in quality, coupon, maturity, type of issue, call provisions, trading
characteristics and other features deemed to be relevant; (2) futures are valued
at the latest sale price on the commodities exchange on which they trade unless
it is determined that such price does not reflect their market value, in which
case they will be valued at their fair value as determined in good faith under
procedures established by and under the supervision of the Trustees; and (3)
short-term debt securities having a maturity date of more than sixty days at
time of purchase are valued on a mark-to-market basis until sixty days prior to
maturity and thereafter at amortized cost based on their value on the 61st day.
Short-term debt securities having a maturity date of sixty days or less at the
time of purchase are valued at amortized cost.
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
13
Morgan Stanley New York Tax-Free Income Fund
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 2003 (UNAUDITED) continued
determined by the identified cost method. Discounts are accreted and premiums
are amortized over the life of the respective securities. Interest income is
accrued daily.
C. Multiple Class Allocations -- Investment income, expenses (other than
distribution fees), and realized and unrealized gains and losses are allocated
to each class of shares based upon the relative net asset value on the date such
items are recognized. Distribution fees are charged directly to the respective
class.
D. Futures Contracts -- A futures contract is an agreement between two parties
to buy and sell financial instruments or contracts based on financial indices at
a set price on a future date. Upon entering into such a contract, the Fund is
required to pledge to the broker cash, U.S. Government securities or other
liquid portfolio securities equal to the minimum initial margin requirements of
the applicable futures exchange. Pursuant to the contract, the Fund agrees to
receive from or pay to the broker an amount of cash equal to the daily
fluctuation in the value of the contract. Such receipts or payments known as
variation margin are recorded by the Fund as unrealized gains and losses. Upon
closing of the contract, the Fund realizes a gain or loss equal to the
difference between the value of the contract at the time it was opened and the
value at the time it was closed.
E. Federal Income Tax Policy -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable and nontaxable
income to its shareholders. Accordingly, no federal income tax provision is
required.
F. Dividends and Distributions to Shareholders -- Dividends and distributions to
shareholders are recorded on the ex-dividend date. The amount of dividends and
distributions from net investment income and net realized capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment; temporary
differences do not require reclassification. Dividends and distributions which
exceed net investment income and net realized capital gains for financial
reporting purposes but not for tax purposes are reported as dividends in excess
of net investment income or distributions in excess of net realized capital
gains. To the extent they exceed net investment income and net realized capital
gains for tax purposes, they are reported as distributions of paid-in-capital.
14
Morgan Stanley New York Tax-Free Income Fund
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 2003 (UNAUDITED) continued
G. Use of Estimates -- The preparation of financial statements in accordance
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts and disclosures.
Actual results could differ from those estimates.
2. Investment Management Agreement
Pursuant to an Investment Management Agreement with Morgan Stanley Investment
Advisors Inc. (the "Investment Manager") the Fund pays the Investment Manager a
management fee, accrued daily and payable monthly, by applying the following
annual rates to the Fund's net assets determined as of the close of each
business day: 0.55% to the portion of daily net assets not exceeding $500
million and 0.525% to the portion of daily net assets exceeding $500 million.
3. Plan of Distribution
Shares of the Fund are distributed by Morgan Stanley Distributors Inc. (the
"Distributor"), an affiliate of the Investment Manager. The Fund has adopted a
Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act. The Plan
provides that the Fund will pay the Distributor a fee which is accrued daily and
paid monthly at the following annual rates: (i) Class A -- up to 0.25% of the
average daily net assets of Class A; (ii) Class B - 0.75% of the lesser of: (a)
the average daily aggregate gross sales of the Class B shares since the
inception of the Fund (not including reinvestment of dividend or capital gain
distributions) less the average daily aggregate net asset value of the Class B
shares redeemed since the Fund's inception upon which a contingent deferred
sales charge has been imposed or waived; or (b) the average daily net assets of
Class B; and (iii) Class C -- up to 0.75% of the average daily net assets of
Class C.
In the case of Class B shares, provided that the Plan continues in effect, any
cumulative expenses incurred by the Distributor but not yet recovered may be
recovered through the payment of future distribution fees from the Fund pursuant
to the Plan and contingent deferred sales charges paid by investors upon
redemption of Class B shares. Although there is no legal obligation for the Fund
to pay expenses incurred in excess of payments made to the Distributor under the
Plan and the proceeds of contingent deferred sales charges paid by investors
upon redemption of shares, if for any reason the Plan is terminated, the
Trustees will consider at that time the manner in which to treat such expenses.
The Distributor has advised the Fund that such excess amounts totaled $1,233,637
at June 30, 2003.
In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 0.75% of the average daily
net assets of Class A or Class C,
15
Morgan Stanley New York Tax-Free Income Fund
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 2003 (UNAUDITED) continued
respectively, will not be reimbursed by the Fund through payments in any
subsequent year, except that expenses representing a gross sales credit to
Morgan Stanley Financial Advisors or other selected broker-dealer
representatives may be reimbursed in the subsequent calendar year. For the six
months ended June 30, 2003, the distribution fee was accrued for Class A shares
and Class C shares at the annual rate of 0.19% and 0.75%, respectively.
The Distributor has informed the Fund that for the six months ended June 30,
2003, it received contingent deferred sales charges from certain redemptions of
the Fund's Class B shares and Class C shares of $38,816 and $557, respectively
and received $59,383 in front-end sales charges from sales of the Fund's Class A
shares. The respective shareholders pay such charges which are not an expense of
the Fund.
4. Security Transactions and Transactions with Affiliates
The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the six months ended June 30, 2003 aggregated
$19,338,065 and $20,960,741, respectively.
Morgan Stanley Trust, an affiliate of the Investment Manager and Distributor, is
the Fund's transfer agent. At June 30, 2003, the Fund had transfer agent fees
and expenses payable of approximately $1,500.
The Fund has an unfunded noncontributory defined benefit pension plan covering
all independent Trustees of the Fund who will have served as independent
Trustees for at least five years at the time of retirement. Benefits under this
plan are based on years of service and compensation during the last five years
of service. Aggregate pension costs for the six months ended June 30, 2003
included in Trustees' fees and expenses in the Statement of Operations amounted
to $3,585. At June 30, 2003, the Fund had an accrued pension liability of
$58,102 which is included in accrued expenses in the Statement of Assets and
Liabilities.
5. Federal Income Tax Status
As of December 31, 2002, the Fund had temporary book/tax differences primarily
attributable to book amortization of discounts on debt securities.
6. Expense Offset
The expense offset represents a reduction of the custodian fees for earnings on
cash balances maintained by the Fund.
16
Morgan Stanley New York Tax-Free Income Fund
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 2003 (UNAUDITED) continued
7. Risks Relating to Certain Financial Instruments
The Fund may invest a portion of its assets in residual interest bonds, which
are inverse floating rate municipal obligations. The prices of these securities
are subject to greater market fluctuations during periods of changing prevailing
interest rates than are comparable fixed rate obligations.
At June 30, 2003, the Fund held positions in residual interest bonds having a
total value of $7,456,920, which represents 5.2% of the Fund's net assets.
To hedge against adverse interest rate changes, the Fund may invest in financial
futures contracts or municipal index futures contracts ("futures contracts").
These futures contracts involve elements of market risk in excess of the amount
reflected in the Statement of Assets and Liabilities. The Fund bears the risk of
an unfavorable change in the value of the underlying securities.
At June 30, 2003, the Fund had outstanding futures contracts.
17
Morgan Stanley New York Tax-Free Income Fund
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 2003 (UNAUDITED) continued
8. Shares of Beneficial Interest
Transactions in shares of beneficial interest were as follows:
<Table>
<Caption>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
JUNE 30, 2003 DECEMBER 31, 2002
------------------------- -------------------------
(unaudited)
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
CLASS A SHARES
Sold.............................................. 4,056,279 $ 48,509,218 1,709,367 $ 20,244,891
Reinvestment of dividends and distributions....... 5,183 61,489 16,605 195,757
Redeemed.......................................... (3,950,599) (47,252,818) (1,552,899) (18,352,037)
---------- ------------ ---------- ------------
Net increase - Class A............................ 110,863 1,317,889 173,073 2,088,611
---------- ------------ ---------- ------------
CLASS B SHARES
Sold.............................................. 393,947 4,640,877 1,286,421 15,165,415
Reinvestment of dividends and distributions....... 104,951 1,240,468 375,930 4,430,966
Redeemed.......................................... (769,806) (9,102,977) (1,549,204) (18,257,685)
---------- ------------ ---------- ------------
Net increase (decrease) - Class B................. (270,908) (3,221,632) 113,147 1,338,696
---------- ------------ ---------- ------------
CLASS C SHARES
Sold.............................................. 271,451 3,224,383 266,760 3,187,296
Reinvestment of dividends and distributions....... 3,012 35,646 8,899 104,676
Redeemed.......................................... (150,573) (1,788,305) (287,332) (3,394,507)
---------- ------------ ---------- ------------
Net increase (decrease) - Class C................. 123,890 1,471,724 (11,673) (102,535)
---------- ------------ ---------- ------------
CLASS D SHARES
Sold.............................................. 63,844 751,268 985,512 11,602,457
Reinvestment of dividends and distributions....... 12,209 143,789 42,450 498,825
Redeemed.......................................... (146,036) (1,707,728) (859,274) (10,094,148)
---------- ------------ ---------- ------------
Net increase (decrease) - Class D................. (69,983) (812,671) 168,688 2,007,134
---------- ------------ ---------- ------------
Net increase (decrease) in Fund................... (106,138) $ (1,244,690) 443,235 $ 5,331,906
========== ============ ========== ============
</Table>
18
Morgan Stanley New York Tax Free Income Fund
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<Table>
<Caption>
FOR THE SIX FOR THE YEAR ENDED DECEMBER 31,
MONTHS ENDED ----------------------------------------------------------------------------
JUNE 30, 2003 2002 2001 2000 1999 1998
------------- -------- -------- -------- -------- --------
(unaudited)
Class A Shares
Selected Per Share Data:
Net asset value, beginning
of period.................. $11.82 $11.47 $11.56 $10.89 $11.90 $12.16
------ ------ ------ ------ ------ ------
Income (loss) from
investment operations:
Net investment income... 0.26 0.52 0.53 0.53 0.53 0.55
Net realized and
unrealized gain
(loss).................. 0.09 0.62 (0.06) 0.66 (1.00) 0.13
------ ------ ------ ------ ------ ------
Total income (loss) from
investment operations...... 0.35 1.14 0.47 1.19 (0.47) 0.68
------ ------ ------ ------ ------ ------
Less dividends and
distribution from:
Net investment income... (0.26) (0.52) (0.53) (0.52) (0.52) (0.55)
Net realized gain....... (0.00)++ (0.27) (0.03) -- (0.02) (0.39)
------ ------ ------ ------ ------ ------
Total dividends and
distributions.............. (0.26) (0.79) (0.56) (0.52) (0.54) (0.94)
------ ------ ------ ------ ------ ------
Net asset value, end of
period..................... $11.91 $11.82 $11.47 $11.56 $10.89 $11.90
====== ====== ====== ====== ====== ======
Total Return+............... 2.94%(1) 10.18% 4.08% 11.29% (4.03)% 5.68%
Ratios to Average Net
Assets(4):
Expenses (before expense
offset).................... 0.91%(2)(3) 0.92%(3) 0.94%(3) 0.96%(3) 0.89% 0.93%(3)
Net investment income....... 4.41%(2) 4.44% 4.50% 4.78% 4.58% 4.50%
Supplemental Data:
Net assets, end of period,
in thousands............... $6,585 $5,226 $3,084 $661 $408 $393
Portfolio turnover rate..... 14%(1) 21% 11% 21% 3% 24%
</Table>
- ---------------------
<Table>
+ Does not reflect the deduction of sales charge. Calculated
based on the net asset value as of the last business day of
the period.
++ Less than $0.005 per share.
(1) Not annualized.
(2) Annualized.
(3) Does not reflect the effect of expense offset of 0.01%.
(4) Reflects overall fund ratios for investment income and non
class specific expenses.
</Table>
See Notes to Financial Statements
19
Morgan Stanley New York Tax Free Income Fund
FINANCIAL HIGHLIGHTS continued
<Table>
<Caption>
FOR THE SIX FOR THE YEAR ENDED DECEMBER 31,
MONTHS ENDED ---------------------------------------------------------------------
JUNE 30, 2003 2002 2001 2000 1999 1998
------------- --------- --------- --------- --------- ---------
(unaudited)
Class B Shares
Selected Per Share Data:
Net asset value,
beginning of period.... $11.80 $11.48 $11.60 $10.91 $11.92 $12.16
------ ------ ------ ------ ------ ------
Income (loss) from
investment operations:
Net investment
income.............. 0.23 0.46 0.47 0.47 0.46 0.49
Net realized and
unrealized gain
(loss).............. 0.08 0.59 (0.10) 0.69 (0.99) 0.15
------ ------ ------ ------ ------ ------
Total income (loss) from
investment operations.. 0.31 1.05 0.37 1.16 (0.53) 0.64
------ ------ ------ ------ ------ ------
Less dividends and
distributions from:
Net investment
income.............. (0.23) (0.46) (0.46) (0.47) (0.46) (0.49)
Net realized gain... (0.00)++ (0.27) (0.03) -- (0.02) (0.39)
------ ------ ------ ------ ------ ------
Total dividends and
distributions.......... (0.23) (0.73) (0.49) (0.47) (0.48) (0.88)
------ ------ ------ ------ ------ ------
Net asset value, end of
period................. $11.88 $11.80 $11.48 $11.60 $10.91 $11.92
====== ====== ====== ====== ====== ======
Total Return+........... 2.57%(1) 9.32% 3.26% 10.90% (4.58)% 5.32%
Ratios to Average Net
Assets(4):
Expenses (before expense
offset)................ 1.47%(2)(3) 1.46%(3) 1.46%(3) 1.47%(3) 1.48% 1.44%(3)
Net investment income... 3.85%(2) 3.90% 3.99% 4.27% 3.99% 3.99%
Supplemental Data:
Net assets, end of
period, in thousands... $119,650 $122,099 $117,519 $121,867 $124,774 $162,659
Portfolio turnover
rate................... 14%(1) 21% 11% 21% 3% 24%
</Table>
- ---------------------
<Table>
+ Does not reflect the deduction of sales charge. Calculated
based on the net asset value as of the last business day of
the period.
++ Less than $0.005 per share.
(1) Not annualized.
(2) Annualized.
(3) Does not reflect the effect of expense offset of 0.01%.
(4) Reflects overall fund ratios for investment income and non
class specific expenses.
</Table>
See Notes to Financial Statements
20
Morgan Stanley New York Tax Free Income Fund
FINANCIAL HIGHLIGHTS continued
<Table>
<Caption>
FOR THE SIX FOR THE YEAR ENDED DECEMBER 31,
MONTHS ENDED ----------------------------------------------------------------
JUNE 30, 2003 2002 2001 2000 1999 1998
------------- -------- -------- -------- -------- --------
(unaudited)
Class C Shares
Selected Per Share Data:
Net asset value, beginning of period.... $11.79 $11.46 $11.57 $10.89 $11.90 $12.14
------ ------ ------ ------ ------ ------
Income (loss) from investment
operations:
Net investment income............... 0.23 0.46 0.47 0.47 0.46 0.48
Net realized and unrealized gain
(loss).............................. 0.08 0.60 (0.09) 0.68 (0.99) 0.15
------ ------ ------ ------ ------ ------
Total income (loss) from investment
operations............................. 0.31 1.06 0.38 1.15 (0.53) 0.63
------ ------ ------ ------ ------ ------
Less dividends and distribution from:
Net investment income............... (0.22) (0.46) (0.46) (0.47) (0.46) (0.48)
Net realized gain................... (0.00)++ (0.27) (0.03) -- (0.02) (0.39)
------ ------ ------ ------ ------ ------
Total dividends and distributions....... (0.22) (0.73) (0.49) (0.47) (0.48) (0.87)
------ ------ ------ ------ ------ ------
Net asset value, end of period.......... $11.88 $11.79 $11.46 $11.57 $10.89 $11.90
====== ====== ====== ====== ====== ======
Total Return+........................... 2.65%(1) 9.41% 3.33% 10.81% (4.60)% 5.30%
Ratios to Average Net Assets(4):
Expenses (before expense offset)........ 1.47%(2)(3) 1.46%(3) 1.46%(3) 1.47%(3) 1.48% 1.44%(3)
Net investment income................... 3.85%(2) 3.90% 3.99% 4.27% 3.99% 3.99%
Supplemental Data:
Net assets, end of period, in
thousands.............................. $5,020 $3,521 $3,557 $1,318 $840 $765
Portfolio turnover rate................. 14%(1) 21% 11% 21% 3% 24%
</Table>
- ---------------------
<Table>
+ Does not reflect the deduction of sales charge. Calculated
based on the net asset value as of the last business day of
the period.
++ Less than $0.005 per share.
(1) Not annualized.
(2) Annualized.
(3) Does not reflect the effect of expense offset of 0.01%.
(4) Reflects overall fund ratios for investment income and non
class specific expenses.
</Table>
See Notes to Financial Statements
21
Morgan Stanley New York Tax Free Income Fund
FINANCIAL HIGHLIGHTS continued
<Table>
<Caption>
FOR THE SIX FOR THE YEAR ENDED DECEMBER 31,
MONTHS ENDED ----------------------------------------------------------------
JUNE 30, 2003 2002 2001 2000 1999 1998
------------- -------- -------- -------- -------- --------
(unaudited)
Class D Shares
Selected Per Share Data:
Net asset value,
beginning of period.... $11.76 $11.46 $11.58 $10.90 $11.91 $12.15
------ ------ ------ ------ ------ ------
Income (loss) from
investment operations:
Net investment
income.............. 0.27 0.55 0.56 0.55 0.55 0.58
Net realized and
unrealized gain
(loss).............. 0.07 0.56 (0.10) 0.68 (1.00) 0.15
------ ------ ------ ------ ------ ------
Total income (loss)
investment
operations............. 0.34 1.11 0.46 1.23 (0.45) 0.73
------ ------ ------ ------ ------ ------
Less dividends and
distribution from:
Net investment
income.............. (0.27) (0.54) (0.55) (0.55) (0.54) (0.58)
Net realized gain... (0.00)++ (0.27) (0.03) -- (0.02) (0.39)
------ ------ ------ ------ ------ ------
Total dividends and
distributions.......... (0.27) (0.81) (0.58) (0.55) (0.56) (0.97)
------ ------ ------ ------ ------ ------
Net asset value, end of
period................. $11.83 $11.76 $11.46 $11.58 $10.90 $11.91
====== ====== ====== ====== ====== ======
Total Return+........... 2.85%(1) 9.96% 4.04% 11.64% (3.87)% 6.12%
Ratios to Average Net
Assets(4):
Expenses (before expense
offset)................ 0.72%(2)(3) 0.71%(3) 0.71%(3) 0.72%(3) 0.73% 0.69%(3)
Net investment income... 4.60%(2) 4.65% 4.74% 5.02% 4.74% 4.74%
Supplemental Data:
Net assets, end of
period, in thousands... $11,784 $12,533 $10,285 $10,475 $116 $82
Portfolio turnover
rate................... 14%(1) 21% 11% 21% 3% 24%
</Table>
- ---------------------
<Table>
+ Calculated based on the net asset value as of the last
business day of the period.
++ Less than $0.005 per share.
(1) Not annualized.
(2) Annualized.
(3) Does not reflect the effect of expense offset of 0.01%.
(4) Reflects overall fund ratios for investment income and non
class specific expenses.
</Table>
See Notes to Financial Statements
22
(This Page Intentionally Left Blank)
TRUSTEES
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
Wayne E. Hedien
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael E. Nugent
Philip J. Purcell
Fergus Reid
OFFICERS
Charles A. Fiumefreddo
Chairman of the Board
Mitchell M. Merin
President
Ronald E. Robison
Executive Vice President and Principal Executive Officer
Barry Fink
Vice President and General Counsel
Joseph J. McAlinden
Vice President
Stefanie V. Chang
Vice President
Francis Smith
Treasurer and Chief Financial Officer
Thomas F. Caloia
Vice President
Mary E. Mullin
Secretary
TRANSFER AGENT
Morgan Stanley Trust
Harborside Financial Center, Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT AUDITORS
Deloitte & Touche LLP
Two World Financial Center
New York, New York 10281
INVESTMENT MANAGER
Morgan Stanley Investment Advisors Inc.
1221 Avenue of the Americas
New York, New York 10020
The financial statements included herein have been taken from the records of the
Fund without examination by the independent auditors and accordingly they do not
express an opinion thereon.
This report is submitted for the general information of shareholders of the
Fund. For more detailed information about the Fund, its fees and expenses and
other pertinent information, please read its Prospectus. The Fund's Statement of
Additional Information contains additional information about the Fund, including
its trustees. It is available, without charge, by calling (800) 869-NEWS.
This report is not authorized for distribution to prospective investors in the
Fund unless preceded or accompanied by an effective Prospectus. Read the
prospectus carefully before investing.
Investments and services offered through Morgan Stanley DW Inc., member SIPC.
Morgan Stanley Distributors Inc., member NASD.
(c) 2003 Morgan Stanley
[MORGAN STANLEY LOGO]
MUNICIPAL NEW YORK LONG
Morgan Stanley
New York Tax-Free
Income Fund
Semiannual Report
June 30, 2003
[MORGAN STANLEY LOGO]
37935RPT-11786G03-AP-7/03
Item 9 - Controls and Procedures
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.
There were no significant changes or corrective actions with regard to
significant deficiencies or material weaknesses in the Fund's internal controls
or in other factors that could significantly affect the Fund's internal controls
subsequent to the date of their evaluation.
Item 10b Exhibits
A separate certification for each principal executive officer and principal
financial officer of the registrant are attached hereto as part of EX-99.CERT.
Items 2 - 8 and Item 10a are not applicable
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.
Morgan Stanley New York Tax-Free Income Fund
Ronald E. Robison
Principal Executive Officer
August 19, 2003
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.
Ronald E. Robison
Principal Executive Officer
August 19, 2003
Francis Smith
Principal Financial Officer
August 19, 2003
2