SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __)

Filed by the Registrant /X/

Filed by a Party other than the Registrant / /

Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

THE HYPERION TOTAL RETURN FUND, INC.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

/ / No fee required

/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

/ / Fee paid previously with preliminary materials.

/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:

THE HYPERION TOTAL RETURN FUND, INC.

520 Madison Avenue o New York, New York 10022

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

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

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

January 29, 1997

To the Stockholders:

The Annual Meeting of Stockholders of The Hyperion Total Return Fund, Inc.
(the 'Fund') will be held at The Millenium Hilton, 55 Church Street (next to the
World Trade Center), New York, New York 10007, on Tuesday, April 22, 1997, at
9:00 a.m., for the following purposes:

1. To elect directors (Proposal 1).

2. To ratify or reject the selection of Deloitte & Touche LLP as the
independent auditors of the Fund for the fiscal year ending November 30,
1997 (Proposal 2).

3. To transact any other business that may properly come before the
meeting.

The close of business on January 21, 1997 has been fixed as the record date
for the determination of stockholders entitled to notice of and to vote at the
meeting.

By Order of the Board of Directors,
Patricia A. Sloan
Secretary

WE NEED YOUR PROXY VOTE IMMEDIATELY.

YOU MAY THINK YOUR VOTE IS NOT IMPORTANT, BUT IT IS VITAL. THE MEETING OF
STOCKHOLDERS OF THE FUND WILL BE UNABLE TO CONDUCT ANY BUSINESS IF LESS THAN A
MAJORITY OF THE SHARES ELIGIBLE TO VOTE IS REPRESENTED. IN THAT EVENT, THE FUND,
AT STOCKHOLDERS' EXPENSE, WOULD CONTINUE TO SOLICIT VOTES IN AN ATTEMPT TO
ACHIEVE A QUORUM. CLEARLY, YOUR VOTE COULD BE CRITICAL TO ENABLE THE FUND TO
HOLD THE MEETING AS SCHEDULED, SO PLEASE RETURN YOUR PROXY CARD IMMEDIATELY. YOU
AND ALL OTHER STOCKHOLDERS WILL BENEFIT FROM YOUR COOPERATION.

INSTRUCTIONS FOR SIGNING PROXY CARDS

The following general rules for signing proxy cards may be of assistance to

you and avoid the time and expense to the Fund involved in validating your vote
if you fail to sign your proxy card properly.

1. Individual Accounts. Sign your name exactly as it appears in the
registration on the proxy card.

2. Joint Accounts. Either party may sign, but the name of the party
signing should conform exactly to the name shown in the registration.

3. All Other Accounts. The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the form of registration. For
example:

REGISTRATION VALID SIGNATURE
- ---------------------------------------- ----------------------------
Corporate Accounts
(1) ABC Corp...................... ABC Corp.

(2) ABC Corp...................... John Doe, Treasurer

(3) ABC Corp.
c/o John Doe, Treasurer........ John Doe

(4) ABC Corp. Profit Sharing
Plan............................ John Doe, Trustee

Trust Accounts
(1) ABC Trust..................... John B. Doe, Trustee

(2) Jane B. Doe, Trustee
u/t/d 12/28/78................. Jane B. Doe

Custodial or Estate Accounts
(1) John B. Smith, Cust.
f/b/o John B. Smith, Jr.
UGMA........................... John B. Smith

(2) John B. Smith................. John B. Smith, Jr., Executor

THE HYPERION TOTAL RETURN FUND, INC.

520 Madison Avenue o New York, New York 10022

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

PROXY STATEMENT

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

This proxy statement is furnished in connection with a solicitation by the
Board of Directors of The Hyperion Total Return Fund, Inc. (the 'Fund') of
proxies to be used at the Annual Meeting of Stockholders of the Fund to be held
at The Millenium Hilton, 55 Church Street (next to the World Trade Center), New
York, New York 10007, at 9:00 a.m. on Tuesday, April 22, 1997 (and at any
adjournment or adjournments thereof) for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders. This proxy statement and
the accompanying form of proxy are first being mailed to stockholders on or
about January 29, 1997. Stockholders who execute proxies retain the right to
revoke them by written notice received by the Secretary of the Fund at any time
before they are voted. Unrevoked proxies will be voted in accordance with the
specifications thereon and, unless specified to the contrary, will be voted FOR
the election of the two nominees for director, and FOR the ratification of the
selection of Deloitte & Touche LLP as the independent auditors of the Fund for
the fiscal year ending November 30, 1997. The close of business on January 21,
1996 has been fixed as the record date for the determination of stockholders
entitled to notice of and to vote at the meeting. Each stockholder is entitled
to one vote for each share held. Abstentions will be treated as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum but as unvoted for purposes of determining the approval of any matters
submitted to stockholders for a vote. Broker non-votes will not be counted for
purposes of determining the presence of a quorum or determining whether a
proposal has been approved. On the record date there were 24,761,615 shares
outstanding.

PROPOSAL 1: ELECTION OF DIRECTORS

The Fund's Articles of Incorporation provide that the Fund's Board of
Directors shall be divided into three classes: Class I, Class II and Class III.
The terms of office of the present directors in each class expire at the Annual
Meeting in the year indicated or thereafter in each case when their respective
successors are elected and qualified: Class I, 1997; Class II, 1998; and Class
III, 1999. At each subsequent annual election, Directors chosen to succeed those
whose terms are expiring will be identified as being of that same class and will
be elected for a three-year term. The effect of these staggered terms is to
limit the ability of other entities or persons to acquire control of the Fund by
delaying the replacement of a majority of the Board of Directors.

The terms of Garth Marston and Kenneth C. Weiss, the members of Class I,
currently serving on the Board of Directors, expire at this year's Annual
Meeting. The persons named in the accompanying form of proxy intend to vote at
the Annual Meeting (unless directed not to so vote) for the re-election of

Messrs. Marston and Weiss. Each nominee has indicated that he will serve if
elected, but if any nominee should be unable to serve, the proxy or proxies will
be voted for any other person or persons, as the case may be, determined by the
persons named in the proxy in accordance with their judgment.

As described above, there are two nominees for election to the Board of
Directors at this time. Proxies cannot be voted for a greater number of persons
than the two nominees currently proposed to serve on the Board of Directors.

The following table provides information concerning each of the seven
members and nominees of the Board of Directors of the Fund:

SHARES OF
COMMON STOCK
BENEFICIALLY
OWNED DIRECTLY
PRINCIPAL OCCUPATION OR INDIRECTLY, ON
NAME AND OFFICE DURING PAST FIVE YEARS, DIRECTOR NOVEMBER 30,
WITH THE FUND OTHER DIRECTORSHIPS AND AGE SINCE 1996(**)
- ----------------------------------- -------------------------------------------- ---------- -----------------

CLASS I NOMINEES TO SERVE UNTIL 2000 ANNUAL MEETING OF STOCKHOLDERS:

Garth Marston ................... Managing Director of M.E. Associates, a Sept. 1989 425
Director, Member of the Audit financial consulting group (1986-Pres-
Committee ent). Director and/or Trustee of several
investment companies advised by Hyperion
Capital Management, Inc. (1989-Present).
Currently a member of the Board of
Managers of the Sun Life Assurance Company
of Canada (U.S.) Formerly Director and
interim Chief Executive Officer of Florida
Federal Savings (1986-1988); Chairman of
the Board and Chief Executive Officer of
The Provident Institution for Savings
(1979-1986); Special Assignment regarding
partially call protected Mortgage-Backed
Securities for Salomon Brothers Inc.
(1987). Age 70.
Kenneth C. Weiss* ............... President and Chief Executive Officer of April 1994 4,786
Director, Senior Vice President Hyperion Capital Management, Inc.
(February 1992-Present). Chairman of the
Board, Director/ Trustee and/or officer of
several investment companies advised by
Hyperion Capital Management, Inc. or by
its affiliates (February 1992-Present).
Director and President of Equitable Real

Estate Hyperion Mortgage Opportunity Fund,
Inc. and Equitable Real Estate Hyperion
High Yield Commercial Mortgage Funds, Inc.
and their Investment Advisor
(1995-Present). Formerly Director of First
Boston Asset Management (1988-February
1992). Director of The First Boston
Corporation, (until 1988). Age 45.

Rodman L. Drake ................. President, Mandrake Group (1993-Present). July 1989 205
Director, Member of the Audit Director and/or Trustee of several
Committee investment companies advised by Hyperion
Capital Management, Inc. (1989-Present).
Co-Chairman of KMR Power Corporation
(1993-1997). Formerly, Consultant to
Rockefeller & Co. Inc. (1990-1996).
Formerly Managing Director and Chief
Executive Officer of Cresap (1980-1990).
Trustee of Excelsior Funds. Director,
Parsons Brinckerhoff, Inc. and Latin
American Growth Fund Inc. Age 54.
Harry E. Petersen, Jr. .......... Director and/or Trustee of several invest- Oct. 1993 200
Director, Member of the Audit ment companies advised by Hyperion Capital
Committee Management, Inc. or by its affiliates
(1992-Present). Director of Equitable Real
Estate Hyperion Mortgage Opportunity Fund,
Inc. and Equitable Real Estate Hyperion
High Yield Commercial Mortgage Fund, Inc.
(1995-Present). Senior Advisor to Potomac
Babson Inc. (1995-Present). Director of
Lexington Corporate Properties, Inc.
(1993-Present). Formerly, Consultant to
Advisers Capital Management, Inc.
(1992-1995); Consultant on public and
private pension funds (1991-1993);
President of Lepercq Realty Advisors
(1988-1990). Member of Advisory Council of

Polytechnic University. Age 72.

Lewis S. Ranieri* ............... Chairman and Chief Executive Officer of June 1989 0
Chairman of the Board Ranieri & Co., Inc. (since 1988); in addi-
tion, President of LSR Hyperion Corp., a
general partner of the limited partnership
that is the general partner of Hyperion
Partners L.P. ('Hyperion Partners') (since
1988). Director and Chairman of the Board
of Hyperion Capital Management, Inc.
(since 1989); Chairman of the Board and/or
Director of several investment companies
advised by Hyperion Capital Management,
Inc. or by its affiliates (since 1989);
Director of Equitable Real Estate Hyperion
Mortgage Opportunity Fund, Inc. and
Equitable Real Estate Hyperion High Yield
Commercial Mortgage Fund, Inc. (since
1995); Chairman of Bank United of Texas
FSB (since 1988) and Hyperion Credit
Services Corp. (since 1992); Director and
President of Hyperion Funding 1993 Corp.,
the general partner of the limited part-
nership that is the general partner of
Hyperion 1993 Fund L.P.; and also Chairman
and President of various other direct and
indirect subsidiaries of Hyperion
Partners. Formerly Vice Chairman of
Salomon Brothers Inc. (until 1987). Age
50.

Leo M. Walsh, Jr. ............... Director and/or Trustee of several invest- June 1989 510
Director, Chairman of the Audit ment companies advised by Hyperion Capital
Committee Management, Inc. or by its affiliates
(1989-Present). Director of Equitable Real
Estate Hyperion Mortgage Opportunity Fund,
Inc. and Equitable Real Estate Hyperion
High Yield Commercial Mortgage Fund, Inc.
(since 1995); Financial Consultant for
Merck-Medco Managed Care Inc. (formerly
Medco Containment Services Inc.)
(1994-Present). Formerly, Financial
Consultant for Synetic Inc., a
manufacturer of porous plastic materials
for health care uses (1989-1994);
President, WW Acquisition Corp.
(1989-1990); Senior Executive Vice
President and Chief Operating Officer of
The Equitable Life Assurance Society of
the United States ('The Equitable')
(1986-1988); Director of The Equitable and
Chairman of Equitable Investment
Corporation, a holding company for The
Equitable's investment oriented
subsidiaries (1983-1988); Chairman and
Chief Executive Officer of
EQUICOR-Equitable HCA Corporation
(1987-1988). Age 64.

Patricia A. Sloan* .............. Managing Director of Ranieri & Co., Inc. April 1994 300
Director, Secretary (1988-Present). Secretary, Director and/or
Trustee of several investment companies
advised by Hyperion Capital Management,
Inc. (1989-Present). Director of Bank
United Corp., the parent of Bank United
(formerly Bank United of Texas FSB)
(1988-Present). Formerly Director of the
Financial Institutions Group of Salomon
Brothers Inc. (1972-1988). Age 53.

- ------------------
* Interested persons as defined in the Investment Company Act of 1940, as
amended (the '1940 Act'), because of affiliations with Hyperion Capital
Management, Inc., the Fund's Investment Advisor.

** The holdings of no director or nominee represented more than 1% of the
outstanding shares of the Fund.

OFFICERS OF THE FUND. The officers of the Fund are chosen each year at the
first meeting of the Board of Directors of the Fund following the Annual Meeting
of Stockholders, to hold office at the discretion of the Board of Directors
until the meeting of the Board following the next Annual Meeting of Stockholders
and until their successors are chosen and qualified. The Board of Directors has
elected seven officers of the Fund. Except where dates of service are noted, all
officers listed below served as such throughout the 1996 fiscal year. The
following sets forth information concerning each officer of the Fund who served
during all or part of the last fiscal year of the Fund:

NAME AND
PRINCIPAL OCCUPATION OFFICE AGE OFFICER SINCE
- ----------------------------------------- ---------------- --- --------------
Lewis S. Ranieri......................... Chairman 50 June 1989
Director and Chairman of the Board of
Hyperion Capital Management, Inc.; see
information under 'ELECTION OF
DIRECTORS.'

Kenneth C. Weiss......................... Senior Vice 45 February 1992
President and Chief Executive Officer President
of Hyperion Capital Management, Inc.;
See information under 'ELECTION OF
DIRECTORS.'

Clifford E. Lai.......................... President 43 April 1993
Managing Director and Chief Investment
Officer, Hyperion Capital Management,
Inc. (March 1993-Present). Formerly,
Managing Director and Chief Investment
Strategist for Fixed Income, First
Boston Asset Management (1989-1993);
Vice President, Morgan Stanley & Co.
(1987-1989).

Louis C. Lucido.......................... Senior Vice 48 April 1992
Managing Director and Chief Operating President
Officer of Hyperion Capital Management,
Inc. (February 1992-Present). President
of several investment companies advised
by Hyperion Capital Management, Inc.
(1992-Present). Formerly, Senior Vice
President and Director, Progressive
Capital Management Inc. (1991-February
1992); Senior Vice President and
Manager, Donaldson Lufkin & Jenrette
(1988-1991); Vice President, Smith

Barney, Harris Upham & Co. Inc.
(1987-1988); Vice-President, Merrill
Lynch, Pierce, Fenner & Smith
(1981-1987).

John N. Dunlevy.......................... Vice President 38 July 1992
Director, Hyperion Capital Management,
Inc. (July 1992-Present). Formerly,
Director and Portfolio Manager,
Teachers Insurance & Annuity As-
sociation (1988-1992); Assistant Vice
President, Sumitomo Bank Ltd.
(1985-1988).

Patricia A. Sloan........................ Secretary 53 July 1989
Managing Director of Ranieri & Co.,
Inc. (1988-Present); See information
under 'ELECTION OF DIRECTORS.'

NAME AND
PRINCIPAL OCCUPATION OFFICE AGE OFFICER SINCE
- ----------------------------------------- ---------------- --- --------------

Joseph W. Sullivan....................... Treasurer 40 September 1995
Vice President of Hyperion Capital
Management, Inc. (August 1995-Present).
Formerly, Vice President in Merrill
Lynch & Co.'s Investment Banking
Division; Treasurer and Chief Financial
Officer of several Merrill Lynch
subsidiaries, responsible for all
financial reporting, accounting,
ministerial and administrative services
(1990-1995); Assistant Vice President
of Standard & Poor's Debt Rating Group
(1988-1990); Assistant Vice President
and Operations Controller of Shearson
Lehman Hutton, Inc., engaged in the
identification, analysis and financial
administration of public and private
real estate investment programs
(1983-1987). A Licensed Certified
Public Accountant since 1981.

At November 30, 1996, directors and officers of the Fund as a group owned
beneficially less than 1% of the outstanding shares of the Fund. No person, to
the knowledge of management, owned beneficially more than 5% of the Fund's
outstanding shares at that date. The business address of the Fund and its

officers and directors is 520 Madison Avenue, New York, New York 10022.

INTERESTED PERSONS. Mr. Ranieri serves as a Director and Chairman of the
Board of the Advisor and Mr. Weiss serves as a Director, President and Chief
Executive Officer of the Advisor. Ms. Sloan is a special limited partner of
Hyperion Ventures, the sole general partner of Hyperion Partners L.P., of which
the Advisor is a wholly-owned subsidiary. As a result of their service with the
Advisor and certain affiliations with the Advisor as described below, the Fund
considers Messrs. Ranieri and Weiss and Ms. Sloan to be 'interested persons' of
the Fund within the meaning of Section 2(a)(19) of the 1940 Act.

COMMITTEES AND BOARD OF DIRECTORS' MEETINGS. The Fund has a standing Audit
Committee presently consisting of Messrs. Walsh, Drake, Petersen and Marston,
all of whom are members of the Board of Directors and are currently
non-interested persons of the Fund. The principal functions of the Fund's Audit
Committee are to recommend to the Board the appointment of the Fund's auditors,
to review with the auditors the scope and anticipated costs of their audit and
to receive and consider a report from the auditors concerning their results of
the audit, including any comments or recommendations they might want to make in
that connection. During the last fiscal year of the Fund, the full Board of
Directors met four times, and the Audit Committee met one time. All of the
directors attended the Audit Committee meeting, and all of the Directors
attended at least 75% of the aggregate of the Board meetings and the Audit
Committee meeting. The Fund has no nominating, compensation or similar
committees.

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS. No remuneration was paid
by the Fund to persons who were directors, officers or employees of Hyperion
Capital Management, Inc. or any affiliate thereof for their services as
directors or officers of the Fund. Each director of the Fund, other than those
who are officers or employees of Hyperion Capital Management, Inc. or any
affiliate thereof, is entitled to receive a fee of $7,500 per year plus $1,000
for each Board of Directors' meeting attended. Members of the Audit Committee
receive $750 for each Audit Committee meeting attended, other than meetings held
on days when there is also a directors' meeting.

DIRECTORS' COMPENSATION TABLE
FOR THE TWELVE MONTH PERIOD ENDED 11/30/96

TOTAL DIRECTORS'
DIRECTORS' COMPENSATION
COMPENSATION FROM THE FUND
FROM THE AND THE TRUST
FUND COMPLEX
------------ ----------------
Rodman Drake.................. $ 11,500 $ 55,750
Garth Marston................. 10,500 48,750
Harry E. Petersen, Jr......... 11,500 55,750
Leo M. Walsh, Jr.............. 11,500 55,750
------------ ----------------

$ 45,000 $216,000
------------ ----------------
------------ ----------------

REQUIRED VOTE

Election of the listed nominees for director requires the affirmative vote
of the holders of a majority of the shares of Common Stock of the Fund present
or represented by proxy at the Annual Meeting.

PROPOSAL 2: RATIFICATION OR REJECTION OF
SELECTION OF INDEPENDENT AUDITORS

The Board of Directors of the Fund will consider, and it is expected that
they will recommend, the selection of Deloitte & Touche LLP as independent
auditors of the Fund for the fiscal year ending November 30, 1997 at a meeting
scheduled to be held on March 11, 1997. The appointment of independent auditors
is approved annually by the Audit Committee of the Board of Directors and is
subsequently submitted to the stockholders for ratification or rejection. The
Fund has been advised by Deloitte & Touche LLP that at November 30, 1996 neither
that firm nor any of its partners had any direct or material indirect financial
interest in the Fund. A representative of Deloitte & Touche LLP will be at the
meeting to answer questions concerning the Fund's financial statements and will
have an opportunity to make a statement if he or she chooses to do so.

REQUIRED VOTE

Ratification of the selection of Deloitte & Touche LLP as independent
auditors of the Fund requires the affirmative vote of the holders of a majority
of the outstanding shares of Common Stock of the Fund present or represented by
proxy at the Annual Meeting.

ADDITIONAL INFORMATION

INVESTMENT ADVISOR

The Fund has engaged Hyperion Capital Management, Inc., the Advisor, to
provide professional investment management for the Fund pursuant to an Advisory
Agreement dated August 4, 1989. The Advisor is a Delaware corporation which was
organized in February 1989. The Advisor is a registered investment advisor under
the Investment Advisers Act of 1940, as amended. The business address of the
Advisor and its officers and directors is 520 Madison Avenue, New York, New York
10022.

The Advisor is an indirect, wholly-owned subsidiary of Hyperion Partners
L.P., a Delaware limited partnership ('Hyperion Partners'). Hyperion Partners
acquired all of the shares of the Advisor held by Hyperion Holdings, Inc. in
exchange for a $20,000,000 note on January 15, 1993. The sole general partner of
Hyperion Partners is Hyperion Ventures L.P., a Delaware limited partnership
('Hyperion Ventures'). Corporations owned principally by Lewis S. Ranieri,

Salvatore A. Ranieri and Scott A. Shay are the general partners of Hyperion
Ventures. Lewis S. Ranieri, a former Vice Chairman of Salomon Brothers Inc.
('Salomon Brothers'), is the Chairman of the Board of the Advisor and the Fund.
Messrs. Salvatore Ranieri and Shay are directors of the Advisor, but have no
other positions with either the Advisor or the Fund. Messrs. Salvatore Ranieri
and Shay are principally engaged in the management of the affairs of Hyperion
Ventures and its affiliated entities. Since January 1, 1990, Patricia A. Sloan,
Secretary of the Fund, has been a special limited partner of Hyperion Ventures
and since July 1993 she has been a limited partner of Hyperion Partners. Mr.
Lai, the President of the Fund, and Messrs. Weiss and Lucido, Senior Vice
Presidents of the Fund, are employees of the Advisor, and each may be entitled,
in addition to receiving a salary from the Advisor, to receive a bonus based
upon a portion of the Advisor's profits, including any profit from a sale of the
Advisor. Mr. Dunlevy, a Vice President of the Fund, and Mr. Sullivan, Treasurer
of the Fund, are also employees of the Advisor. The business address of Hyperion
Partners and Hyperion Ventures is 50 Charles Lindbergh Boulevard, Suite 500,
Uniondale, New York 11553.

The Advisor provides advisory services to several other registered
investment companies and one offshore fund, all of which invest in
mortgage-backed securities. Its management includes several individuals with
extensive experience in creating, evaluating and investing in Mortgage-Backed
Securities, Derivative Mortgage-Backed Securities and Asset-Backed Securities,
and in using hedging techniques. Lewis S. Ranieri, Chairman of the Advisor and
Chairman of the Fund, was instrumental in the development of the secondary
mortgage-backed securities market and the creation and development of secondary
markets for conventional mortgage loans, CMOs and other mortgage-related
securities. While at Salomon Brothers, Mr. Ranieri directed that firm's
activities in the mortgage, real estate and government guaranteed areas. Kenneth
C. Weiss, President and Chief Executive Officer of the Advisor and Senior Vice
President of the Fund, was a Director of First Boston Asset Management
Corporation and was a Director of The First Boston Corporation. Clifford E. Lai,
Chief Investment Manager of the Advisor and President of the Fund, was Managing
Director and Chief Investment Strategist for Fixed Income for First Boston Asset
Management Corporation. Louis C. Lucido, Managing Director and Chief Operating
Officer of the Advisor and Senior Vice President of the Fund, was Senior Vice
President and Director of Progressive Capital Management.

INVESTMENT ADVISORY AGREEMENT

On March 12, 1996, the Board of Directors of the Fund, including those
persons identified as interested persons and a majority of the directors who are
not parties to the Advisory Agreement or interested persons (as such term is
defined in the 1940 Act) of any such party (the 'Disinterested Directors'),
approved extension of the Advisory Agreement through March 31, 1997. At the time
of the

Board's approval of the latest extension of the Advisory Agreement, Messrs.
Lewis Ranieri, Weiss and Ms. Sloan were interested persons of the Fund. The
Advisory Agreement was last submitted to a vote of the Stockholders of the Fund

at the first Annual Meeting of the Stockholders of the Fund held on June 5,
1990. At that meeting, the Stockholders approved the continuance of the Advisory
Agreement. The Advisory Agreement provides that it will continue from year to
year, but only so long as such continuation is specifically approved at least
annually by both (1) the vote of a majority of the Board of Directors or the
vote of a majority of the outstanding voting securities of the Fund (as provided
in the 1940 Act) and (2) by the vote of a majority of the Disinterested
Directors cast in person at a meeting called for the purpose of voting on such
approval. The Advisory Agreement may be terminated at any time without the
payment of any penalty, upon the vote of a majority of the Board of Directors or
a majority of the outstanding voting securities of the Fund or by the Advisor,
on 60 days' written notice by either party to the other. The Agreement will
terminate automatically in the event of its assignment (as such term is defined
in the 1940 Act and the rules thereunder). The Board of Directors will consider
continuance of the Advisory Agreement until March 31, 1998 at a meeting
scheduled for March 11, 1997.

Pursuant to the Advisory Agreement, the Fund has retained the Advisor to
manage the investment of the Fund's assets and to provide, with the assistance
of the Sub-Advisor, Pacholder Associates, Inc., such investment research, advice
and supervision, in conformity with the Fund's investment objective and
policies, as may be necessary for the operations of the Fund.

The Advisory Agreement provides, among other things, that the Advisor will
bear all expenses of its employees and overhead incurred in connection with its
duties under the Advisory Agreement, and will pay all salaries of the Fund's
directors and officers who are affiliated persons (as such term is defined in
the 1940 Act) of the Advisor. The Advisory Agreement provides that the Fund
shall pay to the Advisor a monthly fee for its services which is equal to .65%
per annum of the Fund's average weekly net assets, which, for purposes of
determining the Advisor's fee, shall be the average weekly value of the total
assets of the Fund, minus the sum of accrued liabilities (including accrued
expenses) of the Fund and any declared but unpaid dividends on the Common
Shares. Investment advisory fees paid by the Fund to the Advisor during the last
fiscal year of the Fund amounted to $1,654,952, of which $74,947 was paid by the
Advisor to the Sub-Advisor.

SUB-INVESTMENT ADVISOR

Hyperion Capital Management, Inc., the Investment Advisor, has engaged
Pacholder Associates, Inc. (the 'Sub-Advisor') to provide sub-investment
advisory services for investments in higher yielding, lower rated, or unrated
fixed income securities of U.S. corporations ('High Yield Securities'). The
Sub-Advisor, a registered investment advisor, is an Ohio corporation, organized
in December, 1983. The business address of the Sub-Advisor and its officers and
directors is 8044 Montgomery Road, Suite 382, Cincinnati, Ohio 45236.

The overall portfolio management strategy undertaken by the Sub-Advisor on
behalf of the Fund is mutually determined by the Investment Advisor and the
Sub-Advisor. The execution of the management strategy is conducted under the
general supervision and direction of Asher O. Pacholder and William J. Morgan.
Dr. Pacholder has been Chairman and Chief Executive Officer of Pacholder since
its founding in 1983. Prior to that time, he was Vice President and Chief
Investment Officer of Union Central Life Insurance Company in Cincinnati, Ohio.

In that capacity, he was responsible for investments aggregating $1.6 billion in
fixed-income securities, equities and real estate. Mr. Morgan, also a founder of
the Sub-Advisor, is President of the Sub-Advisor. Prior to that time, he was an
Investment Analyst of Union Central Life Insurance Company. Anthony L. Longi,
Jr. has been responsible for the day-to-day management of the Fund's High Yield
Securities portfolio since November 1994. Mr. Longi is an Executive Vice
President and

Fixed-Income Portfolio Manager of the Sub-Advisor, where he has been employed
since 1987. He has had numerous positions within the firm, including high yield
and investment grade fixed-income analyst, special situations analyst, trader
and research coordinator. Messrs. Pacholder and Morgan own equity interests in
the Sub-Advisor, more than 50.1% and more than 10%, respectively, and serve on
its Board of Directors. USF&G Investment Management Group, Inc. owns greater
than 10% of the issued and outstanding equity interests of the Sub-Advisor. The
address of USF&G Investment Management Group, Inc. is 100 Light Street,
Baltimore, Maryland 21203. No officer, director or employee of the Sub-Advisor
is an officer, director or nominee for election as a director of the Fund.

Although the Sub-Advisor will make all decisions with respect to the Fund's
investments in High Yield Securities on behalf of the Advisor, the amount of the
Fund's assets allocated to these investments will be determined by the Advisor.

SUB-ADVISORY AGREEMENT

On March 12, 1996 the Board of Directors of the Fund, including a majority
of the Disinterested Directors, approved extension of the Sub-Advisory Agreement
through March 31, 1997. No director of the Fund owned any securities of, or had
any other material direct or indirect interest in, the Sub-Advisor or any person
controlling, controlled by or under common control with the Sub-Advisor on the
date of the Disinterested Directors' approval of the extension of the
Sub-Advisory Agreement. The Sub-Advisory Agreement was last submitted to a vote
of the Stockholders of the Fund at the first Annual Meeting of the Stockholders
of the Fund held on June 5, 1990. At that meeting the Stockholders approved the
Sub-Advisory Agreement, which contains substantially the same provisions with
respect to continuation and termination as does the Advisory Agreement. The
Board of Directors will consider continuance of the Sub-Advisory Agreement until
March 31, 1998 at a meeting scheduled for March 11, 1997.

The Sub-Advisory Agreement provides, among other things, that the
Sub-Advisor will bear all expenses of its employees and overhead incurred in
connection with its duties under the Sub-Advisory Agreement. The Sub-Advisory
Agreement provides that the Advisor shall pay to the Sub-Advisor a monthly fee
for the Sub-Advisor's services which is equal to .35% per annum of the portion
of the Fund's average weekly net assets that is invested in High Yield
Securities (which shall be equal to the average weekly value of the total assets
invested in High Yield Securities, minus the sum of accrued liabilities
(including accrued expenses) directly related thereto and a pro rata percentage
of any declared but unpaid dividends on the Common Shares and a pro rata
percentage of accrued liabilities related to the Fund in general). The Advisor

has paid and intends to continue to pay the Sub-Advisor's fee out of the fee
that the Advisor will receive from the Fund. Investment advisory fees paid by
the Advisor to the Sub-Advisor during the last fiscal year of the Fund amounted
to $74,947.

ADMINISTRATION AGREEMENT

On August 4, 1989, the Fund entered into an Administration Agreement with
Princeton Administrators, L.P. ('Princeton'), an affiliate of Merrill Lynch,
Pierce, Fenner & Smith Incorporated. Princeton, as administrator, performed
administrative services necessary for the operation of the Fund, which included
maintaining certain books and records of the Fund and preparing reports and
other documents required by federal, state, and other applicable laws and
regulations, and providing the Fund with administrative office facilities. For
these services, the Fund paid to Princeton a monthly fee at an annual rate of
0.20% of the Fund's average weekly net assets.

On September 17, 1996, the Fund's Board of Directors authorized and
directed the Fund to terminate the Administration Agreement with Princeton and
retain Hyperion Capital Management, Inc. as the new administrator to the Fund.

On September 19, 1996, the Fund notified Princeton that it was terminating
its Administration Agreement with Princeton effective November 30, 1996.
Hyperion Capital Management, Inc., as new administrator to the Fund, has assumed
all responsibilities previously performed by Princeton. On that date, the Fund
entered into a new Administration Agreement with Hyperion Capital Management,
Inc. under the same terms and at the same annual rate, 0.20% of the Fund's
average weekly net assets, as the prior Administration Agreement with Princeton.

INVESTMENT COMPANIES MANAGED BY HYPERION CAPITAL MANAGEMENT, INC.

In addition to acting as advisor to the Fund, Hyperion Capital Management,
Inc. acts as investment advisor to the following other investment companies at
the indicated annual compensation.

APPROXIMATE NET
ASSETS AT
NOVEMBER 30,
NAME OF FUND INVESTMENT ADVISORY FEE 1996
- ------------------------------- ---------------------------------------------- ---------------
(IN MILLIONS)

Hyperion 1997 Term Trust, Inc.* 0.50% of the Trust's average weekly net assets $ 421.4
Hyperion 1999 Term Trust, Inc. 0.50% of the Trust's average weekly net assets 455.7
Hyperion 2002 Term Trust, Inc. 0.50% of the Trust's average weekly net assets 306.2
Hyperion 2005 Investment Grade
Opportunity Term Trust, Inc. 0.65% of the Trust's average weekly net assets 191.2

* As of July 16, 1996, the investment advisor voluntarily agreed to reduce its
investment advisory fee from 50 basis points (.50%) per annum to 20 basis
points (.20%) per annum.

BROKERAGE COMMISSIONS

Because it buys its portfolio securities in dealer markets, the Fund did
not pay any brokerage commissions on its securities purchases during its last
fiscal year. The Fund paid an aggregate of $3,150 in futures commissions during
the last fiscal year, all of which were paid to entities that are not affiliated
with the Fund or the Advisor.

The Advisor and the Sub-Advisor have discretion to select brokers and
dealers to execute portfolio transactions initiated by the Advisor and the
Sub-Advisor and to select the markets in which such transactions are to be
executed. The Advisory Agreement and the Sub-Advisory Agreement provide, in
substance, that in executing portfolio transactions and selecting brokers or
dealers, the primary responsibility of the Advisor and the Sub-Advisor is to
seek the best combination of net price and execution for the Fund. It is
expected that securities will ordinarily be purchased in primary markets, and
that in assessing the best net price and execution available to the Fund, the
Advisor and the Sub-Advisor will consider all factors they deem relevant,
including the price, dealer spread, the size, type and difficulty of the
transaction involved, the firm's general execution and operation facilities and
the firm's risk in positioning the securities involved. Transactions in foreign
securities markets may involve the payment of fixed brokerage commissions, which
are generally higher than those in the United States.

In selecting brokers or dealers to execute particular transactions and in
evaluating the best net price and execution available, the Advisor and the
Sub-Advisor are authorized to consider 'brokerage and research services' (as
those terms are defined in Section 28(e) of the Securities Exchange Act of
1934). The Advisor and the Sub-Advisor are also authorized to cause the Fund to
pay to a broker or dealer who provides such brokerage and research services a
commission for executing a portfolio transaction which is in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction. The Advisor and the Sub-Advisor must determine in good faith,
however, that such commission was reasonable in relation to the value of the
brokerage and research services provided,

viewed in terms of that particular transaction or in terms of all the accounts
over which the Advisor or the Sub-Advisor exercises investment discretion.
Research services furnished by brokers through whom the Fund effects securities
transactions may be used by the Advisor and the Sub-Advisor in servicing all of
the accounts for which investment discretion is exercised by the Advisor or the
Sub-Advisor, and not all such services may be used by the Advisor or the
Sub-Advisor in connection with the Fund.

COMPLIANCE WITH SECTION 16 REPORTING REQUIREMENTS

Section 16(a) of the Securities Exchange Act of 1934 requires the Fund's
officers and directors and persons who own more than ten percent of a registered
class of the Fund's equity securities to file reports of ownership and changes
in ownership with the Securities and Exchange Commission and the New York Stock
Exchange. Officers, directors and greater than ten-percent shareholders are
required by SEC regulations to furnish the Fund with copies of all Section 16(a)
forms they file.

Based solely on its review of the copies of such forms received by the Fund
and written representations from certain reporting persons that all applicable
filing requirements for such persons had been complied with, the Fund believes
that, during the fiscal year ending November 30, 1996, all filing requirements
with one exception applicable to the Fund's officers, directors, and greater
than ten-percent beneficial owners were complied with. In one instance, an
amended Form 5 was filed to report one transaction not previously reported on
Form 4 on behalf of Kenneth C. Weiss for shares for which he was an indirect
beneficiary.

OTHER BUSINESS

The Board of Directors of the Fund does not know of any other matter which
may come before the meeting. If any other matter properly comes before the
meeting, it is the intention of the persons named in the proxy to vote the
proxies in accordance with their judgment on that matter.

PROPOSALS TO BE SUBMITTED BY STOCKHOLDERS

All proposals by stockholders of the Fund that are intended to be presented
at the Fund's next Annual Meeting of Stockholders to be held in 1998 must be
received by the Fund for inclusion in the Fund's proxy statement and proxy
relating to that meeting no later than October 23, 1997.

EXPENSES OF PROXY SOLICITATION

The cost of preparing, assembling and mailing material in connection with
this solicitation of proxies will be borne by the Fund. In addition to the use
of the mails, proxies may be solicited personally by regular employees of the
Fund, Hyperion Capital Management, Inc. or Corporate Investors Communications,
Inc., paid solicitors for the Fund, or by telephone or telegraph. The
anticipated cost of solicitation by the paid solicitors will be nominal. The
Fund's agreement with Corporate Investor Communications, Inc. provides that such
paid solicitors will perform a broker search and deliver proxies in return for
the payment of their fee plus the expenses associated with this proxy
solicitation. Brokerage houses, banks and other fiduciaries will be requested to
forward proxy solicitation material to their principals to obtain authorization
for the execution of proxies, and they will be reimbursed by the Fund for
out-of-pocket expenses incurred in this connection.

January 29, 1997

THE HYPERION TOTAL RETURN FUND, INC.
PROXY SOLICITED ON BEHALF OF THE DIRECTORS

The undersigned hereby appoints Lewis S. Ranieri, Kenneth C. Weiss,
Clifford E. Lai, Joseph W. Sullivan, and Patricia A. Sloan, and each of them,
attorneys and proxies for the undersigned, with full power of substitution and
revocation to represent the undersigned and to vote on behalf of the undersigned
all shares of The Hyperion Total Return Fund, Inc. (the "Fund") which the
undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Fund to be held at The Millenium Hilton, 55 Church Street (next to the World
Trade Center), New York, New York 10007, on Tuesday, April 22, 1997 at 9:00
a.m., and at any adjournments thereof. The undersigned hereby acknowledges
receipt of the Notice of Meeting and accompanying Proxy Statement and hereby
instructs said attorneys and proxies to vote said shares as indicated hereon. In
their discretion, the proxies are authorized to vote upon such other business as
may properly come before the Meeting. A majority of the proxies present and
acting at the Meeting in person or by substitute (or, if only one shall be so
present, then that one) shall have and may exercise all of the power of
authority of said proxies hereunder. The undersigned hereby revokes any proxy
previously given.

NOTE: Please sign exactly as your name
appears on the Proxy. If joint owners,
EITHER may sign this Proxy. When signing as
attorney, executor, administrator,
trustee, guardian or corporate officer,
please give full title.

Date __________________, 1997

Signature(s), (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN PROMPTLY IN
THE ENCLOSED ENVELOPE

I / /PLAN / /DO NOT PLAN TO ATTEND THE ANNUAL MEETING OF STOCKHOLDERS ON April
22, 1997

Please indicate your vote by an "X" in the appropriate box below. This
Proxy, if properly executed, will be voted in the manner directed by the
stockholder. If no direction is made, this Proxy will be voted FOR election of
the nominees as Directors in Proposal 1 and FOR Proposal 2. Please refer to the
Proxy Statement for a discussion of the Proposals.

1. ELECTION OF DIRECTORS: / / FOR all nominees listed (except
as marked to the contrary below)

/ / WITHHOLD authority to vote for
all nominees

Class I:
Garth Marston
Kenneth C. Weiss

(Instruction: To withhold authority to vote for any individual nominee(s), write
the name(s) of the nominee(s) on the line below.)

_____________________________________________________

2. Ratification or rejection of the
selection of independent auditors
(a vote "FOR" is a vote for ratification) FOR AGAINST ABSTAIN

/ / / / / /

PLEASE SIGN AND DATE THIS PROXY ON THE REVERSE SIDE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE.