<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
THE HYPERION TOTAL RETURN FUND, INC.
------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
THE HYPERION TOTAL RETURN FUND, INC.
520 Madison Avenue o New York, New York 10022
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
------------------------
January 29, 1996
To the Stockholders:
The Annual Meeting of Stockholders of The Hyperion Total Return Fund, Inc.
(the 'Fund') will be held at The Drake Hotel, 440 Park Avenue at 56th Street,
New York, New York 10022, on Tuesday, April 16, 1996, at 9:00 a.m., for the
following purposes:
1. To elect directors (Proposal 1).
2. To ratify or reject the selection of Deloitte & Touche LLP as the
independent auditors of the Fund for the fiscal year ending November 30,
1996 (Proposal 2).
3. To transact any other business that may properly come before the
meeting.
The close of business on January 19, 1996 has been fixed as the record date
for the determination of stockholders entitled to notice of and to vote at the
meeting.
By Order of the Board of Directors,
Patricia A. Sloan
Secretary
WE NEED YOUR PROXY VOTE IMMEDIATELY.
YOU MAY THINK YOUR VOTE IS NOT IMPORTANT, BUT IT IS VITAL. THE MEETING OF
STOCKHOLDERS OF THE FUND WILL BE UNABLE TO CONDUCT ANY BUSINESS IF LESS THAN A
MAJORITY OF THE SHARES ELIGIBLE TO VOTE IS REPRESENTED. IN THAT EVENT, THE FUND,
AT STOCKHOLDERS' EXPENSE, WOULD CONTINUE TO SOLICIT VOTES IN AN ATTEMPT TO
ACHIEVE A QUORUM. CLEARLY, YOUR VOTE COULD BE CRITICAL TO ENABLE THE FUND TO
HOLD THE MEETING AS SCHEDULED, SO PLEASE RETURN YOUR PROXY CARD IMMEDIATELY. YOU
AND ALL OTHER STOCKHOLDERS WILL BENEFIT FROM YOUR COOPERATION.
<PAGE>
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance to
you and avoid the time and expense to the Fund involved in validating your vote
if you fail to sign your proxy card properly.
1. Individual Accounts. Sign your name exactly as it appears in the
registration on the proxy card.
2. Joint Accounts. Either party may sign, but the name of the party
signing should conform exactly to the name shown in the registration.
3. All Other Accounts. The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the form of registration. For
example:
<TABLE>
<CAPTION>
REGISTRATION VALID SIGNATURE
- ---------------------------------------- ----------------------------
<S> <C>
Corporate Accounts
(1) ABC Corp...................... ABC Corp.
(2) ABC Corp...................... John Doe, Treasurer
(3) ABC Corp.
c/o John Doe, Treasurer....... John Doe
(4) ABC Corp. Profit Sharing
Plan.......................... John Doe, Trustee
Trust Accounts
(1) ABC Trust..................... John B. Doe, Trustee
(2) Jane B. Doe, Trustee
u/t/d 12/28/78............... Jane B. Doe
Custodial or Estate Accounts
(1) John B. Smith, Cust.
f/b/o John B. Smith, Jr.
UGMA.......................... John B. Smith
(2) John B. Smith................. John B. Smith, Jr., Executor
</TABLE>
<PAGE>
THE HYPERION TOTAL RETURN FUND, INC.
520 Madison Avenue o New York, New York 10022
------------------------
PROXY STATEMENT
------------------------
This proxy statement is furnished in connection with a solicitation by the
Board of Directors of The Hyperion Total Return Fund, Inc. (the 'Fund') of
proxies to be used at the Annual Meeting of Stockholders of the Fund to be held
at The Drake Hotel, 440 Park Avenue at 56th Street, New York, New York 10022, at
9:00 a.m. on Tuesday, April 16, 1996 (and at any adjournment or adjournments
thereof) for the purposes set forth in the accompanying Notice of Annual Meeting
of Stockholders. This proxy statement and the accompanying form of proxy are
first being mailed to stockholders on or about January 29, 1996. Stockholders
who execute proxies retain the right to revoke them by written notice received
by the Secretary of the Fund at any time before they are voted. Unrevoked
proxies will be voted in accordance with the specifications thereon and, unless
specified to the contrary, will be voted FOR the election of the three nominees
for director, and FOR the ratification of the selection of Deloitte & Touche LLP
as the independent auditors of the Fund for the fiscal year ending November 30,
1996. The close of business on January 19, 1996 has been fixed as the record
date for the determination of stockholders entitled to notice of and to vote at
the meeting. Each stockholder is entitled to one vote for each share held.
Abstentions will be treated as shares that are present and entitled to vote for
purposes of determining the presence of a quorum but as unvoted for purposes of
determining the approval of any matters submitted to stockholders for a vote.
Broker non-votes will not be counted for purposes of determining the presence of
a quorum or determining whether a proposal has been approved. On the record date
there were 24,781,615 shares outstanding.
PROPOSAL 1: ELECTION OF DIRECTORS
The Fund's Articles of Incorporation provide that the Fund's Board of
Directors shall be divided into three classes: Class I, Class II and Class III.
The terms of office of the present directors in each class expire at the Annual
Meeting in the year indicated or thereafter in each case when their respective
successors are elected and qualified: Class I, 1997; Class II, 1998; and Class
III, 1996. At each subsequent annual election, Directors chosen to succeed those
whose terms are expiring will be identified as being of that same class and will
be elected for a three-year term. The effect of these staggered terms is to
limit the ability of other entities or persons to acquire control of the Fund by
delaying the replacement of a majority of the Board of Directors.
The terms of Lewis S. Ranieri, Leo M. Walsh, Jr. and Patricia A. Sloan, the
members of Class III, currently serving on the Board of Directors, expire at
this year's Annual Meeting. The persons named in the accompanying form of proxy
intend to vote at the Annual Meeting (unless directed not to so vote) for the
re-election of Mr. Ranieri, Mr. Walsh and Ms. Sloan. Each nominee has indicated
that he or she will serve if elected, but if any nominee should be unable to
serve, the proxy or proxies will be voted for any other person or persons, as
the case may be, determined by the persons named in the proxy in accordance with
their judgment.
As described above, there are three nominees for election to the Board of
Directors at this time. Proxies cannot be voted for a greater number of persons
than the three nominees currently proposed to serve on the Board of Directors.
1
<PAGE>
The following table provides information concerning each of the seven
members and nominees of the Board of Directors of the Fund:
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY
OWNED DIRECTLY
PRINCIPAL OCCUPATION OR INDIRECTLY, ON
NAME AND OFFICE DURING PAST FIVE YEARS, DIRECTOR NOVEMBER 30,
WITH THE FUND OTHER DIRECTORSHIPS AND AGE SINCE 1995(**)
- ----------------------------------- -------------------------------------------- ---------- -----------------
CLASS III NOMINEES TO SERVE UNTIL 1999 ANNUAL MEETING OF STOCKHOLDERS:
<S> <C> <C> <C>
Lewis S. Ranieri* ............... Chairman and Chief Executive Officer of June 1989 0
Chairman of the Board Ranieri & Co., Inc. (since 1988); in ad-
dition, President of LSR Hyperion Corp., a
general partner of the limited partnership
that is the general partner of Hyperion
Partners L.P. ('Hyperion Partners') (since
1988). Director and Chairman of the Board
of Hyperion Capital Management, Inc.
(since 1989); Chairman of the Board and/or
Director of several investment companies
advised by Hyperion Capital Management,
Inc. (since 1989) Chairman of Bank United
of Texas FSB (since 1988) and Hyperion
Credit Services Corp. (since 1992);
Director and President of Hyperion Funding
1993 Corp., the general partner of the
limited partnership that is the general
partnership that is the general partner of
Hyperion 1993 Fund L.P.; and also Chairman
and President of various other direct and
indirect subsidiaries of Hyperion Partners
(since 1988); Director of Equitable Real
Estate Hyperion Mortgage Opportunity Fund,
Inc. and Equitable Real Estate Hyperion
High Yield Commercial Mortgage Fund, Inc.
(since 1995) Formerly Vice Chairman of
Salomon Brothers Inc (until 1987). Age 49.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY
OWNED DIRECTLY
PRINCIPAL OCCUPATION OR INDIRECTLY, ON
NAME AND OFFICE DURING PAST FIVE YEARS, DIRECTOR NOVEMBER 30,
WITH THE FUND OTHER DIRECTORSHIPS AND AGE SINCE 1995(**)
- ----------------------------------- -------------------------------------------- ---------- -----------------
<S> <C> <C> <C>
Leo M. Walsh, Jr. ................. Director and/or Trustee of several invest- June 1989 510
Director, Chairman of the ment companies advised by Hyperion Capital
Audit Committee Management, Inc. or by its affiliates
(1989-Present). Financial Consultant for
Medco Containment Services Inc.
(1994-Present). Financial Consultant for
Synetic Inc., a manufacturer of porous
plastic materials for health care uses
(1989-1994). Formerly President, WW
Acquisition Corp. (1989-1990); Senior
Executive Vice President and Chief
Operating Officer of The Equitable Life
Assurance Society of the United States
('The Equitable') (1986-1988); Director of
The Equitable and Chairman of Equitable
Investment Corporation, a holding company
for The Equitable's investment oriented
subsidiaries (1983-1988); Chairman and
Chief Executive Officer of
EQUICOR-Equitable HCA Corporation
(1987-1988). Age 63.
Patricia A. Sloan* ................ Managing Director of Ranieri & Co., Inc. April 1994 300
Director, Secretary (1988-Present). Secretary, Director and/or
Trustee of several investment companies
advised by Hyperion Capital Management,
Inc. or by its affiliates (1989-Present).
Director of Bank United of Texas FSB
(1988-Present). Formerly Director of the
Financial Institutions Group of Salomon
Brothers Inc (1972-1988). Age 52.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY
OWNED DIRECTLY
PRINCIPAL OCCUPATION OR INDIRECTLY, ON
NAME AND OFFICE DURING PAST FIVE YEARS, DIRECTOR NOVEMBER 30,
WITH THE FUND OTHER DIRECTORSHIPS AND AGE SINCE 1995(**)
- ----------------------------------- -------------------------------------------- ---------- -----------------
CLASS I DIRECTORS TO SERVE UNTIL 1997 ANNUAL MEETING OF STOCKHOLDERS:
<S> <C> <C> <C>
Garth Marston ..................... Managing Director of M.E. Associates, a Sept. 1989 425
Director, Member of the financial consulting group (1986-Pre-
Audit Committee sent). Director and/or Trustee of several
investment companies advised by Hyperion
Capital Management, Inc. (1989-Present).
Currently a member of the Board of
Managers of the Sun Life Assurance Company
of Canada (U.S.) Formerly Director and
interim Chief Executive Officer of Florida
Federal Savings (1986-1988); Chairman of
the Board and Chief Executive Officer of
The Provident Institution for Savings
(1979-1986); Special Assignment regarding
partially call protected Mortgage-Backed
Securities for Salomon Brothers Inc
(1987). Age 69.
Kenneth C. Weiss* ................. President, Chief Executive Officer and/or April 1994 2,286
Director, Senior Vice Director of Hyperion Capital Management,
President Inc. (February 1992-Present). Chairman of
the Board, Director/Trustee and/or officer
of several investment companies advised by
Hyperion Capital Management, Inc. or by
its affiliates (February 1992-Present).
Director and President of Equitable Real
Estate Hyperion Mortgage Opportunity Fund,
Inc. and Equitable Real Estate Hyperion
High Yield Commercial Mortgage Fund, Inc.
and their Investment Advisers
(1995-Present). Formerly Director of First
Boston Asset Management (1988-February
1992). Director of The First Boston
Corporation (until 1988). Age 44.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY
OWNED DIRECTLY
PRINCIPAL OCCUPATION OR INDIRECTLY, ON
NAME AND OFFICE DURING PAST FIVE YEARS, DIRECTOR NOVEMBER 30,
WITH THE FUND OTHER DIRECTORSHIPS AND AGE SINCE 1995(**)
- ----------------------------------- -------------------------------------------- ---------- -----------------
CLASS II DIRECTORS TO SERVE UNTIL 1998 ANNUAL MEETING OF STOCKHOLDERS:
<S> <C> <C> <C>
Rodman L. Drake ................... President, R.L. Drake & Co. Inc. (1993- July 1989 205
Director, Member of the Present). Director and/or Trustee of
Audit Committee several investment companies advised by
Hyperion Capital Management, Inc.
(1989-Present). Consultant to Rockefeller
& Co. Inc. (1990-Present). Co-Chairman of
KMR Power Corporation (1993-Present).
Chairman, Car Rental Systems do Brasil
S.A. (Hertz-Brazil) (1994-Present).
Formerly Managing Director and Chief
Executive Officer of Cresap (1980-1990).
Trustee of Excelsior Funds. Member,
Investment Advisory Board, Argentina
Private Equity Fund Inc. and Garantia L.P.
(Brazil). Director, Parsons Brinkerhoff,
Inc. and Latin American Growth Fund Inc.
Age 53.
Harry E. Petersen, Jr. ............ Director and/or Trustee of several invest- Oct. 1993 200
Director, Member of the ment companies advised by Hyperion Capital
Audit Committee Management, Inc. or by its affiliates
(1992-Present). Director of Equitable Real
Estate Hyperion Mortgage Opportunity Fund,
Inc. and Equitable Real Estate Hyperion
High Yield Commercial Mortgage Fund, Inc.
(1995-Present). Director of Lexington
Corporate Properties, Inc. (1993-Present).
Consultant to Advisers Capital Management,
Inc. (1992-Present). Consultant to Ewing
Capital, Inc. (1993-Present). Formerly
Consultant on public and private pension
funds (1991-1993). Formerly President of
Lepercq Realty Advisors (1988-1990). Age
71.
</TABLE>
- ------------------
* Interested persons as defined in the Investment Company Act of 1940, as
amended (the '1940 Act'), because of affiliations with Hyperion Capital
Management, Inc., the Fund's Investment Adviser.
** The holdings of no director or nominee represented more than 1% of the
outstanding shares of the Fund.
5
<PAGE>
OFFICERS OF THE FUND. The officers of the Fund are chosen each year at the
first meeting of the Board of Directors of the Fund following the Annual Meeting
of Stockholders, to hold office at the discretion of the Board of Directors
until the meeting of the Board following the next Annual Meeting of Stockholders
and until their successors are chosen and qualified. The Board of Directors has
elected seven officers of the Fund. Except where dates of service are noted, all
officers listed below served as such throughout the 1995 fiscal year. The
following sets forth information concerning each officer of the Fund who served
during all or part of the last fiscal year of the Fund:
<TABLE>
<CAPTION>
NAME AND
PRINCIPAL OCCUPATION OFFICE AGE OFFICER SINCE
- ----------------------------------------- ---------------- --- --------------
<S> <C> <C> <C>
Lewis S. Ranieri......................... Chairman 49 June 1989
Director and Chairman of the Board of
Hyperion Capital Management, Inc.; see
information under 'ELECTION OF
DIRECTORS.'
Kenneth C. Weiss......................... Senior Vice 44 February 1992
President and Chief Executive Officer President
of Hyperion Capital Management, Inc.;
See information under 'ELECTION OF
DIRECTORS.'
Clifford E. Lai.......................... President (since 42 April 1993
Managing Director and Chief Investment October 1993)
Officer, Hyperion Capital Management,
Inc. (March 1993-Present). President
and/or Director and Senior Vice
President of several investment
companies advised by Hyperion Capital
Management, Inc. or by its affiliates
(1993-Present). Managing Director and
Chief Investment Strategist for Fixed
Income, First Boston Asset Management
(1989-1993). Vice President, Morgan
Stanley & Co. (1987-1989).
Louis C. Lucido.......................... Senior Vice 47 April 1992
Managing Director and Chief Operating President
Officer of Hyperion Capital Management,
Inc. (February 1992-Present). President
and/or Director of several investment
companies advised by Hyperion Capital
Management, Inc. or by its affiliates
(1992-Present). Senior Vice President
and Director, Progressive Capital
Management Inc. (1991-February 1992).
Senior Vice President and Manager,
Donaldson Lufkin & Jenrette
(1988-1991). Vice President, Smith
Barney, Harris Upham & Co. Inc.
(1987-1988). Vice-President, Merrill
Lynch, Pierce, Fenner & Smith
(1981-1987).
John N. Dunlevy.......................... Vice President 37 July 1992
Director, Hyperion Capital Management,
Inc. (July 1992-Present). Director and
Portfolio Manager, Teachers Insurance &
Annuity Association (1988-1992).
Assistant Vice President, Sumitomo Bank
Ltd. (1985-1988).
Patricia A. Sloan........................ Secretary 52 July 1989
Managing Director of Ranieri & Co.,
Inc. (1988-Present); See information
under 'ELECTION OF DIRECTORS.'
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
NAME AND
PRINCIPAL OCCUPATION OFFICE AGE OFFICER SINCE
- ----------------------------------------- ---------------- --- --------------
<S> <C> <C> <C>
Alan M. Mandel........................... Treasurer 38 February 1993
Vice President of Hyperion Capital (Resigned
Management, Inc. (1991-1994). Vice December 1994)
President of Mitchell Hutchins Asset
Management, Inc. (1987-1991). Deloitte
Haskins & Sells (1985-1987).
Paul Zavattoni........................... Treasurer 33 March 1995
Vice President of Hyperion Capital (Resigned
Management, Inc. in 1992; Treasurer July 1995)
(March 1995-July 1995). Formerly
Assistant Vice President of
PaineWebber/Mitchell Hutchins Asset
Management (1988-1992). Fund Supervisor
with Smith Barney Harris Upham & Co.
(1985-1988).
Joseph W. Sullivan....................... Treasurer 39 September 1995
Vice President of Hyperion Capital
Management, Inc. (August 1995-Present).
Treasurer of several investment
companies advised by Hyperion Capital
Management, Inc. or by its affiliates
(September 1995-Present). Formerly,
Vice President in Merrill Lynch & Co.'s
Investment Banking Division; Treasurer
and Chief Financial Officer of several
Merrill Lynch subsidiaries. Re-
sponsible for all financial reporting,
accounting, ministerial and
administrative services (1990-1995);
Assistant Vice President of Standard &
Poor's Debt Rating Group (1988-1990);
Assistant Vice President and Operations
Controller of Shearson Lehman Hutton,
Inc., engaged in the identification,
analysis and financial administration
of public and private real estate
investment programs (1983-1987). A
Licensed Certified Public Accountant
since 1981.
</TABLE>
At November 30, 1995, directors and officers of the Fund as a group owned
beneficially less than 1% of the outstanding shares of the Fund. No person, to
the knowledge of management, owned beneficially more than 5% of the Fund's
outstanding shares at that date. The business address of the Fund and its
officers and directors is 520 Madison Avenue, New York, New York 10022.
INTERESTED PERSONS. Mr. Ranieri serves as a Director and Chairman of the
Board of the Adviser and Mr. Weiss serves as a Director, President and Chief
Executive Officer of Hyperion Capital Management, Inc. ('Adviser'). Ms. Sloan is
a special limited partner of Hyperion Ventures, the sole general partner of
Hyperion Partners L.P., of which the Adviser is a wholly-owned subsidiary. As a
result of their service with the Adviser and certain affiliations with the
Adviser as described below, the Fund considers Messrs. Ranieri and Weiss and Ms.
Sloan to be 'interested persons' of the Fund within the meaning of Section
2(a)(19) of the 1940 Act.
COMMITTEES AND BOARD OF DIRECTORS' MEETINGS. The Fund has a standing Audit
Committee presently consisting of Messrs. Walsh, Drake, Petersen and Marston,
all of whom are members of the Board of Directors and are currently
non-interested persons of the Fund. The principal functions of the Fund's Audit
Committee are to recommend to the Board the appointment of the Fund's auditors,
to review with the auditors the scope and anticipated costs of their audit and
to receive and consider a report from the auditors concerning their conduct of
the audit, including any comments or recommendations they might want to make
7
<PAGE>
in that connection. During the last fiscal year of the Fund, the full Board of
Directors met six times, and the Audit Committee met one time. All of the
directors attended the Audit Committee meeting, and all of the Directors, except
Mr. Marston, attended at least 75% of the aggregate of the Board meetings and
the Audit Committee meeting. Mr. Marston attended five of the seven meetings.
The Fund has no nominating, compensation or similar committees.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS. No remuneration was paid
by the Fund to persons who were directors, officers or employees of Hyperion
Capital Management, Inc. or any affiliate thereof for their services as
directors or officers of the Fund. Each director of the Fund, other than those
who are officers or employees of Hyperion Capital Management, Inc. or any
affiliate thereof, is entitled to receive a fee of $7,500 per year plus $1,000
for each Board of Directors' meeting attended. Members of the Audit Committee
receive $750 for each Audit Committee meeting attended, other than meetings held
on days when there is also a directors' meeting.
DIRECTORS' COMPENSATION TABLE
FOR THE TWELVE MONTH PERIOD ENDED 11/30/95
<TABLE>
<CAPTION>
TOTAL DIRECTORS'
DIRECTORS' COMPENSATION
COMPENSATION FROM THE TRUST
FROM THE AND THE FUND
TRUST COMPLEX
------------ ----------------
<S> <C> <C>
Rodman Drake.................. $ 11,500 $ 61,500
Garth Marston................. 11,500 61,500
Harry E. Petersen, Jr. ....... 12,500 66,500
Leo M. Walsh, Jr. ............ 12,500 66,500
------------ ----------------
$ 48,000 $256,000
------------ ----------------
------------ ----------------
</TABLE>
REQUIRED VOTE
Election of the listed nominees for director requires the affirmative vote
of the holders of a majority of the outstanding shares of Common Stock of the
Fund present or represented by proxy at the Annual Meeting.
PROPOSAL 2: RATIFICATION OR REJECTION OF
SELECTION OF INDEPENDENT AUDITORS
The Board of Directors of the Fund will consider, and it is expected that
they will recommend, the selection of Deloitte & Touche LLP as independent
auditors of the Fund for the fiscal year ending November 30, 1996 at a meeting
scheduled to be held on March 12, 1996. The appointment of accountants is
approved annually by the Audit Committee of the Board of Directors and is
subsequently submitted to the stockholders for ratification or rejection. The
Fund has been advised by Deloitte & Touche LLP that at November 30, 1995 neither
that firm nor any of its partners had any direct or material indirect financial
interest in the Fund. A representative of Deloitte & Touche LLP will be at the
meeting to answer questions concerning the Fund's financial statements and will
have an opportunity to make a statement if he or she chooses to do so.
REQUIRED VOTE
Ratification of the selection of Deloitte & Touche LLP as independent
auditors of the Fund requires the affirmative vote of the holders of a majority
of the outstanding shares of Common Stock of the Fund present or represented by
proxy at the Annual Meeting.
8
<PAGE>
ADDITIONAL INFORMATION
INVESTMENT ADVISER
The Fund has engaged Hyperion Capital Management, Inc., the Adviser, to
provide professional investment management for the Fund pursuant to an Advisory
Agreement dated August 4, 1989. The Adviser is a Delaware corporation which was
organized in February 1989. The Adviser is a registered investment adviser under
the Investment Advisers Act of 1940, as amended. The business address of the
Adviser and its officers and directors is 520 Madison Avenue, New York, New York
10022.
The Adviser is an indirect, wholly-owned subsidiary of Hyperion Partners
L.P., a Delaware limited partnership ('Hyperion Partners'). Hyperion Partners
acquired all of the shares of the Adviser held by Hyperion Holdings, Inc. in
exchange for a $20,000,000 note on January 15, 1993. The sole general partner of
Hyperion Partners is Hyperion Ventures L.P., a Delaware limited partnership
('Hyperion Ventures'). Corporations owned principally by Lewis S. Ranieri,
Salvatore A. Ranieri and Scott A. Shay are the general partners of Hyperion
Ventures. Lewis S. Ranieri, a former Vice Chairman of Salomon Brothers Inc
('Salomon Brothers'), is the Chairman of the Board of the Adviser and the Fund.
Messrs. Salvatore Ranieri and Shay are directors of the Adviser, but have no
other positions with either the Adviser or the Fund. Messrs. Salvatore Ranieri
and Shay are principally engaged in the management of the affairs of Hyperion
Ventures and its affiliated entities. Since January 1, 1990, Patricia A. Sloan,
Secretary of the Fund, has been a special limited partner of Hyperion Ventures
and since July 1993 she has been a limited partner of Hyperion Partners. Mr.
Lai, the President of the Fund, and Messrs. Weiss and Lucido, Senior Vice
Presidents of the Fund, are employees of the Adviser, and each may be entitled,
in addition to receiving a salary from the Adviser, to receive a bonus based
upon a portion of the Adviser's profits, including any profit from a sale of the
Adviser. Mr. Dunlevy, a Vice President of the Fund, and Mr. Sullivan, Treasurer
of the Fund, are also employees of the Adviser. The business address of Hyperion
Partners and Hyperion Ventures is 50 Charles Lindbergh Boulevard, Suite 500,
Uniondale, New York 11553.
The Adviser provides advisory services to several other registered
investment companies and one offshore fund, all of which invest in
mortgage-backed securities. Its management includes several individuals with
extensive experience in creating, evaluating and investing in Mortgage-Backed
Securities, Derivative Mortgage-Backed Securities and Asset-Backed Securities,
and in using hedging techniques. Lewis S. Ranieri, Chairman of the Adviser and
Chairman of the Fund, was instrumental in the development of the secondary
mortgage-backed securities market and the creation and development of secondary
markets for conventional mortgage loans, Commercial Mortgage Obligations and
other mortgage-related securities. While at Salomon Brothers, Mr. Ranieri
directed that firm's activities in the mortgage, real estate and government
guaranteed areas. Kenneth C. Weiss, President and Chief Executive Officer of the
Adviser and Senior Vice President of the Fund, was a Director of First Boston
Asset Management Corporation and was a Director of The First Boston Corporation.
Clifford E. Lai, Chief Investment Manager of the Adviser and President of the
Fund, was Managing Director and Chief Investment Strategist for Fixed Income for
First Boston Asset Management Corporation. Louis C. Lucido, Managing Director
and Chief Operating Officer of the Adviser and Senior Vice President of the
Fund, was Senior Vice President and Director of Progressive Capital Management.
INVESTMENT ADVISORY AGREEMENT
On March 7, 1995, the Board of Directors of the Fund, including those
persons identified as interested persons and a majority of the directors who are
not parties to the Advisory Agreement or interested persons (as such term is
defined in the 1940 Act) of any such party (the 'Disinterested Directors'),
9
<PAGE>
approved extension of the Advisory Agreement through March 31, 1996. At the time
of the Board's approval of the latest extension of the Advisory Agreement,
Messrs. Lewis Ranieri, Weiss and Ms. Sloan were interested persons of the Fund.
The Advisory Agreement was last submitted to a vote of the Stockholders of the
Fund at the first Annual Meeting of the Stockholders of the Fund held on June 5,
1990. At that meeting, the Stockholders approved the continuance of the Advisory
Agreement. The Advisory Agreement provides that it will continue from year to
year, but only so long as such continuation is specifically approved at least
annually by both (1) the vote of a majority of the Board of Directors or the
vote of a majority of the outstanding voting securities of the Fund (as provided
in the 1940 Act) and (2) by the vote of a majority of the Disinterested
Directors cast in person at a meeting called for the purpose of voting on such
approval. The Advisory Agreement may be terminated at any time without the
payment of any penalty, upon the vote of a majority of the Board of Directors or
a majority of the outstanding voting securities of the Fund or by the Adviser,
on 60 days' written notice by either party to the other. The Advisory Agreement
will terminate automatically in the event of its assignment (as such term is
defined in the 1940 Act and the rules thereunder). The Board of Directors will
consider continuance of the Advisory Agreement until March 31, 1997 at a meeting
scheduled for March 12, 1996.
Pursuant to the Advisory Agreement, the Fund has retained the Adviser to
manage the investment of the Fund's assets and to provide, with the assistance
of the Sub-Adviser, Pacholder Associates, Inc., such investment research, advice
and supervision, in conformity with the Fund's investment objective and
policies, as may be necessary for the operations of the Fund.
The Advisory Agreement provides, among other things, that the Adviser will
bear all expenses of its employees and overhead incurred in connection with its
duties under the Advisory Agreement, and will pay all salaries of the Fund's
directors and officers who are affiliated persons (as such term is defined in
the 1940 Act) of the Adviser. The Advisory Agreement provides that the Fund
shall pay to the Adviser a monthly fee for its services which is equal to .65%
per annum of the Fund's average weekly net assets, which, for purposes of
determining the Adviser's fee, shall be the average weekly value of the total
assets of the Fund, minus the sum of accrued liabilities (including accrued
expenses) of the Fund and any declared but unpaid dividends on the Common
Shares. Investment advisory fees paid by the Fund to the Adviser during the last
fiscal year of the Fund amounted to $1,612,199, of which $140,080 was paid by
the Adviser to the Sub-Adviser.
SUB-INVESTMENT ADVISER
Hyperion Capital Management, Inc., the Investment Adviser, has engaged
Pacholder Associates, Inc., the Sub-Adviser, to provide sub-investment advisory
services for investments in higher yielding, lower rated, or unrated fixed
income securities of U.S. corporations ('High Yield Securities'). The
Sub-Adviser, a registered investment adviser, is an Ohio corporation organized
in December, 1983. The business address of the Sub-Adviser and its officers and
directors is 8044 Montgomery Road, Suite 382, Cincinnati, Ohio 45236.
All investment decisions undertaken by the Sub-Adviser on behalf of the
Fund will be approved by three of its four investment executives, Dr. Asher O.
Pacholder, William J. Morgan, James P. Shanahan, Jr., and Anthony L. Longi, Jr.
Dr. Pacholder, Chairman and Chief Executive Officer of the Sub-Adviser, has had
22 years of experience in the investment field. Prior to founding Pacholder
Associates, Inc. in 1983, Dr. Pacholder was Vice President and Chief Investment
Officer of the Union Central Life Insurance Company, where he was responsible
for the management of a $1,600,000,000 investment portfolio, including High
Yield Securities. William J. Morgan, also a founder of the Sub-Adviser, is the
President of the Sub-Adviser and is responsible for management of the research
staff and securities
10
<PAGE>
trading. Prior to 1984, Mr. Morgan was an investment analyst for the Union
Central Life Insurance Company, where he was engaged in the research coverage of
a wide variety of securities, including High Yield Securities. James P.
Shanahan, Jr., Executive Vice President and General Counsel of the Sub-Adviser,
is responsible for legal and investment analysis, particularly in the areas of
restructuring and bankruptcy proceedings. Prior to joining the Sub-Adviser in
1986, he was engaged in the private practice of law. Anthony L. Longi, Jr.,
Executive Vice President and Fixed Income Portfolio Manager of the Sub-Adviser,
and has been employed by Pacholder Associates since 1987. Messrs. Pacholder,
Morgan and Shanahan own equity interests in the Sub-Adviser and Messrs.
Pacholder and Morgan serve on its Board of Directors. Dr. Pacholder owns more
than 50.1% of the issued and outstanding equity interests in the Sub-Adviser.
Mr. Morgan owns greater than 10% of the issued and outstanding equity interests
in the Sub-Adviser. USF&G Investment Management Group, Inc. owns greater than
10% of the issued and outstanding equity interests of the Sub-Adviser. The
address of USF&G Investment Management Group, Inc. is 100 Light Street,
Baltimore, Maryland 21203. No officer, director or employee of the Sub-Adviser
is an officer, director or nominee for election as a director of the Fund.
Although the Sub-Adviser will make all decisions with respect to the Fund's
investments in High Yield Securities on behalf of the Adviser, the amount of the
Fund's assets allocated to these investments will be determined by the Adviser.
SUB-ADVISORY AGREEMENT
On March 7, 1995 the Board of Directors of the Fund, including a majority
of the Disinterested Directors, approved extension of the Sub-Advisory Agreement
through March 31, 1996. No director of the Fund owned any securities of, or had
any other material direct or indirect interest, in the Sub-Adviser or any person
controlling, controlled by or under common control with the Sub-Adviser on the
date of the Disinterested Directors' approval of the extension of the
Sub-Advisory Agreement. The Sub-Advisory Agreement was last submitted to a vote
of the Stockholders of the Fund at the first Annual Meeting of the Stockholders
of the Fund held on June 5, 1990. At that meeting the Stockholders approved the
Sub-Advisory Agreement, which contains the same provisions with respect to
continuation and termination as does the Advisory Agreement, except that the
Sub-Advisory Agreement may not be assigned without the consent of the other
party thereto. The Board of Directors will consider continuance of the
Sub-Advisory Agreement until March 31, 1997 at a meeting scheduled for March 12,
1996.
The Sub-Advisory Agreement provides, among other things, that the
Sub-Adviser will bear all expenses of its employees and overhead incurred in
connection with its duties under the Sub-Advisory Agreement. The Sub-Advisory
Agreement provides that the Adviser shall pay to the Sub-Adviser a monthly fee
for the Sub-Adviser's services which is equal to .35% per annum of the portion
of the Fund's average weekly net assets that is invested in High Yield
Securities (which shall be equal to the average weekly value of the total assets
invested in High Yield Securities, minus the sum of accrued liabilities
(including accrued expenses) directly related thereto and a pro rata percentage
of any declared but unpaid dividends on the Common Shares and a pro rata
percentage of accrued liabilities related to the Fund in general). The Adviser
has paid and intends to continue to pay the Sub-Adviser's fee out of the fee
that the Adviser will receive from the Fund. Investment advisory fees paid by
the Adviser to the Sub-Adviser during the last fiscal year of the Fund amounted
to $140,080.
11
<PAGE>
INVESTMENT COMPANIES MANAGED BY HYPERION CAPITAL MANAGEMENT, INC.
In addition to acting as adviser to the Fund, Hyperion Capital Management,
Inc. acts as investment adviser to the following other investment companies at
the indicated annual compensation.
<TABLE>
<CAPTION>
APPROXIMATE NET
ASSETS AT
NOVEMBER 30,
NAME OF FUND INVESTMENT ADVISORY FEE 1995
- ------------------------------- ---------------------------------------------- ---------------
(IN MILLIONS)
<S> <C> <C>
Hyperion 1997 Term Trust, Inc. 0.50% of the Trust's average weekly net assets $ 479.7
Hyperion 1999 Term Trust, Inc. 0.50% of the Trust's average weekly net assets 480.1
Hyperion 2002 Term Trust, Inc. 0.50% of the Trust's average weekly net assets 311.0
Hyperion 2005 Investment Grade
Opportunity Term Trust, Inc. 0.65% of the Trust's average weekly net assets 197.1
</TABLE>
BROKERAGE COMMISSIONS
Because it buys its portfolio securities in dealer markets, the Fund did
not pay any brokerage commissions on its securities purchases during its last
fiscal year. The Fund paid an aggregate of $36,676 in futures commissions during
the last fiscal year, all of which were paid to entities that are not affiliated
with the Fund or the Adviser.
The Adviser and the Sub-Adviser have discretion to select brokers and
dealers to execute portfolio transactions initiated by the Adviser and the
Sub-Adviser and to select the markets in which such transactions are to be
executed. The Advisory Agreement and the Sub-Advisory Agreement provide, in
substance, that in executing portfolio transactions and selecting brokers or
dealers, the primary responsibility of the Adviser and the Sub-Adviser is to
seek the best combination of net price and execution for the Fund. It is
expected that securities will ordinarily be purchased in primary markets, and
that in assessing the best net price and execution available to the Fund, the
Adviser and the Sub-Adviser will consider all factors they deem relevant,
including the price, dealer spread, the size, type and difficulty of the
transaction involved, the firm's general execution and operation facilities and
the firm's risk in positioning the securities involved. Transactions in foreign
securities markets may involve the payment of fixed brokerage commissions, which
are generally higher than those in the United States.
In selecting brokers or dealers to execute particular transactions and in
evaluating the best net price and execution available, the Adviser and the
Sub-Adviser are authorized to consider 'brokerage and research services' (as
those terms are defined in Section 28(e) of the Securities Exchange Act of
1934). The Adviser and the Sub-Adviser are also authorized to cause the Fund to
pay to a broker or dealer who provides such brokerage and research services a
commission for executing a portfolio transaction which is in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction. The Adviser and the Sub-Adviser must determine in good faith,
however, that such commission was reasonable in relation to the value of the
brokerage and research services provided, viewed in terms of that particular
transaction or in terms of all the accounts over which the Adviser or the
Sub-Adviser exercise investment discretion. Research services furnished by
brokers through whom the Fund effects securities transactions may be used by the
Adviser and the Sub-Adviser in servicing all of the accounts for which
investment discretion is exercised by the Adviser or the Sub-Adviser, and not
all such services may be used by the Adviser or the Sub-Adviser in connection
with the Fund.
12
<PAGE>
COMPLIANCE WITH SECTION 16 REPORTING REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934 requires the Fund's
officers and directors and persons who own more than ten percent of a registered
class of the Fund's equity securities to file reports of ownership and changes
in ownership with the Securities and Exchange Commission and the New York Stock
Exchange. Officers, directors and greater than ten-percent shareholders are
required by SEC regulations to furnish the Fund with copies of all Section 16(a)
forms they file.
Based solely on its review of the copies of such forms received by the Fund
and written representations from certain reporting persons that all applicable
filing requirements for such persons had been complied with, the Fund believes
that, during the fiscal year ending November 30, 1995, all filing requirements
applicable to the Fund's officers, directors, and greater than ten-percent
beneficial owners were complied with.
OTHER BUSINESS
The Board of Directors of the Fund does not know of any other matter which
may come before the meeting. If any other matter properly comes before the
meeting, it is the intention of the persons named in the proxy to vote the
proxies in accordance with their judgment on that matter.
PROPOSALS TO BE SUBMITTED BY STOCKHOLDERS
All proposals by stockholders of the Fund that are intended to be presented
at the Fund's next Annual Meeting of Stockholders to be held in 1997 must be
received by the Fund for inclusion in the Fund's proxy statement and proxy
relating to that meeting no later than October 4, 1996.
EXPENSES OF PROXY SOLICITATION
The cost of preparing, assembling and mailing material in connection with
this solicitation of proxies will be borne by the Fund. In addition to the use
of the mails, proxies may be solicited personally by regular employees of the
Fund, Hyperion Capital Management, Inc., Princeton Administrators, Inc. or
Shareholder Communications Corp., paid solicitors for the Fund, or by telephone
or telegraph. The anticipated cost of solicitation by the paid solicitors will
be nominal. The Fund's agreement with Shareholder Communications Corp. provides
that such paid solicitors will perform a broker search and deliver proxies in
return for the payment of their fee plus the expenses associated with this proxy
solicitation. Brokerage houses, banks and other fiduciaries will be requested to
forward proxy solicitation material to their principals to obtain authorization
for the execution of proxies, and they will be reimbursed by the Fund for
out-of-pocket expenses incurred in this connection.
January 29, 1996
13
<PAGE>
THE HYPERION TOTAL RETURN FUND, INC.
Proxy Solicited on Behalf of the Directors.
The undersigned hereby appoints LEWIS S. RANIERI, KENNETH C. WEISS, CLIFFORD E.
LAI, JOSEPH W. SULLIVAN and PATRICIA A. SLOAN, and each of them, attorneys and
proxies for the undersigned, with full power of substitution and revocation to
represent the undersigned and to vote on behalf of the undersigned all shares of
The Hyperion Total Return Fund, Inc. (the "Fund") which the undersigned is
entitled to vote at the Annual Meeting of Stockholders of the Fund to be held at
The Drake Hotel, 440 Park Avenue at 56th Street, New York, New York 10022, on
Tuesday, April 16, 1996 at 9:00 a.m., and at any adjournments thereof. The
undersigned hereby acknowledges receipt of the Notice of Meeting and
accompanying Proxy Statement and hereby instructs said attorneys and proxies to
vote said shares as indicated hereon. In their discretion, the proxies are
authorized to vote upon such other business as may properly come before the
Meeting. A majority of the proxies present and acting at the Meeting in person
or by substitute (or, if only one shall be so present, then that one) shall have
and may exercise all of the power of authority of said proxies hereunder. The
undersigned hereby revokes any proxy previously given.
This Proxy, if properly executed, will be voted in the manner directed by the
stockholder. If no direction is made, this Proxy will be voted FOR election of
the nominees as Directors in Proposal 1 and FOR Proposal 2. Please refer to the
Proxy Statement for a discussion of the Proposals.
PLEASE SIGN, DATE, AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
NOTE: Please sign exactly as your name appears on the Proxy. If joint owners,
EITHER may sign this Proxy. When signing as attorney, executor, administrator,
trustee, guardian, or corporate officer, please give full title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
______________________________________ ______________________________________
______________________________________ ______________________________________
______________________________________ ______________________________________
<PAGE>
/x/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
1) Election of Directors: With- For All
For hold Except
Class III / / / / / /
Lewis S. Ranieri, Leo M. Walsh, Jr., Patricia A. Sloan
If you do not wish your shares voted "For" a particular nominee, mark the
"For All Except" box and strike a line through the nominee(s) name. Your
shares will be voted for the remaining nominee.
2) Ratification or rejection of the selection of For Against Abstain
independent auditors (a vote "FOR" is a vote for / / / / / /
ratification).
I plan to attend the Annual Meeting of Stockholders on Yes No
April 16, 1996. / / / /
Mark box at right if comments or address change have been
noted on the reverse side of this card. / /
RECORD DATE SHARES:
Please be sure to sign and date this Proxy.
Date ________________________
________________________________________________________________________________
Signature(s), (Title(s), if applicable)
