Tom Rzepski, vice president of the American Stock Exchange's ETF marketplace, points out that the problem was not the fund's performance but that investors weren't getting the actual value of the underlying securities. (The Amex will calculate the value of the index on which the new ETF is based.) Value Line Dividend, which invests in stocks with above-average dividends that also have potential for capital appreciation, returned 36.8% for the year to date through Wednesday, compared with a 21.5% return for the S&P 500, according to Morningstar. Over the past three years, the fund returned an annualized 19.8%, compared with 8.17% for its benchmark. Converting into an ETF isn't the only way for closed-end funds to reduce or eliminate discounts. Some funds have conducted share buybacks, while others have been converted to open-end funds. (Another First Trust closed-end fund, First Trust/Value Line & Ibbotson Equity Allocation, was recently liquidated after a proposal to convert it into an ETF failed to attract sufficient support. First Trust subsequently launched an ETF with a similar strategy.) There are certainly benefits to going to ETF conversion route. For one thing, it preserves shareholders' ability to trade throughout the day, whereas mutual funds price just once a day, at 4 p.m. And because ETFs are based on indices, they are more transparent than open-end funds, which may disclose their holdings just once a quarter. "The big thing is we were able to accomplish something that maintains the strategy employed by FVD and the integrity of what we are trying to do," says First Trust Chief Investment Officer Robert Carey.