PROXY STATEMENT IN OPPOSITION TO THE SOLICITATION BY THE BOARD OF
DIRECTORS OF THE ZWEIG TOTAL RETURN FUND, INC.
ANNUAL MEETING OF STOCKHOLDERS (To be held on May 12, 2004)
Our names are Phillip Goldstein and Arthur Lipson. We are
shareholders of The Zweig Total Return Fund, Inc. (the "Fund").
We are sending this proxy statement and the enclosed GREEN proxy
card to stockholders of record on February 13, 2004 (the "Record
Date") of the Fund. We are soliciting a proxy to vote your
shares at the 2004 Annual Meeting of Stockholders of the Fund
(the "Meeting") and at any and all adjournments or postponements
of the Meeting. Please refer to the Fund's proxy soliciting
material for additional information concerning the Meeting and
the matters to be considered by the shareholders including the
election of directors.
This proxy statement and the enclosed GREEN proxy card are first
being sent to shareholders of the Fund on or about April 23,
2004.
INTRODUCTION
There are two matters that the Fund has scheduled to be
voted upon at the Meeting:
1. The election of three persons to serve as directors of the
Fund.
2.A proposal to convert the Fund to an open-end investment Fund.
In addition, we intend to introduce the following proposal
at the Meeting.
3. A recommendation to reinstate the annual 10% cash
distribution policy which was eliminated in 2003.
With respect to these matters, we are soliciting a proxy to vote
your shares FOR the election of our nominees
and FOR Proposals 2 and 3.
How Proxies Will Be Voted
All of the proposals scheduled by the Fund to be voted upon at
the Meeting are included on the enclosed GREEN proxy card. If
you wish to vote FOR the election of our nominees and/or FOR our
proposal to reinstate the Fund's 10% distribution policy, you may
do so by completing and returning a GREEN proxy card.
If you return a GREEN proxy card to us or to our agent, your
shares will be voted on each matter as you indicate unless the
board of directors determines not to permit us to vote our
proxies, in which case your shares may not be voted at the
Meeting and we may consider other options including filing a
lawsuit to order the Fund to count your votes and/or declining to
attend the Meeting which may prevent a quorum from being reached.
If you do not indicate how your shares are to be voted on a
matter, they will be voted FOR the election of our nominees to
the Board and FOR Proposals 2 and 3. If you return a GREEN proxy
card, you will be granting the proxy holder(s) discretionary
authority to vote on any other matters of which they are not now
aware that may come before the Meeting including matters relating
to the conduct of the Meeting.
Voting Requirements
We do not intend to propose an adjournment of the Meeting. If an
adjournment is proposed, we will vote for or against such
adjournment in our discretion. Please refer to the Fund's proxy
statement for the quorum requirements and the voting requirements
for Proposals 1 and 2. Proposal 3 requires a majority of the
votes cast for approval.
Revocation of Proxies
You may revoke any proxy prior to its exercise by (i) delivering
a written revocation of your proxy at the meeting; (ii) executing
and delivering a later dated proxy to me or to the Fund or to our
respective agents; or (iii) voting in person at the Meeting.
(Attendance at the Meeting will not in and of itself revoke a
proxy.) There is no limit on the number of times you may revoke
your proxy prior to the Meeting. Only the latest dated, properly
signed proxy card will be counted.
Information Concerning the Soliciting Shareholders
Phillip Goldstein and Arthur Lipson are the Soliciting
Shareholders. Mr. Goldstein's address is 60 Heritage Drive,
Pleasantville, NY 10570 and Mr. Lipson's address is 2594 E Bengal
Boulevard, Salt Lake City, UT 84121. Mr. Goldstein and Mr.
Lipson are investment managers.
Since December 1, 1992, Mr. Goldstein has been the president and
50% shareholder of Kimball & Winthrop, Inc., the general partner
of Opportunity Partners L.P., a private investment partnership.
Mr. Goldstein is also the portfolio manager of Opportunity
Partners. Since 1996, Mr. Goldstein has taken an active role in
urging the management of various companies to take actions that
he believed would benefit those companies and their shareholders.
His actions have included discussions with management, submitting
a shareholder proposal, conducting a proxy contest and filing a
lawsuit alleging breach of fiduciary duty.
Mr. Lipson is the sole owner of Western Investment LLC (WILLC).
WILLC is the investment manager of certain private investment
entities.
As of March 4, 2004, Mr. Goldstein and Mr. Lipson are deemed to
be the beneficial owners of 646,300 and 1,876,230 shares of
Common Stock owned by them and their clients. All of their
purchases of Common Stock have been made since July 2003 and all
of their beneficially owned shares are held in street name, some
of which are margin accounts. There have been no sales and no
shares are held in record name.
REASONS FOR THE SOLICITATION
We believe the Fund's board of directors made a serious mistake
when they eliminated the Fund's long-standing annual 10% cash
distribution policy because the Fund's shares quickly went from a
premium to a discount. We wish to afford shareholders an
opportunity to vote to reinstate the 10% cash distribution policy
and to elect directors who will abide by the will of the
shareholders. In addition, we support open-ending the Fund
without any redemption fee so that the discount will be
permanently eliminated.
OTHER CONSIDERATIONS
If our nominees are elected, there is no assurance that the
entire board will agree to reinstate the 10% cash distribution
policy. We believe that all shareholders of the Fund will
benefit by having an opportunity to vote for our proposal and to
elect directors who are committed to abiding by their will. We
also have personal financial incentives to increase the Fund's
stock price because our clients who hold shares of the Fund pay
us fees that are based upon the realized and unrealized gains
that they earn. These fees may partially depend on the value of
the Fund's shares. We will also benefit from an increase in the
Fund's share price as we indirectly own shares through our
investments in certain investment vehicles that we manage.
PROPOSAL 1: ELECTION OF DIRECTORS
At the Meeting, we intend to nominate the following persons for
election as a director for a term expiring in 2007 and 2005
respectively. None of our nominees has any arrangement or
understanding with any person with respect to any future
employment by the Fund or by any affiliate of the Fund. We do
not know of any material conflicts of interest that would
adversely affect any of our nominees from acting in the best
interest of the Fund and we believe that all of our nominees
would be considered independent directors if elected.
Phillip Goldstein (Age 59), 60 Heritage Drive, Pleasantville, NY
10570 (Term to expire in 2007)
Mr. Goldstein has been an investment advisor since 1992; He has
been a director of Brantley Capital Corporation since 2002 and of
The Mexico Equity and Income Fund since 1999.
Arthur Lipson (Age 61), 2594 E Bengal Boulevard, Salt Lake City,
UT 84121 (Term to expire in 2007)
Mr. Lipson has managed private investment partnerships since
1995. Prior to that he was Manager of Fixed Income Research at
Lehman Brothers Inc and Paine Webber Group Inc. He was the
creator of the Lehman Brothers Bond Index.
Elizabeth Tashjian (Age 47), University of Utah, Department of
Finance, 1645 E Campus Center Drive Room 109,
Salt Lake City, UT 84112 (Term to expire in 2005).
Professor Tashjian is an Associate Professor of Finance at the
University of Utah. She received her Ph.D. in Finance from Purdue
University and her B.A. in Mathematics from Boston College. Her
research interests include corporate financial distress. As a
member of The Center for the Representation of Multi-Dimensional
Information, which develops 3D audio-visualization displays that
facilitate the rapid and accurate analysis of complex and rapidly
changing data, she is currently working on tools to improve
trading and investment decisions. She is also a member of the
Academic Council for the Turnaround Management Association.
The proxy holder(s) intend, in the absence of contrary
instructions, to vote all proxies they are entitled to vote FOR
the election of our nominees, each of whom has consented to stand
for election and to serve if elected. If any nominee is unable to
serve, an event not now anticipated, the proxies will be voted
for such other person, if any, as is designated by the proxy
holder(s). Please refer to management's proxy statement for
information regarding the qualifications and background of its
nominees.
PROPOSAL 2: TO CONVERT THE FUND FROM A CLOSED-
END INVESTMENT COMPANY TO AN OPEN-END INVESTMENT COMPANY
Since the board of directors eliminated the Fund's 10%
distribution policy, the shares, which had previously traded
at a premium to their net asset value ("NAV"), began to trade at
a significant discount to NAV. Open-ending the
Fund will permit you to sell your shares at any time and realize
NAV. Although the Fund will incur some expenses to open-end, we
think elimination of the discount more than compensates for them.
We also think the main reason management opposes open-ending is
that its fees may decline if redemptions occur. In the absence of
contrary instructions, the proxy holder(s) will vote your shares
FOR this proposal.
PROPOSAL 3: A RECOMMENDATION TO REINSTATE THE ANNUAL 10% CASH
DISTRIBUTION POLICY WHICH WAS ELIMINATED IN 2003
We believe the board of directors made a serious mistake when it
eliminated the Fund's long-standing annual 10% cash distribution
policy after the close of business on July 28, 2003. According
to Bloomberg, the market price of the Fund's shares, which were
at a 9% premium on July 28, 2003, rapidly fell to a 14% discount
by August 14, 2003. As of April 16, 2004, the discount was
7.9%. On April 8, 2004, the Fund announced a new distribution
policy whereby shareholders would receive annually 7% in cash and
3% in stock. We think this distribution policy is inferior to
the 10% cash distribution policy which was eliminated. There may
be adverse tax consequences related to a 10% cash distribution
policy which we believe could be eliminated or minimized by
making changes to the Fund's investment policy to allow for
increased income. However, there is no certainty that the board
will implement this proposal if it is approved. In the absence
of contrary instructions, the proxy holder(s) will vote your
shares FOR this proposal.
THE SOLICITATION
We are making this solicitation personally. Persons affiliated
with or employed by us or our affiliates may assist us in the
solicitation of proxies. They will not receive any special
compensation for their services. Banks, brokerage houses and
other custodians, nominees and fiduciaries will be requested to
forward this proxy statement and the enclosed GREEN proxy card to
the beneficial owners of shares of Common Stock for whom they
hold shares of record. We will reimburse these organizations for
their reasonable out-of-pocket expenses.
Initially, we will personally bear all of the expenses related to
this proxy solicitation. Because we believe that the
shareholders will benefit from this solicitation, we intend to
seek reimbursement of our expenses from the Fund. Shareholders
will not be asked to vote on the reimbursement of solicitation
expenses incurred by either the incumbent directors or us. We
estimate that our expenses will be about $90,000. As of April
23, 2003, our expenses have been approximately $65,000.
There is no arrangement or understanding involving us or any of
our affiliates that relates to future employment by or any future
transaction with the Fund or any of its affiliates.
ADDITIONAL PROPOSALS
We know of no business that will be presented for consideration
at the Meeting other than that set forth in this proxy statement
and in the Fund's proxy statement. Unless instructed otherwise,
if any other matters are properly presented for consideration at
the Meeting, it is the intention of the persons named as proxies
in the enclosed GREEN proxy card to vote in accordance with their
own best judgment on such matters.
DATED: April 23, 2004
PROXY CARD
PROXY SOLICITED IN OPPOSITION TO THE BOARD OF DIRECTORS OF THE
ZWEIG TOTAL RETURN FUND, INC. BY PHILLIP GOLDSTEIN AND ARTHUR
LIPSON FOR THE ANNUAL MEETING OF STOCKHOLDERS ON MAY 12, 2004
The undersigned hereby appoints Andrew Dakos, Rajeev Das, Steven
Samuels, Phillip Goldstein, and Arthur Lipson and each of them,
as the undersigned's proxies, with full power of substitution, to
attend the Annual Meeting of Shareholders of The Zweig Total
Return Fund, Inc. on May 12, 2004, (the "Meeting"), and any
adjournment or postponement thereof, and to vote on all matters
that may come before the Meeting and any such adjournment or
postponement the number of shares that the undersigned would be
entitled to vote if present in person, as specified below.
(INSTRUCTIONS: Mark votes by placing an "x" in the appropriate [
].)
1. ELECTION OF THREE DIRECTORS
[ ] FOR PHILLIP GOLDSTEIN [ ] WITHHOLD
AUTHORITY
[ ] FOR ARTHUR LIPSON [ ] WITHHOLD AUTHORITY
[ ] FOR ELIZABETH TASHJIAN [ ] WITHHOLD
AUTHORITY
2. TO CONVERT THE FUND FROM A CLOSED-END INVESTMENT COMPANY TO AN
OPEN-END INVESTMENT COMPANY.
FOR [ ] AGAINST [ ]
ABSTAIN [ ]
3. A RECOMMENDATION TO REINSTATE THE FUND'S ANNUAL 10% CASH
DISTRIBUTION POLICY.
FOR [ ] AGAINST [ ]
ABSTAIN [ ]
Please sign and date below. Your shares will be voted as
directed. If no direction is made, this proxy will be voted FOR
the election of the nominees named above in Proposal 1, and FOR
Proposals 2 AND 3. The undersigned hereby acknowledges receipt
of the proxy statement dated April 23, 2004 of Phillip Goldstein
and Arthur Lipson and revokes any proxy previously executed.
(Important - Please be sure to enter date.)
SIGNATURE (S)________________________ Dated: _______________