N-CSRS

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SiuUJudPy58ltNvdqMl6Wl+oX5roG6SPVkTcSHp7XPgKV89asef3zl7UeUH+wZrB 1COVdp53emK/NPh99OWFuA== 0000950123-08-014921.txt : 20081110 0000950123-08-014921.hdr.sgml : 20081110 20081110161435 ACCESSION NUMBER: 0000950123-08-014921 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20080831 FILED AS OF DATE: 20081110 DATE AS OF CHANGE: 20081110 EFFECTIVENESS DATE: 20081110 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MORGAN STANLEY DIVIDEND GROWTH SECURITIES INC CENTRAL INDEX KEY: 0000350183 IRS NUMBER: 133054236 STATE OF INCORPORATION: MD FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-03128 FILM NUMBER: 081175807 BUSINESS ADDRESS: STREET 1: 522 FIFTH AVENUE STREET 2: 19TH FLR. CITY: NEW YORK STATE: NY ZIP: 07311 BUSINESS PHONE: (212) 296-6963 MAIL ADDRESS: STREET 1: 522 FIFTH AVENUE STREET 2: 19TH FLR. CITY: NEW YORK STATE: NY ZIP: 07311 FORMER COMPANY: FORMER CONFORMED NAME: MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC DATE OF NAME CHANGE: 19980622 FORMER COMPANY: FORMER CONFORMED NAME: WITTER DEAN DIVIDEND GROWTH SECURITIES INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: INTERCAPITAL DIVIDEND GROWTH SECURITIES INC DATE OF NAME CHANGE: 19830308

0000350183 S000002342 Morgan Stanley Dividend Growth Securities Inc.

C000006142 A DIVAX

C000006143 B DIVBX

C000006144 C DIVCX

C000006145 I DIVDX

N-CSRS 1 y71105nvcsrs.htm FORM N-CSRS N-CSRS

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: 811-03128

Morgan Stanley Dividend Growth Securities Inc.

(Exact name of registrant as specified in charter)


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

Randy Takian
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: February 28, 2009

Date of reporting period: August 31, 2008

Item 1 — Report to Shareholders


INVESTMENT MANAGEMENT

Welcome, Shareholder:

In this report, you’ll learn about how your investment in Morgan Stanley Dividend Growth Securities Inc. 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 August 31, 2008

Total Return for the 6 Months Ended August 31, 2008

Lipper

Large-Cap

S&P 500^®

Core Funds

Class A

Class B

Class C

Class I⁺

Index¹

Index²

–4.29%

–4.25%

–4.56%

–4.16%

–2.57%

–2.88%

⁺ Formerly Class D shares. Renamed Class I shares effective March 31, 2008.

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 August 31, 2008 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.

Currently, the Distributor has agreed to waive the 12b-1 fee on Class B shares to the extent it exceeds 0.24% of the average daily net assets of such shares on an annualized basis. The Distributor may discontinue this waiver in the future.

Market Conditions

Over the past year and in recent months, the stock market has shown increased volatility driven by the credit market meltdown, the slowing economic activity and the ebb and flow of inflation. A lack of confidence in the creditworthiness of private sector entities is developing and it is very unlikely that satisfactory economic growth can resume as long as credit market participants remain unwilling or unable to extend credit.

As economic activity has shown obvious signs of slowing, corporate profit reports have become disappointing and earnings estimates have been revised downward. Virtually every economic sector has suffered because of the slowdown in economic activity. The once robust commodity sector has faltered as oil prices declined and commodity indexes reversed their long-term uptrend. Stocks of oil companies have not held up well, nor have stocks of consumer related companies. Interestingly, at one point, the consumer stocks faltered because of the estimated negative impact of high and rising energy prices on consumer spending, and now these same stock are weak because of the anticipated reduction in consumer spending as the economy slows.

Performance Analysis

All share classes of Morgan Stanley Dividend Growth Securities Inc. underperformed the S&P 500^® Index and the Lipper Large-Cap Core Funds Index for the six months ended August 31, 2008, assuming no deduction of applicable sales charges.

The Fund’s exposure to the consumer staples, utilities and energy sectors subtracted from overall returns for the period. Stock selection in the industrials, materials and financial sectors also had a negative effect on relative returns.

However, the Fund benefited from its positions in the health care and information technology sectors, from

both its sector exposure and security selection. In addition, stock selection in the utilities sector was beneficial to relative returns.

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.


TOP 10 HOLDINGS as of 08/31/08
General Electric Co.	3	.7%
Exxon Mobil Corp.	3	.4
Procter & Gamble Co. (The)	3	.3
Microsoft Corp.	3	.3
United Technologies Corp.	3	.1
Cisco Systems, Inc.	3	.1
Intel Corp.	2	.9
Philip Morris International Inc.	2	.8
Pfizer, Inc.	2	.6
Johnson & Johnson	2	.6


TOP FIVE INDUSTRIES as of 08/31/08
Pharmaceuticals: Major	7	.6%
Industrial Conglomerates	6	.8
Integrated Oil	6	.0
Financial Conglomerates	4	.9
Tobacco	3	.8

Subject to change daily. Provided for informational purposes only and should not be deemed a recommendation to buy or sell the securities mentioned above. Top 10 holdings and top five industries are as a percentage of net assets. 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 common stocks of companies which pay dividends and have the potential for increasing dividends. The Fund’s “Investment Adviser,” Morgan Stanley Investment Advisors Inc., initially employs a quantitative screening process in an attempt to identify a number of common stocks which are undervalued and pay dividends. The Investment Adviser also considers other factors, such as a company’s return on invested capital and levels of free cash flow. The Investment Adviser then applies qualitative analysis to determine which stocks it believes have attractive future growth prospects and the potential to increase dividends and, finally, to determine whether any of the stocks should be added to or sold from the Fund’s portfolio. The Fund may also use derivative instruments as discussed in the Fund’s prospectus. These derivative instruments will be counted toward the 80 percent policy discussed above to the extent they have economic characteristics similar to the securities included within that policy.

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.

Proxy Voting Policy and Procedures and Proxy Voting Record

You may obtain a copy of the Fund’s Proxy Voting Policy and Procedures without charge, upon request, by calling toll free (800) 869-NEWS or by visiting the Mutual Fund Center on our Web site at www.morganstanley.com. It is also available on the Securities and Exchange Commission’s Web site at http://www.sec.gov.

You may obtain information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 without charge by visiting the Mutual Fund Center on our Web site at www.morganstanley.com. This information is also available on the Securities and Exchange Commission’s Web site at http://www.sec.gov.

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) 869-NEWS, 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.

Performance Summary

Average Annual Total Returns — Period Ended August 31, 2008



	Class A Shares	*	Class B Shares	**	Class C Shares	^†	Class I Shares	^††
	(since 07/28/97	)	(since 03/30/81	)	(since 07/28/97	)	(since 07/28/97	)
Symbol	DIVAX		DIVBX		DIVCX		DIVDX
1 Year	(13.08	)%³	(13.06	)%³	(13.70	)%³	(12.87	)%³
	(17.64	) ⁴	(16.89	) ⁴	(14.47	) ⁴	—

5 Years	5.01	³	5.05	³	4.24	³	5.27	³
	3.88	⁴	4.92	⁴	4.24	⁴	—

10 Years	3.31	³	2.99	³	2.56	³	3.56	³
	2.76	⁴	2.99	⁴	2.56	⁴	—

Since Inception	3.13	³	10.45	³	2.37	³	3.37	³
	2.63	⁴	10.45	⁴	2.37	⁴	—

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/msim 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 I shares will vary due to differences in sales charges and expenses.


*	The maximum front-end sales charge for Class A is 5.25%.

**	The maximum contingent deferred sales charge (CDSC) for Class B is 5.0%. The CDSC declines to 0% after six years. For periods greater than eight years, returns do not reflect conversion to Class A shares eight years after the end of the calendar month in which shares were purchased. The conversion feature is currently suspended because the total annual operating expense ratio of Class B is currently lower than that of Class A. See “Conversion Feature” for Class B shares in “Share Class Arrangements” of the Prospectus for more information.

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

††	Class I (formerly Class D) has no sales charge.

(1)	The Standard & Poor’s 500^® Index (S&P 500^®) is a broad-based index, the performance of which is based on the performance of 500 widely-held common stocks chosen for market size, liquidity and industry group representation. The Index is unmanaged and its 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 Large-Cap Core Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Large-Cap Core 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. The Fund was in the Lipper Large-Cap Core Funds classification as of the date of this report.

(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
03/01/08 – 08/31/08.

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.


	Beginning		Ending		Expenses Paid
	Account Value		Account Value		During Period@
					03/01/08 –
	03/01/08		08/31/08		08/31/08
Class A
Actual (−4.29% return)	$	1,000.00	$	957.10	$	4.53
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,020.51	$	4.67
Class B
Actual (−4.25% return)	$	1,000.00	$	957.50	$	4.33
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,020.71	$	4.47
Class C
Actual (−4.56% return)	$	1,000.00	$	954.40	$	8.20
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,016.74	$	8.47
Class I @@
Actual (−4.16% return)	$	1,000.00	$	958.40	$	3.30
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,021.77	$	3.40


@	Expenses are equal to the Fund’s annualized expense ratio of 0.92%, 0.88%, 1.67% and 0.67% for Class A, Class B, Class C and Class I shares, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). If the Fund had bourne all of its expenses, the annualized expense ratios would have been 0.92%, 0.89%, 1.68% and 0.67% for Class A, Class B, Class C and Class I shares, respectively.

	Because Class B shares incurred lower expenses under the 12b-1 Plan than did Class A shares for the six months ended August 31, 2008, 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.

	Currently, the Distributor has agreed to waive the 12b-1 fee on Class B shares to the extent it exceeds 0.24% of the average daily net assets of such shares on an annualized basis. The Distributor may discontinue this waiver in the future.

@@	Formerly Class D shares. Renamed Class I shares effective March 31, 2008.

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 Adviser (as defined herein) under the advisory agreement, including portfolio management, investment research and equity and fixed income securities trading. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by the Adviser under the administration agreement, including accounting, clerical, bookkeeping, compliance, business management and planning, and the provision of supplies, office space and utilities at the Adviser’s expense. (The 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 December 31, 2007, 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. When a fund underperforms its performance peer group, the Board discusses with the Adviser the causes of the underperformance. The Board noted the change in the portfolio management team implemented in May 2008. The Board concluded that it would continue to monitor the Fund’s performance.

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.

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 breakpoints. 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 breakpoints. 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 and “soft dollar” benefits (discussed in the next section). The Board also considered that, from time to time, the Adviser may, directly or indirectly, effect trades on behalf of certain Morgan Stanley Funds through various electronic communications networks or other alternative trading systems in which the Adviser’s affiliates have ownership interests and/or board seats. 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 fall-out 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 as a result of brokerage transactions executed through “soft dollar” arrangements. Under such arrangements, brokerage commissions paid by the Fund and/or other funds managed by the Adviser would be used to pay for research that a securities broker obtains from third parties, or to pay for both research and execution services from securities brokers who effect transactions for the Fund. The Board recognized that the receipt of such research from brokers may reduce the Adviser’s costs but concluded that the receipt of such research strengthens the investment management resources of the Adviser, which may ultimately benefit the Fund and other funds in the Morgan Stanley Fund Complex.

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 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 Dividend Growth Securities Inc.

Portfolio of Investments - August 31, 2008 (unaudited)


NUMBER OF
SHARES			VALUE
		Common Stocks (97.4%)
		Aerospace & Defense (2.0%)
	306,864	Northrop Grumman Corp.	$	21,127,586
	356,600	Raytheon Co.		21,392,434

				42,520,020

		Apparel/Footwear (0.9%)
	242,492	V.F. Corp.		19,217,491

		Apparel/Footwear Retail (0.8%)
	530,260	Nordstrom, Inc.		16,491,086

		Auto Parts: O.E.M. (0.8%)
	237,610	Eaton Corp.		17,388,300

		Beverages: Non-Alcoholic (2.4%)
	751,003	PepsiCo, Inc.		51,428,685

		Biotechnology (1.1%)
	449,620	Gilead Sciences, Inc. (a)		23,685,982

		Chemicals: Agricultural (1.3%)
	244,900	Monsanto Co.		27,979,825

		Computer Communications (3.1%)
	2,746,550	Cisco Systems, Inc. (a)		66,054,527

		Computer Processing Hardware (1.7%)
	1,700,077	Dell Inc. (a)		36,942,673

		Contract Drilling (1.5%)
	759,900	Patterson-UTI Energy, Inc.		21,596,358
	82,580	Transocean Inc. (Cayman Islands) (a)		10,504,176

				32,100,534

		Discount Stores (2.2%)
	892,089	Target Corp.		47,298,559

		Drugstore Chains (1.6%)
	925,611	CVS/Caremark Corp.		33,877,363

		Electric Utilities (2.3%)
	661,698	Exelon Corp.		50,262,580

		Financial Conglomerates (4.9%)
	1,322,705	Citigroup, Inc.		25,118,168
	1,247,100	JPMorgan Chase & Co.		48,000,879
	432,715	Prudential Financial, Inc.		31,895,423

				105,014,470

		Household/Personal Care (3.3%)
	1,022,102	Procter & Gamble Co. (The)		71,312,057

		Industrial Conglomerates (6.8%)
	2,799,633	General Electric Co.		78,669,687
	1,023,544	United Technologies Corp.		67,134,251

				145,803,938

See Notes to Financial Statements

Morgan Stanley Dividend Growth Securities Inc.

Portfolio of Investments - August 31, 2008 (unaudited) continued


NUMBER OF
SHARES			VALUE
		Information Technology Services (3.1%)
	890,540	Accenture Ltd. (Class A) (Bermuda)	$	36,832,734
	249,000	International Business Machines Corp.		30,310,770

				67,143,504

		Integrated Oil (6.0%)
	595,800	BP PLC (ADR) (United Kingdom)		34,335,954
	913,583	Exxon Mobil Corp.		73,095,776
	475,490	Marathon Oil Corp.		21,430,334

				128,862,064

		Internet Software/Services (1.2%)
	54,324	Google Inc. (Class A) (a)		25,167,766

		Investment Banks/Brokers (1.1%)
	149,534	Goldman Sachs Group, Inc. (The)		24,519,090

		Life/Health Insurance (3.3%)
	520,160	AFLAC, Inc.		29,493,072
	251,260	Lincoln National Corp.		12,753,958
	523,908	MetLife, Inc.		28,395,814

				70,642,844

		Major Banks (2.6%)
	806,000	Bank of America Corp.		25,098,840
	915,138	Bank of New York Mellon Corp.		31,672,926

				56,771,766

		Major Telecommunications (1.6%)
	1,070,347	AT&T Inc.		34,240,401

		Managed Health Care (1.7%)
	861,810	CIGNA Corp.		36,092,603

		Media Conglomerates (1.6%)
	1,098,050	Disney (Walt) Co. (The)		35,521,917

		Medical Specialties (3.3%)
	108,531	Alcon, Inc. (Switzerland)		18,481,744
	993,900	Covidien Ltd. (Bermuda)		53,740,173

				72,221,917

		Office Equipment/ Supplies (1.3%)
	809,800	Pitney Bowes, Inc.		27,654,670

		Oil & Gas Pipelines (1.6%)
	1,114,290	Williams Companies, Inc. (The)		34,420,418

		Oil & Gas Production (3.3%)
	180,440	Apache Corp.		20,638,727
	265,300	Occidental Petroleum Corp.		21,054,208
	590,666	XTO Energy, Inc.		29,775,473

				71,468,408

		Oilfield Services/ Equipment (3.7%)
	476,198	Cameron International Corp. (a)		22,186,065
	806,940	Halliburton Co.		35,456,944
	546,798	Weatherford International Ltd. (Bermuda)(a)		21,095,467

				78,738,476

See Notes to Financial Statements

Morgan Stanley Dividend Growth Securities Inc.

Portfolio of Investments - August 31, 2008 (unaudited) continued


NUMBER OF
SHARES					VALUE
		Packaged Software (3.3%)
	2,608,482	Microsoft Corp.			$	71,185,474

		Pharmaceuticals: Major (7.6%)
	794,389	Johnson & Johnson				55,948,817
	2,938,853	Pfizer, Inc.				56,161,481
	1,207,989	Wyeth				52,281,764

						164,392,062

		Precious Metals (0.4%)
	106,160	Freeport-McMoRan Copper & Gold, Inc.				9,482,211

		Property – Casualty Insurers (2.7%)
	555,950	ACE Ltd. (Switzerland)				29,248,529
	659,860	Allstate Corp. (The)				29,779,482

						59,028,011

		Restaurants (1.8%)
	628,700	McDonald’s Corp.				39,010,835

		Semiconductors (2.9%)
	2,701,909	Intel Corp.				61,792,659

		Specialty Telecommunications (0.0%)
	6,191	FairPoint Communications, Inc.				54,790

		Steel (1.2%)
	301,000	Nucor Corp.				15,802,500
	71,390	United States Steel Corp.				9,499,867

						25,302,367

		Telecommunication Equipment (0.0%)
	14	Nortel Networks Corp. (Canada) (a)				85

		Tobacco (3.8%)
	1,103,011	Altria Group, Inc.				23,196,321
	1,103,011	Philip Morris International Inc.				59,231,691

						82,428,012

		Trucks/Construction/Farm Machinery (1.6%)
	488,840	Caterpillar Inc.				34,575,653

		Total Common Stocks (Cost $1,463,084,130)				2,098,096,093

NUMBER OF
SHARES (000)

		Short-Term Investment (b) (1.5%)
		Investment Company
	32,002	Morgan Stanley Institutional Liquidity Money Market Portfolio – Institutional Class (Cost $32,002,135)				32,002,135

Total Investments (Cost $1,495,086,265) (c)			98.9	%		2,130,098,228
Other Assets in Excess of Liabilities			1.1			23,422,068

Net Assets			100.0	%	$	2,153,520,296


ADR		American Depositary Receipt
(a)		Non-income producing security.
(b)		See Note 4 to the financial statements regarding investments in Morgan Stanley Institutional Liquidity Money Market portfolio – Institutional Class.
(c)		The aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $729,228,016 and the aggregate gross unrealized depreciation is $94,216,053, resulting in net unrealized appreciation of $635,011,963.

See Notes to Financial Statements

Morgan Stanley Dividend Growth Securities Inc.

Summary of Investments - August 31, 2008 (unaudited)


			PERCENT OF
			TOTAL
INDUSTRY	VALUE		INVESTMENTS
Pharmaceuticals: Major	$	164,392,062		7.7	%
Industrial Conglomerates		145,803,938		6.8
Integrated Oil		128,862,064		6.0
Financial Conglomerates		105,014,470		4.9
Tobacco		82,428,012		3.9
Oilfield Services/Equipment		78,738,476		3.7
Medical Specialties		72,221,917		3.4
Oil & Gas Production		71,468,408		3.4
Household/Personal Care		71,312,057		3.4
Packaged Software		71,185,474		3.3
Life/Health Insurance		70,642,844		3.3
Information Technology Services		67,143,504		3.2
Computer Communications		66,054,527		3.1
Semiconductors		61,792,659		2.9
Property – Casualty Insurers		59,028,011		2.8
Major Banks		56,771,766		2.7
Beverages: Non-Alcoholic		51,428,685		2.4
Electric Utilities		50,262,580		2.4
Discount Stores		47,298,559		2.2
Aerospace & Defense		42,520,020		2.0
Restaurants		39,010,835		1.8
Computer Processing Hardware		36,942,673		1.7
Managed Health Care		36,092,603		1.7
Media Conglomerates		35,521,917		1.7
Trucks/Construction/Farm Machinery		34,575,653		1.6
Oil & Gas Pipelines		34,420,418		1.6
Major Telecommunications		34,240,401		1.6
Drugstore Chains		33,877,363		1.6
Contract Drilling		32,100,534		1.5
Investment Company		32,002,135		1.5
Chemicals: Agricultural		27,979,825		1.3
Office Equipment/Supplies		27,654,670		1.3
Steel		25,302,367		1.2
Internet Software/Services		25,167,766		1.2
Investment Banks/Brokers		24,519,090		1.2
Biotechnology		23,685,982		1.1
Apparel/Footwear		19,217,491		0.9
Auto Parts: O.E.M		17,388,300		0.8
Apparel/Footwear Retail		16,491,086		0.8
Precious Metals		9,482,211		0.4
Specialty Telecommunications		54,790		0.0
Telecommunication Equipment		85		0.0

	$	2,130,098,228		100.0	%

See Notes to Financial Statements

Morgan Stanley Dividend Growth Securities Inc.

Financial Statements

Statement of Assets and Liabilities

August 31, 2008 (unaudited)


Assets:
Investments in securities, at value (cost $1,463,084,130)	$2,098,096,093
Investment in affiliate, at value (cost $32,002,135)	32,002,135
Receivable for:
Investments sold	37,729,530
Dividends	5,786,403
Foreign withholding taxes reclaimed	560,794
Capital stock sold	70,672
Dividends from affiliate	65,492
Prepaid expenses and other assets	95,799
Receivable from Distributor	1,089,917


Total Assets	2,175,496,835

Liabilities:
Payable for:
Capital stock redeemed	20,460,291
Investment advisory fee	772,989
Transfer agent fee	317,588
Administration fee	148,692
Accrued expenses and other payables	276,979


Total Liabilities	21,976,539


Net Assets	$2,153,520,296

Composition of Net Assets:
Paid-in-capital	$1,512,775,445
Net unrealized appreciation	635,011,963
Accumulated undistributed net investment income	8,482,221
Accumulated net realized loss	(2,749,333	)


Net Assets	$2,153,520,296

Class A Shares:
Net Assets	$51,721,927

Shares Outstanding (500,000,000 shares authorized, $.01 par value)	3,241,961
Net Asset Value Per Share	$15.95

Maximum Offering Price Per Share, (net asset value plus 5.54% of net asset value)	$16.83

Class B Shares:
Net Assets	$1,988,210,794
Shares Outstanding (500,000,000 shares authorized, $.01 par value)	123,618,405
Net Asset Value Per Share	$16.08

Class C Shares:
Net Assets	$36,291,422
Shares Outstanding (500,000,000 shares authorized, $.01 par value)	2,283,311
Net Asset Value Per Share	$15.89

Class I Shares: @@
Net Assets	$77,296,153
Shares Outstanding (500,000,000 shares authorized, $.01 par value)	4,839,274
Net Asset Value Per Share	$15.97

@@ Formerly Class D shares. Renamed Class I shares effective March 31, 2008.

Statement of Operations

For the six months ended August 31, 2008 (unaudited)


Net Investment Income:

Income

Dividends (net of $97,846 foreign withholding tax)	$	23,733,961

Dividends from affiliate		1,086,874


Total Income		24,820,835


Expenses

Investment advisory fee		4,975,257

Distribution fee (Class A shares)		71,995

Distribution fee (Class B shares)		2,348,537

Distribution fee (Class C shares)		204,298

Transfer agent fees and expenses		1,692,521

Administration fee		959,922

Shareholder reports and notices		170,069

Professional fees		54,118

Custodian fees		44,641

Registration fees		30,476

Directors’ fees and expenses		22,795

Other		101,128


Total Expenses		10,675,757

Less: expense offset		(881	)

Less: rebate from Morgan Stanley affiliated cash sweep (Note 4)		(40,510	)


Net Expenses		10,634,366


Net Investment Income		14,186,469


Realized and Unrealized Gain (Loss):

Realized Gain on:

Investments		49,311,747

Option contracts		546,273


Net Realized Gain		49,858,020


Change in Unrealized Appreciation/Depreciation on:

Investments		(160,979,110	)

Option contracts		(287,388	)


Net Change in Unrealized Appreciation/Depreciation		(161,266,498	)


Net Loss		(111,408,478	)


Net Decrease	$	(97,222,009	)

See Notes to Financial Statements

Morgan Stanley Dividend Growth Securities Inc.

Financial Statements continued

Statements of Changes in Net Assets


	FOR THE SIX			FOR THE YEAR
	MONTHS ENDED			ENDED
	AUGUST 31, 2008			FEBRUARY 29, 2008
	(unaudited)

Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	14,186,469		$	33,119,034
Net realized gain		49,858,020			336,787,051
Net change in unrealized appreciation/depreciation		(161,266,498	)		(435,379,050	)

Net Decrease		(97,222,009	)		(65,472,965	)

Dividends and Distributions to Shareholders from:
Net investment income
Class A shares		(364,430	)		(9,368,481	)
Class B shares		(13,914,280	)		(28,233,929	)
Class C shares		(97,332	)		(249,033	)
Class I shares @@		(814,329	)		(3,507,364	)
Net realized gain
Class A shares		(2,206,604	)		(8,478,294	)
Class B shares		(83,433,707	)		(318,183,155	)
Class C shares		(1,566,739	)		(6,060,662	)
Class I shares @@		(4,098,117	)		(26,230,306	)

Total Dividends and Distributions		(106,495,538	)		(400,311,224	)

Net decrease from capital stock transactions		(164,500,717	)		(670,401,467	)

Net Decrease		(368,218,264	)		(1,136,185,656	)
Net Assets:
Beginning of period		2,521,738,560			3,657,924,216

End of Period (Including accumulated undistributed net investment income of $8,482,221 and $9,486,123, respectively)	$	2,153,520,296		$	2,521,738,560

@@ Formerly Class D shares. Renamed Class I shares effective March 31, 2008.

See Notes to Financial Statements

Morgan Stanley Dividend Growth Securities Inc.

Notes to Financial Statements - August 31, 2008 (unaudited)

1. Organization and Accounting Policies

Morgan Stanley Dividend Growth Securities Inc. (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 reasonable current income and long-term growth of income and capital. The Fund was incorporated in Maryland on December 22, 1980 and commenced operations on March 30, 1981. 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 I 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 I shares are not subject to a sales charge. Additionally, Class A shares, Class B shares and Class C shares incur distribution expenses. Effective March 31, 2008 Class D shares were renamed Class I shares.

The Fund will assess a 2% redemption fee, on Class A shares, Class B shares, Class C shares, and Class I shares, which is paid directly to the Fund, for shares redeemed or exchanged 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) an equity portfolio security listed or traded on the New York Stock Exchange (“NYSE”) or American Stock Exchange or other exchange is valued at its latest sale price prior to the time when assets are valued; if there were no sales that day, the security is valued at the mean between the last reported bid and asked price; (2) an equity portfolio security listed or traded on the Nasdaq is valued at the Nasdaq Official Closing Price; if there were no sales that day, the security is valued at the mean between the last reported bid and asked price; (3) all other portfolio securities for which over-the-counter market quotations are readily available are valued at the mean between the last reported bid and asked price. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (4) for equity securities traded on foreign exchanges, the last reported sale price or the latest bid price may be used if there were no sales on a particular day; (5) when market quotations are not readily available including circumstances under which Morgan Stanley Investment Advisors Inc. (the “Investment Adviser”) determines that the latest sale price, the bid price or the mean between the last reported bid and asked price do not reflect a security’s market value, portfolio securities are valued at their fair

Morgan Stanley Dividend Growth Securities Inc.

Notes to Financial Statements - August 31, 2008 (unaudited) continued

value as determined in good faith under procedures established by and under the general supervision of the Fund’s Directors . Occasionally, developments affecting the closing prices of securities and other assets may occur between the times at which valuations of such securities are determined (that is, close of the foreign market on which the securities trade) and the close of business on the NYSE. If developments occur during such periods that are expected to materially affect the value of such securities, such valuations may be adjusted to reflect the estimated fair value of such securities as of the close of the NYSE, as determined in good faith by the Fund’s Directors or by the Investment Adviser using a pricing service and/or procedures approved by the Directors of the Fund; (6) certain portfolio securities may be valued by an outside pricing service approved by the Fund’s Directors; (7) listed options are valued at the latest sales price on the exchange on which they are listed unless no sales of such options have taken place that day, in which case they are valued at the mean between their latest bid and asked price; (8) investments in open-end mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value as of the close of each business day; and (9) 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. Dividend income and other distributions are recorded on the ex-dividend date. 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. 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. Foreign Currency Translation and Forward Foreign Currency Contracts — The books and records of the Fund are maintained in U.S. dollars as follows: (1) the foreign currency market value of investment securities, other assets and liabilities and forward foreign currency contracts (“forward contracts”) are translated at the exchange rates prevailing at the end of the period; and (2) purchases, sales, income and expenses are translated at the exchange rates prevailing on the respective dates of such transactions. The resultant exchange gains and losses are recorded as realized and unrealized gain/loss on foreign exchange transactions. Pursuant to U.S. federal income tax regulations, certain foreign exchange gains/losses included in realized and unrealized gain/loss are included in or are a

Morgan Stanley Dividend Growth Securities Inc.

Notes to Financial Statements - August 31, 2008 (unaudited) continued

reduction of ordinary income for federal income tax purposes. The Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the changes in the market prices of the securities. Forward contracts are valued daily at the appropriate exchange rates. The resultant unrealized exchange gains and losses are recorded as unrealized foreign currency gain or loss. The Fund records realized gains or losses on delivery of the currency or at the time the forward contract is extinguished (compensated) by entering into a closing transaction prior to delivery.

E. Options — When the Fund writes a call or put option, an amount equal to the premium received is included in the Fund’s Statements of Assets and Liabilities as a liability which is subsequently marked-to-market to reflect the current market value of the option written. If a written option either expires or the Fund enters into a closing purchase transaction, the Fund realizes a gain or loss without regard to any unrealized gain or loss on the underlying security and the liability related to such option is extinguished. If a written call option is exercised, the Fund realizes a gain or loss from the sale of the underlying security and the proceeds from such sale are increased by the premium originally received. If a written put option is exercised, the amount of the premium originally received reduces the cost of the security, which the Fund purchases upon exercise of the option. By writing a covered call option, the Fund, in exchange for the premium, foregoes the opportunity for capital appreciation above the exercise price, should the market price of the underlying security increase. By writing a put option, the Fund, in exchange for the premium, accepts the risk of having to purchase a security at an exercise price that is above the current market price.

When the Fund purchases a call or put option, the premium paid is recorded as an investment which is subsequently marked-to-market to reflect the current market value. If a purchased option expires, the Fund will realize a loss to the extent of the premium paid. If the Fund enters into a closing sale transaction, a gain or loss is realized for the difference between the proceeds from the sale and the cost of the option. If a put option is exercised, the cost of the security sold upon exercise will be increased by the premium originally paid. If a call option is exercised, the cost of the security purchased upon exercise will be increased by the premium originally paid. The maximum exposure to loss for any purchased option is limited to the premium initially paid for the option.

Morgan Stanley Dividend Growth Securities Inc.

Notes to Financial Statements - August 31, 2008 (unaudited) continued

Transactions in written options for the six months ended August 31, 2008 were as follows:


	CONTRACT
	AMOUNT			PREMIUMS

Options written, outstanding at beginning of the period		6,354		$	544,246
Options written		4,032			213,979
Options exercise		0			0
Options expired		(10,386	)		(758,226	)

Option written, outstanding at end of period		0		$	0

F. Federal Income Tax Policy — It is the Fund’s policy to comply with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no provision for federal income taxes is required. The Fund files tax returns with the U.S. Internal Revenue Service, New York State and New York City. Generally, the tax authorities can examine all tax returns filed for the last three years. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in other expenses in the Statement of Operations. The Fund adopted the provisions of the Financial Accounting Standards Board (“FASB”) Interpretation No. 48 (“FIN 48”) Accounting for Uncertainty in Income Taxes on August 30, 2007. 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 Fund recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in other expenses in the Statement of Operations. Each of the tax years in the four year period ended August 31, 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, the Fund pays the Investment Adviser an advisory fee, accrued daily and payable monthly, by applying the following annual rates to the net assets of the Fund determined at the close of each business day: 0.545% to the portion of the daily net assets not exceeding $250 million; 0.42% to the portion of the daily net assets exceeding $250 million but not

Morgan Stanley Dividend Growth Securities Inc.

Notes to Financial Statements - August 31, 2008 (unaudited) continued

exceeding $1 billion; 0.395% to the portion of the daily net assets exceeding $1 billion but not exceeding $2 billion; 0.37% to the portion of the daily net assets exceeding $2 billion but not exceeding $3 billion; 0.345% to the portion of the daily net assets exceeding $3 billion but not exceeding $4 billion; 0.32% to the portion of the daily net assets exceeding $4 billion but not exceeding $5 billion; 0.295% to the portion of the daily net assets exceeding $5 billion but not exceeding $6 billion; 0.27% to the portion of the daily net assets exceeding $6 billion but not exceeding $8 billion; 0.245% to the portion of the daily net assets exceeding $8 billion but not exceeding $10 billion; 0.22% to the portion of the daily net assets exceeding $10 billion but not exceeding $15 billion; and 0.195% to the portion of the daily net assets exceeding $15 billion.

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.

Under an agreement between the Administrator and State Street Bank and Trust Company (“State Street”), State Street provides certain administrative services to the Fund. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

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 shares; (ii) Class B – up to 1.0% of the lesser of: (a) the average daily aggregate gross sales of the Class B shares since the inception of the Plan on July 2, 1984 (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 Plan’s inception upon which a contingent deferred sales charge has been imposed or waived; or (b) the average daily net assets of Class B attributable to shares issued, net of related shares redeemed, since the inception; and (iii) Class C – up to 1.0% of the average daily net assets of Class C shares.

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

Morgan Stanley Dividend Growth Securities Inc.

Notes to Financial Statements - August 31, 2008 (unaudited) continued

Plan is terminated, the Directors will consider at that time the manner in which to treat such expenses. The Distributor has advised the Fund that there were no such expenses as of August 31, 2008.

For the six months ended August 31, 2008, the distribution fee was accrued for Class B shares at an annual rate of 0.21%. At August 31, 2008 included in the Statement of Assets and Liabilities, is a receivable from the Fund’s Distributor which represents payments due to be reimbursed to the Fund under the Plan. Because the Plan is what is referred to as a “reimbursement plan”, the Distributor reimburses to the Fund any 12b-1 fees collected in excess of the actual distribution expenses incurred. This receivable represents this excess amount as of August 31, 2008.

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 1.0% 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 and other authorized financial representatives at the time of sale may be reimbursed in the subsequent calendar year. For the six months ended August 31, 2008, the distribution fee was accrued for Class A shares and Class C shares at the annual rate of 0.25% and 1.0%, respectively.

The Distributor has informed the Fund that for the six months ended August 31, 2008, it received contingent deferred sales charges from certain redemptions of the Fund’s Class A shares, Class B shares and Class C shares of $198, $244,199 and $1,888, respectively and received $27,419 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 Fund invests in Morgan Stanley Institutional Liquidity Money Market Portfolio — Institutional Class, an open-end management investment company managed by an affiliate of the Investment Adviser. Investment advisory fees paid by the Fund are reduced by an amount equal to the advisory and administrative service fees paid by Morgan Stanley Institutional Liquidity Money Market Portfolio — Institutional Class with respect to assets invested by the Fund in Morgan Stanley Institutional Liquidity Money Market Portfolio — Institutional Class. For the six months ended August 31, 2008, advisory fees paid were reduced by $40,510 relating to the Fund’s investment in Morgan Stanley Institutional

Morgan Stanley Dividend Growth Securities Inc.

Notes to Financial Statements - August 31, 2008 (unaudited) continued

Liquidity Money Market Portfolio — Institutional Class. Income distributions earned by the Fund are recorded as dividends from affiliate in the Statement of Operations and totaled $1,086,874 for the six months ended August 31, 2008. During the six months ended August 31, 2008, cost of purchases and sales of investments in Morgan Stanley Institutional Liquidity Money Market Portfolio — Institutional Class aggregated $426,216,047 and $454,781,647, respectively.

The cost of purchases and the proceeds from sales of portfolio securities, excluding short-term investments, for the six months ended August 31, 2008 aggregated $796,795,679 and $888,692,213, respectively.

For the six months ended August 31, 2008, the Fund incurred brokerage commissions of $90,656, with Morgan Stanley & Co., Inc. an affiliate of the Investment Adviser, Administrator and Distributor, for portfolio transactions executed on behalf the Fund.

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 Directors of the Fund who will have served as independent Directors 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 Directors 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 August 31, 2008, included in Directors’ fees and expenses in the Statement of Operations amounted to $2,972. At August 31, 2008, the Fund had an accrued pension liability of $60,907 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 Director to defer payment of all, or a portion, of the fees he or she receives for serving on the Board of Directors. Each eligible Director 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 Fund.

5. Expense Offset

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

Morgan Stanley Dividend Growth Securities Inc.

Notes to Financial Statements - August 31, 2008 (unaudited) continued

6. Capital Stock

Transactions in capital stock were as follows:


	FOR THE SIX						FOR THE YEAR
	MONTHS ENDED						ENDED
	AUGUST 31, 2008						FEBRUARY 29, 2008
	(unaudited)
	SHARES			AMOUNT			SHARES			AMOUNT
CLASS A SHARES
Sold		117,530		$	2,038,243			359,429		$	7,897,739
Conversion from Class B		—			—			1,312			24,901
Conversion to Class B †		—			—			(109,216,124	)		(2,405,873,215	)
Reinvestment of dividends and distributions		149,094			2,487,735			794,869			16,316,458
Redeemed		(533,525	)		(9,133,884	)		(8,843,436	)		(187,065,366	)

Net decrease – Class A		(266,901	)		(4,607,906	)		(116,903,950	)		(2,568,699,483	)

CLASS B SHARES
Sold		265,371			4,574,416			869,767			17,699,345
Conversion to Class A		—			—			(1,302	)		(24,901	)
Conversion from Class A †		—			—			108,477,463			2,405,873,215
Reinvestment of dividends and distributions		5,714,355			96,100,035			16,144,598			325,679,732
Redeemed		(13,468,939	)		(231,014,570	)		(34,903,191	)		(734,930,439	)

Net increase (decrease) – Class B		(7,489,213	)		(130,340,119	)		90,587,335			2,014,296,952

CLASS C SHARES
Sold		29,240			503,238			116,982			2,418,440
Reinvestment of dividends and distributions		99,090			1,645,628			302,431			6,030,644
Redeemed		(355,060	)		(6,023,334	)		(823,794	)		(17,142,877	)

Net decrease – Class C		(226,730	)		(3,874,468	)		(404,381	)		(8,693,793	)

CLASS I SHARES @@
Sold		152,413			2,637,433			527,253			10,991,828
Reinvestment of dividends and distributions		293,230			4,899,101			1,424,908			28,568,019
Redeemed		(2,023,227	)		(33,214,758	)		(7,426,802	)		(146,864,990	)

Net decrease – Class I		(1,577,584	)		(25,678,224	)		(5,474,641	)		(107,305,143	)

Net decrease in Fund		(9,560,428	)	$	(164,500,717	)		(32,195,637	)	$	(670,401,467	)

@@ Formerly Class D shares. Renamed Class I shares effective March 31, 2008.

†

Class B shares typically convert to Class A shares eight years after purchase. This conversion allows shareholders to take advantage of the Class A shares’ lower 12b-1 fees, and thus lower overall expense ratio. However, due to the lack of reimbursable distribution expenses, the Fund’s Class B shares’ 12b-1 fees, and thus their overall expense ratio, have been lower than that of the Fund’s Class A shares. Accordingly, the Fund reversed all previous automatic share class conversions that occurred during the period in which the expense ratio of Class B shares was lower than that of the Class A shares.

Morgan Stanley Dividend Growth Securities Inc.

Notes to Financial Statements - August 31, 2008 (unaudited) continued

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 February 29, 2008, the Fund had temporary book/tax differences primarily attributable to capital loss deferrals on wash sales.

8. Fair Valuation Measurements

The Fund adopted Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”), effective December 1, 2007. In accordance with FAS 157, fair value is defined as the price that the Fund would receive to sell an investment or pay to transfer a liability in a timely transaction with an independent buyer in the principal market, or in the absence of a principal market the most advantageous market for the investment or liability. FAS 157 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (2) inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund’s investments. The inputs are summarized in the three broad levels listed below.


	•	Level 1 — quoted prices in active markets for identical investments

	•	Level 2 — other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

	•	Level 3 — significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

Morgan Stanley Dividend Growth Securities Inc.

Notes to Financial Statements - August 31, 2008 (unaudited) continued

The following is a summary of the inputs used as of August 31, 2008 in valuing the Fund’s investments carried at value:

FAIR VALUE MEASUREMENTS AT AUGUST 31, 2008 USING

QUOTED PRICES IN

SIGNIFICANT

ACTIVE MARKET FOR

OTHER OBSERVABLE

UNOBSERVABLE

IDENTICAL ASSETS

INPUTS

TOTAL

(LEVEL 1)

(LEVEL 2)

(LEVEL 3)

Investments in Securities

2,130,098,228

—

9. Accounting Pronouncement

On March 19, 2008, FASB released Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB statement No. 133 (“SFAS 161”). SFAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about credit-risk related contingent features in derivative agreements. The application of SFAS 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 SFAS 161 and its impact on the financial statements has not yet been determined.

10. Subsequent Event

Subsequent to August 31, 2008, conditions in the worldwide debt and equity markets have deteriorated significantly. These conditions have had a negative effect on the market value of the Fund’s investments since August 31, 2008.

Morgan Stanley Dividend Growth Securities Inc.

Financial Highlights

Selected ratios and per share data for a share of capital stock outstanding throughout each period:


	FOR THE SIX
	MONTHS ENDED				FOR THE YEAR ENDED FEBRUARY 28,
	AUGUST 31, 2008				2008⁽¹⁾				2007				2006				2005				2004⁽¹⁾
	(unaudited)
Class A Shares
Selected Per Share Data:
Net asset value, beginning of period		$17.45				$20.78				$33.51				$37.21				$42.01				$34.01

Income (loss) from investment operations:
Net investment income.⁽²⁾		0.10				0.14				0.29				0.39				0.54				0.61
Net realized and unrealized gain (loss)		(0.81	)			(0.80	)			2.07				1.69				2.08				11.62

Total income (loss) from investment operations		(0.71	)			(0.66	)			2.36				2.08				2.62				12.23

Less dividends and distributions from:
Net investment income		(0.11	)			(0.25	)			(0.34	)			(0.47	)			(0.52	)			(0.65	)
Net realized gain		(0.68	)			(2.42	)			(14.75	)			(5.31	)			(6.90	)			(3.58	)

Total dividends and distributions		(0.79	)			(2.67	)			(15.09	)			(5.78	)			(7.42	)			(4.23	)

Net asset value, end of period		$15.95				$17.45				$20.78				$33.51				$37.21				$42.01

Total Return⁽³⁾		(4.29	)	%⁽⁵⁾		(4.42	)	%		8.55		%		5.94		%		6.98		%		37.26		%
Ratios to Average Net Assets⁽⁴⁾:
Total expenses (before expense offset)		0.92		%⁽⁶⁾⁽⁷⁾		0.88		%		0.88		%		0.85		%		0.80		%		0.80		%
Net investment income		1.15		%⁽⁶⁾⁽⁷⁾		1.00		%		1.04		%		1.05		%		1.41		%		1.56		%
Supplemental Data:
Net assets, end of period, in millions		$52				$61				$2,502				$3,412				$96				$126
Portfolio turnover rate		35		%⁽⁵⁾		34		%		105		%		44		%		38		%		34		%


(1)		For the year ended February 29.
(2)		The per share amounts were computed using an average number of shares outstanding during the period.
(3)		Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period.
(4)		Reflects overall Fund ratios for investment income and non-class specific expenses.
(5)		Not annualized.
(6)		Annualized.
(7)		Reflects rebate of certain Fund expenses in connection with the investments in Morgan Stanley Institutional Liquidity Money Market Portfolio - Institutional Class during the period. The rebate had an effect of less than 0.005%.

See Notes to Financial Statements

Morgan Stanley Dividend Growth Securities Inc.

Financial Highlights continued


	FOR THE SIX
	MONTHS ENDED				FOR THE YEAR ENDED FEBRUARY 28,
	AUGUST 31, 2008				2008⁽¹⁾				2007				2006				2005				2004⁽¹⁾
	(unaudited)
Class B Shares
Selected Per Share Data:
Net asset value, beginning of period		$17.58				$20.92				$33.65				$37.34				$42.08				$34.04

Income (loss) from investment operations:
Net investment income.⁽²⁾		0.10				0.22				0.33				0.39				0.57				0.43
Net realized and unrealized gain (loss)		(0.81	)			(0.87	)			2.08				1.72				2.09				11.64

Total income (loss) from investment operations		(0.71	)			(0.65	)			2.41				2.11				2.66				12.07

Less dividends and distributions from:
Net investment income		(0.11	)			(0.27	)			(0.39	)			(0.49	)			(0.50	)			(0.45	)
Net realized gain		(0.68	)			(2.42	)			(14.75	)			(5.31	)			(6.90	)			(3.58	)

Total dividends and distributions		(0.79	)			(2.69	)			(15.14	)			(5.80	)			(7.40	)			(4.03	)

Net asset value, end of period		$16.08				$17.58				$20.92				$33.65				$37.34				$42.08

Total Return⁽³⁾		(4.25	)	%⁽⁵⁾		(4.39	)	%		8.66		%		6.03		%		7.03		%		36.62		%
Ratios to Average Net Assets⁽⁴⁾:
Total expenses (before expense offset)		0.88%⁽⁶	⁾⁽⁷⁾			0.86		%		0.75		%		0.75		%		0.75%⁽⁸	⁾			1.28%⁽⁸	⁾
Net investment income		1.19%⁽⁶	⁾⁽⁷⁾			1.02		%		1.17		%		1.15		%		1.47%⁽⁸	⁾			1.08%⁽⁸	⁾
Supplemental Data:
Net assets, end of period, in millions		$1,988				$2,305				$848				$1,320				$5,877				$7,040
Portfolio turnover rate		35%⁽⁵	⁾			34		%		105		%		44		%		38		%		34		%


(1)		For the year ended February 29.
(2)		The per share amounts were computed using an average number of shares outstanding during the period.
(3)		Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period.
(4)		Reflects overall Fund ratios for investment income and non-class specific expenses.
(5)		Not annualized.
(6)		Annualized.
(7)		Reflects rebate of certain Fund expenses in connection with the investments in Morgan Stanley Institutional Liquidity Money Market Portfolio – Institutional Class during the period. The rebate had an effect of less than 0.005%.
(8)		If the Distributor had not rebated a portion of its fee to the Fund, the expense and net investment income ratios would have been as follows:


	EXPENSE			NET INVESTMENT
PERIOD ENDED	RATIO			INCOME RATIO
February 28, 2005		0.85	%		1.37	%
February 29, 2004		1.56			0.80

See Notes to Financial Statements

Morgan Stanley Dividend Growth Securities Inc.

Financial Highlights continued


	FOR THE SIX
	MONTHS ENDED				FOR THE YEAR ENDED FEBRUARY 28,
	AUGUST 31, 2008				2008⁽¹⁾				2007				2006				2005				2004⁽¹⁾
	(unaudited)
Class C Shares
Selected Per Share Data:
Net asset value, beginning of period		$17.38				$20.71				$33.42				$37.11				$41.89				$33.92

Income (loss) from investment operations:
Net investment income.⁽²⁾		0.03				0.05				0.08				0.11				0.27				0.31
Net realized and unrealized gain (loss)		(0.80	)			(0.87	)			2.06				1.71				2.07				11.60

Total income (loss) from investment operations		(0.77	)			(0.82	)			2.14				1.82				2.34				11.91

Less dividends and distributions from:
Net investment income		(0.04	)			(0.09	)			(0.10	)			(0.20	)			(0.22	)			(0.36	)
Net realized gain.		(0.68	)			(2.42	)			(14.75	)			(5.31	)			(6.90	)			(3.58	)

Total dividends and distributions		(0.72	)			(2.51	)			(14.85	)			(5.51	)			(7.12	)			(3.94	)

Net asset value, end of period		$15.89				$17.38				$20.71				$33.42				$37.11				$41.89

Total Return⁽³⁾		(4.56	)	%⁽⁵⁾		(5.17	)	%		7.74		%		5.21		%		6.15		%		36.25		%
Ratios to Average Net Assets⁽⁴⁾:
Total expenses (before expense offset)		1.67%⁽⁶	⁾⁽⁷⁾			1.63		%		1.64		%		1.59		%		1.52		%		1.56		%
Net investment income		0.40%⁽⁶	⁾⁽⁷⁾			0.25		%		0.28		%		0.31		%		0.70		%		0.80		%
Supplemental Data:
Net assets, end of period, in millions		$36				$44				$60				$80				$103				$118
Portfolio turnover rate		35%⁽⁵	⁾			34		%		105		%		44		%		38		%		34		%


(1)		For the year ended February 29.
(2)		The per share amounts were computed using an average number of shares outstanding during the period.
(3)		Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period.
(4)		Reflects overall Fund ratios for investment income and non-class specific expenses.
(5)		Not annualized.
(6)		Annualized.
(7)		Reflects rebate of certain Fund expenses in connection with the investments in Morgan Stanley Institutional Liquidity Money Market Portfolio - Institutional Class during the period. The rebate had an effect of less than 0.005%.

See Notes to Financial Statements

Morgan Stanley Dividend Growth Securities Inc.

Financial Highlights continued


	FOR THE SIX
	MONTHS ENDED				FOR THE YEAR ENDED FEBRUARY 28,
	AUGUST 31, 2008				2008⁽¹⁾				2007				2006				2005				2004⁽¹⁾
	(unaudited)
Class I Shares@@
Selected Per Share Data:
Net asset value, beginning of period		$17.47				$20.81				$33.54				$37.23				$42.04				$34.03

Income (loss) from investment operations:
Net investment income.⁽²⁾		0.12				0.26				0.38				0.46				0.65				0.70
Net realized and unrealized gain (loss)		(0.81	)			(0.87	)			2.06				1.71				2.06				11.63

Total income (loss) from investment operations		(0.69	)			(0.61	)			2.44				2.17				2.71				12.33

Less dividends and distributions from:
Net investment income		(0.13	)			(0.31	)			(0.42	)			(0.55	)			(0.62	)			(0.74	)
Net realized gain		(0.68	)			(2.42	)			(14.75	)			(5.31	)			(6.90	)			(3.58	)

Total dividends and distributions		(0.81	)			(2.73	)			(15.17	)			(5.86	)			(7.52	)			(4.32	)

Net asset value, end of period		$15.97				$17.47				$20.81				$33.54				$37.23				$42.04

Total Return⁽³⁾		(4.16	)	%⁽⁵⁾		(4.19	)	%		8.84		%		6.22		%		7.22		%		37.58		%
Ratios to Average Net Assets⁽⁴⁾:
Total expenses (before expense offset)		0.67%⁽⁶	⁾⁽⁷⁾			0.63		%		0.64		%		0.60		%		0.56		%		0.56		%
Net investment income		1.40%⁽⁶	⁾⁽⁷⁾			1.25		%		1.28		%		1.30		%		1.66		%		1.80		%
Supplemental Data:
Net assets, end of period, in millions		$77				$112				$247				$511				$589				$588
Portfolio turnover rate		35%⁽⁵	⁾			34		%		105		%		44		%		38		%		34		%


@@		Formerly Class D shares. Renamed Class I shares effective March 31, 2008.
(1)		For the year ended February 29.
(2)		The per share amounts were computed using an average number of shares outstanding during the period.
(3)		Calculated based on the net asset value as of the last business day of the period.
(4)		Reflects overall Fund ratios for investment income and non-class specific expenses.
(5)		Not annualized.
(6)		Annualized.
(7)		Reflects rebate of certain Fund expenses in connection with the investments in Morgan Stanley Institutional Liquidity Money Market Portfolio - Institutional Class during the period. The rebate had an effect of less than 0.005%.

See Notes to Financial Statements

Morgan Stanley Dividend Growth Securities Inc.

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 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, through the use of “cookies.” “Cookies” recognize your computer each time your return to one of

Morgan Stanley Dividend Growth Securities Inc.

An Important Notice Concerning Our U.S. Privacy Policy (unaudited) continued


	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.

Directors

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

Randy Takian

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

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

Legal Counsel

Clifford Chance US LLP

31 West 52nd Street

New York, NY 10019

Counsel to the Independent Directors

Kramer Levin Naftalis & Frankel LLP

1177 Avenue of the Americas

New York, NY 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 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 directors. 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.

Morgan Stanley Distributors Inc., member FINRA.

INVESTMENT MANAGEMENT

Morgan Stanley

Dividend Growth

Securities Inc.

DIVSAN

IU08-05291P-Y08/08

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.

(a) Refer to Item 1.

(b) Not applicable.

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 Dividend Growth Securities Inc.


/s/ Randy Takian Randy Takian Principal Executive Officer October 23, 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/ Randy Takian Randy Takian Principal Executive Officer October 23, 2008


/s/ Francis Smith Francis Smith Principal Financial Officer October 23, 2008

EX-99.CERT 2 y71105exv99wcert.htm EX-99.CERT: CERTIFICATIONS EX-99.CERT

EXHIBIT 12 B1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

CERTIFICATIONS

I, Randy Takian, certify that:

1.		I have reviewed this report on Form N-CSR of Morgan Stanley Dividend Growth Securities Inc.;

2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.		Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4.		The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

a)		designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)		designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)		evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

d)		disclosed in this report any change 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; and

5.		The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)		all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

b)		any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: October 23, 2008



	/s/ Randy Takian
	Randy Takian
	Principal Executive Officer

EXHIBIT 12 B2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

CERTIFICATIONS

I, Francis Smith, certify that:

1.		I have reviewed this report on Form N-CSR of Morgan Stanley Dividend Growth Securities Inc.;

2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.		Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4.		The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

a)		designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)		designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)		evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

d)		disclosed in this report any change 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; and

5.		The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)		all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

b)		any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: October 23, 2008



	/s/ Francis Smith
	Francis Smith
	Principal Financial Officer

EX-99.906CERT 3 y71105exv99w906cert.htm EX-99.906CERT: CERTIFICATIONS EX-99.906CERT

SECTION 906 CERTIFICATION

Certification Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

Morgan Stanley Dividend Growth Securities Inc.

In connection with the Report on Form N-CSR (the “Report”) of the above-named issuer for the period ended August 31, 2008 that is accompanied by this certification, the undersigned hereby certifies that:

1.		The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.		The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer.



Date: October 23, 2008	/s/ Randy Takian
	Randy Takian
	Principal Executive Officer

A signed original of this written statement required by Section 906 has been provided to Morgan Stanley Dividend Growth Securities Inc. and will be retained by Morgan Stanley Dividend Securities Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

SECTION 906 CERTIFICATION

Certification Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

Morgan Stanley Dividend Growth Securities Inc.

1.			The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.			The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer.



Date: October 23, 2008	/s/ Francis Smith
	Francis Smith
	Principal Financial Officer

A signed original of this written statement required by Section 906 has been provided to Morgan Stanley Dividend Growth Securities Inc. and will be retained by Morgan Stanley Dividend Growth Securities Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

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