N-Q 1 file1.htm FORM N-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number: 811-02978

Morgan Stanley Focus Growth Fund

(Exact name of registrant as specified in charter)

 

522 Fifth Avenue, New York, New York
(Address of principal executive offices) 		  10036
(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: December 31, 2007

Date of reporting period: September 30, 2007

Item 1. Schedule of Investments.

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

 

 


 

Morgan Stanley Focus Growth Fund

Portfolio of Investments September 30, 2007 (unaudited)

 

NUMBER
OF SHARES

 

 

 

 

 

 

 

VALUE

 

 

 

Common Stocks (93.7%)

 

 

 

 

 

 

 

 

 

 

Air Freight/Couriers (4.6%)

 

 

 

 

 

 

 

 

1,462,167

 

C.H. Robinson Worldwide, Inc.

 

 

 

 

 

$

79,381,046

 

1,342,369

 

Expeditors International of Washington, Inc.

 

 

 

 

 

 

63,494,054

 

 

 

 

 

 

 

 

 

 

142,875,100

 

 

 

Apparel/Footwear Retail (2.4%)

 

 

 

 

 

 

 

 

914,960

 

Abercrombie & Fitch Co. (Class A)

 

 

 

 

 

 

73,837,272

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broadcasting (3.1%)

 

 

 

 

 

 

 

 

3,987,947

 

Grupo Televisa S.A. (ADR) (Mexico)

 

 

 

 

 

 

96,388,679

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Casino/Gaming (4.8%)

 

 

 

 

 

 

 

 

938,911

 

Wynn Resorts, Ltd.

 

*

 

 

 

 

147,934,817

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chemicals: Agricultural (6.7%)

 

 

 

 

 

 

 

 

2,434,322

 

Monsanto Co.

 

 

 

 

 

 

208,718,768

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Computer Communications (2.5%)

 

 

 

 

 

 

 

 

2,316,491

 

Cisco Systems, Inc.

 

*

 

 

 

 

76,699,017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Computer Peripherals (0.0%)

 

 

 

 

 

 

 

 

206,600

 

Seagate Technology Inc. (Escrow) (a)

 

*

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Computer Processing Hardware (3.4%)

 

 

 

 

 

 

 

 

699,085

 

Apple Inc.

 

*

 

 

 

 

107,337,511

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discount Stores (5.9%)

 

 

 

 

 

 

 

 

1,358,499

 

Costco Wholesale Corp.

 

 

 

 

 

 

83,371,084

 

779,180

 

Sears Holdings Corp.

 

*

 

 

 

 

99,111,696

 

 

 

 

 

 

 

 

 

 

182,482,780

 

 

 

Financial Conglomerates (9.1%)

 

 

 

 

 

 

 

 

1,928,967

 

American Express Co.

 

 

 

 

 

 

114,522,771

 

4,357,978

 

Brookfield Asset Management Inc. (Class A) (Canada)

 

 

 

 

 

 

167,782,153

 

 

 

 

 

 

 

 

 

 

282,304,924

 

 

 

Financial Publishing/Services (2.3%)

 

 

 

 

 

 

 

 

1,391,940

 

Moody’s Corp.

 

 

 

 

 

 

70,153,776

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hotels/Resorts/Cruiselines (2.1%)

 

 

 

 

 

 

 

 

723,903

 

Accor S.A. (France)

 

 

 

 

 

 

64,288,134

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Internet Retail (6.0%)

 

 

 

 

 

 

 

 

2,010,603

 

Amazon.com, Inc.

 

*

 

 

 

 

187,287,669

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Internet Software/Services (5.8%)

 

 

 

 

 

 

 

 

320,445

 

Google Inc. (Class A)

 

*

 

 

 

 

181,778,835

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment Banks/Brokers (2.6%)

 

 

 

 

 

 

 

 

137,699

 

CME Group Inc.

 

 

 

 

 

 

80,877,508

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Miscellaneous Commercial Services (2.1%)

 

 

 

 

 

 

 

 

861,406

 

Corporate Executive Board Co. (The)

 

 

 

 

 

 

63,950,781

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Multi-Line Insurance (1.5%)

 

 

 

 

 

 

 

 

971,700

 

Loews Corp.

 

 

 

 

 

 

46,981,695

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oil & Gas Production (5.3%)

 

 

 

 

 

 

 

 

2,660,739

 

Ultra Petroleum Corp. (Canada)

 

*

 

 

 

 

165,072,248

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Consumer Services (5.4%)

 

 

 

 

 

 

 

 

4,295,029

 

eBay Inc.

 

*

 

 

 

 

167,592,032

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Personnel Services (1.2%)

 

 

 

 

 

 

 

 

1,151,979

 

Monster Worldwide Inc.

 

*

 

 

 

 

39,236,405

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property - Casualty Insurers (2.5%)

 

 

 

 

 

 

 

 

19,868

 

Berkshire Hathaway Inc. (Class B)

 

*

 

 

 

 

78,518,336

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

Restaurants (3.2%)

 

 

 

 

 

 

 

 

3,815,247

 

Starbucks Corp.

 

*

 

 

 

 

99,959,471

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Steel (2.1%)

 

 

 

 

 

 

 

 

1,107,887

 

Nucor Corp.

 

 

 

 

 

 

65,886,040

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Telecommunication Equipment (4.2%)

 

 

 

 

 

 

 

 

1,322,894

 

Research in Motion Ltd. (Canada)

 

*

 

 

 

 

130,371,204

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wholesale Distributors (0.2%)

 

 

 

 

 

 

 

 

1,592,000

 

Li & Fung Ltd. (Bermuda)

 

 

 

 

 

 

6,759,737

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wireless Telecommunications (4.7%)

 

 

 

 

 

 

 

 

2,269,905

 

America Movil SAB de C.V. (Series L) (ADR) (Mexico)

 

 

 

 

 

 

145,273,920

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Common Stocks

 

 

 

 

 

 

 

 

 

 

(Cost $2,232,657,009)

 

 

 

 

 

 

2,912,566,659

 

 

 

 

 

 

 

 

 

 

 

 

NUMBER OF
SHARES (000)

 

 

 

 

 

 

 

 

 

 

 

 

Short-Term Investment (b) (0.9%)

 

 

 

 

 

 

 

 

 

 

Investment Company

 

 

 

 

 

 

 

 

27,996

 

Morgan Stanley Institutional Liquidity Money Market Portfolio - Institutional Class (Cost $27,995,559)

 

 

 

 

 

 

27,995,559

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Investments

 

 

 

 

 

 

 

 

 

 

(Cost $2,260,652,568) (c)

 

 

 

94.6%

 

 

2,940,562,218

 

 

 

Other Assets in Excess of Liabilities

 

 

 

5.4

 

 

167,701,385

 

 

 

Net Assets

 

 

 

100.0%

 

 

$3,108,263,603

 

 

 

 

 

 

 

 

 

 

 

 
______________

ADR

American Depositary Receipt.

*

Non-income producing security.

(a)

A security with total market value equal to $0 has been valued at its fair value as determined in good faith under procedures established by and under the general supervision of the Fund’s Trustees.

(b)

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 service fees paid by Morgan Stanley Institutional Liquidity Money Market Portfolio - Institutional Class with respect to assets invested by the Fund in Morgan Stanley Institutional Liquidity Money Market Portfolio - Institutional Class. Income distributions earned by the Fund totaled $101,306 for the period ended September 30, 2007.

(c)

The aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $754,219,977 and the aggregate gross unrealized depreciation is $74,310,327 resulting in net unrealized appreciation of $679,909,650.

 

 


Forward Foreign Currency Contracts Open at September 30, 2007:

 

 

CONTRACTS
TO DELIVER

 

IN
EXCHANGE
FOR

 

DELIVERY
DATE

 

UNREALIZED
APPRECIATION
(DEPRECIATION)

 

$

4,070,378

 

HKD 

31,570,668

 

 

10/2/2007

 

$

(8,223

)

EUR

7,925,269

 

$

11,264,185

 

 

10/2/2007

 

 

(17,436

)

$

2,745,028

 

HKD

21,322,281

 

 

10/3/2007

 

 

1,591

 

 

 

 

 

Net Unrealized Depreciation

 

$

(24,068

)

 

Currency Abbreviations:

 

EUR

 

Euro.

 

HKD

 

Hong Kong Dollar.

 

 


Item 2. Controls and Procedures.

(a) The Fund’s principal executive officer and principal financial officer have concluded that the Fund’s disclosure controls and procedures are sufficient to ensure that information required to be disclosed by the Fund in this Form N-Q was recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, based upon such officers’ evaluation of these controls and procedures as of a date within 90 days of the filing date of the report.

(b) There were no changes in the Fund’s internal control over financial reporting that occurred during the registrant’s fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Fund’s internal control over financial reporting.

Item 3. Exhibits.

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

 

 

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 Focus Growth Fund

 

 

 


/s/ Ronald E. Robison

 

 

Ronald E. Robison

 

 

 

Principal Executive Officer

 

 

 

November 20, 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

 

 

 

November 20, 2007

 

 

 

 

/s/ Francis Smith

 

 

Francis Smith

 

 

 

Principal Financial Officer

 

 

 

November 20, 2007

 

 

 

 

 

3

 


 

Exhibit 3 A1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Ronald E. Robison, certify that:

1.

I have reviewed this report on Form N-Q of Morgan Stanley Focus Growth Fund;

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

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have:

 

(a)

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

 

(b)

Omitted;

 

(c)

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

 

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

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

 

(a)

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

 

(b)

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

Date: November 20, 2007

 

 

 

 

/s/ Ronald E. Robison

 

 

 

Ronald E. Robison
Principal Executive Officer

 

 

4

 


Exhibit 3 A2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Francis Smith, certify that:

1.

I have reviewed this report on Form N-Q of Morgan Stanley Focus Growth Fund;

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

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have:

 

(a)

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

 

(b)

Omitted;

 

(c)

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

 

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

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

 

(a)

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

 

(b)

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

Date: November 20, 2007

 

 

 

 

/s/ Francis Smith

 

 

 

Francis Smith
Principal Financial Officer

 

 

5