Semi-Annual
Report
to
Stockholders
June
30, 2008
|
|
|
|
|
%
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
|
|
2
|
Semi-Annual
Report June 30, 2008
|
|
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
|
1-800-624-4190
• www.blu.com
|
3
|
|
Dear
Fellow Stockholders:
|
August
5, 2008
|
4
|
Semi-Annual
Report June 30, 2008
|
|
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
|
|
1-800-624-4190
• www.blu.com
|
7
|
|
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
|
|
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
|
|
10
|
Semi-Annual
Report June 30, 2008
|
|
1-800-624-4190
• www.blu.com
|
11
|
|
12
|
Semi-Annual
Report June 30, 2008
|
|
1-800-624-4190
• www.blu.com
|
13
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
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
|
|
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
|
|
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
|
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
|
%
|
1-800-624-4190
• www.blu.com
|
17
|
|
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
|
18
|
Semi-Annual
Report June 30, 2008
|
|
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
|
)
|
1-800-624-4190
• www.blu.com
|
19
|
|
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
|
20
|
Semi-Annual
Report June 30, 2008
|
|
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. |
1-800-624-4190
• www.blu.com
|
21
|
|
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
|
(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
|
24
|
Semi-Annual
Report June 30, 2008
|
|
|
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
|
Undistributed
net investment income
|
$
|
194,690
|
||
Accumulated
net realized loss
|
(3,165,463
|
)
|
||
Net
unrealized appreciation
|
20,513,189
|
|||
Total
|
$
|
17,542,416
|
1-800-624-4190
• www.blu.com
|
25
|
|
26
|
Semi-Annual
Report June 30, 2008
|
|
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.
|
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
|
1-800-624-4190
• www.blu.com
|
27
|
|
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
|
|
1-800-624-4190
• www.blu.com
|
29
|
|
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
|
(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.
|
(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.
|
(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.
|