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 811-21381
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FIRST TRUST VALUE LINE(R) DIVIDEND FUND
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(Exact name of registrant as specified in charter)
1001 Warrenville Road, Suite 300
LISLE, IL 60532
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(Address of principal executive offices) (Zip code)
W. Scott Jardine
First Trust Portfolios, LP
1001 Warrenville Road, Suite 300
LISLE, IL 60532
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(Name and address of agent for service)
registrant's telephone number, including area code: 630-241-4141
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Date of fiscal year end: MAY 31, 2005
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Date of reporting period: NOVEMBER 30, 2004
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
FIRST TRUST VALUE LINE(R) DIVIDEND FUND
SEMI-ANNUAL REPORT
FOR THE SIX MONTHS ENDED NOVEMBER 30, 2004
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Table of Contents
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FIRST TRUST VALUE LINE(R) DIVIDEND FUND
SEMI-ANNUAL REPORT
NOVEMBER 30, 2004
Shareholder Letter ........................................................ 1
Portfolio Components ...................................................... 2
Portfolio of Investments .................................................. 3
Statement of Assets and Liabilities ....................................... 8
Statement of Operations ................................................... 9
Statement of Changes in Net Assets ........................................ 10
Financial Highlights ...................................................... 11
Notes to Financial Statements ............................................. 12
Dividend Reinvestment Plan ................................................ 15
Proxy Voting Policies and Procedures ...................................... 16
Portfolio Holdings ........................................................ 16
HOW TO READ THIS REPORT
This report contains information that can help you evaluate your investment. It
includes details about the First Trust Value Line(R) Dividend Fund (the "Fund")
and presents data and analysis that provide insight into the Fund's performance
and investment approach.
By reading the letter from the Fund's President, James A. Bowen, you will obtain
an understanding of how the market environment affected the Fund's performance.
The statistical information that follows can help you understand the Fund's
performance and characteristics compared to that of relevant benchmarks.
It is important to keep in mind that the opinions expressed by Mr. Bowen are
just that: informed opinions. They should not be considered to be promises or
advice. The opinions, like the statistics, cover the period through the date on
the cover of this report. Of course, the risks of investing in the Fund are
spelled out in the prospectus.
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Shareholder Letter
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FIRST TRUST VALUE LINE(R) DIVIDEND FUND
SEMI-ANNUAL REPORT
NOVEMBER 30, 2004
Dear Shareholders:
The First Trust Value Line(R) Dividend Fund (the "Fund") commenced trading on
the American Stock Exchange on August 29, 2003, under the ticker symbol FVD,
which means our first anniversary has come and gone. Though we are disappointed
that the Fund's market share price has traded at a 10% to 15% discount to its
net asset value (NAV) for some time, and the discount as of January 11, 2005 was
12.7%, we are pleased with the performance of the strategy itself. The Fund's
year-end distribution of $1.01 per share, in our opinion, is a testament to its
initial success.
From a performance standpoint, the Fund posted a market share price total return
of 12.5% from May 31, 2004, through November 30, 2004, which marked the midway
point of the Fund's fiscal year. The Fund's NAV total return was up 11.1% over
the same period. Both returns outpaced the 5.7% gain posted by the S&P 500
Index.
Corporate America looks to be on solid footing heading into 2005. According to
Standard & Poor's, the non-financial companies in the S&P 500 Index are
currently sitting on $590 billion in cash and equivalents. If that amount sounds
unusually high it's because it is, especially when compared to 1999 ($260
billion), 1994 ($125 billion) and 1989 ($98 billion) levels. In fact, cash at
non-financial companies in the U.S. equaled nearly 24% of these companies'
outstanding debt for the 12-month period ended in March 2004 (when cash levels
were lower than today) - the highest ratio of cash to debt for public companies
since 1969, according to Moody's Investor Services.
Corporate coffers could grow even fatter over the next year thanks to a new
corporate tax law provision that took effect in October. It essentially provides
a one-year tax break window to those multinational corporations parking billions
in profits overseas. It is estimated, according to J.P. Morgan, that U.S.
companies currently have $650 billion parked abroad due to the hefty 35% tax
rate currently levied on foreign profits brought back into the U.S. That tax
rate would drop to 5.25% for one year. J.P. Morgan estimates that $300 billion
could flow back into the U.S. economy as a result of this tax break.
One possible use for these repatriated profits could come in the form of a
dividend distribution. Why do we believe this? Despite the high cash positions
in Corporate America today, the payout ratio, or dividends divided by
earnings-per-share, was only 35% as of the end of the third quarter.
Historically, the average is closer to 55%, according to Standard & Poor's. That
suggests that there is room for companies to either initiate a dividend or
increase their existing dividend distributions.
The performance of dividend-paying stocks has been encouraging this year.
Year-to-date through December 9, the 376 stocks in the S&P 500 Index that pay a
dividend were up 14.8%, vs. a 9.7% gain for 124 stocks that do not pay a
dividend, according to Standard & Poor's.
Please see the following page for a graphical depiction of the Fund's portfolio.
The detailed holdings are shown on the Portfolio of Investments schedule.
We appreciate your continued confidence in our Fund.
Sincerely,
/S/ JAMES A. BOWEN
James A. Bowen
President of the First Trust Value Line(R) Dividend Fund
January 12, 2005
Page 1
FIRST TRUST VALUE LINE(R) DIVIDEND FUND
PORTFOLIO COMPONENTS+
NOVEMBER 30, 2004 (UNAUDITED)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Utilities .......................................... 21.0%
Banks .............................................. 18.7%
REITS .............................................. 12.2%
Food, Beverage & Tobacco ........................... 9.9%
Capital Goods ...................................... 6.1%
Energy ............................................. 5.5%
Insurance .......................................... 4.8%
Materials .......................................... 4.2%
Household & Personal Products ...................... 3.7%
Pharmaceutical & Biotechnology ..................... 3.7%
Telecommunication Services ......................... 3.0%
Commercial Services & Supplies ..................... 1.8%
Health Care Equipment & Services ................... 1.8%
Automobiles & Components ........................... 1.2%
Media .............................................. 1.2%
Hotels, Restaurants & Leisure ...................... 0.6%
Diversified Financials ............................. 0.6%
+ Percentages are based on Total Investments; please note that the percentages
shown on the Portfolio of Investments schedules are based on net assets.
Page 2 See Notes to Financial Statements.
FIRST TRUST VALUE LINE(R) DIVIDEND FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 2004 (UNAUDITED)
MARKET
SHARES VALUE
---------- -----------
COMMON STOCKS - 99.0%
UTILITIES - 20.8%
104,071 AGL Resources, Inc. ............................. $ 3,454,117
94,586 ALLETE, Inc. ................................... 3,442,930
69,262 Ameren Corp. .................................... 3,353,666
81,230 Cinergy Corp. ................................... 3,362,110
75,898 Consolidated Edison, Inc. ....................... 3,328,127
76,984 Constellation Energy Group, Inc. ................ 3,364,201
51,684 Dominion Resources, Inc. ........................ 3,383,751
136,737 Energy East Corp. ............................... 3,441,670
51,491 Entergy Corp. ................................... 3,337,647
58,196 Equitable Resources, Inc. ....................... 3,462,662
81,307 Exelon Corp. .................................... 3,391,315
47,391 FPL Group, Inc. ................................. 3,333,009
114,061 Great Plains Energy, Inc. ....................... 3,377,346
120,062 Hawaiian Electric Industries, Inc. .............. 3,391,752
86,274 KeySpan Corp. ................................... 3,409,548
125,484 MDU Resources Group, Inc. ....................... 3,426,968
121,975 National Fuel Gas Company ....................... 3,439,695
79,378 New Jersey Resources Corp. ...................... 3,452,943
91,839 Nicor, Inc. ..................................... 3,388,859
66,547 NSTAR ........................................... 3,370,606
76,488 Peoples Energy Corp. ............................ 3,412,895
147,067 Piedmont Natural Gas Company, Inc. .............. 3,457,545
75,882 Pinnacle West Capital Corp. ..................... 3,353,984
133,299 PNM Resources, Inc. ............................. 3,391,127
77,660 Progress Energy, Inc. ........................... 3,410,051
87,903 SCANA Corp. ..................................... 3,368,443
91,303 Sempra Energy ................................... 3,376,385
101,946 The Southern Company ............................ 3,342,809
139,959 TransCanada Corp. ............................... 3,461,186
86,209 UGI Corp. ....................................... 3,498,361
130,226 Vectren Corp. ................................... 3,409,317
113,348 WGL Holdings, Inc. .............................. 3,436,711
100,256 Wisconsin Energy Corp. .......................... 3,335,517
69,513 WPS Resources Corp. ............................. 3,360,954
188,191 Xcel Energy, Inc. ............................... 3,398,729
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118,926,936
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BANKS - 18.5%
132,327 AmSouth Bancorp ................................. 3,431,239
103,664 Associated Banc-Corp. ........................... 3,444,755
74,151 Bank of America Corp. ........................... 3,430,967
73,361 Bank of Montreal ................................ 3,400,282
108,631 Bank of Nova Scotia ............................. 3,420,790
80,773 BB&T Corp. ...................................... 3,428,814
56,609 Canadian Imperial Bank of Commerce .............. 3,422,014
96,819 Capitol Federal Financial ....................... 3,415,774
50,267 City National Corp. ............................. 3,438,263
55,239 Comerica, Inc. .................................. 3,397,199
70,683 Commerce Bancshares, Inc. ....................... 3,457,098
67,419 Fifth Third Bancorp ............................. 3,395,221
See Notes to Financial Statements. Page 3
FIRST TRUST VALUE LINE(R) DIVIDEND FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 2004 (UNAUDITED)
MARKET
SHARES VALUE
---------- -----------
COMMON STOCKS - CONTINUED
BANKS - CONTINUED
78,153 First Horizon National Corp. .................... $ 3,415,286
92,878 First Midwest Bancorp, Inc. ..................... 3,486,640
118,820 Hibernia Corp., Class A ......................... 3,436,274
81,770 Marshall & Ilsley Corp. ......................... 3,408,991
67,445 Mercantile Bankshares Corp. ..................... 3,473,418
87,301 National Bank of Canada ......................... 3,415,536
91,668 National City Corp. ............................. 3,399,049
119,149 North Fork Bancorporation, Inc. ................. 3,431,491
132,888 Old National Bancorp ............................ 3,452,430
63,353 PNC Financial Services Group, Inc. .............. 3,446,403
98,226 Regions Financial Corp. ......................... 3,436,928
65,027 Royal Bank of Canada ............................ 3,422,371
47,925 SunTrust Banks, Inc. ............................ 3,417,053
125,850 Synovus Financial Corp. ......................... 3,397,950
84,705 Toronto-Dominion Bank ........................... 3,405,988
128,335 Washington Federal, Inc. ........................ 3,461,195
84,476 Washington Mutual, Inc. ......................... 3,439,018
55,133 Wells Fargo & Company ........................... 3,405,565
96,521 Wilmington Trust Corp. .......................... 3,489,234
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106,323,236
-------------
REITS - 12.1%
94,716 Archstone-Smith Trust ........................... 3,457,134
48,498 Avalonbay Communities, Inc. ..................... 3,448,208
84,043 BRE Properties, Inc., Class A ................... 3,415,507
100,813 Duke Realty Corp. ............................... 3,483,089
123,328 Equity Office Properties Trust .................. 3,385,354
101,676 Equity Residential .............................. 3,427,498
68,166 Federal Realty Investment Trust ................. 3,418,525
128,096 Health Care Property Investors, Inc. ............ 3,436,816
86,643 Healthcare Realty Trust, Inc. ................... 3,526,370
61,291 Kimco Realty Corp. .............................. 3,486,232
84,043 Liberty Property Trust .......................... 3,445,763
78,420 Mack-Cali Realty Corp. .......................... 3,430,091
129,298 New Plan Excel Realty Trust ..................... 3,423,811
84,871 Pennsylvania Real Estate Investment Trust ....... 3,458,493
90,774 Plum Creek Timber Company, Inc. ................. 3,358,638
85,334 Prologis ........................................ 3,432,987
56,065 Simon Property Group, Inc. ...................... 3,480,515
151,864 United Dominion Realty Trust, Inc. .............. 3,491,353
105,764 Washington Real Estate Investment Trust ......... 3,482,809
89,177 Weingarten Realty Investors ..................... 3,633,963
-------------
69,123,156
-------------
FOOD, BEVERAGE & TOBACCO - 9.8%
68,641 Anheuser-Busch Companies, Inc. .................. 3,438,228
72,742 Brown-Forman Corp., Class B ..................... 3,493,071
95,240 Cadbury Schweppes PLC, Sponsored ADR ............ 3,428,640
120,862 Campbell Soup Company ........................... 3,448,193
86,447 Coca-Cola Company ............................... 3,398,232
Page 4 See Notes to Financial Statements.
FIRST TRUST VALUE LINE(R) DIVIDEND FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 2004 (UNAUDITED)
MARKET
SHARES VALUE
---------- -----------
COMMON STOCKS - CONTINUED
FOOD, BEVERAGE & TOBACCO - CONTINUED
126,683 ConAgra Foods, Inc. ............................. $ 3,426,775
76,658 General Mills, Inc. ............................. 3,487,172
91,594 H.J. Heinz Company .............................. 3,403,633
76,556 Kellogg Company ................................. 3,345,497
98,988 Kraft Foods, Inc. ............................... 3,385,390
67,209 PepsiCo, Inc. ................................... 3,354,401
144,175 Sara Lee Corp. .................................. 3,385,229
76,863 The J.M. Smucker Company ........................ 3,495,729
54,436 Unilever NV ..................................... 3,429,468
92,232 Unilever PLC, Sponsored ADR ..................... 3,413,506
69,965 Universal Corp. ................................. 3,405,896
34,500 Weis Markets, Inc. .............................. 1,324,800
-------------
56,063,860
-------------
CAPITAL GOODS - 6.0%
42,986 3M Company ...................................... 3,421,256
37,131 Caterpillar, Inc. ............................... 3,399,343
51,140 Emerson Electric Company ........................ 3,417,175
97,229 General Electric Company ........................ 3,438,017
65,459 Harsco Corp. .................................... 3,479,146
71,564 Hubbell, Inc., Class B .......................... 3,478,010
78,363 Lancaster Colony Corp. .......................... 3,422,896
97,504 Lincoln Electric Holdings, Inc. ................. 3,499,419
110,159 Snap-On, Inc. ................................... 3,482,126
68,792 Teleflex, Inc. .................................. 3,473,996
-------------
34,511,384
-------------
ENERGY - 5.4%
55,884 BP PLC, Sponsored ADR ........................... 3,428,483
62,833 ChevronTexaco Corp. ............................. 3,430,682
38,134 ConocoPhillips .................................. 3,469,813
66,714 Exxon Mobil Corp. ............................... 3,419,093
86,469 Marathon Oil Corp. .............................. 3,410,337
57,135 Occidental Petroleum Corp. ...................... 3,440,098
59,719 Royal Dutch Petroleum Company ................... 3,419,510
67,684 Shell Transport & Trading Company PLC,
Sponsored ADR ................................... 3,426,164
31,280 Total SA, Sponsored ADR ......................... 3,428,288
-------------
30,872,468
-------------
INSURANCE - 4.8%
112,497 Arthur J. Gallagher & Company ................... 3,448,033
45,292 Chubb Corp. ..................................... 3,451,703
77,052 Cincinnati Financial Corp. ...................... 3,451,929
68,627 Jefferson-Pilot Corp. ........................... 3,375,762
74,633 Lincoln National Corp. .......................... 3,434,611
60,021 Mercury General Corp. ........................... 3,403,191
67,564 The Allstate Corp. .............................. 3,411,982
73,315 Unitrin, Inc. ................................... 3,492,727
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27,469,938
-------------
See Notes to Financial Statements. Page 5
FIRST TRUST VALUE LINE(R) DIVIDEND FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 2004 (UNAUDITED)
MARKET
SHARES VALUE
---------- -----------
COMMON STOCKS - CONTINUED
MATERIALS - 4.2%
57,854 Ashland, Inc. ................................... $ 3,422,064
124,983 Bemis Company ................................... 3,479,527
75,798 E. I. du Pont de Nemours and Company ............ 3,435,165
50,725 PPG Industries, Inc. ............................ 3,422,416
147,445 Sensient Technologies Corp. ..................... 3,398,607
121,759 Sonoco Products Company ......................... 3,462,826
66,329 Vulcan Materials Company ........................ 3,439,159
-------------
24,059,764
-------------
HOUSEHOLD & PERSONAL PRODUCTS - 3.6%
58,892 Avery Dennison Corp. ............................ 3,454,605
75,072 Colgate-Palmolive Company ....................... 3,452,561
54,066 Kimberly-Clark Corp. ............................ 3,439,138
116,846 Leggett & Platt, Inc. ........................... 3,487,853
64,239 Procter & Gamble Company ........................ 3,435,502
62,879 The Clorox Company .............................. 3,465,891
-------------
20,735,550
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PHARMACEUTICALS & BIOTECHNOLOGY - 3.6%
80,906 Abbott Laboratories ............................. 3,394,816
80,792 GlaxoSmithKline PLC, Sponsored ADR .............. 3,436,891
62,937 Lilly (Eli) & Company ........................... 3,356,430
124,397 Merck & Company, Inc. ........................... 3,485,604
126,870 Pfizer, Inc. .................................... 3,523,180
87,456 Wyeth ........................................... 3,486,871
-------------
20,683,792
-------------
TELECOMMUNICATION SERVICES - 3.0%
60,452 ALLTEL Corp. .................................... 3,427,024
126,683 BellSouth Corp. ................................. 3,397,638
135,235 SBC Communications, Inc. ........................ 3,403,865
100,285 Telecom Corp. of New Zealand Ltd.,
Sponsored ADR ................................ 3,481,895
83,982 Verizon Communications, Inc. .................... 3,462,578
-------------
17,173,000
-------------
COMMERCIAL SERVICES & SUPPLIES - 1.8%
159,453 ABM Industries, Inc. ............................ 3,499,993
78,689 Pitney Bowes, Inc. .............................. 3,444,218
98,960 R.R. Donnelley & Sons Company ................... 3,433,912
-------------
10,378,123
-------------
HEALTH CARE EQUIPMENT & SERVICES - 1.8%
106,681 Baxter International, Inc. ...................... 3,376,454
63,144 Hillenbrand Industries, Inc. .................... 3,472,920
57,002 Johnson & Johnson ............................... 3,438,360
-------------
10,287,734
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Page 6 See Notes to Financial Statements.
FIRST TRUST VALUE LINE(R) DIVIDEND FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 2004 (UNAUDITED)
MARKET
SHARES VALUE
---------- -----------
COMMON STOCKS - CONTINUED
AUTOMOBILES & COMPONENTS - 1.2%
79,763 Genuine Parts Company ........................... $ 3,462,512
42,911 Magna International, Inc. ....................... 3,395,547
-------------
6,858,059
-------------
MEDIA - 1.2%
79,414 Dow Jones & Company, Inc. ....................... 3,394,948
50,517 Knight-Ridder, Inc. ............................. 3,439,703
-------------
6,834,651
-------------
HOTELS, RESTAURANTS & LEISURE - 0.6%
112,718 McDonald's Corp. ................................ 3,464,951
-------------
DIVERSIFIED FINANCIALS - 0.6%
124,531 Allied Capital Corp. ............................ 3,439,546
-------------
TOTAL COMMON STOCKS ............................. 567,206,148
-------------
(Cost $493,592,108)
TOTAL INVESTMENTS - 99.0% ....................... 567,206,148
(Cost $493,592,108)*
NET OTHER ASSETS & LIABILITIES - 1.0% ........... 5,522,351
-------------
NET ASSETS - 100.0% ............................. $572,728,499
=============
--------------------------------------------------------------------------------
* Aggregate cost for federal tax purposes.
ADR American Depository Receipt
REIT Real Estate Investment Trust
See Notes to Financial Statements. Page 7
FIRST TRUST VALUE LINE(R) DIVIDEND FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 2004 (UNAUDITED)
ASSETS:
Investments, at value
(See portfolio of investments) (a): ................................................... $ 567,206,148
Cash ..................................................................................... 5,205,431
Receivable for investments sold .......................................................... 19,479,344
Dividends receivable ..................................................................... 1,611,455
Interest receivable ...................................................................... 5,986
Prepaid expenses ......................................................................... 14,950
--------------
Total Assets ........................................................................ 593,523,314
--------------
LIABILITIES:
Payable for investment securities purchased .............................................. 20,206,599
Investment advisory fee payable .......................................................... 301,277
Audit and legal fees payable ............................................................. 92,741
License fees payable ..................................................................... 89,685
Payable to administrator ................................................................. 40,368
Accrued expenses and other payables ...................................................... 64,145
--------------
Total Liabilities ................................................................... 20,794,815
--------------
NET ASSETS ............................................................................... $ 572,728,499
==============
------------------------------------------------------------------------------------------
(a) Investments, at cost $ 493,592,108
==============
NET ASSETS CONSIST OF:
Undistributed net investment income ...................................................... $ 1,764,838
Accumulated net realized gain on investments sold ........................................ 33,847,326
Net unrealized appreciation of investments ............................................... 73,614,040
Par value ................................................................................ 324,000
Paid-in capital .......................................................................... 463,178,295
--------------
Total Net Assets .................................................................... $ 572,728,499
==============
NET ASSET VALUE, per Common Share (par value $0.01 per Common Share) ..................... $ 17.68
==============
Number of Common Shares outstanding ...................................................... 32,400,000
==============
Page 8 See Notes to Financial Statements.
FIRST TRUST VALUE LINE(R) DIVIDEND FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 2004 (UNAUDITED)
INVESTMENT INCOME:
Dividends ................................................................................ $ 8,654,774
Interest ................................................................................. 17,422
--------------
Total investment income ............................................................. 8,672,196
--------------
EXPENSES:
Investment advisory fee .................................................................. 1,753,856
License fees ............................................................................. 271,157
Administration fee ....................................................................... 235,914
Audit and legal fees ..................................................................... 76,807
Custodian fees ........................................................................... 42,144
Trustees' fees and expenses .............................................................. 34,730
Printing fees ............................................................................ 24,044
Insurance expense ........................................................................ 20,384
Other .................................................................................... 39,892
--------------
Net expenses ........................................................................ 2,498,928
--------------
NET INVESTMENT INCOME .................................................................... 6,173,268
--------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Realized gain from investments sold during the period .................................... 18,467,418
Net change in unrealized appreciation/(depreciation) of investments during the period .... 31,320,069
--------------
Net realized and unrealized gain on investments .......................................... 49,787,487
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ..................................... $ 55,960,755
==============
See Notes to Financial Statements. Page 9
FIRST TRUST VALUE LINE(R) DIVIDEND FUND
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS
ENDED PERIOD
11/30/2004 ENDED
(UNAUDITED) 5/31/2004*
-------------- ------------
Net investment income .................................................................. $ 6,173,268 $ 8,630,191
Net realized gain on investments sold during the period ................................ 18,467,418 18,408,447
Net change in unrealized appreciation/(depreciation) of investments
during the period ................................................................... 31,320,069 42,293,971
-------------- --------------
Net increase in net assets resulting from operations ................................... 55,960,755 69,332,609
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income .................................................................. (5,913,000) (6,554,520)
Net realized gains ..................................................................... -- (3,599,640)
-------------- --------------
Total distributions to shareholders .................................................... (5,913,000) (10,154,160)
CAPITAL TRANSACTIONS:
Net proceeds from sale of 32,400,000 shares of Common Shares ........................... -- 463,552,295
Offering costs ......................................................................... (50,000) --
-------------- --------------
Net increase in net assets ............................................................. 49,997,755 522,730,744
NET ASSETS:
Beginning of period .................................................................... 522,730,744 --
-------------- --------------
End of period .......................................................................... $ 572,728,499 $ 522,730,744
============== ==============
Undistributed net investment income at end of period ................................... $ 1,764,838 $ 1,504,570
============== ==============
-------------------------------------------------------------------
* The Fund commenced operations on August 19, 2003.
Page 10 See Notes to Financial Statements.
FIRST TRUST VALUE LINE(R) DIVIDEND FUND
FINANCIAL HIGHLIGHTS
FOR A COMMON SHARE OUTSTANDING THROUGHOUT THE PERIOD.
SIX MONTHS
ENDED PERIOD
11/30/2004 ENDED
(UNAUDITED) 5/31/2004*
------------ -----------
Net asset value, beginning of period .............................................. $ 16.13 $ 14.33
------------ -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................................................. 0.19 0.27
Net realized and unrealized gain on investments ................................... 1.54 1.86
------------ -----------
Total from investment operations .................................................. 1.73 2.13
------------ -----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income ............................................................. (0.18) (0.20)
Net realized gains ................................................................ -- (0.11)
------------ -----------
Total from Distributions .......................................................... (0.18) (0.31)
------------ -----------
Common shares offering costs charged to paid-in capital ........................... (0.00)# (0.02)
------------ -----------
Net asset value, end of period .................................................... $ 17.68 $ 16.13
============ ===========
Market value, end of period ....................................................... $ 15.28 $ 13.76
============ ===========
TOTAL RETURN BASED ON NET ASSET VALUE (A)+ ........................................ 11.01% 15.09%
============ ===========
TOTAL RETURN BASED ON MARKET VALUE (B)+ ........................................... 12.46% (6.20)%
============ ===========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .............................................. $ 572,728 $ 522,731
Ratio of operating expenses to average net assets ................................. 0.93%** 0.93%**
Ratio of net investment income to average net assets .............................. 2.29%** 2.29%**
Portfolio turnover rate ........................................................... 29.67% 46.13%
--------------------------------------------------
* The Fund commenced operations on August 19, 2003.
** Annualized.
# Amount represents less than $0.01 per share.
(a) Total Return on net asset value is the combination of reinvested dividend
income and reinvested capital gains distributions, at prices obtained by
the Dividend Reinvestment Plan, if any, and changes in net asset value per
share.
(b) Total Return on market value is the combination of reinvested dividend
income and reinvested capital gains distributions, at prices obtained by
the Dividend Reinvestment Plan, if any, and changes in stock price per
share, all based on market price per share.
+ Total return is not annualized for periods less than one year and does not
reflect sales load.
See Notes to Financial Statements. Page 11
--------------------------------------------------------------------------------
Notes to Financial Statements
--------------------------------------------------------------------------------
FIRST TRUST VALUE LINE(R) DIVIDEND FUND
NOVEMBER 30, 2004 (UNAUDITED)
1. FUND DESCRIPTION
First Trust Value Line(R) Dividend Fund (the "Fund") is a diversified closed-end
management investment company organized as a Massachusetts business trust on
June 11, 2003 and is registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940, as amended (the "1940 Act").
The Fund's investment objective is to provide total return through a combination
of current income and capital appreciation. The Fund seeks to accomplish its
objective by investing in common stocks that pay above-average dividends and
have the potential for capital appreciation. Such common stocks will be selected
through the application of a disciplined investment strategy implemented by the
Fund's investment advisor First Trust Advisors L.P. ("First Trust"). There can
be no assurance that the Fund's investment objective will be achieved.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts and disclosures in
the financial statements. Actual results could differ from those estimates.
PORTFOLIO VALUATION:
The Fund determines the net asset value ("NAV") of its shares daily, as of the
close of regular session trading on the New York Stock Exchange ("NYSE"),
normally 4:00 p.m. Eastern time, on each day the NYSE is open for trading. The
NAV is computed by dividing the value of all assets of the Fund (including
accrued interest and dividends), less all liabilities (including accrued
expenses and dividends declared but unpaid), by the total number of shares
outstanding.
The Fund's investments are valued at market value or, in the absence of market
value with respect to any portfolio securities, at fair value as determined by,
or under the direction of the Fund's Board of Trustees. Portfolio securities
listed on any exchange other than the NASDAQ National Market ("NASDAQ") are
valued at the last sale price on the business day of which such value is being
determined. If there has been no sale on such day, the securities are valued at
the mean of the most recent bid and asked prices on such day. Securities trading
on the NASDAQ are valued at the NASDAQ Official Closing Price as determined by
NASDAQ. Portfolio securities traded on more than one securities exchange are
valued at the last sale price on the business day as of which such value is
being determined at the close of the exchange representing the principal market
for such securities. Portfolio securities traded in the over-the-counter market,
but excluding securities trading on the NASDAQ, are valued at the closing bid
prices. Short-term investments that mature in 60 days or less are valued at
amortized cost.
Foreign securities traded outside the United States are generally valued as of
the time their trading is complete, which is usually different from the close of
the NYSE. Occasionally, events affecting the value of such securities may occur
between such times and the close of the NYSE that will not be reflected in the
computation of a Fund's NAV. If events materially affecting the value of such
securities occur during such period, these securities will be valued at their
fair value according to procedures decided upon in good faith by the Fund's
Board of Trustees. All securities and other assets of the Fund initially
expressed in foreign currencies will be converted to U.S. dollars using exchange
rates in effect at the time of valuation.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME:
Securities transactions are recorded as of the trade date. Realized gains and
losses from securities transactions are recorded on the identified cost basis.
Dividend income is recorded on the ex-dividend date. Interest income is recorded
on the accrual basis.
Page 12
--------------------------------------------------------------------------------
Notes to Financial Statements - (Continued)
--------------------------------------------------------------------------------
FIRST TRUST VALUE LINE(R) DIVIDEND FUND
NOVEMBER 30, 2004 (UNAUDITED)
Securities purchased or sold on a when-issued or delayed-delivery basis may be
settled a month or more after the trade date; interest income is not accrued
until settlement date. The Fund instructs the custodian to segregate assets of
the Fund with a current value at least equal to the amount of its when-issued
purchase commitments.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income of the Fund are declared and paid quarterly
or as the Board of Trustees may determine from time to time. Distributions of
any net capital gains earned by the Fund are distributed at least annually.
Distributions will automatically be reinvested into additional Common Shares
pursuant to the Fund's Dividend Reinvestment Plan unless cash distributions are
elected by the shareholder.
Distributions from income and capital gains are determined in accordance with
income tax regulations, which may differ from accounting principles generally
accepted in the United States of America. These differences are primarily due to
differing treatments of income and gains on various investment securities held
by the Fund, timing differences and differing characterization of distributions
made by the Fund.
INCOME TAXES:
The Fund intends to qualify as a regulated investment company by complying with
the requirements under Subchapter M of the Internal Revenue Code of 1986, as
amended, and by distributing substantially all of its net investment income and
net realized gains to shareholders. Accordingly, no provision has been made for
federal or state income taxes.
EXPENSES:
The Fund will pay all expenses directly related to its operations. First Trust
has entered into a non-exclusive license agreement with Value Line(R)
Publishing, Inc. which allows for the use by First Trust of the Value Line(R)
Safety(TM) Ranking System and certain trademarks and trade names of Value
Line(R) Publishing, Inc. The Fund is a sub-licensee to this license agreement.
In exchange, Value Line(R) Publishing, Inc. receives an annual fee, payable on a
quarterly basis, equal to 10 basis points of the Fund's gross daily assets
during such calendar quarter. This license fee is paid by the Fund to First
Trust, who pays Value Line(R) Publishing, Inc. The terms of the license
agreement provide that it shall continue in effect for a term of one year and
will be automatically renewed for successive one-year terms unless either party
elects not to renew the agreement.
ORGANIZATIONAL AND OFFERING COSTS:
Organization costs consist of costs incurred to establish the Fund and enable it
to legally do business. These costs include incorporation fees, legal services
pertaining to the organization of the business and audit fees relating to the
initial registration and auditing the initial statement of assets and
liabilities, among other fees. Offering costs consist of legal fees pertaining
to the Fund's shares offered for sale, registration fees, underwriting fees, and
printing of the initial prospectus, among other fees. First Trust has paid all
organizational expenses and will pay all offering costs of the Fund (other than
sales load) that exceed $0.03 per Common Share. The Fund's share of Common Share
offering costs, $577,705 were recorded as a reduction of the proceeds from the
sale of Common Shares at May 31, 2004.
3. INVESTMENT ADVISORY FEE AND OTHER AFFILIATED TRANSACTIONS
First Trust is a limited partnership with one limited partner, Grace Partners of
DuPage L.P., and one general partner, The Charger Corporation. First Trust
serves as investment adviser to the Fund pursuant to an Investment Management
Agreement. First Trust is responsible for implementing the Fund's overall
investment strategy, including the allocation and periodic reallocation of the
portion of the Fund's assets to be invested in common stocks, and certain
administrative services necessary for the management of the Fund. For its
investment management services, First Trust is entitled to a monthly fee
calculated at an annual rate of 0.65% of the Fund's average daily net assets.
PFPC Inc. ("PFPC"), an indirect, majority-owned subsidiary of The PNC Financial
Services Group Inc., serves as the Fund's Administrator and Transfer Agent in
accordance with certain fee arrangements. PFPC Trust Company, an indirect,
majority-owned subsidiary of The PNC Financial Services Group Inc., serves as
the Fund's Custodian in accordance with certain fee arrangements.
Page 13
--------------------------------------------------------------------------------
Notes to Financial Statements - (Continued)
--------------------------------------------------------------------------------
FIRST TRUST VALUE LINE(R) DIVIDEND FUND
NOVEMBER 30, 2004 (UNAUDITED)
Effective June 7, 2004, the Trustees of the Fund approved a revised compensation
plan. Under the revised plan, the Fund pays each Trustee who is not an officer
or employee of First Trust or any of their affiliates an annual retainer of
$10,000 which includes compensation for all regular quarterly board meetings and
regular committee meetings. No additional meeting fees are paid in connection
with regular quarterly board meetings or regular committee meetings. Additional
fees of $1,000 and $500 are paid to non-interested Trustees for special board
meetings and non-regular committee meetings, respectively. These additional fees
are shared by the funds in the First Trust fund complex that participate in the
particular meeting and are not per fund fees. Trustees are also reimbursed for
travel and out-of-pocket expenses in connection with all meetings. The Trustees
adopted the revised plan because the increase in the number of funds in the
First Trust complex had the effect of rapidly increasing their compensation
under the previous arrangements. Prior to June 7, 2004, the Fund paid each
Trustee who was not an officer or employee of First Trust or any of their
affiliates $10,000 per annum plus $1,000 per regularly scheduled meeting
attended, $500 per committee meeting attended and reimbursement for travel and
out-of-pocket expenses.
4. PURCHASES AND SALES OF SECURITIES
Cost of purchases and proceeds from sales of investment securities, excluding
short-term investments, for the period ended November 30, 2004, aggregated
amounts were $159,207,749 and $160,756,073, respectively.
As of November 30, 2004, the aggregate gross unrealized appreciation for all
securities, in which there was an excess of value over tax cost, was $77,806,643
and the aggregate gross unrealized depreciation for all securities, in which
there was an excess of tax cost over value, was $4,192,603.
5. COMMON STOCK
As of November 30, 2004, 32,400,000 of $0.01 par value Common Shares were issued
and outstanding. An unlimited number of Common Shares has been authorized under
the Fund's Dividend Reinvestment Plan.
During the six months ended November 30, 2004, it was determined that actual
offering costs from the initial public offering of the Fund's Common Shares in
August 2003 were more than the estimated 2003 offering costs by $50,000.
Therefore, paid-in-capital in excess of par value of Common Shares has been
decreased by this amount.
6. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
The Joint Annual Meeting of Shareholders of First Trust Value Line(R) Dividend
Fund, First Trust/Four Corners Senior Floating Rate Income Fund, Macquarie/First
Trust Global Infrastructure/Utilities Dividend & Income Fund, First Trust/Value
Line(R) & Ibbotson Equity Allocation Fund, and First Trust/Four Corners Senior
Floating Rate Income Fund II was held on September 13, 2004. At the Annual
Meeting the Fund's Board of Trustees, consisting of James A. Bowen, Niel B.
Nielson, Thomas R. Kadlec, Richard E. Erickson and David M. Oster, was elected
to serve an additional one year term. The number of votes cast for James A.
Bowen was 23,162,710, the number of votes withheld was 247,169 and the number of
abstentions was 8,990,121. The number of votes cast for Niel B. Nielson was
23,142,879, the number of votes withheld was 267,000 and the number of
abstentions was 8,990,121. The number of votes cast for Richard E. Erickson was
23,135,292, the number of votes withheld was 274,587 and the number of
abstentions was 8,990,121. The number of votes cast for Thomas R. Kadlec was
23,161,913, the number of votes withheld was 247,966 and the number of
abstentions was 8,990,121. The number of votes cast for David M. Oster was
23,084,272, the number of votes withheld was 196,677 and the number of
abstentions was 9,119,051.
7. SUBSEQUENT EVENT
On December 6, 2004, the Fund declared a dividend of $1.01 per share which
represents a dividend from net investment income of $0.09, short-term capital
gain of $0.81 and long-term capital gain of $0.11 to Common Stock Shareholders
of record December 22, 2004, payable December 30, 2004.
Page 14
--------------------------------------------------------------------------------
Additional Information
--------------------------------------------------------------------------------
FIRST TRUST VALUE LINE(R) DIVIDEND FUND
NOVEMBER 30, 2004 (UNAUDITED)
DIVIDEND REINVESTMENT PLAN
If your Common Shares are registered directly with the Fund or if you hold your
Common Shares with a brokerage firm that participates in the Fund's Dividend
Reinvestment Plan (the "Plan"), unless you elect to receive cash distributions,
all dividends, including any capital gain distributions, on your Common Shares
will be automatically reinvested by PFPC (the "Plan Agent") in additional Common
Shares under the Plan. If you elect to receive cash distributions, you will
receive all distributions in cash paid by check mailed directly to you by PFPC,
as dividend paying agent.
If you decide to participate in the Plan, the number of Common Shares you will
receive will be determined as follows:
(1) If the Common Shares are trading at or above net asset value at the
time of valuation, the Fund will issue new shares at a price equal to
the greater of (i) net asset value per Common Share on that date or
(ii) 95% of the market price on that date.
(2) If the Common Shares are trading below net asset value at the time of
valuation, the Plan Agent will receive the dividend or distribution in
cash and will purchase Common Shares in the open market, on the
American Stock Exchange or elsewhere, for the participants' accounts.
It is possible that the market price for the Common Shares may
increase before the Plan Agent has completed its purchases. Therefore,
the average purchase price per share paid by the Plan Agent may exceed
the market price at the time of valuation, resulting in the purchase
of fewer shares than if the dividend or distribution had been paid in
Common Shares issued by the Fund. The Plan Agent will use all
dividends and distributions received in cash to purchase Common Shares
in the open market within 30 days of the valuation date except where
temporary curtailment or suspension of purchases is necessary to
comply with federal securities laws. Interest will not be paid on any
uninvested cash payments.
You may withdraw from the Plan at any time by giving written notice to the Plan
Agent, or by telephone in accordance with such reasonable requirements as the
Plan Agent and Fund may agree upon. If you withdraw or the Plan is terminated,
you will receive a certificate for each whole share in your account under the
Plan and you will receive a cash payment for any fraction of a share in your
account. If you wish, the Plan Agent will sell your shares and send you the
proceeds, minus brokerage commissions.
The Plan Agent maintains all shareholders' accounts in the Plan and gives
written confirmation of all transactions in the accounts, including information
you may need for tax records. Common Shares in your account will be held by the
Plan Agent in non-certificated form. The Plan Agent will forward to each
participant any proxy solicitation material and will vote any shares so held
only in accordance with proxies returned to the Fund. Any proxy you receive will
include all Common Shares you have received under the Plan.
There is no brokerage charge for reinvestment of your dividends or distributions
in Common Shares. However, all participants will pay a pro rata share of
brokerage commissions incurred by the Plan Agent when it makes open market
purchases.
Automatically reinvesting dividends and distributions does not mean that you do
not have to pay income taxes due upon receiving dividends and distributions.
Capital gains and income are realized, although cash is not received by you.
If you hold your Common Shares with a brokerage firm that does not participate
in the Plan, you will not be able to participate in the Plan and any dividend
reinvestment may be effected on different terms than those described above.
Consult your financial advisor for more information.
The Fund reserves the right to amend or terminate the Plan if in the judgment of
the Board of Trustees the change is warranted. There is no direct service charge
to participants in the Plan; however, the Fund reserves the right to amend the
Plan to include a service charge payable by the participants. Additional
information about the Plan may be obtained by writing PFPC Inc., 301 Bellevue
Parkway, Wilmington, Delaware 19809.
Page 15
--------------------------------------------------------------------------------
Additional Information - (Continued)
--------------------------------------------------------------------------------
FIRST TRUST VALUE LINE(R) DIVIDEND FUND
NOVEMBER 30, 2004 (UNAUDITED)
--------------------------------------------------------------------------------
PROXY VOTING POLICIES AND PROCEDURES
A description of the policies and procedures that the Fund uses to determine how
to vote proxies and information regarding how the Fund voted proxies relating to
portfolio securities during the most recent 12-month period ended June 30 is
available (1) without charge, upon request, by calling (800) 988-5891; (2) on
the Fund's website located at http://www.ftportfolios.com; and (3) on the
Securities and Exchange Commission's website located at http://www.sec.gov.
PORTFOLIO HOLDINGS
The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission ("SEC") for the first and third quarters of each fiscal
year on Form N-Q. The Fund's Form N-Q is available (1) by calling (800)
988-5891; (2) on the Fund's website located at http://www.ftportfolios.com; (3)
on the SEC's website at http://www.sec.gov; and (4) for review and copying at
the SEC's Public Reference Room ("PRR") in Washington, DC. Information regarding
the operation of the PRR may be obtained by calling 1-800-SEC-0330.
Page 16
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS
Schedule of Investments in securities of unaffiliated issuers as of the close of
the reporting period is included as part of the report to shareholders filed
under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not yet applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
None
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR
240.14a-101), or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a)The registrant's principal executive and principal financial
officers, or persons performing similar functions, have concluded that
the registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b)There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17
CFR 270.30a-3(d)) that occurred during the registrant's 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)(1) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) FIRST TRUST VALUE LINE(R) DIVIDEND FUND
--------------------------------------------------------------------
By (Signature and Title)* /S/ JAMES A. BOWEN
-------------------------------------------------------
James A. Bowen, Chief Executive Officer
(principal executive officer)
Date JANUARY 27, 2005
----------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /S/ JAMES A. BOWEN
-------------------------------------------------------
James A. Bowen, Chief Executive Officer
(principal executive officer)
Date JANUARY 27, 2005
----------------------------------------------------------------------------
By (Signature and Title)* /S/ MARK R. BRADLEY
-------------------------------------------------------
Mark R. Bradley, Chief Financial Officer
(principal financial officer)
Date JANUARY 27, 2005
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.