UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-04739
Virtus Total Return Fund Inc.
(Exact name of registrant as specified in charter)
101 Munson Street
Greenfield, MA 01301-9668
(Address of principal executive offices) (Zip code)
William Renahan, Esq.
Vice President, Chief Legal Officer and Secretary for Registrant
One Financial Plaza
Hartford, CT 06103
(Name and address of agent for service)
Registrants telephone number, including area code: (866) 270-7788
Date of fiscal year end: November 30
Date of reporting period: May 31, 2019
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (OMB) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. | Reports to Stockholders. |
The Report to Shareholders is attached herewith.
• | The realized volatility of the S&P 500® Index was over 29% during December, a level not seen since markets reacted to the downgrade of U.S. debt in 2011. |
• | The average level of the Chicago Board Options Exchange Volatility Index® (CBOE VIX®) during the month was also the highest since 2011. |
• | The S&P 500® Index rallied 5% on December 26, 2018 – its largest upward move since March 2009. |
• | The range between the high and low levels of the S&P 500® Index in December exceeded the range for all of 2017. |
Open Purchased Options Contracts as of May 31, 2019 were as follows: | |||||
Description of Options | Number
of Contracts |
Contract
Notional Amount |
Strike
Price(1) |
Expiration
Date |
Value |
Call Options | |||||
S&P 500® Index | 89 | $26,967 | $3,030 | 6/3/19 | $ — |
S&P 500® Index | 89 | 26,967 | 3,030 | 6/5/19 | — |
S&P 500® Index | 89 | 26,878 | 3,020 | 6/7/19 | — |
S&P 500® Index | 89 | 26,700 | 3,000 | 6/10/19 | — |
S&P 500® Index | 71 | 21,300 | 3,000 | 6/12/19 | — |
S&P 500® Index | 89 | 26,344 | 2,960 | 6/14/19 | — (2) |
— (2) | |||||
Put Options | |||||
S&P 500® Index | 89 | 23,496 | 2,640 | 6/3/19 | 2 |
S&P 500® Index | 89 | 23,852 | 2,680 | 6/5/19 | 36 |
S&P 500® Index | 89 | 23,407 | 2,630 | 6/7/19 | 22 |
S&P 500® Index | 89 | 23,452 | 2,635 | 6/10/19 | 36 |
S&P 500® Index | 71 | 18,176 | 2,560 | 6/12/19 | 13 |
S&P 500® Index | 89 | 22,695 | 2,550 | 6/14/19 | 23 |
132 | |||||
Total Purchased Options | $132 |
Open Written Options Contracts as of May 31, 2019 were as follows: | |||||
Description of Options | Number
of Contracts |
Contract
Notional Amount |
Strike
Price(1) |
Expiration
Date |
Value |
Call Options | |||||
S&P 500® Index | 89 | $26,433 | $2,970 | 6/3/19 | $ — |
S&P 500® Index | 89 | 26,433 | 2,970 | 6/5/19 | — (2) |
S&P 500® Index | 89 | 26,344 | 2,960 | 6/7/19 | — (2) |
S&P 500® Index | 89 | 26,166 | 2,940 | 6/10/19 | (1) |
S&P 500® Index | 71 | 20,768 | 2,925 | 6/12/19 | (1) |
S&P 500® Index | 89 | 25,810 | 2,900 | 6/14/19 | (5) |
(7) | |||||
Put Options | |||||
S&P 500® Index | 89 | 24,030 | 2,700 | 6/3/19 | (16) |
S&P 500® Index | 89 | 24,386 | 2,740 | 6/5/19 | (164) |
S&P 500® Index | 89 | 23,941 | 2,690 | 6/7/19 | (84) |
S&P 500® Index | 89 | 23,985 | 2,695 | 6/10/19 | (110) |
S&P 500® Index | 71 | 18,709 | 2,635 | 6/12/19 | (43) |
S&P 500® Index | 89 | 23,229 | 2,610 | 6/14/19 | (53) |
(470) | |||||
Total Written Options | $ (477) |
Footnote Legend: | |
(1) | Strike price not reported in thousands. |
(2) | Amount is less than $500. |
Total
Value at May 31, 2019 |
Level
1 Quoted Prices |
Level
2 Significant Observable Inputs |
Level
3 Significant Unobservable Inputs | ||||
Assets: | |||||||
Debt Securities: | |||||||
Asset-Backed Securities | $ 9,126 | $ — | $ 9,126 | $ — | |||
Corporate Bonds and Notes | 56,007 | — | 56,007 | — | |||
Foreign Government Securities | 8,836 | — | 8,836 | — | |||
Leveraged Loans | 16,125 | — | 16,125 | — | |||
Mortgage-Backed Securities | 25,169 | — | 24,774 | 395 | |||
U.S. Government Securities | 4,061 | — | 4,061 | — | |||
Equity Securities: | |||||||
Common Stocks | 196,283 | 196,283 | — | — | |||
Preferred Stocks | 2,783 | 500 | 2,283 | — | |||
Rights | 2 | — | — | 2 | |||
Warrant | 18 | — | — | 18 | |||
Money Market Mutual Fund | 1,143 | 1,143 | — | — | |||
Purchased Options | 132 | 109 | 23 | — | |||
Total Investments, before Written Options | 319,685 | 198,035 | 121,235 | 415 | |||
Liabilities: | |||||||
Written Options | (477) | (418) | (59) | — | |||
Total Investments, Net of Written Options | $319,208 | $197,617 | $121,176 | $415 |
Assets | |
Investment in securities at value (Identified cost
$294,419) |
$ 319,685 |
Foreign currency at value (Identified cost
$2) |
2 |
Cash
|
1,566 |
Receivables | |
Investment securities sold
|
1,112 |
Dividends and
interest |
1,549 |
Tax reclaims
|
176 |
Prepaid Directors’
retainer |
23 |
Prepaid expenses
|
25 |
Total
assets |
324,138 |
Liabilities | |
Borrowings (Note
8) |
87,250 |
Written options at value (Premiums received $259) (Note
3) |
477 |
Payables | |
Investment securities purchased
|
1,773 |
Investment advisory fees
|
231 |
Professional fees
|
40 |
Administration and accounting
fees |
31 |
Interest on borrowings (Note
8) |
26 |
Transfer agent fees and expenses
|
3 |
Other accrued
expenses |
60 |
Total
liabilities |
89,891 |
Net
Assets |
$234,247 |
Net Assets Consist of: | |
Common stock ($0.10 par value; 200,000,000 shares
authorized) |
$ 2,153 |
Capital paid in on shares of beneficial
interest |
239,801 |
Total distributable earnings
(loss) |
(7,707) |
Net
Assets |
$234,247 |
Net Asset Value Per Share | |
(Net assets/shares outstanding) Shares outstanding
21,527,388 |
$ 10.88 |
Investment Income | |
Dividends
|
$ 3,532 |
Interest
|
3,044 |
Foreign taxes withheld
|
(241) |
Total investment
income |
6,335 |
Expenses | |
Investment advisory
fees |
1,309 |
Administration and accounting
fees |
183 |
Directors’ fees and
expenses |
160 |
Professional fees
|
95 |
Printing fees and expenses
|
65 |
Transfer agent fees and
expenses |
23 |
Custodian fees
|
3 |
Miscellaneous
expenses |
40 |
Total expenses before interest
expense |
1,878 |
Interest expense on borrowings (Note
8) |
1,442 |
Total expenses after interest
expense |
3,320 |
Less administration fee
waiver |
(1) |
Net
expenses |
3,319 |
Net investment income
(loss) |
3,016 |
Net Realized and Unrealized Gain (Loss) on Investments | |
Net realized gain (loss) from: | |
Investments |
1,599 |
Foreign currency
transactions |
(234) |
Written
options |
(3,154) |
Net change in unrealized appreciation (depreciation) on: | |
Investments |
20,707 |
Foreign currency
transactions |
2 |
Written
options |
(100) |
Net realized and unrealized gain (loss) on
investments |
18,820 |
Net increase (decrease) in net assets resulting from
operations |
$21,836 |
Six
Months Ended May 31, 2019 (Unaudited) |
Year
Ended November 30, 2018 | ||
INCREASE
(DECREASE) IN NET ASSETS From Operations |
|||
Net investment income (loss)
|
$ 3,016 | $ 6,815 | |
Net realized gain (loss)
|
(1,789) | (21,516) | |
Net change in unrealized appreciation (depreciation) | 20,609 | (15,839) | |
Increase (decrease) in net assets resulting from
operations |
21,836 | (30,540) | |
From Dividends and Distributions to Shareholders | |||
Net investment income and net realized
gains |
(15,543) (1) | (8,263) | |
Return of
capital |
— | (22,823) | |
Dividends and Distributions to
Shareholders |
(15,543) | (31,086) | |
Net increase (decrease) in net
assets |
6,293 | (61,626) | |
Net Assets | |||
Beginning of
period |
227,954 | 289,580 | |
End of
period |
$ 234,247 | $ 227,954 | |
Supplemental
– Other Information Capital share transactions were as follows: |
|||
Common shares outstanding at beginning of
period |
21,527,388 | 21,527,389 | |
Adjustments for fractional common
shares |
— | (1) | |
Common shares outstanding at end of
period |
21,527,388 | 21,527,388 |
(1) | Please note that the tax status of our distributions is determined at the end of the taxable year. However, based on interim data as of June 28, 2019, we estimate that 15.9% of distributions will represent net investment income and 84.1% will represent return of capital. Also refer to inside front cover for information on the Managed Distribution Plan. See Notes to Financial Statements. |
Increase (Decrease) in cash | |
Cash Flows provided by (Used for) Operating Activities: | |
Net increase (decrease) in net assets resulting from operations
|
$ 21,836 |
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided (used by) operating activities: | |
Proceeds from sales and paydowns of long-term investments
|
77,554 |
(Increase) Decrease in investment securities sold receivable
|
(713) |
Purchases of long-term investments
|
(66,666) |
Increase (Decrease) in investment securities purchased payable
|
(842) |
Net (purchases) or sales of short-term
investments |
(588) |
Net (purchases) or sales in purchased options
|
(1,077) |
Net purchases or (sales) in written options
|
(3,860) |
Net change in unrealized (appreciation)/depreciation from investments
|
(20,607) |
Net realized (gain)/loss from
investments |
1,555 |
Non-cash adjustments from corporate
events |
(6) |
Return of capital distributions on
investments |
275 |
Amortization of premium and accretion of discounts on
investments |
210 |
Proceeds from litigation
settlements |
194 |
(Increase) Decrease in tax reclaims receivable
|
(1) |
(Increase) Decrease in dividends and interest receivable
|
75 |
(Increase) Decrease in prepaid
expenses |
(23) |
Increase (Decrease) in interest payable on
borrowings |
(1) |
Increase (Decrease) in affiliated expenses payable
|
33 |
Increase (Decrease) in non-affiliated expenses payable
|
(36) |
Cash provided by (used for) operating activities
|
7,312 |
Cash provided by (used for) financing activities: | |
Cash receipts from
borrowings |
10,000 |
Cash payments to reduce borrowings
|
(7,000) |
Cash distributions paid to shareholders
|
(15,543) |
Cash provided by (used for) financing
activites |
(12,543) |
Net increase (decrease) in
cash |
(5,231) |
Cash: |
|
Cash and foreign currency at beginning of
period |
6,799 |
Cash and foreign currency at end of
period |
$ 1,568 |
Supplemental Cash Flow information: | |
Cash paid during the period for interest expense on
borrowings |
$ 1,443 |
Six
Months Ended May 31, 2019 (Unaudited) |
Year
Ended November 30, |
Fiscal
Period Ended November 30, 2015(1)(2) | ||||||||
2018 | 2017 (1) | 2016 (1) | ||||||||
PER SHARE DATA: | ||||||||||
Net asset value, beginning of
period |
$ 10.59 | $ 13.45 | $ 11.78 | $ 11.76 | $ 12.99 | |||||
Income (loss) from investment operations: | ||||||||||
Net investment income
(loss)(3) |
0.14 | 0.32 | 0.29 | 0.41 | 0.46 | |||||
Net realized and unrealized gain
(loss) |
0.87 | (1.74) | 2.25 | 0.63 | (0.67) | |||||
Total from investment
operations |
1.01 | (1.42) | 2.54 | 1.04 | (0.21) | |||||
Dividends and Distributions to Shareholders: | ||||||||||
Net investment
income |
(0.72) | (0.30) | (0.34) | (1.02) | (1.02) | |||||
Net realized
gains |
— | (0.08) | (0.58) | — | — | |||||
Return of
capital |
— | (1.06) | — | — | — | |||||
Total dividends and distributions to
shareholders |
(0.72) | (1.44) | (0.92) | (1.02) | (1.02) | |||||
Fund Share Transactions | ||||||||||
Anti-dilutive impact of tender
offers |
— | — | 0.05 | — | — | |||||
Net asset value, end of
period |
$ 10.88 | $ 10.59 | $ 13.45 | $ 11.78 | $ 11.76 | |||||
Market value, end of
period(4) |
$ 9.87 | $ 9.27 | $ 12.82 | $ 11.17 | $ 9.87 | |||||
Total return, net asset
value(5) |
10.77% | (10.17)% | 26.37% | 10.09% | (0.92)% (6) | |||||
Total return, market
value(5) |
14.80% | (17.51)% | 27.06% | 24.37% | (6.56)% (6) | |||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||
Ratio of net expenses to average net
assets(7) |
2.94% (8) | 2.61% | 2.55% (9) | 2.33% | 1.97% (8) | |||||
Ratio of total expenses after interest expense to average net
assets |
2.94% (8) | 2.70% | 2.62% (9) | 2.33% | 1.97% (8) | |||||
Ratio of net investment income (loss) to average net
assets |
2.67% (8) | 2.75% | 2.86% (9) | 3.44% | 3.90% (8) | |||||
Portfolio turnover
rate |
22% (6) | 46% | 61% | 60% | 32% (6) | |||||
Net assets, end of period
(000’s) |
$234,247 | $227,954 | $289,580 | $126,508 | $126,454 | |||||
Borrowings, end of period
(000’s) |
$ 87,250 | $ 84,250 | $105,000 | $ 47,000 | $ 43,500 | |||||
Asset coverage, per $1,000 principal amount of
borrowings(10) |
$ 3,685 | $ 3,706 | $ 3,758 | $ 3,692 | $ 3,907 |
(1) | On April 3, 2017, Virtus Total Return Fund (DCA) was reorganized into the Fund (f/k/a The Zweig Fund, Inc.). The activity in the table presented above is for the accounting survivor, Virtus Total Return Fund (DCA), for the periods prior to the date of the reorganization and for the post-reorganization fund thereafter. The net asset values and other per share information have been restated for periods prior to the reorganization to reflect the share conversion ratio of 0.391206. See Note 12 Plan of Reorganization in the Notes to Financial Statements. |
Year
Ended December 31, | |||
2014 (1) | 2013 (1) | ||
PER SHARE DATA: | |||
Net asset value, beginning of
period |
$ 12.37 | $ 11.32 | |
Income (loss) from investment operations: | |||
Net investment income
(loss)(3) |
0.82 | 0.51 | |
Net realized and unrealized gain
(loss) |
0.72 | 1.08 | |
Total from investment
operations |
1.54 | 1.59 | |
Dividends and Distributions to Shareholders: | |||
Net investment
income |
(0.92) | (0.54) | |
Total dividends and distributions to
shareholders |
(0.92) | (0.54) | |
Net asset value, end of
period |
$ 12.99 | $ 12.37 | |
Market value, end of
period(4) |
$ 11.55 | $ 10.25 | |
Total return, net asset
value(5) |
13.59% | 15.02% | |
Total return, market
value(5) |
21.98% | 9.08% | |
RATIOS/SUPPLEMENTAL DATA: | |||
Ratio of net expenses to average net
assets(7) |
1.93% | 2.01% | |
Ratio of total expenses after interest expense to average net
assets |
1.93% | 2.01% | |
Ratio of net investment income (loss) to average net
assets |
6.31% | 4.42% | |
Portfolio turnover
rate |
33% | 42% | |
Net assets, end of period
(000’s) |
$139,630 | $132,857 | |
Borrowings, end of period
(000’s) |
$ 50,500 | $ 50,500 | |
Asset coverage, per $1,000 principal amount of
borrowings(10) |
$ 3,765 | $ 3,631 |
(2) | During the period the Fund changed its fiscal year end from December 31 to November 30. |
(3) | Calculated using average shares outstanding. |
(4) | Closing Price – New York Stock Exchange. |
(5) | Total return on market value is calculated assuming a purchase of common shares on the opening of the first day and sale on the closing of the last day of each period reported. Dividends and distributions are assumed, for purposes of this calculation, to be reinvested at prices obtained under the Fund’s Automatic Reinvestment and Cash Purchase Plan. Total return on market value is not annualized for periods of less than one year. Brokerage commissions that a shareholder may pay are not reflected. Total return on market value does not reflect the deduction of taxes that a shareholder may pay on fund distributions or the sale of fund shares. Total return on net asset value uses the same methodology, but with use of net asset value for the beginning, ending and reinvestment values. |
(6) | Not annualized. |
(7) | Ratio of total expenses, before interest expense on the line of credit, was 1.61% for the six months ended May 31, 2019, 1.63% and 1.92% for the years ended November 30, 2018 and 2017, respectively, and 1.87% for the year ended November 30, 2016, 1.61% for the fiscal period ended November 30, 2015, and 1.58% and 1.62%, for the years ending December 31, 2014 and 2013, respectively. |
(8) | Annualized. |
(9) | The Fund incurred certain non-recurring merger and tender offer costs in 2017. When excluding these costs, the ratio of total expenses after interest expense and before expense waivers and earnings credits to average net assets would be 2.41%, the ratio of net expenses to average net assets would be 2.34% and the ratio of net investment income (loss) to average net assets would be 3.07%. |
(10) | Represents value of net assets plus the borrowings at the end of the period divided by the borrowings at the end of the period multiplied by $1,000. |
A. | Security Valuation |
The Fund utilizes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The Fund’s policy is to recognize transfers into and out of Level 3 at the end of the reporting period. |
B. | Security Transactions and Investment Income |
Security transactions are recorded on the trade date. Realized gains and losses from the sales of securities are determined on the identified cost basis. Dividend income is recognized 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 amortizes premiums and accretes discounts using the effective interest method. | |
Any distributions from underlying funds are recorded in accordance with the character of the distributions as designated by the underlying funds. | |
Dividend income from investments in real estate investment trusts (“REITs”) is recorded using management’s estimate of the percentage of income included in distributions received from such investments based on historical information and other industry sources. The return of capital portion of the estimate is a reduction of income. The actual amounts of income, return of capital, and capital gains are only determined by each REIT after its fiscal year-end, and may differ from the estimated amounts. |
C. | Income Taxes |
The Fund is treated as a separate taxable entity. It is the Fund’s intention to comply with the requirements of Subchapter M of the Internal Revenue Code and to distribute substantially all of its taxable income to its shareholders. Therefore, no provision for federal income taxes or excise taxes has been made. | |
The Fund may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. The Fund will accrue such taxes and recoveries as applicable based upon current interpretations of the tax rules and regulations that exist in the markets in which it invests. | |
Management of the Fund has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements. As of May 31, 2019, the tax years that remain subject to examination by the major tax jurisdictions under the statute of limitations are from the year 2015 forward (with limited exceptions). | |
D. | Distributions to Shareholders |
Distributions are recorded by the Fund on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations that may differ from U.S. GAAP. | |
The Fund has a Managed Distribution Plan which currently provides for the Fund to make a quarterly distribution of $0.361 per share. Distributions may represent earnings from net investment income, realized capital gains, or, if necessary, return of capital. Shareholders should not draw any conclusions about the Fund’s investment performance from the terms of the Fund’s Managed Distribution Plan. | |
E. | Foreign Currency Transactions |
Non-U.S. investment securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at 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 date 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 the date it is paid is treated as a gain or loss on foreign currency. The Fund does not isolate that portion of the results of operations arising from changes in foreign exchange rates on investments from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments. | |
F. | When-issued Purchases and Forward Commitments (Delayed Delivery) |
The Fund may engage in when-issued or forward commitment transactions. Securities transactions on a when-issued or forward commitment basis are also known as delayed delivery transactions. Delayed delivery transactions involve a commitment by the Fund to purchase or sell a security at a future date (ordinarily up to 90 days later). When-issued or forward commitments enables the Fund to lock in what is believed to be an attractive price or yield on a particular security for a period of time, regardless of future changes in interest rates. The Fund records when-issued and forward commitment securities on the trade date. The Fund maintains collateral for the securities |
purchased. Securities purchased on a when-issued or forward commitment basis begin earning interest on the settlement date. | |
G. | Leveraged Loans |
The Fund may invest in direct debt instruments which are interests in amounts owed by a corporate, governmental, or other borrower to lenders or lending syndicates. Leveraged loans are generally non-investment grade and often involve borrowers that are highly leveraged. The Fund may invest in obligations of borrowers who are in bankruptcy proceedings. Leveraged loans are typically senior in the corporate capital structure of the borrower. A loan is often administered by a bank or other financial institution (the “lender”) that acts as agent for all holders. The agent administers the terms of the loan, as specified in the loan agreement. The Fund’s investments in loans may be in the form of participations in loans or assignments of all or a portion of loans from third parties. When investing in loan participations, the Fund has the right to receive payments of principal, interest and any fees to which it is entitled only from the lender selling the loan participation and only upon receipt by the lender of payments from the borrower. The Fund generally has no right to enforce compliance with the terms of the leveraged loan with the borrower. As a result, the Fund may be subject to the credit risk of both the borrower and the lender that is selling the leveraged loan. When the Fund purchases assignments from lenders it acquires direct rights against the borrower on the loan. | |
The Fund may invest in multiple series or tranches of a loan, which may have varying terms and carry different associated risks. Leveraged loans may involve foreign borrowers and investments may be denominated in foreign currencies. Direct indebtedness of emerging countries involves a risk that the government entities responsible for the repayment of the debt may be unable, or unwilling, to pay the principal and interest when due. | |
The leveraged loans have floating rate loan interests which generally pay interest at rates that are periodically determined by reference to a base lending rate plus a premium. The base lending rates are generally LIBOR, the prime rate offered by one or more U.S. banks or the certificate of deposit rate. When a leveraged loan is purchased, the Fund may pay an assignment fee. On an ongoing basis, the Fund may receive a commitment fee based on the undrawn portion of the underlying line of credit portion of a leveraged loan. Prepayment penalty fees are received upon the prepayment of a leveraged loan by a borrower. Prepayment penalty, facility, commitment, consent and amendment fees are recorded to income as earned or paid. | |
H. | Expenses |
Expenses incurred together by the Fund and other affiliated open- and closed-end funds are allocated in proportion to the net assets of each such fund, except where allocation of direct expenses to each fund or an alternative allocation method can be more appropriately used. | |
In addition to the net annual operating expenses that the Fund bears directly, the shareholders of the Fund indirectly bear the Fund’s pro-rata expenses of any underlying mutual funds in which the Fund invests. |
A. | Options Contracts |
An options contract provides the purchaser with the right, but not the obligation, to buy (call option) or sell (put option) a financial instrument at an agreed upon price. The Fund pursues an option income strategy whereby it purchases and sells out-of-the-money puts and calls, creating an options spread designed to generate a consistent level of option cash flow which should result in additional yield. The Fund is subject to equity price risk in the normal course of pursuing its investment objective. | |
When the Fund purchases an option, it pays a premium and an amount equal to that premium is recorded as an asset. When the Fund writes an option, it receives a premium and an amount equal to that premium is recorded as a liability. The asset or liability is adjusted daily to reflect the current market value of the option. Holdings of the Fund designated to cover outstanding written options are noted in the Schedule of Investments. Purchased options are reported as an asset within “Investment in securities at value” in the Statement of Assets and Liabilities. Written options are reported as a liability within “Written options at value.” Changes in value of the purchased option are included in “Net change in unrealized appreciation (depreciation) on investments” in the Statement of Operations. Changes in value of written options are included in “Net change in unrealized appreciation (depreciation) on written options” in the Statement of Operations. | |
If an option expires unexercised, the Fund realizes a gain or loss to the extent of the premium received or paid. If an option is exercised, the premium received or paid is recorded as an adjustment to the proceeds from the sale or the cost basis of the purchase. The difference between the premium and the amount received or paid on effecting a closing purchase or sale transaction is also treated as a realized gain or loss. Gain or loss on purchased options is included in “Net realized gain (loss) from investments” in the Statement of Operations. Gain or loss from written options is presented separately as “Net realized gain (loss) from written options” in the Statement of Operations. | |
The risk in writing call options is that the Fund gives up the opportunity for profit if the market price of the security increases and the option is exercised. The risk in writing put options is that the Fund may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying options is that the Fund pays a premium whether or not the option is exercised. The use of such instruments may involve certain additional risks as a result of unanticipated movements in the market. Writers (sellers) of options are normally subject to unlimited risk of loss, as the seller will be obligated to deliver or take delivery of the security at a predetermined price which may, upon exercise of the option, be significantly different from the then-market value. However, the Fund may limit its risk of loss when writing an option by purchasing an option similar to |
the one that is sold, except for the fact it is further “out of the money.” | |
The Fund invested in derivative instruments during the period in the form of writing put/ call options and buying put/call options on the S&P 500® Index. The primary risk associated with these derivative instruments is equity risk. | |
The following is a summary of the Fund’s options contracts as presented in the Statement of Assets and Liabilities as of May 31, 2019: |
Assets: Purchased options at
value |
$132(1) |
Liabilities: Written options at
value |
(477) |
Net asset (liability)
balance |
$(345) |
Net realized gain (loss) from purchased
options |
(1,406) (2) |
Net realized gain (loss) from written
options |
(3,154) |
Net change in unrealized appreciation (depreciation) on purchased
options |
258 (3) |
Net change in unrealized appreciation (depreciation) on written
options |
(100) |
Total realized and unrealized gain (loss) on purchased and written options
|
$(4,402) |
(1) | Amount included in Investment in securities at value. |
(2) | Amount included in Net realized gain (loss) from investments. |
(3) | Amount included in Net change in unrealized appreciation (depreciation) on investments. |
A. | Adviser |
Virtus Investment Advisers, Inc. (the “Adviser”), an indirect wholly-owned subsidiary of Virtus Investment Partners, Inc. (“Virtus”), is the investment adviser of the Fund. The Adviser manages the Fund’s investment program and general operations of the Fund, including oversight of the Fund’s subadvisers. | |
As compensation for its services to the Fund, the Adviser receives a fee at an annual rate of 0.85% of the Fund’s average daily Managed Assets, which is calculated daily and paid monthly. “Managed Assets” is defined as the value of the total assets of the Fund minus the sum of all accrued liabilities of the Fund (other than the aggregate amount of any outstanding borrowings or other indebtedness, entered into for the purpose of leverage). |
B. | Subadvisers |
Duff & Phelps Investment Management Co. (“DPIM”), an indirect wholly-owned subsidiary of Virtus, is the subadviser of the equity portion of the Fund’s portfolio, Newfleet Asset Management LLC (“Newfleet”), an indirect wholly-owned subsidiary of Virtus, is the subadviser of the fixed income portion of the Fund’s portfolio and Rampart Investment Management Company, LLC (“Rampart”), an indirect wholly-owned subsidiary of Virtus, is the subadviser of the Fund’s options overlay strategy. These three subadvisers are, in the aggregate, responsible for the day-to-day portfolio management of the Fund for which they are each paid a fee by the Adviser. | |
C. | Administrator Services |
Virtus Fund Services, LLC (“VFS”), an indirect wholly-owned subsidiary of Virtus, serves as administrator to the Fund. For the services provided by the administrator under the Administration Agreement, the Fund pays the administrator an asset-based fee of 0.10% per annum calculated on the Fund’s average daily Managed Assets, which is calculated daily and paid monthly. | |
For the period ended May 31, 2019, the Fund incurred administration fees totaling $154 which are included in the Statement of Operations within the line item “Administration and accounting fees.” | |
For the period ended May 31, 2019, the Fund waived administration fees totaling $1 as reported in the Statement of Operations for a waiver which expired December 2, 2018. | |
D. | Directors’ Fees |
For the period ended May 31, 2019, the Fund incurred Directors’ fees totaling $139 which are included in the Statement of Operations within the line item “Directors’ fees and expenses.” |
Purchases | Sales | |
$55,727 | $62,204 |
Purchases | Sales | |
$10,939 | $15,350 |
Federal
Tax Cost |
Unrealized
Appreciation |
Unrealized
(Depreciation) |
Net
Unrealized Appreciation (Depreciation) | ||||
Investments
(including Purchased Options) |
$294,419 | $37,401 | $(12,135) | $25,266 | |||
Written Options | (477) | — | — | — |
No Expiration | ||||
Short-Term | Long-Term | Total | ||
$7,864 | $10,369 | $18,233 |
Outstanding
Borrowings |
Interest
Rate | |
$87,250 | 3.29% |
Election of Directors | Votes For | Votes Withheld | |
George R.
Aylward |
16,842,266 | 900,654 | |
Philip R.
McLoughlin |
16,836,059 | 906,861 | |
William R.
Moyer |
16,831,568 | 911,352 |
8524 | 07-19 |
Item 2. | Code of Ethics. |
Response not required for semi-annual report.
Item 3. | Audit Committee Financial Expert. |
Response not required for semi-annual report.
Item 4. | Principal Accountant Fees and Services. |
Response not required for semi-annual report.
Item 5. | Audit Committee of Listed Registrants. |
Response not required for semi-annual report.
Item 6. | Investments. |
(a) | Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1 of this form. |
(b) | Not applicable. |
Item 7. | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. |
Response not required for semi-annual report.
Item 8. | Portfolio Managers of Closed-End Management Investment Companies. |
(a) | Response not required for semi-annual report. |
(b) | There has been no change, as of the date of this filing, in any of the portfolio managers identified in response to paragraph (a)(1) of this Item in the registrants most recently filed annual report on Form N-CSR. |
Item 9. | Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. |
REGISTRANT PURCHASES OF EQUITY SECURITIES
Period
|
(a) Total Number of Shares (or Units) Purchased
|
(b) Average Price Paid per Share (or Unit)
|
(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs
|
(d) Maximum Number (or Approximate Dollar Value) of Shares Under the Plans or Programs
| ||||
December 2018
|
0 |
$0.00 |
0 |
1,473,841 | ||||
January 2019
|
0 |
$0.00 |
0 |
1,473,841 | ||||
February 2019
|
0 |
$0.00 |
0 |
1,473,841 | ||||
March 2019
|
0 |
$0.00 |
0 |
1,473,841 | ||||
April 2019
|
0 |
$0.00 |
0 |
1,473,841 | ||||
May 2019
|
0 |
$0.00 |
0 |
1,473,841 | ||||
Total
|
0
|
$0.00
|
0
|
1,473,841
|
a. | The date each plan or program was announced: 3/13/12 and expanded 9/19/12 and 2/10/14 |
b. | The dollar amount (or share or unit amount) approved: 4,392,838 shares |
c. | The expiration date (if any) of each plan or program: None |
d. | Each plan or program that has expired during the period covered by the table: None |
e. | Each plan or program the registrant has determined to terminate prior to expiration, or under which the registrant does not intend to make further purchases. None |
Item 10. | Submission of Matters to a Vote of Security Holders. |
There have been no material changes to the procedures by which the shareholders may recommend nominees to the Registrants Board of Trustees that were implemented after the Registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item.
Item 11. | Controls and Procedures. |
(a) | The registrants principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrants disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the 1940 Act) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)). |
(b) | There were no changes in the registrants internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d))) that occurred during the registrants last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting. |
Item 12. | Disclosure of Securities Lending Activities for Closed-End Management Investment Companies. |
Not applicable.
Item 13. | Exhibits. |
(a)(1) | Not applicable. |
(a)(2) | Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. |
(a)(3) | Not applicable. |
(a)(4) | Not applicable. |
(b) | Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto. |
(c) | Copies of the Registrants notices to shareholders pursuant to Rule 19a-1 under the 1940 Act which accompanied distributions paid for the period ended May 31, 2019 pursuant to the Registrants Managed Distribution Plan are filed herewith as required by the terms of the Registrants exemptive order issued on November 17, 2008. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Virtus Total Return Fund Inc. |
|
By (Signature and Title)* /s/ George R. Aylward |
|
George R. Aylward, President |
||||
(principal executive officer) |
Date 8/5/19 |
|
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By (Signature and Title)* /s/ George R. Aylward |
|
George R. Aylward, President |
||||
(principal executive officer) |
Date 8/5/19 |
|
By (Signature and Title)* /s/ W. Patrick Bradley |
|
W. Patrick Bradley, Executive Vice President, |
||||
Chief Financial Officer, and Treasurer |
||||
(principal financial officer) |
Date 8/5/19 |
|
* Print the name and title of each signing officer under his or her signature.
Certification Pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act
I, George R. Aylward, certify that:
1. | I have reviewed this report on Form N-CSR of Virtus Total Return Fund Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize, and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: 8/5/19 |
/s/ George R. Aylward | |
George R. Aylward, President | ||
(principal executive officer) |
Certification Pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act
I, W. Patrick Bradley, certify that:
1. | I have reviewed this report on Form N-CSR of Virtus Total Return Fund Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize, and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: 8/5/19 |
/s/ W. Patrick Bradley | |
W. Patrick Bradley, Executive Vice President, Chief Financial Officer, and Treasurer (principal financial officer) |
Certification Pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act
I, George R. Aylward, President of Virtus Total Return Fund Inc. (the Registrant), certify that:
1. | The Form N-CSR of the Registrant (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. |
Date: | 8/5/19 |
/s/ George R. Aylward | ||||
George R. Aylward, President (principal executive officer) |
I, W. Patrick Bradley, Senior Vice President, Chief Financial Officer, and Treasurer of Virtus Total Return Fund Inc. (the Registrant), certify that:
1. | The Form N-CSR of the Registrant (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. |
Date: | 8/5/19 |
/s/ W. Patrick Bradley | ||||
W. Patrick Bradley, Executive Vice President, Chief Financial Officer, and Treasurer (principal financial officer) |
SECTION 19(a) NOTICE
Hartford, CT, January 9, 2019 -- Virtus Total Return Fund Inc. (NYSE: ZF) declared a distribution of $0.361 per share to shareholders of record at the close of business on December 31, 2018 (ex-date January 4, 2019).
The following table sets forth the estimated amounts of the most current distribution and the cumulative distributions paid this fiscal year to date from the following sources. All amounts are expressed based on U.S. generally accepted accounting principles which may differ from federal income tax regulations.
Distribution Estimates | December 2018 (QTD) | Year-to-date (YTD) (1) | ||||||||||||||
(Sources) | Per Share Amount
|
Percentage of Current Distribution |
Per Share Amount
|
Percentage of Current Distribution |
||||||||||||
Net Investment Income | $ | 0.041 | 11.2% | $ | 0.041 | 11.2% | ||||||||||
Net Realized Foreign Currency Gains | - | 0.0% | - | 0.0% | ||||||||||||
Net Realized Short-Term Capital Gains | - | 0.0% | - | 0.0% | ||||||||||||
Net Realized Long-Term Capital Gains | - | 0.0% | - | 0.0% | ||||||||||||
Return of Capital (or other Capital Source) | 0.320 | 88.8% | 0.320 | 88.8% | ||||||||||||
Total Distribution | $ | 0.361 | 100.0% | $ | 0.361 | 100.0% |
(1) YTD December 1, 2018 to November 30, 2019.
December 31, 2018 |
||||
Average Annual Total Return on NAV for the 5-year period (2) |
5.50% | |||
Current Fiscal YTD Annualized Distribution Rate (3) |
14.67% | |||
YTD Cumulative Total Return on NAV (4) |
-7.08% | |||
YTD Cumulative Distribution Rate (5) |
3.67% |
(2) | Average Annual Total Return on NAV is the annual compound return for the five-year period. It reflects the change in the funds NAV and reinvestment of all distributions. |
(3) | Current Fiscal YTD Annualized Distribution Rate is the current distribution rate annualized as a percentage of the funds NAV at quarter end. |
(4) | YTD Cumulative Total Return on NAV is the percentage change in the funds NAV from the first day of the year to this quarter end, including distributions paid and assuming reinvestment of those distributions. |
(5) | YTD Cumulative Distribution Rate is the dollar value of distributions from the first day of the year to this quarter end as a percentage of the funds NAV at quarter end. |
Virtus Total Return Fund Inc. - 2
Under the terms of its managed distribution plan, the fund will seek to maintain a consistent distribution level that may be paid in part or in full from net investment income and realized capital gains, or a combination thereof. You should not draw any conclusions about the funds investment performance from the amount of this distribution or from the terms of the funds managed distribution plan. Shareholders should note, however, that if the funds aggregate net investment income and net realized capital gains are less than the amount of the distribution level, the difference will be distributed from the funds assets and will constitute a return of the shareholders capital.
The fund estimates that it has distributed more than its income and capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may occur, for example, when some or all of the money that you invested in the fund is paid back to you. A return of capital distribution does not necessarily reflect the funds investment performance and should not be confused with yield or income.
The amounts and sources of distributions reported in this notice are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the distributions will depend on the funds investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The fund or your broker will send you a Form 1099- DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.
For more information on Virtus Total Return Fund Inc., contact shareholder services at (866) 270-7788, by email at closedendfunds@virtus.com, or through the closed end fund section on the web at www.virtus.com.
Cusip: 92837G100
# # #
SECTION 19(a) NOTICE
Hartford, CT, April 18, 2019 -- Virtus Total Return Fund Inc. (NYSE: ZF) declared a distribution of $0.361 per share to shareholders of record at the close of business on April 11, 2019 (ex-date April 10, 2019).
The following table sets forth the estimated amounts of the most current distribution and the cumulative distributions paid this fiscal year to date from the following sources. All amounts are expressed based on U.S. generally accepted accounting principles which may differ from federal income tax regulations.
Distribution Estimates | March 2019 (QTD) | Year-to-date (YTD) (1) | ||||||||||||||
(Sources) | Per Share Amount
|
Percentage of Current Distribution |
Per Share Amount
|
Percentage of Current Distribution |
||||||||||||
Net Investment Income | $ | 0.041 | 11.3% | $ | 0.081 | 11.3% | ||||||||||
Net Realized Foreign Currency Gains | - | 0.0% | - | 0.0% | ||||||||||||
Net Realized Short-Term Capital Gains | - | 0.0% | - | 0.0% | ||||||||||||
Net Realized Long-Term Capital Gains | - | 0.0% | - | 0.0% | ||||||||||||
Return of Capital (or other Capital Source) | 0.320 | 88.7% | 0.641 | 88.7% | ||||||||||||
Total Distribution | $ | 0.361 | 100.0% | $ | 0.722 | 100.0% |
(1) YTD December 1, 2018 to November 30, 2019.
March 29, 2019 |
||||
Average Annual Total Return on NAV for the 5-year period (2) |
7.59% | |||
Current Fiscal YTD Annualized Distribution Rate (3) |
13.04% | |||
YTD Cumulative Total Return on NAV (4) |
8.76% | |||
YTD Cumulative Distribution Rate (5) |
6.52% |
(2) | Average Annual Total Return on NAV is the annual compound return for the five-year period. It reflects the change in the funds NAV and reinvestment of all distributions. |
(3) | Current Fiscal YTD Annualized Distribution Rate is the current distribution rate annualized as a percentage of the funds NAV at quarter end. |
(4) | YTD Cumulative Total Return on NAV is the percentage change in the funds NAV from the first day of the year to this quarter end, including distributions paid and assuming reinvestment of those distributions. |
(5) | YTD Cumulative Distribution Rate is the dollar value of distributions from the first day of the year to this quarter end as a percentage of the funds NAV at quarter end. |
Virtus Total Return Fund Inc. - 2
Under the terms of its managed distribution plan, the fund will seek to maintain a consistent distribution level that may be paid in part or in full from net investment income and realized capital gains, or a combination thereof. Shareholders should note, however, that if the funds aggregate net investment income and net realized capital gains are less than the amount of the distribution level, the difference will be distributed from the funds assets and will constitute a return of the shareholders capital. You should not draw any conclusions about the funds investment performance from the amount of this distribution or from the terms of the funds managed distribution plan.
The fund estimates that it has distributed more than its income and capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may occur, for example, when some or all of the money that you invested in the fund is paid back to you. A return of capital distribution does not necessarily reflect the funds investment performance and should not be confused with yield or income.
The amounts and sources of distributions reported in this notice are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the distributions will depend on the funds investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The fund or your broker will send you a Form 1099- DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.
For more information on Virtus Total Return Fund Inc., contact shareholder services at (866) 270-7788, by email at closedendfunds@virtus.com, or through the closed end fund section on the web at www.virtus.com.
Cusip: 92837G100
# # #
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