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: 811-04222

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, 2006

Date of reporting period: June 30, 2006

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. We will
provide an overview of the market conditions, and discuss some of the factors
that affected performance during the reporting period. In addition, this report
includes the Fund's financial statements and a list of Fund investments.

THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A PROSPECTUS FOR THE FUND BEING
OFFERED.

MARKET FORECASTS PROVIDED IN THIS REPORT MAY NOT NECESSARILY COME TO PASS. THERE
IS NO ASSURANCE THAT THE FUND WILL ACHIEVE ITS INVESTMENT OBJECTIVE. THE FUND IS
SUBJECT TO MARKET RISK, WHICH IS THE POSSIBILITY THAT MARKET VALUES OF
SECURITIES OWNED BY THE FUND WILL DECLINE AND, THEREFORE, THE VALUE OF THE
FUND'S SHARES MAY BE LESS THAN WHAT YOU PAID FOR THEM. ACCORDINGLY, YOU CAN LOSE
MONEY INVESTING IN THIS FUND. PLEASE SEE THE PROSPECTUS FOR MORE COMPLETE
INFORMATION ON INVESTMENT RISKS.

FUND REPORT

For the six months ended June 30, 2006

TOTAL RETURN FOR THE SIX MONTHS ENDED JUNE 30, 2006

<Table>
<Caption>
LEHMAN LIPPER
BROTHERS NEW YORK
NEW YORK MUNICIPAL
EXEMPT DEBT FUNDS
CLASS A CLASS B CLASS C CLASS D INDEX(1) INDEX(2)

0.37% 0.48% 0.11% 0.47% 0.31% 0.29%
</Table>

The performance of the Fund's four share classes varies because each has
different expenses. The Fund's total returns assume the reinvestment of all
distributions but do not reflect the deduction of any applicable sales charges.
Such costs would lower performance. See Performance Summary for standardized
performance and benchmark information.

Because Class B shares incurred lower expenses under the 12b-1 Plan than did
Class A shares for the six months ended June 30, 2006, the total operating
expense ratio for Class B shares was lower and, as a result, the performance of
Class B shares was higher than that of the Class A shares. There can be no
assurance that this will continue to occur in the future as the maximum fees
payable by Class B shares under the 12b-1 Plan are higher than those payable by
Class A shares.

MARKET CONDITIONS

The pace of U.S. economic growth remained resilient during the first half of
2006 despite record oil prices and a slowdown in housing. Recently, the market
has focused on the change in leadership at the Federal Reserve Board (the "Fed")
and uncertainties created by inflationary pressures and forecasts of slower
growth.

As investors had anticipated, the Fed continued to raise the federal funds
target rate in 25 basis point increments at each of its four meetings in the
first six months of 2006, bringing the rate to 5.25 percent as of June 29. Since
June 2004, the Fed has raised the rate 17 consecutive times. Representative
yields on two-year AAA-rated municipal bonds generally followed the federal
funds target rate, rising 50 basis points, while yields on 30-year bonds rose
only 25 basis points from 4.40 to 4.65 percent during the first half of 2006.
Accordingly, the slope of the municipal yield curve continued to flatten as the
spread (the difference between yields on short-term and long-term interest
rates) narrowed.

Investors' quest for yield favored lower-quality bonds over high-grade issues
and continued to keep credit spreads relatively tight. Credit spreads measure
the incremental yield investors are willing to accept to assume additional
credit risk. When credit spreads tighten, lower quality issues typically
outperform high-grade issues.

Reinvestment of an estimated $100 billion of bond maturities, calls and coupons
for June, July and August strengthened demand for municipal bonds. Although
municipal bond issuance picked up during the quarter, supply continued to lag
last year's record pace. New issue volume in the first six months of 2006
declined by nearly 15 percent. Rising interest rates discouraged municipalities
from refinancing debt and the pace of refunding activity slowed substantially.
Bond issues backed by insurance had close to a 50 percent market share.

Sustained demand and declining supply helped municipal bonds outperform U.S.
Treasuries with comparable maturities. As a result, the relative attractiveness
of tax-exempt bonds ebbed and the 30-year municipal-to-Treasury yield ratio
declined from 97 to 89 percent. The municipal-to-Treasury yield ratio measures
the relative attractiveness of the two sectors.

The higher the ratio, the greater the attractiveness of municipal yields
relative to Treasury yields.

Although slowing refunding activity in 2006 contributed to over a 30 percent
drop in issuance, New York remained a leading issuer of municipal bonds during
the period. The state enjoys a good, stable credit outlook, and economic growth
has boosted state revenues. For the second consecutive year, the state passed
its budget on time. The securities and tourism industries counted among the
state's bright spots, as did the real estate market. Growth in professional and
business services continued to serve as a catalyst for employment gains in the
New York City metropolitan area and the Hudson Valley region. However,
manufacturing activity, especially in upstate New York, remained a notable
pocket of economic weakness.

PERFORMANCE ANALYSIS

Morgan Stanley New York Tax-Free Income Fund's Class A, B, and D shares
outperformed the Lehman Brothers New York Exempt Index and the Lipper New York
Municipal Debt Funds Index for the six months ended June 30, 2006, assuming no
deduction of applicable sales charges. Its Class C shares underperformed the
Lehman Brothers New York Exempt Index and the Lipper New York Municipal Debt
Funds Index for the period, also assuming no deduction of applicable sales
charges.

In anticipation of Fed tightening and generally higher interest rates, the Fund
made modest ongoing adjustments to its portfolio to reduce volatility during the
period. For example, the Fund's interest rate sensitivity was positioned
conservatively. At the end of June, the Fund's option-adjusted duration was 7.2
years.* This duration positioning helped total returns when rates rose.

The Fund maintained its high-quality bias, with over 80 percent of the portfolio
rated A or better. However, exposure to investment grade bonds rated BBB was
modestly increased by purchases of tobacco securitization bonds in the
industrial development/ pollution control sector. This had a positive impact on
performance as lower-rated issues outperformed. Reflecting a commitment to
diversification, the Fund's net assets of approximately $96 million were
invested among 11 long-term sectors and 40 credits.

- ------------------
* 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, funds with shorter durations perform better in
rising-interest-rate environments, while funds with longer durations perform
better when rates decline.

There is no guarantee that any sectors mentioned will continue to perform as
discussed herein or that securities in such sectors will be held by the Fund in
the future.

<Table>
<Caption>
TOP FIVE SECTORS

IDR/PCR* 18.0%
Public Facilities Other 9.9
Hospital 9.7
Transportation 9.3
Mortgage 8.9
</Table>

<Table>
<Caption>
LONG-TERM CREDIT ANALYSIS

Aaa/AAA 53.5%
Aa/AA 15.2
A/A 11.9
Baa/BBB 15.4
NR 4.0
</Table>

* Industrial Development/Pollution Control Revenue

Data as of June 30, 2006. Subject to change daily. All percentages for top five
sectors are as a percentage of net assets and 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.

INVESTMENT STRATEGY

THE FUND WILL NORMALLY INVEST AT LEAST 80 PERCENT OF ITS ASSETS IN SECURITIES
THAT PAY INTEREST EXEMPT FROM FEDERAL, NEW YORK STATE AND NEW YORK CITY INCOME
TAX OR OTHER LOCAL INCOME TAXES. THE FUND'S "INVESTMENT ADVISER," MORGAN STANLEY
INVESTMENT ADVISORS INC., GENERALLY INVESTS THE FUND'S ASSETS IN INVESTMENT
GRADE, NEW YORK MUNICIPAL OBLIGATIONS. MUNICIPAL OBLIGATIONS ARE BONDS, NOTES OR
SHORT-TERM COMMERCIAL PAPER ISSUED BY STATE GOVERNMENTS, LOCAL GOVERNMENTS OR
THEIR RESPECTIVE AGENCIES. THESE MUNICIPAL OBLIGATIONS WILL HAVE THE FOLLOWING
RATINGS AT THE TIME OF PURCHASE:

- - MUNICIPAL BONDS -- WITHIN THE FOUR HIGHEST GRADES BY MOODY'S INVESTORS SERVICE
INC. ("MOODY'S"), STANDARD & POOR'S RATINGS GROUP, A DIVISION OF THE MCGRAW-
HILL COMPANIES, INC. ("S&P"), OR FITCH RATINGS ("FITCH");

- - MUNICIPAL NOTES -- WITHIN THE TWO HIGHEST GRADES OR, IF NOT RATED, HAVE
OUTSTANDING BONDS WITHIN THE FOUR HIGHEST GRADES BY MOODY'S, S&P OR FITCH; AND

- - MUNICIPAL COMMERCIAL PAPER -- WITHIN THE HIGHEST GRADE BY MOODY'S, S&P OR
FITCH.

THE FUND MAY ALSO INVEST IN UNRATED SECURITIES WHICH ARE JUDGED BY THE
INVESTMENT ADVISER TO HAVE COMPARABLE QUALITY TO THE SECURITIES DESCRIBED ABOVE.

FOR MORE INFORMATION ABOUT PORTFOLIO HOLDINGS

EACH MORGAN STANLEY FUND PROVIDES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS IN
ITS SEMIANNUAL AND ANNUAL REPORTS WITHIN 60 DAYS OF THE END OF THE FUND'S SECOND
AND FOURTH FISCAL QUARTERS. THE SEMIANNUAL REPORTS AND THE ANNUAL REPORTS ARE
FILED ELECTRONICALLY WITH THE SECURITIES AND EXCHANGE COMMISSION (SEC) ON

FORM N-CSRS AND FORM N-CSR, RESPECTIVELY. MORGAN STANLEY ALSO DELIVERS THE
SEMIANNUAL AND ANNUAL REPORTS TO FUND SHAREHOLDERS AND MAKES THESE REPORTS
AVAILABLE ON ITS PUBLIC WEB SITE, WWW.MORGANSTANLEY.COM. EACH MORGAN STANLEY
FUND ALSO FILES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS WITH THE SEC FOR THE
FUND'S FIRST AND THIRD FISCAL QUARTERS ON FORM N-Q. MORGAN STANLEY DOES NOT
DELIVER THE REPORTS FOR THE FIRST AND THIRD FISCAL QUARTERS TO SHAREHOLDERS, NOR
ARE THE REPORTS POSTED TO THE MORGAN STANLEY PUBLIC WEB SITE. YOU MAY, HOWEVER,
OBTAIN THE FORM N-Q FILINGS (AS WELL AS THE FORM N-CSR AND N-CSRS FILINGS) BY
ACCESSING THE SEC'S WEB SITE, HTTP://WWW.SEC.GOV. YOU MAY ALSO REVIEW AND COPY
THEM AT THE SEC'S PUBLIC REFERENCE ROOM IN WASHINGTON, DC. INFORMATION ON THE
OPERATION OF THE SEC'S PUBLIC REFERENCE ROOM MAY BE OBTAINED BY CALLING THE SEC
AT (800) SEC-0330. YOU CAN ALSO REQUEST COPIES OF THESE MATERIALS, UPON PAYMENT
OF A DUPLICATING FEE, BY ELECTRONIC REQUEST AT THE SEC'S E-MAIL ADDRESS
(PUBLICINFO@SEC.GOV) OR BY WRITING THE PUBLIC REFERENCE SECTION OF THE SEC,
WASHINGTON, DC 20549-0102.

HOUSEHOLDING NOTICE

TO REDUCE PRINTING AND MAILING COSTS, THE FUND ATTEMPTS TO ELIMINATE DUPLICATE
MAILINGS TO THE SAME ADDRESS. THE FUND DELIVERS A SINGLE COPY OF CERTAIN
SHAREHOLDER DOCUMENTS, INCLUDING SHAREHOLDER REPORTS, PROSPECTUSES AND PROXY
MATERIALS, TO INVESTORS WITH THE SAME LAST NAME WHO RESIDE AT THE SAME ADDRESS.
YOUR PARTICIPATION IN THIS PROGRAM WILL CONTINUE FOR AN UNLIMITED PERIOD OF TIME
UNLESS YOU INSTRUCT US OTHERWISE. YOU CAN REQUEST MULTIPLE COPIES OF THESE
DOCUMENTS BY CALLING (800) 350-6414, 8:00 A.M. TO 8:00 P.M., ET. ONCE OUR
CUSTOMER SERVICE CENTER HAS RECEIVED YOUR INSTRUCTIONS, WE WILL BEGIN SENDING
INDIVIDUAL COPIES FOR EACH ACCOUNT WITHIN 30 DAYS.

DISTRIBUTION BY MATURITY
(% of Long-Term Portfolio) As of June 30, 2006

WEIGHTED AVERAGE MATURITY: 18 YEARS(A)

<Table>

0-5 5
6-10 17
11-15 15
16-20 37
21-25 10
26-30 10
30+ 6
</Table>

(a) Where applicable maturities reflect mandatory tenders, puts and call dates.
Portfolio structure is subject to change.

CALL AND COST (BOOK) YIELD STRUCTURE
(Based on Long-Term Portfolio) As of June 30, 2006

YEARS BONDS CALLABLE -- WEIGHTED AVERAGE CALL PROTECTION: 7 YEARS

<Table>

2007(a) 13
2008 5
2009 2
2010 5
2011 5
2012 13
2013 13
2014 6
2015 16
2016+ 22
</Table>

COST (BOOK) YIELD(B) -- WEIGHTED AVERAGE BOOK YIELD: 5.4%

<Table>

2007 7.7
2008 5.4
2009 5.8
2010 5.4
2011 4.9
2012 4.6
2013 4.9
2014 4.7
2015 5.1
2016+ 5.2
</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 Fund's operating expenses.
For example, the Fund is earning a book yield of 7.7% on 13% of the
long-term portfolio that is callable in 2007.
Portfolio structure is subject to change.

PERFORMANCE SUMMARY

AVERAGE ANNUAL TOTAL RETURNS --PERIOD ENDED JUNE 30, 2006

<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)
SYMBOL NYFAX NYFBX NYFCX NYFDX

1 YEAR 0.68%(3) 0.94%(3) 0.16%(3) 0.98%(3)
(3.60)(4) (3.82)(4) (0.79)(4) --
5 YEARS 4.62(3) 4.05(3) 3.94(3) 4.64(3)
3.72(4) 3.73(4) 3.94(4) --
10 YEARS -- 4.67(3) -- --
-- 4.67(4) -- --
SINCE INCEPTION 4.67(3) 6.37(3) 4.03(3) 4.77(3)
4.16(4) 6.37(4) 4.03(4) --
</Table>

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. For most recent month-end performance figures, please visit
www.morganstanley.com or speak with your Financial Advisor. Investment returns
and principal value will fluctuate and fund shares, when redeemed, may be worth
more or 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.

* 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 contingent deferred sales charge for Class C is 1.0% for shares
redeemed within one year of purchase.

++ Class D has no sales charge.

(1) The Lehman Brothers New York Exempt Index tracks the performance of New
York issued 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, which
is adjusted for capital gains distributions and income dividends, is
unmanaged and should not be considered an investment. There are currently
30 funds represented in this 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.

EXPENSE EXAMPLE

As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments and redemption fees;
and (2) ongoing costs, including advisory fees; distribution and service (12b-1)
fees; and other Fund expenses. This example is intended to help you understand
your ongoing costs (in dollars) of investing in the Fund and to compare these
costs with the ongoing costs of investing in other mutual funds.

The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period 01/01/06 - 06/30/06.

ACTUAL EXPENSES

The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

The second line of the table below provides information about hypothetical
expenses based on the Fund's actual expense ratio and an assumed rate of return
of 5% per year before expenses, which is not the Fund's actual return. The
hypothetical account values and expenses may not be used to estimate the actual
ending account balance or expenses you paid for the period. You may use this
information to compare the ongoing cost of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) and redemption fees. Therefore, the second line of the table is
useful in comparing ongoing costs, and will not help you determine the relative
total cost of owning different funds. In addition, if these transactional costs
were included, your costs would have been higher.

<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD *
------------- ------------- ---------------
01/01/06 -
01/01/06 06/30/06 06/30/06
------------- ------------- ---------------

CLASS A
Actual (0.37% return)....................................... $1,000.00 $1,003.70 $4.47
Hypothetical (5% annual return before expenses)............. $1,000.00 $1,020.33 $4.51
CLASS B
Actual (0.48% return)....................................... $1,000.00 $1,004.80 $3.38
Hypothetical (5% annual return before expenses)............. $1,000.00 $1,021.42 $3.41
CLASS C
Actual (0.11% return)....................................... $1,000.00 $1,001.10 $6.95
Hypothetical (5% annual return before expenses)............. $1,000.00 $1,017.85 $7.00
CLASS D
Actual (0.47% return)....................................... $1,000.00 $1,004.70 $3.23
Hypothetical (5% annual return before expenses)............. $1,000.00 $1,021.57 $3.26
</Table>

- ------------------
* Expenses are equal to the Fund's annualized expense ratios of 0.90%, 0.68%,
1.40% and 0.65% for Class A, Class B, Class C and Class D shares,
respectively, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period). If the Fund had
borne all of its expenses, the annualized expense ratios would have been
1.01%, 0.79%, 1.51% and 0.76% for Class A, Class B, Class C and Class D
shares, respectively.

Because Class B shares incurred lower expenses under the Rule 12b-1 Plan of
Distribution than did Class A shares for the six months ended June 30, 2006,
the total operating expense ratio for Class B shares was lower and, as a
result, the performance of Class B shares was higher than that of the Class
A shares. There can be no assurance that this will continue to occur in the
future as the maximum fees payable by Class B shares under the Rule 12b-1
Plan of Distribution are higher than those payable by Class A shares.

INVESTMENT ADVISORY AGREEMENT APPROVAL

NATURE, EXTENT AND QUALITY OF SERVICES

The Board reviewed and considered the nature and extent of the investment
advisory services provided by the Investment Adviser under the Advisory
Agreement, including portfolio management, investment research and fixed income
securities trading. The Board also reviewed and considered the nature and extent
of the non-advisory, administrative services provided by the Fund's
Administrator under the Administration Agreement, including accounting,
clerical, bookkeeping, compliance, business management and planning, and the
provision of supplies, office space and utilities at the Investment Adviser's
expense. (The Investment Adviser and the Administrator together are referred to
as the "Adviser" and the Advisory and Administration Agreements together are
referred to as the "Management Agreement.") The Board also compared the nature
of the services provided by the Adviser with similar services provided by
non-affiliated advisers as reported to the Board by Lipper Inc. ("Lipper").

The Board reviewed and considered the qualifications of the portfolio managers,
the senior administrative managers and other key personnel of the Adviser who
provide the advisory and administrative services to the Fund. The Board
determined that the Adviser's portfolio managers and key personnel are well
qualified by education and/or training and experience to perform the services in
an efficient and professional manner. The Board concluded that the nature and
extent of the advisory and administrative services provided were necessary and
appropriate for the conduct of the business and investment activities of the
Fund. The Board also concluded that the overall quality of the advisory and
administrative services was satisfactory.

PERFORMANCE RELATIVE TO COMPARABLE FUNDS MANAGED BY OTHER ADVISERS

On a regular basis, the Board reviews the performance of all funds in the Morgan
Stanley Fund Complex, including the Fund, compared to their peers, paying
specific attention to the underperforming funds. In addition, the Board
specifically reviewed the Fund's performance for the one-, three- and five-year
periods ended November 30, 2005, as shown in a report provided by Lipper (the
"Lipper Report"), compared to the performance of comparable funds selected by
Lipper (the "performance peer group"). The Board also discussed with the Adviser
the performance goals and the actual results achieved in managing the Fund. The
Board concluded that the Fund's performance was competitive with that of its
performance peer group.

FEES RELATIVE TO OTHER PROPRIETARY FUNDS MANAGED BY THE ADVISER WITH COMPARABLE
INVESTMENT STRATEGIES

The Board reviewed the advisory and administrative fee (together, the
"management fee") rate paid by the Fund under the Management Agreement. The
Board noted that the management fee rate was comparable to

the management fee rates charged by the Adviser to other proprietary funds it
manages with investment strategies comparable to those of the Fund taking into
account the scope of the services provided.

FEES AND EXPENSES RELATIVE TO COMPARABLE FUNDS MANAGED BY OTHER ADVISERS

The Board reviewed the management fee rate and total expense ratio of the Fund
as compared to the average management fee rate and average total expense ratio
for funds, selected by Lipper (the "expense peer group"), managed by other
advisers with investment strategies comparable to those of the Fund, as shown in
the Lipper Report. The Board concluded that the Fund's management fee rate and
total expense ratio were competitive with those of its expense peer group.

BREAKPOINTS AND ECONOMIES OF SCALE

The Board reviewed the structure of the Fund's management fee schedule under the
Management Agreement and noted that it includes a breakpoint. The Board also
reviewed the level of the Fund's management fee and noted that the fee, as a
percentage of the Fund's net assets, would decrease as net assets increase
because the management fee includes a breakpoint. The Board concluded that the
Fund's management fee would reflect economies of scale as assets increase.

PROFITABILITY OF THE ADVISER AND AFFILIATES

The Board considered information concerning the costs incurred and profits
realized by the Adviser and affiliates during the last year from their
relationship with the Fund and during the last two years from their relationship
with the Morgan Stanley Fund Complex and reviewed with the Adviser the cost
allocation methodology used to determine the profitability of the Adviser and
affiliates. Based on its review of the information it received, the Board
concluded that the profits earned by the Adviser and affiliates were not
excessive in light of the advisory, administrative and other services provided
to the Fund.

FALL-OUT BENEFITS

The Board considered so-called "fall-out benefits" derived by the Adviser and
affiliates from their relationship with the Fund and the Morgan Stanley Fund
Complex, such as sales charges on sales of Class A shares and "float" benefits
derived from handling of checks for purchases and sales of Fund shares, through
a broker-dealer affiliate of the Adviser. The Board also considered that a
broker-dealer affiliate of the Adviser receives from the Fund 12b-1 fees for
distribution and shareholder services. The Board concluded that the float
benefits were relatively small and the sales charges and 12b-1 fees were
competitive with those of other broker-dealers.

SOFT DOLLAR BENEFITS

The Board considered whether the Adviser realizes any benefits from commissions
paid to brokers who execute securities transactions for the Fund ("soft
dollars"). The Board noted that the Fund invests only in fixed income
securities, which do not generate soft dollars.

ADVISER FINANCIALLY SOUND AND FINANCIALLY CAPABLE OF MEETING THE FUND'S NEEDS

The Board considered whether the Adviser is financially sound and has the
resources necessary to perform its obligations under the Management Agreement.
The Board noted that the Adviser's operations remain profitable, although
increased expenses in recent years have reduced the Adviser's profitability. The
Board concluded that the Adviser has the financial resources necessary to
fulfill its obligations under the Management Agreement.

HISTORICAL RELATIONSHIP BETWEEN THE FUND AND THE ADVISER

The Board also reviewed and considered the historical relationship between the
Fund and the Adviser, including the organizational structure of the Adviser, the
policies and procedures formulated and adopted by the Adviser for managing the
Fund's operations and the Board's confidence in the competence and integrity of
the senior managers and key personnel of the Adviser. The Board concluded that
it is beneficial for the Fund to continue its relationship with the Adviser.

OTHER FACTORS AND CURRENT TRENDS

The Board considered the controls and procedures adopted and implemented by the
Adviser and monitored by the Fund's Chief Compliance Officer and concluded that
the conduct of business by the Adviser indicates a good faith effort on its part
to adhere to high ethical standards in the conduct of the Fund's business.

GENERAL CONCLUSION

After considering and weighing all of the above factors, the Board concluded
that it would be in the best interest of the Fund and its shareholders to
approve renewal of the Management Agreement for another year.

Morgan Stanley New York Tax-Free Income Fund
PORTFOLIO OF INVESTMENTS - JUNE 30, 2006 (UNAUDITED)

<Table>
<Caption>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------------

New York Tax-Exempt Municipal Bonds (95.2%)
General Obligation (3.2%)
New York City,
$ 2,000 2006 Ser F............................................... 5.00 % 09/01/23 $ 2,038,920
1,000 2005 Ser G............................................... 5.00 12/01/26 1,013,330
-----------
-------
3,052,250
3,000
-----------
-------
Educational Facilities Revenue (6.1%)
500 Hempstead Industrial Development Agency, Hofstra University
Ser 1996 (MBIA).......................................... 5.80 07/01/15 514,475
New York State Dormitory Authority,
2,000 City University Ser 1993 A 5.75 07/01/09 2,087,300
1,000 New York University Ser 1998 A (MBIA).................... 5.75 07/01/15 1,114,800
2,000 State University 1993 Ser A.............................. 5.25 05/15/15 2,127,760
-----------
-------
5,844,335
5,500
-----------
-------
Electric Revenue (6.7%)
Long Island Power Authority,
2,000 Ser 2000 A (FSA)......................................... 0.00 06/01/18 1,168,500
1,345 Ser 2003 C............................................... 5.50 09/01/21 1,429,264
675 Ser 1998 A (FSA)......................................... 5.125 12/01/22 693,995
1,000 Ser 2006 B............................................... 5.00 12/01/35 1,012,050
2,000 New York State Power Authority, Ser 2000 A................. 5.25 11/15/40 2,056,460
-----------
-------
6,360,269
7,020
-----------
-------
Hospital Revenue (9.7%)
2,000 New York City Health & Hospital Corporation, Health 2003
Ser A (Ambac)............................................ 5.25 02/15/22 2,103,720
New York State Dormitory Authority,
1,000 Catholic Health Long Island - St Francis Hospital Ser
2004..................................................... 5.00 07/01/27 998,060
1,000 Department of Health Refg Ser 2004....................... 5.00 07/01/22 1,022,160
2,000 Memorial Sloan-Kettering Cancer Center 2003 Ser I
(MBIA)................................................... 5.00 07/01/23 2,057,080
1,000 Montefiore Medical Center - FHA Insured Mtge Ser 2004
(FGIC)................................................... 5.00 08/01/29 1,020,600
2,000 Winthrop South Nassau University Health Ser 2003 B....... 5.50 07/01/23 2,066,820
-----------
-------
9,268,440
9,000
-----------
-------
Industrial Development/Pollution Control Revenue (18.0%)
1,000 Nassau County Tobacco Settlement Corporation, Ser 2006..... 0.00# 06/01/26 837,750
1,000 New York Counties Tobacco Trust IV, Ser 2005 A............. 5.00 06/01/45 957,880
New York City Industrial Development Agency,
1,000 Airis JFK I LLC Ser 2001A (AMT).......................... 5.50 07/01/28 1,020,870
2,000 Brooklyn Navy Yard Cogeneration Partners LP Ser 1997
(AMT).................................................... 5.75 10/01/36 2,003,080
1,500 IAC/Interactive Corp Ser 2005............................ 5.00 09/01/35 1,502,085
2,000 Terminal One Group Association Ser 2005 (AMT)............ 5.50 01/01/24 2,084,900
</Table>

13
See Notes to Financial Statements

Morgan Stanley New York Tax-Free Income Fund
PORTFOLIO OF INVESTMENTS - JUNE 30, 2006 (UNAUDITED) continued

<Table>
<Caption>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------------

$ 6,000 New York State Energy Research & Development Authority,
Brooklyn Union Gas Co 1991 Ser D (AMT)................... 9.868%++ 07/01/26 $ 6,362,639
1,000 TSASC Inc, Tobacco Settlement Ser 2006-1................... 5.125 06/01/42 979,060
1,500 Westchester Tobacco Asset Securitization Corporation, Ser
2005..................................................... 5.125 06/01/45 1,467,750
-----------
-------
17,216,014
17,000
-----------
-------
Mortgage Revenue - Multi-Family (8.9%)
New York City Housing Development Corporation,
1,750 East Midtown - FHA Ins Sec 223........................... 6.50 11/15/18 1,840,512
1,801 Ruppert - FHA Ins Sec 223................................ 6.50 11/15/18 1,894,106
4,645 New York State Housing Finance Agency, 1996 Ser A Refg
(FSA).................................................... 6.10 11/01/15 4,745,378
-----------
-------
8,479,996
8,196
-----------
-------
Public Facilities Revenue (8.6%)
1,000 Montgomery County Industrial Development Agency, Hamilton
Fulton Montgomery Board of Cooperative Educational
Services Ser 2004 A (XLCA)............................... 5.00 07/01/34 1,014,090
New York City Industrial Development Agency,
500 American National Red Cross Ser 2006 (Ambac)............. 5.00 02/01/36 509,710
1,035 Royal Charter Properties - The New York & Presbyterian
Hospital Parking Ser 2001 (FSA).......................... 5.25 12/15/32 1,087,309
New York State Dormitory Authority,
2,000 School District Ser 2002 E (MBIA)........................ 5.50 10/01/17 2,153,500
1,300 School District Ser 2002 C (MBIA)........................ 5.25 04/01/21 1,372,540
2,000 Puerto Rico Public Buildings Authority, Refg Ser J (Ambac)
(Mandatory Tender 07/01/12).............................. 5.00 07/01/36 2,100,900
-----------
-------
8,238,049
7,835
-----------
-------
Transportation Facilities Revenue (9.3%)
3,000 Metropolitan Transportation Authority, Dedicated Tax Refg
Ser 2002 A (FSA)......................................... 5.25 11/15/24 3,166,860
2,000 New York State Thruway Authority, Ser G 2005 (FSA)......... 5.00 01/01/28 2,051,760
Triborough Bridge & Tunnel Authority,
480 Ser 2001 A............................................... 5.00 01/01/32 485,170
1,000 Refg Ser 2002 E (MBIA) 5.00 11/15/32 1,016,580
2,000 Puerto Rico Highway & Transportation Authority, Refg Ser
X........................................................ 5.50 07/01/15 2,132,220
-----------
-------
8,852,590
8,480
-----------
-------
</Table>

14
See Notes to Financial Statements

Morgan Stanley New York Tax-Free Income Fund
PORTFOLIO OF INVESTMENTS - JUNE 30, 2006 (UNAUDITED) continued

<Table>
<Caption>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------------

Water & Sewer Revenue (7.5%)
$ 3,000 New York City Municipal Water Finance Authority, 2001 Ser
B........................................................ 5.125% 06/15/31 $ 3,049,110
2,000 New York State Environment Facilities Corporation, Clean
Water Ser 2003 C......................................... 5.00 07/15/23 2,060,020
2,000 Suffolk County Industrial Development Agency, Southwest
Sewer Ser 1994 (FGIC).................................... 6.00 02/01/08 2,066,160
-----------
-------
7,175,290
7,000
-----------
-------
Other Revenue (9.9%)
2,000 Battery Park City Authority, Ser 2003A 5.00 11/01/24 2,058,240
New York City Transitional Finance Authority,
2,000 2003 Ser D (MBIA)........................................ 5.25 02/01/20 2,112,360
2,000 Refg 2003 Ser A.......................................... 5.50# 11/01/26 2,135,220
2,000 New York Local Government Assistance Corporation, Ser 1993
C........................................................ 5.50 04/01/17 2,184,220
1,000 Sales Tax Asset Receivable Corporation, 2005 Ser A
(Ambac).................................................. 5.00 10/15/29 1,027,600
-----------
-------
9,517,640
9,000
-----------
-------
Refunded (7.3%)
2,345 New York State Dormitory Authority, Suffolk County Judicial
Ser 1986 (ETM)........................................... 7.375 07/01/16 2,760,159
4,000 Puerto Rico Infrastructure Financing Authority, 2000 Ser A
(ETM).................................................... 5.375 10/01/24 4,237,960
-----------
-------
6,998,119
6,345
-----------
-------
88,376 Total New York Tax-Exempt Municipal Bonds (Cost $87,504,581) ................. 91,002,992
-----------
-------
Short-Term New York Tax-Exempt Municipal Obligations (3.0%)
1,870 Jay Street Development Corporation, Fiscal 2001 Ser A-2
(Demand 07/03/06)........................................ 3.97* 05/01/20 1,870,000
1,000 New York City Municipal Water Finance Authority, 2000 Ser C
------- (Demand 07/03/06)........................................ 4.01* 06/15/33 1,000,000
-----------
2,870 Total Short-Term New York Tax-Exempt Municipal Obligations (Cost
$2,870,000)................................................................... 2,870,000
-----------
-------
</Table>

<Table>

$91,246 Total Investments (Cost $90,374,581) (a)............................. 98.2% 93,872,992
=======
Other Assets in Excess of Liabilities................................ 1.8 1,706,047
----- -----------
Net Assets........................................................... 100.0% $95,579,039
===== ===========
</Table>

15
See Notes to Financial Statements

Morgan Stanley New York Tax-Free Income Fund
PORTFOLIO OF INVESTMENTS - JUNE 30, 2006 (UNAUDITED) continued

- ---------------------

<Table>

AMT Alternative Minimum Tax.
ETM Escrowed to Maturity.
FHA Federal Housing Administration.
* Current coupon of variable rate demand obligation.
# Security is a "step up" bond where the coupon increases on a
predetermined future date.
++ Current coupon rate for inverse floating rate municipal
obligation. This rate resets periodically as the auction
rate on the related security changes. Positions in inverse
floating rate municipal obligations have total value of
$6,362,639 which represents 6.7 % of net assets.
(a) The aggregate cost for federal income tax purposes is
$90,301,663. The aggregate gross unrealized appreciation is
$3,796,997 and the aggregate gross unrealized depreciation
is $225,668, resulting in net unrealized appreciation of
$3,571,329.
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 Corporation.
</Table>

16
See Notes to Financial Statements

Morgan Stanley New York Tax-Free Income Fund
FINANCIAL STATEMENTS

Statement of Assets and Liabilities
June 30, 2006 (unaudited)

<Table>

Assets:
Investments in securities, at value (cost $90,374,581)...... $93,872,992
Cash........................................................ 2,489
Receivable for:
Interest................................................ 1,327,813
Investments sold........................................ 620,000
Shares of beneficial interest sold...................... 4,302
Receivable from affiliate................................... 13,601
Prepaid expenses and other assets........................... 12,882
-----------
Total Assets............................................ 95,854,079
-----------
Liabilities:
Payable for:
Shares of beneficial interest redeemed.................. 82,659
Distribution fee........................................ 28,894
Investment advisory fee................................. 28,417
Dividends and distributions to shareholders............. 23,332
Administration fee...................................... 6,327
Transfer agent fee...................................... 1,786
Accrued expenses and other payables......................... 103,625
-----------
Total Liabilities....................................... 275,040
-----------
Net Assets.............................................. $95,579,039
===========
Composition of Net Assets:
Paid-in-capital............................................. $91,583,968
Net unrealized appreciation................................. 3,498,411
Accumulated undistributed net investment income............. 100,584
Accumulated undistributed net realized gain................. 396,076
-----------
Net Assets.............................................. $95,579,039
===========
Class A Shares:
Net Assets.................................................. $60,377,191
Shares Outstanding (unlimited authorized, $.01 par value)... 5,434,563
Net Asset Value Per Share............................... $11.11
===========
Maximum Offering Price Per Share,
(net asset value plus 4.44% of net asset value)......... $11.60
===========
Class B Shares:
Net Assets.................................................. $23,387,946
Shares Outstanding (unlimited authorized, $.01 par value)... 2,119,382
Net Asset Value Per Share............................... $11.04
===========
Class C Shares:
Net Assets.................................................. $2,880,873
Shares Outstanding (unlimited authorized, $.01 par value)... 260,896
Net Asset Value Per Share............................... $11.04
===========
Class D Shares:
Net Assets.................................................. $8,933,029
Shares Outstanding (unlimited authorized, $.01 par value)... 812,736
Net Asset Value Per Share............................... $10.99
===========
</Table>

17
See Notes to Financial Statements

Morgan Stanley New York Tax-Free Income Fund
FINANCIAL STATEMENTS continued

Statement of Operations
For the six months ended June 30, 2006 (unaudited)

<Table>

Net Investment Income:
Interest Income............................................. $ 2,624,362
-----------
Expenses
Investment advisory fee..................................... 233,920
Distribution fee (Class A shares)........................... 77,022
Distribution fee (Class B shares)........................... 3,139
Distribution fee (Class C shares)........................... 11,997
Administration fee.......................................... 39,816
Shareholder reports and notices............................. 31,962
Professional fees........................................... 27,123
Transfer agent fees and expenses............................ 26,302
Registration fees........................................... 5,317
Trustees' fees and expenses................................. 4,338
Custodian fees.............................................. 2,617
Other....................................................... 9,431
-----------
Total Expenses.......................................... 472,984

Less: amounts waived........................................ (54,898)

Less: expense offset........................................ (2,422)
-----------
Net Expenses............................................ 415,664
-----------
Net Investment Income................................... 2,208,698
-----------
Net Realized and Unrealized Gain (Loss):
Net realized gain........................................... 430,268
Net change in unrealized appreciation....................... (2,232,770)
-----------
Net Loss................................................ (1,802,502)
-----------
Net Increase................................................ $ 406,196
===========
</Table>

18
See Notes to Financial Statements

Morgan Stanley New York Tax-Free Income Fund
FINANCIAL STATEMENTS continued

Statements of Changes in Net Assets

<Table>
<Caption>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
JUNE 30, 2006 DECEMBER 31, 2005
------------- -----------------
(unaudited)

Increase (Decrease) in Net Assets:
Operations:
Net investment income....................................... $ 2,208,698 $ 4,708,891
Net realized gain........................................... 430,268 1,415,463
Net change in unrealized appreciation....................... (2,232,770) (2,885,329)
------------ ------------
Net Increase............................................ 406,196 3,239,025
------------ ------------
Dividends and Distributions to Shareholders from:
Net investment income
Class A shares.......................................... (1,355,724) (1,998,709)
Class B shares.......................................... (585,528) (2,057,637)
Class C shares.......................................... (62,656) (154,202)
Class D shares.......................................... (211,489) (465,657)
Net realized gain
Class A shares.......................................... -- (1,134,858)
Class B shares.......................................... -- (497,373)
Class C shares.......................................... -- (73,345)
Class D shares.......................................... -- (171,642)
------------ ------------
Total Dividends and Distributions....................... (2,215,397) (6,553,423)
------------ ------------

Net decrease from transactions in shares of beneficial
interest.................................................. (6,634,996) (9,658,456)
------------ ------------
Net Decrease............................................ (8,444,197) (12,972,854)
Net Assets:
Beginning of period......................................... 104,023,236 116,996,090
------------ ------------
End of Period
(Including accumulated undistributed net investment income
of $100,584 and $107,283, respectively)..................... $ 95,579,039 $104,023,236
============ ============
</Table>

19
See Notes to Financial Statements

Morgan Stanley New York Tax-Free Income Fund
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 2006 (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 eighteen
months, 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 Fund will assess a 2% redemption fee, on Class A shares, Class B shares,
Class C shares, and Class D shares, which is paid directly to the Fund, for
shares redeemed within seven days of purchase, subject to certain exceptions.
The redemption fee is designed to protect the Fund and its remaining
shareholders from the effects of short-term trading.

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

Morgan Stanley New York Tax-Free Income Fund
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 2006 (UNAUDITED) continued

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. 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.

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 Advisory/Administration Agreements

Pursuant to an Investment Advisory Agreement with Morgan Stanley Investment
Advisers, Inc. (the "Investment Adviser"), the Fund pays the Investment Adviser
an advisory fee, accrued daily and

Morgan Stanley New York Tax-Free Income Fund
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 2006 (UNAUDITED) continued

payable monthly, by applying the following annual rates to the Fund's net assets
determined as of the close of each business day: 0.47% to the portion of the
daily net assets not exceeding $500 million and 0.445% to the portion of the
daily net assets exceeding $500 million.

Pursuant to an Administration Agreement with Morgan Stanley Services Company
Inc. (the Administrator"), an affiliate of the Investment Adviser, the Fund pays
an administration fee, accrued daily and payable monthly, by applying the annual
rate of 0.08% to the Fund's daily net assets.

The Investment Adviser has agreed to cap the Fund's operating expenses (except
for 12b-1 fees) by assuming the Fund's "other expenses" and/or waiving the
Fund's advisory fees, and the Administrator has agreed to waive the Fund's
administrative fees, to the extent that such operating expenses exceed 0.65% of
the average daily net assets of the Fund on an annualized basis.

3. Plan of Distribution

Shares of the Fund are distributed by Morgan Stanley Distributors Inc. (the
"Distributor"), an affiliate of the Investment Adviser and Administrator. 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 -- up
to 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 there were no excess expenses as of
June 30, 2006.

For the six months ended June 30, 2006, the distribution fee for Class B shares
was accrued at the annual rate of 0.03%. At June 30, 2006, included in the
Statement of Assets and Liabilities, is a receivable from affiliate, which
represents payments due from the Distributor to the Fund.

Morgan Stanley New York Tax-Free Income Fund
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 2006 (UNAUDITED) continued

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, 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, 2006, the distribution fee was accrued for
Class A shares and Class C shares at the annual rate of 0.25% and 0.75%,
respectively.

The Distributor has informed the Fund that for the six months ended June 30,
2006, it received contingent deferred sales charges from certain redemptions of
the Fund's Class B shares and Class C shares of $23,367 and $586, respectively
and received $9,567 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, 2006 aggregated
$5,478,395 and $13,386,847, respectively. Included in the aforementioned
transactions is a sale of $2,272,944 with Morgan Stanley New York Quality
Municipal Securities, with a net realized gain of $253,409.

Morgan Stanley Trust, an affiliate of the Investment Adviser, Administrator and
Distributor, is the Fund's transfer agent.

The Fund has an unfunded noncontributory defined benefit pension plan covering
certain independent Trustees of the Fund who will have served as independent
Trustees for at least five years at the time of retirement. Benefits under this
plan are based on factors which include years of service and compensation. The
Trustees voted to close the plan to new participants and eliminate the future
benefits growth due to increases to compensation after July 31, 2003. Aggregate
pension costs for the six months ended June 30, 2006 included in Trustees' fees
and expenses in the Statement of Operations amounted to $3,658. At June 30,
2006, the Fund had an accrued pension liability of $62,566 which is included in
accrued expenses in the Statement of Assets and Liabilities.

The Fund has an unfunded Deferred Compensation Plan (the "Compensation Plan")
which allows each independent Trustee to defer payment of all, or a portion, of
the fees he receives for serving on the Board of Trustees. Each eligible Trustee
generally may elect to have the deferred amounts credited with a return equal to
the total return on one or more of the Morgan Stanley funds that are offered as
investment options under the Compensation Plan. Appreciation/depreciation and
distributions

Morgan Stanley New York Tax-Free Income Fund
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 2006 (UNAUDITED) continued

received from these investments are recorded with an offsetting
increase/decrease in the deferred compensation obligation and do not affect the
net asset value of the Fund.

5. Expense Offset

The expense offset represents a reduction of custodian and transfer agent fees
and expenses for earnings on cash balances maintained by the Fund.

6. 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.

To hedge against adverse interest rate changes, the Fund 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 Fund 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.

7. 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.

As of December 31, 2005, the Fund had temporary book/tax differences primarily
attributable to post-October losses (capital losses incurred after October 31
within the taxable year which are deemed to arise on the first business day of
the Fund's next taxable year) and book amortization of discounts on debt
securities.

Morgan Stanley New York Tax-Free Income Fund
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 2006 (UNAUDITED) continued

8. Shares of Beneficial Interest

Transactions in shares of beneficial interest were as follows:

<Table>
<Caption>
FOR THE SIX
MONTHS ENDED FOR THE YEAR
JUNE 30, 2006 ENDED
---------------------- DECEMBER 31, 2005
(unaudited) -------------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- ---------- ------------

CLASS A SHARES
Sold................................................. 51,096 $ 574,961 116,823 $ 1,351,792
Conversion from Class B.............................. 122,875 1,378,868 5,692,353 66,190,016
Reinvestment of dividends and distributions.......... 70,883 794,869 172,741 1,982,859
Redeemed............................................. (417,335) (4,680,248) (616,460) (7,127,483)
-------- ----------- ---------- ------------
Net increase (decrease) - Class A.................... (172,481) (1,931,550) 5,365,457 62,397,184
-------- ----------- ---------- ------------
CLASS B SHARES
Sold................................................. 26,781 299,977 117,868 1,361,166
Conversion to Class A................................ (123,728) (1,378,868) (5,731,770) (66,190,016)
Reinvestment of dividends and distributions.......... 24,270 270,371 108,722 1,246,738
Redeemed............................................. (205,955) (2,296,232) (683,792) (7,886,773)
-------- ----------- ---------- ------------
Net decrease - Class B............................... (278,632) (3,104,752) (6,188,972) (71,468,885)
-------- ----------- ---------- ------------
CLASS C SHARES
Sold................................................. 23,614 265,410 66,232 765,319
Reinvestment of dividends and distributions.......... 3,210 35,785 13,903 158,871
Redeemed............................................. (135,134) (1,516,448) (61,441) (710,113)
-------- ----------- ---------- ------------
Net increase (decrease) - Class C.................... (108,310) (1,215,253) 18,694 214,077
-------- ----------- ---------- ------------
CLASS D SHARES
Sold................................................. 18,699 207,056 71,869 823,725
Reinvestment of dividends and distributions.......... 10,983 121,861 34,574 393,844
Redeemed............................................. (64,142) (712,358) (175,623) (2,018,401)
-------- ----------- ---------- ------------
Net decrease - Class D............................... (34,460) (383,441) (69,180) (800,832)
-------- ----------- ---------- ------------
Net decrease in Fund................................. (593,883) $(6,634,996) (874,001) $ (9,658,456)
======== =========== ========== ============
</Table>

9. Legal Matters

The Investment Adviser, certain affiliates of the Investment Adviser, certain
officers of such affiliates and certain investment companies advised by the
Investment Adviser or its affiliates, including the Fund, are named as
defendants in a consolidated class action. This consolidated action also names
as defendants certain individual Trustees and Directors of the Morgan Stanley
funds. The consolidated amended complaint, filed in the United States District
Court Southern District of New York on April 16, 2004, generally alleges that
defendants, including the Fund, violated their statutory disclosure obligations
and fiduciary duties by failing properly to disclose (i) that the Investment

Morgan Stanley New York Tax-Free Income Fund
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 2006 (UNAUDITED) continued

Adviser and certain affiliates of the Investment Adviser allegedly offered
economic incentives to brokers and others to recommend the funds advised by the
Investment Adviser or its affiliates to investors rather than funds managed by
other companies, and (ii) that the funds advised by the Investment Adviser or
its affiliates, including the Fund, allegedly paid excessive commissions to
brokers in return for their efforts to recommend these funds to investors. The
complaint seeks, among other things, unspecified compensatory damages,
rescissionary damages, fees and costs. The defendants have moved to dismiss the
action. On March 9, 2005, Plaintiffs sought leave to supplement their complaint
to assert claims on behalf of other investors, which motion defendants opposed.
On April 14, 2006, the Court granted defendants' motion to dismiss in its
entirety. Additionally, the Court denied Plaintiff's motion to supplement their
complaint. This matter is now concluded.

10. New Accounting Pronouncement

In July 2006, the Financial Accounting Standards Board (FASB) issued
Interpretation 48, Accounting for Uncertainty in Income Taxes -- an
interpretation of FASB Statement 109 (FIN 48). FIN 48 clarifies the accounting
for income taxes by prescribing the minimum recognition threshold a tax position
must meet before being recognized in the financial statements. FIN 48 is
effective for fiscal years beginning after December 15, 2006. The Fund will
adopt FIN 48 during 2007 and the impact to the Fund's financial statements, if
any, is currently being assessed.

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, 2006 2005 2004 2003 2002 2001
------------- -------- -------- -------- -------- --------
(unaudited)

Class A Shares
Selected Per Share Data:
Net asset value, beginning of period............ $11.31 $11.67 $11.79 $11.82 $11.47 $11.56
------ ------ ------ ------ ------ ------
Income (loss) from investment operations:
Net investment income....................... 0.24 0.52 0.52 0.51 0.52 0.53
Net realized and unrealized gain (loss)..... (0.20) (0.17) (0.11) 0.06 0.62 (0.06)
------ ------ ------ ------ ------ ------
Total income from investment operations......... 0.04 0.35 0.41 0.57 1.14 0.47
------ ------ ------ ------ ------ ------
Less dividends and distribution from:
Net investment income....................... (0.24) (0.51) (0.51) (0.51) (0.52) (0.53)
Net realized gain........................... -- (0.20) (0.02) (0.09) (0.27) (0.03)
------ ------ ------ ------ ------ ------
Total dividends and distributions............... (0.24) (0.71) (0.53) (0.60) (0.79) (0.56)
------ ------ ------ ------ ------ ------
Net asset value, end of period.................. $11.11 $11.31 $11.67 $11.79 $11.82 $11.47
====== ====== ====== ====== ====== ======
Total Return+................................... 0.37%(1) 3.10% 3.61% 4.90% 10.18% 4.08%
Ratios to Average Net Assets(3)(4):
Expenses (before expense offset)................ 0.90%(2)(5) 0.90%(5) 0.84%(5) 0.93% 0.92% 0.94%
Net investment income........................... 4.37%(2)(5) 4.37%(5) 4.42%(5) 4.29% 4.44% 4.50%
Supplemental Data:
Net assets, end of period, in thousands......... $60,377 $63,437 $2,819 $4,285 $5,226 $3,084
Portfolio turnover rate......................... 6%(1) 15% 11% 20% 21% 11%
</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.
(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.
(5) If the Fund had borne all its expenses that were reimbursed or waived by the Investment
Adviser and Administrator, the annualized expense and net investment income ratios would
have been as follows:

EXPENSE NET INVESTMENT
PERIOD ENDED RATIO INCOME RATIO
----------------- ---- ----
June
30,
2006 1.01% 4.26%
December
31,
2005 1.00 4.27
December
31,
2004 0.89 4.37
</Table>

27
See Notes to Financial Statements

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, 2006 2005 2004 2003 2002 2001
------------- -------- -------- --------- --------- ---------
(unaudited)

Class B Shares
Selected Per Share Data:
Net asset value, beginning of period......... $11.24 $11.59 $11.71 $11.80 $11.48 $11.60
------ ------ ------ ------ ------ ------
Income (loss) from investment operations:
Net investment income.................... 0.26 0.48 0.45 0.44 0.46 0.47
Net realized and unrealized gain
(loss)................................... (0.20) (0.15) (0.11) 0.00 0.59 (0.10)
------ ------ ------ ------ ------ ------
Total income from investment operations...... 0.06 0.33 0.34 0.44 1.05 0.37
------ ------ ------ ------ ------ ------
Less dividends and distributions from:
Net investment income.................... (0.26) (0.48) (0.44) (0.44) (0.46) (0.46)
Net realized gain........................ -- (0.20) (0.02) (0.09) (0.27) (0.03)
------ ------ ------ ------ ------ ------
Total dividends and distributions............ (0.26) (0.68) (0.46) (0.53) (0.73) (0.49)
------ ------ ------ ------ ------ ------
Net asset value, end of period............... $11.04 $11.24 $11.59 $11.71 $11.80 $11.48
====== ====== ====== ====== ====== ======
Total Return+................................ 0.48%(1) 2.93% 3.01% 3.81% 9.32% 3.26%
Ratios to Average Net Assets(3)(4):
Expenses (before expense offset)............. 0.68%(2)(5) 1.21%(5) 1.43%(5) 1.46% 1.46% 1.46%
Net investment income........................ 4.59%(2)(5) 4.06%(5) 3.83%(5) 3.76% 3.90% 3.99%
Supplemental Data:
Net assets, end of period, in thousands...... $23,388 $26,952 $99,530 $113,223 $122,099 $117,519
Portfolio turnover rate...................... 6%(1) 15% 11% 20% 21% 11%
</Table>

- ---------------------

<Table>

EXPENSE NET INVESTMENT
PERIOD ENDED RATIO INCOME RATIO
----------------- ---- ----
June
30,
2006 0.79% 4.48%
December
31,
2005 1.31 3.96
December
31,
2004 1.48 3.78
</Table>

28
See Notes to Financial Statements

Morgan Stanley New York Tax-Free Income Fund
FINANCIAL HIGHLIGHTS continued

Class C Shares
Selected Per Share Data:
Net asset value, beginning of period............ $11.25 $11.60 $11.72 $11.79 $11.46 $11.57
------ ------ ------ ------ ------ ------
Income (loss) from investment operations:
Net investment income....................... 0.22 0.45 0.45 0.44 0.46 0.47
Net realized and unrealized gain (loss)..... (0.22) (0.16) (0.11) 0.02 0.60 (0.09)
------ ------ ------ ------ ------ ------
Total income from investment operations......... 0.00 0.29 0.34 0.46 1.06 0.38
------ ------ ------ ------ ------ ------
Less dividends and distribution from:
Net investment income....................... (0.21) (0.44) (0.44) (0.44) (0.46) (0.46)
Net realized gain........................... -- (0.20) (0.02) (0.09) (0.27) (0.03)
------ ------ ------ ------ ------ ------
Total dividends and distributions............... (0.21) (0.64) (0.46) (0.53) (0.73) (0.49)
------ ------ ------ ------ ------ ------
Net asset value, end of period.................. $11.04 $11.25 $11.60 $11.72 $11.79 $11.46
====== ====== ====== ====== ====== ======
Total Return+................................... 0.11%(1) 2.51% 3.01% 3.98% 9.41% 3.33%
Ratios to Average Net Assets(3)(4):
Expenses (before expense offset)................ 1.40%(2)(5) 1.41%(5) 1.43%(5) 1.46% 1.46% 1.46%
Net investment income........................... 3.87%(2)(5) 3.86%(5) 3.83%(5) 3.76% 3.90% 3.99%
Supplemental Data:
Net assets, end of period, in thousands......... $2,881 $4,152 $4,066 $4,679 $3,521 $3,557
Portfolio turnover rate......................... 6%(1) 15% 11% 20% 21% 11%
</Table>

- ---------------------

<Table>

EXPENSE NET INVESTMENT
PERIOD ENDED RATIO INCOME RATIO
----------------- ---- ----
June
30,
2006 1.51% 3.76%
December
31,
2005 1.51 3.76
December
31,
2004 1.48 3.78
</Table>

29
See Notes to Financial Statements

Morgan Stanley New York Tax-Free Income Fund
FINANCIAL HIGHLIGHTS continued

Class D Shares
Selected Per Share Data:
Net asset value, beginning of period............ $11.19 $11.55 $11.67 $11.76 $11.46 $11.58
------ ------ ------ ------ ------ ------
Income (loss) from investment operations:
Net investment income....................... 0.26 0.53 0.53 0.53 0.55 0.56
Net realized and unrealized gain (loss)..... (0.20) (0.16) (0.10) 0.00 0.56 (0.10)
------ ------ ------ ------ ------ ------
Total income from investment operations......... 0.06 0.37 0.43 0.53 1.11 0.46
------ ------ ------ ------ ------ ------
Less dividends and distribution from:
Net investment income....................... (0.26) (0.53) (0.53) (0.53) (0.54) (0.55)
Net realized gain........................... -- (0.20) (0.02) (0.09) (0.27) (0.03)
------ ------ ------ ------ ------ ------
Total dividends and distributions............... (0.26) (0.73) (0.55) (0.62) (0.81) (0.58)
------ ------ ------ ------ ------ ------
Net asset value, end of period.................. $10.99 $11.19 $11.55 $11.67 $11.76 $11.46
====== ====== ====== ====== ====== ======
Total Return+................................... 0.47%(1) 3.27% 3.78% 4.59% 9.96% 4.04%
Ratios to Average Net Assets(3)(4):
Expenses (before expense offset)................ 0.65%(2)(5) 0.66%(5) 0.68%(5) 0.71% 0.71% 0.71%
Net investment income........................... 4.62%(2)(5) 4.61%(5) 4.58%(5) 4.51% 4.65% 4.74%
Supplemental Data:
Net assets, end of period, in thousands......... $8,933 $9,483 $10,582 $11,402 $12,533 $10,285
Portfolio turnover rate......................... 6%(1) 15% 11% 20% 21% 11%
</Table>

- ---------------------

<Table>

+ Calculated based on the net asset value as of the last business day of the period.
(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.
(5) If the Fund had borne all its expenses that were reimbursed or waived by the Investment
Adviser and Administrator, the annualized expense and net investment income ratios would
have been as follows:

EXPENSE NET INVESTMENT
PERIOD ENDED RATIO INCOME RATIO
----------------- ---- ----
June
30,
2006 0.76% 4.51%
December
31,
2005 0.76 4.51
December
31,
2004 0.73 4.53
</Table>

30
See Notes to Financial Statements

(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
Fergus Reid

OFFICERS

Michael E. Nugent
Chairman of the Board

Ronald E. Robison
President and Principal Executive Officer

J. David Germany
Vice President

Dennis F. Shea
Vice President

Barry Fink
Vice President

Amy R. Doberman
Vice President

Carsten Otto
Chief Compliance Officer

Stefanie V. Chang Yu
Vice President

Francis J. Smith
Treasurer and Chief Financial Officer

Mary E. Mullin
Secretary

TRANSFER AGENT

Morgan Stanley Trust
Harborside Financial Center, Plaza Two
Jersey City, New Jersey 07311

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Deloitte & Touche LLP
Two World Financial Center
New York, New York 10281

INVESTMENT ADVISER

Morgan Stanley Investment Advisors Inc.
1221 Avenue of the Americas
New York, New York 10020

The financial statements included herein have been taken from the records of the
Fund without examination by the independent auditors and accordingly they do not
express an opinion thereon.

This report is submitted for the general information of the shareholders of the
Fund. For more detailed information about the Fund, its fees and expenses and
other pertinent information, please read its Prospectus. The Fund's Statement of
Additional Information contains additional information about the Fund, including
its trustees. It is available, without charge, by calling (800) 869-NEWS.

This report is not authorized for distribution to prospective investors in the
Fund unless preceded or accompanied by an effective Prospectus. Read the
Prospectus carefully before investing.

Investments and services offered through Morgan Stanley DW Inc., member SIPC.
Morgan Stanley Distributors Inc., member NASD.

[MORGAN STANLEY LOGO]

MORGAN STANLEY FUNDS

Morgan Stanley
New York Tax-Free
Income Fund

Semiannual Report
June 30, 2006

[MORGAN STANLEY LOGO]

NYFSAR-37935RPT-RA06-00728P-Y06/06

Item 2. Code of Ethics.

Not applicable for semiannual reports.

Item 3. Audit Committee Financial Expert.

Not applicable for semiannual reports.

Item 4. Principal Accountant Fees and Services

Not applicable for semiannual reports.

Item 5. Audit Committee of Listed Registrants.

Not applicable for semiannual reports.

Item 6.

Refer to Item 1.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.

Not applicable for semiannual reports.

Item 8. Portfolio Managers of Closed-End Management Investment Companies

Applicable only to reports filed by closed-end funds.

Item 9. Closed-End Fund Repurchases

Applicable to reports filed by closed-end funds.

Item 10. Submission of Matters to a Vote of Security Holders

Not applicable.

Item 11. Controls and Procedures

(a) The Fund's principal executive officer and principal financial officer have
concluded that the Fund's disclosure controls and procedures are sufficient to
ensure that information required to be disclosed by the Fund in this Form N-CSR
was recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms, based
upon such officers' evaluation of these controls and procedures as of a date
within 90 days of the filing date of the report.

(b) There were no changes in the registrant's internal control over financial
reporting that occurred during the second fiscal quarter of the period covered
by this report that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting.

Item 12. Exhibits

(a) Code of Ethics - Not applicable for semiannual reports.

(b) A separate certification for each principal executive officer and principal
financial officer of the registrant are attached hereto as part of EX-99.CERT.

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

/s/ Ronald E. Robison
- -------------------------------------
Ronald E. Robison
Principal Executive Officer
August 10, 2006

Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.

/s/ Ronald E. Robison
- -------------------------------------
Ronald E. Robison
Principal Executive Officer
August 10, 2006

/s/ Francis Smith
- -------------------------------------
Francis Smith
Principal Financial Officer
August 10, 2006