Edgar Filing: ZWEIG FUND INC /MD/

OFFICERS AND DIRECTORS
George R. Aylward
President, Chairman and Chief Executive Officer

Carlton Neel
Executive Vice President

David Dickerson
Senior Vice President

Marc Baltuch
Chief Compliance Officer and Vice President

Moshe Luchins
Vice President

Kevin J. Carr
Chief Legal Officer and Secretary

Nancy Curtiss
Treasurer

Jacqueline Porter
Vice President and Assistant Treasurer

Charles H. Brunie
Director

Wendy Luscombe
Director

Alden C. Olson, Ph.D.
Director

James B. Rogers, Jr.
Director

R. Keith Walton
Director

Investment Adviser
Zweig Advisers LLC
900 Third Avenue
New York, NY 10022-4793

Fund Administrator
Phoenix Equity Planning Corporation
One American Row
Hartford, CT 06103-2899

Custodian
State Street Bank and Trust Company
P.O. Box 5501
Boston, MA 02206-5501

Legal Counsel
Katten Muchin Rosenman LLP
575 Madison Avenue
New York, NY 10022-2585

Transfer Agent
Computershare Trust Company, NA
P.O. Box 43010
Providence, RI 02940-3010

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

This report is transmitted to the shareholders of The Zweig 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.

Q3-08

Quarterly Report

Zweig

The Zweig Fund, Inc.

September 30, 2008

[LOGO]

VIRTUS
INVESTMENT PARTNERS

November 1, 2008

Dear Fellow ZF Shareholder;

I am pleased to share with you the manager's report and commentary for The
Zweig Fund, Inc. for the quarter ended September 30, 2008.

The Zweig Fund's net asset value declined 11.96% for the quarter ended
September 30, 2008, including $0.133 in reinvested distributions. During the
same period, the S&P 500 Index fell 8.37%, including reinvested dividends. The
Fund's average exposure in equities was approximately 80%.

For the first nine months of 2008, the Fund's net asset value declined
15.54%, including $0.401 in reinvested distributions. During the same period,
the S&P 500 Index fell 19.29%, including reinvested dividends. The Fund's
average exposure for the nine months was approximately 81% in equities and 1%
in bonds.

Sincerely,

/s/ George R. Aylward
George R. Aylward
President, Chairman and Chief Executive Officer
The Zweig Fund, Inc.

MARKET REVIEW AND OUTLOOK

A huge economic earthquake struck the U.S. financial structure in September
and its aftershocks will be felt for a long time to come. When the dust
settled, many of the industry's traditional landmarks were gone or changed
forever. Fannie Mae and Freddie Mac, the mortgage-lending giants, were seized
by the government; Lehman Brothers, founded in 1850 and survivor of every
financial catastrophe since then, filed for bankruptcy. Merrill Lynch, 94 years
old, was acquired by Bank of America. Bear Stearns was gobbled up by J.P.
Morgan Chase, which also swallowed Washington Mutual, the nation's largest
savings and loan. American International Group (AIG) is still in business,
propped up by a $85 billion loan from the Treasury. Ending the era of the
independent investment banks, Goldman Sachs and Morgan Stanley became bank
holding companies.

The upheaval in these long-established companies began with staggering
losses in the $1.3 trillion market for "subprime" mortgages, many of which were
cut up and repackaged into bonds and sold to investors. The bursting of this
enormous bubble, combined with plummeting housing prices, ignited the
long-simmering credit crisis. Loans for any purpose became almost impossible to
obtain. As a result, the economy froze and many businesses were in deep trouble
as the quarter ended.

It was in this bleak environment that stocks stumbled into the fourth
quarter in bear market territory. The Dow Jones Industrial Average declined
4.4%/(1)/ for the third quarter and fell 18.2%/(1)/ for the year to date. This
left the Dow 23% below its last October peak. The NASDAQ

Managed Distribution Plan: The Fund has a policy to distribute 10% of its net
asset value annually. Please see the inside back cover for more details.

Composite Index was off 9.2%/(1)/ for the quarter, 21.5%/(1)/ for the nine
months and 27% from its previous high. Similarly, the S&P 500 Index slipped
9%/(1)/ for the quarter, 20.7%/(1)/ for the year to date, and 26% from its peak.

There was no light in the tunnel for the world markets. The Dow Jones World
Stock Index, excluding the U.S., tumbled 22%/(1)/ in dollar terms for the third
quarter. Britain's FTSE 100 was down 13%/(1)/. Asia did no better, with Japan's
Nikkei stock average of 272 companies falling 17%/(1)/ and China's Shanghai
Composite Index off 16%/(1)/.

Stating that it was concerned about both downside risks to growth and upside
risks of inflation, the Federal Reserve (the "Fed") kept its benchmark lending
rate unchanged at 2% at its September meeting. The Fed warned that "tight
credit conditions, the ongoing housing contraction, and some slowing in export
growth are likely to weigh on economic gains over the next few months." On
inflation, the Fed saw moderation later this year and next but warned that the
outlook remains highly uncertain.

Indicating that a slowdown was well underway, the Institute for Supply
Management ("ISM") reported that its index of manufacturing activities dropped
to 43.5 in September from 49.9 in August. A reading under 50 indicates
contraction. In its survey of purchasing agents, ISM found that new orders fell
to 38.8 from 48.3 in August. Also down were order backlogs, inventories and
employment.

The economic weakness was confirmed by a Commerce Department report that
orders for durable goods (items like furniture, cars, aircraft and household
appliances) declined 4% to $208.5 billion in August, a drop of $9.9 billion
from July. In separate reports the Commerce Department noted that construction
of new homes and apartments slipped 6.2% in August to the lowest point since
January 1991. Also dropping to that level were sales of newly-built homes,
which fell 11.5% in August to an annual pace of 460,000 units.

There was no silver lining in the employment sector. The Labor Department
reported that the American economy lost 150,000 jobs in September, the largest
monthly decline in five years. The September drop-off was more than twice the
average loss for the first eight months of this year. For the year-to-date,
750,000 jobs were eliminated.

The widespread credit crisis that made it difficult for many companies to
obtain credit made it possible for stronger companies to take over weaker ones.
Capital-rich companies were able to acquire companies that sought deals or were
unable to avoid them to survive. Consequently, merger and acquisition activity
soared 27% to $368.2 billion in the third quarter. World-wide volume rose only
1% to $968 billion in dollar terms.

With market conditions very challenging, initial public offerings ("IPOs")
activity fell dramatically. Only 5 IPOs took place in the U.S. in the third
quarter, raising $935 million, according to Dealogic. This compares with 39
deals raising $12 billion in the like quarter of 2007. Global transactions in
the third quarter came to 129, raising $7.8 billion. These figures are down
sharply from the 241 offerings that raised $33.3 billion in the second quarter
and 364 IPOs that raised $49.3 billion in the third quarter of last year. The
latest numbers were the fewest deals and the least money raised since Deologic
began tracking IPOs in 1995.

We expect to see this pattern of many mergers and few new issues to continue
for the foreseeable future. The financial area is especially ripe for increased
mergers. With the encouragement of the Treasury and Fed, stronger banks will
continue to take over weaker ones. As far as new issues are concerned, the
state of the

/(1)/ Return excludes reinvested dividends.

current stock market is certainly not conducive for companies to go public.

U.S. exports, which had been a strong positive factor in the nation's
economy, grew to $168.1 billion in July, an increase of 3.3%, or $5.4 billion,
from June, according to the Commerce Department. In the second quarter, exports
provided approximately 3% of the revised 2.8% annualized growth of the gross
domestic product. The weak dollar played a vital part in expanding exports but
a problem loomed with the latest strengthening of the dollar. After Congress
passed the bank rescue bill, the euro fell to 1.3856 against the dollar, the
lowest level since September 2000.

Wall Street analysts believe that third-quarter earnings of the S&P 500
would wind up 2.3% below the 2007 period, according to a poll by Thomson
Reuter. They also project flat results for all of 2008. That's a big comedown
from the 6.7% gain predicted in July but still much better than the drop of 8%
that some analysts expect for this year. We believe that these estimates are
still way too optimistic. While analysts have been reducing their estimates,
they are not cutting deep enough to reflect the recession conditions.

At the end of the quarter, a survey of market advisors by Investors
Intelligence found 37% bulls and 41% bears. At this writing, the sentiment has
shifted to 22% bulls and 54% bears, a sharp turnaround from the 55% bulls and
23% bears reported at the start of this year. Advisors currently are the most
pessimistic since December 1988.

Companies in the S&P 500 were trading at 22.9 times earnings on Sept. 30,
2008. This compares with P/Es of 20 on June 30 and 19 on December 31, 2007. P/E
ratios are higher because company earning fell more than their share prices. As
is normal in a bear market, P/Es will probably climb as earnings decline
further.

Because it seems that we are getting very close to a market bottom, we
expect a bear market rally and are bullish for the short term. We saw a selling
climax in October and have been following a typical recession pattern since
then. While many people say we haven't seen anything quite like this, we have
had nine larger bear markets than this one since 1900. The only one massively
larger was in the early 1930s. There were many bear markets where the Dow fell
40% to 49% but at present we are barely below 40%. However, this bear market
has a potential for getting a lot worse, depending on the outcome of the
critical credit situation.

With all the panic and pessimism around, virtually all of our traditional
indicators are very bullish and we don't want to be overly bearish in the short
run. Currently we are about 80% invested.

Sincerely,

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

Martin E. Zweig, Ph.D.
President
Zweig Consulting LLC

PORTFOLIO COMPOSITION

The Fund's leading stock market sectors on September 30, 2008 were
financials, information technology, energy, industrials and consumer staples.
Although there were some changes in percentages held, all of the sectors listed
appeared in our previous report. During the quarter we added to our positions
in energy and consumer staples and reduced our holdings in information
technology and health care.

On September 30, our leading individual equity positions included Altria,
Costco, Hudson Bancorp, L-3 Communications, McDonald's, Nike, PepsiCo,
Reinsurance Group of America, Wells Fargo and Wilmington Trust. Aside from
Hudson Bancorp and Wells Fargo, where we trimmed our positions, there were no
changes in shares held in the other companies named.

No longer among our top positions are Bunge, Freeport-McMoRan, Halliburton,
Nucor and PowerShares DB Agriculture Fund, where there were no changes in
shares held; IBM, QUALCOMM and Union Pacific, where we trimmed our positions,
and Foster Wheeler, where we added to our holdings.

Sincerely,

[SIGNATURE]

/s/ Carlton Neel
Carlton Neel
Executive Vice President
Zweig Advisers LLC
(formerly Phoenix/Zweig Advisers LLC)

The preceding information is the opinion of portfolio management. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts will be realized.
For definitions of indexes cited and certain investment terms used in this
report see the glossary on page 5.

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.

Dow Jones Industrial Average/SM/: A price-weighted average of 30 blue chip
stocks. The index is calculated on a total return basis with dividends
reinvested.

The Dow Jones World Stock Index: The Dow Jones World Stock Index measures the
performance of companies worldwide as represented by various foreign stock
markets.

Federal Reserve: 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.

Institute for Supply Management (ISM) Report on Business(R): An economic
forecast, released monthly, that measures U.S. manufacturing conditions and is
arrived at by surveying 300 purchasing professionals in the manufacturing
sector representing 20 industries in all 50 states.

Investors Intelligence Survey: A weekly survey published by Chartcraft, an
investment services company, of the current sentiment of approximately 150
market newsletter writers. Participants are classified into three categories:
bullish, bearish or waiting for a correction.

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 free-float market capitalization-weighted index of 500 of
the largest U.S. companies. The index is calculated on a total return basis
with dividends reinvested.

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, INC.

SCHEDULE OF INVESTMENTS

September 30, 2008
(Unaudited)

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

INVESTMENTS
DOMESTIC COMMON STOCKS 72.91%
CONSUMER DISCRETIONARY -- 6.80%
McDonald's Corp............................... 150,000 $ 9,255,000
NIKE, Inc. Class B............................ 145,000 9,700,500
Under Armour, Inc. Class A/(b)/............... 265,000 8,416,400
-----------
27,371,900
-----------
CONSUMER STAPLES -- 10.10%
Altria Group, Inc............................. 430,000 8,531,200
Bunge Ltd..................................... 90,000 5,686,200
Costco Wholesale Corp......................... 135,000 8,765,550
PepsiCo, Inc.................................. 130,000 9,265,100
Philip Morris International, Inc.............. 175,000 8,417,500
-----------
40,665,550
-----------
ENERGY -- 10.53%
Chesapeake Energy Corp........................ 155,000 5,558,300
ConocoPhillips................................ 115,000 8,423,750
Halliburton Co................................ 215,000 6,963,850
Massey Energy Co.............................. 120,000 4,280,400
Occidental Petroleum Corp..................... 120,000 8,454,000
St. Mary Land & Exploration Co................ 190,000 6,773,500
Valero Energy Corp............................ 65,000 1,969,500
-----------
42,423,300
-----------
FINANCIALS -- 12.74%
Allstate Corp. (The).......................... 165,000 7,609,800
Goldman Sachs Group, Inc. (The)............... 54,000 6,912,000
Hudson City Bancorp, Inc...................... 480,000 8,856,000
Reinsurance Group of America, Inc............. 165,000 8,910,000
Wachovia Corp................................. 90,000 315,000
Wells Fargo & Co.............................. 260,000 9,757,800
Wilmington Trust Corp......................... 310,000 8,937,300
-----------
51,297,900
-----------
HEALTH CARE -- 5.65%
Gilead Sciences, Inc./(b)/.................... 170,000 7,748,600
Merck & Co., Inc.............................. 250,000 7,890,000

See notes to schedule of investments

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

HEALTH CARE (CONTINUED)
UnitedHealth Group, Inc.......................... 280,000 $ 7,109,200
------------
22,747,800
------------
INDUSTRIALS -- 10.33%
Boeing Co. (The)................................. 115,000 6,595,250
Caterpillar, Inc................................. 120,000 7,152,000
Continental Airlines, Inc. Class B/(b)/.......... 325,000 5,421,000
Foster Wheeler Ltd./(b)/......................... 160,000 5,777,600
L-3 Communications Holdings, Inc................. 90,000 8,848,800
Union Pacific Corp............................... 110,000 7,827,600
------------
41,622,250
------------
INFORMATION TECHNOLOGY -- 10.89%
Cisco Systems, Inc./(b)/......................... 330,000 7,444,800
Corning, Inc..................................... 380,000 5,943,200
Hewlett-Packard Co............................... 180,000 8,323,200
International Business Machines Corp............. 70,000 8,187,200
Microsoft Corp................................... 250,000 6,672,500
QUALCOMM, Inc.................................... 170,000 7,304,900
------------
43,875,800
------------
MATERIALS -- 2.67%
Alcoa, Inc....................................... 240,000 5,419,200
NuCor Corp....................................... 135,000 5,332,500
------------
10,751,700
------------
TELECOMMUNICATION SERVICES -- 3.20%
AT&T, Inc........................................ 220,000 6,142,400
Verizon Communications, Inc...................... 210,000 6,738,900
------------
12,881,300
------------
Total Domestic Common Stocks (Identified Cost
$288,277,222)..................................... 293,637,500
------------
FOREIGN COMMON STOCKS/(c)/ 4.75%
ENERGY -- 1.91%
Petroleo Brasileiro SA ADR (Brazil).............. 175,000 7,691,250
------------
INFORMATION TECHNOLOGY -- 1.60%
Nokia Oyj Sponsored ADR (Finland)................ 345,000 6,434,250
------------

See notes to schedule of investments

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

MATERIALS -- 1.24%
Freeport-McMoRan Copper & Gold, Inc.
(United States)/(c)/....................... 88,000 $ 5,002,800
------------
Total Foreign Common Stocks (Identified Cost
$25,058,335).................................. 19,128,300
------------
EXCHANGE TRADED FUNDS 1.81%
PowerShares Deutsche Bank Agriculture
Fund/(b)/.................................. 240,000 7,300,800
------------
Total Exchange Traded Funds (Identified Cost
$8,196,236)................................... 7,300,800
------------
Total Long Term Investments -- 79.47% (Identified
Cost $321,531,793)............................ 320,066,600
------------

Par
(000's)
---------
SHORT-TERM INVESTMENTS 20.72%
COMMERCIAL PAPER/(d)/ -- 7.08%
Goldman Sachs Group, Inc. 1.50%, 10/1/08..... $ 8,500 8,500,000
Henkel of America 2.20%, 10/7/08............. 20,000 19,992,667
------------
Total Commercial Paper (Identified Cost
$28,492,667).................................. 28,492,667
------------
U.S. TREASURY BILLS/(d)/ -- 13.64%
U.S. Treasury Bill 1.74%, 11/6/08............ 15,000 14,976,926
U.S. Treasury Bill 1.94%, 11/28/08........... 40,000 39,958,124
------------
Total U.S. Treasury Bills (Identified Cost
$54,849,628).................................. 54,935,050
------------
Total Short-Term Investments (Identified
Cost $83,342,295)............................. 83,427,717
------------
Total Investments (Identified Cost $404,874,088)
-- 100.19%.................................... 403,494,317/(a)/
Other Assets and Liabilities, Net -- (0.19)%.... (778,431)
------------
Net Assets -- 100.00%........................... $402,715,886
============

--------
(a) Federal Income Tax Information: Net unrealized depreciation of investment
securities is comprised of gross appreciation of $34,205,669 and gross
depreciation of $36,442,335 for federal income tax purposes. At
September 30, 2008, the aggregate cost of securities for federal income
tax purposes was $405,730,983.
(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 described in Note 1D "Foreign security country
determination" in the Notes to Schedule of Investments.
(d) The rate shown is the discount rate.

See notes to schedule of investments

THE ZWEIG FUND, INC.

FINANCIAL HIGHLIGHTS

September 30, 2008
(Unaudited)

Net Asset Value
Total Net Assets per share
------------------------------- ------------------

Beginning of period: December 31, 2007................ $ 519,104,356 $ 5.65
Net investment income.............................. $ 2,598,497 $ 0.03
Net realized and unrealized gain on investments.... (82,260,143) (0.90)
Dividends from net investment income and
distributions from net long-term and short-term
capital gains*................................... (36,875,035) (0.40)
Adjustment to bring costs estimated in
connection with 2007 rights offering to
actual....................................... 148,211/(1)/ --/(2)/
------------ ------
Net increase (decrease) in net assets/net asset
value............................................ (116,388,470) (1.27)
------------- ------
End of period: September 30, 2008..................... $ 402,715,886 $ 4.38
============= ======

--------
*Please note that the tax status of our distributions is determined at the
end of the taxable year. However, based on interim data as of September 30,
2008, we estimate that 92% of distributions represent return of capital and
8% represent net investment income distributions.
(1) Adjustment to bring costs estimated in connection with rights offering to
actual.
(2) Amount is less than $0.005.

See notes to schedule of investments

THE ZWEIG FUND, INC.

NOTES TO SCHEDULE OF INVESTMENTS

September 30, 2008
(Unaudited)

NOTE 1 -- 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 conformity with accounting principals
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 financial statements and the reported amount of increases and decreases in
net assets from operations during the reporting period. 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. Due
to excessive volatility in the current market (please see note on Market
Conditions -- Note 4), valuations developed through pricing techniques may
materially vary from the actual amounts realized upon sale of the securities.

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.

The Fund has adopted the provisions of the Statement of Financial Accounting
Standards No. 157 ("SFAS 157") as of the beginning of the current fiscal period
of the Fund. This standard clarifies the definition of fair value for financial
reporting, establishes a framework for measuring fair value and requires
additional disclosures about the use of fair value measurements. To increase
consistency and

comparability in fair value measurements and related disclosures, the Fund
utilizes a fair value hierarchy which prioritizes the inputs to valuation
techniques used to measure fair value into three broad levels:

. Level 1 -- quoted prices in active markets for identical securities

. Level 2 -- prices determined using other significant observable
inputs (including quoted prices for similar securities, interest
rates, prepayment speeds, credit risk, etc.)

. Level 3 -- prices determined using significant unobservable inputs
(including the Fund's own assumptions in determining the fair value
of investments)

The following is a summary of the inputs used to value the Fund's net assets
as of September 30, 2008. The inputs or methodology used for valuing securities
are not necessarily an indication of the risk associated with investing in
those securities.

Valuation Inputs Investments in Securities
---------------- -------------------------

Assets:
Level 1 -- Quoted Prices....................... $320,066,600
Level 2 -- Other Significant Observable Inputs. 83,427,717
Level 3 -- Significant Unobservable Inputs..... --
------------
Total...................................... $403,494,317
============

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. The gain or loss resulting from a change in currency exchange
rates between the trade and settlement dates of a portfolio transaction is
treated as a gain or loss on foreign currency. Likewise, the gain or loss
resulting from a change in currency exchange rates between the date income is
accrued and paid is treated as a gain or loss on foreign currency. The Fund
does not isolate that portion of the results of operations arising from changes
in exchange rates and that portion arising from changes in the market prices of
securities.

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. 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, and any realized
loss increased, by the amount of transaction costs. On ex-dividend date,
dividends on short sales are recorded as an expense to the Fund. 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.

At September 30, 2008, the Fund had no securities sold short.

F. Security Lending:

The Fund may loan securities to qualified brokers through an agreement with
State Street Bank and Trust Company (the "Custodian"). Under the terns of
agreement, the Fund is required to maintain collateral with a market value not
less than 100% of the market value of loaned securities. Collateral is adjusted
daily in connection with changes in the market value of securities on loan.
Collateral may consist of cash, securities issued or guaranteed by the U.S.
Government or its agencies. Cash collateral is invested in a short-term money
market fund. Dividends earned on the collateral and premiums paid by the broker
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.

At September 30, 2008, the Fund had no securities on loan.

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 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 arrangements.

NOTE 4 -- MARKET CONDITIONS

Recent events in the financial sector have resulted in an unusually high
degree of volatility in the financial markets and the net asset value of many
mutual funds, including the Fund. Such events in-

clude, but are not limited to, the seizure of the Federal National Mortgage
Association and the Federal Home Loan Mortgage Corporation by U.S. banking
regulators, the bankruptcy filing of Lehman Brothers and sale of Merrill Lynch
to Bank of America, and the government bailout of AIG. The potential investment
of the Fund's investments in these issuers, and the financial sector in
general, as reflected in the Fund's schedule of investments, exposes investors
to the negative (or positive) performance resulting from these and other events.

NOTE 5 -- OTHER

On February 7, 2008, the Phoenix Companies, Inc. ("PNX") announced its
intention to spin off various subsidiaries constituting its asset management
business to PNX's shareholders. Once spun off from PNX, the company holding the
asset management subsidiaries, Virtus Investment Partners, Inc. ("Virtus"),
will become an independent public company. The spinoff is expected to occur at
a date later in the year based on regulatory approval. In preparation for this
spinoff, certain of the asset management subsidiaries have changed their names
to reflect the Virtus brand, including the Fund's adviser, Phoenix Zweig
Advisers LLC, which is now known as Zweig Advisers LLC.

KEY INFORMATION

Zweig Shareholder Relations: 1-800-272-2700
For general information and literature, as well as 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.

REPURCHASE OF SECURITIES

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.

PROXY VOTING INFORMATION (FORM N-PX)

The Adviser and Sub-Adviser vote proxies relating to portfolio securities in
accordance with procedures that have been approved by the Fund's Board of
Directors. You may obtain a description of these procedures, along with
information regarding how the Fund voted proxies during the most recent
12-month period ended June 30, 2008, free of charge, by calling toll-free
1-800-243-1574. This information is also available through the Securities and
Exchange Commission's website at http://www.sec.gov.

FORM N-Q INFORMATION

The Fund files a complete schedule of portfolio holdings with the Securities
and Exchange Commission (the "SEC") for the first and third quarters of each
fiscal year on Form N-Q. Form N-Q is available on the SEC's website at
http://www.sec.gov. Form N-Q may be reviewed and copied at the SEC's Public
Reference Room. Information on the operation of the SEC's Public Reference Room
can be obtained by calling toll-free 1-800-SEC-0330.

FUND DISTRIBUTIONS AND MANAGED DISTRIBUTION PLAN

The Fund has a Managed Distribution Plan to pay 10% of the Fund's net asset
value on an annualized basis. Distributions may represent earnings from net
investment income, realized capital gains, or, if necessary, return of capital.
The board believes that regular, fixed quarterly cash payouts will enhance
shareholder value and serve the long-term interests of shareholders. You should
not draw any conclusions about the Fund's investment performance from the
amount of the distributions or from the terms of the Fund's Managed
Distribution Plan.

The Fund estimates that it has distributed more than its income and net
realized capital gains in the fiscal year to date; therefore, a portion of your
distributions may be a return of capital. A return of capital may occur when
some or all of the money that you invested in the Fund is paid back to you. A
return of capital does not necessarily reflect the Fund's investment
performance and should not be confused with "yield" or "income".

Please note that the characterization of Fund distributions for federal
income tax purposes is different from book accounting generally accepted
accounting principles ("GAAP"). The amounts and sources of distributions
reported in Section 19(a) notices of the 1940 Act are only estimates and are
not being provided for tax reporting purposes. The actual amounts and sources
of the amounts for tax reporting purposes will depend upon the Fund's
investment experience during the remainder of its fiscal year and may be
subject to changes based on tax regulations. It is only after December 31, 2008
that we will know the exact source of our distributions. Shareholders should
use only the Form 1099-DIV that will be mailed by January 31, 2009 to determine
the taxability of our distributions.

The Board may amend, suspend or terminate the Managed Distribution Plan
without prior notice to shareholders if it deems such action to be in the best
interest of the Fund and its shareholders.

Information on the Zweig funds is available at www.virtus.com. Section 19(a)
notices are posted on the website at:
http://www.virtus.com/products/closed/details.aspx?type=individual&fundid=ZF.