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
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The Zweig Fund, Inc.
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(Exact name of registrant as specified in charter)
900 Third Ave, 31st Floor
New York, NY 10022-4728
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(Address of principal executive offices) (Zip code)
Kevin J. Carr, Esq.
Vice President, Chief Legal Officer,
Counsel and Secretary for Registrant
56 Prospect St.
Hartford, CT 06103-2899
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(Name and address of agent for service)
Registrant's telephone number, including area code: 800-272-2700
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Date of fiscal year end: December 31
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Date of reporting period: September 30, 2008
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Form N-Q is to be used by management investment companies, other than small
business investment companies registered on Form N-5 ((S)(S) 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. (S) 3507.
Item 1. Schedule of Investments.
The Schedule of Investments is attached herewith.
THE ZWEIG FUND, INC.
SCHEDULE OF INVESTMENTS
September 30, 2008
(Unaudited)
Number of
Shares Value
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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
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27,371,900
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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
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40,665,550
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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
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42,423,300
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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
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51,297,900
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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
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Number of
Shares Value
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HEALTH CARE (CONTINUED)
UnitedHealth Group, Inc.......................... 280,000 $ 7,109,200
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22,747,800
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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
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41,622,250
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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
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43,875,800
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MATERIALS -- 2.67%
Alcoa, Inc....................................... 240,000 5,419,200
NuCor Corp....................................... 135,000 5,332,500
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10,751,700
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TELECOMMUNICATION SERVICES -- 3.20%
AT&T, Inc........................................ 220,000 6,142,400
Verizon Communications, Inc...................... 210,000 6,738,900
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12,881,300
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Total Domestic Common Stocks (Identified Cost
$288,277,222)..................................... 293,637,500
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FOREIGN COMMON STOCKS/(c)/ 4.75%
ENERGY -- 1.91%
Petroleo Brasileiro SA ADR (Brazil).............. 175,000 7,691,250
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INFORMATION TECHNOLOGY -- 1.60%
Nokia Oyj Sponsored ADR (Finland)................ 345,000 6,434,250
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See notes to schedule of investments
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Number of
Shares Value
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MATERIALS -- 1.24%
Freeport-McMoRan Copper & Gold, Inc.
(United States)/(c)/....................... 88,000 $ 5,002,800
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Total Foreign Common Stocks (Identified Cost
$25,058,335).................................. 19,128,300
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EXCHANGE TRADED FUNDS 1.81%
PowerShares Deutsche Bank Agriculture
Fund/(b)/.................................. 240,000 7,300,800
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Total Exchange Traded Funds (Identified Cost
$8,196,236)................................... 7,300,800
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Total Long Term Investments -- 79.47% (Identified
Cost $321,531,793)............................ 320,066,600
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Par
(000's)
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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
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Total Commercial Paper (Identified Cost
$28,492,667).................................. 28,492,667
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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
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Total U.S. Treasury Bills (Identified Cost
$54,849,628).................................. 54,935,050
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Total Short-Term Investments (Identified
Cost $83,342,295)............................. 83,427,717
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Total Investments (Identified Cost $404,874,088)
-- 100.19%.................................... 403,494,317/(a)/
Other Assets and Liabilities, Net -- (0.19)%.... (778,431)
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Net Assets -- 100.00%........................... $402,715,886
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(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 1B "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
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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 Schedules of Investments. The
preparation of Schedules of Investments 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 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. Due
to excessive volatility in the current market (please see note on Market
Conditions -- Note 2), 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
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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
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Assets:
Level 1 -- Quoted Prices....................... $320,066,600
Level 2 -- Other Significant Observable Inputs. 83,427,717
Level 3 -- Significant Unobservable Inputs..... --
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Total...................................... $403,494,317
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B. 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.
C. 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
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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.
D. 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 -- 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-
6
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 3 -- 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.
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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.
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By (Signature and Title)* /s/ George R. Aylward
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George R. Aylward, President
(principal executive officer)
Date November 26, 2008
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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
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George R. Aylward, President
(principal executive officer)
Date November 26, 2008
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By (Signature and Title)* /s/ Nancy G. Curtiss
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Nancy G. Curtiss, Treasurer
(principal financial officer)
Date November 21, 2008
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* Print the name and title of each signing officer under his or her signature.