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)

Ronald E. Robison
522 Fifth Avenue, New York, New York 10036
(Name and address of agent for service)

Registrant's telephone number, including area code: 212-296-6990

Date of fiscal year end: February 29, 2008

Date of reporting period: August 31, 2007

Item 1 - Report to Shareholders

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, 2007

TOTAL RETURN FOR THE 6 MONTHS ENDED AUGUST 31, 2007

<Table>
<Caption>
LIPPER
S&P LARGE-CAP
500(R) CORE FUNDS
CLASS A CLASS B CLASS C CLASS D INDEX(1) INDEX(2)

5.24% 5.30% 4.87% 5.39% 5.70% 5.65%
</Table>

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, 2007, 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

Although the stock market, as measured by the S&P 500(R) Index, finished the six
months ended August 31, 2007 in positive territory, volatility during this
period increased sharply from the relatively low levels of the past several
years. In late February, prior to the beginning of the reporting period, the
markets sustained a steep, though short-lived, decline amid early signs of the
subprime mortgage (which are loans to riskier consumers) market's problems.
Although the broad stock market resumed its advance for the next several months
and second quarter gross domestic product growth rebounded from the first
quarter's meager growth rate, the subprime market's bad news intensified as the
year progressed. Rising home foreclosures led to bankruptcies at a number of
mortgage lenders and contributed to the demise of several hedge funds invested
in subprime-related securities. As a result, credit began tightening across the
board, removing much of the low-cost liquidity that had helped support the
leveraged buyout boom and stocks' robust gains for the past several years. In
addition, consumers became more cautious on spending, as gasoline prices rose
and the housing market continued to languish.

In this more challenging environment, investors began to reassess risk, which
fueled a rotation out of the higher yielding segments of the bond market into
the relative safety of Treasury bonds. Moreover, market volatility further
extended a slide in the U.S. dollar relative to other major currencies. On
August 17, the Federal Reserve Board lowered the discount rate (the rate at
which member banks borrow from the Federal Reserve) in an attempt to help
stabilize the financial markets. Although the markets continued to be choppy,
the Fed's action bolstered investors' expectations that an increase of the
target federal funds rate would be forthcoming. Economic data at the end of
August did not portray a particularly dire situation at the time, but investors
remained

undecided as to how deeply this turbulence would affect the overall economy.

Given the increase in economic uncertainty during the period, investors
naturally sought stocks that they believed would be more likely to withstand an
economic downturn and still generate growth. As a result, investors rotated into
large-capitalization stocks (in which the Fund primarily invests) and away from
mid- and small-cap stocks, and favored growth stocks over value stocks. On a
sector basis, the energy sector was the S&P 500 Index's best performing area, as
energy prices rose again in 2007 after declining in the second half of 2006. The
technology and industrials sectors also showed strong gains, driven by the more
"cyclical" industries, or those that are more closely tied to the economic
cycle. These included computers and peripherals, communications equipment and
semiconductors companies within the technology sector, and aerospace and
machinery companies within the industrials sector. Conversely, the financials
sector was the worst performing sector during the six-month period and not
surprisingly so, given the problems in the subprime market. Additionally,
investors fled the consumer discretionary sector on concerns about the
consumers' ability to withstand the housing slump, high energy prices and a
potentially weaker economy. The utilities sector was also among the lagging
sectors during the period.

PERFORMANCE ANALYSIS

All share classes of Morgan Stanley Dividend Growth Securities Inc.
underperformed the S&P 500(R) Index and the Lipper Large-Cap Core Funds Index
for the six months ended August 31, 2007, assuming no deduction of applicable
sales charges.

The Fund's slight underperformance relative to the S&P 500 Index was partially
attributable to stock selection in the health care sector. Several holdings in
pharmaceutical stocks and a holding in health care providers and services
dampened the Fund's relative performance during the period. An underweight in
the energy sector was disadvantageous for the Fund's relative return because the
sector was among the S&P 500 Index's best performing sectors. Stock selection in
the consumer discretionary sector also had an adverse effect on relative
performance, due to the weak performances of a multi-line retailer and a few
media stocks.

However, the Fund was well served by other investments. Among the positive
contributors during the period to the Fund's return relative to the S&P 500
Index was stock selection in the consumer staples sector. Notable contributors
here included beverage, food and staples retailing, and tobacco holdings. In the
technology sector, the Fund benefited from stock selection in some of the
classically cyclical technology areas (which were bolstered by investors'
renewed interest in these stocks, as noted in the market conditions discussion)
such as computers and peripherals, communications equipment and semiconductors.
Finally, the Fund's underweight in the financial sector also helped shield the
Fund from the overall sector's losses during the period under review.

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.

<Table>
<Caption>
TOP 10 HOLDINGS

Exxon Mobil Corp. 3.6%
Procter & Gamble Co. (The) 3.4
General Electric Co. 3.3
United Technologies Corp. 3.3
PepsiCo, Inc. 3.1
Cisco Systems, Inc. 2.9
Altria Group, Inc. 2.7
Microsoft Corp. 2.6
JPMorgan Chase & Co. 2.6
Wyeth 2.5
</Table>

<Table>
<Caption>
TOP FIVE INDUSTRIES

Financial Conglomerates 8.4%
Industrial Conglomerates 7.9
Pharmaceuticals: Major 7.5
Aerospace & Defense 3.7
Oilfield Services/Equipment 3.7
</Table>

Data as of August 31, 2007. Subject to change daily. All percentages for top 10
holdings and top five industries are as a percentage of net assets. These data
are provided for informational purposes only and should not be deemed a
recommendation to buy or sell 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

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.

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) 350-6414, 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, 2007

<Table>
<Caption>
CLASS A SHARES* CLASS B SHARES** CLASS C SHARES(+) CLASS D SHARES(++)
(since 07/28/97) (since 03/30/81) (since 07/28/97) (since 07/28/97)
SYMBOL DIVAX DIVBX DIVCX DIVDX

1 YEAR 12.45%(3) 12.57%(3) 11.67%(3) 12.77%(3)
6.55(4) 8.91(4) 10.94(4) --
5 YEARS 9.53(3) 9.41(3) 8.72(3) 9.80(3)
8.36(4) 9.26(4) 8.72(4) --
10 YEARS 5.32(3) 4.95(3) 4.55(3) 5.58(3)
4.76(4) 4.95(4) 4.55(4) --
SINCE INCEPTION 4.89(3) 11.45(3) 4.12(3) 5.14(3)
4.33(4) 11.45(4) 4.12(4) --
</Table>

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
D 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.

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

++ Class D has no sales charge.

(1) The Standard & Poor's 500(R) 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.
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 is 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 03/01/07 - 08/31/07.

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.

<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD *
------------- ------------- ---------------
03/01/07 -
03/01/07 08/31/07 08/31/07
------------- ------------- ---------------

CLASS A
Actual (5.24% return)....................................... $1,000.00 $1,052.40 $4.55
Hypothetical (5% annual return before expenses)............. $1,000.00 $1,020.77 $4.48
CLASS B
Actual (5.30% return)....................................... $1,000.00 $1,053.00 $4.40
Hypothetical (5% annual return before expenses)............. $1,000.00 $1,020.92 $4.33
CLASS C
Actual (4.87% return)....................................... $1,000.00 $1,048.70 $8.42
Hypothetical (5% annual return before expenses)............. $1,000.00 $1,016.99 $8.29
CLASS D
Actual (5.39% return)....................................... $1,000.00 $1,053.90 $3.26
Hypothetical (5% annual return before expenses)............. $1,000.00 $1,022.03 $3.21
</Table>

- ------------------

* Expenses are equal to the Fund's annualized expense ratios of 0.88%, 0.85%,
1.63% and 0.63% for Class A, Class B, Class C and Class D shares,
respectively, multiplied by the average account value over the period,
multiplied by 184/365 (to reflect the one-half year period).

Because Class B shares incurred lower expenses under the 12b-1 Plan than did
Class A shares for the six months ended August 31, 2007, 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.

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 Investment Adviser 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
Fund's Administrator under the Administration Agreement, including accounting,
clerical, bookkeeping, compliance, business management and planning, and the
provision of supplies, office space and utilities at the Investment Adviser's
expense. (The Investment 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 November 30, 2006, 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 that the Adviser is
evaluating various alternatives to improve performance, including portfolio
management changes/additions. However, the Board concluded that the Fund's
performance was competitive with that of its performance peer group at the
present time.

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 a broker-dealer affiliate
of the Adviser receives from the Fund 12b-1 fees for distribution and
shareholder services. The Board concluded that the float 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

On April 25, 2007, 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
until April 30, 2008. On June 20, 2007, the Board again considered and weighed
all of the above factors and concluded that it would be in the best interest of
the Fund and its shareholders to approve renewal of the Management Agreement to
continue until June 30, 2008.

Morgan Stanley Dividend Growth Securities Inc.
PORTFOLIO OF INVESTMENTS - AUGUST 31, 2007 (UNAUDITED)

<Table>
<Caption>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------

Common Stocks (99.0%)
Aerospace & Defense
(3.7%)
440,408 Boeing Co. (The)....... $ 42,587,454
780,164 Northrop Grumman
Corp. ................ 61,508,130
278,000 Raytheon Co. .......... 17,052,520
--------------
121,148,104
--------------
Aluminum (1.6%)
1,440,400 Alcoa, Inc. ........... 52,617,812
--------------
Apparel/Footwear (1.1%)
436,392 V.F. Corp. ............ 34,845,901
--------------
Beverages: Alcoholic
(0.5%)
194,179 Diageo PLC (ADR)
(United Kingdom)...... 16,586,770
--------------
Beverages: Non-
Alcoholic (3.1%)
1,488,103 PepsiCo, Inc. ......... 101,235,647
--------------
Cable/Satellite TV
(0.3%)
359,800 Comcast Corp. (Class
A)*................... 9,387,182
--------------
Chemicals: Agricultural
(0.9%)
399,300 Monsanto Co. .......... 27,847,182
--------------
Computer Communications
(2.9%)
2,954,450 Cisco Systems, Inc.*... 94,306,044
--------------
Computer Peripherals
(2.3%)
3,808,602 EMC Corp.*............. 74,877,115
--------------
Computer Processing
Hardware (1.2%)
1,380,477 Dell Inc.*............. 38,998,475
--------------
Contract Drilling
(1.0%)
1,033,600 Nabors Industries, Ltd.
(Bermuda)*............ 30,584,224
--------------
</Table>

<Table>
<Caption>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------

Data Processing
Services (2.1%)
1,485,774 Automatic Data
Processing, Inc. ..... $ 67,959,303
--------------
Department Stores
(0.6%)
652,481 Macy's, Inc. .......... 20,696,697
--------------
Discount Stores (1.8%)
892,089 Target Corp. .......... 58,815,428
--------------
Drugstore Chains (1.8%)
1,164,611 CVS Caremark Corp. .... 44,045,588
2,963,400 Rite Aid Corp.*........ 15,024,438
--------------
59,070,026
--------------
Electric Utilities
(1.5%)
691,598 Exelon Corp. .......... 48,875,231
--------------
Electronic Production
Equipment (0.9%)
1,302,700 Applied Materials,
Inc. ................. 27,825,672
--------------
Finance/Rental/ Leasing
(0.6%)
279,500 Fannie Mae............. 18,337,995
--------------
Financial Conglomerates
(8.4%)
834,390 American Express
Co. .................. 48,911,942
1,696,805 Citigroup, Inc. ....... 79,546,218
1,860,300 JPMorgan Chase &
Co. .................. 82,820,556
669,315 Prudential Financial,
Inc. ................. 60,091,101
--------------
271,369,817
--------------
Food: Major Diversified
(0.7%)
694,946 Kraft Foods Inc. (Class
A).................... 22,279,969
--------------
Home Improvement Chains
(0.6%)
464,500 Home Depot, Inc.
(The)................. 17,794,995
--------------
</Table>

11
See Notes to Financial Statements

Morgan Stanley Dividend Growth Securities Inc.
PORTFOLIO OF INVESTMENTS - AUGUST 31, 2007 (UNAUDITED) continued

<Table>
<Caption>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------

Hotels/Resorts/
Cruiselines (0.2%)
116,367 Starwood Hotels &
Resorts Worldwide,
Inc. ................. $ 7,112,351
--------------
Household/Personal Care
(3.4%)
1,694,002 Procter & Gamble Co.
(The)................. 110,635,271
--------------
Industrial
Conglomerates (7.9%)
474,100 3M Co. ................ 43,138,359
2,759,433 General Electric
Co. .................. 107,259,161
1,420,244 United Technologies
Corp. ................ 105,992,810
--------------
256,390,330
--------------
Information Technology
Services (1.7%)
1,366,940 Accenture Ltd. (Class
A) (Bermuda).......... 56,331,597
--------------
Integrated Oil (3.6%)
1,363,083 Exxon Mobil Corp. ..... 116,857,106
--------------
Internet Software/
Services (0.5%)
31,224 Google Inc. (Class
A)*................... 16,088,166
--------------
Investment Banks/
Brokers (3.3%)
224,634 Goldman Sachs Group,
Inc. (The)............ 39,537,830
574,300 Lehman Brothers
Holdings Inc. ........ 31,488,869
477,440 Merrill Lynch & Co.,
Inc. ................. 35,187,328
--------------
106,214,027
--------------
Life/Health Insurance
(1.0%)
251,260 Lincoln National
Corp. ................ 15,296,709
283,208 MetLife, Inc. ......... 18,139,472
--------------
33,436,181
--------------
</Table>

<Table>
<Caption>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------

Major Banks (2.0%)
1,620,338 Bank of New York Mellon
Corp. ................ $ 65,510,265
--------------
Major
Telecommunications
(3.3%)
1,280,347 AT&T Inc. ............. 51,047,435
1,893,900 Sprint Nextel Corp. ... 35,832,588
513,200 Verizon Communications,
Inc. ................. 21,492,816
--------------
108,372,839
--------------
Media Conglomerates
(2.5%)
3,327,500 Time Warner, Inc. ..... 63,155,950
469,216 Viacom Inc. (Class
B)*................... 18,515,263
--------------
81,671,213
--------------
Medical Specialties
(1.9%)
108,531 Alcon, Inc.
(Switzerland)......... 14,679,903
491,200 Medtronic, Inc. ....... 25,955,008
401,486 Thermo Fisher
Scientific, Inc.*..... 21,772,586
--------------
62,407,497
--------------
Multi-Line Insurance
(2.0%)
1,000,998 American International
Group, Inc. .......... 66,065,868
--------------
Office Equipment/
Supplies (1.3%)
949,700 Pitney Bowes Inc. ..... 42,423,099
--------------
Oil & Gas Production
(1.0%)
596,933 XTO Energy, Inc. ...... 32,449,278
--------------
</Table>

12
See Notes to Financial Statements

Morgan Stanley Dividend Growth Securities Inc.
PORTFOLIO OF INVESTMENTS - AUGUST 31, 2007 (UNAUDITED) continued

<Table>
<Caption>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------

Oilfield Services/
Equipment (3.7%)
426,249 Cameron International
Corp.*................ $ 34,854,381
548,580 Schlumberger Ltd.
(Netherlands
Antilles)............. 52,937,970
541,619 Weatherford
International Ltd.
(Bermuda)*............ 31,619,717
--------------
119,412,068
--------------
Other Consumer Services
(1.4%)
1,361,310 eBay Inc.*............. 46,420,671
--------------
Packaged Software
(3.7%)
2,957,782 Microsoft Corp. ....... 84,977,077
1,654,800 Oracle Corp.*.......... 33,559,344
--------------
118,536,421
--------------
Pharmaceuticals: Major
(7.5%)
692,690 Abbott Laboratories.... 35,957,538
1,010,889 Johnson & Johnson...... 62,462,831
2,531,703 Pfizer, Inc. .......... 62,887,502
1,745,389 Wyeth.................. 80,811,511
--------------
242,119,382
--------------
Precious Metals (1.0%)
795,300 Newmont Mining
Corp. ................ 33,609,378
--------------
Property - Casualty
Insurers (1.5%)
633,305 XL Capital Ltd. (Class
A) (Cayman Islands)... 48,257,841
--------------
Publishing: Newspapers
(0.4%)
303,900 Gannett Co., Inc. ..... 14,283,300
--------------
Pulp & Paper (1.2%)
1,066,123 International Paper
Co. .................. 37,431,578
--------------
</Table>

<Table>
<Caption>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------

Regional Banks (0.5%)
421,600 Fifth Third Bancorp.... $ 15,046,904
--------------
Semiconductors (2.2%)
2,701,909 Intel Corp. ........... 69,574,157
--------------
Tobacco (2.7%)
1,279,411 Altria Group, Inc. .... 88,803,917
--------------
Total Common Stocks
(Cost
$2,020,919,478)........ 3,210,920,294
--------------
<Caption>
NUMBER OF
SHARES (000)
- ------------

Short-Term Investment (a) (0.6%)
Investment Company
17,851 Morgan Stanley
Institutional
Liquidity Money Market
Portfolio -
Institutional Class
(Cost $17,851,342).... 17,851,342
--------------
</Table>

<Table>

Total Investments
(Cost $2,038,770,820)
(b)....................... 99.6% 3,228,771,636
Other Assets in Excess of
Liabilities............... 0.4 12,885,250
----- --------------
Net Assets................ 100.0% $3,241,656,886
===== ==============
</Table>

- ---------------------

<Table>

ADR American Depositary Receipt.
* Non-income producing security.
(a) See Note 4 to the financial statements regarding
investments in Morgan Stanley Institutional
Liquidity Money Market Portfolio -- Institutional
Class.
(b) The aggregate cost for federal income tax purposes
approximates the aggregate cost for book purposes.
The aggregate gross unrealized appreciation is
$1,223,652,376 and the aggregate gross unrealized
depreciation is $33,651,560, resulting in net
unrealized appreciation of $1,190,000,816.
</Table>

13
See Notes to Financial Statements

Morgan Stanley Dividend Growth Securities Inc.
SUMMARY OF INVESTMENTS - AUGUST 31, 2007 (UNAUDITED)

<Table>
<Caption>
PERCENT OF
TOTAL
INDUSTRY VALUE INVESTMENTS
- ---------------------------------------------------------

Financial Conglomerates... $ 271,369,817 8.4%
Industrial
Conglomerates............ 256,390,330 7.9
Pharmaceuticals: Major.... 242,119,382 7.5
Aerospace & Defense....... 121,148,104 3.8
Oilfield
Services/Equipment....... 119,412,068 3.7
Packaged Software......... 118,536,421 3.7
Integrated Oil............ 116,857,106 3.6
Household/Personal Care... 110,635,271 3.4
Major
Telecommunications....... 108,372,839 3.4
Investment
Banks/Brokers............ 106,214,027 3.3
Beverages:
Non-Alcoholic............ 101,235,647 3.1
Computer Communications... 94,306,044 2.9
Tobacco................... 88,803,917 2.8
Media Conglomerates....... 81,671,213 2.5
Computer Peripherals...... 74,877,115 2.3
Semiconductors............ 69,574,157 2.2
Data Processing
Services................. 67,959,303 2.1
Multi-Line Insurance...... 66,065,868 2.1
Major Banks............... 65,510,265 2.0
Medical Specialties....... 62,407,497 1.9
Discount Stores........... 58,815,428 1.8
Drugstore Chains.......... 59,070,026 1.8
Information Technology
Services................. 56,331,597 1.7
Aluminum.................. 52,617,812 1.6
Electric Utilities........ 48,875,231 1.5
Property - Casualty
Insurers................. 48,257,841 1.5
</Table>

<Table>
<Caption>
PERCENT OF
TOTAL
INDUSTRY VALUE INVESTMENTS
- ---------------------------------------------------------

Other Consumer Services... 46,420,671 1.4
Office
Equipment/Supplies....... 42,423,099 1.3
Computer Processing
Hardware................. 38,998,475 1.2
Pulp & Paper.............. 37,431,578 1.2
Apparel/Footwear.......... 34,845,901 1.1
Contract Drilling......... 30,584,224 1.0
Life/Health Insurance..... 33,436,181 1.0
Oil & Gas Production...... 32,449,278 1.0
Precious Metals........... 33,609,378 1.0
Chemicals: Agricultural... 27,847,182 0.9
Electronic Production
Equipment................ 27,825,672 0.9
Food: Major Diversified... 22,279,969 0.7
Department Stores......... 20,696,697 0.6
Finance/Rental/Leasing.... 18,337,995 0.6
Home Improvement Chains... 17,794,995 0.6
Investment Company........ 17,851,342 0.6
Beverages: Alcoholic...... 16,586,770 0.5
Internet
Software/Services........ 16,088,166 0.5
Regional Banks............ 15,046,904 0.5
Publishing: Newspapers.... 14,283,300 0.4
Cable/Satellite TV........ 9,387,182 0.3
Hotels/Resorts/Cruiselines.. 7,112,351 0.2
-------------- -----
$3,228,771,636 100.0%
============== =====
</Table>

14
See Notes to Financial Statements

Morgan Stanley Dividend Growth Securities Inc.
FINANCIAL STATEMENTS

Statement of Assets and Liabilities
August 31, 2007 (unaudited)

<Table>

Assets:
Investments in securities, at value (cost $2,020,919,478)... $3,210,920,294
Investments in affiliate (cost $17,851,342)................. 17,851,342
Cash........................................................ 52,517
Receivable for:
Investments sold........................................ 9,986,129
Dividends............................................... 5,526,186
Foreign withholding taxes reclaimed..................... 560,794
Capital stock sold...................................... 290,797
Interest................................................ 2,719
Prepaid expenses and other assets........................... 219,664
Receivable from Distributor................................. 3,894,632
--------------
Total Assets............................................ 3,249,305,074
--------------
Liabilities:
Payable for:
Capital stock redeemed.................................. 3,503,312
Distribution fee........................................ 2,499,440
Investment advisory fee................................. 1,098,851
Administration fee...................................... 219,591
Transfer agent fee...................................... 58
Accrued expenses and other payables......................... 326,936
--------------
Total Liabilities....................................... 7,648,188
--------------
Net Assets.............................................. $3,241,656,886
==============
Composition of Net Assets:
Paid-in-capital............................................. $1,607,401,503
Net unrealized appreciation................................. 1,190,000,816
Accumulated undistributed net investment income............. 9,126,396
Accumulated undistributed net realized gain................. 435,128,171
--------------
Net Assets.............................................. $3,241,656,886
==============
Class A Shares:
Net Assets.................................................. $76,121,023
Shares Outstanding (500,000,000 authorized, $.01 par
value)..................................................... 3,646,787
Net Asset Value Per Share............................... $20.87
==============
Maximum Offering Price Per Share,
(net asset value plus 5.54% of net asset value)......... $22.03
==============
Class B Shares:
Net Assets.................................................. $2,877,892,910
Shares Outstanding (500,000,000 authorized, $.01 par
value)..................................................... 136,902,698
Net Asset Value Per Share............................... $21.02
==============
Class C Shares:
Net Assets.................................................. $53,791,856
Shares Outstanding (500,000,000 authorized, $.01 par
value)..................................................... 2,586,510
Net Asset Value Per Share............................... $20.80
==============
Class D Shares:
Net Assets.................................................. $233,851,097
Shares Outstanding (500,000,000 authorized, $.01 par
value)..................................................... 11,189,986
Net Asset Value Per Share............................... $20.90
==============
</Table>

15
See Notes to Financial Statements

Morgan Stanley Dividend Growth Securities Inc.
FINANCIAL STATEMENTS continued

Statement of Operations
For the six months ended August 31, 2007 (unaudited)

<Table>

Net Investment Income:
Income
Dividends (net of $235,970 foreign withholding tax)......... $ 30,474,359
Interest.................................................... 625,502
Dividends from affiliate.................................... 254,033
------------
Total Income............................................ 31,353,894
------------
Expenses
Investment advisory fee..................................... 7,001,811
Distribution fee (Class A shares)........................... 1,050,405
Distribution fee (Class B shares)........................... 2,577,211
Distribution fee (Class C shares)........................... 292,398
Transfer agent fees and expenses............................ 2,088,239
Administration fee.......................................... 1,412,315
Shareholder reports and notices............................. 269,769
Custodian fees.............................................. 95,986
Professional fees........................................... 38,435
Directors' fees and expenses................................ 30,770
Registration fees........................................... 28,900
Other....................................................... 123,330
------------
Total Expenses.......................................... 15,009,569
Less: amounts waived/reimbursed............................. (2,002)
Less: expense offset........................................ (16,307)
------------
Net Expenses............................................ 14,991,260
------------
Net Investment Income................................... 16,362,634
------------
Net Realized and Unrealized Gain (Loss)
Net realized gain........................................... 218,124,049
Net change in unrealized appreciation/depreciation.......... (41,656,695)
------------
Net Gain................................................ 176,467,354
------------
Net Increase................................................ $192,829,988
============
</Table>

16
See Notes to Financial Statements

Morgan Stanley Dividend Growth Securities Inc.
FINANCIAL STATEMENTS continued

Statements of Changes in Net Assets

<Table>
<Caption>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
AUGUST 31, 2007 FEBRUARY 28, 2007
--------------- -----------------
(unaudited)

Increase (Decrease) in Net Assets:
Operations:
Net investment income....................................... $ 16,362,634 $ 48,328,544
Net realized gain........................................... 218,124,049 1,677,959,597
Net change in unrealized appreciation/depreciation.......... (41,656,695) (1,368,759,011)
-------------- ---------------
Net Increase............................................ 192,829,988 357,529,130
-------------- ---------------
Dividends and Distributions to Shareholders from:
Net investment income
Class A shares.......................................... (8,983,656) (33,648,233)
Class B shares.......................................... (13,788,949) (13,354,889)
Class C shares.......................................... (179,349) (239,627)
Class D shares.......................................... (2,010,315) (5,220,915)
Net realized gain
Class A shares.......................................... (3,174,119) (1,371,440,067)
Class B shares.......................................... (120,531,662) (467,483,245)
Class C shares.......................................... (2,278,484) (32,454,561)
Class D shares.......................................... (9,617,710) (154,851,187)
-------------- ---------------
Total Dividends and Distributions....................... (160,564,244) (2,078,692,724)
-------------- ---------------

Net increase (decrease) from capital stock transactions..... (448,533,074) 55,387,710
-------------- ---------------
Net Decrease............................................ (416,267,330) (1,665,775,884)
Net Assets:
Beginning of period......................................... 3,657,924,216 5,323,700,100
-------------- ---------------
End of Period
(Including accumulated undistributed net investment income
of $9,126,396 and $17,726,031, respectively)................ $3,241,656,886 $ 3,657,924,216
============== ===============
</Table>

17
See Notes to Financial Statements

Morgan Stanley Dividend Growth Securities Inc.
NOTES TO FINANCIAL STATEMENTS - AUGUST 31, 2007 (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 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 eighteen
months, six years 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 Fund will assess a 2% redemption fee, on Class A shares, Class B shares,
Class C shares, and Class D 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
value as determined in good faith under procedures established by and under the

Morgan Stanley Dividend Growth Securities Inc.
NOTES TO FINANCIAL STATEMENTS - AUGUST 31, 2007 (UNAUDITED) continued

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) 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 (8) 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 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

Morgan Stanley Dividend Growth Securities Inc.
NOTES TO FINANCIAL STATEMENTS - AUGUST 31, 2007 (UNAUDITED) continued

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. 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 and various states. 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's (FSAB) Interpretation
number 48 Accounting for Uncertainty in Income Taxes, on June 30, 2007. As of
August 31, 2007, this did not result in an impact to the Fund's financial
statements.

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 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 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

Morgan Stanley Dividend Growth Securities Inc.
NOTES TO FINANCIAL STATEMENTS - AUGUST 31, 2007 (UNAUDITED) continued

$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.

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 Plan's 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 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, 2007.

For the six months ended August 31, 2007, the distribution fee was accrued for
Class B shares at an annual rate of 0.22%. At August 31, 2007, 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, 2007.

Morgan Stanley Dividend Growth Securities Inc.
NOTES TO FINANCIAL STATEMENTS - AUGUST 31, 2007 (UNAUDITED) continued

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, 2007, 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,
2007, it received contingent deferred sales charges from certain redemptions of
the Fund's Class A shares, Class B shares and Class C shares of $729, $474,537
and $3,734, respectively and received $79,412 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 the Investment Adviser. Investment advisory fees paid by the Fund are
reduced by an amount equal to the advisory and administrative services 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, 2007, advisory fees paid were reduced by
$2,002 relating to the Fund's investment in Morgan Stanley Institutional
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 $254,033 for the six months ended August 31, 2007. During
the six months ended August 31, 2007, cost of purchases and sales in investments
in Morgan Stanley Institutional Liquidity Money Market Portfolio --
Institutional Class aggregated $890,416,309 and $872,564,967, respectively.

The cost of purchases and the proceeds from sales of portfolio securities,
excluding short-term investments, for the six months ended August 31, 2007
aggregated $593,879,334 and $1,189,034,021, respectively. Included in the
aforementioned transactions are purchases with other Morgan Stanley funds of
$23,645,722.

Morgan Stanley Dividend Growth Securities Inc.
NOTES TO FINANCIAL STATEMENTS - AUGUST 31, 2007 (UNAUDITED) continued

At August 31, 2007, the Fund's receivable for investments sold included
unsettled trades with Morgan Stanley & Co., Inc. of $25,302,321.

For the six months ended August 31, 2007, the Fund incurred brokerage
commissions of $380,296, 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, 2007, included in Directors'
fees and expenses in the Statement of Operations amounted to $2,972. At August
31, 2007, the Fund had an accrued pension liability of $62,130 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. 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.

Morgan Stanley Dividend Growth Securities Inc.
NOTES TO FINANCIAL STATEMENTS - AUGUST 31, 2007 (UNAUDITED) continued

As of February 28, 2007, the Fund had a net capital loss carryforward of
$23,686,880 of which $18,870,941 will expire on February 28, 2010 and $4,815,939
will expire on February 28, 2011 to offset future capital gains to the extent
provided by regulations.

As of February 28, 2007, the Fund had temporary book/tax differences primarily
attributable to capital loss deferrals on wash sales.

6. Capital Stock

Transactions in capital stock were as follows:

<Table>
<Caption>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
AUGUST 31, 2007 FEBRUARY 28, 2007
------------------------------ -----------------------------
(unaudited)
SHARES AMOUNT SHARES AMOUNT
------------ --------------- ----------- ---------------

CLASS A SHARES
Sold........................................ 188,418 $ 4,448,672 1,050,212 $ 27,325,177
Conversion from Class B..................... -- -- 3,291,256 105,886,505
Conversion to Class B....................... (109,216,124) (2,405,873,215) -- --
Reinvestment of dividends and
distributions............................. 528,149 11,167,912 56,047,622 1,287,637,674
Redeemed.................................... (8,266,468) (175,547,503) (41,801,927) (1,176,445,929)
------------ --------------- ----------- ---------------
Net increase (decrease) - Class A........... (116,766,025) (2,565,804,134) 18,587,163 244,403,427
------------ --------------- ----------- ---------------
CLASS B SHARES
Sold........................................ 329,611 7,130,916 933,743 25,090,217
Conversion to Class A....................... -- -- (3,277,154) (105,886,505)
Conversion from Class A..................... 108,477,463 2,405,873,215 -- --
Reinvestment of dividends and
distributions............................. 5,904,514 126,566,015 19,119,176 442,888,838
Redeemed.................................... (18,329,173) (399,999,672) (15,495,125) (439,531,293)
------------ --------------- ----------- ---------------
Net increase (decrease) - Class B........... 96,382,415 2,139,570,474 1,280,640 (77,438,743)
------------ --------------- ----------- ---------------
CLASS C SHARES
Sold........................................ 62,307 1,334,273 160,925 4,286,356
Reinvestment of dividends and
distributions............................. 110,129 2,338,358 1,342,799 30,732,999
Redeemed.................................... (500,348) (10,723,211) (994,190) (27,686,576)
------------ --------------- ----------- ---------------
Net increase (decrease) - Class C........... (327,912) (7,050,580) 509,534 7,332,779
------------ --------------- ----------- ---------------
CLASS D SHARES
Sold........................................ 272,809 5,857,463 891,718 25,715,168
Reinvestment of dividends and
distributions............................. 524,394 11,160,886 6,330,393 149,575,088
Redeemed.................................... (1,498,716) (32,267,183) (10,557,854) (294,200,009)
------------ --------------- ----------- ---------------
Net decrease - Class D...................... (701,513) (15,248,834) (3,335,743) (118,909,753)
------------ --------------- ----------- ---------------
Net increase (decrease) in Fund............. (21,413,035) $ (448,533,074) 17,041,594 $ 55,387,710
============ =============== =========== ===============
</Table>

Morgan Stanley Dividend Growth Securities Inc.
NOTES TO FINANCIAL STATEMENTS - AUGUST 31, 2007 (UNAUDITED) continued

7. 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.

8. Purposes of and Risks Relating to Certain Financial Instruments

The Fund may enter into forward contracts for many purposes, including to
facilitate settlement of foreign currency denominated portfolio transactions or
to manage foreign currency exposure associated with foreign currency denominated
securities.

Forward contracts involve elements of market risk in excess of the amounts
reflected in the Statement of Assets and Liabilities. The Fund bears the risk of
an unfavorable change in the foreign exchange rates underlying the forward
contracts. Risks may also rise upon entering into these contracts from the
potential inability of the counterparties to meet the terms of their contracts.

9. Accounting Pronouncement

In September 2006, Statement of Financial Accounting Standards No. 157, Fair
Value Measurements (SFAS 157), was issued and is effective for fiscal years
beginning after November 15, 2007. SFAS 157 defines fair value, establishes a
framework for measuring fair value and expands disclosures about fair value
measurements. Management is currently evaluating the impact the adoption of SFAS
157 will have on the Fund's financial statement disclosures.

Morgan Stanley Dividend Growth Securities Inc.
FINANCIAL HIGHLIGHTS

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

<Table>
<Caption>
FOR THE SIX FOR THE YEAR ENDED FEBRUARY 28,
MONTHS ENDED --------------------------------------------
AUGUST 31, 2007 2007 2006 2005 2004* 2003
--------------- ------- ------ ------ ------ -------
(unaudited)

Class A Shares:
Selected Per Share Data:
Net asset value, beginning of period................ $20.78 $ 33.51 $37.21 $42.01 $34.01 $ 46.44
------ ------- ------ ------ ------ -------
Income (loss) from investment operations:
Net investment income++......................... 0.07 0.29 0.39 0.54 0.61 0.68
Net realized and unrealized gain (loss)......... 1.03 2.07 1.69 2.08 11.62 (11.41)
------ ------- ------ ------ ------ -------
Total income (loss) from investment operations...... 1.10 2.36 2.08 2.62 12.23 (10.73)
------ ------- ------ ------ ------ -------
Less dividends and distributions from:
Net investment income........................... (0.14) (0.34) (0.47) (0.52) (0.65) (0.72)
Net realized gain............................... (0.87) (14.75) (5.31) (6.90) (3.58) (0.98)
------ ------- ------ ------ ------ -------
Total dividends and distributions................... (1.01) (15.09) (5.78) (7.42) (4.23) (1.70)
------ ------- ------ ------ ------ -------
Net asset value, end of period...................... $20.87 $ 20.78 $33.51 $37.21 $42.01 $ 34.01
====== ======= ====== ====== ====== =======
Total Return+....................................... 5.24%(1) 8.55% 5.94% 6.98% 37.26% (23.66)%
Ratios to Average Net Assets(3):
Total expenses (before expense offset).............. 0.88%(2)(4) 0.88% 0.85% 0.80% 0.80% 0.77%
Net investment income............................... 0.90%(2)(4) 1.04% 1.05% 1.41% 1.56% 1.69%
Supplemental Data:
Net assets, end of period, in millions.............. $ 76 $ 2,502 $3,412 $ 96 $ 126 $ 104
Portfolio turnover rate............................. 17%(1) 105% 44% 38% 34% 7%
</Table>

- ---------------------

<Table>

* 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.
(4) Reflects waivers of certain Fund expenses in connection with
the investments in Morgan Stanley Institutional Liquidity
Money Market Portfolio -- Institutional Class during the
period. As a result of such waivers the expenses as a
percentage of its net assets had an effect of less than
0.005%.
</Table>

26
See Notes to Financial Statements

Morgan Stanley Dividend Growth Securities Inc.
FINANCIAL HIGHLIGHTS continued

<Table>
<Caption>
FOR THE SIX FOR THE YEAR ENDED FEBRUARY 28,
MONTHS ENDED ----------------------------------------------------
AUGUST 31, 2007 2007 2006 2005 2004* 2003
--------------- -------- -------- -------- -------- --------
(unaudited)

Class B Shares:
Selected Per Share Data:
Net asset value, beginning of period................. $20.92 $33.65 $37.34 $42.08 $34.04 $46.46
------ ------ ------ ------ ------ ------
Income (loss) from investment operations:
Net investment income++.......................... 0.11 0.33 0.39 0.57 0.43 0.37
Net realized and unrealized gain (loss).......... 1.02 2.08 1.72 2.09 11.64 (11.41)
------ ------ ------ ------ ------ ------
Total income (loss) from investment operations....... 1.13 2.41 2.11 2.66 12.07 (11.04)
------ ------ ------ ------ ------ ------
Less dividends and distributions from:
Net investment income............................ (0.16) (0.39) (0.49) (0.50) (0.45) (0.40)
Net realized gain................................ (0.87) (14.75) (5.31) (6.90) (3.58) (0.98)
------ ------ ------ ------ ------ ------
Total dividends and distributions.................... (1.03) (15.14) (5.80) (7.40) (4.03) (1.38)
------ ------ ------ ------ ------ ------
Net asset value, end of period....................... $21.02 $20.92 $33.65 $37.34 $42.08 $34.04
====== ====== ====== ====== ====== ======
Total Return+........................................ 5.30%(1) 8.66% 6.03% 7.03% 36.62% (24.27)%
Ratios to Average Net Assets(3):
Total expenses (before expense offset)............... 0.85%(2)(4) 0.75% 0.75% 0.75%(5) 1.28%(5) 1.54%
Net investment income................................ 0.93%(2)(4) 1.17% 1.15% 1.47%(5) 1.08%(5) 0.92%
Supplemental Data:
Net assets, end of period, in millions............... $2,878 $ 848 $1,320 $5,877 $7,040 $6,020
Portfolio turnover rate.............................. 17%(1) 105% 44% 38% 34% 7%
</Table>

- ---------------------

<Table>

<Table>
<Caption>
PERIOD ENDED EXPENSE RATIO NET INVESTMENT INCOME RATIO
------------ ------------- ---------------------------

February 28, 2005 0.85% 1.37%
February 29, 2004 1.56 0.80
</Table>

27
See Notes to Financial Statements

Morgan Stanley Dividend Growth Securities Inc.
FINANCIAL HIGHLIGHTS continued

Class C Shares:
Selected Per Share Data:
Net asset value, beginning of period................ $20.71 $ 33.42 $37.11 $41.89 $33.92 $ 46.32
------ ------- ------ ------ ------ -------
Income (loss) from investment operations:
Net investment income++......................... 0.02 0.08 0.11 0.27 0.31 0.37
Net realized and unrealized gain (loss)......... 1.01 2.06 1.71 2.07 11.60 (11.38)
------ ------- ------ ------ ------ -------
Total income (loss) from investment operations...... 1.03 2.14 1.82 2.34 11.91 (11.01)
------ ------- ------ ------ ------ -------
Less dividends and distributions from:
Net investment income........................... (0.07) (0.10) (0.20) (0.22) (0.36) (0.41)
Net realized gain............................... (0.87) (14.75) (5.31) (6.90) (3.58) (0.98)
------ ------- ------ ------ ------ -------
Total dividends and distributions................... (0.94) (14.85) (5.51) (7.12) (3.94) (1.39)
------ ------- ------ ------ ------ -------
Net asset value, end of period...................... $20.80 $ 20.71 $33.42 $37.11 $41.89 $ 33.92
====== ======= ====== ====== ====== =======
Total Return+....................................... 4.87%(1) 7.74% 5.21% 6.15% 36.25% (24.26)%
Ratios to Average Net Assets(3):
Total expenses (before expense offset).............. 1.63%(2)(4) 1.64% 1.59% 1.52% 1.56% 1.54%
Net investment income............................... 0.15%(2)(4) 0.28% 0.31% 0.70% 0.80% 0.92%
Supplemental Data:
Net assets, end of period, in millions.............. $ 54 $ 60 $ 80 $ 103 $ 118 $ 83
Portfolio turnover rate............................. 17%(1) 105% 44% 38% 34% 7%
</Table>

- ---------------------------------------------------

<Table>

28
See Notes to Financial Statements

Morgan Stanley Dividend Growth Securities Inc.
FINANCIAL HIGHLIGHTS continued

<Table>
<Caption>
FOR THE SIX FOR THE YEAR ENDED FEBRUARY 28,
MONTHS ENDED -----------------------------------------------------
AUGUST 31, 2007 2007 2006 2005 2004* 2003
--------------- -------- --------- -------- -------- --------
(unaudited)

Class D Shares:
Selected Per Share Data:
Net asset value, beginning of period.......... $ 20.81 $ 33.54 $ 37.23 $ 42.04 $ 34.03 $ 46.47
-------- ------- --------- ------- ------- --------
Income (loss) from investment operations:
Net investment income++................... 0.12 0.38 0.46 0.65 0.70 0.77
Net realized and unrealized gain (loss)... 1.02 2.06 1.71 2.06 11.63 (11.41)
-------- ------- --------- ------- ------- --------
Total income (loss) from investment
operations................................... 1.14 2.44 2.17 2.71 12.33 (10.64)
-------- ------- --------- ------- ------- --------
Less dividends and distributions from:
Net investment income..................... (0.18) (0.42) (0.55) (0.62) (0.74) (0.82)
Net realized gain......................... (0.87) (14.75) (5.31) (6.90) (3.58) (0.98)
-------- ------- --------- ------- ------- --------
Total dividends and distributions............. (1.05) (15.17) (5.86) (7.52) (4.32) (1.80)
-------- ------- --------- ------- ------- --------
Net asset value, end of period................ $ 20.90 $ 20.81 $ 33.54 $ 37.23 $ 42.04 $ 34.03
======== ======= ========= ======= ======= ========
Total Return+................................. 5.39%(1) 8.84% 6.22% 7.22% 37.58% (23.50)%
Ratios to Average Net Assets(3):
Total expenses (before expense offset)........ 0.63%(2)(4) 0.64% 0.60% 0.56% 0.56% 0.54%
Net investment income......................... 1.15%(2)(4) 1.28% 1.30% 1.66% 1.80% 1.92%
Supplemental Data:
Net assets, end of period, in millions........ $ 234 $ 247 $ 511 $ 589 $ 588 $ 376
Portfolio turnover rate....................... 17%(1) 105% 44% 38% 34% 7%
</Table>

- ---------------------------------------------------

<Table>

* 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.
(4) Reflects waivers of certain Fund expenses in connection with
the investments in Morgan Stanley Institutional Liquidity
Money Market Portfolio -- Institutional Class during the
period. As a result of such waivers the expenses as a
percentage of its net assets had an effect of less than
0.005%.
</Table>

29
See Notes to Financial Statements

(This Page Intentionally Left Blank)

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

Ronald E. Robison
President and Principal Executive Officer

J. David Germany
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, New York 10019

COUNSEL TO THE INDEPENDENT DIRECTORS

Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036

INVESTMENT ADVISER

Morgan Stanley Investment Advisors Inc.
522 Fifth Avenue
New York, New York 10036

The financial statements included herein have been taken from the records of the
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

[MORGAN STANLEY LOGO]

MORGAN STANLEY FUNDS

Morgan Stanley
Dividend Growth
Securities Inc.

Semiannual Report
August 31, 2007

[MORGAN STANLEY LOGO]

DIVSAN IU07-04177P-Y08/07

Item 2. Code of Ethics.

Not applicable for semiannual reports.

Item 3. Audit Committee Financial Expert.

Not applicable for semiannual reports.

Item 4. Principal Accountant Fees and Services

Not applicable for semiannual reports.

Item 5. Audit Committee of Listed Registrants.

Not applicable for semiannual reports.

Item 6.

Refer to Item 1.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.

Not applicable for semiannual reports.

Item 8. Portfolio Managers of Closed-End Management Investment Companies

Applicable only to reports 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/ Ronald E. Robison
Ronald E. Robison
Principal Executive Officer
October 18, 2007

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 18, 2007

/s/ Francis Smith
Francis Smith
Principal Financial Officer
October 18, 2007