SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ X ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
BOULDER TOTAL RETURN 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 transactions 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 identity
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:
1
BOULDER TOTAL RETURN FUND, INC.
1680 38th Street, Suite 800
Boulder, Colorado 80301
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on April 27, 2001
To the Shareholders:
Notice is hereby given that the Annual Meeting of Shareholders of
Boulder Total Return Fund, Inc. (the "Fund"), a Maryland corporation, will be
held at the Embassy Suites Omaha Downtown/Old Market, 555 South 10th St., Omaha,
Nebraska 68102 at 12:00 noon Central time, on April 27, 2001, for the following
purposes:
1. To elect two Directors of the Fund (PROPOSAL 1).
2. To ratify the selection of KPMG LLP as independent accountants
for the Fund for the fiscal year ending November 30, 2001
(PROPOSAL 2).
3. To approve or disapprove a proposed amendment to the
Investment Advisory Agreement to increase in the advisory fee
paid to Boulder Investment Advisors, LLC (PROPOSAL 3).
4. To transact such other business as may properly come before
the Meeting or any adjournments thereof.
The Board of Directors of the Fund has fixed the close of business on
February 28, 2001 as the record date for the determination of shareholders of
the Fund entitled to notice of and to vote at the Annual Meeting.
By Order of the Board of Directors,
STEPHANIE KELLEY
SECRETARY
March 16, 2001
- --------------------------------------------------------------------------------
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE ANNUAL MEETING ARE
REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD.
THE PROXY CARD SHOULD BE RETURNED IN THE ENCLOSED ENVELOPE,
WHICH NEEDS NO POSTAGE IF MAILED IN THE CONTINENTAL UNITED
STATES. INSTRUCTIONS FOR THE PROPER EXECUTION OF PROXIES ARE
SET FORTH ON THE INSIDE COVER.
- --------------------------------------------------------------------------------
2
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of
assistance to you and may avoid the time and expense to the Fund involved in
validating your vote if you fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the party
signing should conform exactly to a name shown in the registration.
3. All Other Accounts: The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the form of registration. For
example:
REGISTRATION VALID SIGNATURE
------------ ---------------
CORPORATE ACCOUNTS
(1) ABC Corp. ABC Corp.
(2) ABC Corp. John Doe, Treasurer
(3) ABC Corp., c/o John Doe Treasurer John Doe
(4) ABC Corp. Profit Sharing Plan John Doe, Trustee
TRUST ACCOUNTS
(1) ABC Trust Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee, u/t/d 12/28/78 Jane B. Doe
CUSTODIAN OR ESTATE ACCOUNTS
(1) John B. Smith, Cust., John B. Smith
f/b/o John B. Smith, Jr. UGMA
(2) John B. Smith John B. Smith, Jr.,
Executor
3
BOULDER TOTAL RETURN FUND, INC.
1680 38th Street, Suite 800
Boulder, Colorado 80301
ANNUAL MEETING OF SHAREHOLDERS
April 27, 2001
PROXY STATEMENT
This document is a proxy statement ("Proxy Statement") for Boulder
Total Return Fund, Inc. ("BTF" or the "Fund"). This Proxy Statement is furnished
in connection with the solicitation of proxies by the Fund's Board of Directors
(collectively, the "Board" and individually, the "Directors") for use at the
Annual Meeting of Shareholders of the Fund to be held on Friday, April 27, 2001,
at 12:00 noon Central time, at the Embassy Suites Omaha Downtown/Old Market, 555
South 10th St., Omaha, Nebraska 68102, and at any adjournments thereof (the
"Meeting"). A Notice of Annual Meeting of Shareholders and proxy card for the
Fund accompany this Proxy Statement. Proxy solicitations will be made, beginning
on or about March 16, 2001, primarily by mail, but proxy solicitations may also
be made by telephone, online on the Fund's web site, telegraph or personal
interviews conducted by officers of the Fund and PFPC Inc. ("PFPC"), the
transfer agent and co-administrator of the Fund. The costs of proxy solicitation
and expenses incurred in connection with the preparation of this Proxy Statement
and its enclosures will be paid by the Fund. The Fund also will reimburse
brokerage firms and others for their expenses in forwarding solicitation
material to the beneficial owners of its shares.
THE ANNUAL REPORT OF THE FUND, INCLUDING AUDITED FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED NOVEMBER 30, 2000, HAS BEEN MAILED TO SHAREHOLDERS.
ADDITIONAL COPIES ARE AVAILABLE UPON REQUEST, WITHOUT CHARGE, BY CALLING
1-800-331-1710. THE REPORT IS ALSO VIEWABLE ONLINE AT THE FUND'S WEB SITE AT
WWW.BOULDERTOTALRETURN.COM
If the enclosed proxy is properly executed and returned in time to be
voted at the Meeting, the Shares (as defined below) represented thereby will be
voted in accordance with the instructions marked thereon. Unless instructions to
the contrary are marked thereon, a proxy will be voted FOR the election of the
nominees for Director and FOR the other matters listed in the accompanying
Notice of the Annual Meeting of Shareholders. Any shareholder who has given a
proxy has the right to revoke it at any time prior to its exercise either by
attending the Meeting and voting his or her Shares in person or by submitting a
letter of revocation or a later-dated proxy to the Fund at the above address
prior to the date of the Meeting.
In the event that a quorum is not present at the Meeting, or in the
event that a quorum is present but sufficient votes to approve any of the
proposals are not received, the persons named as proxies may propose one or more
adjournments of the Meeting to permit further solicitation of proxies. Any such
adjournment will require the affirmative vote of a majority of those shares
represented at the Meeting in person or by proxy. If a quorum is present, the
persons named as proxies will vote those proxies which they are entitled to vote
FOR any proposal in favor of such an adjournment and will vote those proxies
required to be voted AGAINST any proposal against any such adjournment. A
shareholder vote may be taken on one or more of the proposals in the Proxy
Statement prior to any such adjournment if sufficient votes have been received
for approval. Under the By-Laws of the Fund, a quorum is constituted by the
presence in person or by proxy of the holders of a majority of the outstanding
shares of the Fund entitled to vote at the Meeting. If a proposal is to be voted
upon by only one class of the Fund's shares, a quorum of that class of shares
must be present at the Meeting in order for the proposal to be considered.
4
The Fund has two classes of capital stock: common stock, par value
$0.01 per share (the "Common Stock") and Auction Market Preferred Stock, par
value $0.01 per share ("AMPs", together with the Common Stock, the "Shares"). On
the record date, February 28, 2001, the following number of Shares of the Fund
were issued and outstanding:
AMPS
COMMON STOCK OUTSTANDING
OUTSTANDING
------------ -----------
9,416,743 775
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the
beneficial ownership of the Fund's shares as of February 28, 2001 by each person
who is known by the Fund to beneficially own 5% or more of the Fund's Common
Stock. To the Fund's knowledge, there are no 5% or greater beneficial owners of
the AMPs.
NAME OF OWNER* NUMBER OF SHARES NUMBER OF SHARES PERCENTAGE
DIRECTLY OWNED (1) BENEFICIALLY OWNED (2) BENEFICIALLY OWNED
------------------ ---------------------- ------------------
Badlands Trust Company (1)(3) 12,735 3,945,550 41.90%
Stewart R. Horejsi Trust
No. 2 (4) 0 3,945,550 41.90%
Ernest Horejsi Trust
No. 1B (1) 2,468,053 2,468,053 26.21%
Lola Brown Trust
No. 1B (1) 1,028,001 1,028,001 10.92%
Evergreen Atlantic LLC (1) 257,811 257,811 2.74%
Stewart West Indies Trust (1)(2) 78,470 191,907 2.04%
Susan L. Ciciora Trust (1)(2) 54,132 131,475 1.40%
John S. Horejsi Trust (1)(2) 27,075 65,747 0.70%
Evergreen Trust (1)(2) 19,273 47,632 0.51%
AGGREGATE SHARES OWNED ** 3,945,550 3,945,550 41.90%
- ----------------------------
<FN>
* The address of Evergreen Atlantic LLC is 1680 38th Street, Suite 800,
Boulder, Colorado 80301. The address of each other listed owner is c/o
Badlands Trust Company, POB 801, 614 Broadway, Yankton, South Dakota
57078.
** Aggregate number and percentage are less than the sum total of amounts
shown for each owner because the same shares may be deemed beneficially
owned by more than one party (see Footnotes 1 through 4).
</FN>
5
(1) DIRECT OWNERSHIP. Evergreen Atlantic, LLC ("EALLC"), The Evergreen
Trust (the "Evergreen Trust"), John S. Horejsi Trust ("John Trust"),
Susan L. Ciciora Trust ("Susan Trust"), Stewart West Indies Trust ("SWI
Trust"), the Lola Brown Trust No. 1B (the "Brown Trust"), the Ernest
Horejsi Trust No. 1B (the "EH Trust"), Badlands Trust Company
("Badlands"), the Stewart R. Horejsi Trust No. 2 (the "SRH Trust") and
Stewart R. Horejsi are, as a group, considered to be a "control person"
of the Fund (as that term is defined in Section 2(a)(9) of the
Investment Company Act of 1940, as amended (the "1940 Act")). EALLC,
the Evergreen Trust, John Trust, Susan Trust, SWI Trust, the Brown
Trust, the EH Trust and Badlands (collectively, the "Horejsi
Affiliates") directly own the shares indicated for such entity in the
table above, totaling 3,945,550 (42.2%). However, these entities and
other trusts or companies with interlocking management and/or common
ownership may be deemed to indirectly own additional Fund shares, which
are included in the table above.
(2) INDIRECT OWNERSHIP THROUGH EALLC. Numbers shown in the table include
shares held directly (see Footnote No. 1) and shares that may be deemed
to be beneficially owned indirectly through ownership of EALLC. The
outstanding membership interests in EALLC are owned by the Evergreen
Trust, the Susan Trust, the John Trust and the SWI Trust in the
following percentages - 11%, 30%, 15% and 44%. The Trustees of the
Evergreen Trust are Stephen C. Miller, Larry Dunlap and Badlands.
Badlands is the sole trustee for each of the Susan Trust, the John
Trust and the SWI Trust. Mr. Horejsi is not a beneficiary under any of
the foregoing trusts. Badlands has sole discretion with respect to the
Susan Trust, John Trust and SWI Trust while any action by the Evergreen
Trust requires a majority vote of the trustees. Consequently, both the
trusts and each trustee disclaim beneficial ownership of shares owned
by EALLC. Mr. Stewart Horejsi is the manager of EALLC.
(3) OWNERSHIP BY BADLANDS. The number shown in the table includes shares
held directly by Badlands (see Footnote No. 1) and shares that may be
deemed to be beneficially owned indirectly by Badlands through direct
or indirect ownership by the Brown Trust, the EH Trust, EALLC,
Evergreen Trust, the Susan Trust, the John Trust and the SWI Trust.
Badlands is the sole trustee of the Susan Trust, the John Trust and the
SWI Trust, which together with the Evergreen Trust control EALLC (see
Footnote No. 2), the other two trustees of Evergreen Trust being
Stephen C. Miller and Larry Dunlap. Badlands, together with Larry
Dunlap and Susan Ciciora (Mr. Horejsi's daughter), is one of three
trustees of both the Brown Trust and the EH Trust. Badlands is a trust
company organized under the laws of South Dakota, which is wholly owned
by the SRH Trust, an irrevocable trust organized by Mr. Stewart Horejsi
for the benefit of his children. The directors of Badlands are Larry
Dunlap, Stephen C. Miller, Robert Ciciora, who is the brother of Mr.
Horejsi's son-in-law (John Ciciora), Daniel E. Loveland and Marty Jans.
Badlands and its directors disclaim beneficial ownership of shares
owned directly by the EALLC, the Evergreen Trust, the Susan Trust, the
John Trust, the SWI Trust, Brown Trust and the EH Trust.
(4) INDIRECT OWNERSHIP BY SRH TRUST. The number shown in the table reflects
shares that may be deemed to be beneficially owned indirectly through
ownership of Badlands. The trustees of the SRH Trust are Badlands,
Robert Ciciora and Robert Kastner. Both the Trust and its trustees
disclaim beneficial ownership of shares beneficially owned directly or
indirectly by Badlands.
Information as to beneficial ownership in the previous paragraph has
been obtained from a representative of the beneficial owners; all other
information as to beneficial ownership is based on reports filed with the
Securities and Exchange Commission (the "SEC") by such beneficial owners.
As of February 28, 2001, Cede & Co., a nominee partnership of
Depository Trust Company, held of record, but not beneficially, 9,288,680 shares
or 98.6% of Common Stock outstanding and 775 shares or 100% of AMP outstanding
of the Fund.
As of February 28, 2001, the executive officers and directors of the
Fund, as a group, owned 3,968,577 Common Shares (this amount includes the
aggregate shares of Common Stock owned by the Horejsi Affiliates set forth
above) and 0 shares of AMPs of the Fund, representing 42.14% of Common Shares
and 0% of AMPs.
6
In order that your Shares may be represented at the
Meeting, you are requested to vote on the following matters:
PROPOSAL 1: ELECTION OF DIRECTORS
The first proposal to be considered at the Meeting is the election of
two (2) Directors of the Fund. Only the Common Stock shareholders are entitled
to vote on the election of these Directors. The Board of Directors is divided
into three classes, each class having a term of three years. Each year the term
of one class will expire. Joel W. Looney and Stewart R. Horejsi, Class I
Directors of the Fund, are being nominated for three year terms to expire at the
Fund's 2004 Annual Meeting of Shareholders or until their successors are duly
elected and qualified. Richard I. Barr and Stephen C. Miller, Class II Directors
of the Fund, were elected on April 21, 1999, for a three-year term to expire at
the Fund's 2002 Annual Meeting of Shareholders or until their successors are
duly elected and qualified. Alfred G. Aldridge, Jr., a Class III Director of the
Fund, was elected on April 25, 2000, for a three-year term to expire at the
Fund's 2003 Annual Meeting of Shareholders or until his successor is duly
elected and qualified.
The nominees have consented to serve as a Directors if elected at the
Meeting. If the designated nominees decline or otherwise become unavailable for
election, however, the proxy confers discretionary power on the persons named
therein to vote in favor of a substitute nominee or nominees.
Under the Fund's Articles of Incorporation, Articles Supplementary and
the 1940 Act, holders of the AMP, voting as a single class, are entitled to
elect two Directors, and holders of the Common Stock will be entitled to elect
the remaining Directors, subject to the provisions of the 1940 Act and the
Fund's Articles of Incorporation, which permit the holders of the AMP, when
dividends are in arrears for two full years, to elect the minimum number of
additional Directors that when combined with the two Directors elected by the
holders of the AMP would give the holders of the AMP a majority of the
Directors. (Dividends are not in arrears.) Messrs. Aldridge and Barr were
previously nominated (and elected) to represent holders of the AMP.
INFORMATION ABOUT DIRECTORS AND OFFICERS
Set forth in the following table are the nominees for election to the
Board of Directors and the existing Directors of the Fund, together with certain
other information. No Director or officer owned any shares of AMP on February
28, 2001.
BUSINESS EXPERIENCE COMMON STOCK
DURING THE BENEFICIALLY OWNED
NAME, ADDRESS AND AGE PAST FIVE YEARS ON FEBRUARY 28, 2001* PERCENT
- --------------------- --------------- --------------------- -------
NOMINEES TO SERVE UNTIL 2004 ANNUAL MEETING OF SHAREHOLDERS
- -----------------------------------------------------------
STEWART R. HOREJSI*** Director of the Fund since 3,753,865 Shares++ 38.86%
Bellerive 1977; Since April 1994,
Queen Street General Manager, Brown
St. Peter Barbados Welding Supply, LLC (sold
Age: 62 in 1999); President or
Manager, various
subsidiaries of Horejsi,
Inc. (liquidated in 1999)
since January, 1992;
Investment Manager, Stewart
West Indies Trading
Company, Ltd. (doing
business as SIA) since
1999.
JOEL W. LOONEY Director of the Fund since 700 **
506 S. Cherry St. January 2001; Partner,
Lindsborg, KS 64 Financial Management Group,
Age: 39 LLC since July 1999.
DIRECTORS SERVING UNTIL 2003 ANNUAL MEETING OF SHAREHOLDERS
7
ALFRED G. ALDRIDGE, JR. Director of the Fund since 1025 Shares **
6831 E. Presidio Road 1999; Sales Manager of
Scottsdale, AZ 85254 Shamrock Foods Company
Age: 63 since 1982; Director of the
Fiesta Bowl, Tempe, AZ;
retired Brigadier General,
CA Air National Guard.
DIRECTORS SERVING UNTIL 2002 ANNUAL MEETING OF SHAREHOLDERS
RICHARD I. BARR Director of the Fund since
2502 E. Solano Drive 1999; Manager of Advantage
Phoenix, AZ 85016 Sales and Marketing, Inc.
Age: 63 since 1963. 9,500 Shares **
STEPHEN C. MILLER*** President of the Fund and 3,947,050 Shares+ 41.92%
1680 38th Street, Suite 800 Chairman of the Board since
Boulder, CO 80301 1999; President and General
Age: 48 Counsel, Boulder Investment
Advisers, LLC ("BIA");
Manager, Boulder
Administrative Services,
LLC ("BAS"); Vice
President, Stewart West
Indies Trading Company,
Ltd. (doing business as
Stewart Investment Advisers
("SIA")); President and
General Counsel, Horejsi,
Inc. (liquidated in 1999):
General Counsel, Brown
Welding Supply, LLC (sold
in 1999); Of Counsel,
Krassa, Madsen & Miller,
LLC since 1991.
DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP 3,968,577 Shares 42.14%
- -----------------------------------------------------------------------------
* This information has been furnished by each Director. "Beneficial
Ownership" is defined under Section 13(d) of the 1934 Act.
** Less than 1%.
*** Designates "interested person" of the Fund as defined in the 1940 Act.
Mr. Miller and Mr. Horejsi are "interested persons" because they are
officers and directors of BIA and SIA, the Fund's investment advisers.
Mr. Horejsi is also an "interested person" as a result of the amount of
his beneficial ownership of Fund shares.
+ Mr. Miller directly owns 1500 Shares of the Fund. Mr. Miller is a (i)
trustee of Evergreen Trust and (ii) director and officer of Badlands
Trust Company. By virtue of such relationships, Mr. Miller may be
deemed to share the indirect power to vote and direct the disposition
of the Shares directly and beneficially held by Evergreen Trust and
Badlands Trust Company. Mr. Miller disclaims beneficial ownership of
such Shares.
++ 2,468,053, 257,811 and 1,028,001 Shares of the Fund are held by the EH
Trust, EALLC, and Lola Brown Trust, respectively. Accordingly, Mr.
Horejsi may be deemed to have indirect beneficial ownership of such
Shares. Mr. Horejsi disclaims all such beneficial ownership.
Each Director of the Fund who is not a Director, officer or employee of
an investment adviser, or any of their affiliates, receives a fee of $6,000 per
annum plus $4,000 for each in-person meeting, and $1000 for each telephone
meeting. Each Director of the Fund is reimbursed for travel and out-of-pocket
expenses associated with attending Board and Committee meetings. On January 26,
2001, the Board of Directors voted to change its compensation. The fee for each
attended in-person meeting was increased from $2,000 per meeting to $4,000 per
meeting. The Board of Directors of the Fund held seven meetings (two of which
were held by telephone conference call) during the fiscal year ended November
30, 2000. Each Director currently serving in such capacity attended at least 75%
of the meetings of Directors and any Committee of which he is a member. The
aggregate remuneration paid to the Directors of the Fund for acting as such
during the fiscal year ended November 30, 2000 amounted to $65,574.97.
From --------- until January, 2001, Mr. Looney had served, without
compensation, as one of three trustees of the Mildred Horejsi Trust, an
affiliate of the Fund.
8
The Board of Directors has an Audit Committee consisting of Messrs.
Aldridge and Barr. Messrs. Aldridge and Barr were appointed to the Audit
Committee on January 15, 1999. The Audit Committee reviews the scope and results
of the Fund's annual audit with the Fund's independent accountants and
recommends the engagement of such accountants. Management, however, is
responsible for the preparation, presentation and integrity of the Fund's
financial statements, and the independent accountants are responsible for
planning and carrying out proper audits and reviews. The Board of Directors
adopted a written charter for the Audit Committee on January 21, 2000. A copy of
the Audit Committee Charter is attached hereto as Exhibit A. The Audit Committee
met twice during the fiscal year ended November 30, 2000.
In connection with the audited financial statements as of and for the
year ended November 30, 2000 included in the Fund's Annual Report for the year
ended November 30, 2000 (the "Annual Report"), at a meeting held on January 26,
2001, the Audit Committee considered and discussed the audited financial
statements with management and the independent accountants, and discussed the
audit of such financial statements with the independent accountants.
The members of the Audit Committee are not professionally engaged in
the practice of auditing or accounting and are not employed by the Fund for
accounting, financial management or internal control. Moreover, the Audit
Committee relies on and makes no independent verification of the facts presented
to it or representations made by management or the independent accountants.
Accordingly, the Audit Committee's oversight does not provide an independent
basis to determine that management has maintained appropriate accounting and
financial reporting principles and policies, or internal controls and
procedures, designed to assure compliance with accounting standards and
applicable laws and regulations. Furthermore, the Audit Committee's
considerations and discussions referred to above do not provide assurance that
the audit of the Fund's financial statements has been carried out in accordance
with generally accepted accounting standards or that the financial statements
are presented in accordance with generally accepted accounting principles.
Based on its consideration of the audited financial statements and the
discussions referred to above with management and the independent accountants
and subject to the limitation on the responsibilities and role of the Audit
Committee set forth in the Charter and those discussed above, the Audit
Committee of the Fund recommended to the Board of Directors of the Fund that the
audited financial statements be included in the Fund's Annual Report.
Set forth below are audit fees and non-audit related fees billed to the
Fund for professional services received from PwC for the Fund's fiscal year
ended November 30, 2000. No fees were billed by PwC to the Fund's adviser or its
affiliates.
Audit Fees Financial Information Systems All Other Fees
---------- Design and Implementation Fees --------------
------------------------------
$--------- $------------- $----------
The Audit Committee has considered and concluded that the provision of
non-audit services is compatible with maintaining the auditors' independence.
The Audit Committee met twice during the fiscal year ended November 30, 2000.
The Audit Committee is composed entirely of the Fund's independent Directors,
consisting of Messrs. Aldridge, Barr and Looney.
The Board of Directors has a Nominating Committee consisting of Messrs.
Aldridge and Barr which is responsible for considering candidates for election
to the Board of Directors of the Fund in the event a position is vacated or
created. The Nominating Committee would consider recommendations by shareholders
if a vacancy were to exist. Such recommendations should be forwarded to the
Secretary of the Fund. The Nominating Committee of the Fund did not meet during
the fiscal year ended November 30, 2000 and met once on January 26, 2001 to
nominate Joel W. Looney as a Director of the Fund.
The names of the executive officers of the Fund (other than Mr. Miller
who is described above) are listed in the table below. Each officer was elected
to office by the Board at a meeting held on January 26, 2001. This table also
shows certain additional information. Each officer will hold such office until a
successor has been elected by the Board of Directors of the Fund.
POSITIONS HELD PRINCIPAL OCCUPATIONS AND OTHER AFFILIATIONS
NAME AND AGE WITH THE FUND DURING THE PAST FIVE YEARS
- ------------ ------------- --------------------------
Carl D. Johns Chief Financial Officer, Chief Chief Financial Officer, Chief Accounting Officer,
Age: 38 Accounting Officer, Vice Vice President and Treasurer, Boulder Total Return
President and Treasurer Fund, Inc., since January 15, 1999; Vice President
and Treasurer of BIA and Assistant Manager of BAS,
since April, 1999; Employee of Flaherty & Crumrine
Incorporated prior to December 31, 1998; Assistant
Treasurer of the Fund (f/k/a Preferred Income
Management Fund Incorporated), Preferred Income Fund
Incorporated and Preferred Income Opportunity Fund
Incorporated prior to December 31, 1998.
Stephanie Kelley Secretary Secretary, Boulder Total Return Fund, Inc., since
Age: 44 October 27, 2000; assistant secretary and assistant
treasurer of BIA; assistant secretary of BAS;
assistant secretary and assistant treasurer of
various other Horejsi Affiliates.
9
The following table sets forth certain information regarding the
compensation of the Fund's Directors for the fiscal year ended November 30,
2000. No persons (other than the "independent" Directors, as set forth below)
currently receive compensation from the Fund for acting as a Director or
officer. Directors and executive officers of the Fund do not receive pension or
retirement benefits from the Fund. Directors receive reimbursement for travel
and other out of pocket expenses incurred in connection with board meetings.
COMPENSATION TABLE
------------------
NAME OF PERSON AND AGGREGATE COMPENSATION
POSITION WITH THE FUND* FROM THE FUND PAID TO DIRECTORS**
- ----------------------- -------------------------------
ALFRED G. ALDRIDGE, JR. $17,652.17
Director
RICHARD I. BARR $21,148.90
Director
STEWART R. HOREJSI $0
Director
JOEL W. LOONEY $0
Director
STEPHEN C. MILLER $0
President of the Fund, Chairman
of the Board and Director
- ----------------------------
* Effective September 19, 2000, James G. Duff resigned as a Director of
the Fund.
** The Fund is not part of a fund complex. In addition to the amounts
shown above that were paid to persons currently serving as Directors,
the Fund paid James G. Duff $1,450 for his service as Director of the
Fund prior to September 19, 2000.
REQUIRED VOTE
Election of the listed nominees for Director of the Fund will require
the affirmative vote of a plurality of the votes cast at the Meeting in person
or by proxy on Proposal 1.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE NON-INTERESTED DIRECTORS,
RECOMMENDS THAT THE COMMON STOCK SHAREHOLDERS VOTE "FOR" PROPOSAL NO. 1.
PROPOSAL 2: RATIFICATION OF THE SELECTION OF
INDEPENDENT ACCOUNTANTS
On January 26, 2001, the Audit Committee of the Board,(consisting of
those Directors who are not "interested persons" (as defined in the 1940 Act))
selected KPMG LLP ("KPMG"), 99 High Street, Boston, Massachusetts 02110-2371, as
independent accountants for the Fund for the Fund's fiscal year ending November
30, 2001. The selection of KPMG was ratified by the entire Board. A
representative of KPMG will not be present at the Meeting but will be available
by telephone and will have an opportunity to make a statement if the
representative so desires and will be available to respond to appropriate
questions.
10
KPMG has informed the Fund that it has no direct or indirect financial
interest in the Fund. The Horejsi Affiliates have engaged KPMG from time to time
in the past to provide various accounting, auditing and consulting services.
PricewaterhouseCoopers LLP ("PricewaterhouseCoopers"), One Post Office
Square, Boston, Massachusetts 02109, served as independent accountants for the
Fund since the Fund's commencement of operations until the end of the fiscal
year ending November 30, 2000. PricewaterhouseCoopers declined to stand for
re-election. PricewaterhouseCoopers' reports on the financial statements for the
past two years contained no adverse opinion or disclaimer of opinion and was not
qualified or modified as to uncertainty, audit scope, or accounting principles.
During the two fiscal years immediately preceding PricewaterhouseCoopers'
declination, there have been no disagreements with such accountants on any
matter of accounting principals or practices, financial statement disclosure, or
auditing scope or procedure. A representative of PricewaterhouseCoopers will not
be present at the Meeting but will be available by telephone and will have an
opportunity to make a statement if the representative so desires and will be
available to respond to appropriate questions.
REQUIRED VOTE
Ratification of the selection of KPMG as independent accountants for
the Fund requires the affirmative vote of the holders of a majority of the
Shares (including all shares of Common Stock and AMP) represented at the Meeting
in person or by proxy, voting as a single class.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE NON-INTERESTED DIRECTORS,
RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL NO. 2.
PROPOSAL 3: APPROVAL OF PROPOSED AMENDMENT TO
INVESTMENT ADVISORY AGREEMENT
At a meeting of the Board held on March 1, 2001, the Directors
unanimously approved (including unanimous approval on a separate vote of the
Directors who are not "interested persons" of the Fund within the meaning of
Section 2(a)(19) of the 1940 Act) an amendment to the Investment Advisory
Agreement between the Fund and Boulder Investment Advisers, L.L.C. (the
"Adviser") dated August 27, 1999, (the "Advisory Agreement") that would increase
the advisory fee payable by the Fund to the Adviser and resolved to recommend
such amendment to the shareholders for their approval.
SUMMARY OF THE PROPOSAL
At the March 1, 2001 meeting, the Adviser presented a proposal to the
Board in support of an amendment to the Advisory Agreement relating to an
increased advisory fee to reflect the quality of advisory services rendered (the
"Proposed Amendment"). The Adviser made reference to the fact that when the
Board approved the Adviser in 1999, the Adviser at that time had no previous
experience managing registered investment companies. Therefore, the Adviser
11
requested a fee of 1.00% of total net assets. However, the Adviser has
successfully produced for the Fund a total return of 24.5% in 2000 compared to
negative 9.1% for the S&P 500. Notably, the Fund was ranked #1 by Lipper
Analytical Services, Inc. for the year 2000 in the closed-end growth & income
funds category. Specifically, the Adviser addressed the Fund's current and pro
forma advisory fee, the Fund's performance since the Adviser and SIA began
providing services, the experience of the Adviser and SIA, and the total current
and pro forma expense ratios for the Fund.
A form of the Proposed Amendment is attached as Exhibit B. The Proposed
Amendment is the same in all substantive respects to the existing Advisory
Agreement, except for the proposed fee increase.
CURRENT FEE
The Adviser is currently paid an annual fee, payable monthly, of 1.00%
of the value of the Fund's average monthly total net assets (including principal
amount of AMPs).
PROPOSED FEE
Pursuant to the Proposed Amendment, as approved by the Board of
Directors, the Adviser would receive an annual fee, payable monthly, of 1.25% of
the value of the Fund's average monthly total net assets (including principal
amount of AMPs). If approved by the shareholders, the new advisory fee would
become effective on the date of such shareholder approval. Under current
arrangements between the Adviser and SIA, 70% of such fee would be paid to SIA.
No changes to the sub-advisory agreement with the SIA are being proposed.
For the fiscal year ended November 30, 2000, the Adviser received
aggregate advisory fees from the Fund in the amount of $1,669,632. If the
proposed fee had been in effect during the 2000 fiscal year, the Adviser would
have received an aggregate amount of $2,098,267, representing an increase of
25.67%. These figures exclude all investment advisory fees paid to Spectrum
Asset Management as a sub-adviser to the Fund from July 1, 1999 through August
15, 2000. If approved, the increase in advisory fees could negatively affect the
Fund's performance and returns because the Fund will have higher expenses than
otherwise would be the case.
12
FEES AND EXPENSES
The following expense table and example provide a comparison of the
Fund's annual operating expenses based on total net assets for the fiscal year
ended November 30, 2000, as reported in the Fund's most recent annual report,
and pro forma expenses showing these same expenses adjusted for the proposed
advisory fee increase.
TABLE OF FEES AND EXPENSES
CURRENT AND PRO FORMA
-----------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
-----------------------------------------------------------------------------
Current Pro Forma
------------------------------------- --------------------- -----------------
Management fees 1.00% 1.25%
------------------------------------- --------------------- -----------------
Administration, Transfer Agency and 0.25% 0.21%
Custody fees
------------------------------------- --------------------- -----------------
Other expenses 0.31% 0.28%
------------------------------------- --------------------- -----------------
------------------------------------- --------------------- -----------------
Total Annual Fund Operating Expenses 1.57% 1.75%
------------------------------------- --------------------- -----------------
The following example illustrates the projected dollar amount of cumulative
expenses that would be incurred over various periods with respect to a
hypothetical investment in the Fund. These amounts are based upon payment by the
Fund of current and pro forma expenses at levels set forth in the table above.
A common stockholder would pay the following annual expenses on a
$1,000 investment, assuming a 5% annual return. Notably, the Fund is leveraged
with $77.5 million AMPs. The fees set forth in the table above are charged
against all of the assets in the Fund, including the $77.5 million of leverage
associated with the AMPs. Therefore, in the table below, the expenses shown are
total Fund expenses, including the expenses on the AMPs leverage.
- -------------- ----------------- ---------------- ----------------- ------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------- ----------------- ---------------- ----------------- ------------
Current $22.73 $23.59 $24.52 $27.16
- -------------- ----------------- ---------------- ----------------- ------------
Pro Forma $26.48 $27.35 $28.28 $30.89
- -------------- ----------------- ---------------- ----------------- ------------
The foregoing table is to assist you in understanding the various costs and
expenses that a Common Stock investor in the Fund will bear directly or
indirectly. The assumed 5% annual return is not a prediction of, and does not
represent, the projected or actual performance of the Fund's common stock.
Actual expenses and annual rates of return may be more or less than those
assumed for the purposes of the foregoing example.
FUND PERFORMANCE
In determining whether or not to approve the Proposed Amendment, the
Board considered the Adviser's past performance of the Adviser and SIA as
advisers to the Fund. The Board specifically reviewed the Fund's performance
13
for the periods set forth below:
TOTAL RETURN ON NET ASSET VALUE FOR THE FUND VS. S&P 500 INDEX
- -------------------------- ------------------------- ------------------------
BTF TOTAL RETURN ON NAV S&P 500
- -------------------------- ------------------------- ------------------------
One Year ending 12/31/00 24.53% -9.10%
- -------------------------- ------------------------- ------------------------
Fiscal Year ending 13.30% -4.20%
11/30/00
- -------------------------- ------------------------- ------------------------
Past performance, of course, is no indication or guarantee of future returns.
Note that the Adviser and SIA have been the adviser and sub-adviser,
respectively, to the Fund since August 27, 1999.
BOARD CONSIDERATIONS
The Board, in making its determination to approve the proposed increase in the
advisory fee, considered the information provided by the Adviser, as well as
other information made available to it regarding the Fund, its fees and the
proposed increase. The Board considered, among other things, the following:
(1) the performance of the Fund, noting that the Fund significantly
outperformed the S&P 500 Index in 2000 and that the Fund was ranked #1
by Lipper in the closed-end Growth & Income Fund category for the year
2000,
(2) the outperformance by the Fund in relation to numerous comparative
funds during the 12 months ending December 31, 2000, and January 31,
2001,
(3) that the proposed fee was on the high end of the advisory-fee-spectrum
as compared to advisory fees paid by other funds with similar
objectives and policies, but that the Fund's expense ratio taking the
proposed fee increase into account was more middle-of-the-range when
compared to other total fund's expenses,
(4) the nature and quality of the services rendered by the Adviser and SIA,
(5) actual expense ratios of the Fund as of November 30, 2000, and pro
forma expense ratios assuming adoption of the proposed fee increase,
(6) the profitability of the Fund's advisory contract to the Adviser for
calendar year 2000 and pro forma data regarding profitability of the
contract to the Adviser assuming adoption of the Proposed Amendment,
(7) that the Adviser was instrumental in successfully restructuring the
Fund, its investment objectives, characteristics and policies thus
resulting in major changes in the Fund's current portfolio and
investment style,
(8) that the excellent performance of the Adviser was achieved over a
relatively short period of time,
(9) the strong performance of Mr. Horejsi in managing the assets of the
Horejsi Affiliates over a ten-year period prior to his becoming
associated with a registered adviser, and
(10) such other factors and information as they considered relevant.
The Adviser pointed out to the Directors that for most of the Fund's
fiscal year in 2000, the Fund held significant investments in preferred stocks,
which had been the primary investment vehicle under the Fund's former investment
objective of income prior to August, 1999. This significant weighting in
preferred stocks caused the Fund's total return in 2000 to be lower than it
would otherwise have been without the investments in preferred stocks.
The Board placed primary emphasis upon the high level of investing
expertise provided by the Adviser and SIA, as well as the strong relative
investment performance of the Fund in the recent fiscal year and since
14
the Adviser and SIA became advisers (see Fund Performance above).
The Board reviewed a comparison of the Fund's proposed advisory fee and
expense ratio against data available through Lipper. With the new advisory fee
in place, the Adviser believes that the overall advisory fees, although higher
than many other registered investment companies, will remain in line with other
funds of similar objectives and policies and attractive performance records.
Following the Adviser's presentation, the independent Directors
consulted separately with their independent counsel. Thereafter, upon reviewing
all of the information the Board considered relevant and necessary, the Board
determined that the proposed increase in investment advisory fees for the Fund
was in the best interests of the Fund and its shareholders.
The Board approved the Amended Agreement subject to approval of the
Amended Agreement by a majority of the Fund's outstanding shares, which is
higher than the minimum voting requirement under the 1940 Act.
INVESTMENT ADVISORY AGREEMENT
The Adviser (i.e., Boulder Investment Advisers, L.L.C.), a Colorado
limited liability company with principal offices at 1680 38th Street, Suite 800,
Boulder, Colorado 80301, together with Stewart Investment Advisers (the
"Sub-Adviser"), a Barbados company with principal offices at Bellerive, Queen
St., St. Peter, Barbados, currently provide investment advisory services to the
Fund under the terms of the Advisory Agreement. The current Advisory Agreement,
dated August 27, 1999, was last approved by a majority of the outstanding voting
securities of the Fund on August 27, 1999, at the time of initial approval of
the Adviser and Sub-Adviser as advisers to the Fund. The Adviser and Sub-Adviser
provide investment advice and, in general, conduct the management and investment
program of the Fund under the supervision of the Board.
Under the Advisory Agreement, the Adviser is primarily responsible for
making investment decisions, supplying investment research and portfolio
management services and placing purchase and sale orders for portfolio
transactions, which functions are substantially delegated to the Sub-Adviser for
common stock investing. The Adviser is responsible for monitoring and evaluating
the services provided to the Fund by the Sub-Adviser. The Adviser also makes
asset allocation decisions for the Fund and determines the extent and nature of
the Fund's leverage, which services are also delegated to the Sub-Adviser. The
Advisory Agreement also provides that the Adviser will bear all expenses in
connection with its performance, including fees that it will pay to any
sub-advisers under the Sub-Advisory Agreement (defined below) or other
sub-advisory agreements of the Fund.
The Advisory Agreement provides that the Adviser will be indemnified by
the Fund for losses, claims and expenses not caused by the Adviser's willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations and duties under the
Advisory Agreement.
The Advisory Agreement is to continue initially for a two-year period
and to continue for successive annual periods thereafter, provided such
continuance is approved at least annually by (a) a majority of the Directors who
are not "interested persons" of the Fund (as that term is used in the 1940 Act)
and a majority of the full Board of Directors or (b) a majority of the
outstanding voting securities of the Fund (as defined in the 1940 Act). The
Advisory Agreement is terminable, without penalty, on 60 days' written notice by
the Board or the Adviser upon written notice to the other. The Advisory
Agreement will terminate automatically upon its assignment (as defined in the
1940 Act).
BOULDER INVESTMENT ADVISERS, L.L.C.
The Adviser (i.e., Boulder Investment Advisers, L.L.C.) was formed on
April 8, 1999 as a Colorado limited liability company and is registered as an
investment adviser under the Investment Advisers Act of 1940. At the time the
Fund entered into the Advisory Agreement with the Adviser, the Adviser had not
previously served as an investment adviser to a registered investment company or
managed assets on a discretionary or non-discretionary basis. However, the
Adviser delegates substantial responsibilities under the Advisory Agreement to
the Sub-Adviser (i.e., Stewart Investment Advisers). Stewart R. Horejsi is an
15
employee of and investment manager for the Sub-Adviser and has extensive
experience managing common stocks for the Horejsi Affiliates and other family
interests. The members of the Adviser are Evergreen Atlantic, LLC and the Lola
Brown Trust No. 1B (the "Members"). The Members each hold a 50% interest in the
Adviser. The Members are "affiliated persons" of the Fund (as that term is
defined in the 1940 Act) and together with the other Horejsi Affiliates hold
42.22% of the Fund's common stock. Please refer to the section entitled
"Security Ownership of Certain Beneficial Owners" for additional information
relating to Evergreen Atlantic, LLC and the Lola Brown Trust No. 1B.
The executive officers of the Adviser and the principal occupation of
each are set forth below:
- ----------------------------------------------------------- -------------------------------------------------
Name and Position with BIA Principal Occupation
- ----------------------------------------------------------- -------------------------------------------------
Stephen C. Miller - President, General Counsel and Chief President, Chief Executive Officer and Chairman
Executive Officer of the Board of the Fund; vice president and
Secretary of of the Sub-Adviser; Director, Vice
President and Assistant Secretary of Badlands;
Counsel to Krassa, Madsen & Miller, LLC since
1991; and Manager of Boulder Administrative
Services, L.L.C. ("BAS")
- ----------------------------------------------------------- -------------------------------------------------
Carl D. Johns - Investment Manager, Vice President and Chief Financial Officer, Chief Accounting
Treasurer Officer, Vice President and Treasurer of the
Fund; Assistant Manager of BAS
- ----------------------------------------------------------- -------------------------------------------------
Laura Rhodenbaugh - Secretary Secretary and treasurer of various Horejsi
Affiliates
- ----------------------------------------------------------- -------------------------------------------------
Carl D. Johns, the Fund's Vice President and Treasurer, is the
investment manager for the Adviser and is responsible for the Adviser's
day-to-day advisory activities. Mr. Johns received a Bachelors degree in
Mechanical Engineering at the University of Colorado in 1985, and a Masters
degree in Finance from the University of Colorado in 1991. He worked at Flaherty
& Crumrine, Incorporated, from 1992 to 1998. During that period he was an
Assistant Treasurer for the Preferred Income Fund Incorporated, the Preferred
Income Opportunity Fund Incorporated, and the Fund.
Pursuant to the Sub-Advisory Agreement between the Fund, the Adviser
and the Sub-Adviser, the Adviser and the Fund engaged the Sub-Adviser, a
Barbados incorporated international business company, as a sub-adviser and
primary investment manager and analyst. The Sub-Adviser bears the primary
responsibility for investment of the Fund's assets. Stewart R. Horejsi is an
employee of the Sub-Adviser and is its primary investment manager. Mr. Horejsi
has been a Director of the Fund since July 1997.
Because of the relationships described above under "Security Ownership
of Certain Beneficial Owners" with respect to Mr. Horejsi, the Members of the
Adviser and the primary equity owner the Sub-Adviser, Mr. Horejsi may be deemed
to have an economic interest in the outcome of voting on this Proposal.
SUB-ADVISORY AGREEMENT
The Fund, the Adviser and Sub-Adviser are parties to a Sub-Advisory
Agreement dated August 27, 1999 (the "Sub-Advisory Agreement"). The Sub-Advisory
Agreement was approved by shareholders of the Fund on August 27, 1999 and is set
forth as Exhibit C to this Proxy Statement. The Sub-Advisory Agreement will
continue initially for a two-year period and continues for successive annual
periods thereafter, provided such continuance is approved at least annually by
(a) a majority of the Directors who are "not-interested persons" of the Fund (as
that term is used in the 1940 Act) and a majority of the full Board of Directors
or (b) a majority of the outstanding voting securities of the Fund (as defined
in the 1940 Act). The Sub-Advisory Agreement is terminable, without penalty, on
60 days' written notice by the Board, or by the Sub-Adviser upon written notice
to the other. The Sub-Advisory Agreement will terminate automatically upon its
assignment (as defined in the 1940 Act).
16
Under the Sub-Advisory Agreement, the Sub-Adviser is responsible for
making investment decisions for the portion of the Fund's assets invested in
common stocks and cash equivalents, supplying investment research and portfolio
management services and placing purchase and sale orders for portfolio
transactions. The Sub-Advisory Agreement also provides that the Sub-Adviser will
bear all expenses in connection with its performance. Pursuant to the
Sub-Advisory Agreement, the Sub-Adviser receives an annual fee, payable monthly,
in the amount agreed to among the parties from time to time. The Sub-Adviser
currently receives an annual fee, payable monthly, of 70% of the advisory fee
retained by the Adviser under the Advisory Agreement after the Adviser has made
required payments to any other sub-adviser(s). This percentage was decreased
from 80% by action of the Board of Directors on October 27, 2000.
The Sub-Advisory Agreement provides that the Sub-Adviser will be
indemnified by the Fund for losses, claims and expenses not caused by the
Sub-Adviser's willful misfeasance, bad faith or gross negligence on its part in
the performance of its duties or from reckless disregard by it of its
obligations and duties under the Agreement.
STEWART INVESTMENT ADVISERS
Stewart R. Horejsi, an employee of the Sub-Adviser and its primary
investment manager, is responsible for the day-to-day management of the Fund's
assets advised by the Sub-Adviser. Mr. Horejsi has been a director of the Fund
since July 1997; General Manager, Brown Welding Supply, LLC (sold in 1999),
since April 1994; Director, Sunflower Bank (resigned); and the President or
Manager of various subsidiaries of the Horejsi Affiliates since June 1986. Mr.
Horejsi has been the investment adviser for the Horejsi family trusts (i.e. the
Brown Trust, the EH Trust, the SRH Trust and certain related trusts) and Horejsi
Affiliates since 1982. As of December 31, 2000, the size of these trusts' common
stock portfolio is approximately $542 million. Mr. Horejsi has been the Director
and President of the Horejsi Family Charitable Foundation, Inc. since 1997. Mr.
Horejsi received a Masters Degree in Economics from Indiana University in 1961
and a Bachelor of Science Degree in Industrial Management from the University of
Kansas in 1959.
The Sub-Adviser is a Barbados international business company,
incorporated on November 12, 1996, and is wholly owned by the Stewart West
Indies Trust, an irrevocable South Dakota trust, established by Mr. Horejsi in
1996 primarily to benefit his issue. Mr. Horejsi is not a beneficiary under this
trust. Prior to entering into the Sub-Advisory Agreement, the Sub-Adviser, which
is registered as an investment adviser under the Investment Advisers Act of
1940, had not previously served as adviser to a registered investment company or
managed assets on a discretionary or non-discretionary basis. However, as
described above, Mr. Horejsi, an employee and investment manager of the
Sub-Adviser, has extensive experience managing common stocks for the Horejsi
Affiliates and other family interests.
The Sub-Adviser is not domiciled in the United States and substantially
all of its assets are located outside the United States. As a result, it may be
difficult to realize judgments of courts of the United States predicated upon
civil liabilities under federal securities laws of the United States. The Fund
has been advised that there is substantial doubt as to the enforceability in
Barbados of such civil remedies and criminal penalties as are afforded by the
federal securities laws of the United States. Pursuant to the Sub-Advisory
Agreement, the Sub-Adviser has appointed the Secretary of the Fund (i.e.,
presently Stephanie Kelley in Boulder, Colorado) as its agent for service of
process in any legal action in the United States, thus subjecting it to the
jurisdiction of the United States courts.
The executive officers of SIA and the principal occupation of each are
set forth below:
- --------------------------------------------- ---------------------------------------------------------------
Name and Position with SIA Principal Occupation and Address
- --------------------------------------------- ---------------------------------------------------------------
Glade Christensen - President and Resident Sales manager for SIA
General Sales Manager
- --------------------------------------------- ---------------------------------------------------------------
Stephen C. Miller - Vice President and President, Chief Executive Officer and Chairman of the Board
17
Secretary of the Fund; president and General Counsel to the Adviser;
Director, Vice President and Assistant Secretary of Badlands;
Counsel to Krassa, Madsen & Miller, LLC since 1991; and
Manager of Boulder Administrative Services, L.L.C. ("BAS")
- --------------------------------------------- ---------------------------------------------------------------
Laura Rhodenbaugh - Treasurer Secretary of BAS; Treasurer of SIA; Secretary and Treasurer
of various Horejsi Affiliates
- --------------------------------------------- ---------------------------------------------------------------
Stewart R. Horejsi - Investment Manager Director of the Fund; Since April 1994, General Manager, Brown
Welding Supply, LLC (sold in 1999); President or Manager,
various subsidiaries of Horejsi, Inc. (liquidated in 1999) since
January, 1992.
- --------------------------------------------- ---------------------------------------------------------------
CO-ADMINISTRATION AGREEMENT
The Fund and Boulder Administrative Services, L.L.C. ("BAS") are
parties to a Co-Administration Agreement dated On March 22, 1999 (the
"Co-Administration Agreement"). BAS is owned by the Members, who, as indicated
above, are also the owners of the Adviser and are Horejsi Affiliates. The
address of BAS, like that of the Adviser and the Fund, is 1680 38th Street,
Suite 800, Boulder, Colorado 80301.
Under the Co-Administration Agreement, BAS provides certain
administrative and executive management services to the Fund including:
providing the Fund's principal offices and executive officers, overseeing the
operations of the Fund, overseeing and administering all contracted service
providers, making recommendations to the Board regarding policies of the Fund,
conducting shareholder relations, authorizing expenses and numerous other tasks.
Pursuant to the Co-Administration Agreement, the Fund pays BAS a monthly fee,
calculated at an annual rate of .10% of the value of the Fund's average monthly
net assets. BAS was compensated a total of $202,503 for the fiscal year ending
November 30, 2000. BAS will continue to provide services to the Fund after the
Proposed Amendment is approved.
SPECTRUM ASSET MANAGEMENT
Spectrum Asset Management ("Spectrum") acted as a sub-adviser to the
Fund from July 1, 1999, until August 15, 2000. Spectrum managed the hedged
preferred stocks in the Fund's portfolio. Because the Fund had substantially
liquidated its preferred stock holdings, Spectrum and management for the Fund
mutually agreed to terminate Spectrum's sub-advisory agreement as of August 15,
2000. Under the terms of its sub-advisory agreement with the Adviser and the
Fund, Spectrum was paid a monthly fee at an annual rate of 0.45% of the average
value of the hedged preferred stocks held by the Fund, up to $50 million, and
0.40% for the value of such stocks exceeding $50 million.
REQUIRED VOTE
Approval of the Proposed Amendment requires the affirmative vote of the
holders of a majority of the outstanding Shares of the Fund (including all
shares of Common Stock and AMPs), voting as a single class.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE NON-INTERESTED DIRECTORS,
RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL NO. 3.
SUBMISSION OF SHAREHOLDER PROPOSALS
All proposals by shareholders of the Fund that are intended to be
presented at the Fund's next Annual Meeting of Shareholders to be held in 2002
must be received by the Fund for consideration for inclusion in the Fund's proxy
statement relating to the meeting no later than November 2, 2001.
18
ADDITIONAL INFORMATION
INVESTMENT ADVISERS, ADMINISTRATOR AND CO-ADMINISTRATOR
Boulder Investment Advisers, L.L.C. serves as the investment adviser to
the Fund and its business address is 1680 38th Street, Suite 800, Boulder,
Colorado 80301. Stewart Investment Advisers, Ltd. serves as sub-adviser to the
Fund and its business address is Bellerive, Queen Street, St. Peter, Barbados.
PFPC Inc. acts as the transfer agent and administrator to the Fund and is
located at 101 Federal Street, Boston, Massachusetts 02110. Boulder
Administrative Services, L.L.C., serves as co-administrator to the Fund and is
located at 1680 38th Street, Suite 800, Boulder Colorado 80301.
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the 1934 Act requires the Fund's Directors and
officers, certain persons affiliated with the Fund's investment advisers, and
persons who own more than 10% of a registered class of the Fund's securities, to
file reports of ownership and changes of ownership with the SEC and the New York
Stock Exchange. Directors, officers and greater-than-10% shareholders are
required by SEC regulations to furnish the Fund with copies of all Section 16(a)
forms they file. Based solely upon the Fund's review of the copies of such forms
it receives and written representations from certain of such persons, the Fund
believes that through the date hereof all such filing requirements applicable to
such persons were complied with.
BROKER NON-VOTES AND ABSTENTIONS
A proxy which is properly executed and returned accompanied by
instructions to withhold authority to vote represents a broker "non-vote" (i.e.,
shares held by brokers or nominees as to which (i) instructions have not been
received from the beneficial owners or the persons entitled to vote and (ii) the
broker or nominee does not have discretionary voting power on a particular
matter). Proxies that reflect abstentions or broker non-votes (collectively
"abstentions") will be counted as shares that are present and entitled to vote
on the matter for purposes of determining the presence of a quorum. 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.
OTHER MATTERS TO COME BEFORE THE MEETING
The Fund does not intend to present any other business at the Meeting,
nor are they aware that any shareholder intends to do so. If, however, any other
matters are properly brought before the Meeting, the persons named in the
accompanying form of proxy will vote thereon in accordance with their judgment.
- --------------------------------------------------------------------------------
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO
NOT EXPECT TO ATTEND THE MEETING ARE THEREFORE URGED TO COMPLETE, SIGN, DATE AND
RETURN ALL PROXY CARDS AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
- --------------------------------------------------------------------------------
Exhibit A
BOULDER TOTAL RETURN FUND, INC.
AUDIT COMMITTEE CHARTER
19
1 . The Audit Committee shall be composed entirely of directors who are not
"interested persons" of the Fund within the meaning of the Investment Company
Act of 1940 ("independent directors"). The Audit Committee Chairman shall be
selected by the members of the Committee. The Audit Committee shall have at
least three members. The Chairman of the Committee must have accounting or
related financial management expertise.
2. The purposes of the Audit Committee are:
(a) to oversee the Fund's accounting and financial reporting policies
and practices, its internal controls and, as appropriate, the internal controls
of certain service providers;
(b) to oversee the quality and objectivity of the Fund's financial
statements and the independent audit thereof; and
(c) to act as a liaison between the Fund's independent auditors and the
full Board of Directors.
The function of the Audit Committee is oversight; it is management's
responsibility to maintain appropriate systems for accounting and internal
control, and it is the responsibility of the Fund's independent auditors to plan
and carry out a proper audit.
3. To carry out its purposes, the Audit Committee shall have the following
duties and powers:
(a) to recommend the selection, retention or termination of auditors
and, in connection therewith, to evaluate the independence of the auditors,
including whether the auditors provide any consulting services to any service
provider, and to receive the auditors' specific representations as to their
independence at least annually;
(b) to meet with the Fund's independent auditors, including private
meetings, as necessary (i) to review the arrangements for and scope of the
annual audit and any special audits; (ii) to discuss any matters of concern
relating to the Fund's financial statements, including any adjustments to such
statements recommended by the auditors, or other results of said audit(s); (iii)
to consider the auditors' comments with respect to the acceptability and
appropriateness of the Fund's financial reporting policies, procedures and
internal accounting controls, and management's responses thereto; and (iv) to
review the form of opinion the auditors propose to render to the Board and
shareholders;
(c) to consider the effect upon the Fund of any changes in accounting
principles or practices proposed by management or the auditors, and to consider,
in consultation with management and the Fund's independent auditors, any
significant changes to the Fund's tax accounting policies, including those
pertaining to its qualification as a regulated investment company under the
Internal Revenue Code;
(d) to review and approve the fees charged by the auditors for audit
and non-audit services;
(e) to investigate any improprieties or suspected improprieties in fund
operations;
(f) to review the findings made in any regulatory examinations of the
Fund and consult with management on appropriate responses;
20
(g) to review any violations of the Code of Ethics for the Fund and its
advisers and report the Committee's findings to the full Board with
recommendations for appropriate action;
(h) to oversee the Fund's compliance with 1940 Act asset coverage tests
and coverage tests under applicable rating agency guidelines and the Fund's
Articles Supplementary, as amended or supplemented from time to time; and
(i) to report its activities to the full Board on a regular basis and
to make such recommendations with respect to the above and other matters as the
Committee may deem necessary or appropriate.
4. The Fund's independent auditors are ultimately accountable to the Board of
Directors of the Fund and the Audit Committee thereof, as representatives of the
shareholders of the Fund, and the Board of Directors and the Audit Committee
have the ultimate authority and responsibility to select, evaluate and, where
appropriate, replace the independent auditors (as well as to nominate the
independent auditors to be proposed for shareholder approval, if necessary). The
Committee will ensure that the Fund's independent auditors submit to the Audit
Committee, on a periodic basis, a formal written statement delineating all
relationships between the independent auditors and the Fund and its service
providers. The Committee will actively engage in a dialogue with the Fund's
independent auditors with respect to any disclosed relationships or services
that may impact the objectivity and independence of the independent auditors,
and will consider recommending that appropriate action be taken by the Board of
Directors to ensure the independence of the independent auditors.
5. The Committee shall meet at least twice annually, which shall include
separate executive sessions as the Committee may deem appropriate, and is
empowered to hold special meetings as circumstances require.
6. The Committee shall regularly meet with the Treasurer of the Fund and with
internal auditors, if any, for the Fund's advisers and/or administrator to
review and discuss matters relevant to the Committee's duties and
responsibilities.
7. The Committee shall have the resources and authority appropriate to discharge
its responsibilities, including the authority to retain special counsel and
other experts or consultants at the expense of the Fund. The Committee shall
also have the authority to seek information, data and services from management
in order to carry out its responsibilities.
8. The Committee shall be responsible for reviewing any required description of
the Committee in the Fund's annual reports or proxy statements.
9. The Committee will periodically assess the independence of its members.
10. The Committee shall review this Charter at least annually and recommend any
changes to the full Board of Directors.
21
Exhibit B
Amended Investment Advisory Agreement - to be supplied
Exhibit C
Investment Sub-Advisory Agreement - to be supplied
22
BOULDER TOTAL RETURN FUND, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned holder of shares of Common Stock of Boulder Total Return Fund,
Inc., a Maryland corporation (the "Fund"), hereby appoints Stephen C. Miller,
Carl D. Johns, and Thomas N. Calabria, attorneys and proxies for the
undersigned, with full powers of substitution and revocation, to represent the
undersigned and to vote on behalf of the undersigned all shares of Common Stock,
which the undersigned is entitled to vote at the Annual Meeting of Shareholders
of the Fund to be held at the Embassy Suites Omaha Downtown/Old Market, 555
South 10th St., Omaha, Nebraska 68102 at 12:00 noon local time, on April 27,
2001, and any adjournments thereof. The undersigned hereby acknowledges receipt
of the Notice of Annual Meeting and Proxy Statement and hereby instructs said
attorneys and proxies to vote said shares as indicated hereon. In their
discretion, the proxies are authorized to vote upon such other business as may
properly come before the Meeting. A majority of the proxies present and acting
at the Annual Meeting in person or by substitute (or, if only one shall be so
present, then that one) shall have and may exercise all of the power and
authority of said proxies hereunder. The undersigned hereby revokes any proxy
previously given.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
Please indicate your vote by an "X" in the appropriate box below.
THIS PROXY, IF PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
ELECTION OF EACH NOMINEE AS DIRECTOR AND FOR PROPOSALS 2 AND 3.
PLEASE REFER TO THE PROXY STATEMENT FOR A DISCUSSION OF THE PROPOSALS.
1. Election of Directors.
NOMINEES: Stewart R. Horejsi and Joel W. Looney
FOR ____ WITHHELD ____
Instruction: If you do not wish your shares voted "For" a particular nominee,
mark the "For All Except" box and strike a line through the name(s) of the
nominee(s). Your shares will be voted "For" the remaining nominee(s).
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" ELECTION OF
STEWART R. HOREJSI AND JOEL W. LOONEY AS CLASS I DIRECTORS OF THE FUND.
2. To ratify the selection of KPMG as independent accountants for the Fund.
FOR ____ AGAINST ____ ABSTAIN ____
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" RATIFICATION
OF THE SELECTION OF KPMG LLP AS INDEPENDENT ACCOUNTANTS FOR THE FUND.
3. To approve or disapprove a proposed amendment to the Investment Advisory
Agreement to increase the advisory fee paid to Boulder Investment Advisors,
L.C.C.
FOR ____ AGAINST ____ ABSTAIN ____
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE PROPOSED
AMENDMENT TO THE INVESTMENT ADVISORY AGREEMENT TO INCREASE THE ADVISORY FEE PAID
TO BOULDER INVESTMENT ADVISERS, L.L.C.
23
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT ____
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
NOTE: Please sign exactly as your name appears on this Proxy. If joint owners,
EITHER may sign this Proxy. When signing as attorney, executor, administrator,
trustee, guardian or corporate officer, please give your full title.
Signature:
--------------------------
Date:
--------------------------
Signature:
--------------------------
Date:
--------------------------
BOULDER TOTAL RETURN FUND, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned holder of shares of Auction Market Preferred Stock ("AMPs") of
Boulder Total Return Fund, Inc., a Maryland corporation (the "Fund"), hereby
appoints Stephen C. Miller, Carl D. Johns, and Thomas N. Calabria, attorneys and
proxies for the undersigned, with full powers of substitution and revocation, to
represent the undersigned and to vote on behalf of the undersigned all shares of
AMPs, which the undersigned is entitled to vote at the Annual Meeting of
Shareholders of the Fund to be held at the Embassy Suites Omaha Downtown/Old
Market, 555 South 10th St., Omaha, Nebraska 68102 at 12:00 noon local time, on
April 27, 2001, and any adjournments thereof. The undersigned hereby
acknowledges receipt of the Notice of Annual Meeting and Proxy Statement and
hereby instructs said attorneys and proxies to vote said shares as indicated
hereon. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting. A majority of the proxies
present and acting at the Annual Meeting in person or by substitute (or, if only
one shall be so present, then that one) shall have and may exercise all of the
power and authority of said proxies hereunder. The undersigned hereby revokes
any proxy previously given.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
Please indicate your vote by an "X" in the appropriate box below.
THIS PROXY, IF PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
FOR PROPOSALS 2 and 3.
PLEASE REFER TO THE PROXY STATEMENT FOR A DISCUSSION OF THE PROPOSALS.
2. To ratify the selection of KPMG LLP as independent accountants for the Fund.
FOR ____ AGAINST ____ ABSTAIN ____
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" RATIFICATION
OF THE SELECTION OF KPMG AS INDEPENDENT ACCOUNTANTS FOR THE FUND.
24
3. To approve or disapprove a proposed amendment to the Investment Advisory
Agreement to increase the advisory fee paid to Boulder Investment Advisers,
L.C.C.
FOR ____ AGAINST ____ ABSTAIN ____
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE PROPOSED
AMENDMENT TO THE INVESTMENT ADVISORY AGREEMENT TO INCREASE THE ADVISORY FEE PAID
TO BOULDER INVESTMENT ADVISERS, L.L.C.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT ____
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
NOTE: Please sign exactly as your name appears on this Proxy. If joint owners,
EITHER may sign this Proxy. When signing as attorney, executor, administrator,
trustee, guardian or corporate officer, please give your full title.
Signature:
--------------------------
Date:
--------------------------
Signature:
--------------------------
Date:
--------------------------
25