UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-07390
BOULDER TOTAL RETURN FUND INC.
----------------------------------------------------------------
(Exact name of registrant as specified in charter)
Fund Administrative Services
1680 38th Street, Suite 800
BOULDER, CO 80301
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(Address of principal executive offices) (Zip code)
Fund Administrative Services
1680 38th Street, Suite 800
BOULDER, CO 80301
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(Name and address of agent for service)
registrant's telephone number, including area code: 303-444-5483
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Date of fiscal year end: NOVEMBER 31, 2004
------------------
Date of reporting period: MAY 31, 2004
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
BOULDER TOTAL RETURN FUND, INC.
Semi Annual Report
May 31, 2004
Dear Shareholder:
Howdy Partners!1 Let's get right to the meat of this report.
Total Returns
For the Periods Ending May 31, 2004
-----------------------------------
BTF NAV BTF NAV Dow Jones
Most WITH WITHOUT S&P 500 Industrial NASDAQ
Recent DILUTION+ DILUTION Index Average Composite
- ------ --------- -------- ----- ------- ---------
3 Months -4.8% -4.8% -1.7% -3.3% -2.0%
6 Months 9.4% 9.4% 6.8% 5.2% 1.6%
1 Year 21.7% 30.1% 18.3% 17.6% 25.1%
3 Years* 3.3% 5.5% -2.1% -0.2% -1.6%
Since 8/99** 7.8% 9.4% -2.4% 0.6% -6.2%
<FN>
- -------------
+ The total returns for BTF include the effect of dilution from the 7/2003
rights offering, effecting the 1 Year, 3 Year and since 8/1999 returns.
* Annualized
** Annualized since August 28, 1999, the date the current Advisers became
investment advisers to the Fund.
</FN>
We're a bit disappointed in our results for the most recent quarter. We
under-performed all of our relevant benchmarks. However, we are comfortable with
the relative results we have achieved since August 28, 1999, when current
management took over. Nevertheless, we seldom pay much attention to short-term
results. Contrary to a lot of contemporary thinking, we believe that the longer
the period of performance you are comparing, the more apt it is to reflect the
skill, or lack thereof, of the manager and the less likely it is to be the
result of luck. We like long periods of success in the "investees" (the
securities we buy) and you will seldom find a turnaround situation in our
portfolio. We do invest in companies and managements that have had a long run of
success but may have had a recent disappointment. We try to judge if the factors
causing the disappointment are temporary and will be successfully resolved by
management, or whether the disappointment will continue. While this is not an
easy thing to predict, we find it far easier to do than to find a start up that
will succeed or a company with a long history of disappointment that all of a
sudden is purportedly going to be a winner. While we can often find glowing
stories in this area, they so seldom pan out that we don't pay much attention to
them. We think the same thing is true with picking good mutual funds. Here's an
example of what we're talking about: since the 5/31/04 reporting period for this
report, we sold our Safeway stock. Safeway has done an excellent job of running
their supermarkets. They have not done nearly as good a job of reinvesting the
cash flow from those operations. Nevertheless, our real reason for selling them
is that Walmart has such a huge cost advantage in groceries over conventional
grocers that we think it will be hard for Safeway to continue the profitability
of its stores as Walmart moves into more and more areas to compete with Safeway.
In this case, we originally thought the disappointment was temporary and that
management could correct it. We finally concluded our original decision was
wrong and sold our Safeway at a loss.
The Fund's stocks outperformed the S&P 500 Index by 2.6% during the 6 months
ended May 31, 2004. Berkshire Hathaway, still by far the Fund's largest holding
at 30% of assets, was up 6.3% during the period. We sometimes get calls from
people asking: "Do you still hold Berkshire Hathaway?" Asking this question is
somewhat akin to somebody calling Warren Buffet and asking: "Does Berkshire
Hathaway still have Geico Insurance?"
- ------------------
1 IF YOU READ THE 11/30/2003 SHAREHOLDER LETTER, WE SAID WE'D NEVER BE CALLED
"GUNSLINGERS," BUT WE DIDN'T SAY ANYTHING ABOUT USING COWBOY JARGON. BESIDES,
WE REALLY DO CONSIDER YOU PARTNERS.
1
The following are some of the other significant holdings in the Fund and their
returns during the period: YUM! Brands was up 8.7%, Citigroup was about flat
during the period, and Providian was up 20% (which wasn't really a "significant"
holding in the Fund when we bought it in 2001 and 2002 - but has appreciated to
become a 3% position in the Fund).
Real Estate Investment Trusts ("REITs") overall were down sharply in April. Take
a look at the table above and you'll see that BTF with a -4.8% return,
under-performed the S&P 500 Index by 3.1% in the latest quarter. Obviously, we
well outperformed the S&P 500 Index during the first quarter, since the 6-month
return for BTF is 2.6% greater. Most of this is explained by the Fund's
significant holdings in REITs. When it became a widespread belief that interest
rates were going up, REITs were treated like other interest sensitive assets and
declined dramatically. We have a different view and believe that an improving
economy will benefit the REITs we own in several ways: (1) higher occupancy
rates; (2) higher rental rates--most of our REITs will be able to raise rents
fairly much in line with any increased inflation; and (3) fixed borrowing
costs--most of our REITs have an above average amount of cheap fixed rate
borrowings which will allow them to enjoy a leveraged benefit if the above two
assumptions are correct. We expect that most of our REIT holdings will raise
their earnings and dividends as interest rates increase, and that is why we
bought them in the first place. Consequently, we suffered paper losses in our
REITs, but our holdings were essentially unchanged during this rather abrupt
re-pricing of them. Nonetheless, when REITs went down, the Fund's NAV suffered
as a result. The NAREIT Index, a commonly used REIT index which will be used
here to demonstrate a point, started moving down on April 2, and suddenly
holders of REITs couldn't seem to sell them fast enough. The NAREIT Index
bottomed out on May 10, having gone down some 18% from the high. It has since
recovered with about a 10% increase from the low, but still below the highs it
reached.
NAREIT INDEX - 12/01/03 TO 5/31/04
[GRAPHIC OMITTED]
EDGAR RREPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Dec-03 2132.00
2123.00
2120.00
2112.OO
2112.00
2129.00
2127.00
2119.00
2134.00
2142.00
2128.00
2143.00
2147.00
2149.00
2154.00
2165.00
2165.00
2170.00
2175.00
2189.00
2195.00
2178.00
Jan-04 2175.00
2176.00
2180.00
2169.00
2175.00
2176.00
2180.00
2183.00
2197.00
2194.00
2180.00
2182.00
2188.00
2196.00
2213.00
2241.00
2259.00
2255.00
2257.00
2271.00
FEB-04 2301.00
2298.00
2254.00
2267.00
2307.00
2308.00
2322.00
2336.00
2313.00
2297.00
2304.00
2299.00
2296.00
2296.00
2296.00
2300.00
2320.00
2316.00
2321.00
MAR-04 2350.00
2365.00
2376.00
2386.00
2400.00
2397.00
2397.00
2367.00
2341.00
2369.00
2355.00
2355.00
2393.00
2404.00
2409.00
2397.00
2408.00
2384.00
2416.00
2393.00
2409.00
2433.00
2451.00
APR-04 2472.00
2441.00
2343.00
2253.00
2288.00
2246.00
2129.00
2115.00
2091.00
2137.00
2161.00
2170.00
2092.00
2098.00
2129.00
2110.00
2120.00
2139.00
2120.00
2090.00
2077.00
MAY-04 2108.00
2125.00
2106.00
2104.00
2029.00
2003.00
2022.00
2022.00
2025.00
2048.00
2061.00
2099.00
2054.00
2095.00
2094.00
2117.00
2160.00
2192.00
2202.00
2223.00
The Fund's performance doesn't live and die with the REITs it owns, but with 21%
invested in them, they do have an impact.
2
We read lots of annual reports. We read the annual reports of companies the Fund
owns; we read annual reports of some companies we find interesting. And some we
read late at night, when we're having trouble falling asleep. We read the
financials, the footnotes, and one of the things we will usually read is the
shareholder letter from the President or the CEO. If the company's legal
department writes it, then it's usually filled with disclaimers and
definitions--lawyers hate to be misunderstood. But to an investor it won't give
you any of the CEO's thoughts or evaluations of the business. Sometimes, though
not always, you can glean insights from the shareholder letter that is pertinent
to us as investors in the company. Berkshire Hathaway is a golden example of
such a letter. If you've never read one, it is highly recommended reading for
investors.
The Fund currently has about 12% of its assets in cash or cash equivalents as of
the date of this letter. This is probably a bit higher than we would normally
want to be, but we haven't found much we like that's priced attractively enough
to get us to buy it. Short-term interest rates have climbed in recent months in
anticipation of the Fed raising interest rates. This has caused an increase in
our cost of leverage. The Fund had been paying in the 1.10% range, but our most
recent AMPs auction was at 1.30%.
The Fund bought back 188,200 shares on the open market in December and January,
at an average price of $15.24, which was a weighted average discount to NAV of
15.7%.
Our website at WWW.BOULDERFUNDS.NET is an excellent source for information on
the Fund. If you've lost your annual report, or want to read an old one, it's
available on the website. You will also find information about the Boulder Total
Return Fund's sister fund - the Boulder Growth & Income Fund.
/S/STEWART R. HOREJSI
Stewart R. Horejsi
June 25, 2004
- ---------------
NOTHING IN THIS SEMI-ANNUAL REPORT SHOULD BE CONSIDERED AS INVESTMENT ADVICE.
THIS LETTER EXPLAINS THE MANAGERS' VIEWS AS OF ITS DATE, WHICH MAY HAVE
SUBSEQUENTLY CHANGED.
3
BOULDER TOTAL RETURN FUND, INC.
EXHIBIT 1
(UNAUDITED)
CHANGE IN PRINCIPAL VALUE OF ASSET CLASSES 11/30/2003 TO 5/31/2004
COMMON STOCK INVESTMENTS
------------------------
REITS INDUSTRIALS AMPS TOTAL
----- ----------- ---- -----
Beginning Market Value.......... 11/30/2003 $65,555,345 $212,333,204 $ -- $ 277,888,549
Cost of Purchases............... 12/1/2003 - 05/31/2004 6,101,696 8,824,616 22,700,000 $ 37,626,312
Proceeds from Sales............. 12/1/2003 - 05/31/2004 7,752,904 12,561,330 2,000,000 $ 22,314,234
----------- ------------ ------------- -------------
Net Purchases / (Sales) ........ (1,651,208) (3,736,714) 20,700,000 $ 15,312,078
Beginning Market Value Plus Net Purchases/(Sales) 63,904,137 208,596,490 20,700,000 293,200,627
----------- ------------ ------------- -------------
Net Appreciation................ 3,534,213 16,366,084 -- $ 19,900,297
Ending Market Value............. 5/31/2004 67,438,350 224,962,574 20,700,000 $ 313,100,924
----------- ------------ ------------- -------------
Number of Issues Held........... 5/31/2004 8 23 9
Cash and Other Assets and
Liabilities....................... $ 2,009,638
-------------
Total Net Assets..................... $ 315,110,562
=============
The information in the table below is unaudited.
FINANCIAL DATA
PER SHARE OF
COMMON STOCK
-----------------------
NET ASSET NYSE
VALUE CLOSING PRICE
------- ------------
12/31/2003 .................... $18.23 $15.23
1/31/2004 .................... $19.31 $16.39
2/28/2004 .................... $20.23 $17.18
3/31/2004 .................... $20.22 $17.06
4/30/2004 .................... $19.33 $16.55
5/31/2004 .................... $19.26 $15.60
4
BOULDER TOTAL RETURN FUND, INC. PORTFOLIO OF INVESTMENTS
MAY 31, 2004 (UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------------
SHARES VALUE
-------- -------
DOMESTIC COMMON STOCKS - 89.3%
BEVERAGES - 1.4% Pepsi Bottling Group, Inc. ........................... 150,000 $ 4,350,000
-------------
DIVERSIFIED - 29.7% Berkshire Hathaway Inc., Class A+ .................... 750 66,750,000
Berkshire Hathaway Inc., Class B+ .................... 9,010 26,777,720
-------------
TOTAL DIVERSIFIED 93,527,720
-------------
FINANCIAL SERVICES - 8.5% Citigroup, Inc. ...................................... 293,360 13,620,705
Federated Investors, Inc. ............................ 120,000 3,573,600
Providian Financial Corporation+ ..................... 698,000 9,492,800
-------------
TOTAL FINANCIAL SERVICES 26,687,105
-------------
HEALTH CARE PRODUCTS &
SERVICES - 1.0% AmerisourceBergen Corporation ........................ 55,000 3,298,900
-------------
INDUSTRIAL - 2.0% Eastman Kodak Company ................................ 240,000 6,283,200
-------------
INSURANCE - 4.8% AON Corporation ...................................... 135,000 3,730,050
First American Corporation ........................... 120,000 3,115,200
Torchmark Corporation ................................ 90,000 4,877,100
Wesco Financial Corporation .......................... 8,800 3,317,160
-------------
TOTAL INSURANCE 15,039,510
-------------
PHARMACEUTICALS - 6.9% Bristol-Meyers Squibb Company ........................ 125,000 3,158,750
Merck & Company, Inc. ................................ 150,000 7,095,000
Pfizer, Inc. ......................................... 200,000 7,068,000
Schering-Plough Corporation .......................... 264,000 4,461,600
-------------
TOTAL PHARMACEUTICALS 21,783,350
-------------
REITS - 21.4% Archstone-Smith Realty Trust ......................... 75,000 2,178,750
First Industrial Realty Trust, Inc. .................. 400,000 14,336,000
Hospitality Properties Trust ......................... 400,000 16,372,000
HRPT Properties Trust ................................ 1,300,000 12,805,000
Pan Pacific Retail Properties, Inc. .................. 60,000 2,760,000
Post Properties, Inc. ................................ 391,000 11,378,100
Prentiss Properties Trust ............................ 169,500 5,593,500
Regency Centers Corporation .......................... 50,000 2,015,000
-------------
TOTAL REITS 67,438,350
-------------
RETAIL - 10.0% Safeway, Inc.+ ....................................... 418,000 9,430,080
Yum! Brands, Inc. .................................... 590,000 22,125,000
-------------
TOTAL RETAIL 31,555,080
-------------
SAVINGS & LOAN
COMPANIES - 2.1% Washington Mutual, Inc. .............................. 153,000 6,683,040
-------------
UTILITY - 1.5% Alliant Energy Corporation ........................... 186,300 4,653,774
-------------
TOTAL DOMESTIC COMMON STOCKS
(Cost $201,475,416) ...................................................................... 281,300,029
-------------
FOREIGN COMMON STOCKS - 3.5%
NETHERLANDS - 2.2% Heineken NV .......................................... 93,750 3,100,195
Unilever NV, ADR ..................................... 60,000 3,958,200
-------------
TOTAL NETHERLANDS 7,058,395
-------------
UNITED KINGDOM - 1.3% Diageo PLC, Sponsored ADR ............................ 75,000 4,042,500
-------------
TOTAL FOREIGN COMMON STOCKS
(Cost $9,304,463) ...................................................................... 11,100,895
-------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
5
BOULDER TOTAL RETURN FUND, INC. PORTFOLIO OF INVESTMENTS
MAY 31, 2004 (UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------------
SHARES VALUE
-------- -------
AUCTION MARKET PREFERRED SECURITIES - 6.6%
Calamos Convertible Opportunities & Income Fund,
Series TH7 .......................................... 160 $ 4,000,000
Cohen & Steers Advantage Income Realty Fund, Inc.,
Series TH ........................................... 80 2,000,000
Flaherty & Crumrine Claymore Preferred Securities,
Income Fund, Series T7 .............................. 48 1,200,000
Nuveen Quality Preferred Income Fund III,
Series M ............................................ 80 2,000,000
Pimco Corporate Opportunity Fund, Series M ........... 80 2,000,000
Preferred Income Strategies Fund, Inc., Series M ..... 100 2,500,000
Scudder RREEF Real Estate Fund II, Series TH7 ........ 80 2,000,000
Western Asset Premier Bond Fund, Series M ............ 80 2,000,000
Western Asset/Claymore US Treasury Inflation
Protected Securities Fund, Series T ................. 120 3,000,000
-------------
TOTAL AUCTION MARKET PREFERRED SECURITIES
(Cost $20,700,000) ...................................................................... 20,700,000
-------------
PAR
-----
U.S. TREASURY BILLS - 0.3%
(Cost $999,786)
0.855% due 06/10/04++ ................................ $ 1,000,000 999,786
-------------
REPURCHASE AGREEMENT - 0.4%
(Cost $1,195,000)
Agreement with PNC Capital Markets, 0.850% dated
05/28/04, to be repurchased at $1,195,113 on 06/01/04,
Collateralized by $1,205,000 U.S. Treasury Bills, 1.500%
due 11/18/04 (Value $1,197,168) .................................... 1,195,000
-------------
TOTAL INVESTMENTS (COST $233,674,665*) - 100.1% ............................................................ 315,295,710
OTHER ASSETS AND LIABILITIES - (0.1%) ...................................................................... (185,148)
-------------
NET ASSETS - 100.0% ........................................................................................ $ 315,110,562
=============
<FN>
- -----------
* Aggregate cost for Federal tax purposes.
+ Non-income producing security.
++ Annualized yield at date of purchase.
ADR American Depository Receipt
</FN>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
6
BOULDER TOTAL RETURN FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
MAY 31, 2004 (UNAUDITED)
ASSETS:
Investments, at value (Cost $233,674,665) (Note 1)
See accompanying schedule ..................................................................... $ 315,295,710
Dividends and interest receivable ................................................................ 202,416
Prepaid expenses and other assets ................................................................ 86,851
----------------
TOTAL ASSETS ............................................................................... 315,584,977
LIABILITIES:
Investment co-advisory fees payable (Note 2) .................................... $ 327,348
Administration and co-administration fees payable (Note 2) ...................... 68,201
Legal fees payable .............................................................. 32,144
Accumulated undeclared dividends on Taxable Auction Market
Preferred Stock (Note 5) ..................................................... 27,986
Directors' fees and expenses payable (Note 2) ................................... 14,333
Due to Custodian ................................................................ 296
Accrued expenses and other payables ............................................. 4,107
---------------
TOTAL LIABILITIES .......................................................................... 474,415
----------------
TAXABLE AUCTION MARKET PREFERRED STOCK:
$0.01 par value, 10,000,000 shares authorized, 775 shares issued outstanding,
liquidation preference of $100,000 per share (Note 5) .......................................... $ 77,500,000
----------------
TOTAL NET ASSETS (APPLICABLE TO COMMON STOCK SHAREHOLDERS) .......................................... $ 237,610,562
================
FUND TOTAL NET ASSETS ............................................................................... $ 315,110,562
================
NET ASSETS consist of:
Undistributed net investment income .............................................................. $ 20,778
Accumulated net realized loss on investments sold ................................................ (6,353,916)
Unrealized appreciation of investments ........................................................... 81,621,045
Par value of Common Stock ........................................................................ 123,387
Paid-in capital in excess of par value of Common Stock ........................................... 162,199,268
----------------
TOTAL NET ASSETS (APPLICABLE TO COMMON STOCK,
12,338,660 SHARES OUTSTANDING) .................................................. $ 19.26 $ 237,610,562
=========== ================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
7
BOULDER TOTAL RETURN FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED MAY 31, 2004 (UNAUDITED)
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $5,379) ............................................ $ 3,074,586
Interest .......................................................................................... 24,233
----------------
TOTAL INVESTMENT INCOME .................................................................... 3,098,819
EXPENSES:
Investment co-advisory fee (Note 2) .............................................. $ 1,964,088
Administration and co-administration fees (Note 2) ............................... 359,774
Legal fees ....................................................................... 111,853
Preferred Stock broker commissions and Auction Agent fees ........................ 98,467
Directors fees and expenses (Note 2) ............................................. 22,836
Audit fees ....................................................................... 21,650
Insurance expense ................................................................ 19,894
Other ............................................................................ 33,762
----------------
TOTAL EXPENSES ............................................................................. 2,632,324
----------------
NET INVESTMENT INCOME ............................................................................... 466,495
----------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain/(loss) on:
Securities ................................................................................. 3,511,520
Foreign currencies and net other assets .................................................... (16,002)
----------------
Net realized gain on investments during the period ................................................ 3,495,518
Change in unrealized appreciation of investments during the period ................................ 16,388,735
----------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS ..................................................... 19,884,253
----------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ................................................ $ 20,350,748
================
LESS: PREFERRED STOCK DIVIDENDS ..................................................................... (445,717)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
APPLICABLE TO COMMON SHARES ...................................................................... $ 19,905,031
================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
8
BOULDER TOTAL RETURN FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
MAY 31, 2004 NOVEMBER 30,
(UNAUDITED) 2003
------------------ --------------
OPERATIONS:
Net investment income ........................................................ $ 466,495 $ 855,241
Net realized gain/(loss) on investments sold during the period ............... 3,495,518 (9,320,659)
Change in unrealized appreciation of investments during the period ........... 16,388,735 51,312,102
-------------- ---------------
Net increase in net assets resulting from operations ......................... 20,350,748 42,846,684
DISTRIBUTIONS: PREFERRED STOCK DIVIDENDS
Dividends paid from net investment income .................................... (445,717) (143,330)
Dividends paid from capital .................................................. -- (893,864)
-------------- ---------------
TOTAL DISTRIBUTIONS: PREFERRED STOCK DIVIDENDS ................................. (445,717) (1,037,194)
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS APPLICABLE TO COMMON SHARES .................................... 19,905,031 41,809,490
DISTRIBUTIONS: COMMON SHARES
Dividends paid from net investment income .................................... -- (99,519)
Dividends paid from capital .................................................. -- (182,990)
-------------- ---------------
TOTAL DISTRIBUTIONS: COMMON SHARES ............................................. -- (282,509)
CAPITAL SHARE TRANSACTIONS
Value of 188,200 and 30,400 shares repurchased, respectively (Note 8) ....... (2,867,925) (440,718)
Proceeds from Rights Offering (Note 9) ....................................... -- 38,000,255
Expenses incurred for Rights Offering (Note 9) ............................... -- (120,460)
-------------- ---------------
NET INCREASE IN NET ASSETS FOR THE PERIOD ...................................... 17,037,106 78,966,058
NET ASSETS:
Beginning of period .......................................................... 298,073,456 219,107,398
-------------- ---------------
End of period (including undistributed net investment income of $20,778
and $0, respectively) ..................................................... $ 315,110,562 $ 298,073,456
============== ===============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
9
BOULDER TOTAL RETURN FUND, INC.
FINANCIAL HIGHLIGHTS
FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
Contained below is per share operating performance data, total investment
returns, ratios to average net assets and other supplemental data. On August 27,
1999 the Fund changed its objective from income to total return. This
information has been derived from information provided in the financial
statements and market price data for the Fund's shares.
SIX MONTHS
ENDED
MAY 31, 2004 YEAR ENDED NOVEMBER 30,
(UNAUDITED) 2003 2002 2001 2000 1999
---------- ---------- --------- --------- --------- ---------
OPERATING PERFORMANCE:
Net asset value, beginning of period................ $ 17.61 $ 15.04 $ 17.36 $ 14.81 $ 13.32 $ 16.06
---------- ---------- --------- --------- --------- ---------
Net investment income............................... 0.04 0.07 0.49 0.63 0.75 1.29
Net realized and unrealized gain/(loss) on investments 1.61 3.78 (2.51) 2.35 1.50 (1.93)
---------- ---------- --------- --------- --------- ---------
Total from investment operations.................... 1.65 3.85 (2.02) 2.98 2.25 (0.64)
---------- ---------- --------- --------- --------- ---------
DISTRIBUTIONS: PREFERRED STOCK
Dividends paid from net investment income to MMP*
Shareholders.................................... -- -- -- -- (0.42) (0.35)
Distributions paid from net realized capital gains to MMP*
Shareholders ................................... -- -- -- -- -- (0.03)
Dividends paid from net investment income to AMP**
Shareholders ................................... (0.04) (0.01) (0.16) (0.40) (0.13) --
Dividends paid from capital to AMP**
Shareholders.................................... -- (0.07) -- -- -- --
Change in accumulated undeclared dividends on MMP*/
AMP** Shareholders.............................. 0.00(d) 0.00(d 0.00(d) 0.02 0.04 (0.06)+
---------- ---------- --------- --------- --------- ---------
Net Increase/Decrease from operations applicable to
common shares................................... 1.61 3.77 (2.18) 2.60 1.74 (1.08)
---------- ---------- --------- --------- --------- ---------
DISTRIBUTIONS: COMMON SHARES
Dividends paid from net investment income to
Common Shareholders ............................ -- (0.01) (0.14) (0.05) (0.19) (1.02)
Distributions paid from capital to Common Shareholders -- (0.02) -- -- -- --
Distributions paid from net realized capital gains
to Common Shareholders ......................... -- -- -- -- -- (0.64)
---------- ---------- -------- --------- --------- ---------
Accretive/(Dilutive) Impact of Rights Offering ++... -- (1.18) -- -- -- --
Accretive/(Dilutive) Impact of Capital Share
Transactions.................................... 0.04 0.01 -- -- -- --
----------- ---------- -------- --------- --------- ---------
Net Increase/Decrease in Common Net Asset Value..... 1.65 2.57 (2.32) 2.55 1.55 (2.74)
----------- ---------- -------- --------- --------- ---------
Costs of AMP** Stock issued (Note 5)................ -- -- -- -- (0.06) --
----------- ---------- -------- --------- --------- ---------
Net asset value, end of period...................... $ 19.26 $ 17.61 $ 15.04 $ 17.36 $ 14.81 $ 13.32+
=========== ========== ======== ========= ========= =========
Market value, end of period......................... $ 15.60 $ 14.59 $ 12.79 $ 16.05 $ 12.00 $ 10.19
=========== ========== ======== ========= ========= =========
Total investment return based on net asset value(a)(c) 9.37% 17.37% (12.62)% 17.68% 13.27% (5.17)%
=========== ========== ======== ========= ========= =========
Total investment return based on market value(a)(c). 6.92% 14.35% (19.62)% 34.27% 20.00% (14.51)%
=========== ========== ======== ========= ========= =========
RATIOS TO AVERAGE NET ASSETS AVAILABLE
TO COMMON STOCK SHAREHOLDERS:
Operating expenses ................................. 2.22%+++ 2.45% 2.42% 2.47% 2.55% 1.97%
Net investment income (b)........................... 0.04%+++ (0.08)% 1.85% 1.52% 1.82% 6.08%
SUPPLEMENTAL DATA:
Portfolio turnover rate............................. 7% 9% 38% 16% 85% 69%
Net assets, end of period (in 000's) ............... $ 237,611 $ 220,573 $ 141,607 $ 163,493 $ 139,488 $ 125,415
- ------------------------------------------------
Ratio of operating expenses to Total Average
Net Assets including MMP*/AMP** ............... 1.67%+++ 1.66% 1.65% 1.66% 1.57% 1.26%
<FN>
* Money Market Cumulative PreferredTM Stock.
** Taxable Auction Market Preferred Stock.
(a) Assumes reinvestment of distributions at the market price at reinvestment
date.
(b) The net investment income ratios reflect income net of operating expenses
and payments and change in undeclared dividends to MMP*/AMP** Shareholders.
(c) Total return is not annualized for periods less than one year.
(d) Amount represents less than $0.01 per Common share.
+ Includes effect of additional distribution available to MMP* Shareholders
($0.04 per Common share).
++ The Rights Offering was fully subscribed at a subscription price of $12.10
at 3,140,517 shares which equals $38,000,255 in gross proceeds. The Rights
Offering had $(1.17) NAV impact and the $120,460 expenses associated with
the Rights Offering had a $(0.01) NAV impact.
+++ Annualized.
</FN>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
10
BOULDER TOTAL RETURN FUND, INC.
FINANCIAL HIGHLIGHTS--(CONTINUED)
(UNAUDITED)
The table below sets out information with respect to Taxable Auction Market
Preferred Stock currently and Money Market Cumulative Preferred Stock previously
outstanding (1).
INVOLUNTARY AVERAGE
ASSET LIQUIDATING MARKET
TOTAL SHARES COVERAGE PREFERENCE VALUE
OUTSTANDING PER SHARE PER SHARE (2) PER SHARE (2)
------------ ---------- ------------ ------------
05/31/04.............................. 775 $406,594 $100,000 $100,000
11/30/03.............................. 775 384,611 100,000 100,000
11/30/02.............................. 775 282,719 100,000 100,000
11/30/01.............................. 775 311,122 100,000 100,000
11/30/00.............................. 775 280,400 100,000 100,000
11/30/99.............................. 775 262,722 100,000 100,000
<FN>
- -----------
(1) See Note 5.
(2) Excludes accumulated undeclared dividends.
</FN>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
11
BOULDER TOTAL RETURN FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
Boulder Total Return Fund, Inc. (the "Fund") is a diversified, closed-end
management investment company organized as a Maryland corporation and is
registered with the Securities and Exchange Commission ("SEC") under the
Investment Company Act of 1940 (the "1940 Act"), as amended. The policies
described below are followed consistently by the Fund in the preparation of its
financial statements in conformity with accounting principles generally accepted
in the United States of America.
PORTFOLIO VALUATION: The net asset value of the Fund's Common Stock is
determined by the Fund's administrator no less frequently than on the last
business day of each week and month. It is determined by dividing the value of
the Fund's net assets attributable to common shares by the number of shares of
Common Stock outstanding. The value of the Fund's net assets attributable to
common shares is deemed to equal the value of the Fund's total assets less (i)
the Fund's liabilities, (ii) the aggregate liquidation value of the outstanding
Taxable Auction Market Preferred Stock and (iii) accumulated and unpaid
dividends on the outstanding Taxable Auction Market Preferred Stock. Securities
listed on a national securities exchange are valued on the basis of the last
sale on such exchange or the NASDAQ Official Close Price ("NOCP") on the day of
valuation. In the absence of sales of listed securities and with respect to
securities for which the most recent sale prices are not deemed to represent
fair market value and unlisted securities (other than money market instruments),
securities are valued at the mean between the closing bid and asked prices when
quoted prices for investments are readily available. Investments for which
market quotations are not readily available are valued at fair value as
determined in good faith by or under the direction of the Board of Directors of
the Fund, including reference to valuations of other securities which are
considered comparable in quality, maturity and type. Investments in money market
instruments, which mature in 60 days or less at the time of purchase, are valued
at amortized cost.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded as of the trade date. Realized gains and losses from securities sold
are recorded on the identified cost basis. Dividend income is recorded on
ex-dividend dates. Interest income is recorded on the accrual basis.
Cash distributions received from the Fund's investment in real estate
investment trusts ("REITs") and registered investment companies ("RICs") are
recorded as income. A portion of these distributions are returns of capital. As
of May 31, 2004, all accumulated net realized gains relating to returns of
capital from REIT distributions have been reclassified to unrealized gain.
REPURCHASE AGREEMENTS: The Fund may engage in repurchase agreement
transactions. The Fund's Management reviews and approves periodically the
eligibility of the banks and dealers with which the Fund enters into repurchase
agreement transactions. The value of the collateral underlying such transactions
is at least equal at all times to the total amount of the repurchase
obligations, including interest. The Fund maintains possession of the collateral
and, in the event of counterparty default, the Fund has the right to use the
collateral to offset losses incurred. There is the possibility of loss to the
Fund in the event the Fund is delayed or prevented from exercising its rights to
dispose of the collateral securities.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Dividends to Common
shareholders will be declared in such a manner as to avoid the imposition of the
4% excise tax described in "Federal Income Taxes" below. The shareholders of
Taxable Auction Market Preferred Stock are entitled to receive cumulative cash
dividends as declared by the Fund's Board of Directors. Distributions to
shareholders are recorded on the ex-dividend date. Any net realized short-term
capital gains will be distributed to shareholders at least annually. Any net
realized long-term capital gains may be distributed to shareholders at least
annually or may be retained by the Fund as determined by the Fund's Board of
Directors. Capital gains retained by the Fund are subject to tax at the
corporate tax rate. Subject to the Fund qualifying as a registered investment
company, any taxes paid by the Fund on such net realized long-term gains may be
used by the Fund's Shareholders as a credit against their own tax liabilities.
FEDERAL INCOME TAXES: The Fund intends to qualify as a registered
investment company by complying with the requirements under subchapter M of the
Internal Revenue Code of 1986, as amended, applicable to RICs and intends to
distribute substantially all of its taxable net investment income to its
shareholders. Therefore, no Federal income tax provision is required.
Income and capital gain distributions are determined and characterized in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. These differences are primarily due to (1) differing
treatments of income and gains on various investment securities held by the
Fund, including timing differences, (2) the attribution of expenses against
certain components of taxable investment income, and (3) federal regulations
requiring proportional allocation of income and gains to all classes of
Shareholders. The Internal Revenue Code of 1986, as amended, imposes a 4%
nondeductible excise tax on the Fund to the extent the Fund does not distribute
by the end of any calendar year at least (1) 98% of the sum of its net
investment income for that year and its capital gains (both long term and short
term) for its fiscal year and (2) certain undistributed amounts from previous
years.
12
BOULDER TOTAL RETURN FUND, INC.
NOTES TO FINANCIAL STATEMENTS-- (UNAUDITED) (CONTINUED)
OTHER: The preparation of financial statements in accordance with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could differ
from those estimates.
2. INVESTMENT CO-ADVISORY FEES, DIRECTORS' FEES, ADMINISTRATION FEE,
CO-ADMINISTRATION FEE AND TRANSFER AGENT FEE
Boulder Investment Advisers, L.L.C. ("BIA") and Stewart Investment Advisers
("SIA") serve as the Fund's Co-Investment Advisers ("Advisers"). The Fund pays
the Advisers a monthly fee at an annual rate of 1.25% of the value of the Fund's
average monthly net assets. The equity owners of BIA are Evergreen Atlantic,
LLC, a Colorado limited liability company ("EALLC"), and the Lola Brown Trust
No. 1B (the "Lola Trust"), each of which is a shareholder of the Fund and
considered to be an "affiliated person" of the Fund as that term is defined in
the 1940 Act. Stewart West Indies Trading Company, Ltd. is a Barbados
international business company doing business as Stewart Investment Advisers.
SIA receives a monthly fee equal to 75% of the fees earned by the Advisers, and
BIA receives 25% of the fees earned by the Advisers. The equity owner of SIA is
the Stewart West Indies Trust, a shareholder of the Fund and considered to be an
"affiliated person" of the Fund as that term is defined in the 1940 Act. The
Advisers agreed to waive one half of their fee on the proceeds from the July
2003 rights offering until such time as more than 50% of the respective proceeds
plus cash on hand at the time the proceeds were received, are invested, which
has since then occurred.
Fund Administrative Services, LLC ("FAS"), serves as the Fund's
Co-Administrator. Under the Co-Administration Agreement, FAS provides certain
administrative and executive management services to the Fund including:
providing the Fund's principal offices and executive officers, overseeing and
administering all contracted service providers, making recommendations to the
Board regarding policies of the Fund, conducting shareholder relations,
authorizing expenses and other administrative tasks. As of February 1, 2004,
under the Co-Administration Agreement, the Fund pays FAS a monthly fee,
calculated at an annual rate of 0.20% of the value of the Fund's average monthly
net assets up to $250 million; 0.18% of the Fund's average monthly net assets on
the next $150 million; and, 0.15% on the value of the Fund's average monthly net
assets over $400 million. Prior to February 1, 2004, the Fund paid FAS a monthly
fee, calculated at an annual rate of 0.10% of the value of the Fund's average
monthly net assets. The equity owners of FAS are EALLC and the Lola Trust, each
of which is a shareholder of the Fund and considered to be an "affiliated
person" of the Fund as that term is defined in the 1940 Act.
The Fund pays each Director who is not a director, officer or employee of
the Advisers or FAS a fee of $8,000 per annum, plus $4,000 for each in-person
meeting of the Board of Directors and $500 for each telephone meeting. In
addition, the Chairman of the Board and the Chairman of the Audit Committee
receive $1,000 per meeting and each member of the Audit Committee receives $500
per meeting. The Fund will also reimburse all Directors for travel and
out-of-pocket expenses incurred in connection with such meetings.
PFPC Inc. ("PFPC"), an indirect, majority-owned subsidiary of The PNC
Financial Services Group Inc., serves as the Fund's Administrator and Transfer
Agent. As Administrator, PFPC calculates the net asset value of the Fund's
shares and generally assists in all aspects of the Fund's administration and
operation. The Fund pays PFPC a fee on a monthly basis based on average net
assets. PFPC Trust Company, an indirect subsidiary of The PNC Financial Services
Group Inc., serves as the Fund's Custodian. As compensation to PFPC Trust
Company, the Fund pays PFPC Trust Company a monthly fee based on the Fund's
average monthly gross assets. PFPC also serves as the Fund's Common Stock
servicing agent (transfer agent), dividend-paying agent and registrar, and as
compensation for PFPC's services as such, the Fund pays PFPC a monthly fee plus
certain out-of-pocket expenses.
Deutsche Bank Trust Company Americas, a wholly owned subsidiary of Deutsche
Bank AG ("Auction Agent"), serves as the Fund's Taxable Auction Market Preferred
Stock transfer agent, registrar, dividend disbursing agent and redemption agent.
3. PURCHASES AND SALES OF SECURITIES
Cost of purchases and proceeds from sales of securities for the six months
ended May 31, 2004 excluding short-term investments, aggregated $37,626,312 and
$22,314,234, respectively.
On May 31, 2004, aggregate gross unrealized appreciation for all securities
in which there is an excess of value over tax cost was $88,006,066 and aggregate
gross unrealized depreciation for all securities in which there is an excess of
tax cost over value was $6,385,021.
4. COMMON STOCK
At May 31, 2004, 240,000,000 shares of $0.01 par value Common Stock were
authorized.
13
BOULDER TOTAL RETURN FUND, INC.
NOTES TO FINANCIAL STATEMENTS-- (UNAUDITED) (CONTINUED)
5. TAXABLE AUCTION MARKET PREFERRED STOCK
The Fund's Articles of Incorporation authorize the issuance of up to
10,000,000 shares of $0.01 par value preferred stock. On August 15, 2000, the
Fund's 775 shares of Money Market Cumulative PreferredTM Stock were retired and
775 shares of Taxable Auction Market Preferred Stock were issued. Offering costs
of $293,843 and commissions paid directly to Merrill Lynch, Pierce Fenner &
Smith Inc. of which $290,625 were charged to capital of common stock to complete
the transaction. Taxable Auction Market Preferred Stock is senior to the Common
Stock and results in the financial leveraging of the Common Stock. Such
leveraging tends to magnify both the risks and opportunities to Common Stock
Shareholders. Dividends on shares of Taxable Auction Market Preferred Stock are
cumulative.
The Fund is required to meet certain asset coverage tests with respect to
the Taxable Auction Market Preferred Stock. If the Fund fails to meet these
requirements and does not correct such failure, the Fund may be required to
redeem, in part or in full, Taxable Auction Market Preferred Stock at a
redemption price of $100,000 per share plus an amount equal to the accumulated
and unpaid dividends on such shares in order to meet these requirements.
Additionally, failure to meet the foregoing asset requirements could restrict
the Fund's ability to pay dividends to Common Stock Shareholders and could lead
to sales of portfolio securities at inopportune times.
An auction of the Taxable Auction Market Preferred Stock is generally held
every 28 days. Existing shareholders may submit an order to hold, bid or sell
such shares at par value on each auction date. Taxable Auction Market Preferred
Stock Shareholders may also trade shares in the secondary market between auction
dates.
On May 31, 2004, 775 shares of Taxable Auction Market Preferred Stock were
outstanding at the annual rate of 1.30%. The dividend rate, as set by the
auction process, is generally expected to vary with short-term interest rates.
These rates may vary in a manner unrelated to the income received on the Fund's
assets, which could have either a beneficial or detrimental impact on net
investment income and gains available to Common Stock Shareholders. While the
Fund expects to earn a higher return on its assets than the cost associated with
the Taxable Auction Market Preferred Stock, including expenses, there can be no
assurance that such results will be attained.
6. PORTFOLIO INVESTMENTS, CONCENTRATION AND INVESTMENT QUALITY
The Fund operates as a "diversified" management investment company, as
defined in the 1940 Act. Under this definition, at least 75% of the value of the
Fund's total assets must at the time of investment consist of cash and cash
items (including receivables), U.S. Government securities, securities of other
investment companies, and other securities limited in respect of any one issuer
to an amount not greater in value than 5% of the value of the Fund's total
assets (at the time of purchase) and to not more than 10% of the voting
securities of a single issuer. This limit does not apply, however, to 25% of the
Fund's assets, which may be invested in a single issuer. A more concentrated
portfolio may cause the Fund's net asset value to be more volatile than it has
been historically and thus may subject shareholders to more risk. The Fund may
hold a substantial position (up to 25% of its assets) in the common stock of a
single issuer. As of May 31, 2004, the Fund held a significant position in
Berkshire Hathaway, Inc., and thus, the volatility of the Fund's common stock,
and the Fund's net assets value and its performance in general, depends
disproportionately more on the performance of this single issuer than that of a
more diversified fund.
The Fund intends to concentrate its common stock investments in a few
issuers and to take large positions in those issuers, consistent with being a
"diversified" fund. As a result, the Fund is subject to a greater risk of loss
than a fund that diversifies its investments more broadly. Taking larger
positions is also likely to increase the volatility of the Fund's net asset
value reflecting fluctuation in the value of its large holdings. Under normal
market conditions, the Fund intends to invest in a portfolio of common stocks.
The portion of the Fund's assets invested in each can vary depending on market
conditions. The term "common stocks" includes both stocks acquired primarily for
their appreciation potential and stocks acquired for their income potential,
such as dividend-paying RICs and REITs. The term "income securities" includes
bonds, U.S. Government securities, notes, bills, debentures, preferred stocks,
convertible securities, bank debt obligations, repurchase agreements and
short-term money market obligations.
7. SIGNIFICANT SHAREHOLDERS
On May 31, 2004, the Lola Trust and other trusts and entities affiliated
with Stewart R. Horejsi and the Horejsi family owned 5,382,982 shares of Common
Stock of the Fund, representing approximately 43.63% of the total Fund shares.
Stewart R. Horejsi is the primary portfolio manager for SIA and is the Fund's
primary portfolio manager. He is responsible for the day-to-day strategic
management of the Fund.
14
BOULDER TOTAL RETURN FUND, INC.
NOTES TO FINANCIAL STATEMENTS-- (UNAUDITED) (CONTINUED)
8. SHARE REPURCHASE PROGRAM
In accordance with Section 23(c) of the Investment Company Act of 1940, as
amended, the Fund hereby gives notice that it may from time to time repurchase
shares of the Fund in the open market at the option of the Board of Directors
and upon such terms as the Directors shall determine.
For the six months ended May 31, 2004 the Fund repurchased 188,200 shares
at an average weighted discount of 16.0% and with a value of $2,867,925. For the
year ended November 30, 2003 the Fund repurchased 30,400 at an average weighted
discount of 17.0% and with a value of $440,718.
9. RIGHTS OFFERING
At a regularly scheduled Board of Directors meeting held on April 22, 2003,
the Fund's Board of Directors approved a transferable rights offering which
would permit shareholders to acquire one new share of common stock for every
three shares held. The rights were transferable, which allowed shareholders who
did not wish to exercise their rights to sell them on the New York Stock
Exchange. The record date for determining shareholders eligible to participate
in the rights offering was June 20, 2003. The subscription period was from June
20, 2003 to July 11, 2003. The market price for the shares issued through the
rights offering was calculated based on the volume-weighted average price of the
Fund's shares from July 7, 2003 through July 11, 2003. The rights offering was
fully subscribed and the Fund issued 3,140,517 new shares at a price of $12.10
each. The total gross proceeds to the Fund were $38,000,255. As of November 30,
2003, the expense associated with the rights offering totaled $120,460.
ADDITIONAL INFORMATION
PRIVACY STATEMENT
Pursuant to SEC Regulation S-P (Privacy of Consumer Financial Information)
the Directors of the Boulder Total Return Fund, Inc. have established the
following policy regarding information about the Fund's shareholders. We
consider all shareholder data to be private and confidential, and we hold
ourselves to the highest standards in its safekeeping and use. The Fund collects
nonpublic information (e.g., your name, address, Social Security Number, Fund
holdings) about shareholders from transactions in Fund shares. The Fund will not
release information about current or former shareholders (except as permitted by
law) unless one of the following conditions is met: (i) we receive your prior
written consent; (ii) we believe the recipient to be you or your authorized
representative; or (iii) we are required by law to release information to the
recipient. The Fund has not and will not in the future give or sell information
about its current or former shareholders to any company, individual, or group
(except as permitted by law). The Fund will only use information about its
shareholders as necessary to service or maintain shareholder accounts in the
ordinary course of business. Internally, we also restrict access to shareholder
personal data to those who have a specific need for the records. We maintain
physical, electronic and procedural safeguards that comply with Federal
standards to guard your personal data.
PROXY VOTING POLICIES AND PROCEDURES
A description of the policies and procedures that the Fund uses to
determine how to vote proxies relating to portfolio securities is available (1)
without charge, upon request, by calling 800-331-1710 and (2) on the Securities
and Exchange Commission's website at http://www.sec.gov, when required to be
filed pursuant to applicable regulations.
15
BOULDER TOTAL RETURN FUND, INC.
MEETING OF SHAREHOLDERS-- VOTING RESULTS (UNAUDITED)
On May 18, 2004, the Fund held its Annual Meeting of Shareholders to
consider the election of Directors of the Fund and certain corporate governance
proposals. The following votes were recorded:
PROPOSAL 1: (VOTING BY AMPS SHAREHOLDERS):
ELECTION OF RICHARD I. BARR AS DIRECTOR OF THE FUND # OF VOTES CAST % OF VOTES CAST
--------------------------------------------------- ---------------- ---------------
Affirmative ................................................................... 588 96.7
Withheld ...................................................................... 20 3.3
---------------- -----
TOTAL ................................................................ 608 100.0
================ =====
ELECTION OF SUSAN L. CICIORA AS DIRECTOR OF THE FUND # OF VOTES CAST % OF VOTES CAST
---------------------------------------------------- ---------------- ---------------
Affirmative ................................................................... 588 96.7
Withheld ...................................................................... 20 3.3
---------------- -----
TOTAL ................................................................ 608 100.0
================ =====
PROPOSAL 1: (VOTING BY COMMON STOCK SHAREHOLDERS):
ELECTION OF JOEL W. LOONEY AS DIRECTOR OF THE FUND # OF VOTES CAST % OF VOTES CAST
-------------------------------------------------- ---------------- ---------------
Affirmative ................................................................... 11,677,667.0890 98.8
Withheld ...................................................................... 138,342.0410 1.2
---------------- -----
TOTAL ................................................................ 11,816,009.1300 100.0
================ =====
ELECTION OF ALFRED G. ALDRIDGE, JR. AS DIRECTOR OF THE FUND # OF VOTES CAST % OF VOTES CAST
----------------------------------------------------------- ---------------- ---------------
Affirmative ................................................................... 11,677,167.0890 98.8
Withheld ...................................................................... 138,842.0410 1.2
---------------- -----
TOTAL ................................................................ 11,816,009.1300 100.0
================ =====
ELECTION OF STEPHEN C. MILLER AS DIRECTOR OF THE FUND # OF VOTES CAST % OF VOTES CAST
----------------------------------------------------- ---------------- ---------------
Affirmative ................................................................... 11,677,978.0890 98.8
Withheld ...................................................................... 138,031.0410 1.2
---------------- -----
TOTAL ................................................................ 11,816,009.1300 100.0
================ =====
PROPOSAL 2: (COMMON STOCK AND AMPS VOTING TOGETHER AS A SINGLE CLASS):
AMENDMENT TO THE FUND'S CHARTER TO DECLASSIFY THE BOARD
AND PROVIDE FOR ANNUAL ELECTION OF DIRECTORS # OF VOTES CAST % OF VOTES CAST
------------------------------------------------------- ---------------- ---------------
For ........................................................................... 11,669,585.1930 98.8
Against ....................................................................... 117,779.4620 1.0
Abstain ....................................................................... 28,132.4750 0.2
---------------- -----
TOTAL ................................................................ 11,815,497.1300 100.0
================ =====
PROPOSAL 3: (COMMON STOCK AND AMPS VOTING TOGETHER AS A SINGLE CLASS):
AMENDMENT TO THE FUND'S CHARTER PROVIDING THAT DIRECTORS SHALL BE
ELECTED BY A PLURALITY OF VOTES CAST AT A MEETING AT WHICH A QUORUM IS PRESENT # OF VOTES CAST % OF VOTES CAST
------------------------------------------------------------------------------ ---------------- ---------------
For ........................................................................... 8,443,274.3280 71.5
Against ....................................................................... 122,395.0000 1.0
Abstain ....................................................................... 28,948.8020 0.2
No Vote . ..................................................................... 3,220,879.0000 27.3
---------------- -----
TOTAL ................................................................ 11,815,497.1300 100.0
================ =====
16
BOULDER TOTAL RETURN FUND, INC.
MEETING OF SHAREHOLDERS-- VOTING RESULTS (UNAUDITED) (CONTINUED)
PROPOSAL 4: (COMMON STOCK AND AMPS VOTING TOGETHER AS A SINGLE CLASS):
AN AMENDMENT TO THE CHARTER REPEALING A PROVISION STATING THAT DIRECTORS
MAY BE REMOVED ONLY BY THE AFFIRMATIVE VOTE OF THE HOLDERS OF AT LEAST 80%
OF THE CLASS OF STOCK ENTITLED TO ELECT THAT DIRECTOR # OF VOTES CAST % OF VOTES CAST
-------------------------------------------------------------------------- --------------- ---------------
For ........................................................................... 8,404,792.0460 71.1
Against ....................................................................... 162,066.6090 1.4
Abstain ....................................................................... 27,759.4750 0.2
No Vote ....................................................................... 3,220,879.0000 27.3
--------------- -----
TOTAL ................................................................ 11,815,497.1300 100.0
=============== =====
PROPOSAL 5: (COMMON STOCK AND AMPS VOTING TOGETHER AS A SINGLE CLASS):
AN AMENDMENT TO THE CHARTER PROVIDING THAT THE SECRETARY OF THE FUND SHALL
CALL A SPECIAL STOCKHOLDERS MEETING UPON THE WRITTEN REQUEST OF THE HOLDERS
OF 25% OF OUTSTANDING SHARES ENTITLED TO VOTE AT THE MEETING # OF VOTES CAST % OF VOTES CAST
--------------------------------------------------------------------------- ---------------- ---------------
For ........................................................................... 8,315,195.6410 70.4
Against ....................................................................... 158,432.0140 1.3
Abstain ....................................................................... 120,990.4750 1.0
No Vote ....................................................................... 3,220,879.0000 27.3
--------------- -----
TOTAL ................................................................ 11,815,497.1300 100.0
=============== =====
PROPOSAL 6: (COMMON STOCK AND AMPS VOTING TOGETHER AS A SINGLE CLASS):
AN AMENDMENT TO THE CHARTER VESTING IN THE STOCKHOLDERS THE POWER TO AMEND
OR ADOPT BYLAWS BY THE AFFIRMATIVE VOTE OF A MAJORITY OF VOTES CAST AT A
MEETING AT WHICH A QUORUM IS PRESENT # OF VOTES CAST % OF VOTES CAST
-------------------------------------------------------------------------- ---------------- ---------------
For ........................................................................... 8,386,600.1790 71.0
Against ....................................................................... 147,239.4620 1.2
Abstain ....................................................................... 60,778.4890 0.5
No Vote ....................................................................... 3,220,879.0000 27.3
--------------- -----
TOTAL ................................................................ 11,815,497.1300 100.0
=============== =====
PROPOSAL 7: (COMMON STOCK AND AMPS VOTING TOGETHER AS A SINGLE CLASS):
AN AMENDMENT TO THE CHARTER PROHIBITING THE FUND FROM OPTING INTO ANY
PROVISION OF THE MARYLAND UNSOLICITED TAKEOVERS ACT # OF VOTES CAST % OF VOTES CAST
--------------------------------------------------------------------- ---------------- ---------------
For ........................................................................... 8,421,382.6730 71.3
Against ....................................................................... 125,908.1060 1.0
Abstain ....................................................................... 47,327.3510 0.4
No Vote ....................................................................... 3,220,879.0000 27.3
--------------- -----
TOTAL ................................................................ 11,815,497.1300 100.0
=============== =====
PROPOSAL 8: (COMMON STOCK AND AMPS VOTING TOGETHER AS A SINGLE CLASS): AN
AMENDMENT TO THE CHARTER REPEALING ARTICLE VII AND REPLACING IT WITH A
NEW SECTION PROVIDING THAT NO (A) BUSINESS COMBINATION (E.G., MERGERS,
CONSOLIDATION, SHARE EXCHANGES), (B) VOLUNTARY LIQUIDATION OR
DISSOLUTION, (C) STOCKHOLDER PROPOSAL REGARDING SPECIFIC INVESTMENT
DECISIONS, (D) PROPOSAL TO OPEN-END THE FUND, OR (E) SELF TENDER FOR
MORE THAN 25% OF THE FUND'S SHARES IN ANY TWELVE-MONTH PERIOD, MAY BE
EFFECTED WITHOUT THE AFFIRMATIVE VOTE OF THE HOLDERS OF AT LEAST
TWO-THIRDS OF OUTSTANDING SHARES ENTITLED TO BE CAST ON THE MATTER # OF VOTES CAST % OF VOTES CAST
---------------------------------------------------------------------- ---------------- ---------------
For ........................................................................... 8,268,896.3010 70.0
Against ....................................................................... 254,547.8050 2.1
Abstain ....................................................................... 71,174.0240 0.6
No Vote ....................................................................... 3,220,879.0000 27.3
--------------- -----
TOTAL ................................................................ 11,815,497.1300 100.0
=============== =====
17
BOULDER TOTAL RETURN FUND, INC.
MEETING OF SHAREHOLDERS-- VOTING RESULTS (UNAUDITED) (CONTINUED)
PROPOSAL 9: (COMMON STOCK AND AMPS VOTING TOGETHER AS A SINGLE CLASS):
AN AMENDMENT TO THE CHARTER TO ESTABLISH THE MAXIMUM NUMBER OF DIRECTORS AT
FIVE # OF VOTES CAST % OF VOTES CAST
--------------------------------------------------------------------------- ---------------- ---------------
For . ......................................................................... 8,375,546.9640 70.9
Against ....................................................................... 176,226.0000 1.5
Abstain ....................................................................... 42,845.1660 0.3
No Vote ....................................................................... 3,220,879.0000 27.3
--------------- -----
TOTAL ................................................................ 11,815,497.1300 100.0
=============== =====
PROPOSAL 10: ( COMMON STOCK AND AMPS VOTING TOGETHER AS A SINGLE CLASS):
AN AMENDMENT TO THE CHARTER PROVIDING THAT, UPON REDEMPTION OF ALL OF THE
FUND'S SHARES OF PREFERRED STOCK, INCLUDING THE FUND'S TAXABLE AUCTION
MARKET PREFERRED STOCK, THE TERM OF THE DIRECTORS ELECTED BY THE HOLDERS OF
THE FUND'S PREFERRED STOCK WILL AUTOMATICALLY TERMINATE # OF VOTES CAST % OF VOTES CAST
--------------------------------------------------------------------------- ---------------- ---------------
For ........................................................................... 8,424,589.9780 71.3
Against ....................................................................... 137,173.0000 1.1
Abstain ....................................................................... 32,855.1520 0.3
No Vote ....................................................................... 3,220,879.0000 27.3
--------------- -----
TOTAL ................................................................ 11,815,497.1300 100.0
=============== =====
PROPOSAL 11: ( COMMON STOCK AND AMPS VOTING TOGETHER AS A SINGLE CLASS): AN
AMENDMENT TO THE CHARTER REPEALING A PROVISION THAT REQUIRES, UNDER
CERTAIN CIRCUMSTANCES, CERTAIN AMENDMENTS TO VARIOUS OTHER PROVISIONS
OF THE CHARTER TO BE APPROVED BY THE HOLDERS OF AT LEAST 80% OF THE
SHARES OF THE FUND'S COMMON STOCK AND PREFERRED STOCK, VOTING TOGETHER
AS A SINGLE CLASS, AND 80% OF THE SHARES OF THE FUND'S PREFERRED STOCK,
VOTING SEPARATELY # OF VOTES CAST % OF VOTES CAST
----------------------------------------------------------------------- ---------------- ---------------
For ........................................................................... 8,386,031.4190 70.9
Against ....................................................................... 174,057.0000 1.5
Abstain ....................................................................... 34,529.7110 0.3
No Vote ....................................................................... 3,220,879.0000 27.3
--------------- -----
TOTAL ................................................................ 11,815,497.1300 100.0
=============== =====
PROPOSAL 12: ( COMMON STOCK AND AMPS VOTING TOGETHER AS A SINGLE CLASS):
A PROPOSAL TO AMEND AND RESTATE THE CHARTER, THE IMPLEMENTATION OF WHICH IS
CONTINGENT ON THE APPROVAL OF PROPOSALS 2 THROUGH 11 # OF VOTES CAST % OF VOTES CAST
--------------------------------------------------------------------------- ---------------- ---------------
For ........................................................................... 8,391,083.7790 71.0
Against ....................................................................... 165,577.0000 1.4
Abstain ....................................................................... 37,957.3510 0.3
No Vote ....................................................................... 3,220,879.0000 27.3
--------------- -----
TOTAL ................................................................ 11,815,497.1300 100.0
=============== =====
18
This Page Left Blank Intentionally.
[GRAPHIC OMITTED]
MOUNTAIN ART
BOULDER TOTAL RETURN FUND, INC.
P.O. Box 43027
Providence, RI 02940-3027
BOULDER
TOTAL RETURN
FUND, INC.
----------------------
SEMI-ANNUAL REPORT
MAY 31, 2004
DIRECTORS
Brig. Gen (Ret.) Alfred G. Aldridge Jr.
Richard I. Barr
Susan L. Ciciora
Joel W. Looney
Stephen C. Miller
OFFICERS
Stephen C. Miller
President
Carl D. Johns
Vice President and Treasurer
Stephanie J. Kelley
Secretary
Nicole L. Murphey
Assistant Secretary
WWW.BOULDERFUNDS.NET
If you have questions regarding shares you held in a brokerage account contact
your broker, or, if you have physical possession of your shares in certificate
form, contact the Fund's Transfer Agent & Shareholder Servicing Agent -- PFPC
Inc., at:
P.O. Box 43027
Providence, RI 02940-3027
1-800-331-1710
This report is sent to shareholders of Boulder Total Return Fund, Inc. for
their information. It is not a prospectus, circular or representation intended
for use in the purchase or sale of shares of the Fund or of any securities
mentioned in this report.
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS
Not yet applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR
240.14a-101), or this Item.
ITEM 10. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17
CFR 270.30a-3(d)) that occurred during the registrant's last fiscal
half-year (the registrant's second fiscal half-year in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting.
ITEM 11. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) BOULDER TOTAL RETURN FUND INC.
By (Signature and Title)* /S/ STEPHEN C. MILLER
-------------------------------------------------------
Stephen C. Miller, President
(principal executive officer)
Date JULY 14, 2004
----------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /S/ STEPHEN C. MILLER
-------------------------------------------------------
Stephen C. Miller, President
(principal executive officer)
Date JULY 14, 2004
----------------------------------------------------------------------------
By (Signature and Title)* /S/ CARL D. JOHNS
-------------------------------------------------------
Carl D. Johns, Vice President and Treasurer
(principal financial officer)
Date JULY 14, 2004
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.