Edgar Filing: ZWEIG TOTAL RETURN FUND INC

February 2, 2002

[PHOTO]

Dear Shareholder:

The net asset value of The Zweig Total Return Fund, Inc. increased 4.3%,
including $0.166 in reinvested distributions, during the fourth quarter of 2001.

For the year ended December 31, 2001, the Fund's net asset value declined
1.9%, including $0.706 in reinvested distributions.

What we experienced in the bond market last year was a very powerful rally
out to five years, good performance in bonds to 10 years, and only a slight
decrease in yields in the 30-year Treasuries. It was, however, another
difficult year for the stock market. I am glad that we made a comeback in the
fourth quarter but not happy about the result for the year.

As far as equities are concerned, I became bullish early in the year when
the Fed began to cut. What kept me bullish were the Fed's aggressive cutting
and the aggressively expanding money supply. Similar conditions prevailed for a
total of 12 cumulative years since the Fed started in 1913. If you arbitrarily
held for one year during those periods and cut off when the Fed tightened, the
results were quite remarkable. The Dow Jones Industrials advanced at almost a
33% annualized rate, while the return on the remaining 75 years, when you
didn't have these conditions, was a pretty lame 2.3%. That's basically why we
anticipated a historically valid long-term bullish response to the Fed's
policies. Despite the strong probabilities, it just didn't work this time.

DISTRIBUTION DECLARED
In accordance with our policy of distributing 10% of our net asset value per
year, which equals 0.83% each month (10% divided by 12 months), on January 2,
2002, the Fund announced a distribution of $0.055 per share payable on January
10, 2002, to shareholders of record December 31, 2001. The amount of a
distribution depends on the exact net asset value at the time of declaration.
For the January distribution, 0.83% of the Fund's net asset value was equal to
$0.055 per share. Including this distribution, the Fund's payout since its
inception is now $11.471.

Of the $0.701 considered to be distributed in 2001 for tax purposes, $0.2164
is ordinary income and $0.4846 is return of capital. (The return of capital
distribution is a tax-free return of capital and therefore should not be
reported as income.)

MARKET OUTLOOK
Our bond exposure on December 31, 2001, was 40% compared with 60% at the end
of the third quarter. If we were fully invested, we would be at 62.5% in bonds
and 37.5% in stocks. Consequently, at 40%, we are at approximately 64% of a
full position (40%/62.5%).

The easy money policy of the Fed helped bond prices move sharply higher for
the year, especially those bonds of shorter maturity. Helping to fuel the rally
in bonds was the sharp drop in equity values. The terrorist attacks also pushed
government bond yields lower (and prices higher). Many investors switched from
equities to fixed-income securities, a so-called "flight

to quality." At least temporarily, investors found a haven in the safety of the
full faith and credit of the government.

At the moment, our bond model is roughly neutral, and the outlook is for
bonds to trade within the recent price range. As always, if our indicators
begin to switch, we remain ready to alter our level of investment.

Our year-end equity exposure was 35% compared with 34% at the end of the
third quarter. At this figure, we are at about 93% of a full position
(35%/37.5%).

Last year was a gloomy one for the stock market. The Dow Jones Industrials
dropped 7.1%, the worst performance since 1981's 9.2% decline; the Nasdaq
Composite fell 21% following the previous year's drop of 39.3%, and the S&P 500
Index was off 10.7% after receding 9.2% in 2000.

What happened last year was a hangover from the bursting of the speculative
bubble in the technology area. That led to a steep drop in capital spending.
The consumer held up reasonably well, and the Fed began to cut in January. The
cuts, which numbered 11 by year-end and brought the rate down to 1.75%,
actually helped the economy from getting worse. However, they weren't enough to
compensate for the excess technological capacity that kept putting pressure on
technology stocks. Eventually, the pressure spread to other stocks as portfolio
managers sought to raise more cash. I thought the economy was beginning to turn
in late summer, but the terrorist attacks came and it all became academic. That
threw everything into a recession, if we hadn't been in one before.

The economists who meet periodically now tell us that the recession started
last March, but I am not convinced of that date. I believe that the recession
probably began around the time of the 2000 election. Although the economy began
to soften during the summer of 2000, I don't think we were in recession until
late in 2000. When the Fed began to cut in early 2001, I believed the downturn
had about another four to six months to go. The market generally does very well
during such an interval. After the third Fed cut in March, the market did
respond for a couple of months. There was a very strong rally in April-May, but
it died during the summer.

Conventional wisdom is that a recession typically lasts 11 months. If you
accept that supposition and the March onset date, then we are about nine months
into the recession. If the average were to hold, the economy should start
turning up in a month or two. The stock market would be right on course
because, as I mentioned earlier, the market tends to turn up four to six months
before recessions end. Unfortunately, the average figure isn't truly
significant - the recession could be much longer or much shorter.

The last time the Fed rate was under 2% was 40 years ago. We had a low
inflation rate in part of the late 1950s and the early 1960s. There were some
rough patches in there--1957, 1960 and 1962 were poor--but overall the stock
market did well. Low inflation and low interest rates can be pretty bullish.

The Fed says that it sees inflation continuing to decline, and some analysts
are beginning to worry about the risk of deflation. Well, it's a danger on the
radar screen. However, one of the Fed governors said recently that he didn't
see any risk of deflation. Slight deflation, say minus 1/2% or 1%, is not the
worst thing. If it gets out of hand, it means the economy is in gridlock. We
saw that happen in the 1930s. I doubt that we will see anything like that. If
we were to see even a small amount of outright deflation, it would indicate a
weak economy. At this stage, I would almost prefer a slight uptick in inflation
or at least a leveling out. What we really need for this stock market is an
economic upturn. If that were to happen, I don't think we would see any
deflation, but it's not a sure thing.

Some economists say that interest rates currently are as low as they'll go
and that a historic turning point is at hand. Actually, I'm ambivalent on
interest rates. I hope that rates are near their lows. If rates start to go
up--assuming they just rise slowly--it would probably indicate that the economy
has improved somewhat. I think that would help the market. If rates go up 1/2%
or something like that over the next six to nine months, it's not a big deal.
It would probably be more positive than negative. I would hate to see the Fed
cut another three or four times with rates approaching zero. That would be a
bad economic indicator.

Earnings, forecast as down 16.7% last year following a drop of 16.2% in
2000, are the worst for any year since World War II. These negative earnings,
which are a reflection of the recession, could hurt the market. Compounding the
poor earnings are lots of write-offs. In times like these, companies tend to
write off everything--including the kitchen sink--because it is a good
opportunity to do so. Consequently, I don't know what the actual earnings were,
but I know they were not good. I also know that earnings tend to do very well
coming out of a recession.

The S&P currently trades at about 30 times estimated earnings. That's not a
reasonable figure--it's too high. And, my major concern right now is the level
of valuations in the market. A lot has to do with the big cap technology stocks
that are selling at very high multiples. Technology, which had been perhaps 35%
of the S&P at one time, is a lot less now. It's closer to the 20% level. It
means that these big cap stocks have an inordinate impact not only on the
market cap of the S&P but also on the earnings. If they are high multiples, it
pushes up the P/E ratio for the market.

If you look at non-tech stocks or the smaller cap stocks within the S&P 500,
the P/E ratios are nowhere near as high. Nevertheless, they still don't appear
cheap to me. The stock market has been down two consecutive years.
Consequently, it has discounted some of the bad news. Perhaps the rally we have
had for a few months demonstrates some discounting of an upward turn of the
economy.

Reflecting the state of the economy, dividends in the S&P fell 3.3% last
year, the biggest drop since 4.1% in 1951. Companies, trying to conserve cash,
have been reluctant to pay dividends in recent years. Also, many companies have
been trying to buy back their stocks to strengthen their share prices. Dividend
yields are small and, in most cases, don't offer much support to the level of
stock prices. The low dividends by themselves don't worry me much--it's just
that we need earnings. With the P/E ratios still high, I'm afraid there is a
caution light on because of the valuations. But, this has been the case for the
past five years or so.

A favorable market development is the fact that just 111 companies, raising
a total of $37 billion in equity, came public last year against 386 companies
raising an aggregate of $60 billion in 2000. Inordinate numbers of IPOs, which
we saw in the boiling markets of a couple of years ago, suck money out of the
market. This is an indicator that we monitor very closely. It is actually
bullish when IPOs slacken and companies buy back their own stock for cash. We
had a terrible supply and demand picture in early 2000, with huge numbers of
IPOs, much smaller numbers of buybacks, and heavy insider selling of stock.
This situation has turned around somewhat, and those numbers recently are okay.

Another positive indicator for the market is that last year was the first
since 1996 that there were fewer than 10,000 mergers. Companies don't have
their inflated stock to take over other companies. With people trying to
conserve cash, it's harder to make deals for cash. It's probably like the
situation with IPOs. It is not a good sign when merger activity gets too heavy.
When it cools off, it is probably a better signal for stocks.

More significantly, broad money supply after adjusting for inflation is
expanding by about 10.5%, the highest year-to-year rate in almost 28 years.
That's definitely bullish. After the attacks in September, the Fed pumped money
into the system in a major, major way to help keep the economy from collapsing.
That money is out there circulating, and it has to go somewhere. There really
are only three main outlets. It can go into financial assets like stocks or
bonds; it can go into tangible assets like real estate; or it can go into the
general economy to stimulate business. So far some of it has gone into stocks,
while the real estate picture has been mixed. Some residential areas have held
up nicely, but commercial real estate, not surprisingly during a recession, has
not done as well. Hopefully, a good portion will go into the real economy.
Consumers will be spending more, and companies will start to rebuild
inventories.

So far, the inventory picture is encouraging. Product inventories fell
sharply in the fourth quarter. On an annual rate, the decline is estimated at
between $100 billion and $120 billion. That's a pattern you see late in
recessions as inventories get worked off. A major cause of recessions is the
excessive buildup of inventories. Goods are stuck on shelves, and manufacturers
and retailers have trouble selling their stocks. Typically they cut prices. We
have been going through this process for a few quarters. As the inventory
overhang diminishes, we get closer to the time when manufacturing goes into
higher gear. Inventories are now down to levels similar to those at a late
stage of previous recessions. So I hope we are near the end of this one.

Looking at the broad economic picture, the fact that the government is
facing deficits instead of surpluses is a market positive. People have a hard
time grasping that government surpluses have been negative for the stock
market. But, we saw it clearly in 2000 and 2001 when we had surpluses and the
market went down. The problem is that a government surplus puts a drain on the
economy by taking money away from people who tend to spend it. I am not
suggesting that the government run a perennial deficit. But, in the Keynesian
way, I think it is judicious for the federal government to run a moderate
deficit during a recessionary period to help stimulate the economy. Then, as
the economy recovers and tax receipts go up, you can go back to a surplus and
pay down some debt. You don't want the deficit to get too big because it then
builds up inflationary pressures. So I think a little bit of a deficit right
now is actually a good thing.

Summing up, I think there are more stock market positives than negatives.
The Fed's monetary policy is pretty bullish. Interest rates are low, and
inflation is low. The money supply is expanding. There has been a fair amount
of pessimism around as a lot of holders have sold out. Now we have regained
some optimism on the rally since September. However, we saw a big shakeout in
mutual fund redemptions and a big drop in margin debt. All that is pretty good.
Looking ahead, I see potential problems with valuations. As I mentioned before,
I don't think the market is cheap. The big question is the direction of the
economy. At this point, I think the economy must improve to help the market.
Since there is more positive than negative evidence on the economy at this
moment, I think the odds favor an upturn, but there is no guarantee. My best
guess is that we are slowly moving out of recession, but it's not a 100% shot.

My monetary indicators are reasonably bullish, and my sentiment indicators
are still positive. Although the valuation situation is not so hot, we're
bullish overall.

PORTFOLIO COMPOSITION

In accordance with our investment policy guidelines, all of our bonds are
U.S. Government and Agency Obligations. The portfolio's average duration (a
measure of sensitivity to interest rate changes) was 3.5 years on December 31,
2001. This compares with 7.5 years at the end of the third quarter. Since these
bonds are highly liquid, they provide the flexibility to respond quickly to
market conditions.

As of December 31, 2001, our leading industry groups included technology,
health care, financial services, retailing, oil and oil services, and
telecommunications. All of these groups appeared on our September 30, 2001
listing. Technology exposure increased slightly during the quarter because of
the group's good performance. We cut back slightly on our holdings of financial
services and telecommunications and added slightly to our retailing stocks.

Some of our largest individual holdings include Microsoft, Pfizer,
Citigroup, General Electric, Wal-Mart, Tyco, IBM, Johnson & Johnson, Home
Depot, and Bank of America.

In the above grouping, we increased our exposure for IBM, Home Depot, and
Bank of America, and all three also benefited from appreciation during the
quarter. Among the top holdings listed in our previous report, we have trimmed
our positions in SBC Communications, Verizon, and Eli Lilly, but all three
remain in our portfolio.

Sincerely,

/s/ Martin E. Zweig, Ph.D.
Chairman
Martin E. Zweig, Ph.D.
Chairman

THE ZWEIG TOTAL RETURN FUND, INC.

SCHEDULE OF INVESTMENTS

December 31, 2001

Number of
Shares Value
--------- ------------

COMMON STOCKS 35.36%
AEROSPACE & AIR TRANSPORT 0.34%
United Technologies Corp........... 31,900 $ 2,061,697
------------
BUILDING & FOREST PRODUCTS 0.48%
International Paper Co............. 39,700 1,601,895
Weyerhaeuser Co.................... 24,000 1,297,920
------------
2,899,815
------------
CHEMICALS 0.31%
Dow Chemical Co.................... 55,900 1,888,302
------------
COMMERCIAL SERVICES 0.24%
Omnicom Group, Inc................. 16,100 1,438,535
------------
CONSUMER PRODUCTS 1.38%
Anheuser-Busch Cos., Inc........... 32,000 1,446,720
Avon Products, Inc................. 16,000 744,000
Kimberly-Clark Corp................ 32,000 1,913,600
PepsiCo, Inc....................... 47,800 2,327,382
Procter & Gamble Co................ 24,000 1,899,120
------------
8,330,822
------------
ELECTRONICS -- ELECTRICAL 1.40%
Celestica, Inc..................... 16,000(a) 646,240
Emerson Electric Co................ 24,000 1,370,400
Flextronics International Ltd...... 16,000(a) 383,840
General Electric Co................ 150,300 6,024,024
------------
8,424,504
------------
ENGINEERING & MACHINERY 0.26%
SPX Corp........................... 11,400 1,560,660
------------
FINANCIAL SERVICES 5.97%
American International Group, Inc.. 47,900 3,803,260
Bank of America Corp............... 71,700 4,513,515
Capital One Financial Corp......... 24,000 1,294,800
Citigroup, Inc..................... 129,000 6,511,920
Fannie Mae......................... 39,900 3,172,050
Freddie Mac........................ 55,500 3,629,700
H & R Block, Inc................... 48,000 2,145,600
Lehman Brothers Holdings, Inc...... 36,800 2,458,240

See notes to financial statements

Number of
Shares Value
--------- -------------

FINANCIAL SERVICES (CONTINUED)
MBNA Corp................................. 24,000 $ 844,800
Merrill Lynch & Co., Inc.................. 24,000 1,250,880
MetLife, Inc.............................. 32,000 1,013,760
Morgan Stanley Dean Witter & Co........... 36,900 2,064,186
SouthTrust Corp........................... 32,200 794,374
Washington Mutual, Inc.................... 31,950 1,044,765
Wells Fargo & Co.......................... 32,000 1,390,400
-------------
35,932,250
-------------
HEALTH CARE 6.15%
American Home Products Corp............... 36,800 2,258,048
AmerisourceBergen Corp.................... 19,200 1,220,160
Amgen, Inc................................ 32,000(a) 1,806,080
Baxter International, Inc................. 32,000 1,716,160
Biomet, Inc............................... 32,000 988,800
Bristol-Myers Squibb Co................... 23,900 1,218,900
Cardinal Health, Inc...................... 16,100 1,041,026
Eli Lilly & Co............................ 32,000 2,513,280
Guidant Corp.............................. 46,400(a) 2,310,720
Johnson & Johnson......................... 82,800 4,893,480
King Pharmaceuticals, Inc................. 24,000(a) 1,011,120
MedImmune, Inc............................ 30,300(a) 1,404,405
Pfizer, Inc............................... 167,200 6,662,920
Pharmacia Corp............................ 32,000 1,364,800
St. Jude Medical, Inc..................... 24,000 1,863,600
Tenet Healthcare Corp..................... 38,100(a) 2,237,232
UnitedHealth Group, Inc................... 35,200 2,491,104
-------------
37,001,835
-------------
HOTELS 0.16%
Starwood Hotels & Resorts Worldwide, Inc.. 32,000 955,200
-------------
INVESTMENT COMPANIES 0.79%
Nasdaq-100 Index.......................... 122,000 4,747,020
-------------
MANUFACTURING 1.39%
Caterpillar, Inc.......................... 32,000 1,672,000
Honeywell International, Inc.............. 32,000 1,082,240
Tyco International Ltd.................... 95,400 5,619,060
-------------
8,373,300
-------------
MEDIA 1.21%
Comcast Corp., Class A.................... 46,700(a) 1,681,200
Gannett Co., Inc.......................... 16,000 1,075,680
Gemstar -- TV Guide International, Inc.... 31,200(a) 864,240

See notes to financial statements

Number of
Shares Value
--------- ------------

MEDIA (CONTINUED)
McGraw-Hill Cos., Inc......... 32,300 $ 1,969,654
New York Times Co., Class A... 39,700 1,717,025
------------
7,307,799
------------
METALS 0.24%
Alcoa, Inc.................... 39,900 1,418,445
------------
OIL & OIL SERVICES 2.14%
Anadarko Petroleum Corp....... 24,000 1,364,400
ChevronTexaco Corp............ 24,200 2,168,562
El Paso Corp.................. 32,000 1,427,520
Exxon Mobil Corp.............. 79,600 3,128,280
Occidental Petroleum Corp..... 32,000 848,960
Royal Dutch Petroleum Co...... 32,000 1,568,640
Talisman Energy, Inc.......... 24,000 908,400
USX-Marathon Group............ 47,600 1,428,000
------------
12,842,762
------------
RAILROADS 0.15%
Union Pacific Corp............ 16,000 912,000
------------
RESTAURANTS 0.23%
McDonald's Corp............... 32,000 847,040
Wendy's International, Inc.... 19,200 560,064
------------
1,407,104
------------
RETAILING 3.13%
Home Depot, Inc............... 84,400 4,305,244
Kroger Co..................... 32,000 667,840
Lowe's Cos., Inc.............. 64,100 2,974,881
Sears, Roebuck & Co........... 48,000 2,286,720
Staples, Inc.................. 32,000(a) 598,400
Target Corp................... 48,000 1,970,400
Wal-Mart Stores, Inc.......... 104,700 6,025,485
------------
18,828,970
------------
TECHNOLOGY 6.65%
AOL Time Warner, Inc.......... 79,900(a) 2,564,790
Applied Materials, Inc........ 25,300(a) 1,014,530
Cisco Systems, Inc............ 134,500(a) 2,435,795
Citrix System, Inc............ 32,000(a) 725,120
Corning, Inc.................. 17,000 151,640
Cypress Semiconductor Corp.... 33,000(a) 657,690
Dell Computer Corp............ 95,100(a) 2,584,818
Electronic Data Systems Corp.. 31,900 2,186,745

See notes to financial statements

Number of
Shares Value
--------- -------------

TECHNOLOGY (CONTINUED)
EMC Corp.............................. 50,000 $ 672,000
First Data Corp....................... 31,700 2,486,865
Intel Corp............................ 126,500 3,978,425
International Business Machines Corp.. 41,600 5,031,936
JDS Uniphase Corp..................... 17,000(a) 147,560
Lucent Technologies, Inc.............. 62,800 395,012
Microchip Technology, Inc............. 24,500(a) 949,130
Microsoft Corp........................ 119,500(a) 7,916,875
Motorola, Inc......................... 32,200 483,644
Network Appliance, Inc................ 17,000(a) 371,790
Oracle Corp........................... 122,700(a) 1,694,487
QUALCOMM, Inc......................... 24,500(a) 1,237,250
Siebel Systems, Inc................... 31,800(a) 889,764
Sun Microsystems, Inc................. 98,000(a) 1,205,400
USinternetworking, Inc................ 29,950(a) 5,990
Yahoo!, Inc........................... 8,800(a) 156,112
-------------
39,943,368
-------------
TELECOMMUNICATIONS 2.32%
ADC Telecommunications, Inc........... 57,500(a) 264,500
Amdocs Ltd............................ 32,000(a) 1,087,040
AT&T Corp............................. 98,000 1,777,720
AT&T Wireless Services, Inc........... 63,736(a) 915,886
General Motors Corp., Class H......... 65,000 1,004,250
Nokia Corp., ADR...................... 63,600 1,560,108
Nortel Networks Corp.................. 65,000(a) 487,500
SBC Communications, Inc............... 79,900 3,129,683
Verizon Communications, Inc........... 55,900 2,653,014
WorldCom, Inc. -- WorldCom Group...... 73,950(a) 1,041,216
-------------
13,920,917
-------------
UTILITIES -- ELECTRIC & GAS 0.42%
Dominion Resources, Inc............... 20,800 1,250,080
Duke Energy Corp...................... 32,000 1,256,320
-------------
2,506,400
-------------
Total Common Stocks
(Cost $240,221,044)............ 212,701,705
-------------

See notes to financial statements

Principal
Amount Value
----------- ------------

UNITED STATES GOVERNMENT AND AGENCY OBLIGATIONS 39.89%
FHLMC, 6.875%, 1/15/05........................................ $70,500,000 $ 76,301,022
FHLMC, 5.125%, 10/15/08....................................... 38,100,000 37,634,723
FHLMC, 7.00%, 3/15/10......................................... 42,000,000 45,752,322
United States Treasury Notes, 6.00%, 8/15/09.................. 21,900,000 23,353,459
United States Treasury Bonds, 10.75%, 5/15/03................. 15,000,000 16,667,580
United States Treasury Bonds, 8.125%, 8/15/19................. 20,800,000 26,268,133
United States Treasury Bonds, 6.875%, 8/15/25................. 12,300,000 14,037,387
------------
Total United States Government and Agency Obligations
(Cost $230,111,829)..................................... 240,014,626
------------
SHORT-TERM INVESTMENTS 23.91%
Citibank Capital II, 1.85%, 1/02/02........................... 7,400,000 7,399,620
Executive Jet, 1.75%, 1/02/02................................. 25,000,000 24,998,785
Goldman Sachs & Co., 2.05%, 1/03/02........................... 20,000,000 19,997,722
Nestle Capital Corp., 1.85%, 1/04/02.......................... 25,000,000 24,996,146
Principal Financial, 2.05%, 1/14/02........................... 20,000,000 19,985,194
UBS Financial Corp., 1.80%, 1/02/02........................... 25,000,000 24,998,750
Washington Post, 1.87%, 1/02/02............................... 21,500,000 21,493,299
------------
Total Short-Term Investments
(Cost $143,869,516)..................................... 143,869,516
------------
Total Investments (Cost $614,202,389) -- 99.16%................ 596,585,847
Other assets less liabilities -- 0.84%......................... 5,069,094
------------
Net Assets -- 100%............................................. $601,654,941
============

--------
(a) Non-income producing security

For Federal income tax purposes, the tax basis of investments owned at
December 31, 2001 was $617,712,145 and net unrealized depreciation of
investments consisted of:

Gross unrealized appreciation. $ 27,917,788
Gross unrealized depreciation. (49,044,086)
------------
Net unrealized depreciation... $(21,126,298)
============

See notes to financial statements

THE ZWEIG TOTAL RETURN FUND, INC.

STATEMENT OF ASSETS AND LIABILITIES

December 31, 2001

ASSETS
Investments, at value (identified cost $614,202,389)......... $596,585,847
Cash......................................................... 558,705
Dividends and interest receivable............................ 5,317,202
Prepaid expenses............................................. 20,561
------------
Total Assets............................................... 602,482,315
------------
LIABILITIES
Accrued advisory fees (Note 4)............................... 357,537
Accrued administration fees (Note 4)......................... 66,399
Other accrued expenses....................................... 403,438
------------
Total Liabilities.......................................... 827,374
------------
NET ASSETS $601,654,941
============
NET ASSET VALUE, PER SHARE
($601,654,941 / 90,760,688 shares outstanding (Note 5)....... $ 6.63
============
Net Assets consist of
Capital paid-in.............................................. $614,966,116
Undistributed net investment income.......................... 4,991,892
Accumulated net realized loss on investments................. (686,525)
Net unrealized depreciation on investments................... (17,616,542)
------------
$601,654,941
============

STATEMENT OF OPERATIONS

For the Year Ended December 31, 2001

Investment Income
Income
Interest................................................... $ 19,838,272
Dividends (net of foreign withholding taxes of $5,031)..... 2,299,798
------------
Total Income............................................ 22,138,070
------------
Expenses
Investment advisory fees (Note 4).......................... 4,364,838
Administrative fees (Note 4)............................... 810,612
Printing and postage expenses.............................. 301,323
Transfer agent fees........................................ 255,402
Professional fees.......................................... 167,881
Directors' fees and expenses (Note 4)...................... 89,711
Custodian fees............................................. 79,887
Miscellaneous.............................................. 394,054
------------
Total Expenses.......................................... 6,463,708
------------
Net Investment Income................................ 15,674,362
------------
Net Realized and Unrealized Gains (Losses)
Net realized gain on investments.............................. 542,036
Increase in unrealized depreciation on investments............ (29,147,637)
------------
Net realized and unrealized loss on investments............ (28,605,601)
------------
Net decrease in net assets resulting from operations....... $(12,931,239)
============

See notes to financial statements

THE ZWEIG TOTAL RETURN FUND, INC.

STATEMENT OF CHANGES IN NET ASSETS

For the Year Ended
December 31
--------------------------
2001 2000(a)
------------ ------------

Increase (Decrease) in Net Assets
Operations
Net investment income................................................ $ 15,674,362 $ 26,796,650
Net realized gains on investments.................................... 542,036 21,769,821
Increase in unrealized depreciation of investments................... (29,147,637) (19,184,705)
------------ ------------
Net increase (decrease) in net assets resulting from
operations...................................................... (12,931,239) 29,381,766
------------ ------------
Dividends and distributions to shareholders from
Net investment income................................................ (19,408,418) (27,554,649)
Net realized short-term gains........................................ (139,441) (2,023,689)
Net realized long-term gains......................................... -- (20,483,611)
Tax return of capital................................................ (44,040,006) (16,801,157)
------------ ------------
Total dividends and distributions to shareholders................. (63,587,865) (66,863,106)
------------ ------------
Capital share transactions
Net asset value of shares issued to shareholders in reinvestment
of dividends resulting in issuance of common stock................. 7,118,182 --
Shares repurchased and retired, 0 and 867,200 shares,
respectively....................................................... -- (6,100,002)
------------ ------------
Net increase (decrease) in net assets derived from capital share
transactions....................................................... 7,118,182 (6,100,002)
------------ ------------
Net decrease in net assets........................................... (69,400,922) (43,581,342)
Net Assets
Beginning of year.................................................... 671,055,863 714,637,205
------------ ------------
End of year (including undistributed net investment income of
$4,991,892 and $5,383,977 for the years ended December 31,
2001 and December 31, 2000, respectively.)......................... $601,654,941 $671,055,863
============ ============

--------
(a) The dividends and distributions on the statement of changes in net assets
for the year ended December 31, 2000 have been reclassified for comparative
purposes.

See notes to financial statements

THE ZWEIG TOTAL RETURN FUND, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2001

NOTE 1 -- Organization

The Zweig Total Return Fund, Inc. (the "Fund") is a closed-end, diversified
management investment company registered under the Investment Company Act of
1940 (the "Act"). The Fund was incorporated under the laws of the State of
Maryland on July 21, 1988.

NOTE 2 -- Significant Accounting Policies

The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in accordance with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates.

A. Portfolio Valuation

Portfolio securities that are traded only on stock exchanges are valued at
the last sale price. Securities traded in the over-the-counter market which are
National Market System securities are valued at the last sale price. Other
over-the-counter securities are valued at the most recently quoted bid price
provided by the principal market makers. Portfolio securities which are traded
both in the over-the-counter market and on a stock exchange are valued
according to the broadest and most representative market, as determined by the
Adviser. Debt securities may be valued on the basis of prices provided by an
independent pricing service, when such prices are believed by the Adviser to
reflect the fair market value of such securities. Short-term investments having
a remaining maturity of 60 days or less when purchased are valued at amortized
cost (which approximates market value). Futures contracts traded on commodities
exchanges are valued at their closing settlement price on such exchange.
Securities for which market quotations are not readily available, (of which
there were none at December 31, 2001) and other assets, if any, are valued at
fair value as determined under procedures approved by the Board of Directors of
the Fund.

B. Security Transactions and Investment Income

Security transactions are recorded on trade date. Dividend income is
recorded on the ex-dividend date. Interest income is recorded on the accrual
basis. Discount and premium on securities purchased other than short-term
securities are accreted on the constant yield method over the life of the
respective securities. Prior to January 1, 2001, premium on securities was not
amortized.

With the adoption of the revised AICPA Audit and Accounting Guide, Audits of
Investment Companies ("Audit Guide"), the Fund is required to amortize premium
and discount on all fixed income securities, and classify gains and losses on
asset-backed securities presently included in realized gains and losses, as
part of interest income. Upon initial adoption, the Fund adjusted the cost of
its fixed-income securities by the cumulative amount of amortization that would
have been recognized had amortization been in effect from the purchase date of
each holding. Adopting this accounting principle did not affect the

Fund's net asset value. The initial adjustment required upon adoption of
premium amortization decreased the recorded cost of its investments (but not
their market value) and increased the net unrealized gain (loss) by
approximately $1,890,167. The effect of this change for the fiscal year ended
December 31, 2001 was $1,451,804.

Realized gains and losses on sales of investments are determined on the
identified cost basis for financial reporting and tax purposes.

C. Federal Income Tax Information

It is the policy of the Fund to comply with the requirements of the Internal
Revenue Code ("the Code"), applicable to regulated investment companies, and to
distribute all of its taxable income to its shareholders. In addition, the Fund
intends to distribute an amount sufficient to avoid the imposition of any
excise tax under Section 4982 of the Code. Therefore, no provision for federal
income taxes or excise taxes has been made.

D. Dividends and Distributions to Shareholders

Distributions to shareholders are recorded on the ex-dividend date. Income
and capital gain distributions are determined in accordance with income tax
regulations that may differ from generally accepted accounting principles.
These differences include the treatment of net operating losses, premium
amortization, losses deferred due to wash sales and the timing of
distributions. For financial reporting purposes, book basis capital accounts
are adjusted to reflect the tax character of permanent book/tax differences.
The reclassifications have no impact on the net assets or net asset value of
the Fund. As of December 31, 2001, the Fund increased undistributed net
investment income by $3,341,971, decreased accumulated net realized gain by
$(325,967) and paid in capital by $(3,016,004).

As of December 31, 2001, the components of distributable earnings on a tax
basis (excluding unrealized appreciation/(depreciation) which is disclosed in
the schedule of investments) were as follows:

Undistributed Ordinary Income............................ $0
Undistributed Long-term Capital Gains.................... $0
Capital Loss Carryovers.................................. $0

Capital loss carryovers may be used to offset future capital gains. The
differences between the book basis and tax basis components of distributable
earnings relate principally to the timing of recognition of income and gains
and distributions for federal income tax purposes. Short-term gain
distributions reported in the statement of changes in net assets are reported
as ordinary income for federal tax purposes.

NOTE 3 -- Portfolio Transactions

During the year ended December 31, 2001, purchases and sales transactions,
excluding short-term investments were:

United States
Government
Common and Agency
Stocks Obligations
------------ -------------

Purchases............................. $200,959,881 $268,501,828
============ ============
Sales................................. $188,060,958 $447,270,890
============ ============

NOTE 4 -- Investment Advisory Fees and Other Transactions with Affiliates

a) Investment Advisory Fee: The Investment Advisory Agreement (the
"Agreement") between Phoenix/Zweig Advisers LLC (the "Adviser"), the Fund's
investment adviser, and the Fund provides that, subject to the direction of the
Board of Directors of the Fund and the applicable provisions of the Act, the
Adviser is responsible for the actual management of the Fund's portfolio.
Phoenix/Zweig Advisers LLC is a wholly-owned subsidiary of Phoenix Investment
Partners, Ltd. ("PXP"). PXP is an indirect, wholly-owned subsidiary of The
Phoenix Companies, Inc. ("PNX"). The responsibility for making decisions to
buy, sell or hold a particular investment rests with the Adviser, subject to
review by the Board of Directors and the applicable provisions of the Act. For
the services provided by the Adviser under the Agreement, the Fund pays the
Adviser a monthly fee equal, on an annual basis, to 0.70% of the Fund's average
daily net assets. During the year ended December 31, 2001, the Fund accrued
advisory fees of $4,364,838.

b) Administration Fee: Phoenix Equity Planning Corporation ("PEPCO"), an
indirect wholly-owned subsidiary of PNX, serves as the Fund's Administrator
(the "Administrator") pursuant to an Administration Agreement with the Fund.
The Administrator generally assists in all aspects of the Fund's operations,
other than providing investment advice, subject to the overall authority of the
Fund's Board of Directors. The Administrator determines the Fund's net asset
value daily, prepares such figures for publication on a weekly basis, maintains
certain of the Fund's books and records that are not maintained by the Adviser,
custodian or transfer agent, assists in the preparation of financial
information for the Fund's income tax returns, proxy statements, quarterly and
annual shareholder reports, and responds to shareholder inquiries. Under the
terms of the Agreement, the Fund pays the Administrator a monthly fee equal, on
an annual basis, to 0.13% of the Fund's average daily net assets. During the
year ended December 31, 2001, the Fund accrued administration fees of $810,612.

c) Directors' Fee: The Fund pays each Director who is not an interested
person of the Fund or the Adviser a fee of $10,000 per year plus $1,500 per
Directors' or committee meeting attended, together with the out-of-pocket costs
relating to attendance at such meetings. Any Director of the Fund who is an
interested person of the Fund or the Adviser receives no remuneration from the
Fund.

d) Brokerage Commission: During the year ended December 31, 2001, the Fund
paid PXP Securities Corp., a wholly-owned subsidiary of PXP, brokerage
commissions of $39,972 in connection with portfolio transactions effected
through them. In addition, PXP Securities Corp. charged $35,966 in commissions
for transactions effected on behalf of the participants in the Fund's Automatic
Reinvestment and Cash Purchase Plan.

NOTE 5 -- Capital Stock and Reinvestment Plan

At December 31, 2001, the Fund had one class of common stock, par value
$.001 per share, of which 500,000,000 shares are authorized and 90,760,688
shares are outstanding.

Registered shareholders may elect to receive all distributions in cash paid
by check mailed directly to the shareholder by EquiServe as dividend paying
agent. Pursuant to the Automatic Reinvestment and Cash Purchase Plan (the
"Plan"), shareholders not making such election will have all such amounts
automatically reinvested by EquiServe, as the Plan agent, in whole or
fractional shares of the Fund, as the case may be. For the year ended December
31, 2001 there were 1,027,722 shares issued pursuant to the Plan.

For the year ended December 31, 2000, 867,200 shares were repurchased and
retired at a cost of $6,100,002. This included $39,024 in commissions paid to
PXP Securities Corp. The weighted average

discount of market price to net asset value of shares repurchased over the
period of August 11, 2000 to September 22, 2000 was 8.6%. There were no shares
repurchased or retired for the year ended December 31, 2001.

On December 17, 2001, the Board of Directors declared a distribution of the
greater of 0.83% of its net value on December 31, 2001 or all available net
investment income plus net short and long term gains.

On January 2, 2002, the Fund announced a distribution of $.055 per share to
shareholders of record on December 31, 2001. This distribution has an
ex-dividend date of January 3, 2002 and is payable on January 10, 2002.

NOTE 6 -- Financial Highlights

Selected data for a share outstanding throughout each year:

Year Ended December 31
------------------------------------------------------
2001 2000 1999 1998 1997
-------- -------- -------- -------- --------

Per Share Data
Net asset value, beginning of year........................... $ 7.48 $ 7.89 $ 8.43 $ 8.61 $ 8.29
-------- -------- -------- -------- --------
Income From Investment Operations
Net investment income........................................ 0.18/(a)/ 0.30 0.28 0.33 0.36
Net realized and unrealized gains (losses)................... (0.32)/(a)/ 0.02 (0.01) 0.39 0.80
-------- -------- -------- -------- --------
Total from investment operations............................. (0.14) 0.32 0.27 0.72 1.16
-------- -------- -------- -------- --------
Dividends and Distributions
Anti-dilutive effect of share repurchase program............. -- 0.01 0.01 -- --
-------- -------- -------- -------- --------
Dividends from net investment income......................... (0.22) (0.30) (0.28) (0.33) (0.36)
Distributions from net realized gains........................ -- (0.25) (0.13) (0.46) (0.48)
Tax return of capital........................................ (0.49) (0.19) (0.41) (0.05) --
-------- -------- -------- -------- --------
Total dividends and distributions............................ (0.71) (0.74) (0.82) (0.84) (0.84)
-------- -------- -------- -------- --------
Effect on net asset value as a result of rights offering*.... -- -- -- (0.06) --
-------- -------- -------- -------- --------
Net asset value, end of year.............................. $ 6.63 $ 7.48 $ 7.89 $ 8.43 $ 8.61
======== ======== ======== ======== ========
Market value, end of year**............................... $ 7.05 $ 6.57 $ 6.50 $ 8.88 $ 9.44
======== ======== ======== ======== ========
Total investment return***................................... 18.73% 12.64% (18.72)% 4.49% 30.22%
======== ======== ======== ======== ========
Ratios/Supplemental Data
Net assets, end of year (in thousands)....................... $601,655 $671,056 $714,637 $757,212 $677,133
Ratio of expenses to average net assets...................... 1.04% 1.00% 0.97% 0.97% 1.04%
Ratio of net investment income to average net assets......... 2.51% 3.87% 3.50% 3.88% 4.30%
Portfolio turnover rate...................................... 86.3% 121.6% 172.3% 87.9% 104.7%

--------
* Shares were sold at a 5% discount from the average market price.
** Closing Price -- New York Stock Exchange.
*** Total investment return is calculated assuming a purchase of common stock
on the opening of the first business day and a sale on the closing of the
last business day of each period reported. Dividends and distributions, if
any, are assumed for the purposes of this calculation, to be reinvested at
prices obtained under the Fund's Automatic Reinvestment and Cash Purchase
Plan. Generally, total investment return based on net asset value will be
higher than total investment return based on market value in periods where
there is an increase in the discount or a decrease in the premium of

the market value to the net assets from the beginning to the end of such
years. Conversely, total investment return based on net asset value will be
lower than total investment return based on market value in periods where
there is a decrease in the discount or an increase in the premium of the
market value to the net asset value from the beginning to the end of such
periods.

(a) As required, effective January 1, 2001, the Fund has adopted the provision
of the AICPA Audit and Accounting Guide for Investment Companies and began
amortizing premium on debt securities. The effect of the change for the
year ended December 31, 2001 is shown below. Per share ratios and
supplemental data for periods prior to January 1, 2001, have not been
restated to reflect this change in presentation.

Decrease net investment income....................... $(.02)
Increase net realized and unrealized gains and losses $ .02
Decrease ratio of net investment income.............. (.23)%

TAX INFORMATION NOTICE
(UNAUDITED)

For federal income tax purposes, 12.09% of the ordinary income dividends
paid by the Fund qualify for the dividends received deduction for corporate
shareholders.

Report of Independent Accountants

To the Board of Directors and Shareholders of
The Zweig Total Return Fund, Inc.:

In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Zweig Total Return Fund, Inc.
(the "Fund") at December 31, 2001, the result of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the five years in
the period then ended, in conformity with accounting principles generally
accepted in the United States of America. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirmation
of securities at December 31, 2001 by correspondence with the custodian,
provide a reasonable basis for our opinion.

PRICEWATERHOUSECOOPERS LLP
New York, New York
February 13, 2002

FUND MANAGEMENT

Information pertaining to the Directors and officers of the Fund is set
forth below. The address of each individual, unless otherwise noted, is c/o
Phoenix/Zweig Advisers LLC, 900 Third Avenue, New York, NY 10022.

Number of
Term of Office and Portfolios in Fund
Name, (Age), Address and Length of Time Complex Overseen Principal Occupation(s)
Position(s) with Fund Served by Director During Past 5 Years and Other Directorships Held
--------------------- ------------------- ------------------ -------------------------------------------------------

DISINTERESTED DIRECTORS

Charles H. Brunie (71)... Term: Until 2003. 2 Chairman, Brunie Associates (investments) since April
Brunie Associates Served since: 1988. 2001; Chairman, Oppenheimer Capital (1969-2000);
600 Third Avenue, 17th Chairman Emeritus, Board of Trustees, Manhattan
Floor Institute (since 1990); Trustee, Milton and Rose D.
New York, NY 10016 Friedman Foundation for Vouchers (since 1999).

Director

Elliot S. Jaffe (75)..... Term: Until 2002. 2 Chairman and Chief Executive Officer of The Dress
30 Dunnigan Drive Served since: 1988. Barn, Inc. (since 1963). Director, National Retail
Suffern, NY 10901 Federation (since 1994); Stamford Hospital Foundation
(since 1997). Member, Board of Overseers of The
Director School of Arts and Sciences, University of
Pennsylvania (since 1998); Trustee, Teachers College,
Columbia University (since 1996). Director of
Citigroup Funds (since 1990).

Wendy Luscombe (50)...... Term: Until 2002. 2 Principal, WLK Associates, Inc. (investment
c/o Phoenix/Zweig Served since: 2001. management) (since 1994). Fellow, Royal Institution of
Advisers LLC Chartered Surveyors. Member, Chartered Institute of
900 Third Avenue Arbitrators. Director, Amadeus Vision Capital, plc
New York, NY 10022 (since 1999). Director, Endeavour Real Estate
Securities, Ltd. (since 2000). Director, PXRE Corp.
Director (reinsurance) (since 1994).

Alden C. Olson (73)...... Term: Until 2004. 2 Currently retired. Chartered Financial Analyst (since
2711 Ramparte Path Served since: 1996. 1964). Professor of Financial Management,
Holt, MI 48842 Investments at Michigan State University (1959 to
1990).
Director

James B. Rogers, Jr. (59) Term: Until 2003. 2 Private investor (since 1980). Chairman, Beeland
352 Riverside Drive Served since: 1986. Interests (Media and Investments) (since 1980).
New York, NY 10025 Regular Commentator on CNBC (1998). Author of
"Investment Biker: On the Road with Jim Rogers"
Director (1994). Visiting Professor, Columbia University (1998).
Columnist, WORTH Magazine (since 1995). Director,
Emerging Markets Brewery Fund (since 1993).
Director, Levco Series Trust 2 portfolios (since 1996).

INTERESTED DIRECTOR

Martin E. Zweig (59)........ Term: Until 2004. 9 President, Zweig Consulting LLC (investment
Chairman and President Served since: 1986. management) (since 1999). President, Phoenix-Zweig
Trust (since 1986) and Phoenix-Euclid Funds (since
1998). Managing Director, Zweig-DiMenna Associates
LLC (investment management) (since 1995). President,
Zweig-DiMenna International Managers, Inc., Zweig-
DiMenna Associates, Inc. and Gotham Advisors, Inc.
Shareholder, Watermark Securities, Inc. Director and
President, Zweig Total Return Advisors, Inc. and Zweig
Advisors Inc. (until 1999). Chairman, Zweig/Glaser
Advisers and Euclid Advisors LLC (until 1999).
Member, Under-graduate Executive board of The
Wharton School, University of Pennsylvania. Trustee,
Manhattan Institute.

OFFICERS WHO ARE NOT DIRECTORS

Jeffrey Lazar (42).......... Served since: 1988. Vice President, Phoenix/Zweig Advisers LLC (since
Executive Vice President and 1999). Director and Vice President, The Zweig Total
Treasurer Return Fund, Inc. (until 1999); Vice President and
Treasurer, The Zweig Total Return Advisors, Inc. (until
1999).

Christopher M. Capano (34).. Served since: 1996. Investment Professional, Phoenix/Zweig Advisers LLC
Vice President (since 1994).

Nancy J. Engberg (45)....... Served since: 1999. Vice President and Counsel, Phoenix Investment
56 Prospect Street Partners, Ltd. (since 1999). Counsel, Phoenix Home
Hartford, CT 06115 Life Mutual Insurance Company. (1994 to 1999).
Secretary

THE ZWEIG TOTAL RETURN FUND, INC.

YEAR END RESULTS

Total Return
on Net Asset Net Asset NYSE Premium
Value Value Share Price (Discount)
------------ --------- ----------- ----------

Year ended 12/31/2001..... (1.9%) $6.63 $ 7.0500 6.3%
Year ended 12/31/2000..... 5.7% 7.48 6.5700 (12.2%)
Year ended 12/31/1999..... 3.9% 7.89 6.5000 (17.6%)
Year ended 12/31/1998..... 8.8% 8.43 8.8750 5.3%
Year ended 12/31/1997..... 14.6% 8.61 9.4375 9.6%
Year ended 12/31/1996..... 6.3% 8.29 8.0000 (3.5%)
Year ended 12/31/1995..... 17.7% 8.63 8.6250 (0.1%)
Year ended 12/31/1994..... (1.9%) 8.11 8.0000 (1.4%)
Year ended 12/31/1993..... 10.7% 9.11 10.7500 18.0%
Year ended 12/31/1992..... 2.1% 9.06 10.0000 10.4%
Year ended 12/31/1991..... 20.1% 9.79 10.6250 8.5%
Year ended 12/31/1990..... 4.2% 9.02 8.6250 (4.4%)
Year ended 12/31/1989..... 14.9% 9.59 9.7500 1.7%
Inception 9/30/88-12/31/88 1.1% 9.24 9.1250 (1.2%)

--------------------------------------------------------------------------------

KEY INFORMATION

1-800-272-2700 Zweig Shareholder Relations: For general information and
literature

1-800-272-2700 The Zweig Total Return Fund Hot Line: For updates on net asset
value, share price, major industry groups and other key
information

REINVESTMENT PLAN

Many of you have questions about our reinvestment plan. We urge
shareholders who want to take advantage of this plan and whose shares are
held in "Street Name," to consult your broker as soon as possible to
determine if you must change registration into your own name to participate.

-----------------

Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that the Fund may from time to time purchase its shares of
common stock in the open market when Fund shares are trading at a discount from
their net asset value.

OFFICERS AND DIRECTORS
Martin E. Zweig, Ph.D.
Chairman of the Board and President

Jeffrey Lazar
Executive Vice President and Treasurer

Nancy J. Engberg
Secretary

Christopher M. Capano
Vice President

Charles H. Brunie
Director

Elliot S. Jaffe
Director

Wendy Luscombe
Director

Alden C. Olson, Ph.D.
Director

James B. Rogers, Jr.
Director

Investment Adviser
Phoenix/Zweig Advisers LLC
900 Third Avenue
New York, NY 10022

Fund Administrator
Phoenix Equity Planning Corporation
56 Prospect St.
P.O. Box 150480
Hartford, CT 06115-0480

Custodian
The Bank of New York
One Wall Street
New York, NY 10286

Transfer Agent
EquiServe Trust Co., NA
P.O. Box 43010
Providence, RI 02940-3010

Legal Counsel
Rosenman & Colin LLP
575 Madison Avenue
New York, NY 10022

Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036

--------------------------------------------------------------------------------

This report is transmitted to the shareholders of The Zweig Total Return
Fund, Inc. for their information. This is not a prospectus, circular or
representation intended for use in the purchase of shares of the Fund or any
securities mentioned in this report.

PXP 1336
3206-ANN (12/01)

[GRAPHIC] Annual Report

[LOGO] Zweig
The Zweig Total Return Fund, Inc.

December 31, 2001

[LOGO] PHOENIX INVESTMENT PARTNERS
A member of The Phoenix Companies, Inc.