UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY
Investment Company Act file number 811-04739
The Zweig Fund, Inc.
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(Exact name of registrant as specified in charter)
900 Third Avenue, New York, NY 10022
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(Address of principal executive offices) (Zip code)
Matthew A. Swendiman, Esq. John R. Flores, Esq.
Counsel & Cheif Legal Officer Vice President,Litigation/
for Registrant Employement Counsel
Phoenix Life Insurance Company Phoenix Life Insurance Company
One American Row One American Row
Hartford, CT 06102 Hartford, CT 06102
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(Names and addresses of agents for service)
Registrant's telephone number, including area code: 1-212-298-1635
Date of fiscal year end: December 31, 2004
Date of reporting period: September 30, 2004
Form N-Q is to be used by management investment companies, other than
small business investment companies registered on Form N-5 (Sections 239.24 and
274.5 of this chapter), to file reports with the Commission, not later than 60
days after the close of the first and third fiscal quarters, pursuant to rule
30b1-5 under the Investment Company Act of 1940 (17 CFR 270.30b1-5). The
Commission may use the information provided on Form N-Q in its regulatory,
disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form
N-Q, and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-Q
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to the Secretary, Securities and Exchange Commission, 450 Fifth Street,
NW, Washington, DC 20549-0609. The OMB has reviewed this collection of
information under the clearance requirements of 44 U.S.C. Section 3507.
Item 1. Schedule of Investments.
THE ZWEIG FUND, INC.
SCHEDULE OF INVESTMENTS AND SECURITIES SOLD SHORT
September 30, 2004
(unaudited)
NUMBER OF
SHARES VALUE
------ -----
INVESTMENTS
DOMESTIC COMMON STOCKS--66.55%
Consumer Discretionary--6.52%
AnnTaylor Stores Corp. 225,000 (a) $ 5,265,000
Fox Entertainment Group, Inc. Class A 220,000 (a) 6,102,800
GAP (The), Inc. 220,000 4,114,000
Home Depot, Inc. 160,000 (b) 6,272,000
Viacom, Inc. Class B 175,000 5,873,000
----------------
27,626,800
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Consumer Staples--8.32%
Altria Group, Inc. 110,000 (b) 5,174,400
Archer-Daniels-Midland Co. 370,000 6,282,600
Coca-Cola Enterprises, Inc. 275,000 5,197,500
Costco Wholesale Corp. 145,000 6,026,200
Kimberly-Clark Corp. 100,000 6,459,000
Procter & Gamble Co. 113,200 6,126,384
----------------
35,266,084
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Energy--7.95%
ConocoPhillips 76,000 6,296,600
Halliburton Co. 200,000 6,738,000
Kerr-McGee Corp. 120,000 (b) 6,870,000
Occidental Petroleum Corp. 125,000 6,991,250
Valero Energy Corp. 85,000 6,817,850
----------------
33,713,700
----------------
Financials--10.34%
Allstate Corp. 135,000 6,478,650
Bank of America Corp. 150,000 (b) 6,499,500
Capital One Financial Corp. 85,000 (b) 6,281,500
Morgan Stanley 115,000 5,669,500
National City Corp. 165,000 6,372,300
Wachovia Corp. 130,000 6,103,500
Wells Fargo & Co. 108,000 6,440,040
----------------
43,844,990
----------------
Health Care--8.38%
Amgen, Inc. 120,000 (a) 6,801,600
Bristol-Myers Squibb Co. 250,000 5,917,500
C. R. Bard, Inc. 105,000 5,946,150
Merck & Co., Inc. 135,000 4,455,000
Pfizer, Inc. 200,000 6,120,000
UnitedHealth Group, Inc. 85,000 6,267,900
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35,508,150
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Industrials--10.74%
Boeing Co. 120,000 6,194,400
Deere & Co. 100,000 (b) 6,455,000
L-3 Communications Holdings, Inc. 95,000 6,365,000
Lockheed Martin Corp. 70,000 3,904,600
Norfolk Southern Corp. 230,000 6,840,200
Northrop Grumman Corp. 58,000 3,093,140
PACCAR, Inc. 100,000 6,912,000
Waste Management, Inc. 210,000 5,741,400
----------------
45,505,740
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See notes to schedule of investments and securities sold short
Information Technology--5.30%
Amdocs Ltd. 280,000 (a) $ 6,112,400
Cisco Systems, Inc. 315,000 (a) 5,701,500
Intel Corp. 290,000 5,817,400
Microsoft Corp. 175,000 4,838,750
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22,470,050
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Materials--6.07%
Alcoa, Inc. 205,000 6,885,950
Dow Chemical Co. (The) 160,000 (b) 7,228,800
Freeport-McMoRan Copper & Gold, Inc., Class
B (Indonesia) 145,000 (b) 5,872,500
Georgia-Pacific Corp. 160,000 5,752,000
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25,739,250
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Telecommunication Services--2.93%
AT&T Corp. 320,000 4,582,400
MCI, Inc. 120,000 2,010,000
SBC Communications, Inc. 225,000 5,838,750
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12,431,150
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TOTAL DOMESTIC COMMON STOCKS
(Cost $257,630,014) 282,105,914
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FOREIGN COMMON STOCKS--9.15% (d)
Consumer Discretionary--1.38%
Honda Motor Co., Ltd. ADR (Japan) 240,000 (b) (c) 5,846,400
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Health Care--3.27%
Angiotech Pharmaceuticals, Inc. (United
States) 340,000 (a) 6,891,800
Sanofi-Aventis, ADR (France) 190,000 (c) 6,955,900
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13,847,700
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Information Technology--1.39%
Nokia Corp., ADR (Finland) 430,000 (c) 5,899,600
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Materials--3.11%
BHP Billiton Ltd. (Australia) 405,032 4,213,008
Newcrest Mining Ltd. (Australia) 266,563 2,932,960
Rio Tinto Ltd. (Australia) 128,086 3,522,822
WMC Resources Ltd. (Australia) 650,343 2,524,967
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13,193,757
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TOTAL FOREIGN COMMON STOCKS
(Cost $36,620,704) 38,787,457
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PREFERRED STOCKS--3.95%
Financials--3.95%
Citibank NA Series A, 6.34% Pfd. 2,000 201,563
Fannie Mae, Series J, 1.89% Pfd. 330,000 16,519,800
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TOTAL PREFERRED STOCKS
(Cost $16,842,000) 16,721,363
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EXCHANGE TRADED FUNDS--3.22%
Nasdaq-100 Index Tracking Stock 230,000 8,084,500
Standard & Poor's Depositary Receipts Trust
Series I 50,000 5,588,000
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TOTAL EXCHANGE TRADED FUNDS
(Cost $13,555,098) 13,672,500
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PRINCIPAL
AMOUNT
------
U.S. GOVERNMENT SECURITIES--13.15%
United States Treasury Notes, 12.75%
11/15/10
(Cost $59,532,050) $ 50,000,000 55,744,150
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CONTRACTS
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OPTIONS--0.00%
Japanese Yen Call Option expiring 10/29/04
@ 90 800,000 (a) 1
Swiss Franc Put Option expiring 10/21/04 @
1.35 25,000,000 (a) 50
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TOTAL OPTIONS
(Cost $205,000) 51
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See notes to schedule of investments and securities sold short
PRINCIPAL
AMOUNT
-----
SHORT-TERM INVESTMENT--3.52%
UBS Finance Delaware LLC, 1.88%, 10/01/04
(Cost $14,900,000) $ 14,900,000 14,900,000
----------------
TOTAL INVESTMENTS--99.54%
(Cost $399,284,866) 421,931,435 (e)
SECURITIES SOLD SHORT--(3.31)%
(Proceeds $14,173,780) (14,026,900)
Other Assets Less Liabilities--3.77% 15,991,920
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Net Assets--100% $ 423,896,455
================
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(a) Non-income producing security.
(b) Position, or portion thereof, with an aggregate market value of
$44,935,950 has been segregated to collateralize securities sold
short.
(c) ADR - American Depositary Receipt
(d) Foreign Common Stocks are determined based on the country in which the
security is issued. The country of risk, noted parenthetically, is
determined based on criteria described in Note 1E "Foreign Security
Country Determination" in the Notes to Schedule of Investments and
Securities Sold Short.
(e) For Federal income tax purposes, the tax basis of investments owned at
September 30, 2004 was $400,673,221 and net unrealized appreciation of
investments consisted of:
Gross unrealized appreciation $ 42,998,616
Gross unrealized depreciation (21,740,402)
-----------------
Net unrealized appreciation $ 21,258,214
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See notes to schedule of investments and securities sold short
NUMBER OF
SHARES VALUE
------ -----
SECURITIES SOLD SHORT--3.31%
DOMESTIC COMMON STOCKS--3.31%
Consumer Discretionary--1.97%
Abercrombie & Fitch Co. 185,000 $ 5,827,500
Fred's, Inc. 140,000 2,514,400
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8,341,900
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Health Care--0.68%
Thoratec Corp. 300,000 2,886,000
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Utilities--0.66%
Reliant Energy, Inc. 300,000 2,799,000
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TOTAL SECURITIES SOLD SHORT
(Proceeds $14,173,780) 925,000 $ 14,026,900 (f)
==================
(f) For Federal income tax purposes, the tax basis of securities held
short at September 30, 2004 was $14,173,780 and net unrealized
depreciation of investments consisted of:
Gross unrealized appreciation $ 966,815
Gross unrealized depreciation (819,935)
------------------
Net unrealized appreciation $ 146,880
==================
See notes to schedule of investments and securities sold short
THE ZWEIG FUND
NOTES TO SCHEDULE OF INVESTMENTS AND SECURITIES SOLD SHORT (Unaudited)
SEPTEMBER 30, 2004
NOTE 1 - - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its Schedules of
Investments and Securities Sold Short. The preparation of Schedules of
Investments and Securities Sold Short requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities. Actual
results could differ from those estimates.
A. SECURITY VALUATION
Equity securities are valued at the official closing price (typically
last sale) on the exchange on which the securities are primarily traded, or if
no closing price is available, at the last bid price.
Debt securities are valued on the basis of broker quotations or
valuations provided by a pricing service, which, in determining value, utilizes
information with respect to recent sales, market transactions in comparable
securities, quotations from dealers, and various relationships between
securities.
Securities for which market quotations are not readily available (of
which there were none at September 30, 2004) and other assets, if any, are
valued at fair value as determined under procedures approved by the Board of
Directors of the Fund.
Short-term investments having a remaining maturity of 60 days or less
are valued at amortized cost, which approximates market.
B. SECURITY TRANSACTIONS AND RELATED INCOME
Security transactions are recorded on the trade date. Dividend income is
recorded on the ex-dividend date, or in the case of certain foreign securities,
as soon as the Fund is notified. Interest income is recorded on the accrual
basis. The Fund amortizes premiums and accretes discounts using the effective
interest method.
Realized gains and losses are determined on the identified cost basis.
C. FOREIGN CURRENCY TRANSLATION
Foreign securities and other assets and liabilities are valued using the
foreign currency exchange rate effective at the end of the reporting period.
Cost of investments is translated at the currency exchange rate effective at the
trade date.
D. FORWARD CURRENCY CONTRACTS
The Fund may enter into forward currency contracts in conjunction with
the planned purchase or sale of foreign denominated securities in order to hedge
the U.S. dollar cost or proceeds. Forward currency contracts involve, to varying
degrees, elements of market risk in excess of the amount recognized in the
Schedules of Investments and Securities Sold Short.Risks arise from the possible
movements in foreign exchange rates or if a counterparty does not perform under
the contract.
A forward currency contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any number of days from the
date of the contract agreed upon by the parties, at a price set at the time of
the contract. These contracts are traded directly between currency traders and
their customers.
E. FOREIGN SECURITY COUNTRY DETERMINATION
A combination of the following criteria is used to assign the countries
of risk listed in the Schedules of Investments: country of incorporation, actual
building address, primary exchange on which the security is traded and country
in which the greatest percentage of company revenue is generated.
F. OPTIONS
The Fund may write covered options or purchase options contracts for the
purpose of hedging against changes in the market value of the underlying
securities or foreign currencies. As of September 30, 2004, the Fund has no
written options outstanding.
Purchased options are included in the Fund's Schedule of Investments and
Securities Sold Short and are marked to market to reflect the current value of
the options. When a purchased option is exercised, the cost of the security is
adjusted by the amount of the premium paid. The risk associated with purchased
options is limited to the premium paid.
G. SHORT SALES
A short sale is a transaction in which the Fund sells a security it does
not own in anticipation of a decline in market price. To sell a security short,
the Fund must borrow the security. The Fund's obligation to replace the security
borrowed and sold short will be fully collateralized at all times by the
proceeds from the short sale retained by the broker and by cash and securities
deposited in a segregated account with the Fund's custodian. If the price of the
security sold short increases between the time of the short sale and the time
the Fund replaces the borrowed security, the Fund will realize a loss, and if
the price declines during the period, the Fund will realize a gain. Any realized
gain will be decreased by, and any realized loss increased by, the amount of
transaction costs. Dividends on short sales are recorded as an expense to the
Fund on ex-dividend date. At September 30, 2004 the value of securities sold
short amounted to $14,026,900 against which collateral of $58,786,104 was held.
The collateral includes the deposits with broker for securities held short and
the value of the segregated investments held long, as shown in the Schedule of
Investments and Securities Sold Short. Short selling used in the management of
the Fund may accelerate the velocity of potential losses if the prices of
securities sold short appreciate quickly. Stocks purchased may decline in value
at the same time stocks sold short may appreciate in value, thereby increasing
potential losses.
Item 2. Controls and Procedures.
(a) The registrant's principal executive and principal financial
officers, or persons performing similar functions, have
concluded that the registrant's disclosure controls and
procedures (as defined in Rule 30a-3(c) under the Investment
Company Act of 1940, as amended (the "1940 Act") (17 CFR
270.30a-3(c))) are effective, as of a date within 90 days of the
filing date of the report that includes the disclosure required
by this paragraph, based on their evaluation of these controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17
CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the
Securities Exchange Act of 1934, as amended (17 CFR
240.13a-15(b) or 240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940
Act (17 CFR 270.30a-3(d)) that occurred during the registrant's
last fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the registrant's
internal control over financial reporting.
Item 3. Exhibits.
A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2(a) under
the Investment Company Act (17 CFR 270.30a-2(a)), exactly as set forth below:
Attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) The Zweig Fund, Inc.
By: /s/ Daniel T. Geraci
------------------------------
Daniel T. Geraci
President
Date: November 29, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Daniel T. Geraci
------------------------------
Daniel T. Geraci
President
Date: November 29, 2004
By: /s/ Nancy Curtiss
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Nancy Curtiss
Treasurer
Date: November 29, 2004