UNITED STATES
                             SECURITIES AND EXCHANGE
                                   COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM N-PX

               ANNUAL REPORT OF PROXY VOTING RECORD OF REGISTERED
                          MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number 811-07243

                       Morgan Stanley Balanced Income Fund
               --------------------------------------------------
               (Exact name of registrant as specified in charter)

  522 Fifth Avenue, New York, New York                                   10036
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(Address of principal executive offices)                              (Zip code)

                               Amy Doberman, Esq.
                                Managing Director
                     Morgan Stanley Investment Advisors Inc.
                                522 Fifth Avenue
                            New York, New York 10036
                     ---------------------------------------
                     (Name and address of agent for service)

Registrant's telephone number, including area code: 800-869-6397

Date of fiscal year end: 1/31

Date of reporting period: 7/1/06 - 6/30/07



******************************* FORM N-Px REPORT *******************************

ICA File Number: 811-07243
Reporting Period: 07/01/2006 - 06/30/2007
Morgan Stanley Balanced Income Fund









===================== MORGAN STANLEY BALANCED INCOME FUND ======================


APPLERA CORP

Ticker:       ABI            Security ID:  038020103
Meeting Date: OCT 19, 2006   Meeting Type: Annual
Record Date:  AUG 30, 2006

#     Proposal                                  Mgt Rec   Vote Cast  Sponsor
1.1   Elect Director Richard H. Ayers           For       For        Management
1.2   Elect Director Jean-Luc Belingard         For       For        Management
1.3   Elect Director Robert H. Hayes            For       For        Management
1.4   Elect Director Arnold J. Levine           For       For        Management
1.5   Elect Director William H. Longfield       For       For        Management
1.6   Elect Director Theodore E. Martin         For       For        Management
1.7   Elect Director Carolyn W. Slayman         For       For        Management
1.8   Elect Director Orin R. Smith              For       For        Management
1.9   Elect Director James R. Tobin             For       Withhold   Management
1.10  Elect Director Tony L. White              For       For        Management
2     Ratify Auditors                           For       For        Management
3     Change Company Name                       For       For        Management
4     Amend Omnibus Stock Plan                  For       For        Management
5     Amend Omnibus Stock Plan                  For       For        Management


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CONAGRA FOODS INC.

Ticker:       CAG            Security ID:  205887102
Meeting Date: SEP 28, 2006   Meeting Type: Annual
Record Date:  JUL 31, 2006

#     Proposal                                  Mgt Rec   Vote Cast  Sponsor
1.1   Elect Director David H. Batchelder        For       For        Management
1.2   Elect Director Steven F. Goldstone        For       For        Management
1.3   Elect Director Mark H. Rauenhorst         For       For        Management
1.4   Elect Director Gary M. Rodkin             For       For        Management
2     Approve Omnibus Stock Plan                For       For        Management
3     Ratify Auditors                           For       For        Management


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DIAGEO PLC (FORMERLY GUINNESS PLC)

Ticker:       DEO            Security ID:  25243Q205
Meeting Date: OCT 17, 2006   Meeting Type: Annual
Record Date:  AUG 31, 2006

#     Proposal                                  Mgt Rec   Vote Cast  Sponsor
1     REPORTS AND ACCOUNTS 2006                 For       For        Management
2     DIRECTORS  REMUNERATION REPORT 2006       For       For        Management
3     DECLARATION OF FINAL DIVIDEND             For       For        Management
4     RE-ELECTION OF LORD HOLLICK OF NOTTING    For       For        Management
      HILL (MEMBER OF AUDIT, NOMINATION,
      REMUNERATION COMMITTEE AND CHAIRMAN OF
      BOARD)
5     RE-ELECTION OF MR HT STITZER (MEMBER OF   For       For        Management
      AUDIT, NOMINATION, AND REMUNERATION
      COMMITTEE)
6     RE-ELECTION OF MR PS WALSH (MEMBER OF     For       For        Management
      EXECUTIVE COMMITTEE AND CHAIRMAN OF
      BOARD)
7     ELECTION OF MS LM DANON (MEMBER OF AUDIT, For       For        Management
      NOMINATION, AND REMUNERATION COMMITTEE)
8     Ratify Auditors                           For       For        Management
9     AUTHORITY TO ALLOT RELEVANT SECURITIES    For       For        Management
10    DISAPPLICATION OF PRE-EMPTION RIGHTS      For       For        Management
11    AUTHORITY TO PURCHASE OWN ORDINARY SHARES For       For        Management
12    AUTHORITY TO MAKE EU POLITICAL            For       For        Management
      DONATIONS/EXPENDITURE
13    ADOPTION OF DIAGEO PLC 2006 IRISH PROFIT  For       For        Management
      SHARING SCHEME
14    AMENDMENTS TO DIAGEO EXECUTIVE SHARE      For       For        Management
      OPTION PLAN


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FREDDIE MAC

Ticker:       FRE            Security ID:  313400301
Meeting Date: SEP 8, 2006    Meeting Type: Annual
Record Date:  JUN 30, 2006

#     Proposal                                  Mgt Rec   Vote Cast  Sponsor
1.1   Elect Director Barbara T. Alexander       For       For        Management
1.2   Elect Director Geoffrey T. Boisi          For       For        Management
1.3   Elect Director Michelle Engler            For       For        Management
1.4   Elect Director Robert R. Glauber          For       For        Management
1.5   Elect Director Richard Karl Goeltz        For       For        Management
1.6   Elect Director Thomas S. Johnson          For       For        Management
1.7   Elect Director William M. Lewis, Jr.      For       For        Management
1.8   Elect Director Eugene M. McQuade          For       For        Management
1.9   Elect Director Shaun F. O'Malley          For       For        Management
1.10  Elect Director Jeffrey M. Peek            For       For        Management
1.11  Elect Director Ronald F. Poe              For       For        Management
1.12  Elect Director Stephen A. Ross            For       For        Management
1.13  Elect Director Richard F. Syron           For       For        Management
2     Ratify Auditors                           For       For        Management
3     Report on Charitable Contributions        Against   Against    Shareholder


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H&R  BLOCK, INC.

Ticker:       HRB            Security ID:  093671105
Meeting Date: SEP 7, 2006    Meeting Type: Annual
Record Date:  JUL 5, 2006

#     Proposal                                  Mgt Rec   Vote Cast  Sponsor
1.1   Elect Director Jerry D. Choate            For       For        Management
1.2   Elect Director Henry F. Frigon            For       For        Management
1.3   Elect Director Roger W. Hale              For       For        Management
1.4   Elect Director Len J. Lauer               For       For        Management
2     Approve Stock Option Plan                 For       Against    Management
3     Approve/Amend Executive Incentive Bonus   For       For        Management
      Plan
4     Ratify Auditors                           For       For        Management


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PROCTER & GAMBLE COMPANY, THE

Ticker:       PG             Security ID:  742718109
Meeting Date: OCT 10, 2006   Meeting Type: Annual
Record Date:  AUG 11, 2006

#     Proposal                                  Mgt Rec   Vote Cast  Sponsor
1.1   Elect Director Norman R. Augustine        For       For        Management
1.2   Elect Director A.G. Lafley                For       For        Management
1.3   Elect Director Johnathan A. Rodgers       For       For        Management
1.4   Elect Director John F. Smith, Jr.         For       For        Management
1.5   Elect Director Margaret C. Whitman        For       For        Management
2     Approve Decrease in Size of Board         For       For        Management
3     Ratify Auditors                           For       For        Management
4     Amend Omnibus Stock Plan                  For       For        Management
5     Put Repricing of Stock Options to         Against   Against    Shareholder
      Shareholder Vote


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SYMANTEC CORP.

Ticker:       SYMC           Security ID:  871503108
Meeting Date: SEP 13, 2006   Meeting Type: Annual
Record Date:  JUL 17, 2006

#     Proposal                                  Mgt Rec   Vote Cast  Sponsor
1.1   Elect Director Michael Brown              For       For        Management
1.2   Elect Director William T. Coleman         For       For        Management
1.3   Elect Director David L. Mahoney           For       For        Management
1.4   Elect Director Robert S. Miller           For       Withhold   Management
1.5   Elect Director George Reyes               For       For        Management
1.6   Elect Director David Roux                 For       For        Management
1.7   Elect Director Daniel H. Schulman         For       For        Management
1.8   Elect Director John W. Thompson           For       For        Management
1.9   Elect Director V. Paul Unruh              For       For        Management
2     Amend Omnibus Stock Plan                  For       For        Management
3     Ratify Auditors                           For       For        Management
========== END NPX REPORT




                                   SIGNATURES

     Pursuant to the requirements of 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.

(Registrant): Morgan Stanley Balanced Income Fund
              -----------------------------------

By (Signature and Title):


                                      /s/ Ronald E. Robison
                 ---------------------------------------------------------------
                 President and Principal Executive Officer - Office of the Funds

Date August 28, 2007


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