N-Q

0000950123-09-001390.txt : 20090128 0000950123-09-001390.hdr.sgml : 20090128 20090128095032 ACCESSION NUMBER: 0000950123-09-001390 CONFORMED SUBMISSION TYPE: N-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20081130 FILED AS OF DATE: 20090128 DATE AS OF CHANGE: 20090128 EFFECTIVENESS DATE: 20090128 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-Q SEC ACT: 1940 Act SEC FILE NUMBER: 811-03128 FILM NUMBER: 09549956 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-Q 1 y73612bnvq.htm FORM N-Q N-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY

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: 212-296-6963

Date of fiscal year end: February 28, 2009

Date of reporting period: November 30, 2008

Item 1. Schedule of Investments.

The Fund’s schedule of investments as of the close of the reporting period prepared pursuant to Rule 12-12 of Regulation S-X is as follows:

Morgan Stanley Dividend Growth Securities Inc.
Portfolio of Investments November 30, 2008 (unaudited)


NUMBER OF
SHARES			VALUE
		COMMON STOCKS (98.9%)
		Aerospace & Defense (3.6%)
	235,830	Boeing Co.	$	10,053,433
	152,050	L-3 Communications Holdings, Inc.		10,213,198
	306,864	Northrop Grumman Corp.		12,566,081
	356,600	Raytheon Co.		17,402,080

				50,234,792


		Agricultural Commodities/Milling (0.8%)
	264,930	Bunge Ltd.		11,248,928


		Apparel/Footwear (2.1%)
	299,510	Nike, Inc. (Class B)		15,948,908
	242,492	V.F. Corp.		12,679,907

				28,628,815


		Apparel/Footwear Retail (1.1%)
	1,211,990	Gap, Inc. (The)		15,780,110


		Auto Parts: O.E.M. (0.8%)
	237,610	Eaton Corp.		11,010,847


		Biotechnology (1.3%)
	327,800	Amgen Inc. (a)		18,206,012


		Chemicals: Agricultural (1.4%)
	244,900	Monsanto Co.		19,396,080


		Computer Processing Hardware (1.9%)
	737,460	Hewlett-Packard Co.		26,017,589


		Contract Drilling (1.8%)
	362,620	Transocean Inc. (Cayman Islands)		24,252,026


		Drugstore Chains (1.9%)
	925,611	CVS/Caremark Corp.		26,777,926


		Electric Utilities (4.0%)
	512,268	Exelon Corp.		28,794,584
	224,640	FirstEnergy Corp.		13,159,411
	441,610	Public Service Enterprise Group Inc.		13,645,749

				55,599,744


		Engineering & Construction (3.0%)
	456,210	Fluor Corp.		20,775,803
	455,520	Jacobs Engineering Group, Inc. (a)		20,393,630

				41,169,433


		Financial Conglomerates (3.6%)
	1,322,705	Citigroup, Inc.		10,965,224
	1,247,100	JPMorgan Chase & Co.		39,483,186

				50,448,410


		Hotels/Resorts/Cruiselines (0.6%)
	906,040	Royal Caribbean Cruises Ltd. (Liberia)		8,534,897



		Household/Personal Care (3.3%)
	720,732	Procter & Gamble Co. (The)		46,379,104

		Industrial Conglomerates (7.1%)
	2,799,633	General Electric Co.		48,069,699
	1,023,544	United Technologies Corp.		49,672,590

				97,742,289


		Information Technology Services (2.2%)
	366,380	International Business Machines Corp.		29,896,608


		Integrated Oil (6.4%)
	387,260	BP PLC (ADR) (United Kingdom)		18,855,689


NUMBER OF
SHARES			VALUE
	672,953	Exxon Mobil Corp.		53,937,183
	609,350	Marathon Oil Corp.		15,952,783

				88,745,655


		Internet Retail (1.5%)
	981,360	Gamestop Corp (Class A) (a)		21,442,716


		Internet Software/Services (1.1%)
	54,324	Google Inc. (Class A) (a)		15,914,759


		Investment Banks/Brokers (0.8%)
	135,974	Goldman Sachs Group, Inc. (The)		10,740,586


		Life/Health Insurance (3.1%)
	520,160	AFLAC, Inc.		24,083,408
	251,260	Lincoln National Corp.		3,449,800
	523,908	MetLife, Inc.		15,067,594

				42,600,802


		Major Banks (2.9%)
	806,000	Bank of America Corp.		13,097,500
	915,138	Bank of New York Mellon Corp.		27,646,319

				40,743,819


		Major Telecommunications (2.2%)
	1,070,347	AT&T Inc.		30,569,110


		Managed Health Care (1.3%)
	489,390	WellPoint Inc. (a)		17,422,284



		Media Conglomerates (1.8%)
	1,098,050	Disney (Walt) Co. (The)		24,728,086


		Medical Specialties (1.2%)
	431,750	Covidien Ltd.		15,909,987


		Office Equipment/Supplies (1.4%)
	809,800	Pitney Bowes, Inc.		20,010,158


		Oil & Gas Production (2.7%)
	265,300	Occidental Petroleum Corp.		14,363,342
	590,666	XTO Energy, Inc.		22,587,068

				36,950,410


		Oil Refining/Marketing (1.7%)
	1,312,580	Valero Energy Corp.		24,085,843


		Oilfield Services/Equipment (1.0%)
	806,940	Halliburton Co.		14,202,144


		Packaged Software (4.7%)
	2,108,482	Microsoft Corp.		42,633,506
	1,365,630	Oracle Corp. (a)		21,972,987

				64,606,493


		Pharmaceuticals: Generic Drugs (1.3%)
	737,800	Watson Pharmaceuticals, Inc. (a)		17,522,750


		Pharmaceuticals: Major (8.0%)
	413,049	Johnson & Johnson		24,196,410
	2,638,853	Pfizer, Inc.		43,356,355
	1,207,989	Wyeth		43,499,684

				111,052,449


		Property — Casualty Insurers (3.4%)
	555,950	ACE Ltd. (Switzerland)		29,048,387
	723,790	Allstate Corp. (The)		18,413,218

				47,461,605


		Pulp & Paper (0.8%)
	891,820	International Paper Co.		11,103,159


		Railroads (0.9%)
	337,750	CSX Corp.		12,577,810



		Restaurants (2.7%)
	628,700	McDonald’s Corp.		36,936,125


NUMBER OF
SHARES					VALUE
		Specialty Telecommunications (0.0%)
	6,191	Fairpoint Communications, Inc.				21,668


		Steel (1.4%)
	301,000	Nucor Corp.				10,739,680
	274,820	United States Steel Corp.				8,354,528

						19,094,208


		Tobacco (4.6%)
	1,103,011	Altria Group, Inc.				17,736,417
	1,103,011	Philip Morris International Inc.				46,502,944

						64,239,361


		Trucks/Construction/Farm Machinery (1.5%)
	488,840	Caterpillar Inc.				20,037,552


		TOTAL COMMON STOCKS
		(Cost $1,284,946,791)				1,370,043,149


NUMBER OF
SHARES (000)


		SHORT-TERM INVESTMENT (b) (1.2%)
		Investment Company
	16,844	Morgan Stanley Institutional Liquidity Funds- Money Market Portfolio-Institutional Class
		(Cost $16,843,690)				16,843,690


		TOTAL INVESTMENTS
		(Cost $1,301,790,481) (c)	100.1	%		1,386,886,839
		LIABILITIES IN EXCESS OF OTHER ASSETS	(0.1	)		(1,364,649	)

		NET ASSETS	100.0	%	$	1,385,522,190


ADR		American Depositary Receipt.

(a)		Non-income producing security.

(b)		The Fund invests in Morgan Stanley Institutional Liquidity Funds-Money Market Portfolio-Intitutional Class, an open-end management investment company managed by 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 Funds- Money Market Portfolio-Institutional Class with respect to assets invested by the Fund in Morgan Stanley Institutional Liquidity Funds- Money Market Portfolio-Institutional Class.

(c)		The aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes.

MS Dividend Growth Securities
Notes to the Portfolio of Investments
FAS 157
11/30/2008

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.

The following is a summary of the inputs used as of November 30, 2008 in valuing the Fund’s investments carried at value:

Fair Value Measurements at November 30, 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

1,386,886,839

—

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 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 sale 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 having a maturity date of sixty days or less at the time of purchase are valued at amortized cost.

Item 2. 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-Q 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 Fund’s internal control over financial reporting that occurred during the registrant’s fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Fund’s internal control over financial reporting.

Item 3. Exhibits.

(a) A separate certification for each principal executive officer and principal financial officer of the registrant are attached hereto.

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
January 20, 2009

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
January 20, 2009

/s/ Francis Smith

Francis Smith
Principal Financial Officer
January 20, 2009

EX-99.CERT 2 y73612bexv99wcert.htm EX-99.CERT: CERTIFICATIONS EX-99.CERT

Exhibit 3 A1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Randy Takian, certify that:

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

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;

Based on my knowledge, the schedules of investments included in this report fairly present in all material respects the investments of the registrant as of the end of the fiscal quarter for which the report is filed;

The registrant’s other certifying officer(s) 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) 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)		Omitted;

	(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

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 control over financial reporting.

Date: January 20, 2009

/s/ Randy Takian

Randy Takian
Principal Executive Officer

Exhibit 3 A2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Francis Smith, certify that:

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

	(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)		Omitted;

	(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 registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

	(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 control over financial reporting.

Date: January 20, 2009

/s/ Francis Smith

Francis Smith
Principal Financial Officer