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 L.P.
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
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Date of reporting period: NOVEMBER 30, 2005
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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, 100 F Street, NE,
Washington, DC 20549. 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.
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FIRST TRUST VALUE LINE(R) DIVIDEND FUND
SEMI-ANNUAL REPORT
FOR THE SIX MONTHS ENDED NOVEMBER 30, 2005
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TABLE OF CONTENTS
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FIRST TRUST VALUE LINE(R) DIVIDEND FUND
NOVEMBER 30, 2005
Shareholder Letter ...................................................... 1
Portfolio Commentary .................................................... 2
Portfolio Components .................................................... 4
Portfolio of Investments ................................................ 5
Statement of Assets and Liabilities ..................................... 11
Statement of Operations ................................................. 12
Statements of Changes in Net Assets ..................................... 13
Financial Highlights .................................................... 14
Notes to Financial Statements ........................................... 15
Additional Information .................................................. 18
Dividend Reinvestment Plan
Proxy Voting Policies and Procedures
Portfolio Holdings
Submission of Matters to a Vote of Shareholders
By-Law Amendment
Board Approval of Advisory Agreement
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This Semi-Annual Report contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933. Forward-looking statements
include statements regarding the goals, beliefs, plans or current expectations
of First Trust Advisors L.P. and its representatives, taking into account the
information currently available to them. Forward-looking statements include all
statements that do not relate solely to current or historical fact. For example,
forward-looking statements include the use of words such as "anticipate,"
"estimate," "intend," "expect," "believe," "plan," "may," "should," "would" or
other words that convey uncertainty of future events or outcomes.
Forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the First Trust Value Line(R) Dividend Fund's (the
"Fund") actual results, performance or achievements to be materially different
from any future results, performance or achievements expressed or implied by the
forward-looking statements. When evaluating the information included in this
Semi-Annual Report, you are cautioned not to place undue reliance on these
forward-looking statements, which reflect the judgment of First Trust Advisors
L.P. and its representatives only as of the date hereof. We undertake no
obligation to publicly revise or update these forward-looking statements to
reflect events and circumstances that arise after the date hereof.
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, together with
the portfolio commentary by Robert F. Carey, who is the Chief Investment Officer
of First Trust Advisors L.P., the Fund's investment advisor, 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 compared to that of relevant benchmarks.
It is important to keep in mind that the opinions expressed by Mr. Bowen, Mr.
Carey and First Trust Advisors L.P. personnel 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 (FVD)
SEMI-ANNUAL REPORT
NOVEMBER 30, 2005
Dear Shareholders:
We are pleased to inform you that your Fund, the First Trust Value Line(R)
Dividend Fund (AMEX: FVD), has continued to provide increased income and price
appreciation for the semi-annual period ended November 30, 2005. 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 investment
objective by investing in common stocks that pay above-average dividends and
have the potential for capital appreciation.
During the six-month period covered by this report, the U.S. stock market, as
measured by the S&P 500 Index, was up 5.9% on a total return basis. Over the
same period, FVD achieved a net asset value ("NAV") total return of 4.2%
compared to a market price total return of 5.4%.
In 2005 dividend-paying stocks rewarded investors and we believe they may
continue to offer an attractive alternative to other income-oriented
investments. Approximately 7,000 publicly-owned companies report dividend
information to Standard & Poor's DIVIDEND RECORD. In 2005, there were 1,949
dividend increases, up 11.7% from the number registered in 2004. The 10-year
average is 1,763. Standard & Poor's is forecasting more than 2,000 dividend
increases for 2006. The companies in the S&P 500 Index paid out dividends
totaling $202 billion to shareholders in 2005, up more than 10% from the
2004 record total, according to Standard & Poor's.
First Trust Advisors L.P. ("First Trust or the "Advisor") serves as the Fund's
Advisor and currently manages or supervises approximately $21 billion in assets.
I encourage you to read the commentary from Bob Carey, Chief Investment Officer
at First Trust, found on the following pages. It includes a review of the Fund's
performance and Bob's outlook for the markets.
We thank you for your confidence in First Trust and we will work diligently to
keep earning it.
Sincerely,
/S/ JAMES A. BOWEN
James A. Bowen
President of the First Trust Value Line(R) Dividend Fund
January 6, 2006
Page 1
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A COMMENTARY ON THE FIRST TRUST VALUE LINE(R) DIVIDEND FUND
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OVERVIEW
The First Trust Value Line(R) Dividend Fund ("FVD" or the "Fund") posted a
market price total return of 5.4% for the six-month period ended November 30,
2005. Its net asset value ("NAV") total return was 4.2%. Over the same six-month
period, the S&P 500 Index gained 5.9%. The Fund distributed $0.2025 per share in
ordinary income for the six-month period ended November 30, 2005. The Fund's
distribution rate, based on market price, was 2.7% as of November 30, 2005. FVD
carried a beta of 0.81 as of November 30, 2005, according to Bloomberg. FVD
traded at a 14.2% discount to its NAV on November 30, 2005. Its daily trading
volume throughout the period averaged 87,085.
Following is a review of the portfolio strategy, composition, investment
environment and performance results of FVD for the semi-annual period ended
November 30, 2005.
INVESTMENT STRATEGY
The investment objective of the Fund is to provide total return through a
combination of current income and capital appreciation. The Fund will invest
substantially all, but in no event less than 80%, of its net assets in the
stocks that are selected through application of a disciplined investment
strategy applied to the universe of stocks which Value Line(R) gives a
Safety(TM) Ranking of #1 and #2 in the Value Line(R) Safety(TM) Ranking System.
The Fund seeks to achieve its investment objective by investing in common stocks
that pay above-average dividends and have the potential for capital
appreciation. On the last Friday of each month, the Fund's investment advisor,
First Trust Advisors L.P., reapplies the Fund's investment strategy and makes
portfolio adjustments to match any changes made to the common stocks selected
through this application of the investment strategy and reweights the portfolio
as of such date. The Fund does not employ leverage.
DISTRIBUTIONS
The Fund distributed $0.2025 per share in ordinary income for the six-month
period ended November 30, 2005. The Fund's distribution rate, based on market
share price, was 2.7% as of November 30, 2005.
COMPOSITION OF THE FUND
The Fund held 178 issues on November 30, 2005. Over the past six months, 34
stocks were sold and 40 were bought. As of November 30, 2005, the average market
capitalization of the stocks in the portfolio was $27.3 billion, up from $26.9
billion six months ago. The largest market capitalization holding in the
portfolio was $378.7 billion, down from 386.7 billion six months ago. The
smallest was $1.0 billion, up from $993.0 million six months ago.
SECTOR DIVERSIFICATION
The following breakdown illustrates the major economic sector weightings,
according to S&P's Global Industry Classification Standard, for FVD as of May
31, 2005 and NOVEMBER 30, 2005: Basic Materials (4.0%; 3.9%); Consumer
Discretionary (5.8%; 7.9%); Consumer Staples (12.0%; 12.8%); Energy (5.2%;
4.9%); Financial Services (26.6%; 25.0%); Health Care (4.6%; 5.0%); Industrials
(6.3%; 7.3%); Information Technology (0%; 0.6%); REITs (11.7%; 10.5%);
Telecommunications (2.9%; 2.8%); Utilities (19.8%; 18.4%); and Cash &
Equivalents (1.1%; 0.9%).
PERFORMANCE OF THE FUND
The Fund posted positive returns for the semi-annual period, although it
underperformed the S&P 500 Index. The Fund's total return was 5.4% based on
market price and was 4.2% based on NAV for the six-month period ended November
30, 2005. Over the same six-month period, the S&P 500 Index gained 5.9%. One
factor that contributed positively to the Fund's performance was an overweight
position in financial stocks. Financials was the second best performing sector
in the benchmark, with a return of 10.2% for the six-month period ended November
30, 2005. Conversely, the Fund had an underweighted position in energy stocks
relative to the benchmark. The energy sector was the period's best performing
sector in the benchmark, returning 15.3%. The underweighted position was one
factor which contributed negatively to the Fund's performance versus the
benchmark over the six-month reporting period.
Page 2
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A COMMENTARY ON THE FIRST TRUST VALUE LINE(R) DIVIDEND FUND - (CONTINUED)
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MARKET AND ECONOMIC OVERVIEW
The companies in the S&P 500, S&P 500/Citigroup Growth and S&P 500/Citigroup
Value indexes finished with moderate gains, including dividends, of 5.9%, 4.7%
and 7.1%, respectively, for the six-month period ended November 30, 2005.
Moderate economic growth, continued strong profit growth and mergers and
acquisitions ("M&A") activity helped to boost market returns. At the same time,
the trend toward rising short-term interest rates continued, a factor that may
limit market performance. The Federal Reserve raised its target for short-term
interest rates four times during the six-month period and has since raised rates
in December 2005, bringing it to the current 4.25% rate.
Despite natural disasters, energy prices and interest rates that are sharply
higher than one year ago, the economy continues to grow. The economy turned in a
strong performance in the summer (July - September) with the fastest growth pace
in one and a half years, according to the Commerce Department. Real Gross
Domestic Product, the output of goods and services produced by labor and
property located in the United States, increased at an annual rate of 4.1% in
the third quarter of 2005, according to final estimates released by the Bureau
of Economic Analysis.
Mergers, acquisitions and restructurings also supported equities. M&A activity
surpassed $1 trillion for the calendar year, according to Thomson Financial.
Companies have announced 8,489 M&A deals valued at roughly $1.1 trillion, a
level not seen since 2000. Two of the most active sectors have been
telecommunications and technology. Deal volume should finish the year about 30%
higher than the volume registered in 2004.
Though oil prices have dropped from post-hurricane peaks, the threat of higher
inflation lingers. In September, inflation numbers, as measured by the Consumer
Price Index and the Producer Price Index, were at levels not experienced in the
past 15-25 years. Obviously, the financial fallout from the hurricanes in the
Gulf Coast region was reflected in the numbers. Investors, however, should not
lose sight of the fact that the U.S. has enjoyed a prolonged period of high
productivity aided by new technologies. High productivity has helped
manufacturers absorb higher commodity and materials prices over the past few
years without having to raise prices much, if at all. High productivity is also
one of the main reasons why corporate profits have surged. While price stability
may not be as feasible a goal moving forward as it once was, stocks have shown
that they are capable of rallying even when higher interest rates are creating
headwind.
IN CLOSING
We believe dividend-paying stocks continue to offer investors an attractive
alternative to other income-oriented investments. Dividend-paying stocks within
the S&P 500 Index posted a total return of 9.3% (shares equally-weighted) in
2005, versus a gain of 8.2% for the non-payers, according to Standard & Poor's.
The number of dividend increases (S&P 500) totaled 306, up from the 272 and 247
increases posted in 2004 and 2003, respectively. A total of 386 companies in the
S&P 500 currently pay a dividend. The S&P 500 Index set records in 2005,
including both earnings per share and dividend payouts. It will be interesting
to monitor the progress and see whether this positive momentum will continue
into 2006.
Page 3
FIRST TRUST VALUE LINE(R) DIVIDEND FUND
PORTFOLIO COMPONENTS+
NOVEMBER 30, 2005 (UNAUDITED)
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
Commerical Banks 17.3%
Real Estate (REITS) 11.2%
Multi-Utilities 8.4%
Food Products 7.3%
Electric Utilities 5.6%
Oil, Gas & Consumable Fuels 5.0%
Gas Utilities 4.5%
Insurance 4.0%
Pharmaceuticals 3.9%
Media 3.4%
Chemicals 2.8%
Thrifts & Mortgage Finance 2.8%
Household Products 2.3%
Diversified Telecommunication Services 2.3%
Commercial Services & Supplies 2.2%
Containers & Packaging 1.1%
Machinery 1.1%
Electrical Equipment 1.1%
Household Durables 1.1%
Aerospace & Defense 1.1%
Beverages 1.1%
Industrial Conglomerates 1.1%
Health Care Equipment & Supplies 1.1%
Food & Staples Retailing 1.1%
Hotels, Restaurants & Leisure 0.6%
Textiles, Apparel & Luxury Goods 0.6%
Capital Markets 0.6%
Leisure Equipment & Products 0.6%
Auto Components 0.6%
Distributors 0.6%
Specialty Retail 0.6%
Wireless Telecommunication Services 0.6%
Personal Products 0.6%
Tobacco 0.6%
Independent Power Producers & Energy Traders 0.6%
Computers & Peripherals 0.5%
+ Percentages are based on total investments. Please note that the
percentages shown on the Portfolio of Investments are based on net
assets.
Page 4 See Notes to Financial Statements.
FIRST TRUST VALUE LINE(R) DIVIDEND FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 2005 (UNAUDITED)
MARKET
SHARES VALUE
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COMMON STOCKS - 99.1%
AEROSPACE & DEFENSE - 1.1%
53,386 Lockheed Martin Corp. ............................. $ 3,235,192
56,915 Northrop Grumman Corp. ............................ 3,265,214
--------------
6,500,406
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AUTO COMPONENTS - 0.6%
46,960 Magna International, Inc. ......................... 3,235,544
--------------
BEVERAGES - 1.1%
73,806 Anheuser-Busch Companies, Inc. .................... 3,228,274
75,652 The Coca-Cola Company ............................. 3,229,584
--------------
6,457,858
--------------
CAPITAL MARKETS - 0.6%
107,428 Allied Capital Corp. .............................. 3,249,697
--------------
CHEMICALS - 2.8%
53,866 Air Products & Chemicals, Inc. .................... 3,187,251
57,186 Ashland Inc. ...................................... 3,188,120
75,038 E. I. du Pont de Nemours and Company .............. 3,207,875
97,851 International Flavors & Fragrances, Inc. .......... 3,184,072
52,907 PPG Industries, Inc. .............................. 3,213,042
--------------
15,980,360
--------------
COMMERCIAL BANKS - 17.2%
120,637 AmSouth Bancorp ................................... 3,207,738
97,940 Associated Banc-Corp .............................. 3,210,473
68,906 Bank of America Corp. ............................. 3,162,096
61,627 Bank of Montreal .................................. 3,309,370
80,385 Bank of Nova Scotia ............................... 3,085,980
74,128 BB&T Corp. ........................................ 3,154,146
49,268 Canadian Imperial Bank of Commerce ................ 3,190,596
43,473 City National Corp. ............................... 3,174,833
54,879 Comerica, Inc. .................................... 3,164,872
65,333 Compass Bancshares, Inc. .......................... 3,166,037
59,140 Cullen/Frost Bankers, Inc. ........................ 3,185,280
76,691 Fifth Third Bancorp ............................... 3,088,347
86,459 First Midwest Bancorp, Inc. ....................... 3,236,160
82,494 Hancock Holding Company. .......................... 3,174,369
74,383 Marshall & Ilsley Corp. ........................... 3,196,981
54,777 Mercantile Bankshares Corp. ....................... 3,254,302
59,377 National Bank of Canada. .......................... 3,152,455
93,934 National City Corp. ............................... 3,185,302
119,568 North Fork Bancorporation, Inc. ................... 3,228,336
143,016 Old National Bancorp .............................. 3,132,050
50,208 PNC Financial Services Group, Inc. ................ 3,201,764
140,412 Popular, Inc. ..................................... 3,114,338
94,207 Regions Financial Corp. ........................... 3,173,834
42,001 Royal Bank of Canada .............................. 3,214,337
43,000 SunTrust Banks, Inc. .............................. 3,127,820
114,332 Synovus Financial Corp. ........................... 3,218,446
61,266 Toronto-Dominion Bank ............................. 3,176,029
58,785 Wachovia Corp. .................................... 3,139,119
50,325 Wells Fargo & Company ............................. 3,162,926
80,786 Wilmington Trust Corp. ............................ 3,271,025
42,237 Zions Bancorporation .............................. 3,194,384
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98,653,745
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See Notes to Financial Statements. Page 5
FIRST TRUST VALUE LINE(R) DIVIDEND FUND
PORTFOLIO OF INVESTMENTS - (CONTINUED)
NOVEMBER 30, 2005 (UNAUDITED)
MARKET
SHARES VALUE
--------- --------------
COMMON STOCKS - CONTINUED
COMMERCIAL SERVICES & SUPPLIES - 2.2%
135,855 ABM Industries, Inc. .............................. $ 2,927,675
54,473 Avery Dennison Corp. .............................. 3,202,468
78,570 Pitney Bowes, Inc. ................................ 3,273,226
94,454 R.R. Donnelley & Sons Company ..................... 3,230,327
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12,633,696
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COMPUTERS & PERIPHERALS - 0.5%
81,682 Diebold, Inc. ..................................... 3,174,163
--------------
CONTAINERS & PACKAGING - 1.1%
119,215 Bemis Company ..................................... 3,284,373
114,292 Sonoco Products Company ........................... 3,277,895
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6,562,268
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DISTRIBUTORS - 0.6%
72,729 Genuine Parts Company ............................. 3,222,622
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DIVERSIFIED TELECOMMUNICATION SERVICES - 2.2%
130,718 AT&T Inc. ......................................... 3,256,185
117,187 BellSouth Corp. ................................... 3,194,518
99,200 Telecom Corp. of New Zealand Ltd.,
Sponsored ADR .................................. 3,206,144
101,247 Verizon Communications, Inc. ...................... 3,237,879
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12,894,726
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ELECTRIC UTILITIES - 5.6%
70,804 ALLETE, Inc. ...................................... 3,274,685
77,424 Cinergy Corp. ..................................... 3,180,578
61,863 Exelon Corp. ...................................... 3,219,351
74,640 FPL Group, Inc. ................................... 3,163,990
110,020 Great Plains Energy, Inc. ......................... 3,197,181
120,952 Hawaiian Electric Industries, Inc. ................ 3,197,971
77,332 Pinnacle West Capital Corp. ....................... 3,208,505
71,873 Progress Energy, Inc. ............................. 3,218,473
92,723 The Southern Company .............................. 3,218,415
140,656 Westar Energy, Inc. ............................... 3,181,639
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32,060,788
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ELECTRICAL EQUIPMENT - 1.1%
44,349 Emerson Electric Company .......................... 3,353,228
65,838 Hubbell, Inc., Class B ............................ 3,193,801
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6,547,029
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FOOD & STAPLES RETAILING - 1.1%
97,999 Sysco Corp. ....................................... 3,167,328
77,093 Weis Markets, Inc. ................................ 3,245,615
--------------
6,412,943
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FOOD PRODUCTS - 7.2%
81,049 Cadbury Schweppes PLC, Sponsored ADR .............. 3,126,870
104,246 Campbell Soup Company ............................. 3,149,272
147,579 ConAgra Foods, Inc. ............................... 3,172,949
67,316 General Mills, Inc. ............................... 3,199,529
90,697 H.J. Heinz Company ................................ 3,149,000
71,666 Kellogg Company ................................... 3,158,321
107,535 Kraft Foods, Inc. ................................. 3,112,063
Page 6 See Notes to Financial Statements.
FIRST TRUST VALUE LINE(R) DIVIDEND FUND
PORTFOLIO OF INVESTMENTS - (CONTINUED)
NOVEMBER 30, 2005 (UNAUDITED)
MARKET
SHARES VALUE
--------- --------------
COMMON STOCKS - CONTINUED
FOOD PRODUCTS - CONTINUED
82,263 Lancaster Colony Corp. ............................ $ 3,208,257
103,779 McCormick & Company, Inc. ......................... 3,239,980
178,790 Sara Lee Corp. .................................... 3,228,947
71,053 The J.M. Smucker Company .......................... 3,222,254
48,276 Unilever NV ....................................... 3,233,526
82,810 Unilever PLC, Sponsored ADR ....................... 3,249,464
--------------
41,450,432
--------------
GAS UTILITIES - 4.5%
89,817 AGL Resources, Inc. ............................... 3,176,827
83,775 Equitable Resources, Inc. ......................... 3,132,347
99,322 National Fuel Gas Company ......................... 3,203,135
76,510 New Jersey Resources Corp. ........................ 3,252,440
88,540 Peoples Energy Corp. .............................. 3,181,242
139,085 Piedmont Natural Gas Company, Inc. ................ 3,267,107
145,002 UGI Corp. ......................................... 3,190,044
106,195 WGL Holdings, Inc. ................................ 3,230,452
--------------
25,633,594
--------------
HEALTH CARE EQUIPMENT & SUPPLIES - 1.1%
105,641 Arrow International Inc. .......................... 3,151,271
67,218 Hillenbrand Industries, Inc. ...................... 3,266,795
--------------
6,418,066
--------------
HOTELS, RESTAURANTS & LEISURE - 0.6%
96,769 McDonald's Corp. .................................. 3,275,631
--------------
HOUSEHOLD DURABLES - 1.1%
141,950 Leggett & Platt, Inc. ............................. 3,332,986
85,863 Snap-On, Inc. ..................................... 3,208,700
--------------
6,541,686
--------------
HOUSEHOLD PRODUCTS - 2.3%
59,905 Colgate-Palmolive Company ......................... 3,266,021
54,796 Kimberly-Clark Corp. .............................. 3,231,868
59,663 The Clorox Company ................................ 3,238,508
56,527 The Procter & Gamble Company ...................... 3,232,779
--------------
12,969,176
--------------
INDEPENDENT POWER PRODUCERS &
ENERGY TRADERS - 0.5%
60,016 Constellation Energy Group, Inc. .................. 3,180,248
--------------
INDUSTRIAL CONGLOMERATES - 1.1%
41,342 3M Company ........................................ 3,244,520
89,444 General Electric Company .......................... 3,194,940
--------------
6,439,460
--------------
INSURANCE - 3.9%
105,024 Arthur J. Gallagher & Company ..................... 3,197,981
72,925 Cincinnati Financial Corp. ........................ 3,247,350
58,235 Jefferson-Pilot Corp. ............................. 3,234,954
62,195 Lincoln National Corp. ............................ 3,232,896
54,528 Mercury General Corp. ............................. 3,233,510
56,331 The Allstate Corp. ................................ 3,160,169
68,672 Unitrin, Inc. ..................................... 3,253,679
--------------
22,560,539
--------------
See Notes to Financial Statements. Page 7
FIRST TRUST VALUE LINE(R) DIVIDEND FUND
PORTFOLIO OF INVESTMENTS - (CONTINUED)
NOVEMBER 30, 2005 (UNAUDITED)
MARKET
SHARES VALUE
--------- --------------
COMMON STOCKS - CONTINUED
LEISURE EQUIPMENT & PRODUCTS - 0.6%
65,491 Polaris Industries, Inc. .......................... $ 3,237,875
--------------
MACHINERY - 1.1%
47,841 Deere & Company ................................... 3,317,773
50,814 Eaton Corp. ....................................... 3,237,868
--------------
6,555,641
--------------
MEDIA - 3.3%
93,338 Dow Jones & Company, Inc. ......................... 3,183,759
52,478 Gannett Co., Inc. ................................. 3,233,694
53,115 Knight-Ridder, Inc. ............................... 3,208,146
83,840 Lee Enterprises, Inc. ............................. 3,221,133
116,095 The New York Times Company ........................ 3,192,613
100,681 Tribune Company ................................... 3,218,772
--------------
19,258,117
--------------
MULTI-UTILITIES - 8.4%
61,185 Ameren Corp. ...................................... 3,209,765
70,374 Consolidated Edison, Inc. ......................... 3,204,832
41,384 Dominion Resources, Inc. .......................... 3,143,115
134,688 Energy East Corp. ................................. 3,158,434
94,675 KeySpan Corp. ..................................... 3,177,293
94,981 MDU Resources Group, Inc. ......................... 3,118,226
115,227 NSTAR ............................................. 3,236,726
119,656 OGE Energy Corp. .................................. 3,201,995
126,628 PNM Resources Inc. ................................ 3,288,529
81,436 SCANA Corp. ....................................... 3,226,494
74,434 Sempra Energy ..................................... 3,271,374
117,230 Vectren Corp. ..................................... 3,182,795
84,386 Wisconsin Energy Corp. ............................ 3,202,449
60,072 WPS Resources Corp. ............................... 3,230,672
171,408 Xcel Energy, Inc. ................................. 3,172,762
--------------
48,025,461
--------------
OIL, GAS & CONSUMABLE FUELS - 4.9%
47,735 BP PLC, Sponsored ADR ............................. 3,142,872
55,311 Chevron Corp. ..................................... 3,169,873
50,592 ConocoPhillips .................................... 3,061,322
53,866 Exxon Mobil Corp. ................................. 3,125,844
53,080 Marathon Oil Corp. ................................ 3,147,113
40,494 Occidental Petroleum Corp. ........................ 3,211,174
51,444 Royal Dutch Shell PLC, ADR, Class A ............... 3,169,979
25,255 Total SA, Sponsored ADR. .......................... 3,149,046
101,438 TransCanada Corp. ................................. 3,141,535
--------------
28,318,758
--------------
PERSONAL PRODUCTS - 0.6%
117,187 Avon Products, Inc. ............................... 3,205,065
--------------
PHARMACEUTICALS - 3.9%
83,065 Abbott Laboratories ............................... 3,132,381
145,458 Bristol-Myers Squibb Company ...................... 3,140,438
65,372 GlaxoSmithKline PLC, ADR. ......................... 3,240,490
52,098 Johnson & Johnson ................................. 3,217,052
64,066 Lilly (Eli) & Company ............................. 3,235,333
149,418 Pfizer, Inc. ...................................... 3,167,662
75,038 Wyeth ............................................. 3,118,579
--------------
22,251,935
--------------
Page 8 See Notes to Financial Statements.
FIRST TRUST VALUE LINE(R) DIVIDEND FUND
PORTFOLIO OF INVESTMENTS - (CONTINUED)
NOVEMBER 30, 2005 (UNAUDITED)
MARKET
SHARES VALUE
--------- --------------
COMMON STOCKS - CONTINUED
REAL ESTATE (REITS) - 11.1%
75,811 Archstone-Smith Trust ............................. $ 3,169,658
35,122 AvalonBay Communities, Inc. ....................... 3,211,907
68,209 BRE Properties, Inc., Class A ..................... 3,175,811
93,419 Duke Realty Corp. ................................. 3,176,246
101,216 Equity Office Properties Trust .................... 3,155,915
77,314 Equity Residential ................................ 3,151,319
49,396 Federal Realty Investment Trust ................... 3,110,960
120,100 Health Care Property Investors, Inc. .............. 3,155,027
102,725 Kimco Realty Corp. ................................ 3,230,701
75,177 Liberty Property Trust ............................ 3,192,015
73,672 Mack-Cali Realty Corp. ............................ 3,254,092
135,250 New Plan Excel Realty Trust ....................... 3,229,770
86,993 Pennsylvania Real Estate Investment Trust ......... 3,212,652
82,494 Plum Creek Timber Company, Inc. ................... 3,213,966
71,116 Prologis .......................................... 3,225,822
45,489 Public Storage, Inc. .............................. 3,211,523
41,490 Simon Property Group, Inc. ........................ 3,207,592
140,900 United Dominion Realty Trust, Inc. ................ 3,154,751
102,432 Washington Real Estate Investment Trust ........... 3,205,097
84,962 Weingarten Realty Investors ....................... 3,209,015
--------------
63,853,839
--------------
SPECIALTY RETAIL - 0.6%
73,255 The Sherwin-Williams Company ...................... 3,211,499
--------------
TEXTILES, APPAREL & LUXURY GOODS - 0.6%
57,819 VF Corp. .......................................... 3,275,446
--------------
THRIFTS & MORTGAGE FINANCE - 2.8%
110,925 Astoria Financial Corp. ........................... 3,136,959
96,798 Capitol Federal Financial ......................... 3,304,684
50,045 Freddie Mac ....................................... 3,125,310
132,105 Washington Federal, Inc. .......................... 3,206,188
75,003 Washington Mutual, Inc. ........................... 3,089,374
--------------
15,862,515
--------------
TOBACCO - 0.5%
79,195 Universal Corp. ................................... 3,197,894
--------------
WIRELESS TELECOMMUNICATION SERVICES - 0.6%
48,011 ALLTEL Corp. ...................................... 3,208,575
--------------
TOTAL COMMON STOCKS ............................... 569,517,297
--------------
(Cost $518,403,161)
See Notes to Financial Statements. Page 9
FIRST TRUST VALUE LINE(R) DIVIDEND FUND
PORTFOLIO OF INVESTMENTS - (CONTINUED)
NOVEMBER 30, 2005 (UNAUDITED)
MARKET
SHARES VALUE
--------- --------------
RIGHTS - 0.0%
COMMERCIAL BANKS - 0.0%
140,412 Popular, Inc. - Rights, Expires 12/19/05 * ........ $ 0
--------------
TOTAL RIGHTS ...................................... 0
--------------
(Cost $0)
TOTAL INVESTMENTS - 99.1% ......................... 569,517,297
(Cost $518,403,161)**
NET OTHER ASSETS & LIABILITIES - 0.9% ............. 4,918,952
--------------
NET ASSETS - 100.0% ............................... $ 574,436,249
==============
--------------------------------------------------------------------------------
* Non-income producing security
** Aggregate cost for federal income tax and financial reporting purposes
ADR American Depository Receipt
REIT Real Estate Investment Trust
Page 10 See Notes to Financial Statements.
FIRST TRUST VALUE LINE(R) DIVIDEND FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 2005 (UNAUDITED)
ASSETS:
Investments, at value
(Cost $518,403,161) ....................................... $ 569,517,297
Cash ......................................................... 7,158,271
Prepaid expenses ............................................. 31,148
Receivables:
Investment securities sold ................................ 25,424,278
Dividends ................................................. 1,898,933
Interest .................................................. 9,496
--------------
Total Assets .............................................. 604,039,423
--------------
LIABILITIES:
Payables:
Investment securities purchased ........................... 29,064,333
Investment advisory fees .................................. 304,289
License fees .............................................. 91,196
Printing fees ............................................. 55,946
Audit and legal fees ...................................... 42,913
Administrative fees ....................................... 40,739
Accrued expenses ............................................. 3,758
--------------
Total Liabilities ......................................... 29,603,174
--------------
NET ASSETS ................................................... $ 574,436,249
==============
NET ASSETS CONSIST OF:
Undistributed net investment income .......................... $ 2,957,742
Accumulated net realized gain on investments sold ............ 56,887,076
Net unrealized appreciation of investments ................... 51,114,136
Par value .................................................... 324,000
Paid-in capital .............................................. 463,153,295
--------------
Total Net Assets .......................................... $ 574,436,249
==============
NET ASSET VALUE, per Common Share (par value $0.01 per
Common Share) ............................................. $ 17.73
==============
Number of Common Shares outstanding (unlimited number of
Common Shares has been authorized) ........................ 32,400,000
==============
See Notes to Financial Statements. Page 11
FIRST TRUST VALUE LINE(R) DIVIDEND FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 2005 (UNAUDITED)
INVESTMENT INCOME:
Dividends .................................................... $ 9,635,263
Interest ..................................................... 56,616
--------------
Total investment income ................................... 9,691,879
--------------
EXPENSES:
Investment advisory fees ..................................... 1,852,709
License fees ................................................. 282,162
Administration fees .......................................... 248,081
Audit and legal fees ......................................... 53,088
Trustees' fees and expenses .................................. 20,945
Custodian fees ............................................... 41,795
Other ........................................................ 108,581
--------------
Total expenses ............................................ 2,607,361
--------------
NET INVESTMENT INCOME ........................................ 7,084,518
--------------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
Net realized gain/(loss) on investments during the period .... 26,437,088
Net change in unrealized appreciation/(depreciation) of
investments during the period ............................. (11,229,348)
--------------
Net realized and unrealized gain on investments .............. 15,207,740
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ......... $ 22,292,258
==============
Page 12 See Notes to Financial Statements.
FIRST TRUST VALUE LINE(R) DIVIDEND FUND
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS
ENDED YEAR
11/30/2005 ENDED
(UNAUDITED) 5/31/2005
------------ ------------
OPERATIONS:
Net investment income ..................................... $ 7,084,518 $ 13,350,696
Net realized gain on investments during
the period ............................................. 26,437,088 44,364,038
Net change in unrealized appreciation/(depreciation) of
investments during the period .......................... (11,229,348) 20,049,513
------------ ------------
Net increase in net assets resulting
from operations ........................................ 22,292,258 77,764,247
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ..................................... (6,561,000) (11,907,000)
Net realized gains ........................................ -- (29,808,000)
------------ ------------
Total distributions to shareholders ....................... (6,561,000) (41,715,000)
CAPITAL TRANSACTIONS:
Offering costs ............................................ -- (75,000)
------------ ------------
Net increase in net assets ................................ 15,731,258 35,974,247
NET ASSETS:
Beginning of period ....................................... 558,704,991 522,730,744
------------ ------------
End of period ............................................. $574,436,249 $558,704,991
============ ============
Undistributed net investment income at
end of period .......................................... $ 2,957,742 $ 2,434,224
============ ============
See Notes to Financial Statements. Page 13
FIRST TRUST VALUE LINE(R) DIVIDEND FUND
FINANCIAL HIGHLIGHTS
FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED YEAR PERIOD
11/30/2005 ENDED ENDED
(UNAUDITED) 5/31/2005 5/31/2004*
----------- --------- ----------
Net asset value, beginning of period ...................... $ 17.24 $ 16.13 $ 14.33
----------- --------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ..................................... 0.22 0.41 0.27
Net realized and unrealized gain on investments ........... 0.47 1.99 1.86
----------- --------- ----------
Total from investment operations .......................... 0.69 2.40 2.13
----------- --------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income ..................................... (0.20) (0.37) (0.20)
Net realized gains ........................................ -- (0.92) (0.11)
----------- --------- ----------
Total from distributions .................................. (0.20) (1.29) (0.31)
----------- --------- ----------
Common Shares offering costs charged to paid-in capital ... -- (0.00)# (0.02)
----------- --------- ----------
Net asset value, end of period ............................ $ 17.73 $ 17.24 $ 16.13
=========== ========= ==========
Market value, end of period ............................... $ 15.22 $ 14.64 $ 13.76
=========== ========= ==========
TOTAL RETURN BASED ON NET ASSET VALUE (A)+ ................ 4.24% 16.05% 15.09%
=========== ========= ==========
TOTAL RETURN BASED ON MARKET VALUE (B)+ ................... 5.37% 15.52% (6.20)%
=========== ========= ==========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ...................... $ 574,436 $ 558,705 $ 522,731
Ratio of total expenses to average net assets ............. 0.91%** 0.93% 0.93%**
Ratio of net investment income to average net assets ...... 2.49%** 2.45% 2.29%**
Portfolio turnover rate ................................... 31.30% 57.15% 46.13%
-----------------------------------------------------------
* The Fund commenced operations on August 19, 2003.
** Annualized.
# Amount represents less than $0.01 per share.
(a) Total return based on net asset value is the combination of reinvested
dividend distributions and reinvested capital gains distributions, if any,
at prices obtained by the Dividend Reinvestment Plan, and changes in net
asset value per share and does not reflect sales load.
(b) Total return based on market value is the combination of reinvested
dividend distributions and reinvested capital gains distributions, if any,
at prices obtained by the Dividend Reinvestment Plan, and changes in
Common Share market price per share, all based on Common Share market
price per share.
+ Total return is not annualized for periods less than one year.
Page 14 See Notes to Financial Statements.
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
FIRST TRUST VALUE LINE(R) DIVIDEND FUND
NOVEMBER 30, 2005 (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 trades under the ticker symbol FVD on the American Stock Exchange.
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.
A. 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 according to
procedures adopted by 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 as 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 traded
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 less than 60 days 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 always be reflected
in such securities' value. 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 adopted by the Fund's Board of Trustees. All
securities and other assets of the Fund denominated in foreign currencies will
be converted to U.S. dollars using exchange rates in effect at the time of
valuation.
B. 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.
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 on such securities
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.
Page 15
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST VALUE LINE(R) DIVIDEND FUND
NOVEMBER 30, 2005 (UNAUDITED)
C. 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.
The tax character of distributions paid during the fiscal year ended May 31,
2005 was as follows:
2005
----
Distributions paid from:
Ordinary Income ............................... $ 38,151,000
Long-term Capital Gains ....................... 3,564,000
As of May 31, 2005, the components of distributable earnings on a tax basis were
as follows:
Undistributed Ordinary Income ................. $ 9,111,242
Undistributed Long-Term Capital Gains ......... $ 24,331,110
Net Unrealized Appreciation ................... $ 61,785,344
D. INCOME TAXES:
The Fund intends to continue 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.
E. EXPENSES:
The Fund pays 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% of the Fund's gross daily assets during such
calendar quarter. This license fee is paid by the Fund to First Trust, which
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.
F. ORGANIZATION AND OFFERING COSTS:
Organization costs consist of costs incurred to establish the Fund and enable it
to legally do business. These costs include filing fees, listing 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
organization expenses and offering costs of the Fund (other than sales load)
that exceeded $0.03 per Common Share.
During the year ended May 31, 2005, 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 offering costs by $75,000. Therefore, paid-in capital in
excess of par value of Common Shares was decreased by this amount.
Page 16
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST VALUE LINE(R) DIVIDEND FUND
NOVEMBER 30, 2005 (UNAUDITED)
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 advisor 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, managing the
Fund's business affairs and certain administrative services necessary for the
management of the Fund. For these 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.
The Fund pays each Trustee who is not an officer or employee of First Trust or
any of its 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.
4. PURCHASES AND SALES OF SECURITIES
Cost of purchases and proceeds from sales of investment securities, excluding
short-term investments, for the six months ended November 30, 2005, were
$179,115,447 and $177,047,621, respectively.
As of November 30, 2005, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was $64,020,773
and the aggregate gross unrealized depreciation for all securities in which
there was an excess of tax cost over value was $12,906,637.
5. SUBSEQUENT EVENT
On December 9, 2005, the Fund declared distributions totaling $1.8075 per share,
which represents a dividend from net investment income of $0.1075, short-term
capital gains of $0.3200 and long-term capital gains of $1.3800, to Common
Shareholders of record December 21, 2005, payable December 30, 2005.
Page 17
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
FIRST TRUST VALUE LINE(R) DIVIDEND FUND
NOVEMBER 30, 2005 (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, by written notice to the Fund,
to receive cash distributions, all dividends, including any capital gain
distributions, on your Common Shares will be automatically reinvested by PFPC
Inc. (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 Inc., 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 ("NAV")
at the time of valuation, the Fund will issue new shares at a price
equal to the greater of (i) NAV per Common Share on that date or
(ii) 95% of the market price on that date.
(2) If the Common Shares are trading below NAV 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 elect to opt-out of or withdraw from the Plan at any time by giving
written notice to the Plan Agent, or by telephone at (800) 331-1710, 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 Common 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.
Consult your financial advisor for more information.
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.
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.
--------------------------------------------------------------------------------
PROXY VOTING POLICIES AND PROCEDURES
A description of the policies and procedures that the Fund uses to determine how
to vote proxies and information on 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.
Page 18
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION - (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST VALUE LINE(R) DIVIDEND FUND
NOVEMBER 30, 2005 (UNAUDITED)
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 Forms N-Q are 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.
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 12, 2005. 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 25,610,544, the number of votes withheld was 670,270 and the number of
abstentions was 6,119,186. The number of votes cast for Niel B. Nielson was
25,580,248, the number of votes withheld was 700,566 and the number of
abstentions was 6,119,186. The number of votes cast for Richard E. Erickson was
25,600,355, the number of votes withheld was 680,459 and the number of
abstentions was 6,119,186. The number of votes cast for Thomas R. Kadlec was
25,617,441, the number of votes withheld was 663,373 and the number of
abstentions was 6,119,186. The number of votes cast for David M. Oster was
25,605,849, the number of votes withheld was 674,965 and the number of
abstentions was 6,119,186.
BY-LAW AMENDMENT
On December 12, 2005, the Board of Trustees of the Fund approved certain changes
to the By-Laws of the Fund that may have the effect of delaying or preventing a
change of control of the Fund. To receive a copy of the revised By-Laws,
investors may call the Fund at (800) 988-5891.
BOARD APPROVAL OF ADVISORY AGREEMENT
The Trustees unanimously approved the continuation of the Investment Management
Agreement (the "AGREEMENT") between First Trust Advisors L.P. ("FIRST TRUST")
and First Trust Value Line(R) Dividend Fund (the "FUND") at a meeting held on
June 13, 2005. The Board of Trustees determined that the Agreement is in the
best interests of the Fund and its shareholders and that the compensation
arrangement set forth in the Agreement is fair and reasonable in light of the
nature and extent and quality of the services provided by First Trust and such
other matters as the Trustees considered to be relevant in the exercise of their
reasonable business judgment, including information provided by First Trust
since the Agreement was initially approved in July 2003.
To reach this determination, the Trustees considered their duties under the
Investment Company Act of 1940, as amended (the "1940 ACT") as well as under the
general principles of state law in reviewing and approving advisory contracts;
the requirements of the 1940 Act in such matters; the fiduciary duty of
investment advisers with respect to advisory agreements and compensation; the
standards used by courts in determining whether investment company boards have
fulfilled their duties; and the factors to be considered by the Trustees in
voting on such agreements. The Independent Trustees received advice from
independent legal counsel. The Trustees also applied their business judgment to
determine whether the arrangement between the Fund and First Trust was a
reasonable business arrangement from the Fund's perspective as well as from the
perspective of its shareholders. In reviewing such arrangement, the Board of
Trustees considered factors such as the nature, quality and scope of services
provided by First Trust under the Agreement and the fairness of the fee charged.
The Trustees reviewed data compiled from an independent source showing the
advisory fees and expense ratios of the Fund compared to those of a peer group
of similar funds and the Fund's advisory fees and expense ratios as compared to
an expense universe of non-leveraged, closed-end funds. The Trustees concluded
that the Fund's advisory fees and expense ratios compared favorably to the
expense group and the expense universe. The Trustees also considered the Fund's
performance for the year ended December 31, 2004 as compared to that of the
three other non-leveraged closed-end funds in the performance universe selected
by the independent source and concluded that the Fund's performance was
reasonable, particularly in light of the small number of funds to which it was
able to be compared. The Trustees determined that First Trust adhered to the
Fund's investment strategies and that the services that had been provided to the
Fund by First Trust were good. The Trustees noted that First Trust had not
identified any economies of scale realized by the Fund, and therefore the
Trustees concluded that any economies of scale were not meaningful. The Trustees
also considered the costs of the services provided and estimated profits to be
realized by First Trust from its relationship with the Fund, as set forth in the
materials provided to the Board. The Trustees noted the inherent limitations in
the profitability analysis, and concluded that First Trust's profitability
appeared to be reasonable in light of the services provided to the Fund. In
addition, the Trustees considered and discussed any ancillary benefits derived
Page 19
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ADDITIONAL INFORMATION - (CONTINUED)
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FIRST TRUST VALUE LINE(R) DIVIDEND FUND
NOVEMBER 30, 2005 (UNAUDITED)
by First Trust from its relationship with the Fund and noted that First Trust
receives no brokerage or soft dollars from the Fund and therefore the typical
fall-out benefits are not present. The Trustees concluded that any other
fall-out benefits received by First Trust or its affiliates would appear to be
attenuated. Based on all of the factors considered, the Trustees concluded that
it was in the best interests of the Fund and its shareholders to approve the
continuation of the Agreement, including the fees to be charged for services
thereunder.
Page 20
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 issures 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.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On December 12, 2005, the Registrant's Board of Trustees adopted an
Amended Nominating and Governance Committee Charter which included some material
changes to the procedures by which shareholders may recommend nominees to the
Registrant's board of trustees as described below:
Any proposal to elect any person nominated by shareholders for election
as trustee may only be brought before an annual meeting of the Registrant if
timely written notice (the "Shareholder Notice") is provided to the secretary of
the Registrant. Unless a greater or lesser period is required under applicable
law, to be timely, the Shareholder Notice must be delivered to or mailed and
received at Registrant's address, 1001 Warrenville Road, Suite 300, Lisle,
Illinois 60532, Attn: W. Scott Jardine, not less than forty-five (45) days nor
more than sixty (60) days prior to the first anniversary date of the date of the
Registrant's proxy statement released to shareholders for the prior year's
annual meeting; provided, however, if and only if the annual meeting is not
scheduled to be held within a period that commences thirty (30) days before the
first anniversary date of the annual meeting for the preceding year and ends
thirty (30) days after such anniversary date (an annual meeting date outside
such period being referred to herein as an "Other Annual Meeting Date"), such
Shareholder Notice must be given in the manner provided herein by the later of
the close of business on (i) the date forty-five (45) days prior to such Other
Annual Meeting Date or (ii) the tenth (10th) business day following the date
such Other Annual Meeting Date is first publicly announced or disclosed.
Any shareholder submitting a nomination of any person or persons (as
the case may be) for election as a trustee or trustees of the Registrant shall
deliver, as part of such Shareholder Notice: (i) a statement in writing setting
forth (A) the name, age, date of birth, business address, residence address and
nationality of the person or persons to be nominated; (B) the class or series
and number of all shares of the Registrant owned of record or beneficially by
each such person or persons, as reported to such shareholder by such nominee(s);
(C) any other information regarding each such person required by paragraphs (a),
(d), (e) and (f) of Item 401 of Regulation S-K or paragraph (b) of Item 22 of
Rule 14a-101 (Schedule 14A) under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (or any successor provision
thereto); (D) any other information regarding the person or persons to be
nominated that would be required to be disclosed in a proxy statement or other
filings required to be made in connection with solicitation of proxies for
election of trustees or directors pursuant to Section 14 of the Exchange Act and
the rules and regulations promulgated thereunder; and (E) whether such
shareholder believes any nominee is or will be an "interested person" of the
Registrant (as defined in the Investment Company Act of 1940) and, if not an
"interested person," information regarding each nominee that will be sufficient
for the Registrant to make such determination; and (ii) the written and signed
consent of any person to be nominated to be named as a nominee and to serve as a
trustee if elected. In addition, the trustees may require any proposed nominee
to furnish such other information as they may reasonably require or deem
necessary to determine the eligibility of such proposed nominee to serve as a
trustee.
Without limiting the foregoing, any shareholder who gives a Shareholder
Notice of any matter proposed to be brought before a shareholder meeting
(whether or not involving nominees for trustees) shall deliver, as part of such
Shareholder Notice: (i) the description of and text of the proposal to be
presented; (ii) a brief written statement of the reasons why such shareholder
favors the proposal; (iii) such shareholder's name and address as they appear on
the Registrant's books; (iv) any other information relating to the shareholder
that would be required to be disclosed in a proxy statement or other filings
required to be made in connection with the solicitation of proxies with respect
to the matter(s) proposed pursuant to Section 14 of the Exchange Act; (v) the
class or series and number of all shares of the Registrant owned beneficially
and of record by such shareholder; (vi) any material interest of such
shareholder in the matter proposed (other than as a shareholder); (vii) a
representation that the shareholder intends to appear in person or by proxy at
the shareholder meeting to act on the matter(s) proposed; (viii) if the proposal
involves nominee(s) for trustees, a description of all arrangements or
understandings between the shareholder and each proposed nominee and any other
person or persons (including their names) pursuant to which the nomination(s)
are to be made by the shareholder; and (ix) in the case of a shareholder (a
"BENEFICIAL OWNER") that holds shares entitled to vote at the meeting through a
nominee or "street name" holder of record, evidence establishing such Beneficial
Owner's indirect ownership of, and entitlement to vote, shares at the meeting of
shareholders. As used herein, shares "beneficially owned" shall mean all shares
which such person is deemed to beneficially own pursuant to Rules 13d-3 and
13d-5 under the Exchange Act.
A copy of the amended Nominating and Governance Committee Charter is
available on the Registrant's website at www.ftportfolios.com.
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(b) 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
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James A. Bowen, Chairman of the Board, President and
Chief Executive Officer
(principal executive officer)
Date FEBRUARY 1, 2006
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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
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James A. Bowen, Chairman of the Board, President and
Chief Executive Officer
(principal executive officer)
Date FEBRUARY 1, 2006
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By (Signature and Title)* /S/ MARK R. BRADLEY
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Mark R. Bradley, Treasurer, Controller, Chief
Financial Officer and Chief Accounting Officer
(principal financial officer)
Date FEBRUARY 1, 2006
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* Print the name and title of each signing officer under his or her signature.