BOULDER TOTAL RETURN FUND, INC.
Annual Report
November 30, 2002
Dear Shareholder:
The fiscal year ending November 30, 2002 saw the Net Asset Value (NAV) of the
Boulder Total Return Fund ("BTF") decline from $17.36 to $15.04, a decrease of
$2.32 per share. If you throw in the $0.14 per share dividend the Fund paid in
December 2001, the decline was $2.18. Performance would have been better if we
had sold all the stocks in the Fund last November 30, and put the money into a
savings account. The Fund would have only earned about 2% had we done this, but
that's much better than losing. Unlike investment advisors of most funds, we
feel your pain in this loss. Our affiliates own 3.9 million shares of BTF, so
our paper loss for the year was about $8.5 million.
With the dividend reinvested, the Fund's total return on NAV for the fiscal year
ending November 30, 2002 was -12.6%. This compares to a return on the S&P 500
Index during the same period of -16.5%. Anyone who had to decide between losing
12.6% of their assets as opposed to 16.5% of their assets would obviously opt
for the Fund's return of -12.6%. But anytime you lose money, you should ask for
a better scenario - one in which you can't lose any of your assets. The savings
account solution is one of those. Another would be to stuff the money in your
mattress. But investors in the stock market know, or should know, they stand the
risk of losing. They also stand to make money. That is our goal. Here is how BTF
has done annually over the last 3 years* vs. the S&P 500.
FOR THE 12 MONTHS ENDING NOVEMBER 30
FISCAL YEAR ENDING BTF NAV TOTAL RETURN S&P 500 TOTAL RETURN
------------------ -------------------- --------------------
2000* 13.3% -4.2%
2001 17.7% -12.2%
2002 -12.6% -16.5%
* 2000 was the first full year under the management of Boulder Investment
Advisers and Stewart Investment Advisers.
For the 3 years, BTF returned 16.5% based on NAV or 5.2% annualized, while the
S&P 500 lost 29.7%, or -11.1% annualized. Keep in mind that the Fund is
leveraged. This helped us a lot in 2000 and in 2001, but hurt us in 2002. We use
the S&P 500 Index to measure our performance relative to the market, but it's
not necessarily our goal to beat the S&P 500. As illustrated above, our goal is
to make money for our investors. This year is a perfect example. We beat the S&P
500 by around 4%, but we didn't achieve our goal - to make money for our
investors.
So where did we do well and where did we do poorly? Let's start with the Fund's
biggest holding - Berkshire Hathaway ("BRK"). This investment represents about
1/3 of the Fund's assets. The Fund's share position in BRK didn't change during
the year, and the price of BRK 'A' shares went from $70,000 per share to $72,300
per share; BRK 'B' shares went from $2,333 to $2,411. The 700,000 shares of Dana
Corporation that we owned was at $13.70 per share at the end of last year. We
sold it all at an average price of $20.17, a gain of 47% this fiscal year (our
cost basis in Dana Corp. was $13.94 per share). The 180,000 shares of
Progressive Corp. the Fund held went from $48.80 on November 30, 2001 to $58
when we sold it. So far, so good. So where did we lose money? In the utility
sector. Good old utilities - you know, the investment your mom and dad made that
was safe and sound. No risk. Regular dividends. Regulated industry. Monopoly.
Today, in hindsight (which is always 20/20) we can use one word to describe the
performance of the utility sector --"lousy." From the beginning of this year,
the Philadelphia Utility Index (comprising 20 utility companies) is down 26%.
We have unrealized losses in Alliant Energy of $4.8 million, and in Aquila of
$10.5 million. We sold all of our Xcel Energy to realize a loss of $8.1 million.
We did this for tax reasons to offset realized gains. We sold some positions for
losses in other companies as well. Some of the significant gains that were
realized this year: Progressive Corp. was $6.4 million, Dana Corp. was $4.4
million, a small piece of Yum! Brands Inc. was $2.1 million, The Limited was
$1.5 million, and gains of over $4 million were realized in several REITS, for
total realized gains on the year of over $19 million. Nonetheless, the Fund
realized enough losses, and carried a net-loss carry-forward into this year so
that the Fund will carry a net realized loss into fiscal 2003, which, for tax
purposes, is good. We may realize some additional losses through selling. It's
also possible the Fund may buy back some of the companies that were sold.
As stated in our Semi-Annual report, our investment in the utility sector was
intended to earn a reasonable return through the dividend payout. Four of the
five utilities we purchased either reduced or eliminated their dividend. There
is a perceived liquidity risk in the utility industry that the market sees as a
reason to sell these companies. The utility industry is capital intensive and
uses debt as a financing tool. We knew this going in. But it also has a
"captured" customer base, which can't be infringed upon. Some utility companies
ventured into unregulated businesses, and overpaid for some assets. But we feel
the market is over-reacting in some situations. Certainly, it's not unheard of
for the market to over-react. Nevertheless, in retrospect, our decision to go
into utilities was a bad one. The prices of the utilities we bought were at the
low end of their prices for the last business cycle, but continued to get much
lower after we bought them. We believe they will recover in price to give us
decent returns from the current level, but they will never give us anywhere
close to the total return that we expected when we bought them. We simply made a
big mistake investing in the utility sector.
Our Auction Market Preferreds ("AMPs") have been a very cheap source of capital.
The current cost is 1.65% on an annualized basis. The cost of these AMPs will go
up and down with short term interest rates. So it is not only possible, it is
probable that this cost will increase some time, though hopefully not soon.
We declared and paid a $0.03 per share dividend from net investment income in
December 2002. This was income the Fund earned above and beyond the cost of our
AMPs and the Fund's expenses.
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
there on the site. You will also see on the website the Boulder Total Return's
sister Fund - The Boulder Growth & Income Fund.
We look forward to trying to achieve our goal this coming year, and the years to
follow.
Sincerely
/S/ SIGNATURE
Stewart R. Horejsi
December 27, 2002
--------------------------------
NOTHING IN THIS ANNUAL REPORT SHOULD BE CONSIDERED AS INVESTMENT ADVICE. THIS
LETTER EXPLAINS THE MANAGERS' VIEWS AS OF ITS DATE, WHICH MAY HAVE SUBSEQUENTLY
CHANGED.
2
BOULDER TOTAL RETURN FUND, INC.
EXHIBIT 1
(UNAUDITED)
NET ASSET VALUE AND MARKET PERFORMANCE FOR A COMMON SHARE
FOR THE YEAR ENDING 11/30/02
NAV MARKET
------ ---------
November 30, 2001................................... $17.36 $16.05
November 30, 2002................................... $15.04 $12.79
------ ------
Change........................................... $(2.32) $(3.26)
Dividends Paid...................................... $ 0.14 $ 0.14
------ ------
Net Decrease in Value............................... $(2.18) $(3.12)
Net Decrease % (No Dividend Reinvestment)........... -12.6% -19.4%
EXHIBIT 2
(UNAUDITED)
BTF TOTAL RETURNS FOR QTRS. AND YEAR ENDING 11/30/02 VS. S&P 500
DIVIDENDS REINVESTED ON DIVIDEND PAY DATE
BTF BTF
NAV MARKET S&P 500
----- ------ -------
Quarter Ending 11/30/02 ................... -7.7% -11.4% 2.7%
Quarter Ending 8/31/02 .................... -18.2% -21.2% -13.8%
Quarter Ending 5/31/02 .................... 4.4% 14.5% -3.3%
Quarter Ending 2/28/02 .................... 10.9% 0.6% -2.5%
----- ----- ------
Trailing 12 Months Ending 11/30/02......... -12.6% -19.6% -16.5%
3
BOULDER TOTAL RETURN FUND, INC.
EXHIBIT 3
(UNAUDITED)
CHANGE IN PRINCIPAL VALUE OF ASSET CLASSES 11/30/2001 TO 11/30/2002
COMMON STOCK INVESTMENTS
-----------------------------------------------------------------
RICS REITS INDUSTRIALS TOTAL
---- ----- ----------- -----
Beginning Market Value............... 11/30/01 $ 21,923,900 $56,596,770 $ 132,308,575 $210,829,245
------------- ----------- ------------- ------------
Cost of Purchases.................... 12/1/01-11/30/02 3,416,631 16,851,236 77,245,022 97,512,889
Proceeds from Sales.................. 12/1/01-11/30/02 25,623,401 16,346,672 44,846,753 86,816,826
------------- ----------- ------------- ------------
Net Purchase/(Sales)................. (22,206,770) 504,564 32,398,269 10,696,063
Beginning Market Value Plus
Net Purchases/(Sales)............. (282,870) 57,101,334 164,706,844 221,525,308
Net Appreciation/(Depreciation)...... 534,975 (288,610) (23,874,061) (23,627,696)
------------- ----------- ------------- ------------
Ending Market Value.................. 11/30/02 $ 252,105 $56,812,724 $ 140,832,783 $197,897,612
Number of Issues Held................ 11/30/02 1 9 18
Cash and Other Assets &
Liabilities....................... 11/30/02 21,209,786
------------
Total Net Assets.................. $219,107,398
============
The information in the table below is unaudited.
FINANCIAL DATA
PER SHARE OF
COMMON STOCK
----------------------
NYSE
NAV CLOSING PRICE
------ -------------
12/31/01............................... $18.32 $16.24
1/31/02............................... 18.65 16.25
2/28/02............................... 19.09 16.00
3/31/02............................... 19.98 16.80
4/30/02............................... 20.16 18.29
5/31/02............................... 19.92 18.32
6/30/02............................... 17.52 16.40
7/31/02............................... 14.26 14.29
8/31/02............................... 16.30 14.44
9/30/02............................... 15.36 13.29
10/31/02............................... 14.75 12.94
11/30/02............................... 15.04 12.79
4
BOULDER TOTAL RETURN FUND, INC. PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 2002
------------------------------------------------------------------------------------------------------------------------------
SHARES VALUE
-------- -------
DOMESTIC COMMON STOCKS - 90.3%
DIVERSIFIED - 34.7% Berkshire Hathaway Inc., Class A+ .................... 750 $ 54,225,000
Berkshire Hathaway Inc., Class B+ .................... 9,010 21,723,110
------------
TOTAL DIVERSIFIED 75,948,110
------------
FINANCIAL SERVICES - 7.4% Citigroup, Inc. ...................................... 293,360 11,405,837
MBIA Inc. ............................................ 5,000 227,400
MGIC Investment Corporation .......................... 5,000 233,350
Providian Financial Corporation+ ..................... 698,000 4,243,840
------------
TOTAL FINANCIAL SERVICES 16,110,427
------------
INSURANCE - 1.5% Travelers Property Casualty Corporation, Class A+ .... 12,674 202,150
Travelers Property Casualty Corporation, Class B+ .... 26,040 416,640
Wesco Financial Corporation .......................... 9,000 2,718,000
------------
TOTAL INSURANCE 3,336,790
------------
INVESTMENT COMPANIES - 0.1% Morgan Stanley Emerging Markets Debt Fund ............ 34,300 252,105
MEDICAL-DRUG/DIVERSIFIED
- 5.4% Bristol-Meyers Squibb Company ........................ 125,000 3,312,500
Merck & Company, Inc. ................................ 75,000 4,455,750
Schering-Plough Corporation .......................... 178,000 4,033,480
------------
TOTAL MEDICAL-DRUG/DIVERSIFIED 11,801,730
------------
REITS - 25.9% Boykin Lodging Company ............................... 300,000 2,730,000
First Industrial Realty Trust Inc. ................... 400,000 10,804,000
Hospitality Property Trust ........................... 400,000 13,640,000
HRPT Properties Trust ................................ 1,300,000 10,881,000
JDN Realty Corporation ............................... 375,100 4,193,618
Pennsylvania Real Estate Investment Trust ............ 100,000 2,531,000
Post Properties, Inc. ................................ 320,000 8,160,000
Tanger Factory Outlet Centers, Inc. .................. 110,000 3,242,800
Thornburg Mortgage, Inc. ............................. 34,200 630,306
------------
TOTAL REITS 56,812,724
------------
RETAIL-RESTAURANTS - 6.5% Yum! Brands Inc.+ .................................... 600,000 14,346,000
------------
RETAIL-SUPERMARKETS - 3.8% Safeway Inc.+ ........................................ 350,000 8,323,000
------------
UTILITY - 5.0% Alliant Energy Corporation ........................... 400,000 6,512,000
Aquila Inc. .......................................... 1,468,700 2,966,774
Northwestern Corporation ............................. 156,300 1,256,652
TXU Corporation ...................................... 15,000 231,300
------------
TOTAL UTILITY 10,966,726
------------
TOTAL DOMESTIC COMMON STOCKS
(Cost $185,786,871) ...................................................................... 197,897,612
------------
PAR
-------
U.S. TREASURY BILLS - 6.9%
1.200% due 01/02/03++ ................................ $ 5,000,000 4,994,834
1.465% due 12/05/02++ ................................ 5,000,000 4,999,379
1.490% due 12/19/02++ ................................ 5,000,000 4,996,541
TOTAL U.S. TREASURY BILLS
(Cost $14,990,754) ...................................................................... 14,990,754
------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
5
BOULDER TOTAL RETURN FUND, INC. PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 2002
------------------------------------------------------------------------------------------------------------------------------
VALUE
-------
REPURCHASE AGREEMENTS - 3.0%
(Cost $6,629,000)
Agreement with PNC Capital Markets,
1.250% dated 11/29/02, to be
repurchased at $6,629,691 on 12/02/02,
collateralized by $6,470,000 U.S.
Treasury Note, 3.375% due 04/30/04
(Value $6,635,594) ............................................... $ 6,629,000
------------
TOTAL INVESTMENTS (COST $207,406,625*) - 100.2% ........................................................... 219,517,366
OTHER ASSETS AND LIABILITIES - (0.2%) ..................................................................... (409,968)
------------
NET ASSETS - 100.0% ....................................................................................... $219,107,398
============
-----------
* Aggregate cost for Federal tax purposes is $205,597,158.
+ Non-income producing security.
++ Annualized yield at date of purchase.
6
BOULDER TOTAL RETURN FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
NOVEMBER 30, 2002
ASSETS:
Investments, at value (Cost $207,406,625) (Note 1)
See accompanying schedule ..................................................................... $ 219,517,366
Dividends and interest receivable ............................................................... 54,385
Prepaid expenses ................................................................................ 22,190
---------------
TOTAL ASSETS .............................................................................. 219,593,941
LIABILITIES:
Cash due to custodian ....................................................... $ 272
Investment co-advisory fees payable (Note 2) ................................ 223,763
Accumulated undeclared dividends on Taxable Auction Market Preferred
Stock (Note 5) . ......................................................... 103,336
Administration and co-administration fees payable (Note 2) .................. 33,573
Audit fees and expenses payable ............................................. 32,125
Directors' fees and expenses payable (Note 2) ............................... 15,839
Accrued expenses and other payables ......................................... 77,635
---------------
TOTAL LIABILITIES ......................................................................... 486,543
---------------
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) ......................................... $ 141,607,398
===============
FUND TOTAL NET ASSETS .............................................................................. $ 219,107,398
===============
NET ASSETS consist of:
Undistributed net investment income .............................................................. $ 99,519
Accumulated net realized gain on investments sold ................................................ 568,780
Unrealized appreciation of investments ........................................................... 12,110,741
Par value of Common Stock ........................................................................ 94,167
Paid-in capital in excess of par value of Common Stock ........................................... 128,734,191
---------------
TOTAL NET ASSETS (APPLICABLE TO COMMON STOCK
9,416,743 SHARES OUTSTANDING) ............................................... $ 15.04 $ 141,607,398
============== ===============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
7
BOULDER TOTAL RETURN FUND, INC.
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
FOR THE YEAR ENDED NOVEMBER 30, 2002
INVESTMENT INCOME:
Dividends ........................................................................................ $ 8,283,606
Interest ......................................................................................... 280,340
----------------
TOTAL INVESTMENT INCOME .................................................................... 8,563,946
EXPENSES:
Investment co-advisory fees (Note 2) ............................................ $ 3,033,309
Administration and co-administration fees (Note 2) .............................. 448,264
Preferred Stock broker commissions and Auction Agent fees ....................... 196,396
Directors' fees and expenses (Note 2) ........................................... 87,686
Insurance expense (Note 2) ...................................................... 29,012
Legal fees ...................................................................... 45,931
Shareholder servicing agent fees ................................................ 39,119
Custodian fees .................................................................. 31,596
Other ........................................................................... 90,997
---------------
TOTAL EXPENSES ............................................................................. 4,002,310
----------------
NET INVESTMENT INCOME ............................................................................... 4,561,636
================
REALIZED AND UNREALIZED GAIN/LOSS ON INVESTMENTS:
Net realized gain on investments sold during the year ............................................ 846,240
Change in unrealized depreciation of investments during the year ................................. (24,473,124)
----------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS ..................................................... (23,626,884)
----------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ................................................ $ (19,065,248)
================
LESS: PREFERRED STOCK DIVIDENDS ..................................................................... (1,628,676)
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS
APPLICABLE TO COMMON SHARES .................................................................... $ (20,693,924)
================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
8
BOULDER TOTAL RETURN FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
YEAR ENDED
NOVEMBER 30,
-------------------------------------
2002 2001
------------- -------------
OPERATIONS:
Net investment income .......................................................... $ 4,561,636 $ 5,975,939
Net realized gain on investments sold during the year .......................... 846,240 6,539,577
Change in unrealized appreciation/(depreciation) of investments
during the year ........................................................... (24,473,124) 15,522,133
------------- -------------
Net increase/(decrease) in net assets resulting from operations ................ (19,065,248) 28,037,649
DISTRIBUTIONS: PREFERRED STOCK DIVIDENDS
Dividends paid from net investment income ...................................... (1,628,676) (3,757,115)
NET INCREASE/DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS APPLICABLE TO COMMON SHARES ............................... (20,693,924) 24,280,534
DISTRIBUTIONS:COMMON SHARES
Dividends paid from net investment income ...................................... (1,318,356) (470,846)
NET INCREASE/DECREASE IN NET ASSETS FOR THE YEAR ............................... (22,012,280) 23,809,688
NET ASSETS:
Beginning of year .............................................................. 241,119,678 217,309,990
------------- -------------
End of year (including undistributed net investment income of $99,519 and
$602,301, respectively) ................................................... $ 219,107,398 $ 241,119,678
============= =============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
9
BOULDER TOTAL RETURN FUND, INC.
FINANCIAL HIGHLIGHTS
FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH YEAR.
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.
YEAR ENDED NOVEMBER 30,
------------------------------------------------------------
2002 2001 2000 1999 1998
--------- --------- --------- --------- ---------
OPERATING PERFORMANCE:
Net asset value, beginning of year................................ $ 17.36 $ 14.81 $ 13.32 $ 16.06 $ 16.33
--------- --------- --------- --------- ---------
Net investment income............................................. 0.49 0.63 0.75 1.29 1.33
Net realized and unrealized gain/loss on investments.............. (2.51) 2.35 1.50 (1.93) 0.13
--------- --------- --------- --------- ---------
Total from investment operations.................................. (2.02) 2.98 2.25 (0.64) 1.46
--------- --------- --------- --------- ---------
DISTRIBUTIONS: PREFERRED STOCK
Dividends paid from net investment income to
MMP* Shareholders............................................. -- -- (0.42) (0.35) (0.25)
Distributions paid from net realized capital gains to
MMP* Shareholders ............................................ -- -- -- (0.03) (0.14)
Dividends paid from net investment income to
AMP** Shareholders ........................................... (0.16) (0.40) (0.13) -- --
Change in accumulated undeclared dividends on
MMP*/AMP** Shareholders ...................................... -- 0.02 0.04 (0.06)+ 0.02
--------- --------- --------- --------- ---------
Net Increase/Decrease from operations applicable to
common shares................................................. (2.18) 2.60 1.74 (1.08) 1.09
--------- --------- --------- --------- ---------
DISTRIBUTIONS: COMMON SHARES
Dividends paid from net investment income to Common
Shareholders ................................................. (0.14) (0.05) (0.19) (1.02) (1.07)
Distributions paid from net realized capital gains to
Common Shareholders .......................................... -- -- -- (0.64) (0.29)
--------- --------- --------- --------- ---------
Net Increase/Decrease in Common Net Asset Value................... (2.32) 2.55 1.55 (2.74) (0.27)
--------- --------- --------- --------- ---------
Costs of AMPs** Stock issued (Note 5)......................... -- -- (0.06) -- --
--------- --------- --------- --------- ---------
Net asset value, end of year.................................. $ 15.04 $ 17.36 $ 14.81 $ 13.32+ $ 16.06
========= ========= ========= ========= =========
Market value, end of year..................................... $ 12.79 $ 16.05 $ 12.00 $ 10.19 $ 13.63
========= ========= ========= ========= =========
Total investment return based on net asset value(a)........... (12.62)% 17.68% 13.27% (5.17)% 7.65%
========= ========= ========= ========= =========
Total investment return based on market value(a).............. (19.62)% 34.27% 20.00% (14.51)% (4.55)%
========= ========= ========= ========= =========
RATIOS TO AVERAGE NET ASSETS AVAILABLE
TO COMMON STOCK SHAREHOLDERS:
Operating expenses ........................................ 2.42% 2.47% 2.55% 1.97% 1.83%
Net investment income (b).................................. 1.85% 1.52% 1.82% 6.08% 5.92%
SUPPLEMENTAL DATA:
Portfolio turnover rate.................................... 38% 16% 85% 69% 86%
Net assets for common stock shareholders,
end of year (in 000's) (Note 5)........................ $141,607 $163,493 $ 139,488 $125,415 $151,215
-------------------------------------
Ratio of operating expenses to Total Average Net Assets
including MMP*/AMP** ........................................ 1.65% 1.66% 1.57% 1.26% 1.22%
* Money Market Cumulative Preferred(TM) Stock.
** Taxable Auction Market Preferred Stock.
(a) Assumes reinvestment of distributions at the price obtained by the Fund's Dividend Reinvestment Plan.
(b) The net investment income ratios reflect income net of operating expenses and payments and change in undeclared dividends to
MMP*/AMP** Shareholders.
+ Includes effect of additional distribution available to MMP* Shareholders ($0.04 per Common share).
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
10
BOULDER TOTAL RETURN FUND, INC.
FINANCIAL HIGHLIGHTS--(CONTINUED)
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)
------------ --------- ------------- -------------
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
11/30/98.................. 775 295,263 100,000 100,000
---------------
(1) See Note 5.
(2) Excludes accumulated undeclared dividends.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
11
BOULDER TOTAL RETURN FUND, INC.
NOTES TO FINANCIAL STATEMENTS
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 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. If the Fund is subsequently informed that such distributions
received or a portion thereof are designated as returns of captial, the Fund
will reclassify such amounts from income and reduce the cost basis of such
securities.
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 possiblity 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 disributed 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.
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.
12
BOULDER TOTAL RETURN FUND, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
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.
Beginning February 1, 2002, 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.
Prior to February 1, 2002, SIA received a monthly fee equal to 65% of the fees
earned by the Advisers, and BIA received 35% 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.
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. Under the Co-Administration
Agreement, the Fund pays 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
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 $6,000 per annum, plus $4,000 for each in-person
meeting of the Board of Directors and $500 for each telephone meeting. In
addition, the Fund will 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 year ended
November 30, 2002, excluding short-term investments, aggregated $97,512,889 and
$86,816,826, respectively.
On November 30, 2002, aggregate gross unrealized appreciation for all
securities in which there is an excess of value over tax cost was $38,417,054
and aggregate gross unrealized depreciation for all securities in which there is
an excess of tax cost over value was $24,496,846.
4. COMMON STOCK
At November 30, 2002, 240,000,000 of $0.01 par value Common Stock were
authorized. There were no Common Stock transactions for the year ended November
30, 2002 and for the year ended November 30, 2001.
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 was 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 $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.
13
BOULDER TOTAL RETURN FUND, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
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 November 30, 2002, 775 shares of Taxable Auction Market Preferred Stock
were outstanding at the annual rate of 2.00%. 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.
Under Emerging Issues Task Force (EITF) promulgating Topic D-98,
CLASSIFICATION AND MEASUREMENT OF REDEEMABLE SECURITIES, which was issed on July
19, 2001, preferred securities that are redeemable for cash or other assets are
to be classified outside of permanent equity to the extent that the redemption
is at a fixed or determinable price and at the option of the holder or upon the
occurance of an event that is not solely within the control of the issuer.
Subject to the guidance of the EITF, the Fund's Taxable Auction Market Preferred
Stock, which was previously classified as a component of net assets, has been
reclassified outside of permanent equity (net assets available to common stock)
in the accompanying financial statements. Prior year amounts have also been
classified to conform with this presentation. The impact of this
reclassification creates no change to the net assets available to common
shareholders.
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 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 November 30,
2002, 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 asset 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 November 30, 2002, trusts and other entities affiliated with the Horejsi
family owned 3,939,735 shares of Common Stock of the Fund, representing
approximately 41.84% 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's assets.
14
BOULDER TOTAL RETURN FUND, INC.
NOTES TO FINANCIAL STATEMENTS--(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.
9. TAX BASIS DISTRIBUTIONS
Income distributions and capital gain distributions are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. The character of distributions paid on a tax basis during
2002 and 2001 is as follows:
2002 2001
---- ----
Distributions paid from:
Ordinary Income .................. $2,947,032 $4,227,961
Short-Term Capital Gain .......... -- --
Long-Term Capital Gain ........... -- --
---------- ----------
$2,947,032 $4,227,961
========== ==========
As of November 30, 2002, the components of distributable earnings on a tax
basis were as follows:
Ordinary Income ..................................... $ 202,855
Unrealized Appreciation ............................. 13,920,208
-----------
$14,123,063
===========
The Fund had available for tax basis distributions purposes accumulated
capital and other losses of $1,240,686, which will expire on 11/30/08.
Net investment income and realized gain and loss for federal income tax
purposes differ from that reported in the financial statements because of
permanent and temporary book and tax differences. These differences are
primarily related to differing treatment of long-term capital gains dividends
and excess ordinary distributions received from Real Estate Investment Trusts.
Permanent book and tax basis differences of $(2,117,386) and $2,117,386 were
reclassified at November 30, 2002 between undistributed net investment income
and accumulated net realized loss on investments, respectively, for the Boulder
Total Return Fund, Inc.
ADDITIONAL INFORMATION (UNAUDITED)
AUTOMATIC DIVIDEND REINVESTMENT PLAN
On July 22, 2002, the Board of Directors determined to eliminate the Fund's
Automatic Dividend Reinvestment Plan.
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.
15
BOULDER TOTAL RETURN FUND, INC.
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors and Shareholders
Boulder Total Return Fund, Inc.
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments of the Boulder Total Return Fund, Inc., as of
November 30, 2002, and the related statement of operations for the year then
ended, the statements of changes in net assets and financial highlights for each
of the years in the two-year period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The financial highlights for each of
the years in the three year-period ended November 30, 2000 were audited by other
auditors whose report dated January 12, 2001 expressed an unqualified opinion on
those financial highlights.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of November 30, 2002 by correspondence with the custodian.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Boulder Total Return Fund, Inc. as of November 30, 2002, and the results of its
operations, changes in its net assets, and financial highlights for each of the
years described above in conformity with accounting principles generally
accepted in the United States of America.
[GRAPHIC OMITTED]
KPMG LLP LOGO
Boston, Massachusetts
December 31, 2002
16
BOULDER TOTAL RETURN FUND, INC.
INFORMATION ABOUT DIRECTORS AND OFFICERS (UNAUDITED)
Set forth in the following table is information about the Directors of the Fund,
together with their address, age, position with the Fund, term of office, length
of time served and principal occupation during the last five years.
NAME, ADDRESS*, AGE POSITION, LENGTH OF PRINCIPAL OCCUPATION(S) AND OTHER NUMBER OF
TERM SERVED, AND DIRECTORSHIPS HELD FUNDS IN FUND
TERM OF OFFICE DURING THE PAST FIVE YEARS COMPLEX
OVERSEEN BY
DIRECTOR
---------------------------------------------------------------------------------------------------------------------------
DISINTERESTED DIRECTORS
---------------------------------------------------------------------------------------------------------------------------
ALFRED G. ALDRIDGE, JR. Director of the Fund Retired; from 1982-2002, Sales Manager of 2
BRIG. GEN. (RETIRED) since 1999. Current Shamrock Foods Company; Director of the
CAL. AIR NATIONAL GUARD term expires April Fiesta Bowl, Tempe, AZ; Director, Boulder
Age: 65 2003 Growth & Income Fund, Inc.,
since Jan. 2002.
---------------------------------------------------------------------------------------------------------------------------
RICHARD I. BARR Director of the Fund Retired; from 1963-2001, Manager of 2
Age: 64 since 1999. Current Advantage Sales and Marketing, Inc.; Director,
term expires April First Financial Fund, Inc., since 2001; Director,
2005 Boulder Growth & Income Fund, Inc.,
since Jan. 2002.
---------------------------------------------------------------------------------------------------------------------------
JOEL W. LOONEY Director of the Fund Partner, Financial Management Group, LLC since 2
Age: 40 since January, 2001. July 1999; Director, Boulder Growth & Income
Current term expires Fund, Inc. since Jan. 2002.
2004
---------------------------------------------------------------------------------------------------------------------------
INTERESTED DIRECTORS**
---------------------------------------------------------------------------------------------------------------------------
SUSAN L. CICIORA Director of the Fund Owner, Superior Interiors (interior design for 2
Age: 38 since November 2001. custom homes) since 1995; Corporate Secretary,
Current term expires Ciciora Custom Builders, LLC since 1995;
April 2004 Trustee of the Brown Trust and the EH Trust;
Director, Boulder Growth & Income Fund, Inc.
since Jan. 2002.
---------------------------------------------------------------------------------------------------------------------------
STEPHEN C. MILLER Director and Chairman President and General Counsel of BIA; Manager, 2
Age: 50 of the Board since Fund Administrative Services, LLC ("FAS"); Vice
1999. President of the President of SIA; Director, President and
Fund. Current term as Chairman of the Board of Boulder Growth &
Director expires April Income Fund, Inc., since Jan. 2002; President
2005 and General Counsel, Horejsi, Inc. (liquidated in
1999); General Counsel, Brown Welding Supply, LLC
(sold in 1999); Of Counsel, Krassa & Miller, LLC
since 1991.
---------------------------------------------------------------------------------------------------------------------------
* Unless otherwise specified, the Directors' respective addresses are c/o Boulder Total Return Fund, Inc., 1680 38th
Street, Suite 800, Boulder, Colorado 80301.
** Mr. Miller is an "interested person" because he is an officer of BIA and SIA, the Fund's investment co-advisers.
Ms. Ciciora is an "interested person" as a result of the extent of her beneficial ownership of Fund shares and by
virtue of her indirect beneficial ownership of BIA and FAS.
17
BOULDER TOTAL RETURN FUND, INC.
INFORMATION ABOUT DIRECTORS AND OFFICERS (UNAUDITED) (CONTINUED)
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 28, 2002. 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.
NAME, ADDRESS, AGE POSITION, LENGTH OF PRINCIPAL OCCUPATION(S) AND OTHER DIRECTORSHIPS
TERM SERVED, AND HELD
TERM OF OFFICE DURING THE PAST FIVE YEARS
-----------------------------------------------------------------------------------------------------------------------------------
CARL D. JOHNS Chief Financial Officer, Vice President and Treasurer of BIA and Assistant
1680 38th Street, Chief Accounting Manager of FAS, since April, 1999; Chief
Suite 800 Officer, Vice President Financial Officer, Chief Accounting Officer, Vice
Boulder, CO 80301 and Treasurer since President and Treasurer, Boulder Growth &
Age: 39 1999. Appointed Income Fund, Inc. since Jan. 2002; Employee of
annually. 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 J. KELLEY Secretary since 2000. Secretary, Boulder Growth & Income Fund, Inc.,
1680 38th Street, Appointed annually. since Jan. 2002; employee of FAS since 1999;
Suite 800 Assistant Secretary and Assistant Treasurer of
Boulder, CO 80301 various Horejsi Affiliates.
Age: 45
-----------------------------------------------------------------------------------------------------------------------------------
NICOLE L. MURPHEY Assistant Secretary Assistant Secretary, Boulder Growth & Income
1680 38th Street, since 2000. Fund, Inc., since Jan. 2002; employee of FAS
Suite 800 Appointed annually. since July 1999.
Boulder, CO 80301
Age: 25
-----------------------------------------------------------------------------------------------------------------------------------
18
BOULDER TOTAL RETURN FUND, INC.
P.O. Box 43027
Providence, RI 02940-3027
[GRAPHIC OMITTED]
MOUNTAIN ART
BOULDER
TOTAL RETURN
FUND, INC.
--------------------------------------------------------------------------------
ANNUAL REPORT
NOVEMBER 30, 2002
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.