[front cover]
June 30, 1996
Phoenix Total Return
Fund, Inc.
Semiannual Report
[Phoenix Duff & Phelps double diamond logo]
[right side of page]
PHOENIX
SEMIANNUAL REPORT
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
PHOENIX TOTAL RETURN FUND, INC.
Investment Environment
Over this latest reporting period, the outlook for the U.S. economy has
shifted dramatically. At year-end 1995, the consensus opinion on Wall Street
was for continued slow economic growth and benign inflation. During the first
six months of 1996, however, numerous reports were released which suggested
manufacturing activity, consumer spending and job growth had picked up
dramatically.
Bond investors reacted negatively to this upbeat economic news, believing
that a higher growth rate in the economy could potentially trigger higher
inflation, which would erode the value of their fixed-income securities.
Although we have not yet seen any compelling evidence of inflationary
pressures, bond prices continued to stumble during this reporting cycle as
interest rates climbed higher and talk of a Fed tightening became more
widespread. As measured by the Lehman Brothers Aggregate Bond Index, a
commonly used, unmanaged gauge of market performance, bonds returned a
disappointing -1.22% for this six-month period.
Despite rising interest rates and growing concerns about corporate
profitability, the stock market posted solid results aided by record mutual
fund inflows. The Standard & Poor's 500 Composite Stock Index, a commonly
used, unmanaged indicator of stock performance, was up 10.24% during the
first half of 1996. Throughout the reporting period, shifting investor
interest contributed to strong market rotation and a lack of clear industry
leadership. Nevertheless, the consumer staples and technology sectors
performed best over this six-month period, while utilities and basic
materials clearly lagged.
Portfolio Review
Phoenix Total Return Fund posted solid absolute gains over this reporting
period. For the six months ended June 30, 1996, the Fund's Class A shares
returned 4.33% and Class B shares returned 3.91%. In contrast, its peer
group's average--the 194 flexible funds tracked by the Lipper Analytical
Services--was up 5.52%. As with the broad market returns noted above, all of
these figures assume reinvestment of any distributions, but exclude the
effect of sales charges.
The Fund's relative underperformance was due primarily to its
underweighting in cyclical stocks during the first quarter of 1996. Equity
investors reacted dramatically to reports of stronger economic activity in
the beginning of the year, resulting in superior performance for economically
sensitive stocks. Positive contributors to equity performance during the
reporting period included the portfolio's exposure to the energy and
technology sectors.
Although bond prices plummeted during this reporting cycle, the Fund's
fixed-income segment continued to perform well relative to its benchmark, the
Lehman Brothers Aggregate Bond Index. Our multi-sector approach to
fixed-income investing has continued to pay off and we are particularly
pleased with the strong performance from our emerging market debt, high-yield
and municipal bond holdings.
Outlook
Looking ahead, we expect further volatility in the equity markets and
continued earnings shortfalls. Given this environment of slowing corporate
profits, we believe that it is increasingly a growth investor's market and we
will continue to seek out sustainable earnings growth stocks for this Fund.
Based on our thematic approach, we have identified a number of areas that
should provide significant growth potential. Within health care, our 21st
Century Medicine theme focuses on leading companies offering compelling
solutions to health care needs. Energy Technology identifies companies within
the oil services sector that provide productivity-enhancing solutions to
exploration and production companies. Lastly, our Move to Outsourcing theme
capitalizes on the growing trend by corporate America to increase
productivity and concentrate on core businesses.
Our short-term outlook for the fixed-income markets remains neutral.
Although bond prices have fallen dramatically over this reporting period, the
threat of rising inflation continues to plague the bond market. In terms of
our sector allocation strategy, we have scaled back our exposure to some of
the less traditional sectors of the bond market as a result of their strong
performance year-to-date. From a valuation standpoint, current yield spreads
on these bonds appear to be less compelling than they were at the beginning
of the year. Despite being much more selective, we are still finding a number
of undervalued sectors including emerging markets debt, commercial and
non-agency residential mortgage-backed securities, and taxable municipal
bonds.
As we move further into 1996, we continue to identify many investment
opportunities, while balancing our view with the realization that all markets
take a pause. Slower earnings growth and higher inflation may be near-term
catalysts for such a pause. Thus, we expect to continue holding higher cash
reserves to balance portfolio risk and await a better opportunity to more
fully invest.
1
<PAGE>
Phoenix Total Return Fund, Inc.
INVESTMENTS AT JUNE 30, 1996
(Unaudited)
STANDARD PAR
& POOR'S VALUE
RATING (000) VALUE
----------- ------ -----------
U.S. GOVERNMENT SECURITIES--5.5%
U.S. Treasury Notes--5.5%
U.S. Treasury Notes 6.375%,
'99 AAA $ 1,650 $ 1,654,125
U.S. Treasury Notes 6.875%,
'06 AAA 15,900 16,073,882
U.S. Treasury Notes 6%, '26 AAA 1,200 1,064,250
----------
18,792,257
----------
TOTAL U.S. GOVERNMENT SECURITIES
(Identified cost $18,778,811) 18,792,257
----------
SHARES
-------
COMMON STOCKS--72.3%
Advertising--0.8%
Interpublic Group Co., Inc. 60,700 2,845,313
-----------
Aerospace & Defense--2.4%
Boeing Company 54,900 4,783,163
General Motors Corp. Class H 56,400 3,391,050
-----------
8,174,213
-----------
Airlines--2.4%
AMR Corp. (b) 50,000 4,550,000
Delta Airlines, Inc. 41,800 3,469,400
-----------
8,019,400
-----------
Banks--2.1%
Chase Manhattan Corp. 48,800 3,446,500
Citicorp 45,000 3,718,125
-----------
7,164,625
-----------
Beverages--1.1%
Northland Cranberries, Inc. Class A 12,800 384,000
PepsiCo, Inc. 100,000 3,537,500
-----------
3,921,500
-----------
Chemical--0.7%
Monsanto Co. 75,000 2,437,500
-----------
Chemical--Specialty--0.5%
Sealed Air Corp. (b) 50,400 1,694,700
-----------
Computer Software & Services--10.0%
Arbor Software Corp. (b) 18,700 1,117,325
Computer Associates International, Inc. 72,000 5,130,000
HBO & Co. 50,000 3,387,500
Microsoft Corp. (b) 90,000 10,811,250
Netscape Communications Corp. (b) 18,500 1,151,625
Oracle Systems Corp. (b) 161,250 6,359,297
Peoplesoft, Inc. (b) 30,000 2,137,500
Reynolds & Reynolds Company 75,200 4,004,400
-----------
34,098,897
-----------
Conglomerates--0.9%
Alco Standard Corp. 64,900 2,936,725
-----------
Cosmetics & Soaps--2.3%
Gillette Co. 65,000 4,054,375
Procter & Gamble Co. 40,000 3,625,000
-----------
7,679,375
-----------
Diversified Financial Services--0.5%
Green Tree Financial Corp. 55,300 1,728,125
-----------
Electrical Equipment--1.0%
General Electric Co. 41,000 $ 3,546,500
-----------
Electronics--1.1%
Coherent, Inc. (b) 35,300 1,835,600
Intel Corp. 24,300 1,784,531
-----------
3,620,131
-----------
Entertainment, Leisure & Gaming--1.6%
Bally Entertainment Corp. (b) 72,600 1,996,500
Mirage Resorts, Inc. (b) 65,400 3,531,600
-----------
5,528,100
-----------
Healthcare--Diversified--1.8%
American Home Products Corp. 100,000 6,012,500
-----------
Healthcare--Drugs--3.0%
Amgen, Inc. (b) 30,000 1,620,000
Merck & Co., Inc. 56,500 3,651,312
Pfizer, Inc. 71,300 5,089,038
-----------
10,360,350
-----------
Insurance--2.1%
American International Group, Inc. 38,000 3,747,750
SunAmerica, Inc. 60,400 3,412,600
-----------
7,160,350
-----------
Lodging & Restaurants--0.8%
Marriott International, Inc. 50,000 2,687,500
-----------
Medical Products & Supplies--4.0%
Becton Dickinson & Co. 35,000 2,808,750
Guidant Corp. 38,000 1,871,500
Johnson & Johnson 110,000 5,445,000
Medtronic, Inc. 60,000 3,360,000
-----------
13,485,250
-----------
Natural Gas--1.6%
Anadarko Petroleum Corp. 30,000 1,740,000
Burlington Resources, Inc. 48,100 2,068,300
Enron Oil & Gas Co. 60,000 1,672,500
-----------
5,480,800
-----------
Office & Business Equipment--3.2%
Hewlett Packard Co. 33,000 3,287,625
Sun Microsystems, Inc. (b) 61,000 3,591,375
Xerox Corp. 73,200 3,916,200
-----------
10,795,200
-----------
Oil--0.5%
Louisiana Land & Exploration Co. 32,600 1,878,575
-----------
Oil Service & Equipment--6.0%
Baker Hughes, Inc. 87,700 2,883,138
Halliburton Co. 63,300 3,513,150
Schlumberger Ltd. 40,700 3,428,975
Sonat Offshore Drilling 70,900 3,580,450
Tidewater, Inc. 80,000 3,510,000
Varco International, Inc. (b) 186,500 3,380,312
-----------
20,296,025
-----------
See Notes to Financial Statements
2
<PAGE>
Phoenix Total Return Fund, Inc.
SHARES VALUE
------- -------------
Pollution Control--1.1%
U.S. Filter Corp. (b) 111,500 $ 3,874,625
------------
Professional Services--5.0%
Accustaff, Inc. (b) 58,600 1,596,850
HFS, Inc. (b) 69,100 4,837,000
Interim Services, Inc. (b) 37,400 1,608,200
Manpower, Inc. 127,400 5,000,450
Robert Half International, Inc. (b) 147,400 4,108,775
------------
17,151,275
------------
Publishing, Broadcasting, Printing & Cable--1.9%
Evergreen Media Corp. Class A (b) 60,000 2,565,000
Infinity Broadcasting Corp. Class A (b) 125,000 3,750,000
------------
6,315,000
------------
Retail--6.0%
AutoZone, Inc. (b) 80,000 2,780,000
Federated Department Stores, Inc. (b) 100,000 3,412,500
Home Depot, Inc. 62,900 3,396,600
Nordstrom, Inc. 68,000 3,026,000
Petsmart, Inc. (b) 36,400 1,738,100
Staples, Inc. (b) 100,000 1,950,000
TJX Companies, Inc. 120,000 4,050,000
------------
20,353,200
------------
Retail--Food--1.0%
Safeway, Inc. (b) 106,700 3,521,100
------------
Telecommunications Equipment--5.5%
Ascend Communications, Inc. (b) 40,000 2,250,000
Cisco Systems, Inc. (b) 189,800 10,747,425
Newbridge Networks Corp. (b) 51,200 3,353,600
U.S. Robotics Corporation (b) 28,000 2,394,000
------------
18,745,025
------------
Textile & Apparel--1.4%
Nike, Inc. Class B 45,000 4,623,750
------------
TOTAL COMMON STOCKS
(Identified cost $227,141,586) 246,135,629
------------
STANDARD PAR
& POOR'S VALUE
RATING (000)
----------- -------
MUNICIPAL BONDS--3.5%
California--1.5%
Kern County Pension
Obligation Taxable
7.26%, '14 AAA $1,700 1,632,714
Long Beach Pension
Obligation Taxable
6.87%, '06 AAA 950 921,852
San Bernardino County
Obligation Revenue
Taxable 6.87%, '08 AAA 455 439,002
San Bernardino County
Obligation Revenue
Taxable 6.94%, '09 AAA 1,240 1,199,588
Ventura County
Pension Taxable
6.54%, '05 AAA 1,100 1,055,604
------------
5,248,760
------------
Florida--1.5%
Miami Beach Spec.
Obligation Taxable
8.60%, '21 AAA $3,600 $ 3,846,780
University Miami
Exchange Revenue A
Taxable 7.65%, '20 AAA 1,365 1,329,278
-----------
5,176,058
-----------
Michigan--0.1%
Michigan Public Power
Agency Sinker 5.25%,
'18 AAA 250 229,750
-----------
South Carolina--0.4%
South Carolina Public
Service Series C 5%,
'25 AAA 1,425 1,229,775
-----------
TOTAL MUNICIPAL BONDS
(Identified cost $12,266,301) 11,884,343
------------
NON-CONVERTIBLE BONDS--5.6%
Industrial--0.1%
Buckeye Cellulos
9.25%, '08 NR 350 351,750
-----------
Non-Agency Mortgage-Backed Securities--5.4%
Airplanes Pass
Through Trust 1D
10.875%, '19 BB 560 582,400
CS First Boston Mtg.
95-AE1, B 7.182%, '27 AA- 1,780 1,718,054
GE Capital Mortgage
Service 96-8, M
7.25%, '26 AA 250 234,922
Green Tree Financial
Corp. 96-2, M1 7.60%,
'27 AA- 1,150 1,127,719
Lehman Commercial
Conduit 95-C2, B
7.18404%, '05 AA 1,850 1,800,281
Merrill Lynch
Mortgage, Inc. 95-C2,
B 7.53%, '21 Aa(c) 964 963,695
Merrill Lynch
Mortgage, Inc. 96-C1,
B 7.42%, '28 AA 420 413,175
Nationslink Funding
Corp. 96-1, B 7.69%,
'05 AA 325 324,797
Residential Funding
Mtg. 96-S1, A11
7.10%, '26 AAA 1,500 1,399,453
Residential Funding
Mtg. 96-S4, M1 7.25%,
'26 AA 499 469,651
Resolution Trust
Corp. 93-C1, B 8.75%,
'24 Aa(c) 1,750 1,791,289
Resolution Trust
Corp. 95-C2, B 6.80%,
'27 Aa(c) 1,017 971,057
Resolution Trust
Corp. 95-C1, B 6.90%,
'27 Aa(c) 2,125 2,028,711
Resolution Trust
Corp.
95-2, M1 7.15%, '29 Aa(c) 1,682 1,663,997
SASC 95-C1, C 7.375%,
'24 A 755 730,463
SASC 95-C4, B 7%, '26 AA 1,850 1,767,328
SASC 96-CFL, C
6.525%, '28 A 405 385,256
-----------
18,372,248
-----------
See Notes to Financial Statements
3
<PAGE>
Phoenix Total Return Fund, Inc.
STANDARD PAR
& POOR'S VALUE
RATING (000) VALUE
----------- ------- -------------
Oil--0.1%
Petropower Funding
144A 7.36%, '14 (d) BBB $ 500 $ 466,550
-----------
TOTAL NON-CONVERTIBLE BONDS
(Identified cost $19,729,602) 19,190,548
------------
FOREIGN GOVERNMENT SECURITIES--2.3%
Argentina--0.4%
Republic of Argentina
Discount L-GL Euro
6.4375%, '23 (e) BB- 1,800 1,260,000
-----------
Brazil--0.3%
Republic of Brazil
Discount Series ZL
Euro 6.50%, '24 (e) B+ 800 568,500
Republic of Brazil
Par Z-L Euro 5%, '24
(e) B(c) 1,000 553,750
-----------
1,122,250
-----------
Colombia--1.1%
Republic of Colombia
Yankee 7.25%, '04 BBB- 3,900 3,602,625
-----------
Mexico--0.3%
United Mexican States
Euro D 6.45313%, '19
(e) (f) BB 1,250 984,375
-----------
Panama--0.2%
Republic of Panama
IRB WI 3.50%, '49 (b)
(g) NR 700 390,250
Republic of Panama
PDI WI '49 (b) (g) NR 600 367,500
-----------
757,750
-----------
TOTAL FOREIGN GOVERNMENT SECURITIES
(Identified cost $7,431,602) 7,727,000
------------
FOREIGN NON-CONVERTIBLE BONDS--1.1%
Colombia--1.1%
Financiera Energ.
Nacional EMTN Euro
9%, '99 BBB- 3,600 3,699,000
-----------
TOTAL FOREIGN NON-CONVERTIBLE BONDS
(Identified cost $3,686,400) 3,699,000
------------
TOTAL LONG-TERM INVESTMENTS--90.3%
(Identified cost $289,034,302) 307,428,777
------------
SHORT-TERM OBLIGATIONS--8.0%
Commercial Paper--6.0%
McDonald's Corp.
5.30%, 7-1-96 A-1+ $3,850 $ 3,850,000
GTE North, Inc.
5.35%, 7-2-96 A-1+ 405 404,940
General Electric
Capital Corp. 5.37%,
7-10-96 A-1+ 4,198 4,198,000
Ciesco L.P. 5.40%,
7-18-96 A-1+ 3,840 3,830,208
Kimberly-Clark Corp.
5.40%, 7-23-96 A-1+ 4,585 4,569,870
Abbott Laboratories
5.33%, 7-25-96 A-1+ 1,615 1,609,261
H.J. Heinz Co. 5.38%,
7-30-96 A-1 1,800 1,792,199
-----------
20,254,478
-----------
Federal Agency Securities--1.6%
Federal Home Loan Banks
5.27%, 7-29-96 4,630 4,611,022
Federal Home Loan Mortgage Corp.
4.82%, 8-15-96 (h) 1,000 993,145
------------
5,604,167
-----------
Federal Agency Securities--Variable--0.4%
Student Loan Marketing Assoc.
5.36%, 7-2-96 1,500 1,500,000
------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $27,359,156) 27,358,645
------------
TOTAL INVESTMENTS--98.3%
(Identified cost $316,393,458) 334,787,422(a)
Cash and receivables, less liabilities--1.7% 5,624,414
------------
NET ASSETS--100.0% $340,411,836
============
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $22,989,090 and gross
depreciation of $4,654,664 for income tax purposes. At June 30, 1996, the
aggregate cost of securities for federal income tax purposes was
$316,452,996.
(b) Non-income producing.
(c) As rated by Moody's or Fitch.
(d) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At June 30,
1996, these securities amounted to a value of $466,550 or 0.14% of net
assets.
(e) Variable or step coupon bond; interest rate shown reflects the rate
currently in effect.
(f) Rights incorporated as a unit.
(g) When issued.
(h) Segregated as collateral for the when issued obligations.
See Notes to Financial Statements
4
<PAGE>
Phoenix Total Return Fund, Inc.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996
(Unaudited)
Assets
Investment securities at value
(Identified cost $316,393,458) $334,787,422
Receivables
Investment securities sold 17,654,085
Fund shares sold 55,612
Dividends and interest 1,104,553
------------
Total assets 353,601,672
------------
Liabilities
Payables
Custodian 90,310
Investment securities purchased 6,544,171
Fund shares repurchased 6,080,997
Investment advisory fee 185,021
Transfer agent fee 93,200
Distribution fee 76,748
Financial agent fee 8,539
Directors' fee 6,236
Accrued expenses 104,614
------------
Total liabilities 13,189,836
------------
Net Assets $340,411,836
============
Net Assets Consist of:
Capital paid in on shares of common stock $303,500,521
Undistributed net investment income 10,428
Accumulated net realized gain 18,506,923
Net unrealized appreciation 18,393,964
------------
Net Assets $340,411,836
============
Class A
Shares of common stock, $1 par value,
50,000,000 shares authorized,
(Net Assets $331,196,492) 20,182,705
Net asset value per share $16.41
Offering price per share
$16.41/(1-4.75%) $17.23
Class B
Shares of common stock, $1 par value,
50,000,000 shares authorized,
(Net Assets $9,215,344) 564,458
Net asset value and offering price per
share $16.33
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996
(Unaudited)
Investment Income
Dividends $ 1,503,621
Interest 4,184,766
-----------
Total investment income 5,688,387
-----------
Expenses
Investment advisory fee 1,164,116
Distribution fee--Class A 436,765
Distribution fee--Class B 43,887
Financial agent fee 53,728
Transfer agent 334,684
Printing 43,751
Custodian 41,883
Registration 25,124
Professional 13,308
Directors 10,536
Miscellaneous 15,094
-----------
Total expenses 2,182,876
-----------
Net investment income 3,505,511
-----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 18,435,092
Net realized loss on foreign currency transactions (5,196)
Net change in unrealized appreciation
(depreciation) on investments (6,716,954)
-----------
Net gain on investments 11,712,942
-----------
Net increase in net assets resulting from
operations $15,218,453
===========
See Notes to Financial Statements
5
<PAGE>
Phoenix Total Return Fund, Inc.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months
Ended Year
June 30, 1996 Ended
(Unaudited) December 31, 1995
---------------- -----------------
<S> <C> <C>
From Operations
Net investment income $ 3,505,511 $ 9,711,631
Net realized gain 18,429,896 30,657,387
Net change in unrealized appreciation (depreciation) (6,716,954) 20,305,509
-------------- ---------------
Increase in net assets resulting from operations 15,218,453 60,674,527
-------------- ---------------
From Distributions to Shareholders
Net investment income--Class A (3,434,612) (11,137,166)
Net investment income--Class B (60,471) (157,249)
Net realized gains--Class A (1,753,955) (21,046,512)
Net realized gains--Class B (47,832) (460,526)
-------------- ---------------
Decrease in net assets from distributions to shareholders (5,296,870) (32,801,453)
-------------- ---------------
From Share Transactions
Class A
Proceeds from sales of shares (604,162 and 2,327,216 shares, respectively) 9,783,436 36,428,108
Net asset value of shares issued from reinvestment of distributions (274,214 and
1,767,069 shares, respectively) 4,379,191 27,891,041
Cost of shares repurchased (3,324,202 and 4,076,035 shares, respectively) (54,184,299) (65,751,129)
-------------- ---------------
Total (40,021,672) (1,431,980)
-------------- ---------------
Class B
Proceeds from sales of shares (97,732 and 418,716 shares, respectively) 1,583,187 6,684,860
Net asset value of shares issued from reinvestment of distributions (6,006 and
34,447 shares, respectively) 95,435 539,518
Cost of shares repurchased (45,522 and 36,705 shares, respectively) (738,214) (599,012)
-------------- ---------------
Total 940,408 6,625,366
-------------- ---------------
Increase (decrease) in net assets from share transactions (39,081,264) 5,193,386
-------------- ---------------
Net increase (decrease) in net assets (29,159,681) 33,066,460
Net Assets
Beginning of period 369,571,517 336,505,057
-------------- ---------------
End of period (including undistributed net investment income of $10,428 and
$0, respectively) $340,411,836 $369,571,517
============== ===============
</TABLE>
See Notes to Financial Statements
6
<PAGE>
Phoenix Total Return Fund, Inc.
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
---------------------------------------------------------------
Six
Months
Ended Year Ended December 31,
6/30/96
(Unaudited) 1995 1994 1993 1992 1991
--------- -------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.98 $14.82 $15.48 $14.89 $15.22 $13.43
Income from investment operations
Net investment income 0.17 0.45 0.34 0.06(2) 0.24 0.36
Net realized and unrealized gain
(loss) 0.52 2.22 (0.69) 1.49 1.32 3.45
-------- ------- ------- ------- ------ -------
Total from investment operations 0.69 2.67 (0.35) 1.55 1.56 3.81
-------- ------- ------- ------- ------ -------
Less distributions
Dividends from net investment
income (0.17) (0.52) (0.31) (0.11) (0.25) (0.37)
Dividends from net realized gains (0.09) (0.99) (0.001) (0.85) (1.64) (1.65)
-------- ------- ------- ------- ------ -------
Total distributions (0.26) (1.51) (0.311) (0.96) (1.89) (2.02)
-------- ------- ------- ------- ------ -------
Change in net asset value 0.43 1.16 (0.66) 0.59 (0.33) 1.79
-------- ------- ------- ------- ------ -------
Net asset value, end of period $16.41 $15.98 $14.82 $15.48 $14.89 $15.22
======== ======= ======= ======= ====== =======
Total return(1) 4.33%(4) 18.23% -2.26% 10.49% 10.32% 28.62%
Ratios/supplemental data:
Net assets, end of period (thousands) $331,196 $361,526 $335,177 $370,440 $58,006 $35,209
Ratio to average net assets of:
Operating expenses 1.19%(3) 1.21% 1.24% 1.29% 1.36% 1.58%
Net investment income 1.97%(3) 2.67% 2.18% 1.26% 2.06% 2.51%
Portfolio turnover 130%(4) 184% 225% 246% 322% 249%
Average commission rate paid(5) $0.0505 N/A N/A N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
Class B
-----------------------------------
Six
Months From
Ended Year Inception
6/30/96 Ended 10/24/94 to
(Unaudited) 12/31/95 12/31/94
--------- -------- ------------
<S> <C> <C> <C>
Net asset value, beginning of period $15.89 $14.79 $14.98
Income from investment operations
Net investment income 0.11 0.30(2) 0.07
Net realized and unrealized gain
(loss) 0.53 2.22 (0.09)
-------- ------- -----------
Total from investment operations 0.64 2.52 (0.02)
-------- ------- -----------
Less distributions
Dividends from net investment
income (0.11) (0.43) (0.17)
Dividends from net realized gains (0.09) (0.99) --
-------- ------- -----------
Total distributions (0.20) (1.42) (0.17)
-------- ------- -----------
Change in net asset value 0.44 1.10 (0.19)
-------- ------- -----------
Net asset value, end of period $16.33 $15.89 $14.79
======== ======= ===========
Total return(1) 3.91%(4) 17.31% -0.12%(4)
Ratios/supplemental data:
Net assets, end of period (thousands) $9,215 $8,046 $1,328
Ratio to average net assets of:
Operating expenses 1.94%(3) 1.97% 2.26%(3)
Net investment income 1.21%(3) 1.88% 1.74%(3)
Portfolio turnover 130%(4) 184% 225%
Average commission rate paid(5) $0.0505 N/A N/A
</TABLE>
(1) Maximum sales load is not reflected in total return calculation.
(2) Computed using average shares outstanding.
(3) Annualized
(4) Not annualized
(5) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for securities
trades on which commissions are charged. This rate generally does not
reflect mark-ups, mark-downs, or spreads on shares traded on a principal
basis.
See Notes to Financial Statements
7
<PAGE>
PHOENIX TOTAL RETURN FUND, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1996 (Unaudited)
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
Phoenix Total Return Fund, Inc. ("the Fund") is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Fund's investment objective is to achieve
the highest total return consistent with reasonable risk by investing in
stocks, bonds and money market instruments. The Fund offers both Class A and
Class B shares. Class A shares are sold with a front-end sales charge of up
to 4.75%. Class B shares are sold with a contingent deferred sales charge
which declines from 5% to zero depending on the period of time the shares are
held. Both classes of shares have identical voting, dividend, liquidation and
other rights and the same terms and conditions, except that each class bears
different distribution expenses and has exclusive voting rights with respect
to its distribution plan. Income and expenses of the Fund are borne pro rata
by the holders of both classes of shares, except that each class bears
distribution expenses unique to that class.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets, liabilities, revenues and
expenses. Actual results could differ from those estimates.
A. Security valuation:
Equity securities listed or traded on a national securities exchange are
valued at the last sale price or, if there has been no recent sale, at the
last bid price. Securities traded in the over-the-counter market are valued
at the last bid price. Debt securities (other than short-term obligations)
are valued on the basis of broker quotations or valuations provided by a
pricing service when such prices are believed to reflect the fair value of
such securities. Prices provided by the pricing service may be determined
without exclusive reliance on quoted prices and take into account appropriate
factors such as institution-size trading in similar groups of securities,
yield, quality, coupon rate, maturity, type of issue, trading characteristics
and other market data. Use of pricing services has been approved by the
Directors. Short-term investments having a remaining maturity of less than 61
days are valued at amortized cost which approximates market. All other
securities and assets are valued at fair value as determined in good faith by
or under the direction of the Directors.
B. Security transactions and related income:
Security transactions are recorded on the trade date. Dividend income is
recorded on the ex-dividend date or, in the case of certain foreign
securities, as soon as the Fund is notified. Interest income is recorded on
the accrual basis. The Fund does not amortize premiums but does amortize
discounts using the effective interest method. Realized gains or losses are
determined on the identified cost basis.
C. Income taxes:
It is the policy of the Fund to comply with the requirements of the
Internal Revenue Code (the Code), applicable to regulated investment
companies, and to distribute substantially all of its taxable income to its
shareholders. In addition, the Fund intends to distribute an amount
sufficient to avoid the imposition of any excise tax under Section 4982 of
the Code. Therefore, no provision for federal income taxes or excise taxes
has been made.
D. Distributions to shareholders:
Distributions to shareholders are recorded on the ex-dividend date. Income
and capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences include the treatment of non-taxable dividends, expiring
capital loss carryforwards, foreign currency gain/loss, partnerships, and
losses deferred due to wash sales and excise tax regulations. Permanent book
and tax basis differences relating to shareholder distributions will result
in reclassifications to paid in capital.
E. Foreign currency translation:
Foreign securities and other assets and liabilities are valued using the
foreign currency exchange rate effective at the end of the reporting period.
Cost of investments is translated at the currency exchange rate effective at
the trade date. The gain or loss resulting from a change in currency exchange
rates between the trade and settlement dates of a portfolio transaction, is
treated as a gain or loss on foreign currency. Likewise, the gain or loss
resulting from a change in currency exchange rates, between the date income
is accrued and paid, is treated as a gain or loss on foreign currency. The
Fund does not separate that portion of the results of operations arising from
changes in exchange rates and that portion arising from changes in the market
prices of securities.
8
<PAGE>
PHOENIX TOTAL RETURN FUND, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1996 (Unaudited) (Continued)
F. Security lending:
The Fund loans securities to qualified brokers through an agreement with
State Street Bank and Trust Company (State Street). Under the terms of the
agreement, the Fund receives collateral with a market value not less than
100% of the market value of loaned securities. Collateral consists of cash,
securities issued or guaranteed by the U.S. Government or its agencies and
the sovereign debt of foreign countries. Interest earned on the collateral
and premiums paid by the borrower are recorded as interest income by the Fund
net of fees charged by State Street for its services in connection with this
securities lending program. Lending portfolio securities involves a risk of
delay in the recovery of the loaned securities or in the foreclosure on
collateral. At June 30, 1996, the Fund had loaned securities with a market
value of $16,914,307 and received collateral of $16,881,832.
NOTE 2. INVESTMENT ADVISORY FEES AND RELATED PARTY TRANSACTIONS
As compensation for its services to the Fund, the Investment Adviser,
Phoenix Investment Counsel, Inc., an indirect majority-owned subsidiary of
Phoenix Home Life Mutual Insurance Company ("PHL"), is entitled to a fee at
an annual rate of 0.65% of the average daily net assets of the Fund for the
first $1 billion.
As Distributor of the Fund's shares, Phoenix Equity Planning Corp.
("PEPCO"), an indirect majority-owned subsidiary of PHL, has advised the Fund
that it retained net selling commissions of $16,673 for Class A shares and
deferred sales charges of $5,363 for Class B shares for the six months ended
June 30, 1996. In addition, the Fund pays PEPCO a distribution fee at an
annual rate of 0.25% for Class A shares and 1.00% for Class B shares of the
average daily net assets of the Fund. The Distributor has advised the Fund
that of the total amount expensed for the six months ended June 30, 1996,
approximately $136,000 was retained by the Distributor and $345,000 was paid
to unaffiliated participants.
As Financial Agent of the Fund, PEPCO receives a fee at an annual rate of
0.03% of the average daily net assets of the Fund for bookkeeping,
administration and pricing services. PEPCO serves as the Fund's Transfer
Agent with State Street as sub-transfer agent. For the six months ended June
30, 1996, transfer agent fees were $334,684 of which PEPCO retained $116,640
which is net of the fees paid to State Street.
At June 30, 1996, PHL and affiliates held 44 Class A shares and 7,440
Class B shares of the Fund with a combined value of $122,136.
NOTE 3. PURCHASES AND SALES OF SECURITIES
During the six months ended June 30, 1996, purchases and sales of
investments, excluding short-term securities and U.S. Government securities,
amounted to $367,975,944 and $344,614,498, respectively. Purchases and sales
of long-term U.S. Government securities amounted to $45,170,368 and
$70,476,214, respectively.
9
<PAGE>
PHOENIX TOTAL RETURN FUND, INC.
101 Munson Street
Greenfield, Massachusetts 01301
Directors
C. Duane Blinn
Robert Chesek
E. Virgil Conway
Harry Dalzell-Payne
Francis E. Jeffries
Leroy Keith, Jr.
Philip R. McLoughlin
Everett L. Morris
James M. Oates
Calvin J. Pedersen
Philip R. Reynolds
Herbert Roth, Jr.
Richard E. Segerson
Lowell P. Weicker, Jr.
Officers
Philip R. McLoughlin, President
Martin J. Gavin, Executive Vice President
Michael E. Haylon, Executive Vice President
William J. Newman, Senior Vice President
James M. Dolan, Vice President
William R. Moyer, Vice President
C. Edwin Riley, Jr., Vice President
Leonard J. Saltiel, Vice President
Philip Stekl, Vice President
Nancy G. Curtiss, Treasurer
G. Jeffrey Bohne, Secretary and Clerk
Investment Adviser
Phoenix Investment Counsel, Inc.
56 Prospect St.
Hartford, CT 06115-0480
Principal Underwriter
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, CT 06083-2200
Transfer Agent
Phoenix Equity Planning Corporation
100 Bright Meadow Blvd.
P.O. Box 2200
Enfield, CT 06083-2200
Attention: Phoenix Funds
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, MA 02101
This report is not authorized for distribution to prospective investors in
the Phoenix Total Return Fund, Inc. unless preceded or accompanied by an
effective prospectus which includes information concerning the sales charge,
the Fund's record and other pertinent information.
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[back cover]
Phoenix Total Return Fund, Inc.
P.O. Box 2200
Enfield, CT 06083-2200
[Phoenix Duff & Phelps double diamond logo]
PDP 462 (8/96)
Bulk Rate Mail
U.S. Postage
PAID
Springfield, MA
Permit No. 444
[Dalbar honor logo]
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