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: 811-07562
Morgan Stanley New York Quality Municipal Securities
(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: October 31, 2004
Date of reporting period: October 31, 2004
Item 1 - Report to Shareholders
Welcome, Shareholder:
In this report, you'll learn about how your investment in Morgan Stanley New
York Quality Municipal Securities performed during the annual period. We will
provide an overview of the market conditions, and discuss some of the factors
that affected performance during the reporting period. In addition, this report
includes the Trust's financial statements and a list of Trust investments.
Market forecasts provided in this report may not necessarily come to pass. There
is no assurance that the Trust will achieve its investment objective. The Trust
is subject to market risk, which is the possibility that market values of
securities owned by the Trust will decline and, therefore, the value of the
Trust's shares may be less than what you paid for them. Accordingly, you can
lose money investing in this Trust.
FUND REPORT
For the year ended October 31, 2004
MARKET CONDITIONS
The U.S. economy continued to expand during the Trust's fiscal year ended
October 31, 2004. However, through the spring and summer the economy hit what
Federal Reserve Board Chairman Alan Greenspan described as a "soft patch." Oil
prices almost doubled, reaching record highs, and employment growth weakened. As
a result, real gross domestic product growth that had averaged 4.3 percent in
the first half of the fiscal period slowed to 3.5 percent in the second.
Throughout most of the year, the Federal Reserve Open Market Committee (the
"Fed") maintained its short-term borrowing rate (the "federal funds rate") at an
historic low. By April, the market had begun to anticipate that the Fed would
begin to increase short-term interest rates in response to higher commodity
prices and reduced concern about the risk of deflation. In a series of three
measured moves between June and the end of October, the Fed did increase the
federal funds rate, from 1.00 to 1.75 percent.
Rising inflation fears led to rising bond yields from April to June. The market
reversed course in July, however, with yields falling from July through October
as investors became concerned with slower growth. Rising and falling yields
tended to offset each other over the entire period, and long-term municipal bond
yields at the end of October had changed little from where they had begun the
fiscal year. Higher short-term interest rates reduced the yield pickup for
extending to longer maturities, and the yield curve flattened.
The supply of new-issue municipal bonds declined by 8 percent in the first 10
months of 2004. New York issuers accounted for 9 percent of total underwriting
volume. The ratio of municipal yields to Treasury yields, which serves as a
gauge of relative performance, indicated that municipals generally remained
attractive relative to Treasuries during the period. As a result, taxable
investors such as insurance companies and hedge funds that normally focus on
other sectors of the bond market supported municipal bond prices by "crossing
over" to purchase municipal bonds.
New York's economy has demonstrated sustained improvement. Employment has shown
steady gains and brightened the outlook. However, concerns remained over the
structural imbalance in the budget between revenues and expenditures.
PERFORMANCE ANALYSIS
The net asset value (NAV) of Morgan Stanley New York Quality Municipal
Securities (IQN) moved from $15.00 to $15.38 per share. IQN declared tax-free
dividends totaling $0.805 per share and long-term capital gains of $0.001 per
share. The Trust's total NAV return was 8.80 percent. IQN's value on the New
York Stock Exchange (NYSE) increased from $13.38 to $13.72 per share during the
same period. Based on this change plus the reinvestment of dividends and
distributions, IQN's total market return was 8.81 percent. IQN's share price was
trading at a 10.79 percent discount to its NAV on October 31, 2004. Past
performance is no guarantee of future results.
Monthly dividends for the fourth quarter of 2004 declared in September were
decreased from $0.0675 to $0.0625 per share to reflect the Trust's current and
projected earnings level. The Trust's level of undistributed net investment
income was $0.089 per share on October 31, 2004, versus $0.140 per share 12
months earlier.
2
One of our key strategies in managing the Trust was to keep its overall
interest-rate sensitivity lower than that of its benchmark index. This defensive
strategy helped performance early in the period when rates rose but had the net
effect of hampering total returns over the whole period by limiting the Trust's
participation in the rally later in the period. The Trust's duration,* adjusted
for leverage, was 11.1 years. The Trust's net assets, including preferred
shares, of $92 million were diversified across 36 credits in 13 long-term
sectors.
As discussed in previous reports, the total income available for distribution to
holders of common shares includes incremental income provided by the Trust's
outstanding Auction Rate Preferred Shares (ARPS). ARPS dividends reflect
prevailing short-term interest rates on maturities ranging from one week to two
years. Incremental income to holders of common shares depends on two factors:
the amount of ARPS outstanding and the spread between the portfolio's cost yield
and its ARPS auction rate and expenses. The greater the spread and the higher
the amount of ARPS outstanding, the greater the amount of incremental income
available for distribution to holders of common shares. The level of net
investment income available for distribution to holders of common shares varies
with the level of short-term interest rates. ARPS leverage also increases the
price volatility of common shares and has the effect of extending portfolio
duration.
During this 12-month period, ARPS leverage contributed approximately $0.12 per
share to common-share earnings. The Trust has two ARPS series totaling $24
million, representing 26 percent of net assets, including preferred shares. Both
series are currently in two-year auction modes with maturities ranging from July
2005 to January 2006. The yields ranged from 1.19 to 1.70 percent.
The Trust's procedure for reinvesting all dividends and distributions in common
shares is through purchases in the open market. This method helps support the
market value of the Trust's shares. In addition, we would like to remind you
that the Trustees have approved a procedure whereby the Trust may, when
appropriate, purchase shares in the open market or in privately negotiated
transactions at a price not above market value or net asset value, whichever is
lower at the time of purchase. The Trust may also utilize procedures to reduce
or eliminate the amount of ARPS outstanding, including their purchase in the
open market or in privately negotiated transactions. During the 12-month period
ended October 31, 2004, the Trust purchased and retired 101,500 shares of common
stock at a weighted average market discount of 9.83 percent.
- ----------------------------------------------------
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF
FUTURE RESULTS, AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE FIGURES
SHOWN. Investment return, net asset value and common share market price will
fluctuate and trust shares, when sold, may be worth more or less than their
original cost.
There is no guarantee that any securities mentioned will continue to perform
well or be held by the Trust in the future.
* A measure of the sensitivity of a bond's price to changes in interest rates,
expressed in years. Each year of duration represents an expected 1 percent
change in the price of a bond for every 1 percent change in interest rates. The
longer a bond's duration, the greater the effect of interest-rate movements on
its price. Typically, trusts with shorter durations perform better in
rising-interest-rate environments, while trusts with longer durations perform
better when rates decline.
3
<Table>
<Caption>
LARGEST SECTORS
Hospital 26.8%
Transportation 22.5%
Other 18.3%
Water & Sewer 15.8%
Public Facilities 12.4%
</Table>
<Table>
<Caption>
LONG-TERM CREDIT ANALYSIS*
Aaa/AAA 55.4%
Aa/AA 28.8%
A/A 11.9%
Baa/BBB 3.9%
</Table>
Data as of October 31, 2004. Subject to change daily. All percentages for top
five sectors are as a percentage of net assets applicable to common
shareholders. All percentages for long-term credit analysis are as a percentage
of total long-term investments. These data are provided for informational
purposes only and should not be deemed a recommendation to buy or sell the
securities mentioned. Morgan Stanley is a full-service securities firm engaged
in securities trading and brokerage activities, investment banking, research and
analysis, financing and financial advisory services.
* Does not include open short futures contracts with an underlying face amount
of $6,770,000 with unrealized depreciation of $94,294.
RESULTS OF ANNUAL SHAREHOLDER MEETING
ON JUNE 22, 2004, AN ANNUAL MEETING OF THE TRUST'S SHAREHOLDERS WAS HELD FOR THE
PURPOSE OF VOTING ON THE FOLLOWING MATTER, THE RESULTS OF WHICH WERE AS FOLLOWS:
(1) ELECTION OF TRUSTEES BY ALL SHAREHOLDERS:
<Table>
- -------------------------------------------------
MICHAEL BOZIC
FOR: 3,217,512
WITHHELD: 83,454
- -------------------------------------------------
JAMES F. HIGGINS
FOR: 3,218,692
WITHHELD: 82,274
- -------------------------------------------------
JOSEPH J. KEARNS
FOR: 3,211,977
WITHHELD: 88,989
- -------------------------------------------------
FERGUS REID
FOR: 3,220,192
WITHHELD: 80,774
- -------------------------------------------------
</Table>
(2) ELECTION OF TRUSTEE BY PREFERRED SHAREHOLDERS:
<Table>
- -------------------------------------------------
CHARLES A. FIUMEFREDDO
FOR 319
WITHHELD 0
- -------------------------------------------------
</Table>
THE FOLLOWING TRUSTEES WERE NOT STANDING FOR REELECTION AT THIS MEETING: EDWIN
J. GARN, WAYNE E. HEDIEN, MANUEL H. JOHNSON AND MICHAEL E. NUGENT.
4
DISTRIBUTION BY MATURITY
(% of Long-Term Portfolio) As of October 31, 2004
WEIGHTED AVERAGE MATURITY: 19 YEARS
<Table>
1-5 0
5-10 6
10-20 64
20-30 29
30+ 1
</Table>
Portfolio structure is subject to change.
5
CALL AND COST (BOOK) YIELD STRUCTURE
(Based on Long-Term Portfolio) As of October 31, 2004
YEARS BONDS CALLABLE -- WEIGHTED AVERAGE CALL PROTECTION: 8 YEARS
<Table>
2004(a) 6
2005 1
2006 3
2007 0
2008 4
2009 0
2010 3
2011 3
2012 13
2013 33
2014+ 34
</Table>
COST (BOOK) YIELD(B) -- WEIGHTED AVERAGE BOOK YIELD: 4.9%
<Table>
2004(a) 5.6
2005 6.1
2006 5.9
2007 0
2008 5.7
2009 0
2010 5.8
2011 4.4
2012 4.7
2013 4.7
2014+ 4.6
</Table>
(a) May include issues initially callable in previous years.
(b) Cost or "book" yield is the annual income earned on a portfolio investment
based on its original purchase price before the Trust's operating expenses.
For example, the Trust is earning a book yield of 5.6% on 6% of the
long-term portfolio that is callable in 2004.
Portfolio structure is subject to change.
6
Morgan Stanley New York Quality Municipal Securities
PORTFOLIO OF INVESTMENTS - OCTOBER 31, 2004
<Table>
<Caption>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------------
New York Tax-Exempt Municipal Bonds (131.8%)
General Obligation (1.7%)
$ 1,000 Puerto Rico, Public Improvement Refg Ser 1999 5.25% 07/01/16 $1,129,070
----------
- --------
Educational Facilities Revenue (6.4%)
New York State Dormitory Authority,
1,000 Fordham University Ser 2002 (FGIC)........................ 5.00 07/01/21 1,063,750
1,000 Fordham University Ser 2002 (FGIC)........................ 5.00 07/01/22 1,058,340
2,000 Personal Income Tax Education Ser 2003 A.................. 5.375 03/15/20 2,197,760
----------
- --------
4,319,850
4,000
----------
- --------
Electric Revenue (10.6%)
Long Island Power Authority,
3,000 Ser 2003 B................................................ 5.25 06/01/14 3,339,330
1,000 Ser 1998 A (FSA).......................................... 5.125 12/01/22 1,077,490
1,705 Ser 2004 A (Ambac)........................................ 5.00 09/01/34 1,757,565
1,000 Puerto Rico Electric Power Authority, Power Ser DD (FSA).... 4.50 07/01/19 1,027,910
----------
- --------
7,202,295
6,705
----------
- --------
Hospital Revenue (26.8%)
2,000 New York City Health & Hospitals Corporation, 2003 Ser B
(Ambac)++................................................. 5.25 02/15/21 2,169,720
New York State Dormitory Authority,
2,500 Catholic Health Long Island - St.Francis Hospital Ser 2004
(WI)...................................................... 5.10 07/01/34 2,487,325
3,000 Hospital - FHA Insured Insured Mtge 2004 Ser A (FSA)...... 5.25 08/15/19 3,315,330
4,000 Memorial Sloan-Kettering Cancer Center 2003 Ser I......... 5.00 07/01/34 4,088,960
1,000 Winthrop South Nassau University Health Ser 2003 B........ 5.50 07/01/23 1,050,560
1,645 Rochester General Hospital - FHA Insured Mtge Ser 1993.... 5.70 08/01/33 1,665,957
New York State Medical Care Facilities Finance Agency,
1,290 Hospital & Nursing Home - FHA Insured Mtge 1993 Ser B..... 5.50 02/15/22 1,339,201
2,000 St Lukes - Roosevelt Hospital - FHA Insured Mtge Ser A.... 5.625 08/15/18 2,039,000
----------
- --------
18,156,053
17,435
----------
- --------
Industrial Development/Pollution Control Revenue (2.7%)
New York State Energy Research & Development Authority,
1,500 Brooklyn Union Gas Co 1991 Ser D (AMT) (MBIA)............. 10.779++ 04/01/20 1,868,565
----------
- --------
Mortgage Revenue - Multi-Family (3.9%)
2,535 New York State Housing Finance Agency, 1996 Ser A Refg
(FSA)..................................................... 6.10 11/01/15 2,625,702
----------
- --------
Mortgage Revenue - Single Family (2.4%)
1,500 New York State Mortgage Agency, 27th Ser (AMT).............. 5.875 04/01/30 1,607,250
----------
- --------
Nursing - Health Related Facilities Revenue (1.6%)
1,000 New York State Dormitory Authority,
Dept of Health Ser 2004................................... 5.00 07/01/23 1,048,000
----------
- --------
</Table>
7
See Notes to Financial Statements
Morgan Stanley New York Quality Municipal Securities
PORTFOLIO OF INVESTMENTS - OCTOBER 31, 2004 continued
<Table>
<Caption>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------------
Public Facilities Revenue (12.4%)
$ 1,000 Empire State Development Corporation, Personal Income Tax
Ser 2002 C-1 (FGIC)....................................... 5.50% 03/15/20 $1,129,450
1,000 New York City Cultural Resource Trust, Wildlife Conservation
Society Ser 2004 (FGIC)................................... 5.00 02/01/34 1,033,000
New York State Dormitory Authority,
3,000 New York City Court Ser 2003 A............................ 5.375 05/15/21 3,234,060
1,795 New York School Districts 2003 Ser A...................... 5.25 07/01/20 1,948,652
1,000 New York School Districts 2002 Ser D (MBIA)............... 5.00 10/01/30 1,029,280
----------
- --------
8,374,442
7,795
----------
- --------
Transportation Facilities Revenue (22.5%)
1,000 Buffalo & Fort Erie Public Bridge Authority, Toll Bridge Ser
1995 (MBIA)............................................... 5.75 01/01/25 1,015,950
Metropolitan Transportation Authority,
2,000 Dedicated Tax Fund Refg Ser 2002 A (FSA).................. 5.25 11/15/24 2,142,760
4,000 Transportation Ser 2003 A (FSA)........................... 5.00 11/15/25 4,194,160
New York State Thruway Authority,
1,000 Local Hwy & Bridge Ser 2000 A (FSA)....................... 5.75 04/01/17 1,143,260
2,500 Personal Income Tax Transportation Ser 2003 A (MBIA)...... 5.00 03/15/21 2,671,775
1,500 Port Authority of New York & New Jersey, Cons 135th Ser
(XLCA)**.................................................. 5.00 09/15/29 1,555,980
1,500 Triborough Bridge & Tunnel Authority, Ser 2003 A (Ambac).... 5.00 11/15/28 1,550,565
1,000 Puerto Rico Highway & Transportation Authority, Ser 1998
A......................................................... 4.75 07/01/38 988,330
----------
- --------
15,262,780
14,500
----------
- --------
Water & Sewer Revenue (15.8%)
Nassau County Sewer & Storm Water Finance Authority,
500 2004 Ser B (MBIA)......................................... 5.00 10/01/22 534,055
500 2004 Ser B (MBIA)......................................... 5.00 10/01/23 530,295
New York City Municipal Water Finance Authority,
2,000 2003 Ser A................................................ 5.375 06/15/18 2,206,100
5,000 2004 Ser C................................................ 5.00 06/15/22 5,332,200
1,940 New York State Environmental Facilities Corporation, Clean
Water Ser 2003 B.......................................... 5.00 12/15/22 2,059,155
----------
- --------
10,661,805
9,940
----------
- --------
</Table>
See Notes to Financial Statements
8
Morgan Stanley New York Quality Municipal Securities
PORTFOLIO OF INVESTMENTS - OCTOBER 31, 2004 continued
<Table>
<Caption>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------------
Other Revenue (18.3%)
$ 2,000 Battery Park City Authority, Ser 2003A...................... 5.00% 11/01/24 $2,116,640
New York City Transitional Finance Authority,
1,000 2004 Ser C................................................ 5.00 02/01/21 1,074,660
1,000 Refg 2003 Ser D (MBIA).................................... 5.25 02/01/21 1,089,660
3,000 2004 Ser B................................................ 5.00 08/01/23 3,164,010
2,000 Refg 2003 Ser A........................................... 5.50# 11/01/26 2,264,040
1,500 Sales Tax Asset Receivable Corporation, 2005 Ser A (Ambac)
(WI)...................................................... 5.00 10/15/29 1,556,595
1,000 Tobacco Settlement Financing Corporation, State Contingency
Ser 2003 B-1C............................................. 5.50 06/01/21 1,094,770
----------
- --------
12,360,375
11,500
----------
- --------
Refunded (6.7%)
2,000 New York State Dormitory Authority, State University Ser
2002...................................................... 5.375 07/01/12+ 2,301,840
2,000 Triborough Bridge & Tunnel Authority, Ser 1993 B (ETM)...... 5.00 01/01/20 2,223,320
----------
- --------
4,525,160
4,000
----------
- --------
83,410 Total New York Tax-Exempt Municipal Bonds (Cost $85,449,504)................... 89,141,347
----------
- --------
New York Short-Term Tax-Exempt Municipal Obligations (7.5%)
2,505 New York City Transitional Finance Authority, 2003 Subser C4
(Demand 11/01/04)......................................... 1.70* 08/01/31 2,505,000
2,600 Port Authority of New York & New Jersey, Versatile Structure
Ser (Demand 11/01/04)..................................... 1.70* 05/01/19 2,600,000
----------
- --------
5,105 Total New York Short Term Tax-Exempt Municipal Obligations (Cost $5,105,000)... 5,105,000
----------
- --------
$ 88,515 Total Investments (Cost $90,554,504)(a) (b)........................ 139.3% 94,246,347
========
Liabilities in Excess of Other Assets.............................. (3.8) (2,574,101)
Preferred Shares of Beneficial Interest............................ (35.5) (24,029,323)
----- -----------
Net Assets Applicable to Common Shareholders....................... 100.0% $67,642,923
===== ===========
</Table>
See Notes to Financial Statements
9
Morgan Stanley New York Quality Municipal Securities
PORTFOLIO OF INVESTMENTS - OCTOBER 31, 2004 continued
- ---------------------
<Table>
Note: The categories of investments are shown as a percentage of net
assets applicable to common shareholders.
AMT Alternative Minimum Tax.
ETM Escrowed to maturity.
WI Security purchased on a when-issued basis.
+ Prerefunded to call date shown.
++ A portion of this security has been physically segregated in
connection with open futures contracts in the amount of
$48,000.
* Current coupon of variable rate demand obligation.
** Joint exemption in New York and New Jersey.
# Step up security; will convert to 14% on November 1, 2011.
++ Current coupon rate for inverse floating rate municipal
obligations. This rate resets periodically as the auction
rate on the related security changes. Positions in inverse
floating rate municipal obligations have total value of
$1,868,565 which represents 2.8% of net assets applicable to
common shareholders.
(a) Securities have been designated as collateral in an amount
equal to $10,648,510 in connection with open futures
contracts and securities purchased on a when-issued basis.
(b) The aggregate cost for federal income tax purposes is
$90,545,214. The aggregate gross unrealized appreciation is
$3,812,909 and the aggregate gross unrealized depreciation
is $111,776, resulting in net unrealized appreciation of
$3,701,133.
Bond Insurance:
- ---------------
Ambac Ambac Assurance Corporation.
FGIC Financial Guaranty Insurance Company.
FSA Financial Security Assurance Inc.
MBIA Municipal Bond Investors Assurance Corporation.
XLCA XL Capital Assurance Inc.
</Table>
Futures Contracts Open at October 31, 2004:
<Table>
<Caption>
DESCRIPTION/
NUMBER OF DELIVERY MONTH UNDERLYING FACE UNREALIZED
CONTRACTS LONG/SHORT AND YEAR AMOUNT AT VALUE DEPRECIATION
- --------- ---------- ---------------------- ------------------------ --------------
20 Short U.S. Treasury Notes 5 $(2,227,500) $(21,684)
Year
December 2004
40 Short U.S. Treasury Notes 10 (4,542,500) (72,610)
Year
December 2004
--------
Total unrealized depreciation................... $(94,294)
========
</Table>
See Notes to Financial Statements
10
Morgan Stanley New York Quality Municipal Securities
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
October 31, 2004
<Table>
Assets:
Investments in securities, at value
(cost $90,554,504)........................................ $94,246,347
Cash........................................................ 116,795
Interest receivable......................................... 1,324,385
Prepaid expenses and other assets........................... 129,771
-----------
Total Assets............................................ 95,817,298
-----------
Liabilities:
Payable for:
Investments purchased................................... 4,020,640
Investment management fee............................... 32,529
Common shares of beneficial interest repurchased........ 23,387
Variation margin........................................ 19,376
Accrued expenses and other payables......................... 49,120
-----------
Total Liabilities....................................... 4,145,052
-----------
Preferred shares of beneficial interest (at liquidation
value) (1,000,000 shares
authorized of non-participating $.01 par value, 480 shares
outstanding).............................................. 24,029,323
-----------
Net Assets Applicable to Common Shareholders............ $67,642,923
===========
Composition of Net Assets Applicable to Common Shareholders:
Common shares of beneficial interest (unlimited shares
authorized of $.01 par value, 4,398,363 shares
outstanding).............................................. $63,234,240
Net unrealized appreciation................................. 3,597,549
Accumulated undistributed net investment income............. 390,891
Accumulated undistributed net realized gain................. 420,243
-----------
Net Assets Applicable to Common Shareholders............ $67,642,923
===========
Net Asset Value Per Common Share,
($67,642,923 divided by 4,398,363 common shares
outstanding)................................................ $15.38
===========
</Table>
See Notes to Financial Statements
11
Morgan Stanley New York Quality Municipal Securities
FINANCIAL STATEMENTS continued
Statement of Operations
For the year ended October 31, 2004
<Table>
Net Investment Income:
Interest Income............................................. $4,320,272
----------
Expenses
Investment management fee................................... 321,175
Auction commission fees..................................... 121,026
Professional fees........................................... 51,946
Transfer agent fees and expenses............................ 28,310
Shareholder reports and notices............................. 25,089
Registration fees........................................... 16,165
Auction agent fees.......................................... 14,252
Custodian fees.............................................. 7,957
Trustees' fees and expenses................................. 1,387
Other....................................................... 22,420
----------
Total Expenses.......................................... 609,727
Less: expense offset........................................ (7,893)
----------
Net Expenses............................................ 601,834
----------
Net Investment Income................................... 3,718,438
----------
Net Realized and Unrealized Gain (Loss):
Net Realized Gain (Loss) on:
Investments................................................. 660,508
Futures contracts........................................... (242,872)
----------
Net Realized Gain....................................... 417,636
----------
Net Change in Unrealized Appreciation/Depreciation on:
Investments................................................. 1,439,291
Futures contracts........................................... (94,294)
----------
Net Appreciation........................................ 1,344,997
----------
Net Gain................................................ 1,762,633
----------
Dividends to preferred shareholders from net investment
income.................................................... (374,363)
----------
Net Increase................................................ $5,106,708
==========
</Table>
See Notes to Financial Statements
12
Morgan Stanley New York Quality Municipal Securities
FINANCIAL STATEMENTS continued
Statement of Changes in Net Assets
<Table>
<Caption>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
OCTOBER 31, 2004 OCTOBER 31, 2003
---------------- ----------------
Increase (Decrease) in Net Assets:
Operations:
Net investment income....................................... $ 3,718,438 $ 4,037,747
Net realized gain........................................... 417,636 1,105,395
Net change in unrealized appreciation/depreciation.......... 1,344,997 (1,473,147)
Dividends to preferred shareholders from net investment
income.................................................... (374,363) (463,715)
----------- -----------
Net Increase............................................ 5,106,708 3,206,280
----------- -----------
Dividends and Distributions to Common Shareholders from:
Net investment income....................................... (3,582,468) (3,690,650)
Net realized gain........................................... (4,383) --
----------- -----------
Total Dividends and Distributions....................... (3,586,851) (3,690,650)
----------- -----------
Decrease from transactions in common shares of beneficial
interest.................................................. (1,385,721) (1,428,108)
----------- -----------
Net Increase (Decrease)................................. 134,136 (1,912,478)
Net Assets Applicable to Common Shareholders:
Beginning of period......................................... 67,508,787 69,421,265
----------- -----------
End of Period...............................................
(Including accumulated undistributed net investment income
of $390,891 and $631,891, respectively)..................... $67,642,923 $67,508,787
=========== ===========
</Table>
See Notes to Financial Statements
13
Morgan Stanley New York Quality Municipal Securities
NOTES TO FINANCIAL STATEMENTS - OCTOBER 31, 2004
1. Organization and Accounting Policies
Morgan Stanley New York Quality Municipal Securities (the "Trust") is registered
under the Investment Company Act of 1940, as amended, as a non-diversified,
closed-end management investment company. The Trust's investment objective is to
provide current income which is exempt from federal, New York State and New York
City income taxes. The Trust was organized as a Massachusetts business trust on
March 3, 1993 and commenced operations on September 29, 1993.
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 mean between the last reported bid and
asked price. 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.
The Trustees believe that timely and reliable market quotations are generally
not readily available for purposes of valuing tax-exempt securities and that the
valuations supplied by the pricing service are more likely to approximate the
fair value of such securities; (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 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. 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 Trust 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
14
Morgan Stanley New York Quality Municipal Securities
NOTES TO FINANCIAL STATEMENTS - OCTOBER 31, 2004 continued
applicable futures exchange. Pursuant to the contract, the Trust 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 Trust as unrealized gains and losses. Upon
closing of the contract, the Trust 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.
D. Federal Income Tax Policy -- It is the Trust'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.
E. Dividends and Distributions to Shareholders -- Dividends and distributions to
shareholders are recorded on the ex-dividend date.
F. 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 Trust pays the Investment Manager
a management fee, calculated weekly and payable monthly, by applying the annual
rate of 0.35% to the Trust's weekly net assets including preferred shares.
3. Security Transactions and Transactions with Affiliates
The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the year ended October 31, 2004 aggregated
$22,594,811 and $26,126,861, respectively.
Morgan Stanley Trust, an affiliate of the Investment Manager, is the Trust's
transfer agent. At October 31, 2004, the Trust had transfer agent fees and
expenses payable of approximately $4,200.
Effective April 1, 2004, the Trust began an unfunded Deferred Compensation Plan
(the "Compensation Plan") which allows each independent Trustee to defer payment
of all, or a portion, of the fees he receives for serving on the Board of
Trustees. Each eligible Trustee generally may elect to have the deferred amounts
credited with a return equal to the total return on one or more of the Morgan
Stanley funds that are offered as investment options under the Compensation
Plan.
15
Morgan Stanley New York Quality Municipal Securities
NOTES TO FINANCIAL STATEMENTS - OCTOBER 31, 2004 continued
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 Trust.
4. Preferred Shares of Beneficial Interest
The Trust is authorized to issue up to 1,000,000 non-participating preferred
shares of beneficial interest having a par value of $.01 per share, in one or
more series, with rights as determined by the Trustees, without approval of the
common shareholders. The Trust has issued Series 1 and 2 Auction Rate Preferred
Shares ("Preferred Shares") which have a liquidation value of $50,000 per share
plus the redemption premium, if any, plus accumulated but unpaid dividends,
whether or not declared, thereon to the date of distribution. The Trust may
redeem such shares, in whole or in part, at the original purchase price of
$50,000 per share plus accumulated but unpaid dividends, whether or not
declared, thereon to the date of redemption.
Dividends, which are cumulative, are reset through auction procedures.
<Table>
<Caption>
AMOUNT IN RESET RANGE OF
SERIES SHARES* THOUSANDS* RATE* DATE DIVIDEND RATES**
- ------ ------- ---------- ----- -------- ----------------
1 260 $13,000 1.70% 01/10/06 1.70% - 2.65%
2 220 11,000 1.19 07/01/05 1.19
</Table>
- ---------------------
* As of October 31, 2004.
** For the year ended October 31, 2004.
Subsequent to October 31, 2004 and up through December 3, 2004, the Trust paid
dividends to Series 1 and 2 at rates ranging from 1.19% to 1.70%, in the
aggregate amount of $58,646.
The Trust is subject to certain restrictions relating to the preferred shares.
Failure to comply with these restrictions could preclude the Trust from
declaring any distributions to common shareholders or purchasing common shares
and/or could trigger the mandatory redemption of preferred shares at liquidation
value.
The preferred shares, which are entitled to one vote per share, generally vote
with the common shares but vote separately as a class to elect two Trustees and
on any matters affecting the rights of the preferred shares.
16
Morgan Stanley New York Quality Municipal Securities
NOTES TO FINANCIAL STATEMENTS - OCTOBER 31, 2004 continued
5. Common Shares of Beneficial Interest
Transactions in common shares of beneficial interest were as follows:
<Table>
<Caption>
CAPITAL
PAID IN
EXCESS OF
SHARES PAR VALUE PAR VALUE
--------- --------- -----------
Balance, October 31, 2002................................... 4,605,313 $46,053 $66,002,016
Treasury shares purchased and retired (weighted average
discount 10.41%)*......................................... (105,450) (1,055) (1,427,053)
--------- ------- -----------
Balance, October 31, 2003................................... 4,499,863 44,998 64,574,963
Treasury shares purchased and retired (weighted average
discount 9.83%)*.......................................... (101,500) (1,015) (1,384,706)
--------- ------- -----------
Balance, October 31, 2004................................... 4,398,363 $43,983 $63,190,257
========= ======= ===========
</Table>
- ---------------------
* The Trustees have voted to retire the shares purchased.
6. Dividends to Common Shareholders
On September 28, 2004, the Trust declared the following dividends from net
investment income:
<Table>
<Caption>
AMOUNT RECORD PAYABLE
PER SHARE DATE DATE
- --------- ----------------- -----------------
$0.0625 November 5, 2004 November 19, 2004
$0.0625 December 10, 2004 December 23, 2004
</Table>
7. Expense Offset
The expense offset represents a reduction of the custodian fees for earnings on
cash balances maintained by the Trust.
8. Risks Relating to Certain Financial Instruments
The Trust 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.
To hedge against adverse interest rate changes, the Trust may invest in
financial futures contracts or municipal bond 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 Trust bears the risk
of an unfavorable change in the value of the underlying securities. Risks may
also arise upon entering into these contracts from the potential inability of
the counterparties to meet the terms of their contracts.
17
Morgan Stanley New York Quality Municipal Securities
NOTES TO FINANCIAL STATEMENTS - OCTOBER 31, 2004 continued
9. Federal Income Tax Status
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 tax purposes are reported as distributions of paid-in-capital.
The tax character of distributions paid was as follows:
<Table>
<Caption>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
OCTOBER 31, 2004 OCTOBER 31, 2003
---------------- ----------------
Tax-exempt income........................................... $3,967,125 $4,146,806
Long-term capital gains..................................... 4,383 --
---------- ----------
Total distributions......................................... $3,971,508 $4,146,806
========== ==========
</Table>
As of October 31, 2004, the tax-basis components of accumulated earnings were as
follows:
<Table>
<Caption>
Undistributed tax-exempt income............................. $ 410,963
Undistributed long-term gains............................... 325,949
----------
Net accumulated earnings.................................... 736,912
Temporary differences....................................... (29,362)
Net unrealized appreciation................................. 3,701,133
----------
Total accumulated earnings.................................. $4,408,683
==========
</Table>
As of October 31, 2004, the Trust had temporary book/tax differences primarily
attributable to book amortization of discounts on debt securities,
mark-to-market of open futures contracts and dividend payable and permanent
book/tax differences attributable to tax adjustments on debt securities sold by
the Trust. To reflect reclassifications arising from the permanent differences,
accumulated undistributed net investment income was charged and accumulated
undistributed net realized gain was credited $2,607.
18
Morgan Stanley New York Quality Municipal Securities
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a common share of beneficial interest
outstanding throughout each period:
<Table>
<Caption>
FOR THE YEAR ENDED OCTOBER 31
----------------------------------------------------
2004 2003 2002 2001 2000
-------- -------- -------- -------- --------
Selected Per Share Data:
Net asset value, beginning of period....................... $15.00 $15.07 $14.88 $13.81 $ 13.03
------ ------ ------ ------ -------
Income (loss) from investment operations:
Net investment income*................................. 0.84 0.89 0.92 0.92 0.90
Net realized and unrealized gain (loss)................ 0.40 (0.09) 0.11 0.95 0.82
Common share equivalent of dividends paid to preferred
shareholders*.......................................... (0.08) (0.10) (0.10) (0.15) (0.19)
------ ------ ------ ------ -------
Total income from investment operations.................... 1.16 0.70 0.93 1.72 1.53
------ ------ ------ ------ -------
Less dividends from net investment income.................. (0.81)** (0.81) (0.78) (0.69) (0.77)
------ ------ ------ ------ -------
Anti-dilutive effect of acquiring treasury shares*......... 0.03 0.04 0.04 0.04 0.02
------ ------ ------ ------ -------
Net asset value, end of period............................. $15.38 $15.00 $15.07 $14.88 $ 13.81
====== ====== ====== ====== =======
Market value, end of period................................ $13.72 $13.38 $13.29 $13.25 $11.813
====== ====== ====== ====== =======
Total Return+.............................................. 8.81% 6.91% 6.25% 18.29% 2.07%
Ratios to Average Net Assets of Common Shareholders:
Total expenses (before expense offset)..................... 0.91%(1) 0.89%(1) 0.85%(1) 0.80%(1) 0.88%(1)
Net investment income before preferred stock dividends..... 5.53% 5.86% 6.21% 6.37% 6.81%
Preferred stock dividends.................................. 0.56% 0.67% 0.68% 1.06% 1.45%
Net investment income available to common shareholders..... 4.97% 5.19% 5.53% 5.31% 5.36%
Supplemental Data:
Net assets applicable to common shareholders, end of
period, in thousands...................................... $67,643 $67,509 $69,421 $70,731 $67,333
Asset coverage on preferred shares at end of period........ 382% 381% 389% 395% 380%
Portfolio turnover rate.................................... 26% 38% 20% 9% 7%
</Table>
- ---------------------------------------------------
<Table>
* The per share amounts were computed using an average number
of shares outstanding during the period.
** Includes capital gain distribution of $0.001 per share.
+ Total return is based upon the current market value on the
last day of each period reported. Dividends are assumed to
be reinvested at the prices obtained under the Trust's
dividend reinvestment plan. Total return does not reflect
brokerage commissions.
(1) Does not reflect the effect of expense offset of 0.01%.
</Table>
See Notes to Financial Statements
19
Morgan Stanley New York Quality Municipal Securities
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Trustees of
Morgan Stanley New York Quality Municipal Securities:
We have audited the accompanying statement of assets and liabilities of Morgan
Stanley New York Quality Municipal Securities (the "Trust"), including the
portfolio of investments, as of October 31, 2004, and the related statements of
operations for the year then ended and changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 2004, by correspondence with the custodian
and broker. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Morgan
Stanley New York Quality Municipal Securities as of October 31, 2004, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and the financial highlights
for each of the five years in the period then ended, in conformity with
accounting principles generally accepted in the United States of America.
Deloitte & Touche LLP
New York, New York
December 14, 2004
2004 FEDERAL TAX NOTICE (UNAUDITED)
During the year ended October 31, 2004, the Trust paid the
following per share amounts from tax-exempt income: $0.81 to
common shareholders, $974.53 to Series 1 preferred
shareholders and $594.19 to Series 2 preferred shareholders.
For the year ended October 31, 2004, the Trust paid the
following per share amounts from long-term capital gains:
$0.001 to common shareholders, $1.32 to Series 1 preferred
shareholders and $0.52 to Series 2 preferred shareholders.
20
Morgan Stanley New York Quality Municipal Securities
TRUSTEE AND OFFICER INFORMATION
Independent Trustees:
<Table>
<Caption>
Number of
Portfolios in
Position(s) Term of Office Fund Complex
Name, Age and Address of Held with and Length of Principal Occupation(s) During Overseen by
Independent Trustee Registrant Time Served* Past 5 Years** Trustee***
- --------------------------------------- ----------- -------------- ------------------------------ -------------
Michael Bozic (63) Trustee Since April Private Investor; Director or 208
c/o Kramer Levin Naftalis & Frankel LLP 1994 Trustee of the Retail Funds
Counsel to the Independent Trustees (since April 1994) and the
919 Third Avenue Institutional Funds (since
New York, NY July 2003); formerly Vice
Chairman of Kmart Corporation
(December 1998-October 2000),
Chairman and Chief Executive
Officer of Levitz Furniture
Corporation (November
1995-November 1998) and
President and Chief Executive
Officer of Hills Department
Stores (May 1991-July 1995);
formerly variously Chairman,
Chief Executive Officer,
President and Chief Operating
Officer (1987-1991) of the
Sears Merchandise Group of
Sears, Roebuck & Co.
Edwin J. Garn (72) Trustee Since January Managing Director of Summit 208
c/o Summit Ventures LLC 1993 Ventures LLC; Director or
1 Utah Center Trustee of the Retail Funds
201 S. Main Street (since January 1993) and the
Salt Lake City, UT Institutional Funds (since
July 2003); member of the Utah
Regional Advisory Board of
Pacific Corp.; formerly United
States Senator (R-Utah) (1974-
1992) and Chairman, Senate
Banking Committee (1980-1986),
Mayor of Salt Lake City, Utah
(1971-1974), Astronaut, Space
Shuttle Discovery (April
12-19, 1985), and Vice
Chairman, Huntsman Corporation
(chemical company).
Wayne E. Hedien (70) Trustee Since Retired; Director or Trustee 208
c/o Kramer Levin Naftalis & Frankel LLP September 1997 of the Retail Funds (since
Counsel to the Independent Trustees September 1997) and the
919 Third Avenue Institutional Funds (since
New York, NY July 2003); formerly
associated with the Allstate
Companies (1966-1994), most
recently as Chairman of The
Allstate Corporation (March
1993-December 1994) and
Chairman and Chief Executive
Officer of its wholly-owned
subsidiary, Allstate Insurance
Company (July 1989-December
1994).
<Caption>
Name, Age and Address of
Independent Trustee Other Directorships Held by Trustee
- --------------------------------------- -----------------------------------
Michael Bozic (63) Director of Weirton Steel
c/o Kramer Levin Naftalis & Frankel LLP Corporation.
Counsel to the Independent Trustees
919 Third Avenue
New York, NY
Edwin J. Garn (72) Director of Franklin Covey (time
c/o Summit Ventures LLC management systems), BMW Bank of
1 Utah Center North America, Inc. (industrial
201 S. Main Street loan corporation), United Space
Salt Lake City, UT Alliance (joint venture between
Lockheed Martin and the Boeing
Company) and Nuskin Asia Pacific
(multilevel marketing); member of
the board of various civic and
charitable organizations.
Wayne E. Hedien (70) Director of The PMI Group Inc.
c/o Kramer Levin Naftalis & Frankel LLP (private mortgage insurance);
Counsel to the Independent Trustees Trustee and Vice Chairman of The
919 Third Avenue Field Museum of Natural History;
New York, NY director of various other business
and charitable organizations.
</Table>
21
Morgan Stanley New York Quality Municipal Securities
TRUSTEE AND OFFICER INFORMATION continued
<Table>
<Caption>
Number of
Portfolios in
Position(s) Term of Office Fund Complex
Name, Age and Address of Held with and Length of Principal Occupation(s) During Overseen by
Independent Trustee Registrant Time Served* Past 5 Years** Trustee***
- --------------------------------------- ----------- -------------- ------------------------------ -------------
Dr. Manuel H. Johnson (55) Trustee Since July Senior Partner, Johnson Smick 208
c/o Johnson Smick International, Inc. 1991 International, Inc., a
2099 Pennsylvania Avenue, N.W. consulting firm; Chairman of
Suite 950 the Audit Committee and
Washington, D.C. Director or Trustee of the
Retail Funds (since July 1991)
and the Institutional Funds
(since July 2003); Co-
Chairman and a founder of the
Group of Seven Council (G7C),
an international economic
commission; formerly Vice
Chairman of the Board of
Governors of the Federal
Reserve System and Assistant
Secretary of the U.S.
Treasury.
Joseph J. Kearns (62) Trustee Since July President, Kearns & Associates 209
PMB754 2003 LLC (investment consulting);
23852 Pacific Coast Highway Deputy Chairman of the Audit
Malibu, CA Committee and Director or
Trustee of the Retail Funds
(since July 2003) and the
Institutional Funds (since
August 1994); previously
Chairman of the Audit
Committee of the Institutional
Funds (October 2001-July
2003); formerly CFO of the J.
Paul Getty Trust.
Michael E. Nugent (68) Trustee Since July General Partner of Triumph 208
c/o Triumph Capital, L.P. 1991 Capital, L.P., a private
445 Park Avenue investment partnership;
New York, NY Chairman of the Insurance
Committee and Director or
Trustee of the Retail Funds
(since July 1991) and the
Institutional Funds (since
July 2001); formerly Vice
President, Bankers Trust
Company and BT Capital
Corporation (1984-1988).
Fergus Reid (72) Trustee Since July Chairman of Lumelite Plastics 209
c/o Lumelite Plastics Corporation 2003 Corporation; Chairman of the
85 Charles Colman Blvd. Governance Committee and
Pawling, NY Director or Trustee of the
Retail Funds (since July 2003)
and the Institutional Funds
(since June 1992).
<Caption>
Name, Age and Address of
Independent Trustee Other Directorships Held by Trustee
- --------------------------------------- -----------------------------------
Dr. Manuel H. Johnson (55) Director of NVR, Inc. (home
c/o Johnson Smick International, Inc. construction); Chairman and Trustee
2099 Pennsylvania Avenue, N.W. of the Financial Accounting
Suite 950 Foundation (oversight organization
Washington, D.C. of the Financial Accounting
Standards Board); Director of RBS
Greenwich Capital Holdings
(financial holding company).
Joseph J. Kearns (62) Director of Electro Rent
PMB754 Corporation (equipment leasing),
23852 Pacific Coast Highway The Ford Family Foundation, and the
Malibu, CA UCLA Foundation.
Michael E. Nugent (68) Director of various business
c/o Triumph Capital, L.P. organizations.
445 Park Avenue
New York, NY
Fergus Reid (72) Trustee and Director of certain
c/o Lumelite Plastics Corporation investment companies in the
85 Charles Colman Blvd. JPMorgan Funds complex managed by
Pawling, NY J.P. Morgan Investment Management
Inc.
</Table>
22
Morgan Stanley New York Quality Municipal Securities
TRUSTEE AND OFFICER INFORMATION continued
Interested Trustees:
<Table>
<Caption>
Number of
Portfolios in
Position(s) Term of Office Fund Complex
Name, Age and Address of Held with and Length of Principal Occupation(s) During Overseen by
Interested Trustee Registrant Time Served* Past 5 Years** Trustee***
- ------------------------------------- ----------- -------------- ------------------------------ -------------
Charles A. Fiumefreddo (71) Chairman of Since July Chairman and Director or 208
c/o Morgan Stanley Trust the Board 1991 Trustee of the Retail Funds
Harborside Financial Center, and Trustee (since July 1991) and the
Plaza Two, Institutional Funds (since
Jersey City, NJ July 2003); formerly Chief
Executive Officer of the
Retail Funds (until September
2002).
James F. Higgins (56) Trustee Since June Director or Trustee of the 208
c/o Morgan Stanley Trust 2000 Retail Funds (since June 2000)
Harborside Financial Center, and the Institutional Funds
Plaza Two, (since July 2003); Senior
Jersey City, NJ Advisor of Morgan Stanley
(since August 2000); Director
of the Distributor and Dean
Witter Realty Inc.; previously
President and Chief Operating
Officer of the Private Client
Group of Morgan Stanley (May
1999-August 2000), and
President and Chief Operating
Officer of Individual
Securities of Morgan Stanley
(February 1997-May 1999).
<Caption>
Name, Age and Address of
Interested Trustee Other Directorships Held by Trustee
- ------------------------------------- -----------------------------------
Charles A. Fiumefreddo (71) None
c/o Morgan Stanley Trust
Harborside Financial Center,
Plaza Two,
Jersey City, NJ
James F. Higgins (56) Director of AXA Financial, Inc. and
c/o Morgan Stanley Trust The Equitable Life Assurance
Harborside Financial Center, Society of the United States
Plaza Two, (financial services).
Jersey City, NJ
</Table>
- ---------------------
* This is the earliest date the Trustee began serving the funds advised by
Morgan Stanley Investment Advisors Inc. (the "Investment Manager") (the
"Retail Funds").
** The dates referenced below indicating commencement of services as
Director/Trustee for the Retail Funds and the funds advised by Morgan
Stanley Investment Management Inc. and Morgan Stanley AIP GP LP (the
"Institutional Funds") reflect the earliest date the Director/Trustee began
serving the Retail or Institutional Funds as applicable.
*** The Fund Complex includes all open-end and closed-end funds (including all
of their portfolios) advised by the Investment Manager and any funds that
have an investment advisor that is an affiliated person of the Investment
Manager (including but not limited to Morgan Stanley Investment Management
Inc.).
23
Morgan Stanley New York Quality Municipal Securities
TRUSTEE AND OFFICER INFORMATION continued
Officers:
<Table>
<Caption>
Term of
Position(s) Office and
Name, Age and Address of Held with Length of
Executive Officer Registrant Time Served* Principal Occupation(s) During Past 5 Years**
- ----------------------------- --------------- -------------- ------------------------------------------------------------
Mitchell M. Merin (51) President Since May 1999 President and Chief Operating Officer of Morgan Stanley
1221 Avenue of the Americas Investment Management Inc.; President, Director and Chief
New York, NY Executive Officer of the Investment Manager and Morgan
Stanley Services; Chairman and Director of the Distributor;
Chairman and Director of the Transfer Agent; Director of
various Morgan Stanley subsidiaries; President of the
Institutional Funds (since July 2003) and President of the
Retail Funds (since May 1999); Trustee (since July 2003) and
President (since December 2002) of the Van Kampen Closed-End
Funds; Trustee (since May 1999) and President (since October
2002) of the Van Kampen Open-End Funds.
Ronald E. Robison (65) Executive Vice Since April Principal Executive Officer-Office of the Funds (since
1221 Avenue of the Americas President and 2003 November 2003); Managing Director of Morgan Stanley & Co.
New York, NY Principal Incorporated, Managing Director of Morgan Stanley; Managing
Executive Director, Chief Administrative Officer and Director of the
Officer Investment Manager and Morgan Stanley Services; Chief
Executive Officer and Director of the Transfer Agent;
Managing Director and Director of the Distributor; Executive
Vice President and Principal Executive Officer of the
Institutional Funds (since July 2003) and the Retail Funds
(since April 2003); Director of Morgan Stanley SICAV (since
May 2004); previously President and Director of the Retail
Funds (March 2001-July 2003) and Chief Global Operations
Officer and Managing Director of Morgan Stanley Investment
Management Inc.
Joseph J. McAlinden (61) Vice President Since July Managing Director and Chief Investment Officer of the
1221 Avenue of the Americas 1995 Investment Manager and Morgan Stanley Investment Management
New York, NY Inc.; Director of the Transfer Agent, Chief Investment
Officer of the Van Kampen Funds; Vice President of the
Institutional Funds (since July 2003) and the Retail Funds
(since July 1995).
Barry Fink (49) Vice President Since February General Counsel (since May 2000) and Managing Director
1221 Avenue of the Americas 1997 (since December 2000) of Morgan Stanley Investment
New York, NY Management; Managing Director (since December 2000),
Secretary (since February 1997) and Director (since July
1998) of the Investment Manager and Morgan Stanley Services;
Vice President of the Retail Funds; Assistant Secretary of
Morgan Stanley DW; Vice President of the Institutional Funds
(since July 2003); Managing Director, Secretary and Director
of the Distributor; previously Secretary (February 1997-July
2003) and General Counsel (February 1997-April 2004) of the
Retail Funds; Vice President and Assistant General Counsel
of the Investment Manager and Morgan Stanley Services
(February 1997-December 2001).
Amy R. Doberman (42) Vice President Since July Managing Director and General Counsel, U.S. Investment
1221 Avenue of the Americas 2004 Management; Managing Director of Morgan Stanley Investment
New York, NY Management Inc. and the Investment Manager, Vice President
of the Institutional and Retail Funds (since July 2004);
previously, Managing Director and General
Counsel -- Americas, UBS Global Asset Management (July
2000-July 2004) and General Counsel, Aeltus Investment
Management, Inc. (January 1997-July 2000).
Carsten Otto (41) Chief Since October Executive Director and U.S. Director of Compliance for
1221 Avenue of the Americas Compliance 2004 Morgan Stanley Investment Management (since October 2004);
New York, NY Officer Executive Director of the Investment Adviser and Morgan
Stanley Investment Management Inc.; formerly Assistant
Secretary and Assistant General Counsel of the Morgan
Stanley Retail Funds.
</Table>
24
Morgan Stanley New York Quality Municipal Securities
TRUSTEE AND OFFICER INFORMATION continued
<Table>
<Caption>
Term of
Position(s) Office and
Name, Age and Address of Held with Length of
Executive Officer Registrant Time Served* Principal Occupation(s) During Past 5 Years**
- ----------------------------- --------------- -------------- ------------------------------------------------------------
Stefanie V. Chang (37) Vice President Since July Executive Director of Morgan Stanley & Co. Incorporated,
1221 Avenue of the Americas 2003 Morgan Stanley Investment Management Inc. and the Investment
New York, NY Manager; Vice President of the Institutional Funds (since
December 1997) and the Retail Funds (since July 2003);
formerly practiced law with the New York law firm of Rogers
& Wells (now Clifford Chance US LLP).
Francis J. Smith (39) Treasurer and Treasurer Executive Director of the Investment Manager and Morgan
c/o Morgan Stanley Trust Chief Financial since July Stanley Services (since December 2001); previously, Vice
Harborside Financial Center, Officer 2003 and Chief President of the Retail Funds (September 2002-July 2003),
Plaza Two, Financial Vice President of the Investment Manager and Morgan Stanley
Jersey City, NJ Officer since Services (August 2000-November 2001) and Senior Manager at
September 2002 PricewaterhouseCoopers LLP (January 1998-August 2000).
Thomas F. Caloia (58) Vice President Since July Executive Director (since December 2002) and Assistant
c/o Morgan Stanley Trust 2003 Treasurer of the Investment Manager, the Distributor and
Harborside Financial Center, Morgan Stanley Services; previously Treasurer of the Retail
Plaza Two, Funds (April 1989-July 2003); formerly First Vice President
Jersey City, NJ of the Investment Manager, the Distributor and Morgan
Stanley Services.
Mary E. Mullin (37) Secretary Since July Executive Director of Morgan Stanley & Co. Incorporated,
1221 Avenue of the Americas 2003 Morgan Stanley Investment Management Inc. and the Investment
New York, NY Manager; Secretary of the Institutional Funds (since June
1999) and the Retail Funds (since July 2003); formerly
practiced law with the New York law firms of McDermott, Will
& Emery and Skadden, Arps, Slate, Meagher & Flom LLP.
</Table>
- ---------------------
* This is the earliest date the Officer began serving the Retail Funds. Each
Officer serves an indefinite term, until his or her successor is elected.
** The dates referenced below indicating commencement of service as an Officer
for the Retail and Institutional Funds reflect the earliest date the Officer
began serving the Retail or Institutional Funds as applicable.
25
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TRUSTEES
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
Wayne E. Hedien
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael E. Nugent
Fergus Reid
OFFICERS
Charles A. Fiumefreddo
Chairman of the Board
Mitchell M. Merin
President
Ronald E. Robison
Executive Vice President and Principal Executive Officer
Joseph J. McAlinden
Vice President
Barry Fink
Vice President
Amy R. Doberman
Vice President
Carsten Otto
Chief Compliance Officer
Stefanie V. Chang
Vice President
Francis J. Smith
Treasurer and Chief Financial Officer
Thomas F. Caloia
Vice President
Mary E. Mullin
Secretary
TRANSFER AGENT
Morgan Stanley Trust
Harborside Financial Center, Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
Two World Financial Center
New York, New York 10281
INVESTMENT MANAGER
Morgan Stanley Investment Advisors Inc.
1221 Avenue of the Americas
New York, New York 10020
Investments and services offered through Morgan Stanley DW Inc., member SIPC.
(c) 2004 Morgan Stanley
[MORGAN STANLEY LOGO]
MORGAN STANLEY FUNDS
Morgan Stanley
New York Quality
Municipal Securities
Annual Report
October 31, 2004
[MORGAN STANLEY LOGO]
37954RPT-RA04-00901P-Y10/04
Item 2. Code of Ethics.
(a) The Trust has adopted a code of ethics (the "Code of Ethics") that applies
to its principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the Trust or a third
party.
(b) No information need be disclosed pursuant to this paragraph.
(c) The Trust has amended its Code of Ethics during the period covered by
the shareholder report presented in Item 1 hereto to delete from the end of the
following paragraph on page 2 of the Code the phrase "to the detriment of the
Fund.":
"Each Covered Officer must not use his personal influence or personal
relationship improperly to influence investment decisions or financial reporting
by the Fund whereby the Covered Officer would benefit personally (directly or
indirectly)."
(d) Not applicable.
(e) Not applicable.
(f)
(1) The Trusts Code of Ethics is attached hereto as Exhibit A.
(2) Not applicable.
(3) Not applicable.
Item 3. Audit Committee Financial Expert.
The Trust's Board of Trustees has determined that it has two "audit committee
financial experts" serving on its audit committee, each of whom are
"independent" Trustees: Dr. Manuel H. Johnson and Joseph J. Kearns. Under
applicable securities laws, a person who is determined to be an audit committee
financial expert will not be deemed an "expert" for any purpose, including
without limitation for the purposes of Section 11 of the Securities Act of 1933,
as a result of being designated or identified as an audit committee financial
expert. The designation or identification of a person as an audit committee
financial expert does not impose on such person any duties, obligations, or
liabilities that are greater than the duties, obligations, and liabilities
imposed on such person as a member of the audit committee and Board of Trustees
in the absence of such designation or identification.
Item 4. Principal Accountant Fees and Services.
(a)(b)(c)(d) and (g). Based on fees billed for the periods shown:
REGISTRANT COVERED ENTITIES(1)
2004
AUDIT FEES......................... $ 25,647 N/A
NON-AUDIT FEES
AUDIT-RELATED FEES....... $ 5,752(2) $ 5,067,400(2)
TAX FEES................. $ 4,455(3) $ 545,053(4)
ALL OTHER FEES........... $ - $ -
TOTAL NON-AUDIT FEES............... $ 10,207 $ 5,612,453
TOTAL.............................. $ 35,854 $ 5,612,453
REGISTRANT COVERED ENTITIES(1)
2003
AUDIT FEES......................... $ 24,199 N/A
NON-AUDIT FEES
AUDIT-RELATED FEES....... $ 21,284(2) $ 1,086,576(2)
TAX FEES................. $ 4,346(3) $ 252,500(4)
ALL OTHER FEES........... $ - $ -(5)
TOTAL NON-AUDIT FEES............... $ 25,630 $ 1,339,076
TOTAL.............................. $ 49,829 $ 1,339,076
N/A- Not applicable, as not required by Item 4.
(1) Covered Entities include the Adviser (excluding sub-advisors) and
any entity controlling, controlled by or under common control with
the Adviser that provides ongoing services to the Registrant.
(2) Audit-Related Fees represent assurance and related services provided
that are reasonably related to the performance of the audit of the
financial statements of the Covered Entities' and funds advised by
the Adviser or its affiliates, specifically data verification and
agreed-upon procedures related to asset securitizations and
agreed-upon procedures engagements.
(3) Tax Fees represent tax compliance, tax planning and tax advice
services provided in connection with the preparation and review of
the Registrant's tax returns.
(4) Tax Fees represent tax compliance, tax planning and tax advice
services provided in connection with the review of Covered Entities'
tax returns.
(5) All other fees represent project management for future business
applications and improving business and operational processes.
2
(e)(1) The audit committee's pre-approval policies and procedures are as
follows:
APPENDIX A
AUDIT COMMITTEE
AUDIT AND NON-AUDIT SERVICES
PRE-APPROVAL POLICY AND PROCEDURES
OF THE
MORGAN STANLEY RETAIL AND INSTITUTIONAL FUNDS
AS ADOPTED AND AMENDED JULY 23, 2004,(1)
1. STATEMENT OF PRINCIPLES
The Audit Committee of the Board is required to review and, in its sole
discretion, pre-approve all Covered Services to be provided by the Independent
Auditors to the Fund and Covered Entities in order to assure that services
performed by the Independent Auditors do not impair the auditor's independence
from the Fund.
The SEC has issued rules specifying the types of services that an independent
auditor may not provide to its audit client, as well as the audit committee's
administration of the engagement of the independent auditor. The SEC's rules
establish two different approaches to pre-approving services, which the SEC
considers to be equally valid. Proposed services either: may be pre-approved
without consideration of specific case-by-case services by the Audit Committee
("general pre-approval"); or require the specific pre-approval of the Audit
Committee or its delegate ("specific pre-approval"). The Audit Committee
believes that the combination of these two approaches in this Policy will result
in an effective and efficient procedure to pre-approve services performed by the
Independent Auditors. As set forth in this Policy, unless a type of service has
received general pre-approval, it will require specific pre-approval by the
Audit Committee (or by any member of the Audit Committee to which pre-approval
authority has been delegated) if it is to be provided by the Independent
Auditors. Any proposed services exceeding pre-approved cost levels or budgeted
amounts will also require specific pre-approval by the Audit Committee.
The appendices to this Policy describe the Audit, Audit-related, Tax and All
Other services that have the general pre-approval of the Audit Committee. The
term of any general pre-approval is 12 months from the date of pre-approval,
unless the Audit Committee considers and provides a different period and states
otherwise. The Audit Committee will annually review and pre-approve the services
that may be provided by the Independent Auditors without obtaining specific
pre-approval from the Audit Committee. The Audit Committee will add to or
subtract from the list of general pre-approved services from time to time, based
on subsequent determinations.
- ------------
(1) This Audit Committee Audit and Non-Audit Services Pre-Approval Policy and
Procedures (the "Policy"), adopted as of the date above, supersedes and
replaces all prior versions that may have been adopted from time to time.
3
The purpose of this Policy is to set forth the policy and procedures by which
the Audit Committee intends to fulfill its responsibilities. It does not
delegate the Audit Committee's responsibilities to pre-approve services
performed by the Independent Auditors to management.
The Fund's Independent Auditors have reviewed this Policy and believes that
implementation of the Policy will not adversely affect the Independent Auditors'
independence.
2. DELEGATION
As provided in the Act and the SEC's rules, the Audit Committee may delegate
either type of pre-approval authority to one or more of its members. The member
to whom such authority is delegated must report, for informational purposes
only, any pre-approval decisions to the Audit Committee at its next scheduled
meeting.
3. AUDIT SERVICES
The annual Audit services engagement terms and fees are subject to the specific
pre-approval of the Audit Committee. Audit services include the annual financial
statement audit and other procedures required to be performed by the Independent
Auditors to be able to form an opinion on the Fund's financial statements. These
other procedures include information systems and procedural reviews and testing
performed in order to understand and place reliance on the systems of internal
control, and consultations relating to the audit. The Audit Committee will
approve, if necessary, any changes in terms, conditions and fees resulting from
changes in audit scope, Fund structure or other items.
In addition to the annual Audit services engagement approved by the Audit
Committee, the Audit Committee may grant general pre-approval to other Audit
services, which are those services that only the Independent Auditors reasonably
can provide. Other Audit services may include statutory audits and services
associated with SEC registration statements (on Forms N-1A, N-2, N-3, N-4,
etc.), periodic reports and other documents filed with the SEC or other
documents issued in connection with securities offerings.
The Audit Committee has pre-approved the Audit services in Appendix B.1. All
other Audit services not listed in Appendix B.1 must be specifically
pre-approved by the Audit Committee (or by any member of the Audit Committee to
which pre-approval has been delegated).
4. AUDIT-RELATED SERVICES
Audit-related services are assurance and related services that are reasonably
related to the performance of the audit or review of the Fund's financial
statements and, to the extent they are Covered Services, the Covered Entities or
that are traditionally performed by the Independent Auditors. Because the Audit
Committee believes that the provision of Audit-related services does not impair
the independence of the auditor and is consistent with the SEC's rules on
auditor independence, the Audit Committee may grant general pre-approval to
Audit-related services. Audit-related services include, among others, accounting
consultations related to accounting, financial reporting or disclosure matters
4
not classified as "Audit services"; assistance with understanding and
implementing new accounting and financial reporting guidance from rulemaking
authorities; agreed-upon or expanded audit procedures related to accounting
and/or billing records required to respond to or comply with financial,
accounting or regulatory reporting matters; and assistance with internal control
reporting requirements under Forms N-SAR and/or N-CSR.
The Audit Committee has pre-approved the Audit-related services in Appendix B.2.
All other Audit-related services not listed in Appendix B.2 must be specifically
pre-approved by the Audit Committee (or by any member of the Audit Committee to
which pre-approval has been delegated).
5. TAX SERVICES
The Audit Committee believes that the Independent Auditors can provide Tax
services to the Fund and, to the extent they are Covered Services, the Covered
Entities, such as tax compliance, tax planning and tax advice without impairing
the auditor's independence, and the SEC has stated that the Independent Auditors
may provide such services.
Pursuant to the preceding paragraph, the Audit Committee has pre-approved the
Tax Services in Appendix B.3. All Tax services in Appendix B.3 must be
specifically pre-approved by the Audit Committee (or by any member of the Audit
Committee to which pre-approval has been delegated).
6. ALL OTHER SERVICES
The Audit Committee believes, based on the SEC's rules prohibiting the
Independent Auditors from providing specific non-audit services, that other
types of non-audit services are permitted. Accordingly, the Audit Committee
believes it may grant general pre-approval to those permissible non-audit
services classified as All Other services that it believes are routine and
recurring services, would not impair the independence of the auditor and are
consistent with the SEC's rules on auditor independence.
The Audit Committee has pre-approved the All Other services in Appendix B.4.
Permissible All Other services not listed in Appendix B.4 must be specifically
pre-approved by the Audit Committee (or by any member of the Audit Committee to
which pre-approval has been delegated).
7. PRE-APPROVAL FEE LEVELS OR BUDGETED AMOUNTS
Pre-approval fee levels or budgeted amounts for all services to be provided by
the Independent Auditors will be established annually by the Audit Committee.
Any proposed services exceeding these levels or amounts will require specific
pre-approval by the Audit Committee. The Audit Committee is mindful of the
overall relationship of fees for audit and non-audit services in determining
whether to pre-approve any such services.
8. PROCEDURES
All requests or applications for services to be provided by the Independent
Auditors that do not require specific approval by the Audit Committee will be
submitted to the Fund's Chief Financial Officer and must include a detailed
description of the services to be
5
rendered. The Fund's Chief Financial Officer will determine whether such
services are included within the list of services that have received the general
pre-approval of the Audit Committee. The Audit Committee will be informed on a
timely basis of any such services rendered by the Independent Auditors. Requests
or applications to provide services that require specific approval by the Audit
Committee will be submitted to the Audit Committee by both the Independent
Auditors and the Fund's Chief Financial Officer, and must include a joint
statement as to whether, in their view, the request or application is consistent
with the SEC's rules on auditor independence.
The Audit Committee has designated the Fund's Chief Financial Officer to monitor
the performance of all services provided by the Independent Auditors and to
determine whether such services are in compliance with this Policy. The Fund's
Chief Financial Officer will report to the Audit Committee on a periodic basis
on the results of its monitoring. Both the Fund's Chief Financial Officer and
management will immediately report to the chairman of the Audit Committee any
breach of this Policy that comes to the attention of the Fund's Chief Financial
Officer or any member of management.
9. ADDITIONAL REQUIREMENTS
The Audit Committee has determined to take additional measures on an annual
basis to meet its responsibility to oversee the work of the Independent Auditors
and to assure the auditor's independence from the Fund, such as reviewing a
formal written statement from the Independent Auditors delineating all
relationships between the Independent Auditors and the Fund, consistent with
Independence Standards Board No. 1, and discussing with the Independent Auditors
its methods and procedures for ensuring independence.
10. COVERED ENTITIES
Covered Entities include the Fund's investment adviser(s) and any entity
controlling, controlled by or under common control with the Fund's investment
adviser(s) that provides ongoing services to the Fund(s). Beginning with
non-audit service contracts entered into on or after May 6, 2003, the Fund's
audit committee must pre-approve non-audit services provided not only to the
Fund but also to the Covered Entities if the engagements relate directly to the
operations and financial reporting of the Fund. This list of Covered Entities
would include:
Morgan Stanley Retail Funds
Morgan Stanley Investment Advisors Inc.
Morgan Stanley & Co. Incorporated
Morgan Stanley DW Inc.
Morgan Stanley Investment Management Inc.
Morgan Stanley Investment Management Limited
Morgan Stanley Investment Management Private Limited
Morgan Stanley Asset & Investment Trust Management Co., Limited
Morgan Stanley Investment Management Company
Van Kampen Asset Management
Morgan Stanley Services Company, Inc.
Morgan Stanley Distributors Inc.
Morgan Stanley Trust FSB
6
Morgan Stanley Institutional Funds
Morgan Stanley Investment Management Inc.
Morgan Stanley Investment Advisors Inc.
Morgan Stanley Investment Management Limited
Morgan Stanley Investment Management Private Limited
Morgan Stanley Asset & Investment Trust Management Co., Limited
Morgan Stanley Investment Management Company
Morgan Stanley & Co. Incorporated
Morgan Stanley Distribution, Inc.
Morgan Stanley AIP GP LP
Morgan Stanley Alternative Investment Partners LP
(e)(2) Beginning with non-audit service contracts entered into on or after May
6, 2003, the audit committee also is required to pre-approve services to Covered
Entities to the extent that the services are determined to have a direct impact
on the operations or financial reporting of the Registrant. 100% of such
services were pre-approved by the audit committee pursuant to the Audit
Committee's pre-approval policies and procedures (attached hereto).
(f) Not applicable.
(g) See table above.
(h) The audit committee of the Board of Trustees has considered whether the
provision of services other than audit services performed by the auditors to the
Registrant and Covered Entities is compatible with maintaining the auditors'
independence in performing audit services.
Item 5. Audit Committee of Listed Registrants.
(a) The Trust has a separately-designated standing audit committee established
in accordance with Section 3(a)(58)(A) of the Exchange Act whose members are:
Michael Bozic, Edwin J. Garn, Wayne E. Hedien, Manual H. Johnson, Joseph J.
Kearns, Michael Nugent and Fergus Reid.
(b) Not applicable
Item 6.
See Item 1.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
The Trust invests in exclusively non-voting securities and therefore this item
is not applicable.
7
Item 8. Closed-End Fund Repurchases
REGISTRANT PURCHASE OF EQUITY SECURITIES
(d) Maximum
(c) Total Number (or
Number of Approximate
Shares (or Dollar Value)
Units) of Shares (or
(a) Total Purchased as Units) that May
Number of Part of Publicly Yet Be
Shares (or (b) Average Announced Purchased
Units) Price Paid per Plans or Under the Plans
Period Purchased Share (or Unit) Programs or Programs
- -------------------- ---------- --------------- ---------------- ---------------
November 1, 2003 --
November 30, 2003 3,800.00 13.4200 N/A N/A
December 1, 2003 --
December 31, 2003 12,500.00 13.6500 N/A N/A
January 1, 2004 ---
January 31, 2004 11,500.00 14.0400 N/A N/A
February 1, 2004 ---
February 29, 2004 2,600.00 14.2000 N/A N/A
March 1, 2004 ---
March 31, 2004 14,700.00 14.5100 N/A N/A
April 1, 2004 ---
April 30, 2004 10,800.00 13.7500 N/A N/A
May 1, 2004 ---
May 31, 2004 12,100.00 12.8500 N/A N/A
June 1, 2004 ---
June 30, 2004 8,100.00 12.8600 N/A N/A
July 1, 2004 ---
July 31, 2004 6,000.00 13.1500 N/A N/A
August 1, 2004 ---
August 31, 2004 3,600.00 13.4100 N/A N/A
September 1, 2004 -
September 30, 2004 6,700.00 13.7100 N/A N/A
October 1, 2004 ---
October 31, 2004 9,100.00 13.7600 N/A N/A
Total 101,500.00 13.6092 N/A N/A
8
Item 9. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 10 - Controls and Procedures
(a) The Trust's principal executive officer and principal financial officer have
concluded that the Trust's disclosure controls and procedures are sufficient to
ensure that information required to be disclosed by the Trust in this Form N-CSR
was recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms, based
upon such officers' evaluation of these controls and procedures as of a date
within 90 days of the filing date of the report.
(b) There were no changes in the registrant's internal control over financial
reporting that occurred during the registrant's most recent fiscal half-year
(the registrant's second fiscal half-year in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Item 11 Exhibits
(a) The Code of Ethics for Principal Executive and Senior Financial Officers is
attached hereto.
(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.
9
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 Quality Municipal Securities
/s/ Ronald E. Robison
Ronald E. Robison
Principal Executive Officer
December 14, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.
/s/ Ronald E. Robison
Ronald E. Robison
Principal Executive Officer
December 14, 2004
/s/ Francis Smith
Francis Smith
Principal Financial Officer
December 14, 2004
10