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: 811-5003
Blue
Chip
Value Fund, Inc.
(Exact
name of registrant as specified in charter)
1225
17th
Street,
26th
Floor,
Denver, Colorado 80202
(Address
of principal executive offices) (Zip code)
Michael
P. Malloy
Drinker
Biddle & Reath LLP
One
Logan
Square
18th&
Cherry Streets
Philadelphia,
Pennsylvania 19103-6996
(Name
and
address of agent for service)
Registrant’s
Telephone Number, including Area Code: (800)
624-4190
Date
of
fiscal year end: December
31
Date
of
reporting period: January 1, 2008 - June
30, 2008
Item
1. Reports to Stockholders.
The
following is a copy of the report to shareholders pursuant to Rule 30e-1 under
the Investment Company Act of 1940 (17 CFR 270.30e-1).
 Semi-Annual
Report
to
Stockholders
June
30, 2008
|
MANAGED
DISTRIBUTION POLICY
The
Blue
Chip Value Fund, Inc. (the “Fund”) has a Managed Distribution Policy. This
policy is to make quarterly distributions of at least 2.5% of the Fund’s net
asset value (“NAV”) to stockholders. This is the quarterly payment that Fund
investors elect to receive in cash or reinvest in additional shares through
the
Fund’s Dividend Reinvestment Plan. The Board of Directors believes this
policy creates a predictable level of quarterly cash flow to Fund
shareholders.
The
table
on the next page sets forth the estimated amounts of the most recent
quarterly distribution and the cumulative distributions paid during this
fiscal year to date from the following sources: net investment income;
net
realized short term capital gains; net realized long term capital gain;
and
return of capital.
You
should not necessarily draw any conclusions about the Fund’s investment
performance from the amount of the distributions, as summarized in the
table on
the next page, or from the terms of the Fund’s Managed Distribution
Policy.
The
Fund
estimates that it has distributed more than its income and capital gains;
therefore, a portion of the
distributions, as summarized in the table on the next page,
may be a
return of capital. A return of capital may occur, for example, when some
or all
of the money that you invested in the Fund is paid back to you. A return
of
capital distribution does not necessarily reflect the Fund’s investment
performance and should not be confused with “yield” or “income.” It
is
important to note that the Fund’s investment adviser, Denver Investment Advisors
LLC, seeks to minimize the amount of net realized capital gains, if consistent
with the Fund’s investment objective, to reduce the amount of income taxes
incurred by our stockholders. This strategy can lead
to
greater levels of return of capital being paid out under the Managed
Distribution
Policy.
The
amounts and sources of distributions reported are only estimates and are
not
being provided for tax reporting purposes. The actual amounts and sources
of the
amounts for tax reporting purposes will depend upon the Fund’s investment
experience during the remainder of its fiscal year and may be subject to
changes
based on tax regulations. The Fund will send you a Form 1099-DIV for
the
calendar year that will tell you how to report these distributions for
federal
income tax purposes.
The
Fund’s Managed Distribution Policy may be changed or terminated at the
discretion of the Fund’s Board of Directors without prior notice to
stockholders. If, for example, the Fund’s total distributions for the year
result in taxable return of capital, the Fund’s Board of Directors would
consider that factor, among others, in determining whether to retain, alter
or
eliminate the Managed Distribution Policy. It is possible, that the Fund’s
market price may decrease if the Managed Distribution Policy is terminated.
At
this time, the Board has no intention of making any changes or terminating
the
Managed Distribution Policy.
ESTIMATED
SOURCES OF DISTRIBUTIONS
|
|
|
|
|
%
Breakdown
|
|||||||||
|
|
|
|
|
of
the Total
|
|||||||||
|
|
|
%
Breakdown
|
Total
Cumulative
|
Cumulative
|
|||||||||
|
|
|
of
the
|
Distributions
|
Distributions
|
|||||||||
|
|
Current
|
Current
|
for
the Fiscal
|
for
the Fiscal
|
|||||||||
|
|
Distribution
($)
|
Distribution
|
Year
to Date ($)
|
Year
to Date
|
|||||||||
|
Net
Investment Income
|
$
|
0.0071
|
5.92
|
%
|
$
|
0.0068
|
2.72
|
%
|
|||||
|
Net
Realized Short Term Capital Gains
|
$
|
0.0000
|
0.00
|
%
|
$
|
0.0000
|
0.00
|
%
|
|||||
|
Net
Realized Long Term Capital Gains
|
$
|
0.0007
|
0.58
|
%
|
$
|
0.0000
|
0.00
|
%
|
|||||
|
Return
of Capital
|
$
|
0.1122
|
93.50
|
%
|
$
|
0.2432
|
97.28
|
%
|
|||||
|
Total
(per common share)
|
$
|
0.12
|
100
|
%
|
$
|
0.25
|
100
|
%
|
|||||
|
Average
annual total return (in relation to NAV) for the 5 years ending
June 30,
2008
|
8.77
|
%
|
||
|
Annualized
current distribution rate expressed as a percentage of NAV
as of June 30,
2008
|
9.98
|
%
|
||
|
Cumulative
total return (in relation to NAV) for the fiscal year through
June 30,
2008
|
(7.68
|
%)
|
||
|
Cumulative
fiscal year distributions as a percentage of NAV as of June
30,
2008
|
5.20
|
%
|
|
1-800-624-4190
• www.blu.com
|
1
|
|
Send
Us Your E-mail Address
If
you
would like to receive monthly portfolio composition and characteristic
updates,
press releases and financial reports electronically as soon as they are
available, please send an e-mail to blu@denveria.com and include your name
and
e-mail address. You will still receive paper copies of any required
communications and reports in the mail. This service
is completely voluntary and you can cancel at any time by contacting us
via
e-mail at blu@denveria.com or toll-free at 1-800-624-4190.
|
2
|
Semi-Annual
Report June 30, 2008
|
|
TABLE
OF CONTENTS
|
Managed
Distribution Policy
|
Inside
Front Cover
|
|
Investment
Adviser’s Commentary
|
4
|
|
Sector
Diversification Chart
|
6
|
|
Average
Annual Total Returns
|
6
|
|
Change
in Investment of $10,000
|
7
|
|
Performance
History
|
8
|
|
Sources
of Distribution
|
9
|
|
Dividend
Reinvestment and Cash Purchase Plan
|
10
|
|
Considerations
Relating to the Advisory Contract Renewal
|
11
|
|
Other
Important Information
|
13
|
|
Statement
of Investments
|
14
|
|
Country
Breakdown
|
17
|
|
Statement
of Assets and Liabilities
|
18
|
|
Statement
of Operations
|
19
|
|
Statements
of Changes in Net Assets
|
20
|
|
Statement
of Cash Flows
|
21
|
|
Financial
Highlights
|
22
|
|
Notes
to Financial Statements
|
24
|
The
Investment Adviser’s Commentary included in this report contains certain
forward-looking statements about the factors that may affect the performance
of
the Fund in the future. These statements are based on Fund management’s
predictions and expectations concerning certain future events and their
expected
impact on the Fund, such as performance of the economy as a whole and
of
specific industry sectors, changes in the levels of interest rates, the
impact
of developing world events, and other factors that may influence the
future
performance of the Fund. Management believes these forward-looking statements
to
be reasonable, although they are inherently uncertain and difficult to
predict.
Actual events may
cause adjustments in portfolio management strategies from those currently
expected to be
employed.
|
1-800-624-4190
• www.blu.com
|
3
|
|
INVESTMENT
ADVISER’S COMMENTARY
|
Dear
Fellow Stockholders:
|
August
5, 2008
|
For
the
six months ended June 30, 2008 the net asset value of the Blue Chip Value
Fund,
Inc. declined 7.68%. During this same period the S&P 500 Index, the Fund’s
benchmark index, lost 11.91% and the Lipper Large Core peer group declined
10.80%. The investing environment during the first half of 2008 was perhaps
best
characterized by fear of the financial fallout from the mortgage crisis
and the
continued propensity of investors to buy stocks only in sectors that
have
performed well, such as energy and commodities. Against this backdrop,
we
continued to manage the Fund by choosing stocks that have strong free
cash flow,
earn good returns on capital and are reasonably priced relative to their
earnings.
The
exceptional performance of several of our healthcare holdings helped
the Fund’s
overall performance during the period. Standout performers included the
biotech
company Amgen, Inc. and Zimmer Holdings, Inc., a manufacturer of orthopedic
implants. Both companies enjoyed improving profitability and appear to
us to
have good prospects for continuing their growth.
Another
strong contributor to the Fund’s performance was Quanta Services, Inc., a
contracting services company that offers network solutions to the electric
power, gas, telecommunications and cable television industries. We believe
that
Quanta stands to
benefit meaningfully from upgrades to power grids. It continues to win
contracts, driving revenues and cash flows higher. As a result of a 26%
increase
in Quanta’s stock price over the past six months, the commercial services sector
was the Fund’s second largest contributor to performance.
While
it
is clear that high energy prices and a difficult housing market are affecting
consumer attitudes, our holdings of discount retailer TJX Companies and
casual
dining operator Darden Restaurants were both up in the first half of
the year.
The gains posted by these two companies helped to buffer the loss of
the group
as a whole, which declined only 3.77% compared to the consumer cyclical
stocks
in the S&P 500 Index, which declined nearly 9.72% as a group.
Our
largest individual contributor to performance was oil and gas exploration
company XTO Energy, which gained 33%. Aided by the strong performance
of
integrated oil and gas company Occidental Petroleum, our energy holdings
outperformed the oil and gas stocks in the benchmark index. However,
we remain
somewhat cautious on the sustainability of the recent spike in energy
prices and
therefore owned a slightly smaller weighting in energy than the S&P 500
during the period. As a result, energy created a nominal drag on Fund
performance.
|
4
|
Semi-Annual
Report June 30, 2008
|
|
Fund
holding Wachovia, a provider of commercial and retail banking services,
lost 57%
during the first half of the year. This caused the Fund’s absolute performance
in the interest-rate sensitive sector to lag the S&P 500 on average. Helping
to offset this underperformance was our decision to hold a slightly underweight
position in the sector versus the benchmark. While we believe there is
significant value in interest-rate sensitive stocks over time, near-term
uncertainties convinced us to be cautious in this area.
Although
economic slowing is clearly being discounted in the market, we believe
there
are
increasing opportunities to own companies with strong operations and
balance
sheets at attractive valuations. Over the next several quarters, we believe
the
concerns about the degree of slowing should be clarified, and we expect
the
market
will begin to improve. In the meantime, we remain focused on preserving
capital
and limiting risks.
Thank
you
for your continued support.
Todger
Anderson, CFA
President,
Blue Chip Value Fund, Inc.
Chairman,
Denver Investment Advisors LLC
|
1-800-624-4190
• www.blu.com
|
5
|
|
|
Sector
Diversification in Comparison to
S&P
500 as of June 30, 2008*
|
|||||||
|
Fund
|
|
S&P
500
|
|||||
|
Basic
Materials
|
2.7
|
%
|
3.1
|
%
|
|||
|
Capital
Goods
|
9.6
|
%
|
8.4
|
%
|
|||
|
Commercial
Services
|
5.2
|
%
|
2.0
|
%
|
|||
|
Communications
|
8.0
|
%
|
7.4
|
%
|
|||
|
Consumer
Cyclical
|
12.6
|
%
|
10.6
|
%
|
|||
|
Consumer
Staples
|
8.0
|
%
|
10.3
|
%
|
|||
|
Energy
|
14.7
|
%
|
15.3
|
%
|
|||
|
Interest
Rate Sensitive
|
10.4
|
%
|
12.7
|
%
|
|||
|
Medical/Healthcare
|
12.4
|
%
|
11.1
|
%
|
|||
|
REITs
|
0.0
|
%
|
1.2
|
%
|
|||
|
Technology
|
10.7
|
%
|
11.8
|
%
|
|||
|
Transportation
|
2.7
|
%
|
2.1
|
%
|
|||
|
Utilities
|
2.7
|
%
|
4.0
|
%
|
|||
|
Short-Term
Investments
|
0.3
|
%
|
0.0
|
%
|
|||
| * |
Sector
diversification percentages are based on the Fund’s total investments at
market value. Sector
diversification is subject to change and may not be representative
of
future investments.
|
|
Average
Annual Total Returns
as
of June 30, 2008
|
|||||||||||||||||||
|
Year-To
|
|||||||||||||||||||
|
Return
|
3
Mos.
|
Date
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|||||||||||||
|
Blue
Chip Value Fund - NAV
|
(1.21
|
%)
|
(7.68
|
%)
|
(11.01
|
%)
|
4.83
|
%
|
8.77
|
%
|
3.17
|
%
|
|||||||
|
Blue
Chip Value Fund - Market Price
|
(1.85
|
%)
|
(10.52
|
%)
|
(18.45
|
%)
|
(1.47
|
%)
|
4.99
|
%
|
2.30
|
%
|
|||||||
|
S&P
500 Index
|
(2.73
|
%)
|
(11.91
|
%)
|
(13.12
|
%)
|
4.41
|
%
|
7.58
|
%
|
2.88
|
%
|
|||||||
|
Past
performance is no guarantee of future results. Share
prices will
fluctuate, so that a share may be worth more or less
than its original
cost when sold. Total investment return is calculated
assuming a
purchase of common stock on the opening of the first
day and a sale
on the closing of the last day of each period reported.
Dividends and
distributions, if any, are assumed for purposes of this calculation
to be reinvested at prices obtained under the Fund’s dividend reinvestment
plan. Rights offerings, if any, are assumed for purposes
of this
calculation to be fully subscribed under the terms
of the rights offering.
Please note that the Fund’s total return shown above does not reflect the
deduction of taxes that a stockholder would pay on
Fund distributions or
the cost of sale of Fund shares. Current performance
may be higher or
lower than the total return shown above. Please visit
our website at
www.blu.com to obtain the most recent month end returns.
Generally, total
investment return based on net asset value will be
higher than total
investment return based on market value in periods
where there is an
increase in the discount or a decrease in the premium
of the market
value to the net asset value from the beginning to
the end of such
periods. Conversely, total investment return based
on the net asset
value will be lower than total investment return based
on market value in
periods where there is a decrease in the discount or
an increase in the
premium of the market value to the net asset value
from the beginning to
the end of such periods.
|
|||||||||||||||||||
|
6
|
Semi-Annual
Report June 30, 2008
|
|
Please
Note: Performance calculations are as of the end of December each
year and the
current period end. Past performance is not indicative of future
results. This
chart assumes an investment of $10,000 on 1/1/98. This chart does
not reflect
the deduction of taxes that a shareholder would pay on Fund distributions
or the
redemption of Fund shares.
S&P
500 Index is a broad-based measurement of changes in stock market
conditions
based on the average performance of 500 widely held common stocks.
It is an
unmanaged index.
Please
see Average Annual Total Return information on page 6.
|
1-800-624-4190
• www.blu.com
|
7
|
|
Please
Note: line graph points are as of the end of each calendar
quarter.
Past
performance is no guarantee of future results. Share prices will
fluctuate, so
that a share may be worth more or less than its original cost when
sold.
| 1 |
Reflects
the actual market price of one share as it has traded
on the
NYSE.
|
| 2 |
Reflects
the actual NAV of one share.
|
| 3 |
The
graph above includes the distribution totals since January
1, 1998, which
equals $7.93 per share. For the six months ended June
30, 2008 only one
distribution has been paid. The NAV per share is reduced
by the amount of
the distribution on the ex-dividend date. The sources
of these
distributions are depicted in the chart on the next
page.
|
|
8
|
Semi-Annual
Report June 30, 2008
|
|
HISTORICAL
SOURCES OF DISTRIBUTIONS
|
Net
|
Total
|
|||||||||||||||
|
Investment
|
Capital
|
Return
of
|
Amount
of
|
|||||||||||||
|
Year
|
Income
|
Gains
|
Capital
|
Undesignated*
|
Distribution
|
|||||||||||
|
1998
|
$
|
0.0541
|
$
|
1.0759
|
$
|
0.0000
|
$
|
1.13
|
||||||||
|
1999
|
$
|
0.0335
|
$
|
1.6465
|
$
|
0.0000
|
$
|
1.68
|
||||||||
|
2000
|
$
|
0.0530
|
$
|
0.8370
|
$
|
0.0000
|
$
|
0.89
|
||||||||
|
2001
|
$
|
0.0412
|
$
|
0.3625
|
$
|
0.3363
|
$
|
0.74
|
||||||||
|
2002
|
$
|
0.0351
|
$
|
0.0000
|
$
|
0.5249
|
$
|
0.56
|
||||||||
|
2003
|
$
|
0.0136
|
$
|
0.0000
|
$
|
0.4964
|
$
|
0.51
|
||||||||
|
2004
|
$
|
0.0283
|
$
|
0.5317
|
$
|
0.0000
|
$
|
0.56
|
||||||||
|
2005
|
$
|
0.0150
|
$
|
0.1128
|
$
|
0.4422
|
$
|
0.57
|
||||||||
|
2006
|
$
|
0.0182
|
$
|
0.1260
|
$
|
0.4358
|
$
|
0.58
|
||||||||
|
2007
|
$
|
0.0146
|
$
|
0.2118
|
$
|
0.2136
|
$
|
0.1400*
|
$
|
0.58
|
||||||
|
1Q
2008 (estimated)
|
$
|
0.0000
|
$
|
0.0000
|
$
|
0.1300
|
$
|
0.13
|
||||||||
|
Totals
|
$
|
0.3066
|
$
|
4.9042
|
$
|
2.5792
|
$
|
0.1400*
|
$
|
7.93
|
||||||
|
%
of Total Distribution
|
3.87
|
%
|
61.84
|
%
|
32.52
|
%
|
1.77
|
%
|
100
|
%
|
||||||
|
*
|
Pursuant
to Section 852 of the Internal Revenue Code, the taxability
of this
distribution will be reported in
2008.
|
|
1-800-624-4190
• www.blu.com
|
9
|
|
DIVIDEND
REINVESTMENT AND CASH PURCHASE PLAN
The
Blue
Chip Value Fund Inc.’s (the “Fund”) Dividend Reinvestment and Cash Purchase Plan
(the “Plan”) offers stockholders the opportunity to reinvest the Fund’s
dividends and distributions in additional shares of the Fund. A
stockholder may
also make additional cash investments under the Plan.
Participating
stockholders will receive additional shares issued at a price equal
to the net
asset value per share as of the close of the New York Stock Exchange
on the
record date (“Net Asset Value”), unless at such time the Net Asset Value is
higher than the market price of the Fund’s common stock plus brokerage
commission. In this case the Fund, through BNY Mellon Shareowner
Services, (the
“Plan Administrator”) will attempt, generally over the next 10 business days
(the “Trading Period”), to acquire shares of the Fund’s common stock in the open
market at a price plus brokerage commission which is less than
the Net Asset
Value. In the event that prior to the time such acquisition is
completed, the
market price of such common stock plus commission equals or exceeds
the Net
Asset Value, or in the event that such market purchases are unable
to be
completed by the end of the Trading Period, then the balance of
the distribution
shall be completed by issuing additional shares at Net Asset Value.
The
reinvestment price is then determined by the weighted average price
per share,
including trading fees, of the shares issued by the Fund and/or
acquired by the
Plan Administrator in connection with that transaction.
Participating
stockholders may also make additional cash investments (minimum
$50 and maximum
$10,000 per month) to acquire additional shares of the Fund. Please
note,
however, that these additional shares will be purchased at market
value plus
brokerage commission (without regard to net asset value) per share.
The
transaction price of shares and fractional shares acquired on the
open market
for each participant’s account in connection with the Plan shall be determined
by the weighted average price per share, including trading fees,
of the shares
acquired by the Plan Administrator in connection with that
transaction.
A
registered stockholder may join the Plan by completing an Enrollment
Form from
the Plan Administrator. The Plan Administrator will hold the shares
acquired
through the Plan in book-entry form, unless you request share certificates.
If
your shares are registered with a broker, you may still be able
to participate
in the Fund’s Dividend Reinvestment and Cash Purchase Plan. Please contact
your
broker about how to reregister your shares through the Direct Registration
System (“DRS”) and to inquire if there are any fees which may be charged by
the
broker to your account.
The
automatic reinvestment of dividends and distributions will not
relieve
participants of any income taxes that may be payable (or required
to be
withheld) on dividends or distributions, even though the stockholder
does not
receive the cash.
A
stockholder may elect to withdraw from the Plan at any time on
prior written
notice, and receive future dividends and distributions in cash.
There is no
penalty for withdrawal from the Plan and stockholders who have
withdrawn from
the Plan may rejoin in the future. In addition, you may request
the Plan
Administrator to sell all or a portion of your shares. When your
shares are
sold, you will receive the proceeds less a service charge of $15.00
and trading
fees of $0.02 per share. The Plan Administrator will generally
sell your shares
on the day your request is received in good order, however the
Plan
Administrator reserves the right to take up to 5 business days
to sell your
shares. Shares will be aggregated by the Plan Administrator with
the shares of
other participants selling their shares that day and sold on the
open market. A
participant will receive the weighted average price minus trading
fees and
service charges of all liquidated shares sold by the Plan Administrator
on the
transaction date.
|
10
|
Semi-Annual
Report June 30, 2008
|
|
The
Fund may amend the Plan at any time upon 30-days prior notice to
participants.
Additional
information about the Plan may be obtained from the Plan Administrator
by
writing to BNY Mellon Shareowner Services, 480 Washington Blvd.,
Jersey City, NJ
07310, by telephone at (800) 624-4190 (option #1) or by visiting
the Plan
Administrator at www.bnymellon.com/shareowner.
BLUE
CHIP VALUE FUND BOARD CONSIDERATIONS RELATING TO THE ADVISORY CONTRACT
RENEWAL
The
Board
of Directors of the Fund decided on February 5, 2008 to renew the
Advisory
Agreement (the “Agreement”) with Denver Investment Advisors (“DenverIA”).
Prior to making its determination, the Board received detailed
information from
DenverIA, including, among other things, information provided by
an independent
rating and ranking organization and DenverIA comparing the performance,
advisory
fee and other expenses of the Fund to that of relevant peer groups
identified by
the organization and the Fund’s benchmark and information responsive to requests
by the Fund’s independent counsel for certain information to assist the Board
in
its considerations, including DenverIA’s Form ADV. In addition, the Board
reviewed a memorandum from its independent counsel detailing the
Board’s duties
and responsibilities in considering renewal of the Agreement.
In
reaching its decision to renew the Agreement, the Board, including
a majority of
the Directors who are not interested persons under the Investment
Company Act of
1940 (the “Independent Directors”), considered, among other things: (i) the
nature, extent and quality of DenverIA’s services provided to the Fund,
DenverIA’s compliance culture and resources committed to its compliance
program;
(ii) the experience and qualifications of the portfolio management
team; (iii)
DenverIA’s investment philosophy and process; (iv) DenverIA’s assets under
management and client descriptions; (v) DenverIA’s brokerage and soft dollar
commission reports; (vi) current advisory fee arrangement with
the Fund and
DenverIA’s other similarly managed mutual fund client, noting that DenverIA
did
not provide advisory fee information on its other separate account
clients,
because those clients are not managed similarly to the Fund’s large cap value
style; (vii) independent rating and ranking organization information
comparing
the Fund’s performance, advisory fee and other expenses to those of comparable
funds; (viii) information provided by DenverIA on the Fund’s performance in
relation to its benchmark index and comparing the Fund’s expenses net of the
interest expense for the line of credit and DenverIA’s co-administration fees to
those of comparable funds; (ix) DenverIA’s financial statements, Form ADV, and
profitability analysis related to providing advisory and administrative
services
to the Fund; (x) the level of DenverIA’s insurance coverage; (xi) compensation
and possible benefits to DenverIA and its affiliates arising from
their
advisory, administrative and other relationships with the Fund;
and (xii) the
extent to which economies of scale are relevant to the Fund.
|
1-800-624-4190
• www.blu.com
|
11
|
|
During
the course of its deliberations, the Board, including a majority
of Independent
Directors, reached the following conclusions, among others, regarding
DenverIA
and the Agreement: that DenverIA had the capabilities, resources
and personnel
necessary to manage the Fund; that the performance of the Fund
over the last 3
and 5 year periods was competitive with that of its peer groups
and benchmark
index; the advisory fee is competitive with that of its peer
groups, consistent
with DenverIA’s other similarly managed mutual fund client and is fair and
reasonable; that the combined advisory and co-administration
fee payable to
DenverIA is also competitive with that of its peer group; the
Fund’s expense
ratio, without interest expense from the line of credit, is favorable
compared
to the peer group averages. The Board determined that it was
reasonable to
factor out the interest expense on the Fund’s expenses to those of the peer
group because few of these funds incur interest expense. The
Board also
concluded that the expected profit to DenverIA for advisory and
administrative
services seemed reasonable based on the data Denver IA provided;
that the
benefits derived by DenverIA from managing the Fund, including
how DenverIA uses
soft-dollars, and the ways in which it conducts portfolio transactions
for the
Fund and selects brokers are reasonable; and that the breakpoints
in the
advisory and administrative fees payable to DenverIA allow shareholders
to
benefit from economies of scale as the Fund’s asset level increases, noting that
the asset level breakpoints have been reached under the agreements.
Based
on the factors considered, the Board, including a majority of
the Independent
Directors, concluded that it was appropriate to renew the
Agreement.
|
12
|
Semi-Annual
Report June 30, 2008
|
|
OTHER
IMPORTANT INFORMATION
How
to Obtain a Copy of the Fund’s Proxy Voting Policies and
Records
A
description of the policies and procedures that are used by the
Fund’s
investment adviser to vote proxies relating to the Fund’s portfolio securities
is available (1)
without charge, upon request, by calling (800) 624-4190; (2)
on the Fund’s
website
at www.blu.com
and (3)
on the Fund’s Form N-CSR which
is
available on the U.S. Securities and Exchange Commission
(“SEC”) website at www.sec.gov.
Information
regarding how the Fund’s investment adviser voted proxies relating to the Fund’s
portfolio securities during the most recent 12-month period ended
June 30 is
available, (1) without charge, upon request by calling (800)
624-4190; (2) on
the Fund’s website at www.blu.com
and (3)
on the SEC website at www.sec.gov.
Quarterly
Portfolio Holdings
The
Fund
files its complete schedule of portfolio holdings with the SEC
for the first and
third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are
available on the SEC’s website at www.sec.gov
and may
be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C.
Information on the operation of the SEC’s Public Reference Room may be obtained
by calling 1-800-SEC-0330. In addition, the Fund’s complete schedule of
portfolio holdings for the first and third quarters of each fiscal
year is
available on the Fund’s website at www.blu.com.
|
1-800-624-4190
• www.blu.com
|
13
|
|
BLUE
CHIP
VALUE
FUND, INC.
STATEMENT
OF INVESTMENTS
June
30,
2008 (Unaudited)
|
|
|
|
|
Market
|
|
|||||
|
|
|
Shares
|
|
Cost
|
|
Value
|
||||
|
COMMON
STOCKS - 108.54%
|
||||||||||
|
BASIC
MATERIALS - 3.04%
|
||||||||||
|
Forestry
& Paper - 3.04%
|
||||||||||
|
Ball
Corp.
|
87,140
|
$
|
4,576,516
|
$
|
4,160,064
|
|||||
|
TOTAL
BASIC MATERIALS
|
4,576,516
|
4,160,064
|
||||||||
|
CAPITAL
GOODS - 10.54%
|
||||||||||
|
Aerospace
& Defense - 4.19%
|
||||||||||
|
General
Dynamics Corp.
|
36,800
|
1,885,173
|
3,098,560
|
|||||||
|
Raytheon
Co.
|
46,800
|
1,676,515
|
2,633,904
|
|||||||
|
3,561,688
|
5,732,464
|
|||||||||
|
Farm
Equipment - 1.52%
|
||||||||||
|
CNH
Global N.V. - ADS (Netherlands)
|
61,300
|
2,402,223
|
2,082,361
|
|||||||
|
Industrial
Products - 4.83%
|
||||||||||
|
ITT
Corp.
|
49,000
|
2,669,571
|
3,103,170
|
|||||||
|
Parker
Hannifin Corp.
|
49,150
|
2,282,811
|
3,505,378
|
|||||||
|
4,952,382
|
6,608,548
|
|||||||||
|
TOTAL
CAPITAL GOODS
|
10,916,293
|
14,423,373
|
||||||||
|
COMMERCIAL
SERVICES - 5.65%
|
||||||||||
|
Business
Products & Services - 2.82%
|
||||||||||
|
Quanta
Services Inc.**
|
116,100
|
3,553,909
|
3,862,647
|
|||||||
|
IT
Services - 1.15%
|
||||||||||
|
Computer
Sciences Corp.**
|
33,650
|
1,585,081
|
1,576,166
|
|||||||
|
Transaction
Processing - 1.68%
|
||||||||||
|
The
Western Union Co.
|
92,900
|
1,710,955
|
2,296,488
|
|||||||
|
TOTAL
COMMERCIAL SERVICES
|
6,849,945
|
7,735,301
|
||||||||
|
COMMUNICATIONS
- 8.79%
|
||||||||||
|
Networking
- 4.43%
|
||||||||||
|
Cisco
Systems Inc.**
|
260,900
|
6,458,175
|
6,068,534
|
|||||||
|
Telecomm
Equipment & Solutions - 4.36%
|
||||||||||
|
Nokia
Corp. - ADR (Finland)
|
50,630
|
826,080
|
1,240,435
|
|||||||
|
QUALCOMM
Inc.
|
106,400
|
4,527,012
|
4,720,968
|
|||||||
|
5,353,092
|
5,961,403
|
|||||||||
|
TOTAL
COMMUNICATIONS
|
11,811,267
|
12,029,937
|
||||||||
|
CONSUMER
CYCLICAL - 13.25%
|
||||||||||
|
Apparel
& Footwear Manufacturers - 2.39%
|
||||||||||
|
Nike
Inc.
|
54,750
|
3,437,995
|
3,263,648
|
|||||||
|
Clothing
& Accessories - 2.61%
|
||||||||||
|
TJX
Companies Inc.
|
113,300
|
2,625,925
|
3,565,551
|
|||||||
|
14
|
Semi-Annual
Report June 30, 2008
|
|
STATEMENT
OF INVESTMENTS (cont’d.)
|
|
|
|
|
|
|
Market
|
|
|||
|
|
|
|
Shares
|
|
|
Cost
|
|
|
Value
|
|
|
Hotels
& Gaming - 2.06%
|
||||||||||
|
Starwood
Hotels & Resorts Worldwide Inc.
|
70,200
|
$
|
2,964,536
|
$
|
2,812,914
|
|||||
|
Internet
- 1.27%
|
||||||||||
|
Expedia
Inc.**
|
94,700
|
2,665,192
|
1,740,586
|
|||||||
|
Publishing
& Media - 2.30%
|
||||||||||
|
Walt
Disney Co.
|
101,100
|
2,533,941
|
3,154,320
|
|||||||
|
Restaurants
- 2.62%
|
||||||||||
|
Darden
Restaurants Inc.
|
112,240
|
3,111,435
|
3,584,945
|
|||||||
|
TOTAL
CONSUMER CYCLICAL
|
17,339,024
|
18,121,964
|
||||||||
|
CONSUMER
STAPLES - 8.79%
|
||||||||||
|
Consumer
Products - 2.99%
|
||||||||||
|
Colgate
Palmolive Co.
|
59,300
|
3,360,379
|
4,097,630
|
|||||||
|
Food
& Agricultural Products - 5.80%
|
||||||||||
|
Bunge
Ltd.
|
18,900
|
816,104
|
2,035,341
|
|||||||
|
Campbell
Soup Co.
|
73,500
|
2,395,771
|
2,459,310
|
|||||||
|
Unilever
N.V. (Netherlands)
|
121,100
|
4,282,197
|
3,439,240
|
|||||||
|
7,494,072
|
7,933,891
|
|||||||||
|
TOTAL
CONSUMER STAPLES
|
10,854,451
|
12,031,521
|
||||||||
|
ENERGY
- 16.05%
|
||||||||||
|
Exploration
& Production - 7.99%
|
||||||||||
|
Occidental
Petroleum Corp.
|
64,080
|
1,824,272
|
5,758,228
|
|||||||
|
XTO
Energy Inc.
|
75,537
|
1,858,249
|
5,175,040
|
|||||||
|
3,682,521
|
10,933,268
|
|||||||||
|
Integrated
Oils - 3.27%
|
||||||||||
|
Marathon
Oil Corp.
|
86,300
|
2,546,892
|
4,476,381
|
|||||||
|
Oil
Services - 4.79%
|
||||||||||
|
Transocean
Inc.**
|
42,949
|
2,572,702
|
6,544,998
|
|||||||
|
TOTAL
ENERGY
|
8,802,115
|
21,954,647
|
||||||||
|
INTEREST
RATE SENSITIVE - 11.35%
|
||||||||||
|
Insurance
- 1.01%
|
||||||||||
|
The
Travelers Cos. Inc.
|
31,700
|
1,666,123
|
1,375,780
|
|||||||
|
Integrated
Financial Services - 1.50%
|
||||||||||
|
JPMorgan
Chase & Co.
|
59,600
|
2,568,698
|
2,044,876
|
|||||||
|
Money
Center Banks - 0.77%
|
||||||||||
|
Bank
of America Corp.
|
44,300
|
1,774,693
|
1,057,441
|
|||||||
|
Property
Casualty Insurance - 2.00%
|
||||||||||
|
ACE
Ltd. (Cayman Islands)
|
25,900
|
1,431,670
|
1,426,831
|
|||||||
|
American
International Group Inc.
|
49,600
|
3,119,563
|
1,312,416
|
|||||||
|
4,551,233
|
2,739,247
|
|
1-800-624-4190
• www.blu.com
|
15
|
|
STATEMENT
OF INVESTMENTS (cont’d.)
|
Market
|
||||||||||
|
Shares
|
Cost
|
Value
|
||||||||
|
Regional
Banks - 0.71%
|
||||||||||
|
Wachovia
Corp.
|
62,600
|
$
|
2,613,605
|
$
|
972,178
|
|||||
|
Securities
& Asset Management - 5.36%
|
||||||||||
|
Invesco
Ltd.
|
115,800
|
2,828,747
|
2,776,884
|
|||||||
|
Legg
Mason Inc.
|
29,600
|
1,592,172
|
1,289,672
|
|||||||
|
Morgan
Stanley & Co.
|
25,000
|
1,161,450
|
901,750
|
|||||||
|
State
Street Corp.
|
37,000
|
2,440,975
|
2,367,630
|
|||||||
|
8,023,344
|
7,335,936
|
|||||||||
|
TOTAL
INTEREST RATE SENSITIVE
|
21,197,696
|
15,525,458
|
||||||||
|
MEDICAL
& HEALTHCARE - 13.48%
|
||||||||||
|
Medical
Technology - 3.32%
|
||||||||||
|
Zimmer
Holdings Inc.**
|
66,800
|
4,680,017
|
4,545,740
|
|||||||
|
Pharmaceuticals
- 10.16%
|
||||||||||
|
Abbott
Laboratories
|
109,300
|
4,588,642
|
5,789,621
|
|||||||
|
Amgen
Inc.**
|
59,000
|
3,382,769
|
2,782,440
|
|||||||
|
Teva
Pharmaceutical Industries Ltd. - ADR (Israel)
|
116,400
|
2,945,058
|
5,331,120
|
|||||||
|
10,916,469
|
13,903,181
|
|||||||||
|
TOTAL
MEDICAL & HEALTHCARE
|
15,596,486
|
18,448,921
|
||||||||
|
TECHNOLOGY
- 11.69%
|
||||||||||
|
Computer
Software - 2.49%
|
||||||||||
|
Microsoft
Corp.
|
123,600
|
3,288,432
|
3,400,236
|
|||||||
|
PC’s
& Servers - 4.31%
|
||||||||||
|
International
Business Machines Corp.
|
49,800
|
4,015,749
|
5,902,794
|
|||||||
|
Semiconductors
- 4.89%
|
||||||||||
|
Altera
Corp.
|
131,700
|
2,481,105
|
2,726,190
|
|||||||
|
Intel
Corp.
|
184,600
|
3,627,241
|
3,965,208
|
|||||||
|
6,108,346
|
6,691,398
|
|||||||||
|
TOTAL
TECHNOLOGY
|
13,412,527
|
15,994,428
|
||||||||
|
TRANSPORTATION
- 2.94%
|
||||||||||
|
Railroads
- 2.94%
|
||||||||||
|
Norfolk
Southern Corp.
|
64,200
|
2,277,054
|
4,023,414
|
|||||||
|
TOTAL
TRANSPORTATION
|
2,277,054
|
4,023,414
|
||||||||
|
UTILITIES
- 2.97%
|
||||||||||
|
Regulated
Electric - 2.97%
|
||||||||||
|
PPL
Corp.
|
77,650
|
3,643,581
|
4,058,766
|
|||||||
|
TOTAL
UTILITIES
|
3,643,581
|
4,058,766
|
||||||||
|
TOTAL
COMMON STOCKS
|
127,276,955
|
148,507,794
|
||||||||
|
16
|
Semi-Annual
Report June 30, 2008
|
|
STATEMENT OF INVESTMENTS
(cont’d.)
|
Market
|
||||||||||
|
SHORT
TERM INVESTMENTS - 0.37%
|
Shares
|
Cost
|
Value
|
|||||||
|
Goldman
Sachs Financial Square Prime Obligations Fund
- FST Shares
(7 Day Yield 2.380%) |
507,484
|
$
|
507,484
|
$
|
507,484
|
|||||
|
TOTAL
SHORT TERM INVESTMENTS
|
507,484
|
507,484
|
||||||||
|
TOTAL
INVESTMENTS
|
108.91
|
%
|
$
|
127,784,439
|
$
|
149,015,278
|
||||
|
Liabilities
in Excess of Other Assets
|
(8.91
|
)%
|
(12,194,950
|
)
|
||||||
|
NET
ASSETS
|
100.00
|
%
|
$
|
136,820,328
|
| ** |
Non-income
producing security
|
ADR –
American
Depositary Receipt
ADS –
American Depositary Share
COUNTRY
BREAKDOWN
As
of
June 30, 2008 (Unaudited)
|
Market
|
|||||||
|
Country
|
Value
|
%
|
|||||
|
United
States
|
$
|
135,495,291
|
99.03
|
%
|
|||
|
Netherlands
|
5,521,601
|
4.03
|
%
|
||||
|
Israel
|
5,331,120
|
3.90
|
%
|
||||
|
Cayman
Islands
|
1,426,831
|
1.04
|
%
|
||||
|
Finland
|
1,240,435
|
0.91
|
%
|
||||
|
Total
Investments
|
$
|
149,015,278
|
108.91
|
%
|
|||
|
Liabilities
in Excess of Other Assets
|
(12,194,950
|
)
|
(8.91
|
%)
|
|||
|
Net
Assets
|
$
|
136,820,328
|
100.00
|
%
|
|||
Please
note the country classification is based on the company
headquarters. All
of the Fund’s investments are traded on U.S. exchanges.
See
accompanying notes to financial statements.
|
1-800-624-4190
• www.blu.com
|
17
|
|
BLUE
CHIP
VALUE
FUND, INC.
STATEMENT
OF ASSETS AND LIABILITIES
June
30,
2008 (Unaudited)
|
ASSETS
|
||||
|
Investments
at market value (cost $127,784,439)
|
$
|
149,015,278
|
||
|
Dividends
and interest receivable
|
101,114
|
|||
|
Other
assets
|
19,498
|
|||
|
TOTAL
ASSETS
|
149,135,890
|
|||
|
LIABILITIES
|
||||
|
Loan
payable to bank (Note 5)
|
12,115,000
|
|||
|
Interest
due on loan payable to bank
|
27,217
|
|||
|
Advisory
fee payable
|
71,089
|
|||
|
Administration
fee payable
|
9,269
|
|||
|
Accrued
Compliance Officer fees
|
3,106
|
|||
|
Accrued
expenses and other liabilities
|
89,881
|
|||
|
TOTAL
LIABILITIES
|
12,315,562
|
|||
|
NET
ASSETS
|
$
|
136,820,328
|
||
|
COMPOSITION
OF NET ASSETS
|
||||
|
Capital
stock, at par
|
$
|
284,639
|
||
|
Paid-in-capital
|
121,254,919
|
|||
|
Undistributed
net investment income
|
194,690
|
|||
|
Accumulated
net realized loss
|
(2,447,813
|
)
|
||
|
Net
unrealized appreciation on investments
|
21,230,839
|
|||
|
Undesignated
distributions (Note 1)
|
(3,696,946
|
)
|
||
|
NET
ASSETS
|
$
|
136,820,328
|
||
|
SHARES
OF COMMON STOCK OUTSTANDING (100,000,000 shares
authorized at $0.01 par
value)
|
28,463,912
|
|||
|
Net
asset value per share
|
$
|
4.81
|
||
See
accompanying notes to financial statements.
|
18
|
Semi-Annual
Report June 30, 2008
|
|
BLUE
CHIP
VALUE
FUND, INC.
STATEMENT
OF OPERATIONS
For
the Six Months Ended June 30, 2008 (Unaudited)
|
INCOME
|
|
|
|||||
|
Dividends
(net of foreign withholding taxes of $29,824)
|
$
|
1,136,474
|
|||||
|
Interest
|
8,194
|
||||||
|
TOTAL
INCOME
|
$
|
1,144,668
|
|||||
|
EXPENSES
|
|||||||
|
Investment
advisory fee (Note 4)
|
429,497
|
||||||
|
Administrative
services fee (Note 4)
|
51,464
|
||||||
|
Interest
on outstanding loan payable to bank
|
224,618
|
||||||
|
Stockholder
reporting
|
73,606
|
||||||
|
Directors’
fees
|
42,810
|
||||||
|
Legal
fees
|
41,942
|
||||||
|
Transfer
agent fees
|
26,453
|
||||||
|
Audit
and tax preparation fees
|
14,639
|
||||||
|
NYSE
listing fees
|
13,729
|
||||||
|
Insurance
and fidelity bond
|
10,784
|
||||||
|
Chief
Compliance Officer fees
|
10,763
|
||||||
|
Custodian
fees
|
4,780
|
||||||
|
Other
|
4,893
|
||||||
|
TOTAL
EXPENSES
|
949,978
|
||||||
|
NET
INVESTMENT INCOME
|
194,690
|
||||||
|
REALIZED
AND UNREALIZED
|
|||||||
|
LOSS
ON INVESTMENTS
|
|||||||
|
Net
realized loss on investments
|
(852,785
|
)
|
|||||
|
Change
in net unrealized appreciation or depreciation
of
investments
|
(11,058,540
|
)
|
|||||
|
NET
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
|
(11,911,325
|
)
|
|||||
|
NET
DECREASE IN NET ASSETS
|
|||||||
|
RESULTING
FROM OPERATIONS
|
$
|
(11,716,635
|
)
|
||||
See
accompanying notes to financial statements.
|
1-800-624-4190
• www.blu.com
|
19
|
|
BLUE
CHIP
VALUE
FUND,
INC.
STATEMENTS
OF CHANGES IN NET ASSETS
|
For
the
|
|||||||
|
Six
Months
|
|
For
the
|
|
||||
|
|
|
Ended
|
|
Year
Ended
|
|
||
|
|
|
June
30,
|
|
December
31,
|
|
||
|
|
|
2008*
|
|
2007
|
|||
|
Increase/(decrease)
in net assets from operations:
|
|||||||
|
Net
investment income
|
$
|
194,690
|
$
|
411,499
|
|||
|
Net
realized gain/(loss) on investments
|
(852,785
|
)
|
5,229,902
|
||||
|
Change
in net unrealized appreciation
or
depreciation of investments
|
(11,058,540
|
)
|
(222,134
|
)
|
|||
|
(11,716,635
|
)
|
5,419,267
|
|||||
|
Decrease
in net assets from distributions to stockholders
from:
|
|||||||
|
Net
investment income
|
—
|
(411,499
|
)
|
||||
|
Net
realized gain on investments
|
—
|
(5,980,234
|
)
|
||||
|
Return
of capital
|
—
|
(10,012,387
|
)
|
||||
|
Undesignated
(Note 1)
|
(3,696,946
|
)
|
—
|
||||
|
(3,696,946
|
)
|
(16,404,120
|
)
|
||||
|
Increase
in net assets from common stock transactions:
|
|||||||
|
Net
asset value of common stock issued to stockholders
from reinvestment of
dividends
(29,014 and 412,794 shares issued, respectively)
|
142,459
|
2,412,947
|
|||||
|
142,459
|
2,412,947
|
||||||
|
NET
DECREASE IN NET ASSETS
|
(15,271,122
|
)
|
(8,571,906
|
)
|
|||
|
NET
ASSETS
|
|||||||
|
Beginning
of year
|
152,091,450
|
160,663,356
|
|||||
|
End
of year (including (undistributed net investment
income of $194,690 and
$0,
respectively)
|
$
|
136,820,328
|
$
|
152,091,450
|
|||
| * |
Unaudited
|
See
accompanying notes to financial statements.
|
20
|
Semi-Annual
Report June 30, 2008
|
|
BLUE
CHIP
VALUE
FUND,
INC.
STATEMENT
OF CASH FLOWS
For
the
Six Months Ended June 30, 2008 (Unaudited)
|
Cash
Flows from Operating Activities
|
|
|||
|
Net
decrease in net assets from operations
|
$
|
(11,716,635
|
)
|
|
|
Adjustments
to reconcile net decrease in net assets
from operations to net cash
provided by operating activities:
|
||||
|
Purchase
of investment securities
|
(17,691,543
|
)
|
||
|
Proceeds
from disposition of investment securities
|
22,952,738
|
|||
|
Net
purchase of short-term investment securities
|
(255,086
|
)
|
||
|
Proceeds
from class-action litigation settlements
|
909
|
|||
|
Net
realized loss from securities investments
|
852,785
|
|||
|
Net
change in unrealized appreciation on
investments
|
11,058,540
|
|||
|
Decrease
in receivable for securities sold
|
2,434,479
|
|||
|
Decrease
in dividends and interest receivable
|
166,432
|
|||
|
Increase
in other assets
|
(9,053
|
)
|
||
|
Decrease
in advisory fee payable
|
(11,501
|
)
|
||
|
Decrease
in administrative fee payable
|
(728
|
)
|
||
|
Decrease
in accrued Compliance Officer fees
|
(1,352
|
)
|
||
|
Decrease
in other accrued expenses and payables
|
(4,612
|
)
|
||
|
Net
cash provided by operating activities
|
7,775,373
|
|||
|
Cash
Flows from Financing Activities
|
||||
|
Proceeds
from bank borrowing
|
4,635,000
|
|||
|
Repayment
of bank borrowing
|
(4,875,000
|
)
|
||
|
Cash
distributions paid
|
(7,535,373
|
)
|
||
|
Net
cash used in financing activities
|
(7,775,373
|
)
|
||
|
Net
increase in cash
|
0
|
|||
|
Cash,
beginning balance
|
0
|
|||
|
Cash,
ending balance
|
0
|
|||
|
Supplemental
disclosure of cash flow information:
Cash
paid during the period for interest from
bank borrowing:
$240,710.
Noncash
financing activities not included herein
consist of reinvestment
of dividends and distributions of $142,459. |
||||
See
accompanying notes to financial statements.
|
1-800-624-4190
• www.blu.com
|
21
|
|
BLUE
CHIP
VALUE
FUND,
INC.
FINANCIAL
HIGHLIGHTS
|
Six
Months
|
|||||||||||||||||||
|
Ended
|
|||||||||||||||||||
|
Per
Share Data
|
June
30,
|
For
the year ended December 31,
|
|||||||||||||||||
|
(for
a share outstanding throughout each period)
|
2008(1)
|
2007
|
2006
|
2005
|
2004
|
2003
|
|||||||||||||
|
Net
asset value - beginning of period
|
$
|
5.35
|
$
|
5.73
|
$
|
5.62
|
$
|
5.76
|
$
|
5.58
|
$
|
4.85
|
|||||||
|
Investment
operations(2)
|
|||||||||||||||||||
|
Net
investment income
|
0.01
|
0.01
|
0.02
|
0.01
|
0.03
|
0.01
|
|||||||||||||
|
Net
gain/(loss) on investments
|
(0.68
|
)
|
0.19
|
0.67
|
0.42
|
0.71
|
1.23
|
||||||||||||
|
Total
from investment operations
|
(0.67
|
)
|
0.20
|
0.69
|
0.43
|
0.74
|
1.24
|
||||||||||||
|
Distributions
|
|||||||||||||||||||
|
From
net investment income
|
—
|
(0.02
|
)
|
(0.02
|
)
|
(0.02
|
)
|
(0.03
|
)
|
(0.01
|
)
|
||||||||
|
From
net realized gains on investments
|
—
|
(0.21
|
)
|
(0.13
|
)
|
(0.11
|
)
|
(0.53
|
)
|
—
|
|||||||||
|
Return
of capital
|
—
|
(0.35
|
)
|
(0.43
|
)
|
(0.44
|
)
|
—
|
(0.50
|
)
|
|||||||||
|
Undesignated
|
0.13
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||
|
Total
distributions
|
0.13
|
(0.58
|
)
|
(0.58
|
)
|
(0.57
|
)
|
(0.56
|
)
|
(0.51
|
)
|
||||||||
|
Net
asset value, end of period
|
$
|
4.81
|
$
|
5.35
|
$
|
5.73
|
$
|
5.62
|
$
|
5.76
|
$
|
5.58
|
|||||||
|
Per
share market value, end of period
|
$
|
4.54
|
$
|
5.21
|
$
|
5.96
|
$
|
6.31
|
$
|
6.68
|
$
|
6.14
|
|||||||
|
Total
investment return(3)
based
on:
|
|||||||||||||||||||
|
Market
Value
|
(10.5
|
%)
|
(3.3
|
%)
|
4.6
|
%
|
3.7
|
%
|
19.2
|
%
|
46.9
|
%
|
|||||||
|
Net
Asset Value
|
(7.7
|
%)
|
3.3
|
%
|
12.9
|
%
|
7.1
|
%
|
13.1
|
%
|
26.4
|
%
|
|||||||
|
Ratios/Supplemental
data:
|
|||||||||||||||||||
|
Ratio
of total expenses to average net
assets(4)
|
1.33
|
%(5)
|
1.34
|
%
|
1.36
|
%
|
1.33
|
%
|
1.12
|
%
|
1.13
|
%
|
|||||||
|
Ratio
of net investment income to average net
assets
|
0.27
|
%(5)
|
0.25
|
%
|
0.32
|
%
|
0.21
|
%
|
0.57
|
%
|
0.27
|
%
|
|||||||
|
Ratio
of total distributions to average net
assets
|
2.57
|
%(6)
|
10.04
|
%
|
10.25
|
%
|
10.13
|
%
|
10.16
|
%
|
10.07
|
%
|
|||||||
|
Portfolio
turnover rate(7)
|
11.26
|
%
|
40.03
|
%
|
36.54
|
%
|
40.96
|
%
|
115.39
|
%
|
52.58
|
%
|
|||||||
|
Net
assets - end of period (in thousands)
|
$
|
136,820
|
$
|
152,091
|
$
|
160,663
|
$
|
155,208
|
$
|
156,903
|
$
|
150,057
|
|||||||
See
accompanying notes to financial statements.
| (1) |
Unaudited.
|
| (2) |
Per
share amounts calculated based on average
shares outstanding during the
period.
|
| (3) |
Total
investment return is calculated assuming
a purchase of common stock on the
opening of the first day and a sale on the
closing of the last day of each
period reported. Dividends and distributions,
if any, are assumed for
purposes of this calculation to be reinvested
at prices obtained under the
Fund’s dividend reinvestment plan. Rights offerings,
if any, are assumed
for purposes of this calculation to be fully
subscribed under the terms of
the rights offering. Please note that the
Fund’s total investment return
does not reflect the deduction of taxes that
a stockholder would pay on
Fund distributions or the sale of Fund shares.
Generally, total investment
return based on net asset value will be higher
than total investment
return based on market value in periods where
there is an increase in the
discount or a decrease in the premium of
the market value to the net asset
value from the beginning to the end of such
periods. Conversely, total
investment return based on the net asset
value will be lower than total
investment return based on market value in
periods where there is a
decrease in the discount or an increase in
the premium of the market value
to the net asset value from the beginning
to the end of such
periods.
|
| (4) |
For
the six months ended June 30, 2008
and the years ended December 31, 2007,
2006, 2005 and 2004, the ratio of total
expenses to average net assets
excluding interest expense was 1.01%,
0.93%, 0.92%, 0.97% and 0.99%,
respectively. For 2003 the interest
expense was less than
0.01%.
|
| (5) |
Annualized.
|
| (6) |
Due
to the timing of the quarterly ex-distribution
dates, only one quarterly
distribution was recorded during the
six months ended June 30, 2008.
Please see Note 8 on page 30 concerning
details for the July 2008
distribution.
|
| (7) |
A
portfolio turnover rate is the percentage
computed by taking the lesser of
purchases or sales of portfolio securities
(excluding short-term
investments) for the year and dividing
it by the monthly average of the
market value of the portfolio securities
during the year. Purchases and
sales of investment securities (excluding
short-term securities) for the
six months ended June 30, 2008 were
$17,691,543 and $22,952,738,
respectively.
|
|
|
||
|
22
|
Semi-Annual
Report June 30,
2008 1-800-624-4190
• www.blu.com
|
23
|
BLUE
CHIP
VALUE
FUND,
INC.
NOTES
TO FINANCIAL STATEMENTS
June
30,
2008 (Unaudited)
1.
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Blue
Chip Value Fund, Inc. (the “Fund”) is registered under the Investment Company
Act of 1940, as amended, as a diversified, closed-end
management investment
company.
The
following is a summary of significant accounting
policies followed by the Fund
in the preparation of its financial statements.
Security
Valuation –
All
securities of the Fund are valued as of the close
of regular trading on the New
York Stock Exchange (“NYSE”), generally 4:00 p.m. (Eastern Time), on each
day
that the NYSE is open. Listed securities are generally
valued at the last sales
price as of the close of regular trading on the
NYSE. Securities traded on the
National Association of Securities
Dealers Automated Quotation (“NASDAQ”) are generally valued at the NASDAQ
Official Closing Price (“NOCP”).
In the absence of sales and NOCP, such securities
are valued at the mean of the
bid and asked prices.
Securities
having a remaining maturity of 60 days or less
are valued at amortized cost
which approximates market value.
When
market quotations are not readily available or
when events occur that make
established valuation methods unreliable, securities
of the Fund may be valued
at fair value determined in good faith by or under
the direction of the Board of
Directors. Factors which may be considered when
determining the fair value of a
security include (a) the fundamental data relating to the investment; (b)
an evaluation of the forces which influence the
market in which the security is
sold, including the liquidity and depth of the
market; (c) the market value
at date of purchase; (d) information as to any
transactions or offers with
respect to the security or comparable securities;
and (e) any other relevant
matters.
Investment
Transactions –
Investment
transactions are accounted for on the date the
investments are purchased or sold
(trade date). Realized gains and losses from investment
transactions and
unrealized appreciation and depreciation of investments
are determined on the
“specific identification” basis for both financial statement and federal
income
tax purposes. Dividend income is recorded on the
ex-dividend date. Interest
income, which includes interest earned on money
market funds, is accrued and
recorded daily.
Federal
Income Taxes –
The
Fund
intends to comply with the requirements of the
Internal Revenue Code that are
applicable to regulated investment companies and
to distribute all of its
taxable income to its stockholders. Therefore,
no provision has been made for
federal income taxes.
|
24
|
Semi-Annual
Report June 30, 2008
|
|
The
Fund intends to elect to defer to its fiscal year
ending December 31, 2008
approximately $724,755 of losses recognized during
the period from November 1,
2007 to December 31, 2007.
Classification
of Distributions to Shareholders –
Net
investment income (loss) and net realized gain (loss)
may differ for financial
statement and tax purposes. The character of distributions
made during the year
from net investment income or net realized gains
may differ from its ultimate
characterization for federal income tax purposes.
Also, due to the timing of
dividend distributions, the fiscal year in which
amounts are distributed may
differ from the fiscal year in which the income or
realized gain was recorded by
the Fund.
The
tax
character of the distributions paid was as follows:
|
|
Six
Months Ended
|
Year
Ended
|
|||||
|
June
30,
|
December
31,
|
||||||
|
2008
|
2007
|
||||||
|
Distributions
paid from:
|
|
|
|||||
|
Ordinary
income
|
$
|
—
|
$
|
411,499
|
|||
|
Long-term
capital gain
|
—
|
5,980,234
|
|||||
|
Return
of capital
|
—
|
6,031,501
|
|||||
|
Undesignated
|
3,696,946
|
—
|
|||||
|
Total
|
$
|
3,696,946
|
$
|
12,423,234
|
|||
As
of
June 30, 2008, the components of distributable
earnings on a tax basis were as
follows:
|
Undistributed
net investment income
|
$
|
194,690
|
||
|
Accumulated
net realized loss
|
(3,165,463
|
)
|
||
|
Net
unrealized appreciation
|
20,513,189
|
|||
|
Total
|
$
|
17,542,416
|
The
difference between book basis and tax basis is
attributable to the tax deferral
of losses on wash sales and corporate actions.
Distributions
to Stockholders –
Distributions
to stockholders are recorded on the ex-dividend
date.
The
Fund
currently maintains a “managed distribution policy” which distributes at least
2.5% of its net asset value quarterly to its stockholders.
These fixed
distributions are not related to the amount of
the Fund’s net investment income
or net realized capital gains or losses and will
be classified to conform to the
tax reporting requirements of the Internal Revenue
Code.
Denver
Investment Advisors LLC (“DenverIA”) generally seeks to minimize realized
capital gain distributions without generating capital
loss carryforwards.
As such, if the Fund’s total distributions required by the fixed payout
policy
for the year exceed the Fund’s “current and accumulated earnings and profits,”
the excess will be treated as non-taxable return
of capital, reducing the
stockholder’s adjusted basis in his or
her
shares. Although capital loss carryforwards may
offset any current year net
realized capital gains, such amounts do not reduce
the Fund’s “current earnings
and profits.” Therefore, to the extent that current year net
realized capital
gains are offset by capital loss carryforwards, such excess
distributions would be classified as taxable ordinary income rather
than non-taxable return of capital. In this situation,
the Fund’s Board of
Directors would consider that factor, among others,
in determining whether to
retain, alter or eliminate the “managed distribution policy.” The Fund’s
distribution policy may be changed or terminated
at the discretion of the Fund’s
Board of Directors. At this time, the Board of
Directors has no plans to change
or terminate the current policy.
|
1-800-624-4190
• www.blu.com
|
25
|
|
Use
of Estimates –
The
preparation of financial statements in conformity
with accounting
principles generally accepted in the United States
of America requires
management to make estimates and assumptions that
affect the amounts reported in
the financial statements and disclosures made in
the accompanying notes to the
financial statements. Actual results could differ
from those
estimates.
2. FAS
157 MEASUREMENTS
The
Fund adopted Financial Accounting Standards Board
Statement of Financial
Accounting Standards No. 157, Fair Value Measurements
(“FAS 157”), effective
January 1, 2008. FAS 157 defines fair value, establishes
a three-tier hierarchy
to measure fair value based on the extent of use
of “observable inputs” as
compared to “unobservable inputs” for disclosure purposes and requires
additional disclosures about these valuations measurements.
Inputs refer broadly
to the assumptions that market participants would
use in pricing a security.
Observable inputs are inputs that reflect the assumptions
market participants
would use in pricing the security developed based
on market data obtained from
sources independent of the reporting entity. Unobservable
inputs are inputs that
reflect the reporting entity’s own assumptions about the assumptions market
participants would use in pricing the security
developed based on the best
information available in the circumstances.
The
three-tier hierarchy is summarized as follows:
Level
1
–
quoted
prices in active markets for identical investments.
Level
2 –
other
significant observable inputs (including quoted
prices for similar investments,
interest rates, prepayment speeds, credit risk,
etc.).
Level
3 –
significant
unobservable inputs (including the Fund’s own assumptions in determining the
fair value of investments).
|
26
|
Semi-Annual
Report June 30, 2008
|
|
The
following is a summary of the inputs used as of
June 30, 2008 in valuing the
Fund’s assets:
|
Other
|
|||||||
|
Financial
|
|||||||
|
Instruments*
–
|
|||||||
|
Investments
in
|
Unrealized
|
||||||
|
Securities
at
|
Appreciation
|
||||||
|
Valuation
Inputs
|
Value
|
(Depreciation)
|
|||||
|
Level
– Quoted
Prices
|
$
|
149,015,278
|
$
|
—
|
|||
|
Level
2 – Other
Significant Observable Inputs
|
$
|
—
|
$
|
—
|
|||
|
Level
3 – Significant
Unobservable Inputs
|
$
|
—
|
$
|
—
|
|||
|
Total
|
$
|
149,015,278
|
$
|
—
|
|||
| * |
Other
financial instruments include futures,
forwards and swap
contracts.
|
All
securities of the Fund were valued using Level
1 inputs during the six months
ended June 30, 2008. Thus, a reconciliation of
assets in which significant
unobservable inputs (Level 3) were used in determining
fair value is not
applicable.
The
inputs or methodology used for valuing securities
are not necessarily an
indication of the risk associated with investing
in those
securities.
3. UNREALIZED
APPRECIATION AND DEPRECIATION OF INVESTMENTS (TAX
BASIS)
As
of June 30, 2008:
|
Gross
appreciation (excess of value over
tax cost)
|
$
|
30,477,990
|
||
|
Gross
depreciation (excess of tax cost over
value)
|
(9,964,801
|
)
|
||
|
Net
unrealized appreciation
|
$
|
20,513,189
|
||
|
Cost
of investments for income tax purposes
|
$
|
128,502,089
|
4.
INVESTMENT ADVISORY AND ADMINISTRATION SERVICES
The
Fund has an Investment Advisory Agreement with
Denver Investment Advisors LLC
(“DenverIA”), whereby an investment advisory fee is paid to
DenverIA based on an
annual rate of 0.65% of the Fund’s average weekly net assets up to $100,000,000
and 0.50% of the Fund’s average weekly net assets in excess of $100,000,000.
The
management fee is paid monthly based on the average
of the net assets of
the Fund computed as of the last business day the
New York Stock Exchange is
open each week. Certain officers and a director
of the Fund are also officers of
DenverIA.
ALPS
Fund Services, Inc. (“ALPS”) and DenverIA serve as the Fund’s co-administrators.
The Administrative Agreement includes
the Fund’s administrative and fund accounting services.
The administrative services fee is based on the
current annual rate
for
ALPS and DenverIA, respectively, of 0.0955% and
0.01% of the Fund’s average
daily net assets up to $75,000,000, 0.05%, and
0.005% of the Fund’s average
daily net
assets between $75,000,000 and $125,000,000, and
0.03%
and
0.005% of the Fund’s average daily net assets in
excess
of $125,000,000 plus certain out-of-pocket expenses.
The
administrative service fee is paid monthly.
|
1-800-624-4190
• www.blu.com
|
27
|
|
Prior
to
April 1, 2008, the administrative services fee
for ALPS was an annual rate of
0.0855% of the Fund’s average daily net assets up to $75,000,000,
0.0400% of the
Fund’s average daily net assets between $75,000,000
and $125,000,000
and 0.0200% of the Fund’s average daily net assets in excess of $125,000,000.
DenverIA’s administrative services fee remains unchanged.
The
Directors have appointed a Chief Compliance Officer
who is also Treasurer of the
Fund and an employee of DenverIA. The Directors
agreed that the Fund would
reimburse DenverIA a portion of his compensation
for his services as the Fund’s
Chief Compliance Officer.
5.
LOAN OUTSTANDING
The
Fund has a line of credit with The Bank of New
York Mellon (“BONY”) in which the
Fund may borrow up to the lesser of $15,000,000
or the maximum amount the Fund
is permitted to borrow under the Investment Company
Act of 1940. The interest
rate resets daily at overnight Federal Funds
Rate plus 0.825%. The borrowings
under the BONY loan are secured by a perfected
security interest on all of the
Fund’s assets.
Details
of the loan outstanding are as follows:
|
Average
for the
|
|||||||
|
As
of
|
Six
Months Ended
|
||||||
|
June
30,
|
June
30,
|
||||||
|
2008
|
2008
|
||||||
|
Loan
outstanding
|
$
|
12,115,000
|
$
|
12,852,363
|
|||
|
Interest
rate
|
1.99
|
%* |
2.64
|
%
|
|||
|
%
of Fund’s total assets
|
8.12
|
%
|
8.62
|
%
|
|||
|
Amount
of debt per share outstanding
|
$
|
0.43
|
$
|
0.45
|
|||
|
Number
of shares outstanding (in thousands)
|
28,464
|
28,446
|
** | ||||
| * |
Annualized
|
| ** |
Weighted
average
|
|
28
|
Semi-Annual
Report June 30, 2008
|
|
6.
NEW
ACCOUNTING PRONOUNCEMENTS
Effective
January 2, 2007, the Fund adopted Financial Accounting
Standards Board (“FASB”)
Interpretation No. 48 (“FIN 48”) “Accounting for Uncertainty in Income Taxes,”
which requires that the financial statement effects
of a tax position taken or
expected to be taken in a tax return be recognized
in the financial statements
when it is more likely than not, based on the
technical merits, that the
position will be sustained upon examination.
Management has concluded that the
Fund has taken no uncertain tax positions that
require adjustment to the
financial statements to comply with the provisions
of FIN 48. The Fund files
income tax returns in the U.S. federal jurisdiction
and the State of Colorado.
For the years ended December 31, 2004 through
December 31, 2006, the Fund’s
federal and Colorado returns are still open to
examination by the appropriate
taxing authority. However, to management’s knowledge there are currently no
federal or Colorado income tax returns under
examination.
In
March
2008, the FASB issued Statement of Financial
Accounting Standards No.
161,
“Disclosures about Derivative Instruments and
Hedging Activities” (“SFAS 161”).
SFAS 161 is effective for fiscal years and interim
periods beginning after
November 15, 2008. SFAS 161 requires enhanced
disclosures about Funds’
derivative and hedging activities. Management
of the Fund currently believes
that SFAS 161
will
have no impact on the Fund’s financial statements.
7.
RESULTS OF ANNUAL MEETING OF STOCKHOLDERS
The
Annual Meeting of Stockholders of the Fund (the
“Annual Meeting”) was held May
6, 2008 pursuant to notice given to all stockholders
of record at the close of
business on March 25, 2008. At the Annual Meeting,
stockholders were asked to
approve the following:
Proposal
1.
To
elect Richard C. Schulte and Lee W. Mather, Jr.,
as Class II directors to serve
until the Annual Meeting in the year 2011. The
number of shares voting for the
election of Mr. Schulte was 23,517,797 and 662,659
votes were withheld. The
number of shares voting for the election of Mr.
Mather was 23,551,172 and
629,284 votes were withheld.
Proposal
2.
To
ratify the appointment by the Board of Directors
of Deloitte & Touche LLP as
the Fund’s independent registered public accounting firm
for its fiscal year
ending December 31, 2008. The number of shares
voting for Proposal 2 was
23,551,272, the number voting against was 629,184
and the number abstaining was
0.
|
1-800-624-4190
• www.blu.com
|
29
|
|
8.
SUBSEQUENT EVENT
The
Fund declared a distribution of $0.12 per share
on July 1, 2008. The
distribution
is
payable on July 25, 2008. Of the total distribution,
approximately $0.0078
represents
net investment income for the quarter ended
June 30, 2008 and the remaining
undesignated portion is paid from capital surplus.
If the Fund’s total
distributions for the year exceed its net investment
income and net realized
capital gains for the year, all or a portion
of the undesignated distributions
may constitute a non-taxable return of capital.
A return of capital distribution
would not necessarily reflect the Fund’s investment performance and should not
be confused with “yield” or “income.” The actual amounts and sources of the
amounts for tax reporting purposes will depend
upon the Fund’s investment
experience during the remainder of the year
and may be subject to changes based
on tax regulations.
|
30
|
Semi-Annual
Report June 30, 2008
|
|
|
NOTES
|
|
1-800-624-4190
• www.blu.com
|
31
|
|
|
NOTES
|
|
32
|
Semi-Annual
Report June 30, 2008
|
|
|
BOARD
OF DIRECTORS
Kenneth
V. Penland, Chairman
Todger
Anderson, Director
Lee
W. Mather, Jr, Director
Richard
C. Schulte, Director
Roberta
M. Wilson, Director
OFFICERS
Kenneth
V. Penland, Chairman
Todger
Anderson, President
Mark
M. Adelmann, Vice President
Nancy
P. O’Hara, Secretary
Jasper
R. Frontz, Treasurer,
Chief
Compliance Officer
Investment
Adviser/Co-Administrator
Denver
Investment Advisors LLC
1225
17th Street, 26th Floor
Denver,
CO 80202
Stockholder
Relations
(800)
624-4190 (option #2)
e-mail:
blu@denveria.com
Custodian
The
Bank of New York Mellon
One
Wall Street
New
York, NY 10286
Co-Administrator
ALPS
Fund Services, Inc.
1290
Broadway, Suite 1100
Denver,
CO 80203
Transfer
Agent Dividend Reinvestment Plan Agent
(Questions regarding your Account) BNY
Mellon Shareowner Services
480
Washington Blvd.
Jersey
City, NJ 07310
(800)
624-4190 (option #1)
www.melloninvestor.com
 |
Item
2. Code of Ethics.
Not
Applicable to Semi-Annual Report.
Item
3. Audit Committee Financial Expert.
Not
Applicable to Semi-Annual Report.
Item
4. Principal Accountant Fees and Services.
Not
applicable to Semi-Annual Report.
Item
5. Audit Committee of Listed Registrants.
Not
applicable to Semi-Annual Report.
Item
6. Investments.
Schedule
of Investments is included as part of the Report to Stockholders filed under
Item 1 of this form.
Item
7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management
Investment Companies.
Not
applicable to Semi-Annual Report.
Item
8. Portfolio Managers of Closed-End Management Investment
Companies
|
(a)
|
Not
applicable to Semi-Annual Report.
|
|
(b)
|
There
have been no changes in any of the portfolio managers identified
in
response to paragraph (a)(1) of this Item in the registrant's most
recent
annual report on Form N-CSR.
|
Item
9. Purchases of Equity Securities by Closed-End Management Investment Company
and Affiliated Purchasers.
Not
applicable.
Item
10. Submission of Matters to Vote of Security Holders.
There
have been no material changes to the procedures by which shareholders may
recommend nominees to the registrant’s Board of Directors, where those changes
were implemented after the registrant last provided disclosure in response
to
the requirements of Item 407(c)(2)(iv) of Regulation S-K or this Item.
Item
11. Controls and Procedures.
|
(a)
|
The
registrant’s principal executive officer and principal financial officer
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) are effective based on their evaluation of these controls
and
procedures as of a date within 90 days of the filing date of this
document.
|
|
(b)
|
There
were no change in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company
Act of
1940, as amended) during the second fiscal quarter of the period
covered
by this report that has materially affected, or is reasonably likely
to
materially affect, the registrant's internal control over financial
reporting.
|
Item
12. Exhibits.
|
(a)(1)
|
Not
applicable.
|
|
(a)(2)
|
Separate
certifications for the registrant's Principal Executive Officer and
Principal Financial Officer, as required by Section 302 of the
Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment
Company
Act of 1940, are attached hereto as
Ex99.CERT.
|
|
(a)(3)
|
Not
applicable.
|
|
(b)
|
A
certification for the registrant's Principal Executive Officer and
Principal Financial Officer, as required by Rule 30a-2(b) under the
Investment Company Act of 1940, is attached hereto as Ex99.906CERT.
The
certification furnished pursuant to this paragraph is not deemed
to be
"filed" for purposes of Section 18 of the Securities Exchange Act
of 1934,
or otherwise subject to the liability of that section. Such certification
is not deemed to be incorporated by reference into any filing under
the
Securities Act of 1933 or the Securities Exchange Act of 1934, except
to
the extent that the Registrant specifically incorporates it by
reference.
|
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.
Blue
Chip
Value Fund, Inc.
By: /s/
Todger Anderson
Todger
Anderson
President
and Chief Executive Officer
Date: September
8, 2008
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: /s/
Todger Anderson
Todger
Anderson
President
and Chief Executive Officer
Date: September
8, 2008
By: /s/
Jasper R. Frontz
Jasper
R.
Frontz
Treasurer
and Chief Financial Officer
Date: September
8, 2008