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
VP Distributors, Inc
100 Pearl Street
Hartford, CT 06103-4506

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.

Q1-09

Quarterly Report

Zweig

The Zweig Fund, Inc.

March 31, 2009

[LOGO]

VIRTUS
INVESTMENT PARTNERS

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 quarterly, fixed 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, for
example, when some or all of the money that you invested in the Fund is paid
back to you. A return of capital distribution does not necessarily reflect the
Fund's investment performance and should not be confused with "yield" or
"income".

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. The
Fund will send shareholders a Form 1099-DIV for the calendar year that will
tell you how to report distributions for federal income tax purposes.

The Board may amend, suspend or terminate the Managed Distribution Plan at
any time, 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

May 1, 2009

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 March 31, 2009.

The Zweig Fund's net asset value fell 8.90% for the quarter ended March 31,
2009, including $0.84 in reinvested distributions. During the same period, the
S&P 500 Index declined 10.98%, included reinvested dividends. The Fund's
average exposure in equities for the first quarter was approximately 79%.

Sincerely,

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

MARKET OVERVIEW AND OUTLOOK

The first quarter of 2009 was one of the most turbulent in U.S. financial
history. Despite a 21%/(1)/ rally from a recent bottom in late March,
traditionally the signal for the start of a bull market, the Dow Jones
Industrial Average finished the quarter at 7,608.92, down 13.3%/(1)/. It was
the worst first quarter showing since 1939. It also marked the sixth
consecutive losing quarter, the longest streak since June 1970.

After gaining 8.54%/(1)/ in March, the S&P 500 Index closed the quarter at
797.87, a decline of 11.7%/(1)/. The NASDAQ Composite Index performed the best
of the major indexes, ending the quarter at 1,528.90, down just 3.1%/(1)/.
Following its best March ever, which saw an 11%/(1)/ increase, the NASDAQ
finished 21%/(1)/ above its 6-year low set on March 9.

Unlike last year, when markets world-wide tumbled, there was a sharp
contrast in performances in 2009. While the Dow Jones World Stock Index,
excluding U.S. shares, declined 12%/(1)/ in dollar terms during the first
quarter, some of the component countries showed big gains. After falling
65%/(1)/ last year, the Shanghai Composite soared 30%/(1)/ in the first
quarter. The benchmark indexes of Brazil and Russia each rose 9%/(1)/ and India
closed in positive territory. Other countries were more in accord with the U.S.
result, with the benchmark indexes of the United Kingdom, Germany, and France
off 11%/(1)/ to 15%/(1)/. Japan's Nikkei Stock Average of 275 companies dipped
8%/(1)/.

In unprecedented moves aimed to jump-start the economy and create or save
millions of jobs, the Obama administration announced actions totaling trillions
of dollars. The biggest stock

/1/ Return excludes reinvested dividends

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

market reaction followed the establishment of the Troubled Assets Relief
Program. This permits the Treasury to buy or subsidize the purchase of up to $2
trillion in distressed bank and real estate assets that have obstructed the
flow of credit to business and consumers. On that news the Dow shot up nearly
500 points or 6.84%. The Federal Reserve (the "Fed") later reported that it
would inject $1 trillion into the financial markets by buying long-term
government bonds and mortgage securities. The government also revealed a
housing plan that could reach $275 billion to head off foreclosures and
encourage lenders to modify loans to hard-hit homeowners. All this was on top
of the $787 billion American Recovery and Reinvestment Act passed by Congress.

The economy needs all the help it can get. Illustrating the enormity of the
problem, the Labor Department reported that 663,000 jobs were shed in March,
boosting the unemployment rate from 8.1% to 8.5%, its highest level since 1983.
Since the recession began in December 2007, 5.1 million jobs were lost, with
two-thirds of the cuts coming since last November.

Helping to counter the gloomy job news were reports that the manufacturing
sector was declining more slowly and glimmers that the housing market may be
stabilizing. The Institute for Supply Management reported that its
manufacturing index rose by half a point in March to 36.3, its third
consecutive monthly gain. However, the gauge is still far below the above 50
reading needed to denote expansion.

The Commerce Department reported several positive signs in the housing
market. New home sales rose 4.7% in February, up for the first time in seven
months. February housing starts jumped an unexpected 22.3% but were still 47.3%
below a year ago. Existing home sales increased 5.1% in February, the biggest
monthly rise in five years, helped by first-time buyers benefiting from the
$8,000 government credit and lower mortgage rates. However, unsold inventories
rose to 3.8 million units from 3.6 million in July.

Although the Fed reported that industrial output fell 1.4% in February, the
fourth consecutive monthly decline, there was an increase in factory orders
that month. The Commerce Department reported that orders for durable goods
showed an unexpected 3.4% gain in February after a revised 7.3% drop in January.

A slightly brighter note was the Commerce Department report that showed
consumer spending, which makes up about 70% of the gross national product,
edged up a seasonally adjusted 0.2% in February. Inflation adjusted, spending
was off 0.2% against a 0.7% gain in January. Worries about deflation subsided
somewhat when the Labor Department reported that its Consumer Price Index rose
just 0.4% in February after a 0.3% gain in January. Its wholesale price
increased by 0.1% after a 0.8% jump in January.

Consumer confidence also gained a bit. The Conference Board reported that
its confidence index rose to 26.0 in March from a revised figure of 25.3 in
February. However, the current reading is still way below the 37.4 mark in
January and a far cry from the 65.9 level last March.

The decline in the domestic and world economy was reflected in the narrowing
of the U.S. trade volume and deficit in January. The Commerce Department
reported that imports fell 6.7% to $160.9 billion while exports slipped 5.7% to
$124.9 billion. Meanwhile, after fluctuating widely, the dollar ended the first
quarter on a positive note. It strengthened 5% against the euro and 9% against
the Japanese yen.

Company earnings and dividends paid decreased in the first quarter. Analysts
for the S&P 500 predicted operating earnings for the quarter ranging from
$11.60 a share to $13.45 a share, with the higher figure still off 19% from a
year ago. Howard Silverblatt, S&P senior analyst, noted that during periods of
economic stress the lower figure is usually more accurate. Mr. Silverblatt also
reported that dividend payments in the first quarter were the lowest since S&P
began

tracking payments in 1956. S&P companies cut dividends by $42 billion in the
quarter, exceeding the $40.6 billion reduction in all of 2008, which set a
record low.

Companies in the S&P 500 were trading at 28.3 times earnings at the end of
the first quarter. This compared with P/Es of 18.8 at the year end and 17.1 on
March 31, 2008. The problem here is that the earnings have plunged and that is
why the P/E ratios are higher. However, the market hasn't been cheap since the
early 80's. If the P/E's get really cheap, there is a risk that the market
might be a heck of a lot lower. The biggest bear markets of the last century
saw an average P/E of about nine at the bottom. While we don't consider current
P/E's cheap, they appear to be at a reasonable multiple under present market
conditions.

The markets for initial public offerings and mergers and acquisitions
remained in the doldrums, Dealogic reported. The first quarter saw only one
domestic IPO raising $828 million compared with ten U.S. offerings raising
$20.8 billion in the like 2008 period. In the first quarter, M&A activity in
the U.S. dipped 30% to 1668, with most of the deals small. Largely because of
two huge drug company mergers, U.S. volume was up 39% to $215 billion. Global
volume tumbled 21% from the first quarter of 2008 to $553 billion and was down
11% from the fourth quarter.

The current recession is now the longest since the Great Depression and Fed
chairman Ben Bernanke says that it will extend through this year. Testifying
before the Senate Banking Committee, he placed a condition on the recovery
outlook. "If we are successful in restoring some measure of financial
stability," he said, "there is a reasonable prospect that the current recession
will end in 2009 and that 2010 will be a year of recovery."

Analysts surveyed by Investors Intelligence have turned somewhat more
positive. In early April there were 31% bulls and 38% bears compared with 29%
bulls and 43% bears on March 31. Members of the American Institute of Investors
are even more optimistic, with 43% bulls and 37% bears in early April against
39% bulls and 42% bears at the end of the quarter.

While we may have already hit the bottom, we can't be certain because there
is no history to guide us. We have had bubbles bursting and financial meltdowns
in the past but there is a new factor at work. The government is injecting
trillions of dollars into the economy and it is too early to tell the impact.
Consequently, we are holding in a neutral position and continue to be about 80%
invested.

Sincerely,

[GRAPHIC]

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

PORTFOLIO COMPOSITION

The Fund's leading stock market sectors on March 31, 2009 were Information
Technology, Health Care, Financials, Energy and Consumer Staples. Although
there were some changes in percentages held, all of the above, with the
exception of Health Care, which replaced Industrials, appeared in our previous
listing. During the quarter we added to our positions in Health Care and
Materials and reduced our holdings in Industrials and Energy.

On March 31, our leading individual equity holdings included Altria, Bunge,
Gilead, Goldman Sachs, Hewlett-Packard, IBM, McDonald's, Powershares DB
Agricultural Fund, QUALCOMM and Verizon. With the exception of Gilead,
Hewlett-Packard and Verizon, all of the above are new to this listing. During
the quarter we added to our position in Bunge and there were no changes in
shares held for the other companies listed.

No longer among our top positions are Celgene and Reinsurance Group of
America, where there were no changes in shares held, and the following
companies where we trimmed our holdings: Costco, L-3 Communications, Merck,
Occidental Petroleum and UnitedHealth Group.

Sincerely,

[SIGNATURE]

/s/ Carlton Neel
Carlton Neel
Executive Vice President
Zweig Advisers, LLC
Sector Weightings
March 31, 2009
(as a percentage of total investments)

[CHART]

Information Technology 13%
Health Care 12%
Financials 11%
Energy 10%
Consumer Staples 10%
Industrials 8%
Materials 6%
Other (includes short-term investments) 30%

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 6.

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.

Deflation: A general decline in prices, if it persists, generally creates a
vicious spiral of negatives such as falling profits, closing factories,
shrinking employment and incomes, and increasing defaults on loans by companies
and individuals. To counter deflation, the Federal Reserve (the Fed) can use
monetary policy to increase the money supply and deliberately induce rising
prices, causing inflation.

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.

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.

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.

TARP (Troubled Asset Relief Program): A government program created for the
establishment and management of a Treasury fund, in an attempt to curb the
ongoing financial crisis of 2007-2008. The fund was created by enacting the
Emergency Economic Stabilization Act of 2008.

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

March 31, 2009
(Unaudited)

($ reported in thousands)

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

INVESTMENTS
COMMON STOCKS 77.8%
CONSUMER DISCRETIONARY -- 5.5%
McDonald's Corp.............................. 105,000 $ 5,730
NIKE, Inc. Class B........................... 120,000 5,627
Under Armour, Inc. Class A/(2)/.............. 265,000 4,354
-------
15,711
-------
CONSUMER STAPLES -- 10.4%
Altria Group, Inc............................ 430,000 6,888
Bunge Ltd.................................... 115,000 6,515
Costco Wholesale Corp........................ 115,000 5,327
PepsiCo, Inc................................. 110,000 5,663
Philip Morris International, Inc............. 150,000 5,337
-------
29,730
-------
ENERGY -- 10.0%
Chesapeake Energy Corp....................... 155,000 2,644
ConocoPhillips............................... 115,000 4,503
Halliburton Co............................... 215,000 3,326
Massey Energy Co............................. 255,000 2,581
Occidental Petroleum Corp.................... 95,000 5,287
Petroleo Brasileiro SA ADR................... 170,000 5,180
St. Mary Land & Exploration Co............... 225,000 2,977
Valero Energy Corp........................... 115,000 2,058
-------
28,556
-------
FINANCIALS -- 9.0%
Allstate Corp. (The)......................... 165,000 3,160
Goldman Sachs Group, Inc. (The).............. 54,000 5,725
Hudson City Bancorp, Inc..................... 360,000 4,208
Reinsurance Group of America, Inc............ 165,000 5,344
Templeton Dragon Fund, Inc................... 160,000 2,835
Wells Fargo & Co............................. 215,000 3,062
Wilmington Trust Corp........................ 130,000 1,260
-------
25,594
-------

See notes to schedule of investments

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

HEALTH CARE -- 11.5%
Celgene Corp./(2)/........................ 125,000 $ 5,550
Gilead Sciences, Inc./(2)/................ 170,000 7,874
Johnson & Johnson......................... 90,000 4,734
Merck & Co., Inc.......................... 200,000 5,350
St. Jude Medical, Inc./(2)/............... 125,000 4,541
UnitedHealth Group, Inc................... 230,000 4,814
--------
32,863
--------
INDUSTRIALS -- 7.7%
Boeing Co. (The).......................... 115,000 4,092
Caterpillar, Inc.......................... 120,000 3,355
Continental Airlines, Inc. Class B/(2)/... 325,000 2,863
Foster Wheeler Ltd./(2)/.................. 160,000 2,795
L-3 Communications Holdings, Inc.......... 65,000 4,407
Union Pacific Corp........................ 110,000 4,522
--------
22,034
--------
INFORMATION TECHNOLOGY -- 13.5%
Cisco Systems, Inc./(2)/.................. 330,000 5,534
Corning, Inc.............................. 380,000 5,043
Hewlett-Packard Co........................ 180,000 5,771
International Business Machines Corp...... 70,000 6,782
Microsoft Corp............................ 250,000 4,592
Nokia Oyj Sponsored ADR................... 345,000 4,026
QUALCOMM, Inc............................. 170,000 6,615
--------
38,363
--------
MATERIALS -- 6.0%
Alcoa, Inc................................ 335,000 2,459
FreeportMcMoRan Copper & Gold, Inc........ 120,000 4,573
NuCor Corp................................ 135,000 5,153
Potash Corp. of Saskatchewan, Inc......... 60,000 4,849
--------
17,034
--------
TELECOMMUNICATION SERVICES -- 4.2%
AT&T, Inc................................. 220,000 5,544
Verizon Communications, Inc............... 210,000 6,342
--------
11,886
--------
Total Common Stocks (Identified Cost $310,519) 221,771
--------

See notes to schedule of investments

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

EXCHANGE TRADED FUNDS 2.1%
PowerShares Deutsche Bank Agriculture Fund/(2)/ 240,000 $ 5,878
--------
Total Exchange Traded Funds (Identified Cost $8,088) 5,878
--------
Total Long Term Investments -- 79.9% (Identified cost
$318,607)........................................ 227,649
--------
SHORT-TERM INVESTMENTS........................ 20.0%
MONEY MARKET MUTUAL FUNDS -- 2.5%
State Street Institutional Liquid Reserves Fund
(seven-day effective yield 0.577%)........... 7,103,148 7,103
State Street Institutional Treasury Money
Market Fund (seven-day effective yield 0.089%) 1,507 2
--------
7,105
--------

Par Value
---------- --------
U.S. TREASURY BILLS/(3)/ -- 17.5%
U.S. Treasury Bill.............................
0.97%, 5/15/09............................. $ 10,000 9,998
0.27%, 7/16/09............................. 10,000 9,994
0.79%, 7/30/09............................. 30,000 29,975
--------
49,967
--------
Total Short-Term Investments (Identified Cost $57,007) 57,072
--------
Total Investments (Identified Cost $375,614) -- 99.9% 284,721/(1)/
Other Assets and Liabilities, Net -- 0.1%.......... 410
--------
Net Assets -- 100.0%............................... $285,131
========

--------
(1) Federal Income Tax Information: Net unrealized depreciation of investment
securities is comprised of gross appreciation of $9,319 and gross
depreciation of $101,003 for federal income tax purposes. At March 31,
2009, the aggregate cost of securities for federal income tax purposes was
$376,405.
(2) Non-income producing.
(3) The rate shown is the discount rate.

See notes to schedule of investments

THE ZWEIG FUND, INC.

FINANCIAL HIGHLIGHTS

March 31, 2009
(Unaudited)

(Reported in thousands except for the per share amounts)

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

Beginning of period: December 31, 2008..................... $322,293 $ 3.50
Net investment income................................... $ 672 $ 0.01
Net realized and unrealized gain on investments......... (30,110) (0.33)
Dividends from net investment income and distributions
from net long-term and short-term capital gains*...... (7,724) (0.08)
-------- ------
Net increase (decrease) in net assets/net asset value... (37,162) (0.40)
-------- ------
End of period: March 31, 2009.............................. $285,131 $ 3.10
======== ======

--------
*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 March 31,
2009, we estimate that 90% of distributions represent return of capital and
10% represent net investment income distributions which are taxable as
ordinary income.

See notes to schedule of investments

THE ZWEIG FUND, INC.

NOTES TO SCHEDULE OF INVESTMENTS

March 31, 2009
(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 and those differences could be significant.

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.

The Fund has adopted the provisions of the Statement of Financial Accounting
Standards No. 157 (SFAS 157). 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 March 31, 2009. The inputs or methodology used for valuing securities are
not necessarily an indication of the risk associated with investing in those
securities.

($ reported in thousands)

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

Assets:
Level 1 -- Quoted Prices....................... $234,754
Level 2 -- Other Significant Observable Inputs. 49,967
Level 3 -- Significant Unobservable Inputs..... --
--------
Total $284,721
========

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.

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 and related agreements, 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 -- RECENTLY ISSUED ACCOUNTING STANDARDS

In April 2009, FASB issued FASB Staff Position No. 157-4, Determining Fair
Value when the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly,
("FSP 157-4"). FSP 157-4 is effective for fiscal years and interim periods
ending after June 15, 2009. FSP 157-4 provides additional guidance for
estimating fair value in accordance with SFAS 157 (See Note 1 A), when the
volume and level of activity for the asset or liability have significantly
decreased. FSP 157-4 also includes guidance on identifying circumstances that
indicate a transaction is not orderly. FSP 157-4 requires entities to describe
the inputs used in valuation techniques used to measure fair value and changes
in inputs over the period. FSP 157-4 expands the three-level hierarchy
disclosure and the level three-roll forward disclosure for each major security
type as described in paragraph 19 of FAS No. 115, Accounting for Certain
Investments in Debt and Equity Securities. Management is currently evaluating
the impact the implementation of FSP 157-4 will have on the Funds' financial
statement disclosures.

In March 2008, Statement of Financial Accounting Standards No. 161,
"Disclosures about Derivative Instruments and Hedging Activities" (FAS 161) was
issued and is effective for fiscal years and interim periods beginning after
November 15, 2008. FAS 161 is intended to improve financial reporting for
derivative instruments by requiring enhanced disclosure that enables investors
to understand how and why a fund uses derivatives, how derivatives are
accounted for, and how derivative instruments affect a fund's results of
operations and financial position. Management is currently evaluating the
impact, if any, of FAS 161 on financial statement disclosures.

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.