Date Shares Price Per Share
4/3/2013 119 $12.99
4/5/2013 5,200 $12.92
4/15/2013 (5,800) $12.94
4/17/2013 600 $12.81
4/17/2013 (75) $12.77
4/18/2013 700 $12.70
4/19/2013 750 $12.71
4/24/2013 (2,550) $12.90
4/25/2013 (500) $12.97
5/2/2013 (3,100) $13.04
5/13/2013 (250) $13.19
5/14/2013 (450) $13.23
5/15/2013 (1,400) $13.29
5/21/2013 (6,968) $13.40
5/23/2013 (163) $13.29
5/29/2013 11,243 $13.14
5/29/2013 (1,587) $13.13
5/30/2013 3,000 $13.17
The Accounts have the right to receive all dividends from, and any proceeds from the sale of the Shares. None of the Accounts has an interest in Shares constituting more than 5% of the Shares outstanding.
Item 6. Contracts, Arrangements, Understandings, or Relationships with Respect to Securities of the Issuer.
Except as described above, there are no contracts, arrangements, understandings or relationships of any kind among the Principals and KIM and between any of them and any other person with respect to any of the Zweig Total Return Fund securities.
Item 7. Materials to be Filed as Exhibits.
As is indicated in Item 4, above, KIM has purchased Zweig Total Return Fund for the Accounts for investment purposes. However, KIM has reserved the right to contact management with regard to concerns that they have with respect to the Fund, including letters to the Board and/or other communications with fund management. Accordingly, KIM sent a letter to the Fund on June 3, 2013. A copy of the letter is attached as Exhibit 1.
After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete, and correct.
Karpus Management, Inc.
Name: Daniel Lippincott
Title: Senior Tax-Sensitive Manager
Date: June 4, 2013
Letter to the Fund
Transmitted June 3, 2013
George R. Aylward, June 3, 2013
Chairman of the Board/CEO/President
101 Munson St.
Greenfield, MA 01301-9683
Re: Zweig Total Return Fund Inc. ("ZTR")
Dear Mr. Aylward:
Karpus Management, Inc., d/b/a Karpus Investment Management is the beneficial owner of 1,679,847 shares or 4.82% of the outstanding common shares (the "shares") of the Zweig Total Return Fund Inc (the "Fund").
As a long term shareholder, Karpus is concerned about the significant discount at which the Fund shares currently trade. On June 2, 2010, shareholders approved the "Board recommended" proposal to remove the original charter provision which required the Board of Directors of the Fund (the "Board") to submit to shareholders a proposal to convert the Fund to an open-end investment company if the Fund's shares traded at an average discount from net asset value of 10% or more during the preceding fiscal quarter (the "Lifeboat Provision"). The shareholders followed the recommendation of the Fund's Board. However, since the elimination of this valuable Lifeboat Provision, the Fund shares have traded at an average discount of over 10%. Clearly the Fund shareholders have not been well served by the elimination of the Lifeboat Provision. Fund shareholders have also suffered through a dilutive rights offering in January 2011 and a 30% cut in the distribution policy in March 2012.
The Board is apparently concerned about the discount at which the Fund shares trade, and the net asset value of the fund has modestly increased due to the expanded stock repurchase program. However, the current discount at which the fund is trading is actually larger than when the share repurchase program was announced. Karpus believes that greater measures must be taken if the Board is serious about significantly reducing the discount. In fact, it appears that the Board had a plan in mind when the original charter was amended in 2010 to state:
"In the event that, for any fiscal quarter ending on or after J une 30, 2010, the shares of the Corporation trade at an average discount from their net asset value of 10% or more the Board of Directors at its next regularly scheduled meeting shall consider potential measures to seek to reduce the discount, which may include open-market purchases of, or tender offers for, shares of the Corporation, or other programs intended to reduce the discount." (Emphasis added).
In the opinion of Karpus, a tender offer for a significant percentage of the outstanding shares at or near net asset value would afford shareholders the opportunity to realize the intrinsic value of their shares, while reducing the oversupply of shares in the market.
We appreciate the Board's consideration of this matter.
Director of Investment Personnel/ Sr. Tax-Sensitive Manager
Karpus Investment Management