<PAGE>
================================================================================
SCHEDULE 14A INFORMATION
(RULE 14A-101)
REQUIRED IN PROXY STATEMENT
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Blue Chip Value Fund, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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Notes:
<PAGE>
BLUE CHIP VALUE FUND, INC.
1225 SEVENTEENTH STREET
26TH FLOOR
DENVER, COLORADO 80202
Denver, Colorado
April 9, 1998
To Our Stockholders:
It is our pleasure to invite you to your Company's Annual Meeting of
Stockholders to be held at the Westin Tabor Center, 1672 Lawrence Street,
Denver, Colorado, on Tuesday, May 12, 1998, at 12:00 noon (Mountain Time).
Formal notice of the Annual Meeting appears on the next page and is followed
by the Proxy Statement.
Blue Chip Value Fund, Inc. (the "Fund") celebrated its 10th anniversary in
1997. There have been many changes in the market environment over this time
period. We have reviewed all of the Fund's investment policies and limitations
to ensure that its investment approach is best suited to obtaining the Fund's
long-standing investment objective. The investment objective is to seek a high
level of total return through capital appreciation and current income
consistent with investment primarily in a diversified portfolio of common
stocks. The investment adviser's selection process combines quantitative
research and portfolio management experience. As a result of this review, the
Board of Directors approved several proposed changes to the Fund's investment
policies. The primary purpose of the proposed changes is to increase the
opportunity to provide attractive returns by increasing the number of large-
capitalization stocks eligible for investment by the Fund, and permitting the
limited use of financial futures, options, short sales and borrowing. These
proposed revisions do not reflect a change in the investment approach of the
investment adviser and are not intended to change significantly the Fund's
investment operations. We hope you agree with the Board of Directors'
recommendation to vote FOR these proposals.
We look forward to seeing you at the Annual Meeting. We urge you, in any
event, to complete and return the enclosed proxy card in the envelope
provided. If you do attend, you may vote in person.
The Annual Report of the Blue Chip Value Fund, Inc. for the year ended
December 31, 1997 has previously been mailed to stockholders of record. It is
enclosed with this mailing to beneficial owners of the company's stock who may
not have previously received it. The Annual Report is not to be considered
proxy soliciting material.
Sincerely,
Kenneth V. Penland, C.F.A.
Chairman
YOUR VOTE IS IMPORTANT
WE CONSIDER THE VOTE OF EACH STOCKHOLDER IMPORTANT, WHATEVER THE NUMBER OF
SHARES HELD. PLEASE SIGN, DATE AND RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE
AT YOUR EARLIEST CONVENIENCE. THE PROMPT RETURN OF YOUR PROXY WILL SAVE
EXPENSE TO YOUR COMPANY.
<PAGE>
BLUE CHIP VALUE FUND, INC.
1225 SEVENTEENTH STREET 26TH FLOOR DENVER, COLORADO 80202
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------------
Denver, Colorado
April 9, 1998
To the Stockholders of
Blue Chip Value Fund, Inc.:
The Annual Meeting of Stockholders of Blue Chip Value Fund, Inc. (the
"Fund") will be held at Westin Tabor Center, 1672 Lawrence Street, Denver,
Colorado, on Tuesday, May 12, 1998, at 12:00 noon (Mountain time), for the
following purposes:
1. To elect two (2) Class I directors to serve until the Annual Meeting of
Stockholders in the year 2001 and until the election and qualification
of their successors.
2. To ratify the appointment by the Board of Directors of Ernst & Young
LLP as the Fund's independent auditors for its fiscal year ending
December 31, 1998.
3. To approve a change to the Fund's fundamental investment policies and
limitations regarding investment of 75% of its total assets in equity
securities of large domestic companies ("Proposal 3").
4. To approve the termination of the Fund's fundamental policy which
prohibits the purchase of securities on margin and the adoption of a
non-fundamental policy to permit the Fund to engage in such
transactions in certain limited circumstances ("Proposal 4").
5. To approve the termination of the Fund's fundamental policy which
prohibits short sales of securities and the adoption of a non-
fundamental policy to permit the Fund to engage in such transactions in
certain circumstances ("Proposal 5").
6. To approve the termination of the Fund's fundamental policies which
prohibit the purchase of warrants, rights, options or indices, and
approve an amendment to a fundamental policy to permit the purchase of
financial futures ("Proposal 6").
7. To approve the termination of the Fund's fundamental policy prohibiting
borrowing in most circumstances and the adoption of a non-fundamental
policy to permit leverage of up to 15% of the Fund's total assets and
certain other borrowings ("Proposal 7").
8. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The subjects referred to above are discussed in the Proxy Statement attached
to this Notice. Each Stockholder is invited to attend the Annual Meeting in
person. Holders of record at the close of business on March 10, 1998 are
entitled to receive notice of and to vote at the Meeting. IF YOU CANNOT BE
PRESENT AT THE ANNUAL MEETING, WE URGE YOU TO FILL IN, SIGN, AND PROMPTLY
RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED, WHICH IS ADDRESSED FOR
YOUR CONVENIENCE AND NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. IN ORDER
TO AVOID THE ADDITIONAL EXPENSE TO THE FUND OF FURTHER SOLICITATION, WE ASK
YOUR COOPERATION IN COMPLETING AND RETURNING YOUR PROXY PROMPTLY.
W. Bruce McConnel, III
Secretary
<PAGE>
ANNUAL MEETING OF STOCKHOLDERS
OF
BLUE CHIP VALUE FUND, INC.
1225 SEVENTEENTH STREET
26TH FLOOR
DENVER, COLORADO 80202
----------------
PROXY STATEMENT
----------------
April 9, 1998
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Blue Chip Value Fund, Inc. (the "Fund")
for use at the Fund's Annual Meeting of Stockholders to be held at Westin
Tabor Center, 1672 Lawrence Street, Denver, Colorado, on Tuesday, May 12,
1998, at 12:00 noon (Mountain time), and at any adjournment thereof (the
"Meeting").
Any person giving a proxy may revoke it at any time prior to its use. Signed
proxies received by the Fund in time for voting and not so revoked will be
voted in accordance with the directions specified therein. The Board of
Directors recommends a vote FOR the election of Directors as listed, FOR the
appointment by the Board of Directors of Ernst & Young LLP as the Fund's
independent auditors and FOR Proposals 3-7. If no specification is made, the
proxy will be voted for the election of Directors as listed, for the
appointment of Ernst & Young LLP as auditors and for Proposals 3-7.
Costs of soliciting proxies will be borne by the Fund. Morrow & Co. has been
retained to solicit proxies in connection with the Meeting for a fee of
approximately $7,500. It is anticipated that banks, brokerage houses, and
other custodians will be requested on behalf of the Fund to forward
solicitation material to their principals to obtain authorizations for the
execution of proxies. In addition to soliciting proxies by use of the mails,
some of the officers of the Fund and persons affiliated with Denver Investment
Advisors LLC, the Fund's investment adviser, may, without remuneration,
solicit proxies personally or by telephone or telefax.
On March 10, 1998, the record date for determining the Stockholders entitled
to vote at the Meeting, there were outstanding 14,519,942 shares of common
stock, constituting all of the Fund's outstanding voting securities. Each
share of common stock is entitled to one vote. This Proxy Statement, the
accompanying Notice of Annual Meeting of Stockholders, and the enclosed proxy
are being mailed on or about April 9, 1998 to Stockholders of record on the
record date.
THE FUND PREPARES AND MAILS TO ITS STOCKHOLDERS FINANCIAL REPORTS ON A SEMI-
ANNUAL BASIS. THE FUND WILL FURNISH TO STOCKHOLDERS UPON REQUEST, WITHOUT
CHARGE, COPIES OF ITS ANNUAL REPORT TO STOCKHOLDERS, CONTAINING AUDITED
FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997. REQUESTS FOR
SUCH ANNUAL REPORT SHOULD BE DIRECTED TO MR. JASPER R. FRONTZ, TREASURER, BLUE
CHIP VALUE FUND, INC., 1225 SEVENTEENTH STREET, 26TH FLOOR, DENVER, COLORADO
80202 OR TELEPHONE TOLL-FREE (800) 624-4190. THE ANNUAL REPORT IS NOT TO BE
REGARDED AS PROXY SOLICITING MATERIAL.
1. NOMINEES FOR ELECTION AS DIRECTORS
The Fund's By-Laws provide that the Board of Directors shall consist of
three classes of members. Directors are chosen for a term of three years and
the term of one class of directors expires each year. The Board of Directors
has designated two candidates for whom proxies solicited by the Fund will be
voted if requisite authority is granted. One of the nominees is presently a
director of the Fund and the other is its President. In
<PAGE>
order for any other person to be nominated for election to the Board of
Directors at this Meeting, the By-Laws require the proposed nominee to notify
the Fund in writing by the tenth day following the day on which notice of the
Meeting is mailed and to provide such written information to the Fund as its
Secretary may reasonably require. This Proxy Statement is expected to be mailed
on April 9, 1998, and, if such occurs, any such notice must be received by the
Fund on or before April 19, 1998.
The following table sets forth by class the nominees and the other
directors, their ages, principal occupations for the past five or more years,
and any other directorships they hold in companies which are subject to the
reporting requirements of the Securities Exchange Act of 1934 or are
registered as investment companies under the Investment Company Act of 1940,
as amended (the "1940 Act").
NOMINEES FOR CLASS I DIRECTOR--TO BE ELECTED FOR A TERM OF THREE YEARS UNTIL
THE ANNUAL MEETING IN THE YEAR 2001.
TODGER ANDERSON, C.F.A.*
1225 Seventeenth Street, 26th Floor, Denver, Colorado 80202
President of the Fund
President and Executive Manager, Denver Investment Advisors LLC (since 1995);
prior thereto President and Director of Portfolio Management, Denver
Investment Advisors, Inc. and former director of the Fund; Portfolio Manager,
Westcore MIDCO Growth Fund (since 1986). Age 53.
ROBERT J. GREENEBAUM
111 W. Washington Street, Room 957, Chicago, Illinois 60602
Director of the Fund
Independent Consultant; former Chairman of the Board and Director, Selected
American Shares, Inc. and Selected Special Shares, Inc., Santa Fe, New Mexico;
Director, United Asset Management Corp., Boston, Massachusetts; former
Chairman of the Board and Trustee, Selected Capital Preservation Trust, Santa
Fe, New Mexico. Mr. Greenebaum provides consulting services from time to time
to Denver Investment Advisors LLC. Age 80.
OTHER DIRECTORS:
CLASS II DIRECTORS--TERM EXPIRES IN 1999.
ROBERT M. INMAN
1450 So. Clayton Street, Denver, Colorado 80210
Director of the Fund
Real Estate Investment Advisor and Consultant (since 1988) (real estate
development and construction); former Director, First National Bank of Parker,
N.A., Parker, Colorado. Age 57.
RICHARD C. SCHULTE
34507 Squaw Pass Road, Evergreen, Colorado 80439
Director of the Fund
Private Investor; prior thereto President, Transportation Service Systems,
Inc. (since 1993); prior thereto Employee, Southern Pacific Lines, Denver,
Colorado. Prior thereto, Employee, Rio Grande Industries, Denver, Colorado
(holding company) (since 1991), Vice President Finance and Treasurer, Rio
Grande Holdings, Inc., Denver, Colorado (since 1990), and Vice President,
Denver & Rio Grande Western Railroad Company, Denver, Colorado. Age 53.
- --------
* Mr. Anderson is an "interested person" of the Fund, as that term is defined
in the 1940 Act, because Mr. Anderson is an officer and executive manager
of the investment adviser and an officer of the Fund.
2
<PAGE>
CLASS III DIRECTORS--TERM EXPIRES IN THE YEAR 2000
KENNETH V. PENLAND, C.F.A.**
1225 Seventeenth Street, 26th Floor, Denver, Colorado 80202
Chairman of the Board and Director of the Fund
Chairman and Executive Manager, Denver Investment Advisors LLC (since 1995);
prior thereto Chairman of the Board and Director of Research, Denver
Investment Advisors, Inc.; President, Westcore Funds. Age 55.
ROBERTA M. WILSON, C.F.A.
1600 W. Twelfth Avenue, Denver, Colorado 80254
Director of the Fund
Director of Finance, Denver Board of Water Commissioners, Denver, Colorado.
Age 54.
Messrs. Penland and Inman and Ms. Wilson have served as directors of the
Fund since its organization and were elected by the initial Stockholders of
the Fund. Mr. Schulte has served as a director of the Fund since October 21,
1987 when he was appointed to the Board to fill a vacancy created when the
Board, in accordance with the Fund's By-Laws, increased the number of
directors comprising the Board from three to four. Mr. Greenebaum was elected
to the Board of Directors at the 1988 Annual Meeting of Stockholders to fill a
vacancy created when the number of directors was increased from four to six.
Mr. Anderson, who has been President of the Fund since its organization,
previously served as a director of the Fund from May 12, 1988 to March 31,
1995. Mr. Anderson resigned on March 31, 1995 because of a change in control
of the Fund's investment adviser, in order to comply with the applicable
provisions of Section 15(f) of 1940 Act which require that at least 75% of the
directors of the Fund be disinterested directors for a period of three years
following the change in control.
No director or officer of the Fund who is also a director, officer, or
employee of the investment adviser or any of its parents, received any
remuneration from the Fund during 1997. The other directors taken as a group
were either paid or had accrued directors' fees for 1997 from the Fund in the
aggregate amount of $40,000. For the period January 1, 1997 through June 30,
1997, they received an annual retainer of $4,000 plus a meeting fee of $1,000
for each regular Board meeting attended. Effective July 1, 1997, the annual
retainer was increased to $6,000 and the fee for each regular Board meeting
attended was increased to $1,500. The Fund expects the basis of such
compensation to continue during 1998. The Board of Directors held four
regularly scheduled meetings during the year ended December 31, 1997. All of
the directors attended every Board meeting.
On or about May 21, 1997, the occasion of the Fund's tenth anniversary, on
behalf of the Fund, the investment adviser purchased for each of the Fund's
four directors who are not "interested persons" of the Fund as that term is
defined in the 1940 Act 1,000 shares of the Fund's common stock. The cost to
the investment adviser was $9,175 for each director who is not an "interested
person", or a total of $36,700. Although these shares might be deemed to
represent additional compensation to those directors, the Fund did not bear
the cost of acquiring the shares.
- --------
** Mr. Penland is an "interested person" of the Fund, as that term is defined
in the 1940 Act, because Mr. Penland is an officer and executive manager of
the investment adviser and an officer and director of the Fund.
3
<PAGE>
The following table provides information concerning the compensation of each
of the Fund's directors for services rendered during the Fund's fiscal year
ended December 31, 1997, exclusive of shares of common stock purchased by the
investment adviser for certain directors as described above:
COMPENSATION TABLE
<TABLE>
<CAPTION>
PENSION OR TOTAL
AGGREGATE RETIREMENT BENEFITS ESTIMATED COMPENSATION
COMPENSATION ACCRUED AS PART OF ANNUAL BENEFITS FROM FUND
NAME OF PERSON FROM FUND FUND EXPENSES UPON RETIREMENT PAID TO DIRECTORS
-------------- ------------ ------------------- --------------- -----------------
<S> <C> <C> <C> <C>
Robert J. Greenebaum.... $10,000 $-0- $-0- $10,000
Robert M. Inman......... $10,000 $-0- $-0- $10,000
Kenneth V. Penland...... $ -0- $-0- $-0- $ -0-
Richard C. Schulte...... $10,000 $-0- $-0- $10,000
Roberta M. Wilson....... $10,000 $-0- $-0- $10,000
</TABLE>
Drinker Biddle & Reath LLP, of which W. Bruce McConnel, III, Secretary of
the Fund, is a partner, received fees during the year ended December 31, 1997
for services rendered as the Fund's legal counsel.
The Fund has a standing Audit Committee of the Board composed of Messrs.
Inman, Greenebaum and Schulte, and Ms. Wilson. The functions of the Audit
Committee are to meet with the Fund's independent auditors to review the scope
and findings of the annual audit, discuss the Fund's accounting policies,
discuss any recommendation of the independent auditors with respect to the
Fund's management practices, review the impact of changes in accounting
standards upon the Fund's financial statements, recommend to the Board of
Directors the selection of independent auditors, and perform such other duties
as may be assigned to the Committee by the Board of Directors. The Audit
Committee met one time in 1997, and all members of the Audit Committee were
present.
Section 30(f) of the 1940 Act and Section 16(a) of the Securities Exchange
Act of 1934 require the Fund's directors and officers, certain affiliated
persons of the investment adviser, and persons who own more than ten percent
of the Fund's shares to file with the Securities and Exchange Commission and
the New York Stock Exchange initial reports of ownership and reports of
changes in ownership of shares of the Fund. Specific due dates for these
reports have been established and the Fund is required to disclose in this
Proxy Statement any failure to file by the specific due dates. To the Fund's
knowledge, all of these filing requirements were satisfied during 1997, except
that Messrs. Greenebaum, Penland and Schulte, directors of the Fund, and Mr.
Anderson and Ms. Schock, officers of the Fund, did not file on a timely basis
one report relating to one transaction. In addition, Ms. Schock did not file
on a timely basis one report which concerned transactions which occurred in
1995. In making these disclosures, the Fund has relied on copies of reports
that were furnished to it and written representations of its directors,
officers and investment adviser.
The Board of Directors recommends that Stockholders vote FOR the election of
Messrs. Anderson and Greenebaum as Class I directors to serve until the Annual
Meeting of Stockholders in the year 2001 and until the election and
qualification of their successors.
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Stockholders are asked to act upon a proposal to ratify the appointment
by the directors of Ernst & Young LLP as the Fund's independent auditors for
the fiscal year ending December 31, 1998.
For the fiscal year ended December 31, 1997, Ernst & Young LLP performed
both audit and non-audit services for the Fund. Services consisted of audits
of the Fund's financial statements and review and consultation in connection
with filings with the Securities and Exchange Commission. Related services
consisted of a review of the Fund's status under Subchapter M of the Internal
Revenue Code of 1986.
4
<PAGE>
Representatives of Ernst & Young LLP are expected to be present at the
Meeting with the opportunity to make a statement, if they desire to do so, and
be able to respond to appropriate questions from Stockholders.
The Board of Directors recommends that Stockholders vote FOR the
ratification of Ernst & Young LLP as the Fund's independent auditors for its
fiscal year ending December 31, 1998.
3. APPROVAL OF CHANGES IN FUNDAMENTAL INVESTMENT POLICIES AND LIMITATIONS.
At a meeting of the Fund's Board of Directors on February 23, 1998, the
directors approved proposed changes to the Fund's fundamental investment
policies and limitations, including the elimination of certain fundamental
investment policies and the adoption of certain non-fundamental policies, and
recommended that such changes be submitted to the Fund's stockholders for
approval at the Annual Meeting of Stockholders on May 12, 1998. A
"fundamental" investment policy or limitation is one that may be changed only
with the approval of stockholders. The proposed revisions do not reflect a
change in the investment approach of the investment adviser and are not
intended to change significantly the Fund's investment operations. The primary
purpose of the proposed changes is to increase the Fund's flexibility by
eliminating certain fundamental policies, increasing the number of large-
capitalization stocks eligible for investment by the Fund, and permitting the
limited use of financial futures, options, short sales and borrowing for
investment leverage.
Certain investment policies and limitations of the Fund are matters of
fundamental policy and may not be changed without the approval of its
shareholders. These proposed changes to the language of the Fund's Investment
Objectives and Policies are set forth below in Proposals 3-7.
A. PROPOSAL 3.
<TABLE>
<CAPTION>
PROPOSED NEW
CURRENT INVESTMENT POLICY INVESTMENT POLICY
- ------------------------------------------- -------------------------------------------
(FUNDAMENTAL POLICY) (FUNDAMENTAL POLICY)
<S> <C>
The Fund has a fundamental policy that The Fund has a fundamental policy that
during normal conditions it will at all during normal conditions it will at all
times have at least 75% of its total assets times have at least 75% of its total assets
invested in common stocks selected from invested in equity securities of large
among those issued by (a) the 300 largest, companies with headquarters in the United
dividend-paying companies with headquarters States, such as those included in, or
in the United States as measured by the similar in size to those included in,
market value of publicly-traded common Standard & Poors' 500 Composite Stock Price
stock, or (b) the 300 largest, dividend- Index. The Fund calculates this requirement
paying companies with headquarters in the by adding the market values of common
United States as measured by revenues. stocks, securities convertible into common
stocks and rights and warrants to acquire
common stocks to the net option premiums on
individual common stocks and the notional
principal of net futures positions, and
subtracting from that total the market
values of securities sold short.
</TABLE>
Explanation of Proposed Change: The proposal would broaden the number of
large, domestic companies that are eligible for investment by the Fund and
eliminate the requirement that they pay current dividends. The proposal would
not change the Fund's primary emphasis on a value approach to investing in
blue chip stocks. The new policy would continue to be a fundamental policy.
5
<PAGE>
B. PROPOSAL 4.
<TABLE>
<CAPTION>
PROPOSED NEW
CURRENT INVESTMENT POLICY INVESTMENT POLICY
- ------------------------------------------- -------------------------------------------
(FUNDAMENTAL POLICY) (NON-FUNDAMENTAL POLICY)
<S> <C>
The Fund may not purchase securities on The Fund does not intend to purchase
margin. securities on margin, except that the Fund
may obtain such short-term credits as are
necessary for the clearance of securities
transactions, and may make margin payments
in connection with futures contracts and
related options.
</TABLE>
Explanation of Proposed Change: The proposal would facilitate the clearance
of securities transactions. It would also permit margin payments for options
and futures contracts. The Fund intends to engage in such transactions on a
limited basis. The proposal would eliminate a fundamental policy and adopt a
non-fundamental policy. A non-fundamental policy may be changed in the future
by the Board of Directors without requiring a shareholder vote.
6
<PAGE>
C. PROPOSAL 5.
<TABLE>
<CAPTION>
PROPOSED NEW
CURRENT INVESTMENT POLICY INVESTMENT POLICY
- ------------------------------------------- -------------------------------------------
(FUNDAMENTAL POLICY) (NON-FUNDAMENTAL POLICY)
<S> <C>
The Fund may not sell securities short. The Fund may make short sales of securities
for purposes of hedging securities held or
to seek to enhance the performance of the
Fund. In a short sale transaction, the Fund
borrows a security from a broker and sells
it with the expectation that it will
replace the security borrowed from the
broker by repurchasing the same security at
a lower price. These transactions may
result in gains if a security's price
declines, but may result in losses if a
security's price does not decline in price.
When the Fund engages in short sales,
unless the short sale is otherwise
"covered" in accordance with the policies
of the SEC, the Fund will be required to
maintain in a segregated account an amount
of liquid assets equal to the difference
between: (a) the market value of the
security sold short as calculated on a
daily basis and (b) any cash or United
States Government securities required to be
deposited as collateral with the broker in
connection with the short sale (not
including the proceeds from the short
sale). In addition, until the Fund replaces
the borrowed security, the Fund will
maintain the segregated account on a daily
basis at such a level that the amount
deposited in the account plus the amount
deposited with the broker as collateral
will equal the current market value of the
security sold short. Short sale
transactions will be conducted so that not
more than 10% of the value of the Fund's
total assets at the time of entering into
the short sale (exclusive of proceeds from
short sales) will be, when added together,
(a) in deposits collateralizing the
obligation to replace securities borrowed
to effect short sales, and (b) allocated to
the segregated account in connection with
short sales.
</TABLE>
Explanation of Proposed Change: The proposal would permit the Fund more
flexibility to manage risk through hedging securities owned and to enhance
performance by engaging in short sale transactions. The proposal would
eliminate a fundamental policy and adopt a non-fundamental policy. A non-
fundamental policy may be changed in the future by the Board of Directors
without requiring a shareholder vote.
7
<PAGE>
D. PROPOSAL 6.
<TABLE>
<CAPTION>
PROPOSED AMENDED
CURRENT INVESTMENT POLICY INVESTMENT POLICY
- ------------------------------------------- -------------------------------------------
(FUNDAMENTAL POLICY) (FUNDAMENTAL POLICY)
<S> <C>
(a) The Fund may not purchase or sell (a) The Fund may not purchase or sell
commodities, commodity contracts or commodities, commodity contracts, or
futures. futures, except futures on financial
instruments.
</TABLE>
<TABLE>
<CAPTION>
PROPOSED NEW
CURRENT INVESTMENT POLICY INVESTMENT POLICY
- ------------------------------------------- -------------------------------------------
(FUNDAMENTAL POLICY) (NON-FUNDAMENTAL POLICY DELETED)
<S> <C>
(b) The Fund may not purchase or sell any (b) This restriction is eliminated. The
warrants, rights, options or indices. Board of Directors has adopted, conditional
upon approval of this Proposal 6,
limitations on the use of options and
financial futures contracts.
</TABLE>
Explanation of Proposed Change: The proposal would permit the Fund more
flexibility to manage risk and portfolio volatility, as well as enhance
return, by engaging in transactions in financial futures and options. The
proposal would eliminate fundamental policies prohibiting the purchase or sale
of warrants, rights, options or indices. The fundamental policies would
continue to prohibit the purchase of commodities, commodity contracts and
futures (except financial futures). A non-fundamental policy may be changed in
the future by the Board of Directors without requiring a shareholder vote. The
Fund intends to engage in such transactions on a limited basis.
E. PROPOSAL 7.
<TABLE>
<CAPTION>
PROPOSED NEW
CURRENT INVESTMENT POLICY INVESTMENT POLICY
------------------------------------------- ---------------------------------
(FUNDAMENTAL POLICY) (NON-FUNDAMENTAL POLICY)
<C> <S>
The Fund may not issue senior securities or The Fund may issue senior
borrow money, except for (i) temporary bank securities or borrow money from
borrowings (not in excess of 5% of the banks or other lenders in an
value of its total assets) for emergency or amount not exceeding 15% of the
extraordinary purposes, (ii) such short- value of its total assets when
term credits (not in excess of 5% of the the investment adviser believes
value of its total assets) as are necessary that the return from securities
for the clearance of securities purchased with borrowed funds
transactions, (iii) borrowings from banks will be greater than the cost of
and other financial institutions, in an the borrowing. Otherwise, the
amount not exceeding 10% of its total Fund will not issue senior
assets and on an unsecured basis, to securities or borrow money except
finance the repurchase of its shares, and for (i) temporary bank borrowings
(iv) the borrowing of an amount (not in excess of 5% of the value
approximately equal to the underwriting of its total assets), (ii) short-
discount and organizational and offering term credits (not in excess of 5%
expenses with respect to its initial public of the value of its total assets)
offering. as are necessary for the
clearance of securities
transactions, and (iii)
borrowings from banks or other
lenders to finance the repurchase
of its shares.
</TABLE>
Explanation of Proposed Change: The proposal would eliminate the fundamental
policy prohibiting most borrowings and approve the adoption of a non-
fundamental policy permitting borrowing to obtain investment leverage in
amounts up to 15% of the Fund's total assets and for certain other purposes.
The proposal would remove a fundamental policy and adopt a non-fundamental
policy, thus eliminating the requirement that further changes to the policy be
submitted to a shareholder vote.
8
<PAGE>
F. VOTES REQUIRED FOR THE ELECTION OF DIRECTORS AND APPROVAL OF MATTERS AT
THE MEETING
A quorum for the transaction of business at the Meeting is constituted by
the presence in person or by proxy of holders of a majority of the outstanding
shares of common stock of the Fund. If a Proxy is properly executed and
returned accompanied by instructions to withhold authority, or is marked with
an abstention, the shares represented thereby will be considered to be present
at the Meeting for purposes of determining the existence of a quorum for the
transaction of business. In the election of directors, the nominees receiving
the highest number of votes cast at the Meeting will be elected, assuming that
each receives the votes of a majority of the outstanding shares of common
stock. The withholding of voting authority with respect to the election of a
director means that the shares withheld will not be counted toward the
required majority. Approval of Proposal 2 requires the affirmative vote of the
holders of a majority of the votes cast at the Meeting. Approval of Proposals
3-7 requires the affirmative "vote of a majority of the outstanding voting
securities". The "vote of a majority of the outstanding voting securities"
means the vote, at the annual meeting of the security holders, (a) of 67% or
more of the voting securities present at such meeting, if the holders of more
than 50% of the outstanding voting securities are present or represented by
proxy; or (b) of more than 50% of the outstanding voting securities, whichever
is less. Under Maryland law, abstentions do not constitute a vote "for" or
"against" a matter and will be disregarded in determining the "votes cast" on
an issue. Broker "non-votes" (i.e., proxies from brokers or nominees
indicating that such persons have not received instructions from the
beneficial owner or other persons entitled to vote shares on a particular
matter with respect to which the brokers or nominees do not have discretionary
power) will be deemed to be abstentions. An abstention will have no effect
(i.e. will not be considered a vote "for" or "against") with respect to
Proposal 2 and will have the effect of a vote against Proposals 3-7.
G. OTHER BUSINESS
The Management of the Fund does not know of any other matters to be brought
before the Meeting. If such matters are properly brought before the Meeting,
proxies not limited to the contrary will be voted in accordance with the best
judgment of the person or persons acting thereunder. To propose any business
for consideration at this Meeting (other than matters included in this Proxy
Statement), the By-Laws require a Stockholder to notify the Fund in writing by
the tenth day following the day on which notice of the Meeting is mailed and
to provide such written information to the Fund as its Secretary may
reasonably require. This Proxy Statement is expected to be mailed to
Stockholders on April 9, 1998, and, if such occurs, any such notice must be
received by the Fund on or before April 19, 1998.
9
<PAGE>
ADDITIONAL INFORMATION
INVESTMENT ADVISER
Denver Investment Advisors LLC serves as investment adviser for the Fund and
is located at 1225 Seventeenth Street, 26th Floor, Denver, CO 80202.
ADMINISTRATOR
American Data Services, Inc. serves as administrator for the Fund and is
located at Hauppauge Corporate Center, 150 Motor Parkway, Suite 109,
Hauppauge, NY 11788.
MANAGEMENT
Information concerning the names, ages, positions with the Fund, current
affiliations, and principal occupations of the principal officers of the Fund,
other than Messrs. Anderson and Penland, is set out below. Information
concerning Messrs. Anderson and Penland is set forth on pages 3 and 4.
VARILYN K. SCHOCK, C.F.A.
Vice President of the Fund
Vice President and Member, Denver Investment Advisors LLC (since 1995);
prior thereto Vice President, Quantitative Strategies, Denver Investment
Advisors, Inc. (since 1991); Portfolio Manager, Westcore Blue Chip Fund and
Westcore Small-Cap Opportunity Fund (since 1991). Age 36.
W. BRUCE MCCONNEL, III
Secretary of the Fund
Partner of the law firm of Drinker Biddle & Reath LLP, Philadelphia,
Pennsylvania. Age 55.
JASPER R. FRONTZ, C.P.A.
Treasurer of the Fund
Director of Mutual Fund Administration, Denver Investment Advisors LLC
(since 1997); prior thereto Fund Controller, ALPS Mutual Fund Services,
Inc. (1995- 1997); Senior Accountant, Deloitte & Touche LLP (1991-1995);
Treasurer, Westcore Funds (since 1997). Age 29.
Officers of the Fund are elected by the Board of Directors and, subject to
the earlier termination of office, each officer holds office for the term of
one year and until his or her successor is elected and qualified.
Messrs. Anderson, Penland and McConnel have served as officers of the Fund
since its inception and were initially elected at the organizational meeting
of the Fund on February 4, 1987. Ms. Schock has served as an officer of the
Fund since November 13, 1991. Mr. Frontz has served as an officer of the Fund
since November 11, 1997.
10
<PAGE>
SECURITY OWNERSHIP
The following table sets forth, as of January 1, 1998, beneficial ownership
of the Fund's shares by (1) each director and (2) all directors and officers
as a group:
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
NAME BENEFICIALLY OWNED(/1/) OF CLASS
- ---- ----------------------- --------
<S> <C> <C>
Kenneth V. Penland............................. 145,413(/2/) 1%
Robert J. Greenebaum........................... 12,748 *
Robert M. Inman................................ 4,165 *
Richard C. Schulte............................. 1,825(/3/) *
Roberta M. Wilson.............................. 2,230(/4/) *
Todger Anderson................................ 66,882 *
All directors and officers as a group.......... 235,347 1.6%
</TABLE>
- --------
(/1/) Unless otherwise indicated the beneficial owner has sole voting and
investment power.
(/2/) Including 41,125 shares held by Mr. Penland, 65,347 shares owned by Mr.
Penland's wife, 16,914 shares jointly owned by Mr. Penland and his wife,
and 22,027 shares owned by Mr. Penland's daughter.
(/3/) These shares include 825 shares that are owned by Mr. Schulte's wife.
(/4/) These shares are owned jointly by Ms. Wilson and her husband.
(*) Less than 1%.
STOCKHOLDER PROPOSALS--1999 ANNUAL MEETING
A Stockholder who intends to present a proposal which relates to a proper
subject for Stockholder action at the 1999 Annual Meeting of Stockholders, and
who wishes such proposal to be considered for inclusion in the Fund's proxy
materials for such meeting, must cause such proposal to be received, in proper
form, at the Fund's principal executive offices no later than November 30,
1998. Any such proposals, as well as any questions relating thereto, should be
directed to the Fund to the attention of its President.
April 9, 1998
STOCKHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WHO WISH TO
HAVE THEIR SHARES VOTED ARE REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND
RETURN IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES.
11
<PAGE>
FORM OF PROXY CARD
BLUE CHIP VALUE FUND, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF BLUE CHIP VALUE
FUND, INC. (THE "FUND") FOR USE AT THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
ON MAY 12, 1998 AT 12:00 NOON (MOUNTAIN TIME) AT THE WESTIN TABOR CENTER, 1672
LAWRENCE STREET, DENVER, COLORADO.
The undersigned hereby appoints Louis J. Kahanek, Jr. and Steven G.
Wine, and each of them, with full power of substitution, as proxies of the
undersigned to vote at the above-stated Annual Meeting, and all adjournments
thereof, all shares of common stock held of record by the undersigned on the
record date for the Annual Meeting, upon the following matters, and upon any
other matter which may properly come before the Annual Meeting, at their
discretion.
1. Election of Directors: Todger Anderson
Robert Greenebaum
____ FOR both nominees listed above (except as marked to the
contrary)
____ WITHHOLD AUTHORITY to vote for both nominees listed
above
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, WRITE THE NAME ON THE LINE PROVIDED BELOW.)
__________________________________
2. Proposal to ratify the selection of Ernst & Young LLP as
independent auditors for the Fund for its fiscal year ending
December 31, 1998.
____ FOR ____ AGAINST ____ ABSTAIN
-1-
<PAGE>
3. Proposal to approve a change to the Fund's fundamental investment
policies and limitations regarding investment of 75% of its total
assets in equity securities of large domestic companies ("Proposal
3").
____ FOR ____ AGAINST ____ ABSTAIN
4. Proposal to approve the termination of the Fund's fundamental
policy which prohibits the purchase of securities on margin and the
adoption of a non-fundamental policy to permit the Fund to engage in
such transactions in certain limited circumstances ("Proposal 4").
____ FOR ____ AGAINST ____ ABSTAIN
5. Proposal to approve the termination of the Fund's fundamental
policy which prohibits short sales of securities and the adoption of a
non-fundamental policy to permit the Fund to engage in such
transactions in certain circumstances ("Proposal 5").
____ FOR ____ AGAINST ____ ABSTAIN
6. Proposal to approve the termination of the Fund's fundamental
policies which prohibit the purchase of warrants, rights, options or
indices, and approve an amendment to a fundamental policy to permit
the purchase of financial futures. ("Proposal 6").
____ FOR ____ AGAINST ____ ABSTAIN
7. Proposal to approve the termination of the Fund's fundamental
policy prohibiting borrowing in most circumstances and the adoption of
a non-fundamental policy to permit leverage of up to 15% of the Fund's
total assets and certain other borrowings ("Proposal 7").
____ FOR ____ AGAINST ____ ABSTAIN
-2-
<PAGE>
8. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the Annual Meeting.
Every properly signed proxy will be voted in the manner specified
hereon and, IN THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING
AUTHORITY TO VOTE FOR THE ELECTION OF DIRECTORS, FOR THE APPOINTMENT OF AUDITORS
AND FOR PROPOSALS 3-7.
PLEASE SIGN, DATE AND RETURN PROMPTLY.
RECEIPT OF NOTICE OF ANNUAL MEETING AND
PROXY STATEMENT IS HEREBY ACKNOWLEDGED.
------------------------------
Sign here exactly as name(s) appear(s)
hereon
Date:_________________________
IMPORTANT - Joint owners must EACH sign.
When signing as attorney, trustee, executor,
administrator, guardian, or corporate
officer, please give your FULL title.
-3-
