-----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, RM3d9SLLTeinEMr0e2m1MKSdfbbGJmzV76jhMRX0cE4jWKrbgxw/T3hY4FGK8CUc UkPEgxHB6ePNLT6aRJcItg== 0000950123-03-013872.txt : 20031217 0000950123-03-013872.hdr.sgml : 20031217 20031217123147 ACCESSION NUMBER: 0000950123-03-013872 CONFORMED SUBMISSION TYPE: N-CSRS/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030831 FILED AS OF DATE: 20031217 EFFECTIVENESS DATE: 20031217 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/A SEC ACT: 1940 Act SEC FILE NUMBER: 811-03128 FILM NUMBER: 031059341 BUSINESS ADDRESS: STREET 1: C/O MORGAN STANLEY TRUST STREET 2: HAROBOSIDE FINANCIAL CENTER, PLAZA TWO CITY: JERSEY CITY STATE: NJ ZIP: 07311 BUSINESS PHONE: (212) 869-6397 MAIL ADDRESS: STREET 1: C/O MORGAN STANLEY TRUST STREET 2: HARBORSIDE FINANCIAL CENTER, PLAZA TWO CITY: JERSEY CITY STATE: NJ 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 N-CSRS/A 1 y92356nvcsrsza.txt AMENDMENT TO FORM N-CSRS UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR S/A 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) 1221 Avenue of the Americas, New York, New York 10020 (Address of principal executive offices) (Zip code) Ronald E. Robison 1221 Avenue of the Americas, New York, New York 10020 (Name and address of agent for service) Registrant's telephone number, including area code: 212-762-4000 Date of fiscal year end: February 29, 2004 Date of reporting period: August 31, 2003 Item 1 - Report to Shareholders Welcome, Shareholder: In this report, you'll learn about how your investment in Morgan Stanley Dividend Growth Securities performed during the semiannual period. We will provide an overview of the market conditions, and discuss some of the factors that affected performance during the reporting period. In addition, this report includes the 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 the market values of securities owned by the Fund will decline and, therefore, the value of the Fund shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. FUND REPORT For the six-month period ended August 31, 2003 TOTAL RETURN FOR THE SIX MONTHS ENDED AUGUST 31, 2003
LIPPER S&P LARGE-CAP 500 VALUE CLASS A CLASS B CLASS C CLASS D INDEX(1) FUNDS INDEX(2) 20.99% 20.54% 20.53% 21.12% 20.88% 19.97%
The performance of the Fund's four share classes varies because each has different expenses. The Fund's total return figures assume the reinvestment of all distributions, but do not reflect the deduction of any applicable sales charges. Such costs would lower performance. Past performance is no guarantee of future results. See Performance Summary for standardized performance information. MARKET CONDITIONS The six-month period ended August 31, 2003, was one of sharp contrast. Just prior to its start, in late February, a consumer confidence report recorded the lowest monthly reading since October 1993. Crude oil and natural gas prices were surging due to Iraq-centered geopolitical tensions and unusually cold weather across the United States. And fears of a double-dip recession persisted, defying evidence of a nascent recovery in the domestic economy. Responding to these negative developments, the market challenged its October 2002 low in mid-March. Following the rapid conclusion of the military campaign in Iraq, however, consumer confidence soared and investors returned to the market. Reports of first-quarter corporate revenues and profits exceeded expectations, further buoying equities. And declines in oil prices and corporate bond yields added to the positive tone of the market as well. Economic activity continued to show signs of recovery through the spring and summer months, as data revealed gains in retail sales, industrial production, housing sales and capital goods orders. The major threat to a cyclical recovery continued to be the soft labor market, where unemployment reports remained high. Recent reports of declines in initial jobless claims have helped moderate this continued threat to a more comprehensive recovery. At the end of the six-month period, the S&P 500 Index stood 30 percent above its October 2002 low. Stocks sensitive to the economy benefited disproportionately during this recovery, as did smaller-capitalization stocks. Leaders among large caps included retail, industrials, materials, consumer services and durables. Laggards included health care, consumer staples, telecom and energy. PERFORMANCE ANALYSIS The Fund performed in line with the market during the period. Underperformance was narrowly concentrated in the portfolio's technology allocation. The Fund's underweighting and stock selection in that sector, one of the market's leaders during the rally, detracted from relative performance. The Fund's largest overweightings relative to the S&P 500 were basic resources, heavy industry/transportation and consumer durables. All three of these economically sensitive sector allocations contributed to relative performance. Underweightings in health care and financials, both of which suffered from earnings disappointments and concerns about rising interest rates, also helped relative performance. 2 Stock selection within most sectors positively impacted relative performance, especially in financial services, where our selectivity among banks and investment companies was rewarded. In addition, the Fund's exposure to manufacturers and diversified industrials contributed significantly. We also gained from stock selection within consumer spending-related sectors such as retail and consumer staples, where discounters, specialty stores, and food and tobacco producers and distributors did particularly well.
TOP 10 HOLDINGS United Technologies Corp. 3.4% Target Corp. 3.0 Deere & Co. 2.9 Wyeth 2.8 Johnson Controls, Inc. 2.7 3M Co. 2.5 Alcoa Inc. 2.4 Home Depot, Inc. (The) 2.4 Bank America Corp. 2.4 Int'l Business Machines Corp. 2.3
TOP FIVE INDUSTRIES Industrial Conglomerates 9.4% Pharmaceuticals: Major 9.0 Integrated Oil 4.9 Major Banks 4.7 Trucks/Construction/Farm Machinery 4.3
Subject to change daily. All percentages are as a percentage of net assets. Provided for informational purposes only and should not be deemed as a recommendation to buy the securities mentioned. Morgan Stanley is a full-service securities firm engaged in securities trading and brokerage activities, investment banking, research and analysis, financing and financial advisory services. INVESTMENT STRATEGY 1. THE INVESTMENT MANAGER INITIALLY EMPLOYS A QUANTITATIVE SCREENING PROCESS IN AN ATTEMPT TO IDENTIFY A NUMBER OF COMMON STOCKS WHICH ARE UNDERVALUED AND WHICH HAVE A RECORD OF PAYING DIVIDENDS. 2. THE INVESTMENT MANAGER THEN APPLIES QUALITATIVE ANALYSIS TO DETERMINE WHICH STOCKS IT BELIEVES HAVE 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. PROXY VOTING POLICIES AND PROCEDURES A DESCRIPTION OF THE FUND'S POLICIES AND PROCEDURES WITH RESPECT TO THE VOTING OF PROXIES RELATING TO THE FUND'S PORTFOLIO SECURITIES IS AVAILABLE WITHOUT CHARGE, UPON REQUEST, BY CALLING (800) 869-NEWS. THIS INFORMATION IS ALSO AVAILABLE ON THE SECURITIES AND EXCHANGE COMMISSION'S WEBSITE AT HTTP://WWW.SEC.GOV. 3 PERFORMANCE SUMMARY AVERAGE ANNUAL TOTAL RETURNS -- PERIOD ENDED AUGUST 31, 2003
CLASS A SHARES* CLASS B SHARES** CLASS C SHARES(+) CLASS D SHARES(++) 07/28/97 03/30/81 07/28/97 07/28/97 SYMBOL DIVAX DIVBX DIVCX DIVDX 1 YEAR 7.34%(3) 6.52%(3) 6.50%(3) 7.58%(3) 1.70(4) 1.52(4) 5.50(4) 5 YEARS 1.64(3) 0.97(3) 0.90(3) 1.88(3) 0.55(4) 0.67(4) 0.90(4) 10 YEARS 7.42(3) 7.42(4) SINCE INCEPTION 1.61(3) 11.69(3) 0.86(3) 1.84(3) 0.71(4) 11.69(4) 0.86(4)
Past performance is not predictive of future returns. Investment return and principal value will fluctuate. When you sell fund shares, they may be worth less than their original cost. The table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Performance for Class A, Class B, Class C, and Class D shares will vary due to differences in sales charges and expenses. - -------------------------------------------------------------------------------- Notes on Performance (1) The Standard and Poor's 500 Index (S&P 500(R)) 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. Indexes are unmanaged and their returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index. (2) The Lipper Large-Cap Value Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Large-Cap Value Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 30 funds represented in this Index. (3) Figure shown assumes reinvestment of all distributions and does not reflect the deduction of any sales charges. (4) Figure shown assumes reinvestment of all distributions and the deduction of the maximum applicable sales charge. See the Fund's current prospectus for complete details on fees and sales charges. * 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. + The maximum contingent deferred sales charge for Class C is 1% for shares redeemed within one year of purchase. ++ Class D has no sales charge. 4 Morgan Stanley Dividend Growth Securities Inc. PORTFOLIO OF INVESTMENTS - AUGUST 31, 2003 (UNAUDITED)
NUMBER OF SHARES VALUE - ------------------------------------------------------ Common Stocks (99.8%) Aerospace & Defense (0.6%) 487,000 Northrop Grumman Corp. ................ $ 46,498,760 -------------- Aluminum (4.1%) 3,267,500 Alcan Aluminum Ltd. (Canada).............. 118,838,975 6,324,300 Alcoa, Inc. ........... 180,622,008 -------------- 299,460,983 -------------- Apparel/Footwear (1.3%) 2,392,500 VF Corp. .............. 95,939,250 -------------- Auto Parts: O.E.M. (3.1%) 3,126,100 Delphi Corp. .......... 28,322,466 2,009,700 Johnson Controls, Inc. ................. 198,960,300 -------------- 227,282,766 -------------- Beverages: Non- Alcoholic (2.1%) 3,493,000 Coca-Cola Co. (The).... 152,015,360 -------------- Chemicals: Major Diversified (4.2%) 4,378,100 Dow Chemical Co. (The)................. 151,175,793 3,485,700 Du Pont (E.I.) de Nemours & Co., Inc. ................. 155,950,218 -------------- 307,126,011 -------------- Computer Processing Hardware (1.5%) 5,579,200 Hewlett-Packard Co. ... 111,137,664 -------------- Discount Stores (3.0%) 5,420,200 Target Corp. .......... 220,060,120 -------------- Drugstore Chains (0.9%) 1,964,500 CVS Corp. ............. 64,042,700 -------------- Electric Utilities (4.0%) 1,981,000 Exelon Corp. .......... 116,680,900 2,571,100 FirstEnergy Corp. ..... 75,230,386 1,647,100 FPL Group, Inc. ....... 101,889,606 -------------- 293,800,892 --------------
NUMBER OF SHARES VALUE - ------------------------------------------------------ Electronics/ Appliances(1.6%) 1,691,100 Whirlpool Corp. ....... $ 117,666,738 -------------- Finance/Rental/ Leasing(3.7%) 1,538,200 Fannie Mae............. 99,659,978 1,400,800 Freddie Mac............ 74,452,520 4,154,000 MBNA Corp. ............ 96,954,360 -------------- 271,066,858 -------------- Financial Conglomerates (3.2%) 2,632,000 Citigroup Inc. ........ 114,097,200 3,629,700 J.P. Morgan Chase & Co. .................. 124,208,334 -------------- 238,305,534 -------------- Food Distributors (1.0%) 2,453,800 SYSCO Corp. ........... 77,196,548 -------------- Food: Major Diversified (2.6%) 3,675,200 PepsiCo, Inc. ......... 163,693,408 557,100 Unilever N.V. (ADR) (NY Registered Shares) (Netherlands)......... 31,186,458 -------------- 194,879,866 -------------- Forest Products (2.0%) 2,488,200 Weyerhaeuser Co. ...... 148,047,900 -------------- Home Improvement Chains (2.4%) 5,589,800 Home Depot, Inc. (The)................. 179,767,968 -------------- Household/Personal Care (4.0%) 2,439,300 Avon Products, Inc. ... 156,359,130 1,602,300 Procter & Gamble Co. (The)................. 139,864,767 -------------- 296,223,897 --------------
See Notes to Financial Statements 5 Morgan Stanley Dividend Growth Securities Inc. PORTFOLIO OF INVESTMENTS - AUGUST 31, 2003 (UNAUDITED) continued
NUMBER OF SHARES VALUE - ------------------------------------------------------ Industrial Conglomerates (9.4%) 1,275,600 3M Co. ................ $ 181,734,732 4,880,400 General Electric Co. .................. 144,313,428 4,004,300 Honeywell International, Inc. ................. 116,084,657 3,158,100 United Technologies Corp. ................ 253,437,525 -------------- 695,570,342 -------------- Industrial Specialties (0.8%) 1,064,100 PPG Industries, Inc. ................. 58,429,731 -------------- Information Technology Services (2.3%) 2,105,200 International Business Machines Corp. ....... 172,647,452 -------------- Integrated Oil (4.9%) 3,048,400 BP PLC (ADR) (United Kingdom).............. 127,179,248 3,999,700 Exxon Mobil Corp. ..... 150,788,690 1,849,000 Royal Dutch Petroleum Co. (NY Registered Shares) (Netherlands)......... 82,964,630 -------------- 360,932,568 -------------- Investment Banks/ Brokers (2.0%) 644,600 Goldman Sachs Group, Inc. (The)............ 57,040,654 159,100 Lehman Brothers Holdings, Inc. ....... 10,457,643 1,542,300 Merrill Lynch & Co., Inc. ................. 82,944,894 -------------- 150,443,191 -------------- Investment Managers (0.9%) 2,140,800 Mellon Financial Corp. ................ 67,114,080 --------------
NUMBER OF SHARES VALUE - ------------------------------------------------------ Life/Health Insurance (2.1%) 77,100 Jefferson-Pilot Corp. ................ $ 3,413,217 4,306,500 Lincoln National Corp. ................ 152,536,230 -------------- 155,949,447 -------------- Major Banks (4.7%) 2,237,200 Bank of America Corp. ................ 177,298,100 1,619,200 Comerica, Inc. ........ 79,891,328 2,684,400 KeyCorp................ 73,096,212 338,600 PNC Financial Services Group................. 16,117,360 -------------- 346,403,000 -------------- Major Telecommunications (2.3%) 4,880,400 Verizon Communications Inc. ................. 172,375,728 -------------- Motor Vehicles (1.0%) 865,600 DaimlerChrysler AG (Germany)............. 33,091,888 1,024,300 General Motors Corp. ................ 42,098,730 -------------- 75,190,618 -------------- Multi-Line Insurance (0.8%) 380,400 American International Group, Inc. .......... 22,660,428 635,500 Hartford Financial Services Group, Inc. (The)................. 33,821,310 -------------- 56,481,738 -------------- Office Equipment/ Supplies (2.3%) 4,402,000 Pitney Bowes, Inc. .... 171,678,000 -------------- Packaged Software (0.5%) 1,429,500 Microsoft Corp. ....... 37,910,340 --------------
See Notes to Financial Statements 6 Morgan Stanley Dividend Growth Securities Inc. PORTFOLIO OF INVESTMENTS - AUGUST 31, 2003 (UNAUDITED) continued
NUMBER OF SHARES VALUE - ------------------------------------------------------ Pharmaceuticals: Major (9.0%) 5,292,400 Bristol-Myers Squibb Co. .................. $ 134,268,188 2,442,400 Merck & Co., Inc. ..... 122,901,580 5,253,500 Pfizer Inc. ........... 157,184,720 2,925,400 Schering-Plough Corp. ................ 44,436,826 4,879,400 Wyeth.................. 209,082,290 -------------- 667,873,592 -------------- Property - Casualty Insurers (0.9%) 3,976,400 Travelers Property Casualty Corp. (Class A).................... 61,196,796 233,600 Travelers Property Casualty Corp. (Class B).................... 3,618,464 -------------- 64,815,260 -------------- Pulp & Paper (1.5%) 1,774,900 International Paper Co. .................. 71,972,195 1,457,300 Meadwestvaco Corp. .... 36,942,555 -------------- 108,914,750 -------------- Railroads (2.6%) 4,354,300 Burlington Northern Santa Fe Corp. ....... 123,444,405 2,232,300 CSX Corp. ............. 72,058,644 -------------- 195,503,049 --------------
NUMBER OF SHARES VALUE - ------------------------------------------------------ Tobacco (2.2%) 3,912,400 Altria Group, Inc. .... $ 161,269,128 -------------- Trucks/Construction/Farm Machinery (4.3%) 1,436,700 Caterpillar Inc. ...... 103,198,161 3,768,800 Deere & Co. ........... 212,974,888 -------------- 316,173,049 --------------
Total Investments (Cost $3,463,800,101) (a)....................... 99.8% 7,376,194,890 Other Assets In Excess Of Liabilities............... 0.2 16,881,416 ----- -------------- Net Assets................ 100.0% $7,393,076,306 ===== ==============
- --------------------------------------------------- ADR American Depository Receipt. (a) The aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $3,963,701,456 and the aggregate gross unrealized depreciation is $51,306,667, resulting in net unrealized appreciation of $3,912,394,789.
See Notes to Financial Statements 7 Morgan Stanley Dividend Growth Securities Inc. FINANCIAL STATEMENTS Statement of Assets and Liabilities August 31, 2003 (unaudited) Assets: Investments in securities, at value (cost $3,463,800,101)............... $7,376,194,890 Receivable for: Investments sold................. 23,975,853 Dividends........................ 19,811,369 Capital stock sold............... 4,324,838 Prepaid expenses and other assets.... 300,903 -------------- Total Assets..................... 7,424,607,853 -------------- Liabilities: Payable for: Capital stock redeemed........... 6,166,051 Distribution fee................. 5,736,570 Investment management fee........ 2,646,438 Payable to bank...................... 16,559,771 Accrued expenses and other payables............................ 422,717 -------------- Total Liabilities................ 31,531,547 -------------- Net Assets....................... $7,393,076,306 ============== Composition of Net Assets: Paid-in-capital...................... 3,024,080,544 Net unrealized appreciation.......... 3,912,394,789 Accumulated undistributed net investment income................... 26,218,940 Accumulated undistributed net realized gain....................... 430,382,033 -------------- Net Assets....................... $7,393,076,306 ============== Class A Shares: Net Assets........................... $122,392,026 Shares Outstanding (500,000,000 shares authorized, $.01 par value).............................. 3,072,231 Net Asset Value Per Share........ $39.84 ============== Maximum Offering Price Per Share, (net asset value plus 5.54% of net asset value)................ $42.05 ============== Class B Shares: Net Assets........................... $6,687,636,821 Shares Outstanding (500,000,000 shares authorized, $.01 par value).............................. 167,680,159 Net Asset Value Per Share........ $39.88 ============== Class C Shares: Net Assets........................... $99,532,543 Shares Outstanding (500,000,000 shares authorized, $.01 par value).............................. 2,504,902 Net Asset Value Per Share........ $39.74 ============== Class D Shares: Net Assets........................... $483,514,916 Shares Outstanding (500,000,000 shares authorized, $.01 par value).............................. 12,127,824 Net Asset Value Per Share........ $39.87 ==============
Statement of Operations For the six months ended August 31, 2003 (unaudited) Net Investment Income: Income Dividends (net of $1,280,369 foreign withholding tax)........ $ 92,982,120 Interest.......................... 178,204 -------------- Total Income.................. 93,160,324 -------------- Expenses Distribution fee (Class A shares)......................... 143,934 Distribution fee (Class B shares)......................... 32,375,839 Distribution fee (Class C shares)......................... 459,555 Investment management fee......... 15,251,246 Transfer agent fees and expenses........................ 4,356,577 Custodian fees.................... 214,556 Shareholder reports and notices... 206,061 Registration fees................. 59,005 Taxes............................. 38,889 Professional fees................. 28,286 Directors' fees and expenses...... 18,937 Other............................. 61,308 -------------- Total Expenses................ 53,214,193 -------------- Net Investment Income......... 39,946,131 -------------- Net Realized and Unrealized Gain: Net realized gain................. 430,382,084 Net change in unrealized appreciation.................... 835,783,214 -------------- Net Gain...................... 1,266,165,298 -------------- Net Increase...................... $1,306,111,429 ==============
See Notes to Financial Statements 8 Morgan Stanley Dividend Growth Securities Inc. FINANCIAL STATEMENTS continued Statement of Changes in Net Assets
FOR THE SIX FOR THE YEAR MONTHS ENDED ENDED AUGUST 31, 2003 FEBRUARY 28, 2003 --------------- ----------------- (unaudited) Increase (Decrease) in Net Assets: Operations: Net investment income....................................... $ 39,946,131 $ 83,384,383 Net realized gain........................................... 430,382,084 168,461,681 Net change in unrealized appreciation....................... 835,783,214 (2,624,203,210) --------------- --------------- Net Increase (Decrease)................................. 1,306,111,429 (2,372,357,146) --------------- --------------- Dividends and Distributions to Shareholders from: Net investment income Class A shares.......................................... (1,016,906) (2,241,425) Class B shares.......................................... (32,519,554) (77,556,153) Class C shares.......................................... (464,550) (1,055,263) Class D shares.......................................... (4,199,213) (8,637,871) Net realized gain Class A shares.......................................... (2,729,900) (2,997,124) Class B shares.......................................... (153,089,614) (197,956,757) Class C shares.......................................... (2,198,511) (2,584,634) Class D shares.......................................... (10,422,997) (10,202,124) --------------- --------------- Total Dividends and Distributions....................... (206,641,245) (303,231,351) --------------- --------------- Net decrease from capital stock transactions................ (289,897,606) (1,356,525,019) --------------- --------------- Net Increase (Decrease)................................. 809,572,578 (4,032,113,516) Net Assets: Beginning of period......................................... 6,583,503,728 10,615,617,244 --------------- --------------- End of Period (Including accumulated undistributed net investment income of $26,218,940 and $24,473,032, respectively)............... $7,393,076,306 $ 6,583,503,728 =============== ===============
See Notes to Financial Statements 9 Morgan Stanley Dividend Growth Securities Inc. NOTES TO FINANCIAL STATEMENTS - AUGUST 31, 2003 (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 seeks to achieve its objective by investing primarily in common stock of companies with a record of paying dividends and the potential for increasing dividends. 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 D shares. The four classes are substantially the same except that most Class A shares are subject to a sales charge imposed at the time of purchase and some Class A shares, and most Class B shares and Class C shares are subject to a contingent deferred sales charge imposed on shares redeemed within one year, six year and one year, respectively. Class D shares are not subject to a sales charge. Additionally, Class A shares, Class B shares and Class C shares incur distribution expenses. The following is a summary of significant accounting policies: A. Valuation of Investments -- (1) an equity portfolio security listed or traded on the New York 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 equity 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 or Morgan Stanley Investment Advisors Inc. (the "Investment Manager") 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; (6) certain portfolio securities may be valued by an outside pricing service approved by the Fund's Directors; and (7) 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 10 Morgan Stanley Dividend Growth Securities Inc. NOTES TO FINANCIAL STATEMENTS - AUGUST 31, 2003 (UNAUDITED) continued 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. Interest income is accrued daily. C. Repurchase Agreements -- Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Fund, along with other affiliated entities managed by the Investment Manager, may transfer uninvested cash balances into one or more joint repurchase agreement accounts. These balances are invested in one or more repurchase agreements and are collateralized by cash, U.S. Treasury or federal agency obligations. The Fund may also invest directly with institutions in repurchase agreements. The Fund's custodian receives the collateral, which is marked-to-market daily to determine that the value of the collateral does not decrease below the repurchase price plus accrued interest. D. 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. E. Federal Income Tax Policy -- It is the Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Accordingly, no federal income tax provision is required. F. Dividends and Distributions to Shareholders -- Dividends and distributions to shareholders are recorded on the ex-dividend date. G. Use of Estimates -- The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those estimates. 2. Investment Management Agreement Pursuant to an Investment Management Agreement with the Investment Manager, the Fund pays a management 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: 0.625% to the portion of daily net assets not exceeding $250 million; 0.50% to the portion of daily net assets exceeding 11 Morgan Stanley Dividend Growth Securities Inc. NOTES TO FINANCIAL STATEMENTS - AUGUST 31, 2003 (UNAUDITED) continued $250 million but not exceeding $1 billion; 0.475% to the portion of daily net assets exceeding $1 billion but not exceeding $2 billion; 0.45% to the portion of daily net assets exceeding $2 billion but not exceeding $3 billion; 0.425% to the portion of daily net assets exceeding $3 billion but not exceeding $4 billion; 0.40% to the portion of daily net assets exceeding $4 billion but not exceeding $5 billion; 0.375% to the portion of daily net assets exceeding $5 billion but not exceeding $6 billion; 0.35% to the portion of daily net assets exceeding $6 billion but not exceeding $8 billion; 0.325% to the portion of daily net assets exceeding $8 billion but not exceeding $10 billion; 0.30% to the portion of daily net assets exceeding $10 billion but not exceeding $15 billion; and 0.275% to the portion of daily net assets exceeding $15 billion. 3. Plan of Distribution Shares of the Fund are distributed by Morgan Stanley Distributors Inc. (the "Distributor"), an affiliate of the Investment Manager. The Fund has adopted a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act. The Plan provides that the Fund will pay the Distributor a fee which is accrued daily and paid monthly at the following annual rates: (i) Class A - up to 0.25% of the average daily net assets of Class A; (ii) Class B - 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 Plan's inception; and (iii) Class C - up to 1.0% of the average daily net assets of Class C. In the case of Class B shares, provided that the Plan continues in effect, any cumulative expenses incurred by the Distributor but not yet recovered may be recovered through the payment of future distribution fees from the Fund pursuant to the Plan and contingent deferred sales charges paid by investors upon redemption of Class B shares. Although there is no legal obligation for the Fund to pay expenses incurred in excess of payments made to the Distributor under the Plan and the proceeds of contingent deferred sales charges paid by investors upon redemption of shares, if for any reason the Plan is terminated, the Trustees will consider at that time the manner in which to treat such expenses. The Distributor has advised the Fund that there were no excess expenses as of August 31, 2003. 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 12 Morgan Stanley Dividend Growth Securities Inc. NOTES TO FINANCIAL STATEMENTS - AUGUST 31, 2003 (UNAUDITED) continued that expenses representing a gross sales credit to Morgan Stanley Financial Advisors or other selected broker-dealer representatives may be reimbursed in the subsequent calendar year. For the six months ended August 31, 2003, 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, 2003, it received contingent deferred sales charges from certain redemptions of the Fund's Class A shares, Class B shares and Class C shares of $1,380, $2,147,766 and $6,975, respectively and received $229,650 in front-end sales charges from sales of the Fund's Class A shares. The respective shareholders pay such charges which are not an expense of the Fund. 4. Security Transactions and Transactions with Affiliates The cost of purchases and the proceeds from sales of portfolio securities, excluding short-term investments, for the six months ended August 31, 2003 aggregated $824,027,310 and $1,258,303,712, respectively. For the six months ended August 31, 2003, the Fund incurred brokerage commissions of $256,133 with Morgan Stanley & Co., Inc., an affiliate of the Investment Manager and Distributor, for portfolio transactions executed on behalf of the Fund. The Fund has an unfunded noncontributory defined benefit pension plan covering all 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 years of service and compensation during the last five years of service. Aggregate pension costs for the six months ended August 31, 2003 included in Directors' fees and expenses in the Statement of Operations amounted to $3,644. At August 31, 2003, the Fund had an accrued pension liability of $60,921, which is included in accrued expenses in the Statement of Assets and Liabilities. Morgan Stanley Trust, an affiliate of the Investment Manager and Distributor, is the Fund's transfer agent. At August 31, 2003, the Fund had transfer agent fees and expenses payable of approximately $97,000. 5. 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 13 Morgan Stanley Dividend Growth Securities Inc. NOTES TO FINANCIAL STATEMENTS - AUGUST 31, 2003 (UNAUDITED) continued 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 28, 2003, the Fund had temporary book/tax differences attributable to a non-deductible expense. 6. Capital Stock Transactions in capital stock were as follows:
FOR THE SIX FOR THE YEAR MONTHS ENDED ENDED AUGUST 31, 2003 FEBRUARY 28, 2003 --------------------------- ----------------------------- (unaudited) SHARES AMOUNT SHARES AMOUNT ----------- ------------- ----------- --------------- CLASS A SHARES Sold........................................... 357,755 $ 13,339,480 807,118 $ 31,752,569 Reinvestment of dividends and distributions.... 84,012 3,221,676 106,190 4,371,930 Redeemed....................................... (439,673) (16,246,319) (970,871) (38,277,429) ----------- ------------- ----------- --------------- Net increase (decrease) - Class A.............. 2,094 314,837 (57,563) (2,152,930) ----------- ------------- ----------- --------------- CLASS B SHARES Sold........................................... 4,992,185 189,260,552 9,619,119 386,653,422 Reinvestment of dividends and distributions.... 4,341,948 167,239,326 6,030,065 248,999,928 Redeemed....................................... (18,514,219) (690,915,612) (51,108,510) (2,008,751,524) ----------- ------------- ----------- --------------- Net decrease - Class B......................... (9,180,086) (334,415,734) (35,459,326) (1,373,098,174) ----------- ------------- ----------- --------------- CLASS C SHARES Sold........................................... 277,268 10,535,393 492,590 19,786,226 Reinvestment of dividends and distributions.... 65,393 2,509,762 84,072 3,456,704 Redeemed....................................... (271,318) (10,067,195) (841,485) (33,132,034) ----------- ------------- ----------- --------------- Net increase (decrease) - Class C.............. 71,343 2,977,960 (264,823) (9,889,104) ----------- ------------- ----------- --------------- CLASS D SHARES Sold........................................... 1,729,880 65,574,417 3,402,262 136,185,393 Reinvestment of dividends and distributions.... 360,138 13,758,299 433,093 17,658,220 Redeemed....................................... (1,021,486) (38,107,385) (3,110,440) (125,228,424) ----------- ------------- ----------- --------------- Net increase - Class D......................... 1,068,532 41,225,331 724,915 28,615,189 ----------- ------------- ----------- --------------- Net decrease in Fund........................... (8,038,117) $(289,897,606) (35,056,797) $(1,356,525,019) =========== ============= =========== ===============
14 Morgan Stanley Dividend Growth Securities Inc. NOTES TO FINANCIAL STATEMENTS - AUGUST 31, 2003 (UNAUDITED) continued 7. Fund Merger On July 31, 2003, the Trustees of Morgan Stanley Equity Fund ("Equity") and the Directors of the Fund approved a Plan of Reorganization whereby Equity would be merged into the Fund. The Plan of Reorganization is subject to the consent of Equity's shareholders at a special meeting scheduled to be held on December 16, 2003. If approved, the assets of the Fund would be combined with the assets of Equity and shareholders of Equity would become shareholders of the Fund, receiving shares of the corresponding class of the Fund equal to the value of their holdings in Equity. 15 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 FOR THE YEAR ENDED FEBRUARY 28, MONTHS ENDED ---------------------------------------------------- AUGUST 31, 2003 2003 2002 2001 2000* 1999 --------------- -------- -------- -------- -------- -------- (unaudited) Class A Shares Selected Per Share Data: Net asset value, beginning of period..... $34.01 $ 46.44 $52.54 $50.11 $60.22 $58.39 ------ ------- ------ ------ ------ ------ Income (loss) from investment operations: Net investment income++.............. 0.34 0.68 0.71 0.84 0.94 1.05 Net realized and unrealized gain (loss)............................... 6.74 (11.41) (3.51) 8.35 (7.75) 3.58 ------ ------- ------ ------ ------ ------ Total income (loss) from investment operations.............................. 7.08 (10.73) (2.80) 9.19 (6.81) 4.63 ------ ------- ------ ------ ------ ------ Less dividends and distributions from: Net investment income................ (0.34) (0.72) (0.70) (0.92) (0.99) (1.02) Net realized gain.................... (0.91) (0.98) (2.60) (5.84) (2.31) (1.78) ------ ------- ------ ------ ------ ------ Total dividends and distributions........ (1.25) (1.70) (3.30) (6.76) (3.30) (2.80) ------ ------- ------ ------ ------ ------ Net asset value, end of period........... $39.84 $ 34.01 $46.44 $52.54 $50.11 $60.22 ====== ======= ====== ====== ====== ====== Total Return+............................ 20.99%(1) (23.66)% (5.35)% 19.31% (12.07)% 8.10% Ratios to Average Net Assets:(3) Expenses................................. 0.82%(2) 0.77% 0.73% 0.73% 0.67% 0.64% Net investment income.................... 1.79%(2) 1.69% 1.46% 1.57% 1.52% 1.76% Supplemental Data: Net assets, end of period, in thousands............................... $122,392 $104,419 $145,257 $223,106 $214,669 $227,457 Portfolio turnover rate.................. 12%(1) 7% 0% 1% 4% 13%
- --------------------- * Year ended February 29. ++ The per share amounts were computed using an average number of shares outstanding during the period. + Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period. (1) Not annualized. (2) Annualized. (3) Reflects overall Fund ratios for investment income and non-class specific expenses.
See Notes to Financial Statements 16 Morgan Stanley Dividend Growth Securities Inc. FINANCIAL HIGHLIGHTS continued
FOR THE SIX FOR THE YEAR ENDED FEBRUARY 28, MONTHS ENDED ----------------------------------------------------------------- AUGUST 31, 2003 2003 2002 2001 2000* 1999 --------------- ---------- ---------- ----------- ----------- ----------- (unaudited) Class B Shares Selected Per Share Data: Net asset value, beginning of period......................... $34.04 $ 46.46 $52.54 $50.10 $60.18 $58.36 ------ ------- ------ ------ ------ ------ Income (loss) from investment operations: Net investment income++..... 0.20 0.37 0.34 0.47 0.64 0.77 Net realized and unrealized gain (loss)................. 6.74 (11.41) (3.50) 8.35 (7.73) 3.58 ------ ------- ------ ------ ------ ------ Total income (loss) from investment operations.......... 6.94 (11.04) (3.16) 8.82 (7.09) 4.35 ------ ------- ------ ------ ------ ------ Less dividends and distributions from: Net investment income....... (0.19) (0.40) (0.32) (0.54) (0.68) (0.75) Net realized gain........... (0.91) (0.98) (2.60) (5.84) (2.31) (1.78) ------ ------- ------ ------ ------ ------ Total dividends and distributions.................. (1.10) (1.38) (2.92) (6.38) (2.99) (2.53) ------ ------- ------ ------ ------ ------ Net asset value, end of period......................... $39.88 $ 34.04 $46.46 $52.54 $50.10 $60.18 ====== ======= ====== ====== ====== ====== Total Return+................... 20.54%(1) (24.27)% (6.06)% 18.48% (12.49)% 7.59% Ratios to Average Net Assets (3): Expenses........................ 1.57%(2) 1.54% 1.49% 1.42% 1.15% 1.11% Net investment income........... 1.05%(2) 0.92% 0.70% 0.88% 1.04% 1.29% Supplemental Data: Net assets, end of period, in millions....................... $6,688 $6,020 $9,865 $11,819 $12,869 $18,061 Portfolio turnover rate......... 12%(1) 7% 0% 1% 4% 13%
- --------------------- * Year ended February 29. ++ The per share amounts were computed using an average number of shares outstanding during the period. + Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period. (1) Not annualized. (2) Annualized. (3) Reflects overall Fund ratios for investment income and non-class specific expenses.
See Notes to Financial Statements 17 Morgan Stanley Dividend Growth Securities Inc. FINANCIAL HIGHLIGHTS continued
FOR THE SIX FOR THE YEAR ENDED FEBRUARY 28, MONTHS ENDED --------------------------------------------------- AUGUST 31, 2003 2003 2002 2001 2000* 1999 --------------- ------- -------- -------- -------- -------- (unaudited) Class C Shares Selected Per Share Data: Net asset value, beginning of period...... $33.92 $ 46.32 $52.44 $49.96 $60.02 $58.28 ------ ------- ------ ------ ------ ------ Income (loss) from investment operations: Net investment income++............... 0.20 0.37 0.35 0.50 0.47 0.59 Net realized and unrealized gain (loss)................................ 6.72 (11.38) (3.49) 8.32 (7.70) 3.56 ------ ------- ------ ------ ------ ------ Total income (loss) from investment operations............................... 6.92 (11.01) (3.14) 8.82 (7.23) 4.15 ------ ------- ------ ------ ------ ------ Less dividends and distributions from: Net investment income................. (0.19) (0.41) (0.38) (0.50) (0.52) (0.63) Net realized gain..................... (0.91) (0.98) (2.60) (5.84) (2.31) (1.78) ------ ------- ------ ------ ------ ------ Total dividends and distributions......... (1.10) (1.39) (2.98) (6.34) (2.83) (2.41) ------ ------- ------ ------ ------ ------ Net asset value, end of period............ $39.74 $ 33.92 $46.32 $52.44 $49.96 $60.02 ====== ======= ====== ====== ====== ====== Total Return+............................. 20.53%(1) (24.26)% (6.05)% 18.54% (12.73)% 7.26% Ratios to Average Net Assets (3): Expenses.................................. 1.57%(2) 1.54% 1.48% 1.37% 1.43% 1.43% Net investment income..................... 1.05%(2) 0.92% 0.71% 0.93% 0.76% 0.97% Supplemental Data: Net assets, end of period, in thousands... $99,533 $82,544 $124,976 $139,320 $135,496 $144,425 Portfolio turnover rate................... 12%(1) 7% 0% 1% 4% 13%
- --------------------- * Year ended February 29. ++ The per share amounts were computed using an average number of shares outstanding during the period. + Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period. (1) Not annualized. (2) Annualized. (3) Reflects overall Fund ratios for investment income and non-class specific expenses.
See Notes to Financial Statements 18 Morgan Stanley Dividend Growth Securities Inc. FINANCIAL HIGHLIGHTS continued
FOR THE SIX FOR THE YEAR ENDED FEBRUARY 28, MONTHS ENDED ---------------------------------------------------- AUGUST 31, 2003 2003 2002 2001 2000* 1999 --------------- -------- -------- -------- -------- -------- (unaudited) Class D Shares Selected Per Share Data: Net asset value, beginning of period..... $34.03 $ 46.47 $52.59 $50.16 $60.26 $58.43 ------ ------- ------ ------ ------ ------ Income (loss) from investment operations: Net investment income++.............. 0.39 0.77 0.83 0.97 1.09 1.17 Net realized and unrealized gain (loss)............................... 6.73 (11.41) (3.53) 8.35 (7.76) 3.59 ------ ------- ------ ------ ------ ------ Total income (loss) from investment operations.............................. 7.12 (10.64) (2.70) 9.32 (6.67) 4.76 ------ ------- ------ ------ ------ ------ Less dividends and distributions from: Net investment income................ (0.37) (0.82) (0.82) (1.05) (1.12) (1.15) Net realized gain.................... (0.91) (0.98) (2.60) (5.84) (2.31) (1.78) ------ ------- ------ ------ ------ ------ Total dividends and distributions........ (1.28) (1.80) (3.42) (6.89) (3.43) (2.93) ------ ------- ------ ------ ------ ------ Net asset value, end of period........... $39.87 $ 34.03 $46.47 $52.59 $50.16 $60.26 ====== ======= ====== ====== ====== ====== Total Return+............................ 21.12%(1) (23.50)% (5.10)% 19.60% (11.85)% 8.33% Ratios to Average Net Assets (3): Expenses................................. 0.57%(2) 0.54% 0.49% 0.48% 0.43% 0.43% Net investment income.................... 2.04%(2) 1.92% 1.70% 1.82% 1.76% 1.97% Supplemental Data: Net assets, end of period, in thousands............................... $483,515 $376,299 $480,234 $423,519 $405,246 $488,987 Portfolio turnover rate.................. 12%(1) 7% 0% 1% 4% 13%
- --------------------- * Year ended February 29. ++ The per share amounts were computed using an average number of shares outstanding during the period. + Calculated based on the net asset value as of the last business day of the period. (1) Not annualized. (2) Annualized. (3) Reflects overall Fund ratios for investment income and non-class specific expenses.
See Notes to Financial Statements 19 DIRECTORS Michael Bozic Charles A. Fiumefreddo Edwin J. Garn Wayne E. Hedien James F. Higgins Dr. Manuel H. Johnson Joseph J. Kearns Michael E. Nugent Philip J. Purcell Fergus Reid OFFICERS Charles A. Fiumefreddo Chairman of the Board Mitchell M. Merin President Ronald E. Robison Executive Vice President and Principal Executive Officer Barry Fink Vice President and General Counsel Joseph McAlinden Vice President Stefanie V. Chang Vice President Francis Smith Treasurer and Chief Financial Officer Thomas F. Caloia Vice President Mary E. Mullin Secretary TRANSFER AGENT Morgan Stanley Trust Harborside Financial Center, Plaza Two Jersey City, New Jersey 07311 INDEPENDENT AUDITORS Deloitte & Touche LLP Two World Financial Center New York, New York 10281 INVESTMENT MANAGER Morgan Stanley Investment Advisors Inc. 1221 Avenue of the Americas New York, New York 10020 The financial statements included herein have been taken from the records of the Fund without examination by the independent auditors and accordingly they do not express an opinion thereon. This report is submitted for the general information of 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. Investments and services offered through Morgan Stanley DW Inc., member SIPC. Morgan Stanley Distributors Inc., member NASD. (c) 2003 Morgan Stanley [MORGAN STANLEY LOGO] MORGAN STANLEY FUNDS Morgan Stanley Dividend Growth Securities Semiannual Report August 31, 2003 [MORGAN STANLEY LOGO] 37910RPT-12329I03-AP-9/03 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. [Reserved.] Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable for semiannual reports. Item 8. [Reserved.] Item 9 - 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. There were no significant changes or corrective actions with regard to significant deficiencies or material weaknesses in the Fund's internal controls or in other factors that could significantly affect the Fund's internal controls subsequent to the date of their evaluation. (b) There were no changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 10 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/ Ronald E. Robison Ronald E. Robison Principal Executive Officer October 20, 2003 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated. /s/ Ronald E. Robison Ronald E. Robison Principal Executive Officer October 20, 2003 /s/ Francis Smith Francis Smith Principal Financial Officer October 20, 2003 2 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/ Ronald E. Robison Ronald E. Robison Principal Executive Officer December 8, 2003 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated. /s/ Ronald E. Robison Ronald E. Robison Principal Executive Officer December 8, 2003 /s/ Francis Smith Francis Smith Principal Financial Officer December 8, 2003 3 EX-99.CERT 3 y92356exv99wcert.txt CERTIFICATION EXHIBIT 10 B1 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER CERTIFICATIONS I, Ronald E. Robison, 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) 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 registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual 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 3 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 20, 2003 /s/ Ronald E. Robison Ronald E. Robison Principal Executive Officer 4 EXHIBIT 10 B2 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER CERTIFICATIONS I, Francis Smith, certify that: 6. I have reviewed this report on Form N-CSR of Morgan Stanley Dividend Growth Securities Inc.; 7. 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; 8. 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; 9. 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) for the registrant and have: b) 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.] e) 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 f) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 10. 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): c) 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 5 d) 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 20, 2003 /s/ Francis Smith Francis Smith Principal Financial Officer 6 EXHIBIT 10 B3 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER CERTIFICATIONS I, Ronald E. Robison, 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) 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 registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual 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 7 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: December 8, 2003 /s/ Ronald E. Robison Ronald E. Robison Principal Executive Officer 8 EXHIBIT 10 B4 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER CERTIFICATIONS I, Francis Smith, certify that: 6. I have reviewed this report on Form N-CSR of Morgan Stanley Dividend Growth Securities Inc.; 7. 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; 8. 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; 9. 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) for the registrant and have: b) 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.] e) 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 f) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 10. 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): c) 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 9 d) 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: December 8, 2003 /s/ Francis Smith Francis Smith Principal Financial Officer 10 EX-99.906CERT 4 y92356exv99w906cert.txt CERTIFICATION 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, 2003 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 20, 2003 /s/ Ronald E. Robison --------------------------- Ronald E. Robison 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 Growth Securities Inc. and furnished to the Securities and Exchange Commission or its staff upon request. 7 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, 2003 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 20, 2003 /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. 8 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, 2003 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: December 8, 2003 /s/ Ronald E. Robison --------------------------- Ronald E. Robison 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 Growth Securities Inc. and furnished to the Securities and Exchange Commission or its staff upon request. 9 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, 2003 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: December 8, 2003 /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. 10 -----END PRIVACY-ENHANCED MESSAGE-----