================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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.
--------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
900 Third Ave, 31st Floor
New York, NY 10022-4728
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Kevin J. Carr, Esq.
Chief Legal Officer and Secretary for John H. Beers, Esq.
Registrant Vice President and Counsel
Phoenix Life Insurance Company Phoenix Life Insurance Company
One American Row One American Row
Hartford, CT 06103-2899 Hartford, CT 06103-2899
--------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 800-272-2700
Date of fiscal year end: December 31
Date of reporting period: March 31, 2007
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, 100 F Street, NE, Washington, DC
20549. 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 Schedule of Investments is attached herewith.
Glossary
American Depositary Receipt (ADR): Represents shares of foreign companies
traded in U.S. dollars on U.S. exchanges that are held by a bank or a trust.
Foreign companies use ADRs in order to make it easier for Americans to buy
their shares.
Basis Point (bp): One-hundredth of a percentage point (0.01%). Basis points are
often used to measure changes in or differences between yields on fixed income
securities, since these often change by very small amounts.
Consumer Price Index (CPI): Measures the change in consumer prices of goods and
services, including housing, electricity, food, and transportation, as
determined by a monthly survey of the U.S. Bureau of Labor Statistics. Also
called the cost-of-living index.
Dow Jones Industrial Average/SM/ (the "Dow"): A price-weighted average of 30
blue chip stocks. The index is calculated on a total return basis with
dividends reinvested.
Federal funds rate: The interest rate charged on overnight loans of reserves by
one financial institution to another in the United States. The federal funds
rate is the most sensitive indicator of the direction of interest rates since
it is set daily by the market.
Federal Reserve (the "Fed"): The central bank of the United States, responsible
for controlling the money supply, interest rates and credit with the goal of
keeping the U.S. economy and currency stable. Governed by a seven-member board,
the system includes 12 regional Federal Reserve Banks, 25 branches and all
national and state banks that are part of the system.
Gross domestic product (GDP): An important measure of the United States'
economic performance, GDP is the total market value of all final goods and
services produced in the U.S. during any quarter or year.
Inflation: Rise in the prices of goods and services resulting from increased
spending relative to the supply of goods on the market.
Initial public offering (IPO): A company's first sale of stock to the public.
NASDAQ Composite(R) Index: A market capitalization-weighted index of all issues
listed in the NASDAQ (National Association Of Securities Dealers Automated
Quotation System) Stock Market, except for closed-end funds, convertible
debentures, exchange traded funds, preferred stocks, rights, warrants, units
and other derivative securities. The index is calculated on a total return
basis with dividends reinvested.
S&P 500(R) Index: A market capitalization-weighted index of 500 of the largest
U.S. companies. The index is calculated on a total return basis with dividends
reinvested.
Short Interest: The total number of shares of a security that have been sold
short by customers and securities firms that have not been repurchased to
settle short positions in the market.
Indexes cited are unmanaged and not available for direct investment; therefore
their performance does not reflect the expenses associated with the active
management of an actual portfolio.
THE ZWEIG FUND
SCHEDULE OF INVESTMENTS
March 31, 2007
(Unaudited)
Number of
Shares Value
--------- -----------
INVESTMENTS
DOMESTIC COMMON STOCKS 78.30%
CONSUMER DISCRETIONARY -- 8.10%
Abercrombie & Fitch Co........................ 80,000 $ 6,054,400
Ford Motor Corp./(d)/......................... 900,000 7,101,000
McDonald's Corp............................... 150,000 6,757,500
Newell Rubbermaid, Inc........................ 235,000 7,306,150
Nike, Inc. Class B............................ 72,000 7,650,720
-----------
34,869,770
-----------
CONSUMER STAPLES -- 7.66%
Altria Group, Inc............................. 80,000 7,024,800
Costco Wholesale Corp......................... 125,000 6,730,000
Kimberly-Clark Corp........................... 100,000 6,849,000
PepsiCo, Inc.................................. 95,000 6,038,200
Procter & Gamble Co........................... 100,000 6,316,000
-----------
32,958,000
-----------
ENERGY -- 5.68%
ConocoPhillips................................ 95,000 6,493,250
Halliburton Co./(d)/.......................... 190,000 6,030,600
Occidental Petroleum Corp..................... 85,000 4,191,350
Valero Energy Corp............................ 120,000 7,738,800
-----------
24,454,000
-----------
FINANCIALS -- 18.69%
Allstate Corp................................. 115,000 6,906,900
American International Group.................. 85,000 5,713,700
Bank of America Corp.......................... 110,000 5,612,200
Goldman Sachs Group, Inc...................... 45,000 9,298,350
JPMorgan Chase & Co........................... 125,000 6,047,500
Merrill Lynch & Co., Inc./(d)/................ 80,000 6,533,600
Morgan Stanley................................ 100,000 7,876,000
NASDAQ Stock Market, Inc./(b)(d)/............. 220,000 6,470,200
PNC Financial Services Group, Inc............. 90,000 6,477,300
Reinsurance Group of America, Inc./(d)/....... 110,000 6,349,200
Wachovia Corp................................. 120,000 6,606,000
Wells Fargo & Co.............................. 190,000 6,541,700
-----------
80,432,650
-----------
See notes to schedule of investments
2
Number of
Shares Value
--------- ------------
HEALTH CARE -- 9.17%
Amgen, Inc./(b)/................................. 100,000 $ 5,588,000
Bristol-Myers Squibb Co.......................... 220,000 6,107,200
Gilead Sciences, Inc./(b)/....................... 100,000 7,650,000
Merck & Co., Inc................................. 150,000 6,625,500
Pfizer, Inc...................................... 240,000 6,062,400
UnitedHealth Group, Inc.......................... 140,000 7,415,800
------------
39,448,900
------------
INDUSTRIALS -- 9.22%
Alaska Air Group, Inc./(b)(d)/................... 155,000 5,905,500
AMR Corp./(b)(d)/................................ 245,000 7,460,250
Boeing Co. (The)................................. 70,000 6,223,700
Continental Airlines, Inc. Class B/(b)(d)/....... 195,000 7,096,050
General Electric Co.............................. 170,000 6,011,200
L-3 Communications Holdings, Inc................. 80,000 6,997,600
------------
39,694,300
------------
INFORMATION TECHNOLOGY -- 12.65%
Cisco Systems, Inc./(b)/......................... 285,000 7,276,050
EMC Corp./(b)/................................... 575,000 7,963,750
Hewlett-Packard Co............................... 160,000 6,422,400
International Business Machines Corp............. 70,000 6,598,200
Microsoft Corp................................... 250,000 6,967,500
National Semiconductor Corp...................... 290,000 7,000,600
QUALCOMM, Inc.................................... 190,000 8,105,400
RealNetworks, Inc./(b)(d)/....................... 520,000 4,082,000
------------
54,415,900
------------
MATERIALS -- 1.71%
Dow Chemical Co.................................. 160,000 7,337,600
------------
TELECOMMUNICATIONS SERVICES -- 5.42%
AT&T Corp........................................ 190,000 7,491,700
Corning, Inc./(b)/............................... 380,000 8,641,200
Verizon Communications, Inc...................... 190,000 7,204,800
------------
23,337,700
------------
Total Domestic Common Stocks (Identified Cost
$269,297,794)..................................... 336,948,820
------------
FOREIGN COMMON STOCKS/(c)/ 9.48%
CONSUMER DISCRETIONARY -- 1.62%
Honda Motor Co., Ltd. ADR (Japan)/(d)/........... 200,000 6,974,000
------------
See notes to schedule of investments
3
Number of
Shares Value
----------- ------------
ENERGY -- 1.41%
Nabors Industries Ltd. (United States)/(b)/....... 205,000 $ 6,082,350
------------
FINANCIALS -- 1.72%
Deutsche Bank AG (Germany)........................ 55,000 7,399,700
------------
INFORMATION TECHNOLOGY -- 4.73%
Amdocs Ltd. (United States)/(b)/.................. 200,000 7,296,000
Nokia Oyj ADR (Finland)/(d)/...................... 315,000 7,219,800
Seagate Technology (Singapore)/(d)/............... 250,000 5,825,000
------------
20,340,800
------------
Total Foreign Common Stocks (Identified Cost $33,334,330) 40,796,850
------------
EXCHANGE TRADED FUNDS -- 3.02%
iShares MSCI Japan Index Fund..................... 145,000 2,112,650
NASDAQ-100 Shares/(b)(d)/......................... 250,000 10,882,500
------------
Total Exchange Traded Funds (Identified Cost $11,463,484) 12,995,150
------------
Par
(000's)
-----------
U.S. GOVERNMENT SECURITIES -- 5.80%
U.S. TREASURY NOTES -- 5.80%
U.S. Treasury Note 4.625%, 2/15/17................ $ 25,000 24,949,226
------------
Total U.S. Government Securities (Identified Cost
$25,109,199).......................................... 24,949,226
------------
Total Long Term Investments -- 96.60% (Identified Cost
$339,204,807)......................................... 415,690,046
------------
Number of
Shares
-----------
SHORT-TERM INVESTMENTS 15.26%
MONEY MARKET MUTUAL FUNDS -- 11.89%
State Street Navigator Prime Plus (5.33% seven
day effective yield)/(e)/ (Identified Cost
$51,181,105).................................... 51,181,105 51,181,105
------------
See notes to schedule of investments
4
Par
(000's) Value
------- ------------
COMMERCIAL PAPER -- 3.37%/(f)/
Govco, Inc. 5.40%, 4/2/07.................... $14,500 $ 14,497,825
------------
Total Commercial Paper (Identified Cost
$14,497,825)................................ 14,497,825
------------
Total Short-Term Investments (Identified cost
$65,678,980)................................ 65,678,930
------------
Total Investments (Identified Cost
$404,883,737) -- 111.86%.................... 481,368,976/(a)/
Other Assets Less Liabilities -- (11.86)%..... (51,050,860)
------------
Net Assets -- 100.00%......................... $430,318,116
============
--------
(a) Federal Tax information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $82,750,226 and gross
depreciation of $7,213,539 for federal tax purposes. At March 31, 2007,
the aggregate cost of securities for federal income tax purposes was
$405,832,289.
(b) Non-income producing.
(c) A security is considered to be foreign if the security is issued in a
foreign country. The country of risk, noted parenthetically, is determined
based on criteria in Note 1D "Foreign security country determination" in
the Notes to Schedule of Investments.
(d) All or a portion of security is on loan.
(e) Represents security purchased with cash collateral for securities on loan.
(f) The rate shown is the discount rate.
See notes to schedule of investments
5
THE ZWEIG FUND, INC.
NOTES TO SCHEDULES OF INVESTMENTS
March 31, 2007 (Unaudited)
NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Zweig Fund, Inc. (the "Fund") in the preparation of the
Schedule of Investments. The preparation of the Schedules of Investments in
conformity with accounting principles generally accepted in the United States
of America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, and disclosure of contingent
assets and liabilities at the date of the Schedules of Investments. 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 utilizes information with respect to
recent sales, market transactions in comparable securities, quotations from
dealers, and various relationships between securities in determining value.
As required, some securities and other assets may be valued at fair value as
determined in good faith by or under the direction of the Directors.
Certain foreign common stocks may be fair valued in cases where closing
prices are not readily available or are deemed not reflective of readily
available market prices. For example, significant events (such as movement in
the U.S. securities market, or other regional and local developments) may occur
between the time that foreign markets close (where the security is principally
traded) and the time that the Fund calculates its net asset value (generally,
the close of the NYSE) that may impact the value of securities traded in these
foreign markets. In these cases, information from an external vendor may be
utilized to adjust closing market prices of certain foreign common stocks to
reflect their fair value. Because the frequency of significant events is not
predictable, fair valuation of certain foreign common stocks may occur on a
frequent basis.
Short-term investments having a remaining maturity of 60 days or less are
valued at amortized cost, which approximates market.
In September 2006, Statement of Financial Accounting Standards No. 157,
"Fair Value Measurements" ("SFAS 157"), was issued and is effective for fiscal
years beginning after November 15, 2007. SFAS 157 defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements. Management is currently evaluating the impact the
adoption of SFAS 157 will have on the Funds' financial statement disclosures.
6
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. Foreign Security Country Determination:
A combination of the following criteria is used to assign the countries of
risk listed in the Schedule 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.
E. Security Lending:
The Fund may loan securities to qualified brokers through an agreement with
State Street Bank and Trust (the "Custodian"). Under the terms of the
agreement, the Fund receives collateral with a market value not less than 102%
for domestic securities and 105% for foreign securities of the market value of
loaned securities. Collateral may consist of cash, securities issued or
guaranteed by the U.S. Government or its agencies and the sovereign debt of
foreign countries. Cash collateral is invested in a short-term money market
fund. Dividends earned on the collateral and premiums paid by the borrower are
recorded as income by the Fund net of fees and rebates charged by the Custodian
for its services in connection with this securities lending program. Lending
portfolio securities involves a risk of delay in the recovery of the loaned
securities or in the foreclosure on collateral.
NOTE 2 -- CREDIT RISK AND ASSET CONCENTRATIONS
In countries with limited or developing markets, investments may present
greater risks than in more developed markets and the prices of such investments
may be volatile. The consequences of political, social or economic changes in
these markets may have disruptive effects on the market prices of these
investments and the income they generate, as well as the Fund's ability to
repatriate such amounts.
The Fund may invest a high percentage of its assets in specific sectors of
the market in its pursuit of a greater investment return. Fluctuations in these
sectors of concentration may have a greater impact on the Fund, positive or
negative, than if the Fund did not concentrate its investments in such sectors.
NOTE 3 -- INDEMNIFICATIONS
Under the Fund's organizational documents, its directors and officers are
indemnified against certain liabilities arising out of the performance of their
duties to the Fund. In addition, the Fund enters
7
into contracts that contain a variety of indemnifications. The Fund's maximum
exposure under these arrangements is unknown. However, the Fund has not had
prior claims or losses pursuant to these contracts and expects the risk of loss
to be remote.
NOTE 4 -- SUBSEQUENT EVENT
On May 10, 2007, the Fund announced that its Board of Directors approved the
filing of a registration statement with the Securities and Exchange Commission
relating to the offering of additional shares of its Common Stock in connection
with a contemplated Rights Offering. The Fund will determine and announce the
definitive terms of the Rights Offering at a later date. The preliminary
registration statement relating to these rights was filed with the Securities
and Exchange Commission on May 14, 2007. These securities may not be sold, nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This communication shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State, or an exemption there from.
8
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 the 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 have materially affected, or are reasonably likely
to materially affect, the registrant's internal control over financial
reporting.
Item 3. Exhibits.
Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of
the Sarbanes-Oxley Act of 2002 are 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 (Signature and Title)* /s/ George R. Aylward
------------------------------
George R. Aylward, President
(principal executive officer)
Date May 29, 2007
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ George R. Aylward
------------------------------
George R. Aylward, President
(principal executive officer)
Date May 29, 2007
By (Signature and Title)* /s/ Nancy G. Curtiss
------------------------------
Nancy G. Curtiss, Treasurer
(principal financial officer)
Date May 29, 2007
--------
* Print the name and title of each signing officer under his or her signature.