Post Office Box 1017 / Charlotte, North Carolina 28201-1017 / www.familydollar.com

corporate profile Family Dollar is a chain of more than 6,500 stores. Our merchandise

strategy is simple: offer quality merchandise at everyday low prices in easy-to-shop

neighborhood locations.

Family Dollar stores are located in a 44-state area ranging northeast to Maine, southeast

to Florida, as far northwest as Idaho and southwest to Arizona. On average, our stores

range in size from 7,500 square feet to 9,000 square feet and most are operated in leased

facilities. This relatively small size enables us to open new stores in rural areas, small

towns and large urban neighborhoods.

Our headquarters are located in Matthews, North Carolina, just outside of Charlotte.

We operate automated, full-service distribution centers in Matthews; West Memphis,

Arkansas; Front Royal, Virginia; Duncan, Oklahoma; Morehead, Kentucky; Maquoketa,

Iowa; Odessa, Texas; Marianna, Florida; and Rome, New York.

Family Dollar has been a publicly held corporation since 1970 and its Common Stock is

listed on the New York Stock Exchange under the ticker symbol: FDO.

family dollar mission statement For Our Customers: A compelling place to

shop – by providing convenience and low prices. For Our Associates: A compelling

place to work – by providing exceptional opportunities and rewards for achievement.

For Our Investors: A compelling place to invest – by providing outstanding returns.

My Family. My Family Dollar.Since opening our first store in 1959, Family Dollar has provided our customers with value and convenience.

For nearly a half a century, we have invested considerable resources to increase our understanding of our

customer to better meet her needs. To better reflect our commitment to our customer, we set out to refresh the

Family Dollar brand. Our new logo and tag line,

reinforce our promise of providing customers with value and convenience and emphasize our focus on families.

Our new brand illustrates our customer’s emotional tie with Family Dollar and our commitment to meeting

her needs. Our customers love our stores and consider us to be part of their families. When Mom walks into

her neighborhood Family Dollar, we know she’ll find what she needs for her home and family.

In the face of tough economic headwinds, our mission to be a compelling place to shop, work and invest is

more important than ever. Our customer knows she can count on us for value and convenience, so we’re

focused on making sure we’re stocking the things she uses everyday. Family Dollar is developing talented

teams focused on delivering strong performance. It takes the right people working together to effectively rise

to the challenges we face in today’s environment. Although we’re not immune to external economic pressures,

we are committed to managing risk and containing costs while also maintaining our commitment to investing

in the people, process and technology that move our business forward.

As we begin our 50th year of providing value and convenience to our customers, we will

continue to focus our efforts to be a compelling place to shop for our customers, to work

for our Associates and to invest for our shareholders.

Howard R. LevineChairman and Chief Executive Officer

OCTOBER 2008

The manager

at my Family Dollar knows my children

and me. She treats us like family. The

store is clean and the Associates are

friendly and helpful. When I shop at my

Family Dollar I can get the things I need

to take care of my family.

My Family. My Family Dollar.Our customer takes great pride in providing for her family, and we want her

to feel good about where she shops. Whether she’s buying school supplies and

snacks for her kids or splurging on some new Bugle Boy® apparel, we have

everything she needs. We’re working hard to make our stores easier to shop so

Mom can get in and out quickly and spend more time with her family. She likes

shopping at Family Dollar so much she refers to it as “My Family Dollar.”

In 2008, we introduced a new logo and tagline to build on our strong brand

image. This new logo conveys our commitment to providing value and

convenience and the importance we place on serving the needs of families.

At Family Dollar we help customers care for their families. With a broad range of

products from food and household products to housewares and apparel, Family

Dollar helps Mom get everything she needs for her home and family.

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AutomotiveCar care products that won’t break the bank. Find what you need to keep your automobile looking good and running great.

ApparelBugle Boy®, an authentic American brand that offers quality, value and style for the entire family.

SeasonalSomething for every season. From back-to-school to Valentine’s Day, you can count on Family Dollar for the items you need to celebrate the season at everyday low prices.

3

Household CleanersWhether it’s a nasty spill or your regular spring cleaning, you’ll find the products you use daily at Family Dollar.

Household PaperPaper towels, bath tissue and more. Family Dollar stocks the products you need at a fraction of the cost of other retailers.

Expanded FoodFeed the whole family and don’t spend a lot of money to do it. Family Dollar carries trusted national brands as well as top quality private label products.

4

I know

when I shop at Family Dollar I can

get everything I need for my family

without spending a lot of money.

Even my mom can get a toy for her

granddaughter. I’m looking for good

values, and I know I can find them at

my Family Dollar.

5

Value For Our CustomersAt Family Dollar, providing both value and convenience sets us apart from

other retailers. We know our busy customer works hard to take care of her family.

She wants to provide them with quality products and not spend a lot to do it, so

she shops at Family Dollar.

Today, value is more important than ever. In a challenging economy, people need

their money to go a little further. At Family Dollar, we know our customers

shouldn’t have to give up the quality they deserve. That’s why we work with our

vendor partners to ensure that the products our customers use every day can be

purchased at the lowest prices. Whether Mom needs food, cleaning products or

clothing for her family, she knows she can shop at Family Dollar and be confident

that she’s getting quality products at a great price.

When Riley’s

ready for his walk, we always stop by my

Family Dollar on the way to the park.

He gets a treat, and I refresh the minutes

on my prepaid cell phone. Family Dollar is

right around the corner, so it’s easy

to run in and get what I need.

6

Convenience For Our CustomersAt Family Dollar, our vision is to be the best small-format convenience and value

retailer serving the needs of families in our neighborhoods. Convenience plays

an important role in our success. We want our customers to be able to get in,

get what they need and get out of our stores quickly. With small, neighborhood

stores, we’re able to provide our customers with quality merchandise at affordable

prices right where they live. From pet supplies to snacks for a day in the park,

it’s easy to get what you need … when you need it … from your local Family Dollar.

Our customer wants to spend more time with her family and less time

shopping. Being convenient means providing our customers with easy access

from home or work. It also means a quick in and out shopping experience.

Our easy-to-shop neighborhood locations make it easy for Mom to get

what she needs, close to home, to take care of her family.

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Pet FoodCats and dogs deserve quality at low prices, too. Family Dollar has food, toys and other pet care essentials that won’t break the bank.

ElectronicsStay in touch with friends and family. At Family Dollar we sell prepaid phone services and other consumer electronics.

Snack FoodsLooking for a quick bite to tide you over or just some munchies? Family Dollar has what you need right around the corner.

Career PathsDeveloping talent with clear career paths helps ensure the future growth and success of the Company.

TalentAt Family Dollar we recognize the contributions individuals can make to the overall success of the Company.

TeamworkFrom the corporate headquarters to distribution and the stores, we’re all a team working to make Family Dollar successful in the neighborhoods we serve.

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I’m the

Store Manager and this is my team.

Customer service is our focus. We

take pride in the way we run our

store. We know our customers

and are proud to provide them

with great value and convenience.

Because we all live in the area, this

is truly a neighborhood store. I love

working with my team, and I love

working at Family Dollar.

My Future. My Family Dollar.At Family Dollar, our mission is to be a compelling place to work for our Associates.

This means we strive to hire, train, develop and retain a highly talented team

that’s focused on delivering strong performance. Through succession planning,

expanded training, job readiness and leadership development, we’re working to

increase retention of our Associates while building a stronger culture.

The growth and success of the Company depend on the individual contribution

of each and every Associate. Whether you work in a store, at the distribution

center or at the corporate office, you’ll have the opportunity to work as a team

member supporting the goals of our growing Fortune 500 Company.

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Investing For Our ShareholdersProviding value and convenience is what sets Family Dollar apart from other retailers and what positions us well

in today’s environment of rising unemployment, strong inflationary pressures and volatile energy prices.

Being a compelling place to invest means delivering sustainable shareholder value through income growth and effective capital

deployment. We are investing to build long-term capabilities and lower our cost structure. Through our supply chain optimization

initiative, Project Accelerate, we’ve enhanced our merchandising capabilities and improved the return on one of our largest assets –

inventory. By leveraging our buying power and merchandising capabilities and by more effectively using new technology and

new analytical tools, we intend to lower administrative expenses and maintain everyday low prices for our customers.

To deliver financial returns to our shareholders, we intend to continue to invest aggressively to increase our relevancy to

our customers while mitigating risk and managing costs. Hiring the right people, working to refine how we do business and

harnessing the power of the latest technology have prepared us well for the challenges we face in this new economy.

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Leadership TeamHoward R. LevineChairman of the Board and Chief Executive Officer

R. James KellyPresident and Chief Operating Officer

Dorlisa K. FlurExecutive Vice President – Strategy and Marketing

Robert A. GeorgeExecutive Vice President – Chief Merchandising Officer

Charles S. Gibson, Jr.Executive Vice President – Supply Chain

Barry W. SullivanExecutive Vice President – Store Operations

Bryan P. CauseySenior Vice President – Planning, Allocation and Replenishment

Keith GehlSenior Vice President – Real Estate and Facilities

Joshua R. JewettSenior Vice President – Information Technology and Procurement, CIO

Janet G. Kelley Senior Vice President – General Counsel and Secretary

Michael S. KvitkoSenior Vice President – Merchandising

Wook LeeSenior Vice President – Global Sourcing

Thomas M. NashSenior Vice President – Real Estate Development

John J. ScanlonSenior Vice President – Merchandising

Kenneth T. SmithSenior Vice President – Chief Financial Officer

C. Martin SowersSenior Vice President – Finance

Bryan VenbergSenior Vice President – Human Resources

Elizabeth M. AustinVice President – Information Technology Operations and Infrastructure

Raina L. AvalonVice President – Transportation

Samuel J. BernsteinVice President – General Merchandise Manager

Earl C. BonnecazeVice President – Store Operations

James R. BowenVice President – Distribution

Timothy R. BrokawVice President – Decision Support

Mark S. ChidesterVice President – Human Resources, Store Operations

Charles D. CurryVice President – Store Planning and Store Development

Allen W. FieldsVice President – Store Operations

Marianne P. FiorucciVice President – Planning and Allocations

Joseph A. Hayes, IIIAssistant General Counsel, Corporate and Compliance

James H. HaysVice President – Internal Audit

Dennis A. HeskettVice President – Store Operations

Billy W. Jones, Jr.Vice President – Distribution

Michael E. LaurentiVice President – Information Technology

Timothy A. MatzVice President – General Merchandise Manager

Lonnie W. McCaffetyVice President – Store Operations

Colin P. McGinnisVice President – Store Operations Support

Dennis C. MerriamVice President – Human Resources, Distribution

Jacob J. ModlaVice President – Deputy General Counsel

Marilyn M. MorseVice President – Facilities Management

Mtu W. Pugh Vice President – Business Development

Kiley F. RawlinsVice President – Investor Relations and Corporate Communications

Richard P. SiliakusVice President – General Merchandise Manager

Donald G. SmithVice President – Marketing

R. Jeffrey ThomasVice President – Replenishment

Jerome G. VickersVice President – Store Operations

Boris ZelmanovichVice President – General Merchandise Manager, Food and Merchandise Innovation

Scott T. ZuckerVice President – Merchandise Operations

Michael J. ZuegeVice President – Loss Prevention

PeopleHire, train and develop a highly talented team, building a solid foundation of talent with an eye on the future.

TechnologyOur Store of the Future technology initiative is designed to offer the customer greater convenience. We’re expanding our payment types to help our shoppers move through the checkout process more quickly.

ProcessProject Accelerate helps us make decisions around our processes for category management, assortment planning, merchandise financial planning and space planning.

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’04 ’05 ’06 ’07 ’08

Net Sales(millions of dollars)

’04 ’05 ’06 ’07 ’08 ’04 ’05 ’06 ’07 ’08 ’04 ’05 ’06 ’07 ’08 ’04 ’05 ’06 ’07 ’08

Net Income(millions of dollars)

Returnon Average

Shareholders’Equity(percent)

Comparable StoreSales Gains

(percent)

Net IncomePer Diluted

Common Share

3,32

4

3,68

9

4,14

1

4,61

6

5,02

7

5,46

6

5,89

8

6,17

3

6,43

0

6,57

1

5,28

2

5,82

5

6,39

5

6,83

4

6,98

4

19.6

15.7

14.8

20.4

19.2

258

218

195

243

233

1.9

2.3

3.7

0.9

1.2

1.50

1.30

1.26

1.62

1.66

MaquoketaDistribution

Center

MoreheadDistribution

Center

RomeDistribution

Center

OdessaDistribution

Center

DuncanDistribution

Center

West MemphisDistribution

Center

MariannaDistribution

Center

Front RoyalDistribution

Center

MatthewsCorporate Officesand Distribution

Center

Number of Stores(as of fiscal year end)

Distribution Service Areas

Stores and Distribution Centers(as of fiscal year end)

Rome, New York907,000 Sq. Ft. / Opened ’06

Marianna, Florida907,000 Sq. Ft. / Opened ’05

Odessa, Texas907,000 Sq. Ft. / Opened ’03

Maquoketa, Iowa907,000 Sq. Ft. / Opened ’02

Morehead, Kentucky907,000 Sq. Ft. / Opened ’00

Duncan, Oklahoma907,000 Sq. Ft. / Opened ’99

Front Royal, Virginia907,000 Sq. Ft. / Opened ’98

West Memphis, Arkansas850,000 Sq. Ft. / Opened ’94

Matthews, North Carolina890,000 Sq. Ft. / Opened ’74 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08

24

31

60

130

20

104

90

11

71

32

140

238

411

303

198

364

214

264

46

290

204

186

348

96

98

229

22

31

35

128

817

195

9221

80

5120

99

22

115

12

363

118 145

3

Years Ended (In thousands, except per share amounts) August 30, 2008 September 1, 2007 August 26, 2006

Net sales $ 6,983,628 $ 6,834,305 $ 6,394,772

Cost of sales 4,637,826 4,512,242 4,276,466

Gross margin 2,345,802 2,322,063 2,118,306

Selling, general and administrative expenses 1,980,496 1,933,430 1,756,001

Litigation charge — — 45,000

Operating profit 365,306 388,633 317,305

Interest, net 3,544 6,737 6,161

Income before income taxes 361,762 381,896 311,144

Income taxes 128,689 139,042 116,033

Net income $ 233,073 $ 242,854 $ 195,111

Net income per common share – basic $ 1.66 $ 1.63 $ 1.26

Net income per common share – diluted $ 1.66 $ 1.62 $ 1.26

Dividends declared $ 68,537 $ 66,361 $ 62,757

Dividends declared per common share $ 0.49 $ 0.45 $ 0.41

Cash and investment securities $ 158,502 $ 284,671 $ 216,232

Total assets $ 2,661,782 $ 2,624,156 $ 2,523,029

Working capital $ 275,106 $ 406,977 $ 432,737

Long-term debt $ 250,000 $ 250,000 $ 250,000

Shareholders’ equity $ 1,254,083 $ 1,174,641 $ 1,208,393

Comparable store sales gain 1.2% 0.9% 3.7%

Stores opened 205 300 350

Stores closed 64 43 75

Number of stores – end of year 6,571 6,430 6,173

Family Dollar Financial Highlights

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’04 ’05 ’06 ’07 ’08

Net Sales(millions of dollars)

’04 ’05 ’06 ’07 ’08 ’04 ’05 ’06 ’07 ’08 ’04 ’05 ’06 ’07 ’08 ’04 ’05 ’06 ’07 ’08

Net Income(millions of dollars)

Returnon Average

Shareholders’Equity(percent)

Comparable StoreSales Gains

(percent)

Net IncomePer Diluted

Common Share

3,32

4

3,68

9

4,14

1

4,61

6

5,02

7

5,46

6

5,89

8

6,17

3

6,43

0

6,57

1

5,28

2

5,82

5

6,39

5

6,83

4

6,98

4

19.6

15.7

14.8

20.4

19.2

258

218

195

243

233

1.9

2.3

3.7

0.9

1.2

1.50

1.30

1.26

1.62

1.66

MaquoketaDistribution

Center

MoreheadDistribution

Center

RomeDistribution

Center

OdessaDistribution

Center

DuncanDistribution

Center

West MemphisDistribution

Center

MariannaDistribution

Center

Front RoyalDistribution

Center

MatthewsCorporate Officesand Distribution

Center

Number of Stores(as of fiscal year end)

Distribution Service Areas

Stores and Distribution Centers(as of fiscal year end)

Rome, New York907,000 Sq. Ft. / Opened ’06

Marianna, Florida907,000 Sq. Ft. / Opened ’05

Odessa, Texas907,000 Sq. Ft. / Opened ’03

Maquoketa, Iowa907,000 Sq. Ft. / Opened ’02

Morehead, Kentucky907,000 Sq. Ft. / Opened ’00

Duncan, Oklahoma907,000 Sq. Ft. / Opened ’99

Front Royal, Virginia907,000 Sq. Ft. / Opened ’98

West Memphis, Arkansas850,000 Sq. Ft. / Opened ’94

Matthews, North Carolina890,000 Sq. Ft. / Opened ’74 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08

24

31

60

130

20

104

90

11

71

32

140

238

411

303

198

364

214

264

46

290

204

186

348

96

98

229

22

31

35

128

817

195

9221

80

5120

99

22

115

12

363

118 145

3

Post Office Box 1017 / Charlotte, North Carolina 28201-1017 / www.familydollar.com