Unassociated Document


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: