[MOUNTAIN GRAPHIC OMITTED] Third quarter report
August 31, 2000
Boulder Total Return Fund, Inc.
Dear Shareholder:
In an effort to keep our shareholders fully abreast of the Fund's activities and
holdings, we are pleased to introduce the Fund's new Web Site. You can find our
"homepage" on the Internet at: www.bouldertotalreturn.com. The site will show
the Fund's holdings, the most recent net asset value and market price, press
releases, recent shareholder reports, and a few other informative odds-and-ends.
We hope you find the site informative.
SELECTED HIGHLIGHTS
Now, down to business: For the nine months ending August 31, 2000, the Fund
generated a total return on NAV of 1.7%, and a total return based on market
value of 8.2%.
Although the Fund is still leveraged, the type of leverage has changed. The
change was announced in the Semi-Annual report. On August 15, 2000, the Fund
redeemed all 775 outstanding shares ($77.5 million) of its Money Market
Preferred Cumulative(TRADEMARK) stock, and issued 775 shares ($77.5 million) of
Auction Market Preferred Stock ("AMPS") at an initial rate of 6.57%. The
interest rate on the AMPS will be determined every 28 days through a Dutch
auction procedure.
Two of the Fund's holdings, Associates First Capital ("AFS") and Hertz ("HRZ"),
are acquisition targets. On Sept. 6, 2000, it was announced that Citigroup
agreed to acquire all of Associates First Capital for 0.7334 shares of Citigroup
stock for each AFS share. The Fund owns 400,000 shares of AFS at an average cost
of $17 per share, which were bought during March this year. On Sept. 21, it was
announced that Ford Motor, which already owns 81% of Hertz, wants to buy the
remaining 19% of Hertz for $30/shr. The Fund owns 200,000 shares of HRZ at an
average cost of $24.75 per share that were bought only a week ago. We bought
both these companies because they are profitable companies, with potential for
future earnings increases, and selling at bargain prices (near book value on
AFS).
In the last quarter, the Fund bought shares in Tricon Global Restaurants (NYSE:
YUM - how's that for a ticker symbol!). You know it better as Pizza Hut,
Kentucky Fried Chicken, and Taco Bell. We feel we bought an excellent company,
with very high profile names, at a reasonable price. These three fast-food
restaurants can be found not only in your neighborhood, but around the world. As
your dad would say when you were fishing, "Son, that's a keeper."
INVESTMENT STYLE FOR BOULDER TOTAL RETURN FUND
We believe that everyone is better served if our shareholders, as well as others
interested in the Fund, have a high degree of understanding of our investment
philosophy. In this context, we strive to periodically lay out as clearly as
possible our investment approach, our investment goals and what we are trying to
accomplish. In this regard, I want to share our thoughts and insights about the
direction of the Fund.
Our "prime directive" is and will always be to avoid losing what we have. Our
secondary goal is to achieve the best possible return on investments without
permanently jeopardizing that with which we started. Our approach in reaching
this goal is to use a "tortoise" style of investing. That is, we will not seek
to "get rich quick". I used to think it was impossible to get rich quick,
although I knew very well you could get poor quick. Recently, however, we've
seen a lot of people getting rich quick by investing in Internet and other
technology stocks. I'm impressed with their results, but I just don't have any
idea how to do this myself. So, rather than risk my and your hard-earned money
and try to get rich quick by investing in the wildly volatile technology market,
I am going to stick with the investing style that has served me and my family
well for the last 3 decades.
I believe if you buy good companies with long records of success and what appear
to be good probabilities that they will continue their success, and you buy
these companies at reasonable prices, there is a very high likelihood that you
will be satisfied over the long term. Even this is not certain. But if you are
diversified, this approach seems to offer the best chance for success when
balanced against the least chance for loss. I don't worry about short-term
losses in the price of our stock or the underlying stocks we own, because we are
not going to sell when the price is down. As long as our companies are
performing well, we will keep them for a long time. If we do sell them, it is
likely to be when their price is high, not when it is low.
Our focus will be to make investments with the highest possible degree of
certainty about their future. Our experience is that almost all surprises in the
investment world are to the down side. This leads us to buying businesses with
long track records of success. Some of our companies will pay no or low
dividends - others will pay high dividends. We don't care which, so long as our
projected long-term results are attractive. It is our objective for the Fund to
become part-owners in businesses that produce a high return on assets and can
effectively reinvest those profits in more high return assets. If they cannot
effectively reinvest, we want them to return their profits to the owners either
in the form of dividends or stock repurchases.
(Continued on back cover)
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BOULDER TOTAL RETURN FUND, INC.
SUMMARY OF INVESTMENTS
August 31, 2000 (Unaudited)
---------------------------
<TABLE>
SHARES COST VALUE
---------- ------------ ------------
<S> <C> <C> <C>
COMMON STOCKS - 70.3%
DIVERSIFIED - 29.8% Berkshire Hathaway Inc., Class A ................ 750 $ 41,005,360 $ 43,275,000
Berkshire Hathaway Inc., Class B ................ 9,010 17,971,271 17,236,130
REITS - 16.5% Boykin Lodging Company .......................... 123,100 1,297,523 1,223,306
First industrial Realty Trust Inc. .............. 200,000 5,291,312 5,937,500
Hospitality Property Trust ...................... 428,000 10,554,270 9,951,000
JDN Realty Corporation .......................... 460,100 4,999,840 4,744,781
New Plan Excel Relty Trust ...................... 710,000 10,205,890 9,806,875
Tanger Factory Outlet Centers Inc. .............. 80,000 1,945,261 1,685,000
INVESTMENT COMPANIES - 9.7% ACM Government Securities Fund .................. 635,000 4,483,214 4,802,188
ACM Government Spectrum Fund .................... 45,150 263,337 276,544
Kemper Multi-Market Income Trust ................ 54,000 438,895 469,125
MFS Charter Income Trust ........................ 40,000 335,800 345,000
MFS Multimarket Income Trust .................... 54,300 326,886 342,769
MFS Intermediate Income Trust ................... 10,000 62,075 64,375
MSDW Emerging Market Debt Fund .................. 137,800 1,028,962 1,093,787
Oppenheimer Multi-Sector Income Trust ........... 189,800 1,506,352 1,577,712
Putnam Master Income Trust ...................... 106,642 701,025 713,168
Putnam Master Intermediate Income Trust ......... 393,600 2,369,828 2,533,800
Putnam Premier Income Trust ..................... 930,000 5,721,162 5,928,750
RCM Stategic Global Government Fund ............. 163,289 1,456,044 1,571,657
FINANCIAL SERVICES - 6.6% Associates First Capital Corporation, Class A ... 400,000 6,806,230 11,250,000
Wesco Financial Corporation ..................... 9,000 2,187,680 2,160,000
RESTAURANT - 5.3% Tricon Global Restaurants Inc. .................. 370,000 10,220,446 10,776,250
INSURANCE - 2.3% The Progressive Corporation ..................... 60,000 4,156,018 4,548,750
UTILITY - 0.1% WPS Resources Corporation ....................... 7,950 226,764 238,997
------------ ------------
TOTAL COMMON STOCKS ................................................................ 135,561,445 142,552,464
------------ ------------
U.S. TREASURY SECURITIES - 24.4% ................................................................ 49,383,179 49,379,019
------------ ------------
REPURCHASE AGREEMENT - 12.7% .................................................................... 25,840,000 25,840,000
------------ ------------
TOTAL INVESTMENTS - 107.4% ...................................................................... $210,784,624 217,771,483
============
OTHER ASSETS AND LIABILITIES (Net) - (7.4)% .................................................................... (14,911,810)
------------
NET ASSETS - 100.0% ............................................................................................ $202,859,673
============
</TABLE>
FINANCIAL DATA
Per Share of Common Stock (Unaudited)
-------------------------------------
<TABLE>
DIVIDEND NET ASSET NYSE
PAID VALUE CLOSING PRICE
--------- --------- -------------
<S> <C> <C> <C>
December 31, 1999 ................................................. $0.0770 $12.99 $9.6875
January 31, 2000 .................................................. -- 12.44 9.5625
February 29, 2000 ................................................. -- 11.63 8.8125
March 31, 2000 .................................................... 0.0600 13.24 9.5625
April 30, 2000 .................................................... -- 13.34 9.7500
May 31, 2000 ...................................................... -- 13.46 10.7500
June 30, 2000 ..................................................... 0.0500 12.62 10.8125
July 31, 2000 ..................................................... -- 12.97 10.5625
August 31, 2000 ................................................... -- 13.29 10.8125
</TABLE>
2
<PAGE>
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BOULDER TOTAL RETURN FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS(1)
Nine Months Ended August 31, 2000 (Unaudited)
---------------------------------------------
<TABLE>
<S> <C>
OPERATIONS:
Net investment income ........................................................................................ $ 5,183,963
Net realized loss on investments sold ........................................................................ (11,543,069)
Net unrealized appreciation of investments during the period ................................................. 11,590,538
------------
Net increase in net assets from operations ............................................................... 5,231,432
DISTRIBUTIONS:
Dividends paid from net investment income to MMP* shareholders ............................................... (3,908,953)
Dividends paid from net investment income to Common Stock Shareholders ....................................... (1,760,955)
Capital expenses paid on conversion of MMP* Shares to AMP** shares ........................................... (311,085)
------------
Net decrease in net assets ............................................................................... (749,561)
NETASSETS:
Beginning of period .......................................................................................... 203,609,234
------------
End of period ................................................................................................ $202,859,673
============
</TABLE>
FINANCIAL HIGHLIGHTS(1)
Nine Months Ended August 31, 2000 (Unaudited)
For a Common Share Outstanding Throughout the Period
-----------------------------------------------------
<TABLE>
<S> <C>
OPERATING PERFORMANCE:
Net asset value, beginning of period ......................................................................... $ 13.32
Net investment income ........................................................................................ 0.55
Net realized loss and unrealized appreciation on investments ................................................. 0.01
------------
Net increase in net asset value resulting from investment operations ......................................... 0.56
DISTRIBUTIONS:
Dividends paid from net investment income to MMP* Shareholders ............................................... (0.42)
Dividends paid from net investment income to Common Stock Shareholders ....................................... (0.19)
Change in accumulated undeclared dividends on MMP*/AMP** Shares .............................................. 0.05
Capital expenses paid on conversion of MMP* shares to AMP** shares ........................................... (0.03)
------------
Total distributions .......................................................................................... (0.59)
------------
Net asset value, end of period ............................................................................... $ 13.29
============
Market value, end of period .................................................................................. $ 10.8125
============
Common shares outstanding, end of period ..................................................................... 9,416,743
============
RATIOS TO AVERAGE NET ASSETS AVAILABLE TO COMMON STOCK SHAREHOLDERS:
Operating expenses .............................................................................................. 2.69%(DAGGER)
SUPPLEMENTAL DATA:
Portfolio turnover rate ......................................................................................... 73%
----------------------------------------------------------------------------------------------------------------------
Ratio of operating expenses to Total Average Net Assets including MMP*/AMP** ......................................... 1.64%(DAGGER)
</TABLE>
(1) These tables summarize the nine months ended August 31, 2000 and should
be read in conjunction with the Fund's audited financial statements,
including footnotes, in its Annual Report dated November 30, 1999.
* Money Market Cumulative Preferred TM Stock.
** Taxable Auction Market Preferred Stock.
(DAGGER) Annualized.
<PAGE>
(Continued from front cover)
Note that while we use the same analytical approach for financial companies as
we do commercial/operating companies, the financial ratios we use to evaluate
the companies are different because of the inherent differences in their capital
structures. Nonetheless, for all companies, we look for the following
performance factors and generally every prospect should pass each test before we
move to the next:
1. We look for a consistently high return on assets (above 13%) and favor
those having an improving return on assets.
2. We look for growth. We favor companies whose per share earnings have grown
at a rate of 15% per year over the last 10 years. Since we like a long
history of earnings, this virtually eliminates our investing in startup
companies.
3. We favor companies who, within their industry, have the highest profit
margin as a percent-of-sales. The company having the highest profit will
be the last survivor in a price war.
4. We insist that the stock options granted to employees be sensible.
Generally this means that exercise of the options will usually result in
negligible growth in shares outstanding.
5. We look for low total debt and prefer it to be less than 50% of total
footings. Debt always has to be paid back, usually at an inconvenient
time.
6. We try to predict, in a general way, the long-term effect that the
Internet will have on the business.
7. We like to buy at a "reasonable" price. "Reasonable" is determined by
comparing the prospect's P/E against the S&P 500 and against the
prospect's historical P/E, its peers and its own growth rate. We insist
the growth rate exceed the P/E, and get really excited when the growth
rate plus the dividend rate is two-times the P/E, such as it was when we
bought AFS.
8. We want to minimize commissions, spreads, and taxes. Thus we intend to
hold these companies as long as the first 7 criteria continue to be
satisfied and we won't sell them unless the price becomes outlandishly
high. We must periodically satisfy ourselves that these conditions
continue.
Our real expectation of profit with respect to any investment is to match that
of the underlying company during our holding period. If we successfully buy a
stock when it is below its intrinsic value, we may get a one-time added benefit
when the multiple catches up with the market. However, I view this as a one-time
bonus, and not the purpose of the purchase. Buying at a discount from intrinsic
value gives us a second important advantage by reducing our downside risk. We
hope this makes what we are trying to do clear because it's not likely to change
for a long time. If our position is clear, we hope only people with the same
objective will buy our stock. We view ourselves as running a marathon, not a
sprint, and we expect the tortoise to finish the race for sure. We want to be
there at the end.
Sincerely,
/S/ SIGNATURE
Stewart R. Horejsi
Investment Manager, SIA
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Directors
Alfred G. Aldridge Jr.
Richard I. Barr
James G. Duff
Stewart R. Horejsi
Stephen C. Miller
Officers
Stephen C. Miller
President
Carl D. Johns
Vice President and Treasurer
Laura C. Rhodenbaugh
Secretary
Stephanie J. Kelley
Assistant Secretary
If your shares are held in a
brokerage account contact your
broker. If you have physical
possession of your shares in
certificate form, contact the
Fund's Transfer Agent &
Shareholder Servicing Agent --
PFPC Inc.
P.O. BOX 1376
BOSTON, MA 02104
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.
==============================
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