|
BOULDER FUNDS
[Missing Graphic Reference]
|
BOULDER
TOTAL RETURN FUND, INC.
2344
Spruce Street, Suite A
Boulder,
Colorado 80302
www.boulderfunds.net
|
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To Be
Held on May 3, 2010
To the
Stockholders:
Notice is hereby given that the Annual
Meeting of Stockholders of Boulder Total Return Fund, Inc., a Maryland
corporation (the “Fund”), will be held at the St. Julien Hotel, 900 Walnut
Street, Boulder, Colorado 80302 at 9:30 a.m., Mountain Daylight Time (local
time), on May 3, 2010, to consider and vote on the following Proposals, all of
which are more fully described in the accompanying Proxy Statement:
|
1.
|
The
election of two Class I Directors of the Fund (Proposal
1);
|
|
2.
|
To
consider and vote upon, if properly presented at the meeting, a
stockholder proposal with respect to amending the Fund’s bylaws (Proposal
2); and
|
|
3.
|
To
transact such other business as may properly come before the Meeting or
any adjournments and postponements
thereof.
|
This
meeting is extremely important. A dissident shareholder,
Gramercy Global Optimization Fund, has made a stockholder proposal, included in
this proxy statement as Proposal 2, which your Board of Directors strongly
opposes. Proposal 2 asks stockholders to approve an amendment to the
Fund’s bylaws which would require the Board of Directors, subject to their
fiduciary duty, to take action to terminate the Fund’s advisers if it is
determined by a court or regulatory agency that the Fund has overvalued a
threshold amount of the auction rate preferred securities it holds by more than
5%.
The
Board of Directors unanimously recommends that stockholders vote against
Proposal 2.
The Board of Directors
of the Fund has fixed the close of business on April 1, 2010 as the record date
for the determination of stockholders of the Fund entitled to notice of and to
vote at the Annual Meeting and any postponements or adjournments
thereof. This Proxy Statement, Notice of Annual Meeting, and proxy
card are first being mailed to stockholders on or about April 9,
2010.
By Order of the Board of
Directors,
/s/ Stephanie Kelley
Stephanie
Kelley,
Secretary
April 7,
2010
STOCKHOLDERS
ARE REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD OR AUTHORIZE
PROXIES VIA TELEPHONE OR THE INTERNET. THE PROXY CARD SHOULD BE
RETURNED IN THE ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE
UNITED STATES. INSTRUCTIONS FOR THE PROPER EXECUTION OF PROXIES ARE
SET FORTH ON THE INSIDE COVER.
INSTRUCTIONS
FOR SIGNING PROXY CARDS
The following general rules for signing
proxy cards may be of assistance to you and may avoid the time and expense to
the Fund involved in validating your vote if you fail to sign your proxy card
properly.
1. Individual
Accounts: Sign your name exactly as it appears in the registration on
the proxy card.
2. Joint
Accounts: Either party may sign, but the name of the party signing
should conform exactly to a name shown in the registration.
3. All Other
Accounts: The capacity of the individual signing the proxy card
should be indicated unless it is reflected in the form of
registration. For example:
|
Registration
|
Valid Signature
|
|
Corporate
Accounts
|
|
|
(1) ABC
Corp.
|
ABC
Corp., by [title of authorized officer]
|
|
(2) ABC
Corp., c/o John Doe Treasurer
|
John
Doe
|
|
(3) ABC
Corp. Profit Sharing Plan
|
John
Doe, Trustee
|
|
Trust
Accounts
|
|
|
(1) ABC
Trust
|
Jane
B. Doe, Trustee
|
|
(2) Jane
B. Doe, Trustee, u/t/d 12/28/78
|
Jane
B. Doe
|
|
Custodian
or Estate Accounts
|
|
|
(1) John
B. Smith, Cust.,
|
John
B. Smith
|
|
f/b/o
John B. Smith, Jr. UGMA
|
|
|
(2) John
B. Smith
|
John
B. Smith, Jr., Executor
|
|
BOULDER FUNDS
[Missing Graphic Reference]
|
BOULDER
TOTAL RETURN FUND, INC.
2344
Spruce Street, Suite A
Boulder,
Colorado 80302
www.boulderfunds.net
|
ANNUAL
MEETING OF STOCKHOLDERS
May 3,
2010
PROXY
STATEMENT
This
proxy statement (“Proxy Statement”) for Boulder Total Return Fund, Inc., a
Maryland corporation (“BTF” or the “Fund”), is furnished in connection with the
solicitation of proxies by the Fund’s Board of Directors (collectively, the
“Board” and individually, the “Directors”) for exercise at the Annual Meeting of
Stockholders of the Fund to be held on May 3, 2010, at 9:30 a.m., Mountain
Daylight Time (local time), at the St. Julien Hotel, 900 Walnut Street, Boulder,
Colorado 80302, and at any adjournments and postponements thereof (the
“Meeting”). A Notice of Annual Meeting of Stockholders and proxy card
accompany this Proxy Statement. This Proxy Statement, Notice of
Meeting and form of proxy are first being mailed to stockholders on April 9,
2010. Proxy solicitations may be made, beginning on or about April 9,
2010, primarily by mail, but proxy solicitations may also be made by telephone,
by Internet on the Fund’s website, email, facsimile or personal interviews
conducted by officers of the Fund and proxy solicitors engaged in the discretion
of the Fund. Any cost of proxy solicitation and expenses incurred in
connection with the preparation of this Proxy Statement and its enclosures will
be paid by the Fund. The Fund also will reimburse brokerage firms and
others for their expenses in forwarding solicitation material to the beneficial
owners of its shares. The Board has fixed the close of business on
April 1, 2010 as the record date (the “Record Date”) for the determination of
stockholders entitled to notice of and to vote at the Meeting and any
postponements or adjournments thereof.
The
Annual Report of the Fund, including audited financial statements for the fiscal
year ended November 30, 2009, has been mailed to
stockholders. Additional copies are available upon request, without
charge, by calling 1-800-331-1710. The report is also viewable online
at the Fund’s website at www.boulderfunds.net. The report is not to
be regarded as proxy solicitation material.
Boulder
Investment Advisers, L.L.C. (“BIA”), 2344 Spruce Street, Suite A, Boulder,
Colorado 80302 and Stewart Investment Advisers (“SIA”), Bellerive, Queen Street,
St. Peter, Barbados, currently serve as co-investment advisers to the
Fund. BIA and SIA are collectively referred to herein as the
“Advisers”. Fund Administrative Services, L.L.C., serves as
co-administrator to the Fund and is located at 2344 Spruce Street, Suite A,
Boulder, Colorado 80302. ALPS Fund Services, Inc. (“ALPS”) acts as
the co-administrator to the Fund and is located at 1290 Broadway, Suite 1100,
Denver, Colorado 80203. PNC Global Investment Servicing Inc. (“PNC”)
acts as the transfer agent to the Fund and is located at 4400 Computer Drive,
Westborough, Massachusetts 01581.
If the
enclosed proxy is properly executed and returned by May 3, 2010 in time to be
voted at the Meeting, the Shares (as defined below) represented thereby will be
voted in accordance with the instructions marked thereon. Unless
instructions to the contrary are marked thereon, a proxy will be voted FOR
Proposal 1, AGAINST Proposal 2, and in the discretion of the proxy holder on any
other matters that may properly come before the Meeting. Any
stockholder who has given a proxy has the right to revoke it at any time prior
to its exercise either by attending the Meeting and casting his or her votes in
person or by delivering a written revocation or a later-dated proxy to the
Fund’s Secretary at the above address prior to the date of the
Meeting.
A quorum
of the Fund’s stockholders is required for the conduct of business at the
Meeting. Under the bylaws of the Fund, a quorum is constituted by the
presence in person or by proxy of the holders of a majority of the votes
entitled to be cast (without regard to class) as of the Record
Date. Each of the outstanding Shares (as defined below) is entitled
to cast one vote. In the event that a quorum is not present at the
Meeting, the chairman of the meeting may adjourn the meeting to a date not more
than 120 days after the Record Date without notice other than an announcement at
the meeting. In the event that a quorum is present but sufficient
votes to approve one or more proposals are not received, the persons named as
proxies may propose and vote for one or more adjournments of the Meeting to
permit further solicitation of proxies with respect to any proposal that did not
receive the votes necessary for its passage. Any such adjournment
will require the affirmative vote of a majority of votes cast on the matter at
the Meeting. With respect to those proposals for which there is
represented a sufficient number of votes in favor, actions taken at the Meeting
will be approved and implemented irrespective of any adjournments with respect
to any other proposals.
If you
hold your common shares in "street name" (that is, through a broker or other
nominee), your broker or nominee will not vote your shares unless you provide
instructions to your broker or nominee on how to vote your shares. You should
instruct your broker or nominee how to vote your shares by following the
directions provided by your broker or nominee.
The Fund
has two classes of stock: common stock, par value $0.01 per share
(the “Common Stock”), and preferred stock, par value $0.01 per share (the
“Preferred Stock”), 10,000,000 shares of which have been designated as auction
market preferred stock or “AMPS” (the Common Stock and Preferred Stock are
collectively referred to herein as the “Shares”). On the Record Date,
the following number of Shares of the Fund were issued and
outstanding:
|
Common
Stock
Outstanding
|
Preferred
Stock
Outstanding
|
|
12,338,660
|
749
|
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS. The following
table sets forth certain information regarding the beneficial ownership of the
Shares as of the Record Date by each person who is known by the Fund to
beneficially own 5% or more of the Fund’s outstanding Common Stock.
|
Name
of Owner*
|
Number
of Shares
Directly
Owned
|
Number
of Shares
Beneficially
Owned
|
Percentage
Beneficially
Owned
|
|
Alaska
Trust Company*
|
---
|
---***
|
41.08%
|
|
Ernest
Horejsi Trust No. 1B*
|
2,987,504
|
2,987,504
|
24.21%
|
|
Lola
Brown Trust No. 1B*
|
1,482,101
|
1,482,101
|
12.01%
|
|
Evergreen
Atlantic, LLC**
|
343,749
|
343,749
|
2.79%
|
|
Stewart
West Indies Trust*
|
104,627
|
255,877
|
2.07%
|
|
Susan
L. Ciciora Trust*
|
72,176
|
175,301
|
1.42%
|
|
John
S. Horejsi Trust*
|
53,080
|
104,642
|
0.85%
|
|
Evergreen
Trust*
|
25,698
|
63,510
|
0.51%
|
|
Aggregate
Shares Owned by Horejsi Affiliates (defined below)
|
5,068,935
|
5,068,935
|
41.08%
|
* The
address of each listed Trust is c/o Alaska Trust Company 1029 West Third Avenue,
Suite 400, Anchorage, AK 99501.
**The
address of Evergreen Atlantic, LLC is 2344 Spruce Street, Suite A, Boulder, CO
80302.
*** Alaska Trust Company
(“ATC”) serves as a
trustee or co-trustee for the Ernest Horejsi Trust No. 1B (“EH Trust”), Lola Brown Trust
No. 1B (“Lola Trust”),
Stewart West Indies Trust (“SWIT”), Susan L. Ciciora Trust
(“SLC Trust”), John S. Horejsi Trust
(“JSH Trust”) and the Evergreen
Trust (“Evergreen Trust”) (collectively, the
“Horejsi Trusts”). The members of
Evergreen Atlantic LLC are Evergreen Trust, SLC Trust, JSH Trust and SWIT with
ownership percentages, respectively, of 11%, 30%, 15%, and 44%. ATC is a trust
company organized under the laws of Alaska; 98% of its outstanding shares are
owned by SWIT, an irrevocable trust organized by Stewart R. Horejsi for the
benefit of his issue; Douglas J. Blattmachr, President of ATC, owns 2% of the
outstanding shares of ATC. The Directors and officers of ATC are Larry L. Dunlap
(Director), Stephen C. Miller (Vice President and Director), Mr. Blattmachr
(President and Director), Brandon Cintula (Vice President and Director), and
Richard Thwaites (Secretary/Treasurer and Director). Together with Mr. Dunlap
and ATC, Ms. Ciciora is a trustee of the EH Trust and Lola Trust. Ms. Ciciora is
a discretionary beneficiary under the EH Trust, Lola Trust, SWIT, JSH Trust and
Evergreen Trust. John Horejsi is a discretionary beneficiary under
the EH Trust, Lola Trust, SWIT, SLC Trust and Evergreen Trust. Ms.
Ciciora and Mr. Horejsi are Directors of the Fund. ATC, Mr. Miller,
and Mr. Dunlap are trustees to the Evergreen Trust.
The
following table sets forth certain information regarding the beneficial
ownership of the Preferred Stock as of the Record Date by each person who is
known by the Fund to beneficially own 5% or more of such outstanding Preferred
Stock.
|
Name
of Owner
|
Number
of Shares
Directly
Owned
|
Number
of Shares
Beneficially
Owned
|
Percentage
Beneficially
Owned
|
|
Bank
of America Corporation, Merrill Lynch, Pierce, Fenner &
Smith Incorporated and Blue Ridge Investments, L.L.C.
|
---
|
440‡
|
58.75%‡
|
‡ As
stated in Schedule 13G Amendment No. 2 filed with the Securities and Exchange
Commission on March 12, 2010.
__________________________
The
Horejsi Trusts and ATC, as well as other Horejsi affiliated entities are
collectively referred to herein as the
“Horejsi
Affiliates”. Information as to beneficial ownership in the previous
paragraphs has been obtained from a representative of the beneficial owners; all
other information as to beneficial ownership is based on reports filed with the
Securities and Exchange Commission (the “SEC”) by such beneficial
owners.
As of the
Record Date, Cede & Co., a nominee partnership of the Depository Trust
Company, held of record, but not beneficially, 12,293,270 shares or 99.63% of
Common Stock outstanding and 749 shares or 100% of the Preferred Stock
outstanding.
As of the
Record Date, the executive officers and directors of the Fund, as a group, owned
5,095,537 shares of Common Stock (this amount includes the aggregate shares of
Common Stock owned by the Horejsi Affiliates set forth above) and 0 shares of
Preferred Stock, representing 41.30% of Common Stock outstanding and 0% of the
Preferred Stock.
In order
that your Shares may be represented at the Meeting, you are requested to execute
and return the enclosed proxy authorizing the proxy holders to vote on the
following matters:
PROPOSAL
1
ELECTION
OF DIRECTORS OF THE FUND
The Board
is divided into three classes (Class I, Class II, and Class III), each class
having a term of three years. Each year the term of one class expires
and the successor or successors elected to such class will serve until the
Fund’s annual meeting of stockholders in the third succeeding year and until
their successors are duly elected and qualify. No Class II or
Class III Directors are up for election at this Meeting.
The Board
has nominated John S. Horejsi and Dean L. Jacobson to stand for election as
Class I Directors to serve until the Fund’s 2013 Annual Meeting of Stockholders
and until their successors are duly elected and qualify.
Under the
Fund’s charter, Mr. Horejsi is nominated for a seat voted on by the Preferred
Stockholders and Dr. Jacobson is nominated for a position voted on by the Common
Stockholders and Preferred Stockholders voting together.
Following
the unanimous recommendation of its Nominating Committee, the Board unanimously
recommends a vote FOR both Mr. Horejsi and Dr. Jacobson because they each have
significant experience as directors of closed-end investment companies and, in
particular, the Fund, and have dealt skillfully with a broad range of complex
issues vis-à-vis the Fund and its affiliated investment companies, including,
most recently, the financial crisis which occurred during late
2008.
INFORMATION ABOUT DIRECTORS AND
OFFICERS. Set forth in the
following table is information about the Board of Directors:
|
Name
|
Age
|
Director
Since
|
Current
Term Expires
|
Position
|
|
Independent
Directors
|
|
|
|
|
|
Joel
W. Looney
|
48
|
2001
|
2011
|
Director
|
|
Richard
I. Barr
|
72
|
1999
|
2012
|
Chairman
|
|
Dr.
Dean Jacobson
|
71
|
2004
|
Current
nominee. If elected, term expires in 2013.
|
Director
|
|
Interested
Directors
|
|
|
|
|
|
Susan
L. Ciciora
|
45
|
2001
|
2012
|
Director
|
|
John
S. Horejsi
|
42
|
2006
|
Current
nominee. If elected, term expires in 2013.
|
Director
|
INFORMATION
ABOUT THE DIRECTORS’ QUALIFICATIONS, EXPERIENCE, ATTRIBUTES AND
SKILLS.
The Board
believes that each of the Directors have the qualifications, experience,
attributes and skills appropriate to their continued service as Directors of the
Fund in light of its business and structure. Each Director has
substantial business and professional background and/or board experience that
indicate their ability to critically review, evaluate and respond appropriately
to information provided to them. Certain of these business and
professional experiences are set forth in detail in the narratives
below. In addition, each Director has served on boards for investment
companies and organizations other than the Fund, as well as having served on the
Board of the Fund for a number of years. They therefore have
substantial board experience and, in their service to the Fund, have gained
substantial insight as to the operation of the Fund. The Board
annually conducts a “self-assessment” wherein the effectiveness of the Board and
individual Directors is reviewed.
Below is
information concerning each particular Director and certain of their pertinent
qualifications, experience, attributes and skills. The information
provided below, and in the chart above, is not all-inclusive. Many of
the Directors’ attributes involve intangible elements, such as intelligence,
work and investment ethic, diversity in terms of background or experiences, an
appreciation of and belief in the long-term investment approach of the Fund, the
ability to work together collaboratively, the ability to communicate
effectively, the ability to exercise judgment, to ask incisive questions, to
manage people and problems or to develop solutions. In conducting its
annual self-assessment, the Board has determined that the Directors have the
appropriate qualifications, skills, attributes and experience to continue to
serve effectively as Directors of the Fund.
The
Directors’ respective addresses are c/o Boulder Total Return Fund, Inc., 2344
Spruce Street, Suite A, Boulder, Colorado 80302. Mr. Horejsi and Ms.
Ciciora are each considered “interested persons” because of the extent of their
beneficial ownership of Fund shares and by virtue of their indirect beneficial
ownership of BIA and FAS. The following sets forth the backgrounds
and business experience of the Directors:
Joel W. Looney,
Director. Mr. Looney joined the Board in 2001 and sits on the
boards of three other closed-end investment companies affiliated with the Fund –
the Boulder Growth & Income Fund (“BIF”) since 2002, The Denali Fund (“DNY”)
since 2007, and First Opportunity Fund since 2003 (“FF”; together, the
“Affiliated Funds”). Mr. Looney has significant financial, accounting
and investment knowledge and experience. He holds a Certified
Financial Planner (“CFP”) designation and, since 1999, has been a principal and
partner with Financial Management Group, LLC, an investment management firm in
Salina, KS (“FMG”). Mr. Looney is a registered representative with
VSR Financial Services, Inc. of Overland Park, Kansas and holds FINRA-approved
Series 7, Series 63 Uniform State Law and Series 65 Uniform Investment Adviser
Law certifications. Prior to his current position with FMG, Mr.
Looney was vice president and CFO for Bethany College in Lindsborg, Kansas (1995
to 1999) and also served as vice president and CFO for St. John’s Military
School in Salina, Kansas (1986 to1995). From the late 1980’s until
January, 2001, Mr. Looney served, without compensation, as one of three trustees
of the Mildred Horejsi Trust, an affiliate of the EH Trust. Mr.
Looney holds a B.S. from Marymount College and an MBA from Kansas State
University. The Board believes that Mr. Looney’s past experience as a
chief financial officer and his ongoing experience in the investment management
industry uniquely qualifies him as a Director and, in particular, as chairman of
the Audit Committee and the Fund’s “financial expert” (as defined under the
Securities and Exchange Commission's Regulation S-K, Item
407(d)). In addition, since joining the Board in 2001,
Mr. Looney has gained substantial board and closed-end investment company
experience and, together with the other Directors, has dealt skillfully with a
broad range of complex issues vis-à-vis the Fund and Affiliated
Funds.
Richard I. Barr, Director
and Chairman of the Board. Mr. Barr joined the Board in 1999
and sits on the boards of each of the three Affiliated Funds; BIF since 2002,
DNY since 2007, and FF since 2001. Mr. Barr has extensive business,
executive and board experience including positions as president and director of
Advantage Sales and Marketing (1996 to 2001), president and CEO of CBS Marketing
(1963 to 1996), member of the board of directors (and National Chairman) for the
Association of Sales and Marketing Companies (formerly the National Food Brokers
Association), president of the Arizona Food Brokers Association, and advisory
board member for various food manufacturers, including H.J. Heinz, ConAgra,
Kraft Foods, and M&M Mars. In addition to these professional
positions and experience, Mr. Barr has served in a number of leadership roles
with various charitable or other non-profit organizations, including as member
of the board of directors of Valley Big Brothers/Big Sisters, member of the
board of advisers for University of Kansas Business School, and member of the
board of directors for St. Mary’s Food Bank. Prior to joining the
Board, Mr. Barr amassed substantial and diverse business, executive management
and board experience in a broad range of commercial and non-profit
organizations. The Board believes that given his diverse background
and experience, together with over 10 years of closed-end board experience, Mr.
Barr is uniquely qualified to deal with the complexity and assortment of issues
confronting closed-end boards. Since joining the Board in 1999, Mr.
Barr has gained substantial board and closed-end investment company experience
and, together with the other Directors, has dealt skillfully with a broad range
of complex issues vis-à-vis the Fund and Affiliated Funds.
Dr. Dean Jacobson,
Director. Dr. Jacobson joined the Board in 2004 and sits on
the boards of each of the three Affiliated Funds; BIF since 2006, DNY since
2007, and FF since 2003. He has significant executive and business
experience and extensive academic qualifications. Since 1985, Dr.
Jacobson has been president and CEO of Forensic Engineering, Inc., a consulting
engineering firm providing scientific and technical expertise in a number of
areas where discovery related to property damage and/or personal injury is
necessary (e.g., accident reconstruction, failure and design analysis of
products, animation and simulation of fires, explosions and mechanical system
functions). He sits on the boards of directors of Southwest Mobile Storage Inc.
(1995 to Present), Arizona State University Foundation, (1999 to 2009) and
Arizona State University Sun Angel Foundation (past chairman) (1995 to
Present). He is a Professor Emeritus at Arizona State University
(“ASU”) and held a number of faculty and advisory positions at ASU between 1971
and 1997, including director of the Science and Engineering of Materials Ph.D.
program and tenured professor of Engineering, and he has also served as a
professor and/or research assistant at the University of California at Los
Angeles (“UCLA”) (1964 to 1969) and the University of Notre Dame (“Notre Dame”)
(1957 to 1963). Dr. Jacobson is a renowned expert in business
engineering processes and has published over 130 scholarly and peer-reviewed
research articles in numerous academic, research and business journals and
publications. He holds two patents and a number of professional and
business designations. He holds a B.S. and an M.S. from Notre Dame,
and a Ph.D. from UCLA. In addition to his substantial academic and
business experience, the Board believes that Dr. Jacobson brings to the Board a
strong intellect and exceptional and proven analytical skills. His
forensics engineering and consulting business exposes him to a diversity of
complicated issues requiring him to effectively analyze highly technical
systems, formulate complicated opinions and articulate convincing conclusions,
the same set of skills required to be an effective member of the board of
directors of a public company. The Board believes that Dr. Jacobson’s
intellect and critical thinking add an important analytical dimension to the
Board. In addition, since joining the board of directors of FF in
2003, Dr. Jacobson has gained substantial board and closed-end investment
company experience and, together with the other Directors, has dealt skillfully
with a broad range of complex issues vis-à-vis the Fund and Affiliated
Funds.
Susan L. Ciciora,
Director. Ms. Ciciora joined the Board in 2001 and sits on the
boards of each of the three Affiliated Funds; BIF since 2006, DNY since 2007 and
FF since 2003. She has extensive board experience as one of three
trustees of the Lola Trust since 1994 and the EH Trust since
1992. Ms. Ciciora has other business experience, including various
executive positions with a mid-west welding supply company and a custom home
construction company. She also has served as a director of the
Horejsi Charitable Foundation, Inc. (the “Foundation”) since
1997. She holds a B.S. from the University of Kansas. Ms.
Ciciora is Stewart Horejsi’s daughter. As a trustee and beneficiary
under the Brown Trust and Ernest Trust, the Fund’s largest stockholders, Ms.
Ciciora has a vested interest in ensuring that the Fund’s investment ideals are
and continue to be followed. Ms. Ciciora sits on the board of
trustees of the Foundation, the Brown Trust and Ernest Trust and, in such
capacity and in her prior business experience, has been and continues to be
exposed to complex financial, business, taxation and investment matters. In
addition, since joining the Board in 2001, Ms. Ciciora has gained substantial
board and closed-end investment company experience and, together with the other
Directors, has dealt skillfully with a broad range of complex issues vis-à-vis
the Fund and Affiliated Funds.
John S. Horejsi,
Director. Mr. Horejsi joined the Board in 2006 and sits on the
boards of each of the three Affiliated Funds; BIF since 2004, FF since 2006 and
DNY since 2007. Mr. Horejsi has both executive and business
experience. He has been involved in a number of business ventures,
including as manager of a record label and music production company, various
positions with a mid-west regional welding supply business and as part owner and
driver for an automobile racing team. Mr. Horejsi also has board
experience outside of the Funds as a director of the Foundation, (since
1997). Mr. Horejsi previously held a commercial real estate license
in California. Mr. Horejsi holds a B.S. from the University of
Kansas. Mr. Horejsi is Stewart Horejsi’s son and, like his sister, is
a beneficiary under the Brown Trust and Ernest Trust. Accordingly,
Mr. Horejsi has a vested interest in making sure the Fund’s investment ideals
are and continue to be followed. Mr. Horejsi has been involved in a
variety of business interests and, as a member of the board of trustees of the
Foundation and another Horejsi family trust, has been and continues to be
exposed to complex financial, business, taxation and investment matters. In
addition, since joining the Board of directors of BIF in 2004, Mr. Horejsi has
gained substantial board and closed-end investment company experience and,
together with the other Directors, has dealt skillfully with a broad range of
complex issues vis-à-vis the Fund and Affiliated Funds.
OFFICERS. The
names of the executive officers of the Fund are listed below. Each
officer was elected by the Board at a meeting held on April 24,
2009. Officers are elected annually and each officer will hold such
office until a successor has been elected by the Board.
Stephen C. Miller,
President. Age: 57. Mr. Miller is (and has been
since 1999) president of the Fund. He was a director from 1999 to
2004 and chief compliance officer from 2004 to 2007. He is also
president of and general counsel to BIA (since 1999); manager of Fund
Administrative Services, LLC (“FAS”) (since 1999); and vice president of SIA
(since 1999). Mr. Miller was a director of BIF from 2002 to 2004 and
is its current president (since 2002); a director and chairman of FF from 2003
to 2004 and is its current president (since 2003); and is DNY’s current
president (since 2007). Mr. Miller practiced law in the Denver office
of Kirkland & Ellis from 1987 to 1992 and started a private practice in
Boulder, Colorado in 1992. Mr. Miller became in-house counsel to the
Horejsi Affiliates in 1998 and has served in a number of executive management
capacities for those affiliates. Mr. Miller maintains his law firm,
Stephen C. Miller, P.C., and “of counsel” status with the law firm of Krassa
& Miller, LLC. Mr. Miller holds a B.S. from the University of
Georgia and a J.D. from the University of Denver.
Carl D. Johns, Vice
President. Age: 47. Mr. Johns is (and has been
since 1999) the Fund’s chief financial officer, chief accounting officer, vice
president and treasurer. He is also vice president and treasurer of
BIA (since 1999); assistant manager of FAS (since 1999); and vice president,
treasurer, chief financial officer and chief accounting officer of each of the
Affiliated Funds: BIF since 2002, FF since 2003 and DNY since
2007. Prior to his current position with BIA, he spent seven years
with the firm of Flaherty & Crumrine, a registered investment adviser in
Pasadena, California, which managed preferred stock portfolios. Mr.
Johns holds a B.S. in Mechanical Engineering and a M.S. in Finance, both from
the University of Colorado.
Joel L. Terwilliger, Chief
Compliance Officer. Age: 41. Mr.
Terwilliger is (and has been since 2007) the Fund’s chief compliance officer,
and associate general counsel since 2006. He is (and has been since
2007) the chief compliance officer for BIA, SIA, FAS and each of the Affiliated
Funds. Prior to his employment with FAS, Mr. Terwilliger was employed
from 2002 to 2006 as senior associate/legal counsel for Great West Life &
Annuity Insurance Company (“Great-West”) in Greenwood Village,
Colorado. At Great-West, Mr. Terwilliger served primarily as a
business and securities law attorney responsible for complex financial services
negotiations and contracts. Mr. Terwilliger holds a B.A., J.D., and
LL.M. from the University of Georgia.
Stephanie J. Kelley,
Secretary. Age: 53. Ms. Kelley is (and has been
since 2000) the Fund’s Secretary. She also serves as secretary for
each of the Affiliated Funds: BIF since 2002, FF since 2003 and DNY
since 2007. Ms Kelley also serves as assistant secretary and
assistant treasurer of various other entities affiliated with the Horejsi family
and has been an employee of FAS since 1999. Ms. Kelley holds a B.A.
and an MBA from the State University of New York.
Nicole L. Murphey, Vice
President and Assistant Secretary. Age: 33. Ms.
Murphey is (and has been since 2008) a vice president of the Fund, and assistant
secretary since 2000. She is also vice president (since 2008) of each
of the Affiliated Funds and assistant secretary for BIF since 2002, FF since
2003 and DNY since 2007. Ms. Murphey is also assistant treasurer of
FAS and has been an employee of FAS since 1999. Ms. Murphey holds a
B.A. from the University of Colorado.
Unless
otherwise specified, the Officers’ respective addresses are c/o Boulder Total
Return Fund, Inc., 2344 Spruce Street, Suite A, Boulder, Colorado
80302.
Set forth
in the following table are the nominees for election to the Board together with
the dollar range of equity securities beneficially owned by each Director as of
the Record Date, as well as the aggregate dollar range of the Fund’s equity
securities in all funds overseen in a family of investment companies (i.e.,
other funds managed by the Advisers).
|
OWNERSHIP
OF SECURITIES OF THE FUND BY DIRECTORS
|
|
Independent
Directors and Nominees
|
Dollar
Range of Equity Securities in the Fund
|
Aggregate
Dollar Range of Equity Securities in All Funds in the Family of Investment
Companies
|
|
Richard
I. Barr
|
$50,001
to $100,000
|
Over
$100,000
|
|
Joel
W. Looney
|
$
50,001 to $100,000
|
Over
$100,000
|
|
Dean
L. Jacobson
|
$10,001
to $50,000
|
$50,001
to $100,000
|
|
Interested
Directors and Nominees
|
|
|
|
John
S. Horejsi
|
Over
$100,000 †
|
Over
$100,000
|
|
Susan
L. Ciciora
|
Over
$100,000 †
|
Over
$100,000
|
† 5,068,935
Shares of Common Stock of the Fund are held by the Horejsi
Trusts. Ms. Ciciora is a trustee and beneficiary under the EH Trust
and Lola Trusts and John Horejsi is a beneficiary under the EH Trust and Lola
Trust. Accordingly, Ms. Ciciora and Mr. Horejsi may be deemed to have
indirect beneficial ownership of the Shares held by the EH Trust and the Lola
Trust. Ms. Ciciora directly owns 6,267 common shares of the
Fund. Mr. Horejsi does not directly own any shares of the
Fund.
___________________________
None of
the Independent Directors (i.e., directors who are not “interested persons” of
the Fund (as defined in the Investment Company Act of 1940, as amended (the
“Act”)) (the “Independent Directors”), or their family members owned
beneficially or of record any securities of the Advisers or any person directly
or indirectly controlling, controlled by, or under common control with the
Advisers.
DIRECTOR AND OFFICER
COMPENSATION. The following table sets forth certain
information regarding the compensation of the Directors for the fiscal year
ended November 30, 2009. No persons (other than the Independent
Directors, as set forth below) currently receive compensation from the Fund for
acting as a Director or officer. Directors and executive officers of the Fund do
not receive pension or retirement benefits from the Fund. Independent
Directors receive reimbursement for travel and other out-of-pocket expenses
incurred in connection with attending Board and Board committee
meetings.
|
Name
of Person and Position with the Fund
|
Aggregate
Compensation
from
the Fund Paid to Directors
|
Total
Compensation from the Fund and Fund Complex Paid to
Directors
|
|
Joel
W. Looney, Director
|
$28,500
|
$120,000
(4
funds)
|
|
Richard
I. Barr, Director and Chairman of the Board
|
$30,500
|
$103,000
(4
funds)
|
|
Dr.
Dean Jacobson, Director
|
$26,500
|
$99,000
(4
funds)
|
|
Susan
L. Ciciora, Director
|
$0
|
$0
|
|
John
S. Horejsi, Director
|
$0
|
$0
|
Each
Director of the Fund who was not a director, officer or employee of one of the
Advisers, or any of their affiliates, receives a fee of $8,000 per annum plus
$4,000 for each in-person meeting, $500 for each audit committee meeting and
$500 for each telephonic meeting of the Board. The chairman of the
Board and the chairman of the audit committee each receive an additional $1,000
per meeting. The Board held seven meetings (three of which were held
by telephone conference call) during the fiscal year ended November 30,
2009. Each Director currently serving in such capacity for the entire
fiscal year attended at least 75% of the meetings of Directors and any committee
of which he is a member. The aggregate remuneration paid to the
Directors of the Fund for acting as such during the fiscal year ended November
30, 2009 amounted to $85,500.
COMMITTEES
OF THE BOARD OF DIRECTORS
AUDIT COMMITTEE; REPORT OF AUDIT
COMMITTEE. The purpose of
the Fund’s audit committee (“Audit Committee”) is to assist Board’s oversight of
the integrity of the Fund’s financial statements, the Fund’s compliance with
legal and regulatory requirements, the independent accountants’ qualifications
and independence and the performance of the Fund’s independent
accountants. The Audit Committee reviews the scope and results of the
Fund’s annual audit with the Fund’s independent accountants and recommends the
engagement of such accountants. Management, however, is responsible
for the preparation, presentation and integrity of the Fund’s financial
statements, and the independent accountants are responsible for planning and
carrying out proper audits and reviews. The Board of Directors
adopted a written charter for the Audit Committee on January 23, 2002 and most
recently amended the Charter on January 29, 2010 to comply with recent changes
in corporate governance provisions affecting registered investment companies
generally and the Fund specifically. A copy of the Audit Committee
Charter is available on the Fund’s website at www.boulderfunds.net.
The Audit
Committee is composed entirely of the Fund’s Independent Directors, consisting
of Messrs. Barr, Jacobson and Looney. The Board has determined that
Joel Looney qualifies as an “audit committee financial expert,” as defined under
SEC Regulation S-K, Item 407(d). The Audit Committee is in compliance
with applicable rules of the listing requirements for closed-end fund audit
committees; including the requirement that all members of the audit committee be
“financially literate” and that at least one member of the audit committee have
“accounting or related financial management expertise,” as determined by the
Board. The Audit Committee is required to conduct its operations in
accordance with applicable requirements of the Sarbanes-Oxley Act and the Public
Company Accounting Oversight Board, and the members of the Audit Committee are
subject to the duty to exercise reasonable care in carrying out their
duties. Each member of the Audit Committee is independent, as that
term is defined by the NYSE Listing Standards. The Audit Committee
met twice during the fiscal year ended November 30, 2009.
In
connection with the audited financial statements as of and for the period ended
November 30, 2009, included in the Fund’s Annual Report for the period ended
November 30, 2009 (the “Annual Report”), at meetings held on January 25, 2010
and January 29, 2010, the Audit Committee considered and discussed the audited
financial statements with management and the independent accountants, and
discussed the audit of such financial statements with the independent
accountants.
The Audit
Committee has received the written disclosures and letter from the independent
accountants required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees) and has discussed with independent accountants their
independence. The Audit Committee discussed with the independent
accountants the accounting principles applied by the Fund and such other matters
brought to the attention of the Audit Committee by the independent accountants
required by Statement of Auditing Standards No. 114, The Auditor’s Communication with
Those Charged With Governance, effective December 15, 2006.
The
members of the Audit Committee are not professionally engaged in the practice of
auditing or accounting and are not employed by the Fund in any accounting,
financial management or internal control capacity. Moreover, the
Audit Committee relies on and makes no independent verification of the facts
presented to it or representations made by management or the independent
accountants. Accordingly, the Audit Committee’s oversight does not
provide an independent basis to determine that management has maintained
appropriate accounting and financial reporting principles and policies, or
internal controls and procedures, designed to assure compliance with accounting
standards and applicable laws and regulations. Furthermore, the Audit
Committee’s considerations and discussions referred to above do not provide
assurance that the audit of the Fund’s financial statements has been carried out
in accordance with generally accepted accounting standards or that the financial
statements are presented in accordance with generally accepted accounting
principles.
Based on
its consideration of the audited financial statements and the discussions
referred to above with management and the independent accountants and subject to
the limitation on the responsibilities and role of the Audit Committee set forth
in the charter and those discussed above, the Audit Committee recommended to the
Board that the audited financial statements be included in the Fund’s Annual
Report and be mailed to stockholders and filed with the SEC.
Submitted
by the Audit Committee of the Fund’s Board of Directors: Richard I. Barr, Dean
L. Jacobson, and Joel W. Looney.
NOMINATING COMMITTEE. The Board of
Directors has a nominating committee (the “Nominating Committee”) consisting of
Messrs. Looney, Jacobson and Barr, which is responsible for considering
candidates for election to the Board in the event a position is vacated or
created and also in certain circumstances where a person may be proposed as a
director-nominee by a stockholder. Each member of the Nominating
Committee is independent, as that term is defined by the NYSE Listing
Standards. The Nominating Committee met once during the fiscal year
ended November 30, 2009. The Board of Directors has adopted a
charter for the Nominating Committee that is available on the Fund’s website,
www.boulderfunds.net.
The
Nominating Committee does not have a formal process for identifying
candidates. The Nominating Committee takes into consideration such
factors as it deems appropriate when nominating candidates. These
factors may include investment philosophy, judgment, skill, diversity,
experience with investment companies and other organizations of comparable
purpose, complexity, size and subject to similar legal restrictions and
oversight, the interplay of the candidate’s experience with the experience of
other Board members, and the extent to which the candidate would be a desirable
addition to the Board and any committees thereof. The
Nominating Committee will consider all qualified candidates in the same
manner. The Nominating Committee may modify its policies and
procedures for director nominees and recommendations in response to changes in
the Fund’s circumstances, and as applicable legal or listing standards
change.
Although
the Nominating Committee does not have a formal policy with regard to the
consideration of diversity in identifying director candidates, as a matter of
practice the Committee typically considers the overall diversity of the Board’s
composition when identifying candidates. Specifically, the Nominating
Committee considers the diversity of skill sets desired among the Board members
in light of the Fund’s characteristics and circumstances and how those skill
sets might complement each other. The Nominating Committee also takes
into account the personal background of current and prospective Board members in
considering the composition of the Board. In addition, as part of its
annual self-evaluation, the directors have an opportunity to consider the
diversity of the Board, both in terms of skill sets and personal background, and
any observations made by the Board during the self-evaluation assist the
Nominating Committee in its decision making process.
The
Nominating Committee will consider director candidates recommended by
stockholders (if a vacancy were to exist) and submitted in accordance with
applicable law and procedures as described in this Proxy Statement (see “Submission of
Stockholder Proposals” below). In reviewing such stockholder
director-nominees, the Nominating Committee may generally rely on the provisions
set forth in Nominating Committee charter and other information as deemed
necessary to adjudge the appropriateness and character of such
director-nominee(s). Such recommendations should be forwarded to the
Secretary of the Fund.
The Fund
does not have a compensation committee.
ADDITIONAL
INFORMATION CONCERNING OUR BOARD OF DIRECTORS
COMMUNICATIONS WITH THE
BOARD. Stockholders who wish to send communications to the
Board should send them to the address of the Fund and to the attention of the
Board. All such communications will be directed to the Board’s
attention. The Fund does not have a formal policy regarding Board
member attendance at the Annual Meeting of Stockholders; however, all of the
Directors of the Fund, who were Directors at the time attended the April 24,
2009 Annual Meeting of Stockholders.
ROLE OF THE
BOARD. The business and affairs of the Fund are managed under
the direction of the Board. Like most closed-end investment
companies, the day-to-day responsibility for the management and operation of the
Fund is the responsibility of its various service providers, such as the
Advisers and their portfolio managers, and the Fund’s co-administrators,
custodian and transfer agent. The Board has elected various senior
individuals employed by certain of these service providers as officers of the
Fund, with responsibility to monitor and report to the Board on the Fund’s
operations. In conducting its oversight, the Board is provided
regular reports from the various officers and service providers regarding the
Fund’s operations. For example, the treasurer provides reports as to
financial reporting matters and portfolio managers report on the performance of
the Fund’s portfolios. The Board has appointed a chief compliance
officer who administers the Fund’s compliance program and regularly reports to
the Board as to compliance matters. Some of these reports are
provided as part of formal “Board Meetings” which typically are held quarterly,
in person, and involve the Board’s review of recent Fund
operations. From time to time, one or more members of the Board may
also meet with management in less formal settings, between formal “Board
Meetings”, to discuss various topics. In all cases, however, the role
of the Board and of any individual Director is one of oversight and not of
management of the day-to-day affairs of the Fund.
BOARD LEADERSHIP
STRUCTURE. The Board has determined that its leadership
structure is appropriate given the business and nature of the
Fund. It has established four standing committees, the Audit
Committee and Nominating Committee (each as described above) and a Pricing
Committee and an Executive Committee (defined below) (together, the
“Committees”). Sixty percent of the members of the Board are
Independent Directors, which are Directors not affiliated with the Advisers or
their affiliates, and each Committee is comprised entirely of Independent
Directors. The Board has determined that the Committees help ensure
that the Fund has effective and independent governance and
oversight. The Board also believes that the Committees and leadership
structure facilitate the orderly and efficient flow of information to the
Independent Directors from management, including the Advisers. Where
deemed appropriate, from time to time, the Board may appoint ad hoc
committees.
The
Board’s chairman is an Independent Director who acts as the primary liaison
between the Independent Directors and management (the “Independent
Chairman”). The Independent Chairman plays an important role in
setting the Board meeting agendas and may help identify matters of special
interest to be addressed by management with the Board. The
Independent Chairman also serves as chairman of the Executive Committee, which
is comprised of all of the Independent Directors (the “Executive
Committee”). The Executive Committee meets regularly, providing a
forum for the Independent Directors to meet in separate session, with or without
independent counsel, to deliberate on matters relevant to the
Fund. The Independent Directors have also engaged their own
independent counsel to advise them on matters relating to their responsibilities
in connection with the Fund. The Board reviews its structure
annually. The Board has determined that the structure of the
Independent Chairman and the function and composition of the Committees are
appropriate means to address any potential conflicts of interest that may
arise.
BOARD OVERSIGHT OF RISK
MANAGEMENT. As an integral part of its responsibility for
oversight of management of the Fund, the Board oversees risk management of the
Fund’s investment programs and business affairs. The Board has
emphasized to management and the Advisers the importance of maintaining vigorous
risk management policies and procedures. Oversight of the risk
management process is part of the Board’s general oversight of the Fund and its
service providers. The Board exercises oversight of the risk
management process primarily through the Audit Committee and Executive
Committee, and through oversight by the Board itself.
As part
of its oversight function, the Board of Directors receives various reports
relating to risk management. The Fund faces a number of risks, such
as investment risk, counterparty risk, valuation risk, reputational risk, risk
of operational failure or lack of business continuity, and legal, compliance and
regulatory risks. The process of “risk management” seeks to identify
and address “risks”, that is, events or circumstances that could have material
adverse effects on the business, operations, stockholder services, investment
performance or reputation of the Fund. Under the Board’s overarching
supervision, the Fund, management, Advisers, FAS and other service providers to
the Fund employ a variety of processes, procedures and controls to identify
various risks, to lessen the probability of their occurrence and/or to mitigate
the effects of such events or circumstances if they do
occur. Different processes, procedures and controls are employed by
different service providers and with respect to different types of
risks. Various personnel, including the Fund’s CCO as well as various
personnel of the Advisers and other service providers such as the Funds’
independent accountants, make periodic reports to the Board and appropriate
Committees with respect to various aspects of risk management, as well as events
and circumstances that have arisen and responses thereto. For
example, the audit committee meets regularly with the CCO to discuss compliance
and operational risks and with the Fund’s treasurer and independent public
accounting firm to discuss, among other things, the internal control structure
of the Fund’s financial reporting function. In addition, the full
Board regularly receives reports from the Advisers and their portfolio managers
as to investment risks. The Board recognizes that not all risks that
may affect the Fund can be identified, that it may not be practical or
cost-effective to eliminate or mitigate certain risks, that it may be necessary
to bear certain risks (such as investment-related risks) to achieve the Fund’s
goals, and that the processes, procedures and controls employed to address
certain risks may be limited in their effectiveness. Moreover,
reports received by the Directors as to risk management matters are typically
summaries of the relevant information. As a result of the foregoing
and other factors, the function of the Board with respect to risk management is
one of oversight and not of active involvement in, or coordination of,
day-to-day risk management activities for the Fund.
LEGAL PROCEEDINGS.
None of the Directors or executive officers of the Fund have
been involved in any of the following events during the past ten
years:
|
°
|
Any
bankruptcy petition filed by or against any business of which such person
was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that
time;
|
|
°
|
Any
conviction in a criminal proceeding or being subject to a pending criminal
proceeding (excluding traffic violations and other minor
offenses);
|
|
°
|
Any
judicial or administrative proceedings resulting from involvement in mail
or wire fraud or fraud in connection with any business
entity;
|
|
°
|
Any
judicial or administrative proceedings based on violations of federal or
state securities, commodities, banking or insurance laws and regulation
(including any settlement of such actions other than in connection with a
civil proceeding among private
parties);
|
|
°
|
Any
disciplinary sanctions or orders imposed by a stock, commodities or
derivatives exchange or other self-regulatory
organizations;
|
|
°
|
Subject
to any order, judgment, or decree, not subsequently reversed, suspended or
vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining, barring, suspending or otherwise limiting his
involvement in any type of business, securities or banking activities;
or
|
|
°
|
Found
by a court of competent jurisdiction (in a civil action), the SEC or the
Commodity Futures Trading Commission to have violated a federal or state
securities or commodities law, and the judgment has not been reversed,
suspended, or vacated.
|
Vote
Required. The election of Dr.
Jacobson as a Director of the Fund will require the affirmative vote of a
plurality of the votes cast by holders of the Common Stock and Preferred Stock,
voting together as a single class, at the Meeting in person or by proxy on
Proposal 1. The election of Mr. Horejsi as a Director of the Fund
will require the affirmative vote of a plurality of the votes cast by the
holders of the Preferred Stock at the Meeting in person or by proxy on Proposal
1.
THE
BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE ELECTION OF BOTH OF THE
NOMINEES.
PROPOSAL
2
STOCKHOLDER
PROPOSAL TO AMEND BYLAWS
The
following stockholder proposal has been submitted to the Fund for action at the
meeting by Gramercy Global Optimization Fund (“Gramercy”):
RESOLVED,
Pursuant to Article XIII of the amended and restated bylaws ("Bylaws") of
Boulder Total Return Fund, Inc. ("BTF"), the stockholders of BTF hereby amend
the Bylaws to add the following new Article XIV:
"ARTICLE
XIV VALUATION OF SECURITIES – If it shall be determined by a federal or state
court or regulatory authority that the Corporation, in connection with its
determination of net asset value as of any fiscal quarter in 2008 or 2009, has
overvalued an aggregate of no less than $1,000,000 of the auction rate preferred
securities it holds, by a margin of greater than 5%, then the Board shall,
subject to its fiduciary duties, terminate the Corporation's investment advisory
agreement as soon as reasonably practicable."
Supporting
Statement: Fellow stockholders, we have serious concerns with
the valuations BTF has been applying to the Auction Rate Preferred Securities
(“ARPS”) it holds, and believe these securities may have been significantly
over-valued by BTF. If BTF over-states the fair market value of the
ARPS,
|
·
|
Management
fees are improperly inflated because these fees are based on the value of
assets under management;
|
|
·
|
Reported
performance is misleadingly inflated because the price decline of these
assets is not accurately reflected in performance
calculations.
|
BTF
maintains a significant portion of its assets in ARPS. The market for
ARPS collapsed in early 2008, resulting in an extremely limited secondary
market. By BTF’s own admission, it is unclear when, or if, the market
for these securities will return. A holder who needed to sell these
securities would have been required to sell them at a significant
discount. By way of example, a closed-end fund disclosed in its 2008
annual report that it had repurchased shares of its ARPS at 65% of par in
October 2008.
Despite
this fundamental change in the market for ARPS in 2008 and 2009, BTF has
consistently valued these securities at or near face value, when, we believe, it
was widely known that their fair market valued were significantly less than face
value. If these securities were overvalued, then BTF’s purported
returns are materially overstated and BTF has significantly overpaid management
fees to BTF’s investment adviser. Following the February 2008 auction
failures and consequent market collapse of the ARPS market, BTF valued its ARPS
as follows:
|
Date
|
Principal
Amount ($)
|
Valuation
(%
of Face Value)
|
|
February
29, 2008
|
$12,250,000
|
100%
|
|
May
31, 2008
|
$12,250,000
|
100%
|
|
August
31, 2008
|
$12,250,000
|
100%
|
|
November
30, 2008
|
$6,250,000
|
100%
|
|
February
28, 2009
|
$6,150,000
|
98%
|
|
May
31, 2009
|
$2,100,000
|
98%
|
|
August
31, 2009
|
$ 200,000
|
98%
|
During
these periods, affiliates of BTF’s investment advisor sold 491,634 BTF common
shares. The proposed amendment would require the Board to terminate
the investment advisory agreement, subject to its fiduciary duties, as soon as
reasonably practicable, if it is determined by a federal or state court or
regulatory body that BTF has overpriced the ARPS it holds, as described in the
amendment.
Please
vote FOR this proposal and remind the Board that their fiduciary duty is owed
solely to stockholders..
MANAGEMENT'S STATEMENT IN OPPOSITION
TO STOCKHOLDER PROPOSAL:
The Board
of Directors unanimously recommends that stockholders vote AGAINST Proposal
2.
Here are
the facts: During the 18-months cited by Gramercy above, the Fund
liquidated $12.05
million par value of its ARPS for $12.05 million
through issuer redemptions. That’s 100 cents on every
dollar. 100 percent of par value. 100 percent of what the
Fund originally paid for the ARPS (not including the dividends received while
holding the ARPS). These redemptions liquidated approximately 98% of
the ARPS that the Fund held at the end of February 2008 when the ARPS market
froze. Issuers of ARPS effected these redemptions for various
reasons, including partial and complete de-leveraging, as well as for the
purpose of securing replacement leverage. During this period, all
closed-end fund ARPS redemptions occurred at par (i.e., 100 cents on the dollar
of face value) and occurred at a frequency far surpassing secondary market
transactions. By the end of 2008, redemptions had become less
frequent and a larger number of reported secondary transactions occurred at
below face value. In response to these changed circumstances, in
January 2009 the Fund began valuing its ARPS at below face value, while at the
same time recognizing the high-quality and security of the
investment. The Board of Directors strongly believes that, at all
times, the valuations applied to the ARPS have been appropriate.
By way of
background on the ARPS market, the Advisers are intimately familiar with ARPS
because the Fund is an issuer of ARPS. ARPS are issued by closed-end
funds as a means of leveraging. ARPS are perpetual preferred stocks
which have an auction feature, whereby dividend rates are determined in a Dutch
Auction process held periodically (e.g., every 7 or 28
days). The auction process started failing in February, 2008, when
undercapitalized broker-dealers (which included Bear Stearns and Lehman
Brothers, both of which no longer exist as independent companies) stopped buying
ARPS and simultaneously seemed to be selling any inventory they had at the
time. In addition, these broker-dealers withheld this information on
building illiquidity from buyers and sellers (including the Fund).
The
Advisers divide ARPS into two baskets. The first basket contains ARPS
issued by closed-end funds. The second basket contains ARPS issued by
municipalities, student loan companies, tax-exempt entities such as hospitals
and museums, and similar institutions. Virtually all closed-end funds
have (or had) a AAA rating on ARPS they issued. Many other issuers of
ARPS have lower ratings, some of which are sub-investment grade. Many
of the ARPS in the second basket are in trouble because they are collateralized
with suspect assets (e.g., CDOs, sub-prime loans and mortgages and other toxic
assets). Many of these ARPS are currently subject to valuation
impairment due to the deterioration of the underlying collateral or because they
have defaulted or have been downgraded by rating agencies. The Fund does not own any
ARPS in the second basket. In contrast, ARPS issued by
closed-end funds are collateralized with diversified assets at the 200% ratio
mandated by the Act. In addition, the ARPS the Fund holds continue to
be rated AAA by at least one national rating agency. The AAA rating
requires issuers to maintain certain asset coverage ratios that are often more
onerous than the ratios required under the Act. All of the ARPS held
by the Fund are issued by closed-end funds, are AAA rated, continue to pay
dividends at the contractual rate (which presently is significantly greater than
the yield on U.S. Treasuries) and are backed by high-quality collateral at the
minimum coverage ratio of 200% and as required by the respective rating
agencies. Under the terms of the ARPS held by the Fund, if the asset
coverage dips below the 200% minimum (or the ratio required by the rating
agency), the
issuer is required to redeem a corresponding number of its ARPS at par so
that the issuing fund comes back into compliance. There is a big
difference between the ARPS held by the Fund and the faltering ARPS in the
second basket.
Under the
Act, the Fund must value its portfolio securities by using the market value of
the securities when market quotations for the securities are readily
available. When market quotations are not readily available (as is
currently the case with ARPS), the Act requires that the Fund’s Board of
Directors determine, in good faith, the fair value of the
securities. Accordingly, the Board has implemented comprehensive
policies and procedures for the Fund with respect to valuing its “fair value
securities” and has established a Pricing Committee to oversee the valuation of
the Fund’s portfolio securities. The Board believes that these
policies and procedures conform with all applicable rules, regulations and
financial accounting standards with respect to the valuation of securities, as
well as industry best practices. The Board also believes that its
active oversight of the valuation of the Fund’s portfolio securities effectively
mitigates the conflict of interest cited by Gramercy in its Proposal – that the
Advisers would seek to inflate the value of ARPS in order to increase fees and
overstate returns. Stockholders must recognize, however, that valuing
securities for which market quotations are not readily available (such as the
ARPS) requires consideration of the facts and circumstances of each particular
situation and involves the judgment of the members of the Board of
Directors. Given the subjective evaluations made by fund boards in
valuing “fair value securities”, it is not uncommon for different funds to value
the same security at different prices.
The Board
believes that the Proposal’s call for termination of the Advisers based on a
subjective valuation issue is an irrational proposition that would ultimately
hurt the Fund’s stockholders should it ever be implemented. As noted
above, under the Act the valuation of fair value securities is a matter that is
reserved for the Board of Directors, and the Board believes that it effectively
oversees the valuation of the Fund’s portfolio securities and polices any
related conflicts of interest. The Proposal seeks to substitute the
judgment of the Directors, who have been elected by the stockholders to act in a
manner they reasonably believe is in the best interest of the Fund, with the
judgment of judicial or regulatory authorities with respect to the valuation of
ARPS. Recognizing that the valuation of illiquid securities is
inherently subjective and that reasonable persons can reach different valuation
determinations on the identical facts, the Board is concerned that adopting the
Proposal could lead to frivolous litigation challenging the valuation of the
ARPS. This type of litigation may be initiated by activist closed-end
fund investors seeking to implement short-term strategies that are detrimental
to long-term stockholders, and any such litigation would likely be costly for
the Fund and a distraction to the Advisers. In addition, the Board
has serious questions regarding the legality or enforceability of the
Proposal.
If the
Proposal is approved by stockholders, it is ambiguous as to how it should be
implemented or administered. The Proposal would amend the Fund's
bylaws to require the Board to terminate the Fund's investment advisory
agreement upon the occurrence of certain conditions relating to the valuation of
its holdings. The mandate is qualified entirely by the Board's duties to the
Fund. Under Maryland law, each Director, among other things, has the duty to act
in a manner that he or she reasonably believes is in the best interest of the
Fund. So, in accordance with the proposed bylaw's terms, the Board must
terminate the investment advisory agreement only if the Directors determine that
termination of the agreement is in the best interests of the Fund. It is
unclear, then, what the proposed bylaw requires that is different from
compliance with the standard of conduct already required of each member of the
Board by Maryland law.
For the
reasons stated above, the Fund reserves the right to challenge the
enforceability of the Proposal if it is approved by stockholders.
Vote
Required. Approval of Proposal 2 requires the
affirmative vote of a majority of all the votes entitled to be cast on the
matter.
THE
BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE “AGAINST” PROPOSAL 2.
SUBMISSION
OF STOCKHOLDER PROPOSALS
Notice is
hereby given that for a stockholder proposal to be considered for inclusion in
the Fund’s proxy material relating to its 2011 annual meeting of stockholders,
the stockholder proposal must be received by the Fund not later than December
10, 2010. Any such proposal shall set forth as to each matter the
stockholder proposes to bring before the meeting (i) a brief description of the
business desired to be brought before the meeting and the reasons for conducting
such business at the meeting, (ii) the name and address, as they appear on the
Fund’s books, of the stockholder proposing such business, (iii) the class and
number of shares of the capital stock of the Fund which are beneficially owned
by the stockholder, and (iv) any material interest of the stockholder in such
business. Stockholder proposals, including any accompanying
supporting statement, may not exceed 500 words. A stockholder
desiring to submit a proposal must be a record or beneficial owner of Shares
with a market value of $2,000 and must have held such Shares for at least one
year. Further, the stockholder must continue to hold such Shares
through the date on which the meeting is held. Documentary support
regarding the foregoing must be provided along with the
proposal. There are additional requirements regarding proposals of
stockholders, and a stockholder contemplating submission of a proposal is
referred to Rule 14a-8 promulgated under the 1934 Act. The timely
submission of a proposal does not guarantee its inclusion in the Fund’s proxy
materials. Additionally, approval of a stockholder proposal by the
Fund’s holders of Shares may still be subject to review, including whether such
proposal(s) is legal or comports with general rules and regulations governing
the operations of the Fund.
Pursuant
to the Fund’s bylaws, at any annual meeting of the stockholders, only business
that has been properly brought before the meeting will be
conducted. To be properly brought before the annual meeting, the
business must be (i) specified in the notice of meeting, (ii) proposed by or at
the direction of the Board of Directors, or (iii) otherwise properly
brought before the meeting by a stockholder. For business to be
properly brought before the annual meeting by a stockholder, the stockholder
must have given timely notice thereof in writing to the Secretary of the
Fund. To be timely, a stockholder’s notice must be received by the
Secretary at 2344 Spruce Street, Suite A, Boulder, Colorado 80302 by 5:00 P.M.
Mountain Time not earlier than the 150th day
and not later than the 120th day prior to the first anniversary of the date of
public release of the notice for the preceding year’s annual
meeting. However, if the date of the annual meeting is advanced or
delayed by more than 30 days from the first anniversary of the date of the
preceding year’s annual meeting, for notice by the stockholder to be timely, it
must be received by the Secretary not later than 5:00 p.m., Mountain Time, on
the later of the 120th day
prior to the date of such annual meeting or the tenth day following the day on
which public announcement of the date of such meeting is first
made. The public announcement of a postponement or adjournment of an
annual meeting shall not commence a new time period for the giving of a
stockholder’s notice as described above. Stockholders wishing to make
proposals should refer to the Fund’s bylaws for proper procedures and notice
content. A copy of the Fund’s bylaws is available upon
request, without charge, by writing to the Secretary of the Fund at 2344 Spruce
Street, Suite A, Boulder, Colorado 80302.
ADDITIONAL
INFORMATION
INDEPENDENT ACCOUNTANTS. At
its regularly scheduled Board meeting held on November 2, 2009, the Audit
Committee, consisting of those Directors who are not “interested persons” (as
defined in the Act), selected Deloitte & Touche LLP (“Deloitte”)
of Denver, Colorado as the Fund’s independent registered public accounting firm
for the Fund’s fiscal year ending November 30, 2010. Deloitte served
as independent accountants for the Fund’s fiscal years ended November 30, 2008
and November 30, 2009. A representative of Deloitte will not be
present at the Meeting but will be available by telephone and will have an
opportunity to make a statement if the representative so desires and will be
available to respond to appropriate questions.
Set forth
below are audit fees and non-audit related fees billed to the Fund for
professional services received from Deloitte for the Fund’s fiscal years ended
November 30, 2008 and November 30, 2009.
|
Fiscal
Year Ended
|
Audit
Fees
|
Audit-Related
Fees
|
Tax
Fees*
|
All
Other Fees†
|
|
11/30/2008
|
$
27,350
|
$0
|
$7,250
|
$5,000
|
|
11/30/2009
|
$27,000
|
$0
|
$7,250
|
$5,000
|
|
*
|
“Tax
Fees” are those fees billed to the Fund by Deloitte in connection with tax
consulting services, including primarily the review of the Fund’s income
tax returns, excise tax returns and Maryland property tax
returns.
|
|
†
|
This
fee pertains to those fees billed to the Fund by Deloitte in connection
with their agreed-upon procedures reports under the terms of the Preferred
Stock.
|
The Audit
Committee Charter requires that the Audit Committee pre-approve all audit and
non-audit services to be provided by the independent accountants to the Fund,
and all non-audit services to be provided by the independent accountants to the
Fund’s investment adviser and any service providers controlling, controlled by
or under common control with the Funds’ investment adviser that provide on-going
services to each Fund (“Affiliates”), if the engagement relates directly to the
operations and financial reporting of each Fund, or to establish detailed
pre-approval policies and procedures for such services in accordance with
applicable laws. All of the audit, audit-related and tax services
described above for which Deloitte billed the Fund fees for the fiscal years
ended November 30, 2008 and November 30, 2009 were pre-approved by
the Audit Committee.
Deloitte
has informed the Fund that it has no direct or indirect financial interest in
the Fund. For the Fund’s fiscal year ended November 30, 2009,
Deloitte did not provide any non-audit services or bill any fees for such
services to the Fund’s investment adviser or any Affiliates. For the
twelve months ended November 30, 2009, the Horejsi Affiliates paid $0 to
Deloitte for their services. The Audit Committee has considered and
concluded that the provision of non-audit services is compatible with
maintaining the independent accountants’ independence.
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE. Section 16(a) of
the 1934 Act and Section 30(h) of the Act require the Fund’s Directors and
officers, persons affiliated with the Fund’s investment advisers, and persons
who own more than 10% of a registered class of the Fund’s securities, to file
reports of ownership and changes of ownership with the SEC and the New York
Stock Exchange. Directors, officers and greater-than-10% stockholders
are required by SEC regulations to furnish the Fund with copies of all Section
16(a) forms they file. Based solely upon the Fund’s review of the
copies of such forms it received and written representations from such persons,
the Fund believes that through the date hereof all such filing requirements
applicable to such persons were complied with.
BROKER NON-VOTES AND
ABSTENTIONS. An uninstructed
proxy for shares held by brokers or nominees as to which (i) instructions have
not been received from the beneficial owners or the persons entitled to vote and
(ii) the broker or nominee does not have discretionary voting power on a
particular matter is a broker “non-vote”. Proxies that reflect
abstentions or broker non-votes will be counted as shares that are present and
entitled to vote on the matter for purposes of determining the presence of a
quorum. Abstentions and broker non-votes will have no effect on the
result of the vote in the election of directors in Proposal 1 and will have the
effect of a vote against Proposal 2.
OTHER
MATTERS TO COME BEFORE THE MEETING
The Fund
does not intend to present any other business at the Meeting; however this is
subject to change based on developments at the Meeting.
STOCKHOLDERS
ARE REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD OR AUTHORIZE
PROXIES VIA TELEPHONE OR THE INTERNET. THE PROXY CARD SHOULD BE
RETURNED IN THE ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE
UNITED STATES. INSTRUCTIONS FOR THE PROPER EXECUTION OF PROXIES ARE
SET FORTH ON THE INSIDE COVER
[this
page intentionally left blank]
[this
page intentionally left blank]
BOULDER
FUNDS
[Missing
Graphic Reference]
PROXY
BOULDER
TOTAL RETURN FUND, INC.
PROXY
SOLICITED BY THE BOARD OF DIRECTORS
The
undersigned holder of shares of Common Stock of Boulder Total Return Fund, Inc.,
a Maryland corporation (the "Fund"), hereby appoints Stephen C. Miller, Carl D.
Johns, and Nicole L. Murphey, or any of them, as proxies for the undersigned,
with full power of substitution in each of them, to attend the Annual Meeting of
Stockholders (the “Annual Meeting”) to be held at the St. Julien Hotel, 900
Walnut Street, Boulder, Colorado 80302 at 9:30 a.m. Mountain Daylight Time
(local time), on May 3, 2010, and any adjournments or postponements thereof, to
cast on behalf of the undersigned all votes that the undersigned is entitled to
cast at the Annual Meeting and to otherwise represent the undersigned at the
Annual Meeting with all the powers possessed by the undersigned if personally
present at the Meeting. The votes entitled to be
cast will be cast as instructed below. If this Proxy is executed but
no instruction is given, the votes entitled to be cast by the undersigned will
be cast "FOR" the Nominee for Director in Proposal 1 and ‘AGAINST” Proposal
2. The votes
entitled to be cast by the undersigned will be cast in the discretion of the
proxy holder on any other matter that may properly come before the
meeting. The undersigned hereby acknowledges receipt of the
Notice of Annual Meeting and Proxy Statement (the terms of each of which are
incorporated by reference herein). A majority of the proxies present and acting
at the Annual Meeting in person or by substitute (or, if only one shall be so
present, then that one) shall have and may exercise all of the power and
authority of said proxies under this Proxy. The undersigned hereby
revokes any proxy previously given with respect to the Meeting.
CONTINUED
AND TO BE SIGNED ON REVERSE SIDE
Please
indicate your vote by an "X" in the appropriate box below.
If
this proxy is properly executed, the votes entitled to be cast by the
undersigned will be cast in the manner directed by the undersigned
stockholder. IF NO DIRECTION IS MADE, THE VOTES ENTITLED TO BE CAST
BY THE UNDERSIGNED WILL BE CAST "FOR" THE ELECTION OF THE NOMINEE FOR DIRECTOR
IN PROPOSAL 1 AND "AGAINST" PROPOSAL 2. ADDITIONALLY, THE VOTES
ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST IN THE DISCRETION OF THE
PROXY HOLDER ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING AND
ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.
Please
refer to the Proxy Statement for a discussion of the Proposals.
|
1.
|
Election
of Directors: Nominee is Dr. Dean L. Jacobson.
|
FOR____
|
WITHHOLD_____
|
|
|
THE
BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS,
UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" ELECTION OF THE
NOMINEE.
|
|
2.
|
To
approve an amendment to the bylaws regarding termination of the
advisers.
|
FOR____
|
AGAINST___
|
ABSTAIN
___
|
|
THE
BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS,
UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "AGAINST" THIS PROPOSAL,
AS MORE FULLY DESCRIBED IN THE PROXY
STATEMENT
|
CHECK
HERE ONLY IF YOU PLAN TO ATTEND THE MEETING IN
PERSON. _____
MARK HERE
FOR ADDRESS CHANGE AND NOTE AT
LEFT ____
PLEASE
SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
NOTE: Please sign exactly as
your name appears on this Proxy. If joint owners, EACH should sign
this Proxy. When signing as attorney, executor, administrator,
trustee, guardian or corporate officer, please give your full
title.
Signature:
Date:
Signature:
Date:
[AMPS
PROXY CARD]
PROXY
BOULDER
TOTAL RETURN FUND, INC.
PROXY
SOLICITED BY THE BOARD OF DIRECTORS
The
undersigned holder of shares of the Taxable Auction Market Preferred Stock
("AMPS") of Boulder Total Return Fund, Inc., a Maryland corporation (the
"Fund"), hereby appoints Stephen C. Miller, Carl D. Johns, and Nicole L.
Murphey, or any of them as proxies for the undersigned, with full power of
substitution in each of them, to attend the Annual Meeting of Stockholders (the
“Annual Meeting”) to be held at the St. Julien Hotel, 900 Walnut Street,
Boulder, Colorado 80302, at 9:30 a.m. Mountain Daylight Time (local time), on
May 3, 2010, and any adjournments or postponements thereof, to cast on behalf of
the undersigned all votes that the undersigned is entitled to cast at the Annual
Meeting and to otherwise represent the undersigned at the Annual Meeting with
all the powers possessed by the undersigned if personally present at the
Meeting. The votes
entitled to be cast will be cast as instructed below. If this Proxy
is executed but no instruction is given, the votes entitled to be cast by the
undersigned will be cast "FOR" each of the Nominees for director in Proposal 1
and ‘AGAINST” Proposal 2. The votes entitled to be cast by the
undersigned will be cast in the discretion of the proxy holder on any other
matter that may properly come before the meeting. The
undersigned hereby acknowledges receipt of the Notice of Annual Meeting and
Proxy Statement (the terms of each of which are incorporated by reference
herein). A majority of the proxies present and acting at the Annual
Meeting in person or by substitute (or, if only one shall be so present, then
that one) shall have and may exercise all of the power and authority of said
proxies under this Proxy. The undersigned hereby revokes any proxy
previously given with respect to the Meeting.
CONTINUED
AND TO BE SIGNED ON REVERSE SIDE
Please
indicate your vote by an "X" in the appropriate box below.
If
this proxy is properly executed, the votes entitled to be cast by the
undersigned will be cast in the manner directed by the undersigned
stockholder. IF NO DIRECTION IS MADE, THE VOTES ENTITLED TO BE CAST
BY THE UNDERSIGNED WILL BE CAST "FOR" EACH OF THE NOMINEES FOR DIRECTOR IN
PROPOSAL 1 AND "AGAINST" PROPOSAL 2. ADDITIONALLY, THE VOTES ENTITLED
TO BE CAST BY THE UNDERSIGNED WILL BE CAST IN THE DISCRETION OF THE PROXY HOLDER
ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING AND ANY
ADJOURNMENTS OR POSTPONEMENTS THEREOF.
Please
refer to the Proxy Statement for a discussion of the Proposals.
|
1.
|
Election
of Directors: Nominees are Dr. Dean L. Jacobson
and John S. Horejsi
|
FOR____
|
WITHHOLD_____
|
FOR
ALL EXCEPT ____
|
|
Instruction:
If you do not wish your shares voted "for" a particular nominee, mark the
"For All Except" box and strike a line through the name(s) of the
nominee(s). Your shares will be voted "For" the remaining
nominee(s).
THE
BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS,
UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" ELECTION OF ALL
THE NOMINEES.
|
|
2.
|
To
approve an amendment to the bylaws regarding termination of the
advisers.
|
FOR____
|
AGAINST
____
|
ABSTAIN
___
|
|
THE
BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS,
UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "AGAINST" ELECTION OF
THIS PROPOSAL, AS MORE FULLY DESCRIBED IN THE PROXY
STATEMENT.
|
CHECK
HERE ONLY IF YOU PLAN TO ATTEND THE MEETING IN
PERSON. ____
MARK HERE
FOR ADDRESS CHANGE AND NOTE AT
LEFT ____
PLEASE
SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
NOTE: Please sign exactly as
your name appears on this Proxy. If joint owners, EACH should sign
this Proxy. When signing as attorney, executor, administrator,
trustee, guardian or corporate officer, please give your full
title.
Signature:
Date:
Signature:
Date: