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: 811-07652
Morgan Stanley New York Quality Municipal Securities
(Exact name of registrant as specified in charter)
522 Fifth Avenue, New York, New York 10036
(Address of principal executive offices) (Zip code)
Ronald E. Robison
522 Fifth Avenue, New York, New York 10036
(Name and address of agent for service)
Registrant's telephone number, including area code: 212-296-6990
Date of fiscal year end: October 31, 2008
Date of reporting period: April 30, 2008
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 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 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.
INCOME EARNED BY CERTAIN SECURITIES IN THE PORTFOLIO MAY BE SUBJECT TO THE
FEDERAL ALTERNATIVE MINIMUM TAX (AMT).
FUND REPORT
For the six months ended April 30, 2008
MARKET CONDITIONS
The six-month period under review was marked by disrupted credit markets,
recession fears, deterioration of the housing market, and markdowns in the
mortgage market as a result of forced selling. Although the fixed income market
saw some improvements in the last month of the period, many of the same concerns
and problems remained.
The Federal Reserve (the "Fed") stepped in several times during the period to
minimize the liquidity crisis. Not only did the Federal Open Market Committee
reduce the target federal funds rate several times, from 4.5 percent to 2.0
percent, but in an unprecedented move, the Fed granted primary Treasury dealers
(mostly brokerage firms) access to its discount window and loosened its
collateral requirements, extending loans of Treasury securities in exchange for
lower quality, less liquid securities. Finally, in what was most decidedly the
biggest headline event, the Fed arranged and supported JPMorgan Chase's purchase
of Bear Stearns, which was viewed by many as necessary to avoid serious market
repercussions had the firm failed.
The decline in short-term interest rates, coupled with the risk-averse
environment during the period pushed Treasury yields lower, especially on the
short end of the yield curve, causing the curve to steepen. The municipal yield
curve steepened as well, with the yield differential between one-year and 30-
year maturities reaching more than 300 basis points. Overall, municipal bonds
underperformed their taxable counterparts as credit rating downgrades of various
monoline bond insurers and the deterioration of the auction rate and variable
rate markets posed additional challenges for the sector. After a record year for
new municipal bond issuance in 2007, the amount of new issues coming to market
in the first four months of 2008 declined.
PERFORMANCE ANALYSIS
For the six-month period ended April 30, 2008, the net asset value (NAV) of
Morgan Stanley New York Quality Municipal Securities (IQN) decreased from $14.79
to $14.44 per share. Based on this change plus reinvestment of tax-free
dividends totaling $0.315 per share, the Trust's total NAV return was 0.01
percent. IQN's value on the New York Stock Exchange (NYSE) moved from $13.17 to
$13.09 per share during the same period. Based on this change plus reinvestment
of dividends, the Trust's total market return was 1.81 percent. IQN's NYSE
market price was at a 9.35 percent discount to its NAV. During the fiscal
period, the Trust purchased and retired 25,413 shares of common stock at a
weighted average market discount of 10.69 percent. Past performance is no
guarantee of future results.
Monthly dividends for the second quarter of 2008, declared in April, were
unchanged at $0.0525 per share. The dividend reflects the current level of the
Trust's net investment income. IQN's level of undistributed net investment
income was $0.065 per share on April 30, 2008 and six months earlier.(1)
Throughout the six-month period, the Trust maintained a lower interest rate
sensitivity (as measured by duration*), which was implemented through the use of
a U.S. Treasury futures hedge. This defensive positioning benefited performance
as it helped to minimize the price declines that resulted from rising
2
yields across the intermediate and long end of the municipal yield curve.
In terms of the Trust's sector positioning, an overweight in the hospital/life
care and tobacco sectors detracted from relative performance as spread widening
in the sectors hindered returns. Conversely, an overweight in the public utility
sector, particularly water and sewer bonds, benefited performance. The flight to
quality that took place during the period helped boost the performance of the
more solid infrastructure sectors such as utilities and the Trust's holdings
there enhanced returns.
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 Auction Rate Preferred Shares (ARPS) outstanding,
including their purchase in the open market or in privately negotiated
transactions.
- --------------------------------------------------------------------------------
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 sectors mentioned will continue to perform as
discussed herein or that securities in such sectors will be held by the Trust in
the future.
(1) Income earned by certain securities in the portfolio may be subject to the
federal alternative minimum tax (AMT).
* 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. Duration calculations are adjusted for leverage.
3
<Table>
<Caption>
TOP FIVE SECTORS AS OF 04/30/08
Hospital 18.2%
Other Revenue 17.1
Water & Sewer 11.5
Transportation 10.2
Appropriation 7.4
</Table>
<Table>
<Caption>
LONG-TERM CREDIT ANALYSIS AS OF 04/30/08
Aaa/AAA 55.3%
Aa/AA 17.2
A/A 9.7
Baa/BBB 17.8
</Table>
Subject to change daily. Provided for informational purposes only and should not
be deemed as a recommendation to buy or sell the securities mentioned or
securities in the sectors shown above. Top five sectors are as a percentage of
total investments. Long-term credit analysis are as a percentage of long-term
investments. Securities are classified by sectors that represent broad groupings
of related industries. 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. Rating allocations based
upon ratings as issued by Standard and Poor's and Moody's, respectively.
FOR MORE INFORMATION ABOUT PORTFOLIO HOLDINGS
EACH MORGAN STANLEY TRUST PROVIDES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS IN
ITS SEMIANNUAL AND ANNUAL REPORTS WITHIN 60 DAYS OF THE END OF THE TRUST'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 TRUST SHAREHOLDERS AND MAKES THESE REPORTS
AVAILABLE ON ITS PUBLIC WEB SITE, WWW.MORGANSTANLEY.COM. EACH MORGAN STANLEY
TRUST ALSO FILES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS WITH THE SEC FOR THE
TRUST'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.
4
Morgan Stanley New York Quality Municipal Securities
PORTFOLIO OF INVESTMENTS - APRIL 30, 2008 (UNAUDITED)
<Table>
<Caption>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -------------------------------------------------------------------------------------------
Tax-Exempt Municipal Bonds (136.2%)
New York (132.7%)
$2,000 Battery Park City Authority, Ser 2003A..... 5.00 % 11/01/24 $ 2,064,980
4,000 Hudson Yards Infrastructure Corporation,
2007 Ser A (MBIA Insd)................... 4.50 02/15/47 3,731,640
1,000 Long Island Power Authority, Ser 2003 B.... 5.25 06/01/14 1,086,870
1,705 Long Island Power Authority, Ser 2004 A
(AMBAC Insd)............................. 5.00 09/01/34 1,724,267
1,000 Long Island Power Authority, Ser 2006 B.... 5.00 12/01/35 1,011,230
2,000 Metropolitan Transportation Authority,
Dedicated Tax Fund Refg Ser 2002 A (FSA
Insd).................................... 5.25 11/15/24 2,125,900
3,000 Metropolitan Transportation Authority,
Transportation Ser 2003 A (FSA Insd)..... 5.00 11/15/25 3,100,260
1,000 Montgomery County Industrial Development
Agency, Hamilton Fulton Montgomery BOCES
Ser 2004 A (XLCA Insd)................... 5.00 07/01/34 1,005,680
500 Nassau County Sewer & Storm Water Finance
Authority, 2004 Ser B (MBIA Insd)........ 5.00 10/01/22 516,600
500 Nassau County Sewer & Storm Water Finance
Authority, 2004 Ser B (MBIA Insd)........ 5.00 10/01/23 514,350
1,000 Nassau County Tobacco Settlement
Corporation, Ser 2006.................... 0.00(a) 06/01/26 912,490
1,000 New York City Cultural Resource Trust,
Wildlife Conservation Society Ser 2004
(FGIC Insd).............................. 5.00 02/01/34 1,015,250
2,000 New York City Health & Hospitals
Corporation, 2003 Ser B (AMBAC Insd)..... 5.25 02/15/21 2,069,960
2,000 New York City Industrial Development
Agency, IAC/Interactive Corp Ser 2005.... 5.00 09/01/35 1,720,540
1,500 New York City Industrial Development
Agency, Queens Baseball Stadium Ser 2006
(AMBAC Insd)............................. 5.00 01/01/46 1,500,945
2,000 New York City Industrial Development
Agency, Terminal One Group Association
Ser 2005 (AMT)........................... 5.50 01/01/24 2,031,080
1,500 New York City Industrial Development
Agency, Yankee Stadium Ser 2006 (FGIC
Insd).................................... 5.00 03/01/46 1,431,180
2,000 New York City Municipal Water Finance
Authority, 2003 Ser A.................... 5.375 06/15/18 2,126,580
5,000 New York City Municipal Water Finance
Authority, 2005 Ser B (AMBAC Insd)....... 5.00 06/15/28 5,127,200
1,000 New York City Transitional Finance
Authority, 2004 Ser C (MBIA Insd)........ 5.00 02/01/21 1,048,620
1,000 New York City Transitional Finance
Authority, Refg 2003 Ser D (MBIA Insd)... 5.25 02/01/21 1,053,330
1,500 New York City, 2005 Ser G.................. 5.00 12/01/23 1,544,010
1,000 New York Counties Tobacco Trust IV, Ser
2005 A (b)............................... 5.00 06/01/45 877,880
2,000 New York Local Government Assistance
Corporation, Ser 1993 C.................. 5.50 04/01/17 2,221,700
2,500 New York State Dormitory Authority,
Catholic Health Long Island - St Francis
Hospital Ser 2004........................ 5.10 07/01/34 2,431,200
</Table>
See Notes to Financial Statements
5
Morgan Stanley New York Quality Municipal Securities
PORTFOLIO OF INVESTMENTS - APRIL 30, 2008 (UNAUDITED) continued
<Table>
<Caption>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -------------------------------------------------------------------------------------------
$1,000 New York State Dormitory Authority,
Department of Health Ser 2004............ 5.00 % 07/01/23 $ 1,033,690
3,000 New York State Dormitory Authority,
Hospital - FHA Insured Mtge 2004 Ser A
(FSA Insd)............................... 5.25 08/15/19 3,203,310
4,000 New York State Dormitory Authority,
Memorial Sloan-Kettering Cancer Center
2003 Ser I............................... 5.00 07/01/34 4,055,880
2,000 New York State Dormitory Authority,
Montefiore Hospital - FHA Insured Mtge
Ser 2004 (FGIC Insd)..................... 5.00 08/01/29 2,005,520
1,000 New York State Dormitory Authority, New
York School Districts 2002 Ser D (MBIA
Insd).................................... 5.00 10/01/30 1,009,820
1,795 New York State Dormitory Authority, New
York School Districts 2003 Ser A......... 5.25 07/01/20 1,902,897
1,000 New York State Dormitory Authority,
Winthrop South Nassau University Health
Ser 2003 B............................... 5.50 07/01/23 1,014,270
1,500 New York State Energy & Research
Development Authority, Brooklyn Union Gas
Co 1991 Ser D (AMT) (MBIA Insd).......... 9.666(c) 04/01/20 1,566,135
1,940 New York State Environmental Facilities
Corporation, Clean Water Ser 2003 B...... 5.00 12/15/22 2,024,254
2,160 New York State Housing Finance Agency, 1996
Ser A Refg (FSA Insd).................... 6.10 11/01/15 2,166,610
1,000 New York State Mortgage Agency Homeowner
Ser 143 (AMT)............................ 4.90 10/01/37 915,690
2,500 New York State Thruway Authority, Personal
Income Tax Transportation Ser 2003 A
(MBIA Insd).............................. 5.00 03/15/21 2,576,650
1,000 Niagara Falls City School District, Ser
2005 COPs (FSA Insd)..................... 5.00 06/15/28 1,022,790
1,000 Niagara Falls Public Water Authority, Ser
2005 (XLCA Insd)......................... 5.00 07/15/26 1,026,710
1,500 Sales Tax Asset Receivable Corporation,
2005 Ser A (AMBAC Insd).................. 5.00 10/15/29 1,534,845
1,000 Suffolk County Industrial Development
Agency, Jeffersons Ferry Ser 2006........ 5.00 11/01/28 904,780
1,000 Tobacco Settlement Financing Corporation,
State Contingency Ser 2003 B-1C.......... 5.50 06/01/21 1,045,150
1,000 Triborough Bridge & Tunnel Authority, Refg
Ser 2002 E (MBIA Insd)................... 5.00 11/15/32 1,009,680
1,500 Triborough Bridge & Tunnel Authority, Ser
2003 A (AMBAC Insd)...................... 5.00 11/15/28 1,516,590
1,000 TSASC Inc, Tobacco Settlement Ser 2006-1... 5.125 06/01/42 904,380
1,000 Westchester Tobacco Asset Securization
Corporation, Ser 2005.................... 5.125 06/01/45 896,840
------------
77,330,233
------------
Puerto Rico (3.5%)
1,000 Puerto Rico Electric Power Authority, Power
Ser DD (FSA Insd)........................ 4.50 07/01/19 1,006,310
1,000 Puerto Rico, Public Impr Refg Ser 1999..... 5.25 07/01/16 1,026,310
------------
2,032,620
------------
Total Tax-Exempt Municipal Bonds (Cost $79,584,580).............. 79,362,853
------------
</Table>
See Notes to Financial Statements
6
Morgan Stanley New York Quality Municipal Securities
PORTFOLIO OF INVESTMENTS - APRIL 30, 2008 (UNAUDITED) continued
<Table>
<Caption>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -------------------------------------------------------------------------------------------
Short-Term Tax-Exempt Municipal Obligations
(2.9%)
New York
$ 500 Nassau County Industrial Development Agency
Civic Facility, Cold Spring Harbor Refg
Ser 1999 (Demand 05/01/08)............... 2.32(d) % 01/01/34 $ 500,000
200 New York City SubSer H-7 2004 (Demand
05/01/08)................................ 2.35(d) 03/01/34 200,000
1,000 New York City Ser 1995 B SubSer B7 (Demand
05/01/08) (AMBAC Insd)................... 4.00(d) 08/15/18 1,000,000
------------
Total Short-Term Tax-Exempt Municipal Obligations (Cost
$1,700,000)...................................................... 1,700,000
------------
Total Investments (Cost $81,284,580) (e) (f).......... 139.1% 81,062,853
Other Assets in Excess of Liabilities................. 2.1 1,221,564
Preferred Shares of Beneficial Interest............... (41.2) (24,000,000)
----- ------------
Net Assets Applicable to Common Shareholders.......... 100.0% $ 58,284,417
===== ============
</Table>
- ----------
<Table>
Note: The categories of investments are shown as a percentage of net assets
applicable to common shareholders.
AMT Alternative Minimum Tax.
COPs Certificates of Participation.
FHA Federal Housing Authority.
(a) Security is a "step-up" bond where the coupon increases on a
predetermined future date.
(b) A portion of this security has been physically segregated in
connection with open futures and swap contracts in the amount of
$113,090.
(c) Current coupon rate for inverse floating rate municipal obligations
(See Note 8). This rate resets periodically as the auction rate on
the related security changes. Positions in an inverse floating rate
municipal obligations have a total value of $1,566,135 which
represents 2.7% of net assets applicable to common shareholders.
(d) Current coupon of variable rate demand obligation.
(e) Securities have been designated as collateral in an amount equal to
$31,402,579 in connection with open futures and swap contracts.
(f) The aggregate cost for federal income tax purposes approximates the
aggregate cost for book purposes. The aggregate gross unrealized
appreciation is $995,592 and the aggregate gross unrealized
depreciation is $1,217,319 resulting in net unrealized depreciation
of $221,727.
</Table>
<Table>
<Caption>
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>
See Notes to Financial Statements
7
Morgan Stanley New York Quality Municipal Securities
PORTFOLIO OF INVESTMENTS - APRIL 30, 2008 (UNAUDITED) continued
FUTURES CONTRACTS OPEN AT APRIL 30, 2008:
<Table>
<Caption>
UNREALIZED
NUMBER OF DESCRIPTION, DELIVERY UNDERLYING FACE APPRECIATION
CONTRACTS LONG/SHORT MONTH AND YEAR AMOUNT AT VALUE (DEPRECIATION)
- ----------------------------------------------------------------------------------------------------
55 Long U.S. Treasury Note 2 Year June 2008 $ 11,697,813 $(49,860)
66 Long Swap Future 10 Year June 2008 7,445,625 (775)
22 Long U.S. Treasury Note 5 Year June 2008 2,463,656 (24,058)
14 Short U.S. Treasury Bond 20 Year June 2008 (1,636,469) (6,488)
122 Short U.S. Treasury Note 10 Year June 2008 (14,129,125) 50,905
--------
Net Unrealized Depreciation............................ $(30,276)
========
</Table>
INTEREST RATE SWAP CONTRACTS OPEN AT APRIL 30, 2008:
<Table>
<Caption>
NOTIONAL PAYMENTS PAYMENTS UNREALIZED
AMOUNT RECEIVED MADE TERMINATION APPRECIATION
COUNTERPARTY (000) BY TRUST BY TRUST DATE (DEPRECIATION)
- ---------------------------------------------------------------------------------------------------------------------------
JP Morgan Chase Bank N.A. $3,920 Fixed Rate 5.385% Floating Rate 0.00%@ February 14, 2018 $ 44,570
Bank of America N.A. 3,725 Fixed Rate 5.58 Floating Rate 0.00@ February 28, 2018 68,018
Bank of America N.A. 1,110 Fixed Rate 5.07 Floating Rate 0.00@ April 14, 2018 (1,165)
Bank of America N.A. 1,065 Fixed Rate 4.982 Floating Rate 0.00@ April 15, 2018 (4,494)
Merrill Lynch & Co. 1,425 Fixed Rate 5.00 Floating Rate 0.00@ April 15, 2018 (5,116)
JP Morgan Chase Bank N.A. 5,000 Floating Rate 0.00@ Fixed Rate 5.831 February 14, 2023 (54,600)
Bank of America N.A. 4,760 Floating Rate 0.00@ Fixed Rate 5.99 February 28, 2023 (72,971)
Bank of America N.A. 1,420 Floating Rate 0.00@ Fixed Rate 5.47 April 14, 2023 (937)
Bank of America N.A. 1,295 Floating Rate 0.00@ Fixed Rate 5.38 April 15, 2023 2,396
Merrill Lynch & Co. 1,820 Floating Rate 0.00@ Fixed Rate 5.395 April 15, 2023 2,603
--------
Net Unrealized Depreciation..................................... $(21,696)
========
</Table>
- ----------
<Table>
@ Floating rate represents USD-3 months LIBOR.
</Table>
See Notes to Financial Statements
8
Morgan Stanley New York Quality Municipal Securities
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
April 30, 2008 (unaudited)
<Table>
Assets:
Investments in securities, at value (cost $81,284,580).......... $81,062,853
Unrealized appreciation on open swap contracts.................. 117,587
Cash............................................................ 63,060
Receivable for:
Interest..................................................... 1,217,534
Variation margin............................................. 14,078
Prepaid expenses and other assets............................... 25,228
-----------
Total Assets................................................. 82,500,340
-----------
Liabilities:
Unrealized depreciation on open swap contracts.................. 139,283
Payable for:
Investment advisory fee...................................... 19,947
Administration fee........................................... 5,910
Transfer agent fee........................................... 126
Accrued expenses and other payables............................. 50,657
-----------
Total Liabilities............................................ 215,923
-----------
Preferred shares of beneficial interest (at liquidation value)
(1,000,000 shares authorized of non-participating $.01 par
value, 480 shares outstanding)................................ 24,000,000
-----------
Net Assets Applicable to Common Shareholders................. $58,284,417
===========
Composition of Net Assets Applicable to Common Shareholders:
Common shares of beneficial interest (unlimited shares
authorized of $.01 par value, 4,036,155 shares outstanding)... $58,301,518
Net unrealized depreciation..................................... (273,699)
Accumulated undistributed net investment income................. 261,044
Accumulated net realized loss................................... (4,446)
-----------
Net Assets Applicable to Common Shareholders................. $58,284,417
-----------
Net Asset Value Per Common Share
($58,284,417 divided by 4,036,155 common shares outstanding).... $14.44
======
</Table>
See Notes to Financial Statements
9
Morgan Stanley New York Quality Municipal Securities
FINANCIAL STATEMENTS, continued
Statement of Operations
For the six months ended April 30, 2008 (unaudited)
<Table>
Net Investment Income:
Interest Income................................................. $ 1,946,096
-----------
Expenses
Investment advisory fee......................................... 111,831
Administration fee.............................................. 33,135
Auction commission fees......................................... 29,853
Professional fees............................................... 25,940
Custodian fees.................................................. 21,462
Shareholder reports and notices................................. 13,905
Auction agent fees.............................................. 10,458
Registration fees............................................... 10,041
Transfer agent fees and expenses................................ 5,471
Trustees' fees and expenses..................................... 893
Other........................................................... 18,633
-----------
Total Expenses............................................... 281,622
Less: expense offset............................................ (21,367)
-----------
Net Expenses................................................. 260,255
-----------
Net Investment Income........................................ 1,685,841
-----------
Realized and Unrealized Gain (Loss):
Net Realized Loss on Futures Contracts.......................... (6,007)
-----------
Change in Unrealized Appreciation/Depreciation on:
Investments..................................................... (1,411,853)
Futures contracts............................................... (28,689)
Swap contracts.................................................. (21,696)
-----------
Net Change in Unrealized Appreciation/Depreciation........... (1,462,238)
-----------
Net Loss..................................................... (1,468,245)
-----------
Dividends to preferred shareholders from net investment income.. (412,193)
-----------
Net Decrease.................................................... $ (194,597)
===========
</Table>
See Notes to Financial Statements
10
Morgan Stanley New York Quality Municipal Securities
FINANCIAL STATEMENTS, continued
Statements of Changes in Net Assets
<Table>
<Caption>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
APRIL 30, 2008 OCTOBER 31, 2007
-------------- ----------------
(unaudited)
Increase (Decrease) in Net Assets:
Operations:
Net investment income.............................. $ 1,685,841 $ 3,434,750
Net realized gain (loss)........................... (6,007) 11,894
Net change in unrealized
appreciation/depreciation........................ (1,462,238) (2,240,366)
Dividends to preferred shareholders from net
investment income................................ (412,193) (815,498)
----------- -----------
Net Increase (Decrease)......................... (194,597) 390,780
----------- -----------
Dividends and Distributions to Common Shareholders
from:
Net investment income.............................. (1,274,735) (2,469,431)
Net realized gain.................................. -- (198,128)
----------- -----------
Total Dividends and Distributions............... (1,274,735) (2,667,559)
----------- -----------
Decrease from transactions in common shares of
beneficial interest.............................. (334,838) (1,135,889)
----------- -----------
Net Decrease.................................... (1,804,170) (3,412,668)
Net Assets Applicable to Common Shareholders:
Beginning of period................................ 60,088,587 63,501,255
----------- -----------
End of Period
(Including accumulated undistributed net investment
income of $261,044 and $262,131, respectively)..... $58,284,417 $60,088,587
=========== ===========
</Table>
See Notes to Financial Statements
11
Morgan Stanley New York Quality Municipal Securities
NOTES TO FINANCIAL STATEMENTS - APRIL 30, 2008 (UNAUDITED)
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; (3) interest rate
swaps are marked-to-market daily based upon quotations from market makers; and
(4) 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 and are included in interest income. 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
12
Morgan Stanley New York Quality Municipal Securities
NOTES TO FINANCIAL STATEMENTS - APRIL 30, 2008 (UNAUDITED) 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. Floating Rate Note Obligations Related to Securities Held -- The Trust enters
into transactions in which it transfers to Dealer Trusts ("Dealer Trusts"),
fixed rate bonds in exchange for cash and residual interests in the Dealer
Trusts' assets and cash flows, which are in the form of inverse floating rate
investments. The Dealer Trusts fund the purchases of the fixed rate bonds by
issuing floating rate notes to third parties and allowing the Trust to retain
residual interest in the bonds. The Trust enters into shortfall agreements with
the Dealer Trusts which commit the Trust to pay the Dealer Trusts, in certain
circumstances, the difference between the liquidation value of the fixed rate
bonds held by the Dealer Trusts and the liquidations value of the floating rate
notes held by third parties, as well as any shortfalls in interest cash flows.
The residual interests held by the Trust (inverse floating rate investments)
include the right of the Trust (1) to cause the holders of the floating rate
notes to tender their notes at par at the next interest rate reset date, and (2)
to transfer the municipal bond from the Dealer Trusts to the Trust, thereby
collapsing the Dealer Trusts. The Trust accounts for the transfer of bonds to
the Dealer Trusts as secured borrowings, with the securities transferred
remaining in the Trust's investment assets, and the related floating rate notes
reflected as Trust liabilities under the caption "floating rate note and dealer
trust obligations" on the Statement of Assets and Liabilities. The Trust records
the interest income from the fixed rate bonds under the caption "Interest
Income" and records the expenses related to floating rate obligations and any
administrative expenses of the Dealer Trusts under the caption "Interest and
residual trust expenses" in the Trust's Statement of Operations. The notes
issued by the Dealer Trusts have interest rates that reset weekly and the
floating rate note holders have the option to tender their notes to the Dealer
Trusts for redemption at par at each reset date. At April 30, 2008, the Trust
did not have any holdings of floating rate note obligations.
E. Interest Rate Swaps -- Interest rate swaps involve the exchange of
commitments to pay and receive interest based on a notional principal amount.
Net periodic interest payments to be received or paid are accrued daily and are
recorded as realized gains or losses in the Statement of Operations. The Trust
may pay or receive cash to collateralize interest rate swap contracts. This cash
collateral is recorded as assets/liabilities on the Trust's books.
F. Federal Income Tax Policy -- It is the Trust's policy to comply with the
requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to distribute
13
Morgan Stanley New York Quality Municipal Securities
NOTES TO FINANCIAL STATEMENTS - APRIL 30, 2008 (UNAUDITED) continued
substantially all of its taxable and non taxable income to its shareholders.
Therefore, no provision for federal income taxes is required. The Trust files
tax returns with the U.S. Internal Revenue Service, New York State and New York
City. The Trust adopted the provisions of the Financial Accounting Standards
Board ("FASB") Interpretation No. 48 ("FIN 48") Accounting for Uncertainty in
Income Taxes, on April 29, 2008. FIN 48 sets forth a minimum threshold for
financial statement recognition of the benefit of a tax position taken or
expected to be taken in a tax return. The implementation of FIN 48 did not
result in any unrecognized tax benefits in the accompanying financial
statements. If applicable, the Trust recognizes the interest accrued related to
unrecognized tax benefits in the interest expense and penalties in other
expenses in the Statement of Operations. Each of the tax years in the four year
period ended April 30, 2008, remains subject to examination by taxing
authorities.
G. Dividends and Distributions to Shareholders -- Dividends and distributions to
shareholders are recorded on the ex-dividend date.
H. 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
Advisors Inc. (the "Investment Adviser"), the Trust pays the Investment Adviser
an advisory fee, calculated weekly and payable monthly, by applying the annual
rate of 0.27% to the Trust's average weekly net assets including preferred
shares.
Pursuant to an Administration Agreement with Morgan Stanley Services Company
Inc. (the "Administrator"), an affiliate of the Investment Adviser, the Trust
pays an administration fee, calculated weekly and payable monthly, by applying
the annual rate of 0.08% to the Trust's average weekly net assets including
preferred shares.
Under an agreement between the Administrator and State Street Bank and Trust
Company ("State Street"), State Street provides certain administrative services
to the Trust. For such services, the Administrator pays State Street a portion
of the fee the Administrator receives from the Trust.
3. Security Transactions and Transactions with Affiliates
There were no purchases and proceeds from sales of portfolio securities for the
six months ended April 30, 2008.
14
Morgan Stanley New York Quality Municipal Securities
NOTES TO FINANCIAL STATEMENTS - APRIL 30, 2008 (UNAUDITED) continued
The Trust has an unfunded Deferred Compensation Plan (the "Compensation Plan")
which allows each independent Trustee to defer payment of all, or a portion, of
the fees he or she receives for serving on the Board of Trustees. Each eligible
Trustee generally may elect to have the deferred amounts credited with a return
equal to the total return on one or more of the Morgan Stanley funds that are
offered as investment options under the Compensation Plan.
Appreciation/depreciation and distributions received from these investments are
recorded with an offsetting increase/decrease in the deferred compensation
obligation and do not affect the net asset value of the 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 3.594% 05/06/08 2.418% - 4.508%
2 220 11,000 3.20 05/01/08 2.50 - 4.508
</Table>
- ----------
(+) As of April 30, 2008.
(++) For the six months ended April 30, 2008.
Subsequent to April 30, 2008 and up through June 6, 2008, the Trust paid
dividends to Series 1 and 2 at rates ranging from 2.483% to 3.945%, in the
aggregate amount of $81,165.
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.
15
Morgan Stanley New York Quality Municipal Securities
NOTES TO FINANCIAL STATEMENTS - APRIL 30, 2008 (UNAUDITED) 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, 2006......................... 4,143,868 $41,438 $59,720,486
Treasury shares purchased and retired (weighted
average discount 8.31%)+++...................... (82,300) (823) (1,135,066)
Reclassification due to permanent book/tax
differences..................................... -- -- 10,321
--------- ------- -----------
Balance, October 31, 2007......................... 4,061,568 40,615 58,595,741
Treasury shares purchased and retired (weighted
average discount 10.69%)+++..................... (25,413) ( 254) ( 334,584)
--------- ------- -----------
Balance, April 30, 2008........................... 4,036,155 $40,361 $58,261,157
========= ======= ===========
</Table>
- ----------
(+++) The Trustees have voted to retire the shares purchased.
6. Dividends to Common Shareholders
On April 8, 2008, the Trust declared the following dividends from net investment
income:
<Table>
<Caption>
AMOUNT RECORD PAYABLE
PER SHARE DATE DATE
- --------- ------------- -------------
$0.0525 May 23, 2008 May 30, 2008
$0.0525 June 20, 2008 June 27, 2008
</Table>
7. Expense Offset
The expense offset represents a reduction of the fees and expenses for interest
earned on cash balances maintained by the Trust with the transfer agent and
custodian.
8. Purposes of and Risks Relating to Certain Financial Instruments
The Trust may invest a portion of its assets in inverse floating rate
instruments, either through outright purchases of inverse floating rate
securities or through the transfer of bonds to a Dealer Trust in exchange for
cash and residual interests in the Dealer Trust. These investments are typically
used by the Trust in seeking to enhance the yield of the portfolio. These
instruments typically involve greater risks than a fixed rate municipal bond. In
particular, these instruments are acquired through leverage or may have leverage
embedded in them and therefore involve many of the risks associated with
leverage. Leverage is a speculative technique that may expose the Trust to
greater risk and increased costs. Leverage may cause the Trust's net asset value
to be more volatile than if it had not been leveraged because leverage tends to
magnify the effect of any increases or decreases in the
16
Morgan Stanley New York Quality Municipal Securities
NOTES TO FINANCIAL STATEMENTS - APRIL 30, 2008 (UNAUDITED) continued
value of the Trust's portfolio securities. The use of leverage may also cause
the Trust to liquidate portfolio positions when it may not be advantageous to do
so in order to satisfy its obligations with respect to inverse floating rate
instruments.
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.
The Trust may enter into interest rate swaps and may purchase or sell interest
rate caps, floors and collars. The Trust expects to enter into these
transactions primarily to manage interest rate risk, hedge portfolio positions
and preserve a return or spread on a particular investment or portion of its
portfolio. The Trust may also enter into these transactions to protect against
any increase in the price of securities the Trust anticipates purchasing at a
later date. Interest rate swap transactions are subject to market risk, risk of
default by the other party to the transaction, risk of imperfect correlation and
manager risk. Such risks may exceed the related amounts shown in the Statement
of Assets and Liabilities.
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.
As of October 31, 2007, the Trust had temporary book/tax differences primarily
attributable to book amortization of discounts on debt securities and mark-to-
market of open futures contracts.
10. Accounting Pronouncements
On March 19, 2008, FASB released Statement of Financial Accounting Standards No.
161, "Disclosures about Derivative Instruments and Hedging Activities" ("FAS
161"). FAS 161 requires qualitative disclosures about objectives and strategies
for using derivatives, quantitative disclosures
17
Morgan Stanley New York Quality Municipal Securities
NOTES TO FINANCIAL STATEMENTS - APRIL 30, 2008 (UNAUDITED) continued
about fair value amounts of and gains and losses on derivative instruments, and
disclosures about credit- risk-related contingent features in derivative
agreements. The application of FAS 161 is required for fiscal years beginning
after November 15, 2008 and interim periods within those fiscal years. At this
time, management is evaluating the implications of FAS 161 and its impact on the
financial statements has not been determined.
In September 2006, Statement of Financial Accounting Standards No. 157, Fair
Value Measurements (SFAS 157), was issued and is effective for fiscal years
beginning after November 15, 2007. SFAS 157 defines fair value, establishes a
framework for measuring fair value and expands disclosures about fair value
measurements. Management is currently evaluating the impact the adoption of SFAS
157 will have on the Trust's financial statement disclosures.
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 SIX FOR THE YEAR ENDED OCTOBER 31,
MONTHS ENDED ---------------------------------------------------
APRIL 30, 2008 2007 2006 2005 2004 2003
-------------- ------- ------- ------- ------- -------
(unaudited)
Selected Per Share Data:
Net asset value, beginning of period......... $14.79 $15.32 $15.21 $15.38 $15.00 $15.07
------ ------ ------ ------ ------ ------
Income (loss) from investment operations:
Net investment income(1).................. 0.42 0.84 0.83 0.82 0.84 0.89
Net realized and unrealized gain (loss)... (0.36) (0.55) 0.42 (0.12) 0.40 (0.09)
Common share equivalent of dividends paid
to preferred shareholders(1)............... (0.10) (0.20) (0.17) (0.09) (0.08) (0.10)
------ ------ ------ ------ ------ ------
Total income (loss) from investment
operations.................................. (0.04) 0.09 1.08 0.61 1.16 0.70
------ ----- ----- ----- ----- -----
Less dividends and distributions from:.......
Net Investment income..................... (0.32) (0.60) (0.71) (0.75) (0.81)(2) (0.81)
Net realized gain......................... 0.00 (0.05) (0.31) (0.07) -- --
----- ------ ------ ------ ----- -----
Total dividends and distributions............ (0.32) (0.65) (1.02) (0.82) (0.81) (0.81)
------ ------ ------ ------ ------ ------
Anti-dilutive effect of acquiring treasury
shares(1)................................... 0.01 0.03 0.05 0.04 0.03 0.04
----- ----- ----- ----- ----- -----
Net asset value, end of period............... $14.44 $14.79 $15.32 $15.21 $15.38 $15.00
====== ====== ====== ====== ====== ======
Market value, end of period.................. $13.09 $13.17 $13.92 $13.30 $13.72 $13.38
====== ====== ====== ====== ====== ======
Total Return(3).............................. 1.81%(6) (0.83)% 12.76% 2.93% 8.81% 6.91%
Ratios to Average Net Assets of Common
Shareholders:
Total expenses (before expense offset)....... 0.95%(5)(7) 1.07 %(4) 0.87%(4) 0.91%(4) 0.91%(4) 0.89%(4)
Total expenses (before expense offset,
exclusive of interest and residual trust
expenses)................................... 0.95%(5)(7) 0.89 % 0.87% 0.91% 0.91% 0.89%
Net investment income before preferred stock
dividends................................... 5.71%(7) 5.59 % 5.56% 5.36% 5.53% 5.86%
Preferred stock dividends.................... 1.40%(7) 1.33 % 1.15% 0.59% 0.56% 0.67%
Net investment income available to common
shareholders................................ 4.31%(7) 4.26 % 4.41% 4.77% 4.97% 5.19%
Supplemental Data:
Net assets applicable to common shareholders,
end of period, in thousands................. $58,284 $60,089 $63,501 $65,323 $67,643 $67,509
Asset coverage on preferred shares at end of
period...................................... 343% 350 % 365% 372% 382% 381%
Portfolio turnover rate...................... -- 8 % 17% 27% 26% 38%
</Table>
- ----------
<Table>
(1) The per share amounts were computed using an average number of shares
outstanding during the period.
(2) Includes capital gain distribution of $0.001 per share.
(3) Total return is based upon the current market value on the last day
of each period reported. Dividends and distributions are assumed to
be reinvested at the prices obtained under the Trust's dividend
reinvestment plan. Total return does not reflect brokerage
commissions.
(4) Does not reflect the effect of expense offset of 0.01%.
(5) Does not reflect the effect of expense offset of 0.07%.
(6) Not annualized.
(7) Annualized.
</Table>
See Notes to Financial Statements
19
Morgan Stanley New York Quality Municipal Securities
REVISED INVESTMENT POLICY (UNAUDITED)
While the Trust's policy is to emphasize investments in municipal obligations
with longer-term maturities because generally longer-term obligations, while
more susceptible to market fluctuations resulting from changes in interest
rates, produce higher yields than short-term obligations, the Trust no longer
expects to maintain a specific average weighted maturity of its portfolio. As a
result of changes in the fixed-income and municipal marketplace, the Trust's
average portfolio maturity will vary depending upon market conditions and other
factors.
20
Morgan Stanley New York Quality Municipal Securities
MORGAN STANLEY ADVISOR CLOSED END FUNDS
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY (UNAUDITED)
We are required by federal law to provide you with a copy of our Privacy Policy
annually.
The following Policy applies to current and former individual investors in
Morgan Stanley Advisor closed end funds. This Policy is not applicable to
partnerships, corporations, trusts or other non-individual clients or account
holders. Please note that we may amend this Policy at any time, and will inform
you of any changes to this Policy as required by law.
WE RESPECT YOUR PRIVACY
We appreciate that you have provided us with your personal financial
information. We strive to maintain the privacy of such information while we help
you achieve your financial objectives. This Policy describes what non-public
personal information we collect about you, why we collect it, and when we may
share it with others. We hope this Policy will help you understand how we
collect and share non-public personal information that we gather about you.
Throughout this Policy, we refer to the non-public information that personally
identifies you or your accounts as "personal information."
1. WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?
To serve you better and manage our business, it is important that we collect and
maintain accurate information about you. We may obtain this information from
applications and other forms you submit to us, from your dealings with us, from
consumer reporting agencies, from our Web sites and from third parties and other
sources.
FOR EXAMPLE:
- - We may collect information such as your name, address, e-mail address,
telephone/fax numbers, assets, income and investment objectives through
applications and other forms you submit to us.
- - We may obtain information about account balances, your use of account(s) and
the types of products and services you prefer to receive from us through your
dealings and transactions with us and other sources.
- - We may obtain information about your creditworthiness and credit history from
consumer reporting agencies.
- - We may collect background information from and through third-party vendors to
verify representations you have made and to comply with various regulatory
requirements.
- - If you interact with us through our public and private Web sites, we may
collect information that you provide directly through online communications
(such as an e-mail address). We may also collect information about your
Internet service provider, your domain name, your computer's operating system
and Web browser, your use of our Web sites and your product and service
preferences,
21
Morgan Stanley New York Quality Municipal Securities
MORGAN STANLEY ADVISOR CLOSED END FUNDS
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY (UNAUDITED) continued
through the use of "cookies." "Cookies" recognize your computer each time you
return to one of our sites, and help to improve our sites' content and
personalize your experience on our sites by, for example, suggesting offerings
that may interest you. Please consult the Terms of Use of these sites for more
details on our use of cookies.
2. WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?
To provide you with the products and services you request, to serve you better
and to manage our business, we may disclose personal information we collect
about you to our affiliated companies and to non-affiliated third parties as
required or permitted by law.
A. INFORMATION WE DISCLOSE TO OUR AFFILIATED COMPANIES. We do not disclose
personal information that we collect about you to our affiliated companies
except to enable them to provide services on our behalf or as otherwise required
or permitted by law.
B. INFORMATION WE DISCLOSE TO THIRD PARTIES. We do not disclose personal
information that we collect about you to non-affiliated third parties except to
enable them to provide services on our behalf, to perform joint marketing
agreements with other financial institutions, or as otherwise required or
permitted by law. For example, some instances where we may disclose information
about you to nonaffiliated third parties include: for servicing and processing
transactions, to offer our own products and services, to protect against fraud,
for institutional risk control, to respond to judicial process or to perform
services on our behalf. When we share personal information with these companies,
they are required to limit their use of personal information to the particular
purpose for which it was shared and they are not allowed to share personal
information with others except to fulfill that limited purpose.
3. HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE
COLLECT ABOUT YOU?
We maintain physical, electronic and procedural security measures to help
safeguard the personal information we collect about you. We have internal
policies governing the proper handling of client information. Third parties that
provide support or marketing services on our behalf may also receive personal
information, and we require them to adhere to confidentiality standards with
respect to such information.
22
(This Page Intentionally Left Blank)
TRUSTEES
Frank L. Bowman
Michael Bozic
Kathleen A. Dennis
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Michael E. Nugent
W. Allen Reed
Fergus Reid
OFFICERS
Michael E. Nugent
Chairperson of the Board
Ronald E. Robison
President and Principal Executive Officer
Kevin Klingert
Vice President
Dennis F. Shea
Vice President
Amy R. Doberman
Vice President
Carsten Otto
Chief Compliance Officer
Stefanie V. Chang Yu
Vice President
Francis J. Smith
Treasurer and Chief Financial Officer
Mary E. Mullin
Secretary
TRANSFER AGENT
Computershare Trust Company, N.A.
P.O. Box 43078
Providence, RI 02940-3078
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
Two World Financial Center
New York, New York 10281
LEGAL COUNSEL
Clifford Chance US LLP
31 West 52nd Street
New York, New York 10019
COUNSEL TO THE INDEPENDENT TRUSTEES
Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT ADVISER
Morgan Stanley Investment Advisors Inc.
522 Fifth Avenue
New York, New York 10036
The financial statements included herein have been taken from the records of the
Trust without examination by the independent auditors and accordingly they do
not express an opinion thereon.
(c) 2008 Morgan Stanley
[MORGAN STANLEY LOGO]
MORGAN STANLEY FUNDS
Morgan Stanley
New York Quality
Municipal Securities
Semiannual Report
April 30, 2008
IQNSAN
IU08-03255P-Y04/08
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 covering periods ending on or after December 31,
2005.
Item 9. Closed-End Fund Repurchases
REGISTRANT PURCHASE OF EQUITY SECURITIES
- -----------------------------------------------------------------------------------------------------------
Period (a) Total (b) Average (c) Total (d) Maximum
Number of Price Paid Number of Number (or
Shares (or per Share Shares (or Approximate
Units) (or Unit) Units) Dollar Value)
Purchased Purchased as of Shares (or
Part of Publicly Units) that May
Announced Yet Be Purchased
Plans or Under the Plans
Programs or Programs
- -----------------------------------------------------------------------------------------------------------
November 1,--
November 30, 2007 3,200 13.0069 N/A N/A
- -----------------------------------------------------------------------------------------------------------
December 1, --
December 31, 2007 9,002 12.9266 N/A N/A
- -----------------------------------------------------------------------------------------------------------
January 1, --
January 31, 2008 7,309 13.4763 N/A N/A
- -----------------------------------------------------------------------------------------------------------
February 1 --
February 29, 2008 5,902 13.3250 N/A N/A
- -----------------------------------------------------------------------------------------------------------
March 1--
March 31, 2008 N/A N/A
- -----------------------------------------------------------------------------------------------------------
April 1, --
April 30, 2008 N/A N/A
- -----------------------------------------------------------------------------------------------------------
Total 25,413 13.1837 N/A N/A
- -----------------------------------------------------------------------------------------------------------
Item 10. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 11. Controls and Procedures
(a) The Trust's/Fund's principal executive officer and principal financial
officer have concluded that the Trust's/Fund's disclosure controls and
procedures are sufficient to ensure that information required to be disclosed by
the Trust/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.
2
(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.
3
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
June 19, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, this report has been signed by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
/s/ Ronald E. Robison
Ronald E. Robison
Principal Executive Officer
June 19, 2008
/s/ Francis Smith
Francis Smith
Principal Financial Officer
June 19, 2008
4