BOULDER GROWTH & INCOME FUND, INC.
Annual Report
June 30, 2002
Dear Fellow Shareholder:
As you are probably already aware, your Fund is now the Boulder Growth & Income
Fund, Inc. Shareholders approved the name change (formerly USLife Income Fund),
and a change in the Fund's investment objective from income to total return. The
Fund's stock still trades on the NYSE, but now under the symbol "BIF." You also
approved Boulder Investment Advisers and Stewart Investment Advisers as
co-advisers to the Fund. All this took place at the special shareholder meeting
on April 26, 2002.
Since that meeting, we've been fairly busy making the transition in the
portfolio. The portfolio we inherited from the previous advisers held quite a
few junk bonds (bonds rated below investment grade), many of which have since
either defaulted or declared bankruptcy. While we have sold a good portion of
those bonds, we still own a few. When companies default on their bonds the
holders (us) no longer receive any interest payments from those companies.
You'll recognize the names of some of the bonds we inherited: Worldcom, K-Mart,
and Adelphia Communications. The K-Mart bonds ($2.5 million worth) were
originally purchased back in 1995 near par. When we sold them, we got back
barely half of the original invesment. The other notable bombs in the portfolio
include: Worldcom bonds - the Fund owned $1 million par value - you know what
happened to Worldcom; and Adelphia preferred stock - apparently, John Rigas, the
founder and CEO of Adelphia, felt that he could treat the company as his own
private piggy bank.
While it would have been good for shareholders if all the bonds had been sold
earlier, we feel very fortunate to have sold as many bonds as quickly as we did
as some bonds continued to fall in value after we sold them. The Fund's total
return on NAV for the year ending 6/30/02 was -11.36%.
The logical question you are probably asking is: "What have you done with the
proceeds from the bonds you've sold?" We've bought some quality companies that
we think will be around for a long, long time. However, before I discuss WHAT we
bought, I want to share with you WHY we buy.
When we consider a prospective company we seek candidates that exhibit most of
the following characteristics:
1. Appropriately priced shares relative to earnings and growth;
2. High return on equity and assets;
3. Low and wise use of debt;
4. Sensible, owner friendly use of retained earnings;
5. Reasonably predictable future business, performance and earnings;
6. Reasonable and steady growth;
7. Exceptional management; and
8. Sensible stock option programs for employees.
In summary, the companies should be of such a caliber that we would expect (and
would be happy) to own them for a very long time.
We've bought several companies we believe fit the above criteria. Our largest
purchase was of Berkshire Hathaway. We bought 144 shares of their Class "A"
shares. It doesn't sound like a lot, but it's 25% of the Fund's assets.
Berkshire Hathaway `A' shares trade around $70,000 per share. We have a great
deal of
confidence in the managers at Berkshire (Warren Buffet), which is something
worth saying in these times of the exposure of corporate malfeasance.
Another change shareholders approved in April was to permit the Fund to invest
in Real Estate Investment Trusts ("REITs"). We've bought a couple of these -
HRPT Properties and JDN Realty. Both pay good dividends and are not overly
leveraged.
We also bought several utility companies at what we thought were very good
prices. They are lower today than when we bought them, but we still think they
are good companies worth holding for a while. We will never buy stocks at the
bottom (though we enjoy trying). Rather we are more concerned about buying good
companies at reasonable prices. We are not traders. We like to buy good
companies at reasonable prices and hold onto them for a long time.
In July, the Board approved presenting a rights offering proposal to
shareholders which, if approved, will permit shareholders to purchase one
additional share of the Fund for each share they own. More details of this will
be sent to shareholders in a proxy statement sometime in late August. We have a
web site, www.boulderfunds.net, and have included a new section called "Things
to consider when deciding whether to own the Boulder Funds." We hope you find it
useful.
Sincerely,
/S/ SIGNATURE
Stewart R. Horejsi
------------------
NOTHING IN THIS ANNUAL REPORT SHOULD BE CONSIDERED AS INVESTMENT ADVICE. THIS
LETTER EXPLAINS THE MANAGERS' VIEWS AS OF ITS DATE, WHICH MAY HAVE SUBSEQUENTLY
CHANGED.
2
QUESTIONS & ANSWERS REGARDING THE BOULDER GROWTH & INCOME FUND
Q: What is this Rights Offering?
A: Because the Fund is only $38 million, which is small in terms of mutual
funds, the Advisers believe that a 1:1 Rights Offering, nearly doubling the size
of the Fund, would be in all shareholders' best interest. Notably, a recent
study concluded that $3 billion was the most cost effective closed-end fund
size. We will strive to achieve that optimum size, but it won't be easy. A
Rights Offering would give each shareholder the right to buy one additional
share of the Fund for each share held. You may say that you can do that anytime
you like on the open market. While this is true, in a Rights Offering the Fund
would offer the shareholders the Right to buy the shares at a 5% discount to the
market (or NAV, whichever is less). In other words, for each share you own, you
can buy one additional share for 95% of the market price (or NAV, whichever is
lower). We will not conduct this one-for-one Rights Offering unless shareholders
approve it first.
Q: At the April 26, 2002 shareholder meeting, shareholders approved a proposal
permitting the Fund to leverage itself. Has it done so?
A: We have not yet leveraged the Fund, although we are actively considering
doing so.
Q: What happened to the Dividend?
A: We changed the Fund's dividend policy from paying quarterly (when it was a
bond fund) to paying annually, now that our objective is total return. Any net
investment income the Fund has will be paid out in December. The Fund already
paid $0.17 per share in March and $0.08 per share in June. No dividend will be
paid in September. It is not likely the Fund will have any capital gains to pay
out for some time. This is due to the massive losses taken in the bonds the Fund
held.
Q: What does it mean when you say the Fund is "non-diversified"?
A:Essentially, it means we can have more concentrated positions in the stocks we
really like than if we were a "diversified" fund. Under the federal securities
laws that apply to the Fund, a non-diversified fund may have 50% of its
portfolio in non-diversified positions - that is, positions in stocks that are
greater than 5% of the portfolio, but less than 25% (at the time of purchase).
In contrast, a "diversified" fund is limited to having 25% of the fund's assets
in non-diversified positions. The reason we wanted this flexibility was to allow
us to take significant positions in good companies when we find them.
Conventional wisdom says buy 100 or more different stocks in order to diversify
away risk. If you really want to diversify away risk, ask yourself why you are
taking any risk to begin with. Just put your money in a savings account. But if
you want to invest - I mean really invest - then find a few good companies and
put a significant chunk of your money in those. Don't find a few good companies,
a few OK, and a few mediocre, and then spread your money among all those. Just
invest in the good ones. We hope you find BIF to be a "good one" and invest a
lot in it. We did.
Q. We are disappointed that both the price and NAV of the Fund have gone down.
Why has this happened?
A. First, we are disappointed too. Part of the Fund's falling NAV resulted from
the prices of bonds that we inherited going down. Normally, when interest rates
go down as low as they have, bond prices increase. Some of the bonds in the
Fund's portfolio did, but most declined, some significantly so. The balance of
the
3
QUESTIONS & ANSWERS REGARDING THE BOULDER GROWTH & INCOME FUND
(CONTINUED)
falling NAV is the result of the Fund having acquired stock in what we view as
some really great companies at prices we view to be attractive.
We find that in the long run, stock prices track business performance quite
closely. However, just because we buy a stock doesn't mean the price will
increase right away. Although this would be nice, it would likely be dumb luck.
The truth is, we have little ability to predict where the price of a company
will be next week, next month, or even next year. However, we believe that over
the next five years the performance of the companies we choose will progress
nicely. Shareholders should be aware that if the market prices of our
investments creep lower, we may very well buy a larger stake.
We believe our investment approach will be rewarding to those who remain with
the Fund for the long run. We intend to stay in for the long run and want to
attract investors who have similar objectives. We intend to run the Fund as a
focused portfolio of only a few high-caliber companies. This approach inevitably
results in more volatility and thus, from time to time, shareholders may see the
portfolio fluctuate in excess of what they have experienced with more
diversified funds. We seek to attract investors who, like us, are not concerned
by such fluctuations and instead focus more on the intrinsic, long-term value of
the portfolio. It is an essential element in our investment philosophy not to
sell when the market is falling. That is the time to buy, not sell. We continue
to be surprised to see the Fund's portfolio companies selling as cheaply as they
are. These companies may go down even more, which will also surprise us, but our
motivation to buy a company is driven more by what is happening in its business,
and less by what is happening to its price. We don't know why they are so cheap,
but we are glad they are so we can become part owners of wonderful businesses at
reasonable prices.
4
BOULDER GROWTH & INCOME FUND, INC. PORTFOLIO OF INVESTMENTS
JUNE 30, 2002
SHARES COST VALUE
------ ------ -------
COMMON STOCKS - 83.1%
DIVERSIFIED - 23.7% Berkshire Hathaway Inc., Class A+ .................... 144 $ 10,670,288 $ 9,619,200
------------ ------------
INVESTMENT COMPANIES - 7.9% SSGA Money Market Fund- A ............................ 256 256 256
TCW/DW Term Trust 2002 ............................... 200,000 2,130,592 2,126,000
TCW/DW Term Trust 2003 ............................... 100,000 1,076,000 1,076,000
------------ ------------
TOTAL INVESTMENT COMPANIES ................... 3,206,848 3,202,256
------------ ------------
MANUFACTURING
(SPECIALIZED) - 0.1% Grove Investors Inc.+ ................................ 2,888 304,753 28,880
------------ ------------
MEDICAL-DRUG/
DIVERSIFIED - 15.4% Bristol-Meyers Squibb Company ........................ 82,000 2,384,985 2,107,400
Merck & Company, Inc. ................................ 40,000 2,183,200 2,025,600
Schering-Plough Corporation .......................... 86,000 2,438,688 2,115,600
------------ ------------
TOTAL MEDICAL-DRUG/DIVERSIFIED ................... 7,006,873 6,248,600
------------ ------------
REITS - 16.5% HRPT Properties Trust ................................ 260,000 2,234,700 2,301,000
JDN Realty Corporation ............................... 170,000 2,140,619 2,125,000
Post Properties, Inc. ................................ 71,000 2,389,788 2,141,360
Thornburg Mortgage, Inc. ............................. 5,100 105,162 100,368
------------ ------------
TOTAL REITS ................... 6,870,269 6,667,728
------------ ------------
RETAIL-SUPERMARKETS - 4.3% Safeway Inc.+ ........................................ 60,000 1,845,432 1,751,400
------------ ------------
UTILITIES - 15.2% Alliant Energy Corporation ........................... 83,800 2,360,280 2,153,660
Aquila Inc. .......................................... 210,000 2,865,345 1,680,000
Northwestern Corporation ............................. 27,400 467,483 464,430
Xcel Energy, Inc. .................................... 110,000 2,482,740 1,844,700
------------ ------------
TOTAL UTILITIES ................... 8,175,848 6,142,790
------------ ------------
TOTAL COMMON STOCKS ............................................................... 38,080,311 33,660,854
------------ ------------
PREFERRED STOCKS AND SECURITIES - 0.0%**
CABLE TELEVISION - 0.0%** Adelphia Communications Corporation .................. 3,500 349,125 14,000
------------ ------------
PAR
--------
CORPORATE BONDS - 11.0%
AIRLINES - 0.4% American Airlines Inc., Pass-through Certificates,
7.800% due 10/01/06 ++ .............................$120,000 120,000 123,231
Atlas Air Inc., Senior Notes,
9.250% due 04/15/08 ................................ 100,000 100,244 50,000
----------- -----------
TOTAL AIRLINES 220,244 173,231
----------- -----------
BUILDING PRODUCTS -
WOOD - 0.6% Koppers Industry, Inc., Senior Subordinated Notes,
9.875% due 12/01/07 ................................ 225,000 214,447 227,813
----------- -----------
CABLE TELEVISION - 0.1% Pegasus Communications Corporation,
Senior Notes, 9.750% due 12/01/06 ++ ............... 90,000 87,853 40,500
----------- -----------
ELECTRONICS (DEFENSE) - 0.3% Condor Systems Inc., Series B, Company
Guarantee, (in default), 11.875% due 05/01/09 ...... 400,000 276,840 100,000
----------- -----------
FINANCIAL SERVICES - 0.4% Dana Credit Corporation, MTN,
7.250% due 12/16/02 ++ ............................. 150,000 148,716 147,937
----------- -----------
MACHINERY-CONSTRUCTION/
MINING - 0.3% National Equipment Services Inc., Series B,
Senior Subordinated Notes, 10.000% due
11/30/04 ........................................... 50,000 44,707 43,500
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
5
BOULDER GROWTH & INCOME FUND, INC. PORTFOLIO OF INVESTMENTS
JUNE 30, 2002
SHARES COST VALUE
------ ------ -------
CORPORATE BONDS - (CONTINUED)
MACHINERY-CONSTRUCTION/
MINING - (CONTINUED) National Equipment Services Inc., Series D,
Company Guarantee, 10.000% due 11/30/04 ........... $ 80,000 $ 56,528 $ 69,600
----------- -----------
TOTAL MACHINERY-CONSTRUCTION/MINING ................... 101,235 113,100
----------- -----------
MANUFACTURING
(DIVERSIFIED) - 0.1% DI Industries, Inc., Senior Notes,
8.875% due 07/01/07 ............................... 40,000 38,635 41,000
Polymer Group Inc., Series B, Company
Guarantee, (in default), 9.000% due 07/01/07 ...... 25,000 14,023 5,000
----------- -----------
TOTAL MANUFACTURING (DIVERSIFIED) ................... 52,658 46,000
----------- -----------
PAPER & PAPER PRODUCTS -
5.7% Boise Cascade Company, Series A, MTN,
7.990% due 09/13/13 ...............................2,300,000 2,300,000 2,325,661
----------- -----------
PHARMACEUTICALS - 0.3% Pharmerica Inc., Senior Subordinated Notes,
8.375% due 04/01/08 ............................... 125,000 97,371 129,063
----------- -----------
RETAIL-MAIL ORDER & DIRECT -
0.8% Shop At Home, Inc., Company Guarantee,
11.000% due 04/01/05 .............................. 350,000 345,421 332,938
----------- -----------
RETAIL-MISCELLANEOUS/
DIVERSIFIED - 0.1% MTS, Inc., Senior Subordinated Notes,
9.375% due 05/01/05 ............................... 100,000 95,341 36,000
----------- -----------
TELECOMMUNICATIONS-
CELLULAR - 0.1% American Cellular Corporation, Company
Guarantee, 9.500% due 10/15/09 .................... 200,000 194,778 36,000
----------- -----------
TELECOMMUNICATIONS-
SERVICES - 0.7% GCI Inc., Senior Notes,
9.750% due 08/01/07 ............................... 325,000 332,995 299,000
----------- -----------
TELEPHONE - 0.5% WorldCom, Inc., Notes,
7.500% due 05/15/11 ...............................1,000,000 990,065 150,000
Versatel Telecom International N.V.,
Senior Notes, (in default), 13.250% due
05/15/08 .......................................... 140,000 143,249 35,000
Versatel Telecom International N.V.,
Senior Notes, (in default), 13.250% due
05/15/08 .......................................... 50,000 51,382 12,500
----------- -----------
TOTAL TELEPHONE ................... 1,184,696 197,500
----------- -----------
UTILITY-ELECTRIC POWER -
0.6% Calpine Canada Energy Finance, Company
Guarantee, 8.500% due 05/01/08 .................... 200,000 199,644 137,000
Calpine Corporation, Senior Notes,
8.750% due 07/15/07 ++ ............................ 150,000 127,735 105,000
----------- -----------
TOTAL UTILITY-ELECTRIC POWER 327,379 242,000
----------- -----------
WEB HOSTING/DESIGN - 0.0%** PSInet Inc., Senior Notes, (in default),
11.000% due 08/01/09 .............................. 10,000 7,988 975
----------- -----------
TOTAL CORPORATE BONDS ............................................................... 5,987,962 4,447,718
----------- -----------
6
BOULDER GROWTH & INCOME FUND, INC. PORTFOLIO OF INVESTMENTS
JUNE 30, 2002
SHARES COST VALUE
------ ------ -------
FOREIGN BONDS - 1.6%
CABLE TELEVISION - 0.5% Callahan Nordrhein-Westfalen GMBH,
Senior Notes, 14.000% due 07/15/10 ............... $ 350,000 $ 318,702 $ 14,000
Ekabel Hessen GMBH, Senior Notes,
14.500% due 09/01/10 ++ .......................... 235,000 233,453 57,575
Ono Finance PLC, Company Guarantee,
13.000% due 05/01/09 ............................. 250,000 250,000 82,500
United Pan-Europe Communications N.V.,
Senior Notes, (in default), 11.250% due
02/01/10 ++ ...................................... 350,000 347,760 45,500
------------ ------------
TOTAL CABLE TELEVISION 1,149,915 199,575
------------ ------------
TELECOMMUNICATIONS-
EQUIPMENT - 0.8% Marconi Corporation PLC, Company Guarantee,
7.750% due 09/15/10 .............................. 1,125,000 1,017,610 337,500
------------ ------------
UTILITY - 0.3% AmeriGas Partners L.P., Series D, Senior Notes,
10.000% due 04/15/06 ............................. 100,000 99,643 106,000
------------ ------------
TOTAL FOREIGN BONDS ............................................................... 2,267,168 643,075
------------ ------------
REPURCHASE AGREEMENT - 1.1%
Agreement with PNC Capital Markets,
1.870% dated 06/28/02, to be repurchased
at $461,072 on 07/01/02, collateralized
by $470,000 FNMA,
3.250% due 01/23/04 (value $479,709) ............... 461,000 461,000 461,000
------------ ------------
TOTAL INVESTMENTS - 96.8% ........................................................................... $ 47,145,566* 39,226,647
============
OTHER ASSETS AND LIABILITIES - 3.2% ................................................................................ 1,287,020
------------
NET ASSETS - 100.0% ................................................................................................ $ 40,513,667
============
-----------
* Aggregate cost for Federal tax purposes is $48,893,658.
+ Non-income producing security.
++ Security exempt from registration under Rule 144A of the Securities Act
of 1993.
** Amount represents less than 0.1% of net assets.
Glossary of Terms
GMBH Gesellschaft mit beschrankter Halftung (West German Limited Liability
Company)
MTN Medium Term Note
N.V. Naamloze Vennoolschap (Dutch Corporation)
PLC Public Liability Company
7
BOULDER GROWTH & INCOME FUND, INC.
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
JUNE 30, 2002
ASSETS:
Investments, at value (Cost $47,145,566) (Note 1)
See accompanying schedule .................................................................. $ 39,226,647
Receivable for investment securities sold .................................................... 1,331,250
Dividends and interest receivable ............................................................ 277,991
Prepaid expenses ............................................................................. 96,096
Other receivables ............................................................................ 23,622
---------------
TOTAL ASSETS ........................................................................... 40,955,606
LIABILITIES:
Deferred compensation-director ............................................ $ 158,383
Payable for investment securities purchased ............................... 157,210
Investment co-advisory fees payable (Note 2) .............................. 81,336
Legal and audit fees ...................................................... 34,500
Administration fee payable (Note 2) ....................................... 10,510
---------------
TOTAL LIABILITIES ...................................................................... 441,939
---------------
NET ASSETS ...................................................................................... $ 40,513,667
---------------
NET ASSETS consist of:
Undistributed net investment income .......................................................... $ 334,970
Accumulated net realized loss on investments sold ............................................ (10,143,990)
Unrealized depreciation of investments ....................................................... (7,918,919)
Par value of Common Stock .................................................................... 56,639
Paid-in capital in excess of par value of Common Stock ....................................... 58,184,967
---------------
TOTAL NET ASSETS ....................................................................... $ 40,513,667
---------------
NET ASSET VALUE, (Net Asset Value, $40,513,667 / 5,663,892 shares outstanding) .................. $ 7.15
---------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
8
BOULDER GROWTH & INCOME FUND, INC.
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
FOR THE YEAR ENDED JUNE 30, 2002
INVESTMENT INCOME:
Interest (net of foreign withholding taxes of $384) ............................ $ 3,945,417
Dividends ...................................................................... 252,118
----------------
TOTAL INVESTMENT INCOME .................................................. 4,197,535
EXPENSES:
Investment co-advisory fees (Note 2) ........................... $ 362,370
Legal and audit fees ........................................... 166,583
Proxy fees ..................................................... 144,097
Administration fee (Note 2) .................................... 82,880
Directors' fees and expenses (Note 2) .......................... 51,198
Shareholder servicing agent fees (Note 2) ...................... 41,364
Insurance fees ................................................. 19,789
Interest on Directors' deferred compensation ................... 5,705
Custody fees (Note 2) .......................................... 2,923
Other .......................................................... 42,619
---------------
TOTAL EXPENSES ........................................................... 919,528
----------------
NETINVESTMENT INCOME .............................................................. 3,278,007
----------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss on investments sold during the year .......................... (5,632,874)
Change in unrealized depreciation of investments during the year ............... (2,770,396)
----------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS ................................... (8,403,270)
----------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS .............................. $ (5,125,263)
================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
9
BOULDER GROWTH & INCOME FUND, INC.
--------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
YEAR ENDED
JUNE 30,
----------------------------------
2002 2001
----- -----
OPERATIONS:
Net investment income $ 3,278,007 $ 3,994,351
Net realized loss on investments sold during the year (5,632,874) (2,913,272)
Change in unrealized appreciation/depreciation of investments during the year (2,770,396) 1,152,798
-------------- --------------
Net increase/decrease in net assets resulting from operations (5,125,263) 2,233,877
DISTRIBUTIONS:
Dividends paid from net investment income to Shareholders (3,351,050) (4,010,505)
-------------- --------------
TOTAL DISTRIBUTIONS (3,351,050) (4,010,505)
CAPITAL TRANSACTIONS:
Proceeds from capital stock issued for distributions reinvested -- 175,683
-------------- --------------
Net Increase in Net Assets Resulting From Capital Transactions -- 175,683
NET DECREASE IN NET ASSETS FOR THE YEAR (8,476,313) (1,600,945)
NET ASSETS:
Beginning of year 48,989,980 50,590,925
-------------- --------------
End of year (including undistributed net investment income of $334,970
and $488,277, respectively) $ 40,513,667 $ 48,989,980
============== ==============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
10
BOULDER GROWTH & INCOME FUND, INC.
FINANCIAL HIGHLIGHTS
FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH YEAR.
Contained below is per share operating performance data, total investment
returns, ratios to average net assets and other supplemental data. This
information has been derived from information provided in the financial
statements and market price data for the Fund's shares.
YEAR ENDED JUNE 30,
2002 2001 2000 1999 1998
-------------------------------------------------------------------
OPERATING PERFORMANCE:
Net asset value, beginning of year.............................. $ 8.65 $ 8.96 $ 10.07 $ 10.75 $ 10.17
---------- ---------- --------- --------- ---------
Net investment income........................................... 0.58 0.70 0.67 0.78 0.75
Net realized and unrealized gain/(loss) on investments.......... (1.49) (0.31) (1.02) (0.70) 0.59
---------- ---------- --------- --------- ---------
Total from investment operations................................ (0.91) 0.39 (0.35) 0.08 1.34
---------- ---------- --------- --------- ---------
DISTRIBUTIONS:
Dividends paid from net investment income to shareholders....... (0.59) (0.70) (0.76) (0.76) (0.76)
---------- ---------- --------- --------- ---------
Total distributions............................................. (0.59) (0.70) (0.76) (0.76) (0.76)
---------- ---------- --------- --------- ---------
Net asset value, end of year.................................... $ 7.15 $ 8.65 $ 8.96 $ 10.07 $ 10.75
========== ========== ========= ========= =========
Market value, end of year....................................... $ 6.78 $ 8.50 $ 8.25 $ 9.63 $ 9.63
========== ========== ========= ========= =========
Total investment return based on net asset value(a)............. (11.36)% 4.41% (3.70)% 0.64% 13.57%
========== ========== ========= ========= =========
Total investment return based on market value(a)................ (14.47)% 11.77% (6.81)% 7.85% 14.01%
========== ========== ========= ========= =========
RATIOS AND SUPPLEMENTAL DATA:
Ratio of expenses to average net assets......................... 1.95%+ 1.82%+ 2.51%+ 1.12% 1.12%
Ratio of net investment income to average net assets............ 6.96% 8.03% 7.08% 7.46% 7.11%
SUPPLEMENTAL DATA:
Portfolio turnover rate......................................... 180% 83% 53% 58% 73%
Net assets, end of year (in 000's).............................. $ 40,514 $ 48,990 $ 50,591 $ 56,591 $ 60,670
Number of shares outstanding at end of year (in 000's).......... 5,664 5,664 5,644 5,644 5,644
----------------------------------
(a) Assumes reinvestment of distributions at the price obtained by the Fund's Dividend Reinvestment Plan.
+ For the years ended June 30, 2002, 2001 and 2000, the ratio of expenses to
average net assets excluding the costs attributable to a proxy contest and
related matters was 1.65%, 1.26% and 1.55%, respectively.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
11
BOULDER GROWTH & INCOME FUND, INC.
The information in the table below is unaudited.
FINANCIAL DATA
PER SHARE OF
COMMON STOCK
------------------------------------
NYSE DIVIDEND
NAV CLOSING PRICE PAID
------- ------------ --------
7/31/01 .................. $8.79 $8.73 $ --
8/31/01 .................. 8.71 8.43 0.17
9/30/01 .................. 8.47 7.90 --
10/31/01 .................. 8.66 7.95 --
11/30/01 .................. 8.68 8.18 0.17
12/31/01 .................. 8.40 7.74 --
1/31/02 .................. 8.30 7.77 --
2/28/02 .................. 8.13 7.56 0.17
3/31/02 .................. 8.09 7.31 --
4/30/02 .................. 8.08 7.65 --
5/31/02 .................. 7.86 7.33 0.08
6/30/02 .................. 7.15 6.78 --
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
12
BOULDER GROWTH & INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Boulder Growth & Income Fund, Inc. (the "Fund"), formerly USLife Income
Fund, Inc., is registered under the Investment Company Act of 1940, as amended,
as a closed-end, non-diversified management investment company. The policies
described below are followed consistently by the Fund in the preparation of its
financial statements in conformity with accounting principles generally accepted
in the United States of America.
PORTFOLIO VALUATION: The net asset value of the Fund is determined by the
Fund's administrator no less frequently than on the last business day of each
week and month. It is determined by dividing the value of the Fund's net assets
by the number of shares of Common Stock outstanding. The value of the Fund's net
assets is deemed to equal the value of the Fund's total assets less the Fund's
liabilities. Securities listed on a national securities exchange are valued on
the basis of the last sale on such exchange on the day of valuation. In the
absence of sales of listed securities and with respect to securities for which
the most recent sale prices are not deemed to represent fair market value and
unlisted securities (other than money market instruments), securities are valued
at the mean between the closing bid and asked prices, or based on a matrix
system which utilizes information (such as credit ratings, yields and
maturities) from independent sources. Investments for which market quotations
are not readily available are valued at fair value as determined in good faith
by or under the direction of the Board of Directors of the Fund, including
reference to valuations of other securities which are considered comparable in
quality, maturity and type. Investments in money market instruments, which
mature in 60 days or less at the time of purchase, are valued at amortized cost.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded as of the trade date. Realized gains and losses from securities sold
are recorded on the identified cost basis. Dividend income is recorded on
ex-dividend dates. Interest income is recorded on the accrual basis, with
premiums and discounts being amortized or accreted, respectively.
Cash distributions received from the Fund's investment in real estate
investment trust ("REITs") and registered investment companies ("RICs") are
recorded as income. If the Fund is subsequently informed that such distributions
received or a portion thereof are designated as returns of capital, the Fund
will reclassify such amounts from income and reduce the cost basis of such
securities.
REPURCHASE AGREEMENTS: The Fund may engage in repurchase agreement
transactions. The Fund's Management reviews and approves periodically the
eligibility of the banks and dealers with which the Fund enters into repurchase
agreement transactions. The value of the collateral underlying such transactions
is at least equal at all times to the total amount of the repurchase
obligations, including interest. The Fund maintains possession of the collateral
and, in the event of counterparty default, the Fund has the right to use the
collateral to offset losses incurred. There is the possibility of loss to the
Fund in the event the Fund is delayed or prevented from exercising its rights to
dispose of the collateral securities.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Dividends from net investment
income, if any, are declared and paid annually. The Fund had been declaring and
paying dividends quarterly, however the Fund's Board of Directors changed this
policy to an annual payout rather than quarterly at the April 2002 Board of
Directors meeting. Distributions to shareholders are recorded on the ex-dividend
date. Any net realized short-term capital gains will be distributed to
shareholders at least annually. Any net realized long-term capital gains may be
distributed to shareholders at least annually or may be retained by the Fund as
determined by the Fund's Board of Directors. Capital gains retained by the Fund
are subject to tax at the corporate tax rate. Subject to the Fund qualifying as
a registered investment company, any taxes paid by the Fund on such net realized
long-term gains may be used by the Fund's Shareholders as a credit against their
own tax liabilities.
FEDERAL INCOME TAXES: The Fund intends to qualify as a registered
investment company by complying with the requirements under subchapter M of the
Internal Revenue Code of 1986, as amended, applicable to RICs and intends to
distribute substantially all of its taxable net investment income to its
shareholders. Therefore, no Federal income tax provision is required.
Income and capital gain distributions are determined and characterized in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. These differences are primarily due to (1) differing
treatments of income and gains on various investment securities held by the
Fund, including timing differences, (2) the attribution of expenses against
certain components of taxable investment income, and (3) federal regulations
requiring proportional allocation of income and gains to all classes of
Shareholders. The Internal Revenue Code of 1986, as amended, imposes a 4%
nondeductible excise tax on the Fund to the extent the Fund does not distribute
by the end of any calendar year at least (1) 98% of the sum of its net
investment income for that year and its capital gains (both long term and short
term) for its fiscal year and (2) certain undistributed amounts from previous
years.
OTHER: The preparation of financial statements in accordance with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could differ
from those estimates.
13
BOULDER GROWTH & INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
2. INVESTMENT CO-ADVISORY FEES, DIRECTORS' FEES, ADMINISTRATION FEE, CUSTODY FEE
AND TRANSFER AGENT FEE
Beginning on January 23, 2002, Boulder Investment Advisers, L.L.C. ("BIA")
and Stewart Investment Advisers ("SIA") serve as the Fund's Co-Investment
Advisers (the "Advisers"). From January 23, 2002 to April 25, 2002, the Fund
paid the Advisers a monthly fee at an annual rate of .50% of the value of the
Fund's average monthly net assets plus 2.50% of the Fund's net investment income
during the month. On April 26, 2002, the Fund's shareholders approved a change
in the investment advisory agreement. Effective April 26, 2002, the Fund pays
the Advisers a monthly fee at an annual rate of 1.25% of the value of the Fund's
average monthly net assets. Although the Advisers received a lesser fee equal to
that paid to the previous adviser (see discussion regarding VALIC below) until
such time as the Advisers had invested more than 50% of the value of the Fund's
assets in equity securities, which occured on May 1, 2002. The equity owners of
BIA are Evergreen Atlantic, LLC, a Colorado limited liability company ("EALLC'),
and the Lola Brown Trust No. 1B (the "Lola Trust"), each of which is considered
to be an "affiliated person" of the Fund as that term is defined in the 1940
Act. Stewart West Indies Trading Company, Ltd. is a Barbados international
business company doing business as Stewart Investment Advisers. SIA receives a
monthly fee equal to 75% of the fees earned by the Advisers, and BIA receives
25% of the fees earned by the Advisers. The equity owner of SIA is the Stewart
West Indies Trust, considered to be an "affiliated person" of the Fund as that
term is defined in the 1940 Act.
Prior to January 23, 2002, the Fund paid The Variable Annuity Life
Insurance Company ("VALIC"), a monthly fee equal to the sum of a) .04167% of the
Fund's adjusted net assets (month end net assets, less net investment income for
the month); and b) 2.50% of the Fund's net investment income, minus interest on
borrowed funds during the month.
Beginning on January 23, 2002, Fund Administrative Services, LLC ("FAS")
serves as the Fund's Administrator. Under the Administration Agreement, FAS
provides certain administrative and executive management services to the Fund
including: providing the Fund's principal offices and executive officers,
overseeing and administering all contracted service providers, making
recommendations to the Board regarding policies of the Fund, conducting
shareholder relations, authorizing expenses and other administrative tasks.
Under the Administration Agreement, the Fund pays FAS a monthly fee, calculated
at an annual rate of 0.30% of the value of the Fund's average monthly net assets
out of which FASis required to pay any fees for outsourcing any administrative,
custodial or transfer agent, which it has done. The equity owners of FAS are
EALLC and the Lola Trust, each of which is considered to be an "affiliated
person" of the Fund as that term is defined in the 1940 Act.
Prior to January 23, 2002, the Fund reimbursed VALIC for services performed
on behalf of the Fund by the Secretary and the Treasurer and personnel operating
under their direction. For the year ended June 30, 2002, the Fund paid VALIC
$25,000 for providing these services.
Effective January 28, 2002, the Fund pays each Director who is not a
director, officer or employee of the Advisers or FAS a fee of $3,000 for each
in-person meeting of the Board of Directors and $500 for each telephone meeting.
In addition, the Fund will reimburse all Directors for travel and out-of-pocket
expenses incurred in connection with such meetings.
FAS has hired PFPC Inc. ("PFPC"), an indirect, majority-owned subsidiary of
The PNC Financial Services Group, to serve as a sub-administrator.
Mellon Investor Services, LLC ("Mellon"), serves as the Fund's Transfer
Agent. FAS pays Mellon an annual Transfer Agent fee as well as certain expenses.
The Fund may also pay for certain out-of-pocket expenses.
State Street Bank and Trust Company ("State Street"), serves as the Fund's
Custodian. FAS pays State Street a $150.00 monthly maintenance fee as well as
certain expenses. The Fund may also pay for certain out-of-pocket expenses.
3. CHANGE IN THE FUND'S INVESTMENT POLICIES, INVESTMENT ADVISERS AND RISKS
INVOLVED
CHANGE IN INVESTMENT POLICIES
At a meeting held January 23, 2002, the Board of Directors voted to
eliminate the Fund's non-fundamental investment policy which prohibited the Fund
from investing for purposes of control or management of any company. Removal of
this restriction provides the Fund with flexibility to consider a full range of
reasonable investment options when the Advisers consider a particular
investment. The Advisers currently do not intend to pursue this type of
investment in most circumstances.
The Board also voted to eliminate the Fund's non-fundamental investment
policy which prohibited the Fund from investing in other investment companies.
In the Advisers' view, investing in other registered investment companies
("RICs") can be a good way to indirectly purchase assets or a class of assets
held by such companies. Under current law, the Fund is able to purchase up to 3%
of the
14
BOULDER GROWTH & INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS --(CONTINUED)
voting securities of any one RIC and invest up to an aggregate of 10% of the
Fund's assets in RICs.
CHANGE IN PORTFOLIO MANAGER
On January 23, 2002, shareholders approved new advisory agreements with BIA
and SIA, resulting in a change to the persons who are primarily responsible for
the day-to-day management of the Fund's portfolio. Stewart R. Horejsi is the
primary portfolio manager for SIA and is the Fund's primary portfolio manager.
He is responsible for the day-to-day strategic management of the Fund's assets.
Mr. Horejsi has full discretion regarding specific investment decisions and the
Fund's asset allocation among cash, common stocks and fixed income investments.
In addition to the Fund, Mr. Horejsi has also managed the Boulder Total Return
Fund, Inc. ("BTF") since August 1999. BTF is a closed-end registered investment
company traded on the NYSE. Mr. Horejsi was General Manager of Brown Welding
Supply, LLC, from April 1994 until the company's sale in 1999; and the President
or Manager of various subsidiaries associated with the Horejsi family since the
early 1980's. Mr. Horejsi has been the investment adviser for the Horejsi family
trusts (i.e., the Lola Brown Trust, the Ernest Horejsi Trust No. 1B, the Stewart
R. Horejsi Trust No. 2 and certain other related trusts and affiliates) since
the early 1980's. As of July 31, 2002, the size of these trusts' and affiliates'
common stock portfolio was approximately $574 million. Mr. Horejsi has been the
Director and President of the Horejsi Family Charitable Foundation, Inc. since
1997. Mr. Horejsi received a Masters Degree in Economics from Indiana University
in 1961 and a Bachelor of Science Degree in Industrial Management from the
University of Kansas in 1959.
Carl D. Johns, the Fund's Vice President and Treasurer, is responsible for
managing the bonds in the Fund's portfolio. Mr. Johns has assisted in the
management of BTF since August 1999. Prior to joining BIA, he worked at Flaherty
& Crumrine Incorporated, an investment adviser, from 1992 to 1998. During that
period he was an Assistant Treasurer for three NYSE-listed investment companies.
Mr. Johns received a Bachelors Degree in Mechanical Engineering at the
University of Colorado in 1985, and a Masters Degree in Finance from the
University of Colorado in 1991.
CHANGES IN RISK
Risk is inherent in all investing. Investing in any investment company
security involves risk, including the risk that you may receive little or no
return on your investment or that you may lose part or all of your investment.
Therefore, before investing you should consider carefully the following risks
that you assume when you invest.
On April 26, 2002, the Fund's shareholders approved changes to the Fund's
investment objective and certain investment restrictions. As a result of the
changes to the Fund, the primary risks of investing in the Fund have changed.
The Fund formerly held a substantial amount of non-investment grade bonds
("junk bonds"), many of which the Advisers believe are risky investments. The
Fund is transitioning away from these investments and investing in common
stocks, without limit, for capital appreciation, as well as common stocks that
pay dividends, including real estate investment trusts ("REITs") and other
closed-end investment companies ("RICs"). Investing in common stocks may subject
shareholders to more risk than investing in bonds. The Advisers believe that
evaluating whether to buy a company's common stock is more involved than
evaluating whether to buy the same company's bonds; the Advisers believe there
are more variables that need to be considered. While both bonds and common
stocks are subject to market risk (i.e., the risk that the price of a security
(a stock or bond) will rise or fall due to various unpredictable market
conditions), common stock price variability has been historically greater than
that of bonds.
The Fund is now a "non-diversified management company" as defined by the
Investment Company Act of 1940, as amended (the "1940 Act"). This permits the
Fund to buy fairly significant positions in stocks of companies that the
Advisers find attractive, permitting the Fund to hold larger positions in fewer
companies. A more concentrated portfolio may cause the Fund's net asset value to
be more volatile than it has been historically and thus may subject shareholders
to more risk. The Fund may hold a substantial position (up to 25% of its assets)
in the common stock of a single issuer. As of June 30, 2002, the Fund held a
significant position in Berkshire Hathaway, Inc., and thus, the volatility of
the Fund's common stock, and the Fund's net asset value and its performance in
general, depends disproportionately more on the performance of this single
issuer than that of a more diversified fund.
The Fund may now invest in real estate, REITs (real estate investment
trusts) and other real estate securities. REITs are securities of companies
whose primary objective is investment in real property or providing services to
real property interests. The Fund may invest up to 25% of its assets in REIT
securities. The Fund intends to invest in REIT securities primarily for income.
Risks associated with investing in REITs include the potential for loss of value
if there is an underlying decline in value of the properties in which the REIT
invests. Property valuations may rise and fall with either local economic
conditions or with the national economy. Furthermore, the dividend income paid
by a REIT may be reduced or eliminated. In addition, the Fund bears its ratable
share of REIT expenses while still paying management fees on the Fund assets so
invested.
15
BOULDER GROWTH & INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The Fund may now invest up to 10% of its assets in other investment
companies registered under the 1940 Act. The Fund may invest in other closed-end
RICs when they are trading at a discount, and when market conditions seem
appropriate to the Advisers. The Fund intends to normally invest in RICs that
pay dividends. The risks associated with investments in RICs include the risk
that the dividend paid by the RIC could be reduced or eliminated. As a
shareholder in another fund, the Fund will pay double fees, by bearing its
ratable share of that fund's expenses, including management fees, and remaining
subject to the Fund's advisory and administrative fees with respect to the
assets so invested
4. PURCHASES AND SALES OF SECURITIES
Cost of purchases and proceeds from sales of securities for the year ended
June 30, 2002, excluding short-term investments, aggregated $84,403,350 and
$85,166,759 respectively.
At June 30, 2002, aggregate gross unrealized appreciation for all
securities in which there is an excess of value over tax cost was $162,044 and
aggregate gross unrealized depreciation for all securities in which there is an
excess of tax cost over value was $9,829,055.
5. COMMON STOCK
At June 30, 2002, 10,000,000 of $0.01 par value Common Stock were
authorized. There were no Common Stock transactions for the year ended June 30,
2002. For the year ended June 30, 2001, the Fund issued 20,124 shares as
reinvested dividends under the Automatic Dividend Investment Plan, with a market
value of $175,683.
6. SIGNIFICANT SHAREHOLDERS
On June 30, 2002, trusts and other entities affiliated with the Horejsi
family owned 1,171,400 shares of Common Stock of the Fund, representing
approximately 20.68% of the total Fund shares.
7. POST OCTOBER LOSS
Under the current tax law, capital and currency losses realized after
October 31, may be deferred and treated as occuring on the first day of the
following fiscal year. For the fiscal year ended June 30, 2002, the Fund elected
to defer capital losses of $7,281,430 occuring between November 1, 2001 and June
30, 2002. Such losses will be treated as arising on the first day of the year
ending June 30, 2003.
8. CAPITAL LOSS CARRYFORWARDS
The Fund had available for Federal income tax purposes unused capital
losses of $1,114,468, which will expire in 06/30/09.
9. SHARE REPURCHASE PROGRAM
In accordance with Section 23(c) of the Investment Company Act of 1940, as
amended, the Fund hereby gives notice that it may from time to time repurchase
shares of the Fund in the open market at the option of the Board of Directors
and upon such terms as the Directors shall determine.
10. CHANGE IN INDEPENDENT ACCOUNTANTS
Based on the recommendation of the audit committee of the Fund, the Board
of Directors has determined not to retain Ernst & Young LLP as the Fund's
independent auditor and voted to appoint KPMG LLP for the Fund's fiscal year
ended June 30, 2002. During the two most recent fiscal years, Ernst & Young LLP
audit reports contained no adverse opinion or disclaimer of opinion; nor were
its reports qualified or modified as to uncertainty, audit scope, or accounting
principle. Further, in connection with its audits for the two most recent fiscal
years and through August 1, 2001 there were no disagreements between the Fund
and Ernst & Young LLP on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure, which if not
resolved to the satisfaction of Ernst & Young LLP would have caused it to make
reference to the disagreements in its report on the financial statements for two
years.
16
BOULDER GROWTH & INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
11. TAX BASIS DISTRIBUTIONS
Income distributions and capital gain distributions are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. The character of distributions paid on a tax basis during
2002 and 2001 is as follows:
2002 2001
----- -----
Distributions paid from:
Ordinary Income ................... $3,351,050 $4,010,505
Short-Term Capital Gain ........... -- --
Long-Term Capital Gain ............ -- --
---------- ----------
$3,351,050 $4,010,505
========== ==========
As of June 30, 2002, the components of distributable earnings on a tax
basis were as follows:
Ordinary Income .................................... $ 588,971
Unrealized Depreciation ............................ (9,667,011)
------------
$ (9,078,040)
The Fund had available for tax basis distributions purposes accumulated
capital and other losses of $8,395,898, which will expire in 06/30/09.
Net investment income and realized gain and loss for federal income tax
purposes differ from that reported in the financial statements because of
permanent and temporary book and tax differences. These differences are
primarily related to differing treatment of long-term capital gains dividends
and excess ordinary distributions received from Real Estate Investment Trusts
and wash sales. Permanent book and tax basis differences of $(80,264) and
$80,264 were reclassified at June 30, 2002 between undistributed net investment
income and accumulated net realized loss on investments, respectively, for the
Boulder Growth & Income Fund, Inc.
ADDITIONAL INFORMATION (UNAUDITED)
AUTOMATIC DIVIDEND REINVESTMENT PLAN
The Board of Directors recently determined to eliminate the Fund's
Automatic Dividend Reinvestment Plan.
PRIVACY STATEMENT
Pursuant to SEC Regulation S-P (Privacy of Consumer Financial Information)
the Directors of the Boulder Growth & Income Fund, Inc. have established the
following policy regarding information about the Fund's shareholders. We
consider all shareholder data to be private and confidential, and we hold
ourselves to the highest standards in its safekeeping and use. The Fund collects
nonpublic information (e.g., your name, address, Social Security Number, Fund
holdings) about shareholders from transactions in Fund shares. The Fund will not
release information about current or former shareholders (except as permitted by
law) unless one of the following conditions is met: (i) we receive your prior
written consent; (ii) we believe the recipient to be you or your authorized
representative; or (iii) we are required by law to release information to the
recipient. The Fund has not and will not in the future give or sell information
about its current or former shareholders to any company, individual, or group
(except as permitted by law). The Fund will only use information about its
shareholders as necessary to service or maintain shareholder accounts in the
ordinary course of business. Internally, we also restrict access to shareholder
personal data to those who have a specific need for the records. We maintain
physical, electronic and procedural safeguards that comply with Federal
standards to guard your personal data.
17
BOULDER GROWTH & INCOME FUND, INC.
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors and Shareholders
Boulder Growth & Income Fund, Inc.
We have audited the accompanying statement of assets and liabilities of Boulder
Growth & Income Fund, Inc. (formerly the USLIFE Income Fund, Inc.) including the
portfolio of investments, as of June 30, 2002, and the related statement of
operations, statement of changes in net assets, and financial highlights for the
year then ended. These financial statements are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements based on our audit. The statement of changes in net assets for the
year ended June 30, 2001 and the financial highlights for each of the years in
the four-year period ended June 30, 2001 were audited by other auditors whose
report dated August 1, 2001 expressed an unqualified opinion on that financial
statement and those financial highlights.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of June 30, 2002 by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Boulder Growth & Income Fund,
Inc. as of June 30, 2002, the results of its operations, changes in its net
assets, and financial highlights for the year then ended, in conformity with
accounting principles generally accepted in the United States of America.
[GRAPHIC OMITTED][
KPMG LOGO ART
Boston, Massachusetts
July 31, 2002
18
BOULDER GROWTH & INCOME FUND, INC.
INFORMATION ABOUT DIRECTORS AND OFFICERS (UNAUDITED)
Set forth in the following table is information about the nominee for
election to the Board and the existing Directors of the Fund, together with
their address, age, position with the Fund, term of office, length of time
served and principal occupation during the last five years.
----------------------------------------------------------------------------------------------------------------------------------
NAME, ADDRESS*, AGE POSITION, LENGTH OF PRINCIPAL OCCUPATION(S) AND OTHER DIRECTORSHIPS NUMBER OF FUNDS
TERM SERVED, AND TERM HELD IN FUND COMPLEX
OF OFFICE DURING THE PAST FIVE YEARS OVERSEEN BY
DIRECTOR
----------------------------------------------------------------------------------------------------------------------------------
Non-Interested Directors
----------------------------------------------------------------------------------------------------------------------------------
ALFRED G. ALDRIDGE, JR. Director of the Fund Retired; from 1982-2002, Sales Manager of 2
BRIG. GEN. (RETIRED) since January 2002. Shamrock Foods Company; Director of the
CAL. AIR NATIONAL GUARD Current term expires at Fiesta Bowl, Tempe, AZ. Director, Boulder
Age: 64 Annual Meeting for Total Return Fund, Inc., since 1999.
2004
RICHARD I. BARR Director of the Fund Retired; from 1963-2001, Manager of 2
Age: 64 since January 2002. Advantage Sales and Marketing, Inc.
Current term expires at Director, Boulder Total Return Fund, Inc.,
Annual Meeting for since 1999; Director, First Financial Fund,
2004 Inc., since 2001.
JOEL W. LOONEY Director of the Fund Partner, Financial Management Group, LLC 2
Age: 40 since January, 2002. since July 1999. Director, Boulder Total
Current term expires at Return Fund, Inc., since January 2001.
Annual Meeting for
2003
----------------------------------------------------------------------------------------------------------------------------------
Interested Directors**
----------------------------------------------------------------------------------------------------------------------------------
SUSAN L. CICIORA Director of the Fund Owner, Superior Interiors (interior design for 2
Age: 38 since January 2002. custom homes) since 1995; Corporate
Current term expires at Secretary, Ciciora Custom Builders, LLC
Annual Meeting for 2003 since 1995; Trustee of the Brown Trust and
the EH Trust. Director, Boulder Total Return
Fund, Inc., since November 2001.
STEPHEN C. MILLER Director and Chairman President and General Counsel of Boulder 2
Age: 49 of the Board since Investment Advisers, LLC ("BIA"); Manager,
January 2002. Fund Administrative Services, LLC ("FAS");
President of the Fund. Vice President of Stewart Investment
Nominee for term as Advisers ("SIA"); Director, Chairman of the
Director expire at Board and President of Boulder Total Return
Annual Meeting for Fund, Inc., since 1999. President and
2005 General Counsel, Horejsi, Inc. (liquidated in
1999); General Counsel, Brown Welding Supply, LLC (sold in
1999); Of Counsel, Krassa & Miller, LLC since 1991.
* Unless otherwise specified, the Directors' respective addresses are c/o Boulder Growth & Income Fund, Inc., 1680
38th Street, Suite 800, Boulder, Colorado 80301.
** Mr. Miller is an "interested person" because he is an officer of BIA and SIA, the Fund's investment advisers. Ms.
Ciciora is an "interested person" as a result of her beneficial ownership of Fund shares.
19
BOULDER GROWTH & INCOME FUND, INC.
INFORMATION ABOUT DIRECTORS AND OFFICERS (UNAUDITED) (CONTINUED)
The names of the executive officers of the Fund (other than Mr. Miller, who
is described above) are listed in the table below. Each officer was elected to
office by the Board at a meeting held on January 23, 2002. This table also shows
certain additional information. Each officer will hold such office until a
successor has been elected by the Board.
---------------------------------------------------------------------------------------------------------------------------------
NAME, ADDRESS, AGE POSITION, LENGTH OF PRINCIPAL OCCUPATION(S) AND OTHER DIRECTORSHIPS
TERM SERVED, AND TERM HELD
OF OFFICE DURING THE PAST FIVE YEARS
---------------------------------------------------------------------------------------------------------------------------------
CARL D. JOHNS Chief Financial Officer, Vice President and Treasurer of BIA and Assistant
1680 38th Street, Chief Accounting Officer, Manager of FAS, since April, 1999; Vice President, Chief
Suite 800 Vice President and Financial Officer and Chief Accounting Officer, Boulder
Boulder, CO 80301 Treasurer since January Total Return Fund, Inc., since 1999; Employee of
Age: 39 2002. Appointed annually. Flaherty & Crumrine Incorporated prior to December 31,
1998; Assistant Treasurer of Preferred Income Management
Fund Incorporated, Preferred Income Fund Incorporated and
Preferred Income Opportunity Fund Incorporated prior to
December 31, 1998.
STEPHANIE KELLEY Secretary since January 2002. Secretary, Boulder Total Return Fund, Inc., since
1680 38th Street, Appointed annually. October 27, 2000; Assistant Secretary and Assistant
Suite 800 Treasurer of various Horejsi Affiliates; employee of FAS
Boulder, CO 80301 since March 1999.
Age: 45
NICOLE L. MURPHEY Assistant Secretary Assistant Secretary, Boulder Total Return Fund, Inc.,
1680 38th Street, since January 2002. since October 27, 2000; employee of FAS since July 1999.
Suite 800 Appointed annually.
Boulder, CO 80301
Age: 25
20
BOULDER GROWTH & INCOME FUND, INC.
MEETING OF SHAREHOLDERS -- VOTING RESULTS (UNAUDITED)
On April 26, 2002, the Fund held a Special Meeting of Shareholders to (1)
approve the proposed Investment Advisory Agreement with Boulder Investment
Advisors, L.L.C., (2) approve the proposed Investment Advisory Agreement with
Stewart Investment Advisers, (3) approve a change of the Fund's investment
objective to total return, (4) approve changing the Fund's classification and
related fundamental investment restriction to make the Fund a non-diversified
investment company, (5) approve an amendment to the Fund's fundamental
investment restriction regarding borrowing, (6) approve an amendment to the
Fund's fundamental investment restriction regarding the pledging of assets, (7)
approve an amendment to the Fund's fundamental investment restriction regarding
the issuance of senior securities, (8) approve an amendment to the Fund's
fundamental investment restriction regarding investment in real estate, real
estate investment trusts ("REITs") and other real estate securities, (9) approve
the deletion of the Fund's fundamental investment restriction regarding the
ability to hold greater than 5% in one issuer.
PROPOSAL 1:
INVESTMENT ADVISORY AGREEMENT WITH BOULDER INVESTMENT ADVISERS, L.L.C.
----------------------------------------------------------------------
# OF VOTES CAST % OF VOTES CAST
--------------- ---------------
Affirmative ................................................................... 3,032,976 83.7
Against ....................................................................... 425,433 11.7
Abstain ....................................................................... 164,664 4.6
--------- -----
TOTAL ................................................................ 3,623,073 100.0
========= =====
PROPOSAL 2:
INVESTMENT ADVISORY AGREEMENT WITH STEWART INVESTMENT ADVISERS
--------------------------------------------------------------
# OF VOTES CAST % OF VOTES CAST
--------------- ---------------
Affirmative 3,028,404 83.6
Against 434,172 12.0
Abstain 160,497 4.4
--------- -----
TOTAL 3,623,073 100.0
========= =====
PROPOSAL 3:
CHANGE OF THE FUND'S INVESTMENT OBJECTIVE TO TOTAL RETURN
---------------------------------------------------------
# OF VOTES CAST % OF VOTES CAST
--------------- ---------------
Affirmative 3,025,199 83.5
Against 442,407 12.2
Abstain 155,467 4.3
--------- -----
TOTAL 3,623,073 100.0
========= =====
PROPOSAL 4:
CHANGE THE FUND'S CLASSIFICATION AND RELATED FUNDAMENTAL INVESTMENT
RESTRICTION TO MAKE THE FUND A NON-DIVERSIFIED INVESTMENT COMPANY
-------------------------------------------------------------------
# OF VOTES CAST % OF VOTES CAST
--------------- ---------------
Affirmative 2,963,981 81.8
Against 492,765 13.6
Abstain 166,327 4.6
--------- -----
TOTAL 3,623,073 100.0
========= =====
21
BOULDER GROWTH & INCOME FUND, INC.
MEETING OF SHAREHOLDERS -- VOTING RESULTS (UNAUDITED) (CONTINUED)
PROPOSAL5:
AMEND THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION REGARDING BORROWING
-----------------------------------------------------------------------
# OF VOTES CAST % OF VOTES CAST
--------------- ---------------
Affirmative 2,975,179 82.1
Against 487,345 13.5
Abstain 160,549 4.4
--------- -----
TOTAL 3,623,073 100.0
========= =====
PROPOSAL 6:
AMEND THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION REGARDING THE PLEDGING
OF ASSETS
--------------------------------------------------------------------------
# OF VOTES CAST % OF VOTES CAST
--------------- ---------------
Affirmative 2,937,777 81.1
Against 507,175 14.0
Abstain 178,121 4.9
--------- -----
TOTAL 3,623,073 100.0
========= =====
PROPOSAL 7:
AMEND THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION REGARDING THE ISSUANCE
OF SENIOR SECURITIES
--------------------------------------------------------------------------
# OF VOTES CAST % OF VOTES CAST
--------------- ---------------
Affirmative 2,939,335 81.1
Against 514,109 14.2
Abstain 169,629 4.7
--------- -----
TOTAL 3,623,073 100.0
========= =====
PROPOSAL 8:
AMEND THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION REGARDING
INVESTMENT IN REAL ESTATE, REAL ESTATE INVESTMENT TRUSTS ("REITS") AND
OTHER REAL ESTATE SECURITIES
----------------------------------------------------------------------
# OF VOTES CAST % OF VOTES CAST
--------------- ---------------
Affirmative 3,058,304 84.4
Against 421,070 11.6
Abstain 143,699 4.0
--------- -----
TOTAL 3,623,073 100.0
========= =====
PROPOSAL 9:
DELETION OF THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION REGARDING THE ABILITY
TO GREATER THAN 5% IN ONE ISSUER
-------------------------------------------------------------------------------
# OF VOTES CAST % OF VOTES CAST
--------------- ---------------
Affirmative 2,959,985 81.7
Against 504,800 13.9
Abstain 158,288 4.4
--------- -----
TOTAL 3,623,073 100.0
========= =====
22
This Page Left Blank Intentionally.
BOULDER GROWTH & INCOME FUND, INC.
85 Challenger Road
Ridgefield Park, NJ 07660
[GRAPHIC OMITTED]
MOUNTAIN ART
BOULDER
GROWTH & INCOME
FUND, INC.
(NYSE: BIF)
--------------------------------------------------------------------------------
ANNUAL REPORT
JUNE 30, 2002
DIRECTORS
Brig. Gen (Ret.) Alfred G. Aldridge Jr.
Richard I. Barr
Susan L. Ciciora
Joel W. Looney
Stephen C. Miller
OFFICERS
Stephen C. Miller
President
Carl D. Johns
Vice President and Treasurer
Stephanie J. Kelley
Secretary
Nicole L. Murphey
Assistant Secretary
WWW.BOULDERFUNDS.NET
If you have questions regarding shares you held in a brokerage account contact
your broker, or, if you have physical possession of your shares in certificate
form, contact the Fund's Transfer Agent & Shareholder Servicing Agent --
Mellon Investor Services LLC, at:
85 Challenger Road
Ridgefield Park, NJ 07660
This report is sent to shareholders of Boulder Growth & Income 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.