Edgar Filing: ZWEIG FUND INC /MD/

February 1, 2003

Dear Shareholder:

The Zweig Fund's net asset value increased 4.3% during the three months
ended December 31, 2002, including the $0.144 distribution paid on October 28,
2002. During the same period, the Standard & Poor's 500 Index gained 8.4%,
including dividends.

For the year ended December 31, 2002, the Fund's net asset value declined
22.82%, including $0.698 in distributions and the effect of the rights
offering. During this span, the Standard & Poor's 500 Index fell 22.10%,
including dividends.

DISTRIBUTION DECLARED

On January 2, 2003, the Fund announced a distribution of $0.137 payable on
January 10, 2003 to shareholders of record on December 31, 2002. Including this
distribution, our total payout since the Fund's inception is now $17.565.

Of the $0.64 considered to be distributed in 2002 for tax purposes,
$0.008954 is ordinary income and $0.631046 is return of capital. (The return of
capital distribution is a tax-free return of capital and therefore should not
be reported as income.)

Sincerely,

/s/ Philip R. McLoughlin
Philip R. McLoughlin
Chairman

MARKET OUTLOOK

While the overall market averages showed improvement in the final quarter,
the performance for the year was dismal. For the quarter the Dow was up 10.59%,
the S&P 500 Index, 8.44%, and the Nasdaq Composite Index, 14.07%. However, for
the full year, the Dow was down 15.01%, the S&P Index, 22.10%, and the Nasdaq,
a whopping 31.26%. This is the first time since 1939-41 that the Dow and S&P
fell for three consecutive years, while the Nasdaq, which was introduced in
1971, was down three years in a row for the first time. Because I do not
believe we have seen the bottom, I reduced our exposure during what I
considered a rally phase in the bear market.

Although the market weakness has had a long run, I don't think there is any
limit on how many consecutive years the market can go up or down. From 1995 to
1999 we came off a string when the S&P 500 rose for five years in a row. We
were in a bubble, and the market went to ridiculous valuations. We have been
paying the piper ever since.

In an attempt to provide a boost for the economy and the stock market, the
Administration, which now controls both houses of Congress, has proposed an
extensive stimulus package that includes a proposal to eliminate the taxation
of dividends. Such action might provide some relief. The problem is that the
market is a discounting mechanism, and this package has been talked about for
some time. However, I believe that this expectation helped contribute to the
recent market strength.

As far as dividends are concerned, they might have difficulty eliminating
all of the double taxation because it would cost the Treasury too much revenue.
They might have to settle to cut the tax in half to roughly 20%, the same as the

capital gains tax. Even then, they will have a problem because some people will
perceive it as a tax break for the rich.

However, I do believe they should end the double taxation of dividends.
Anything that eases the tax burden on dividends would help the stock market. It
would give the market some kind of cushion. At least the market would not go
down as far as I think it could. It would also encourage companies to pay more
dividends. That would be good news because I think many companies have not been
judicious in handling their retained earnings.

Too many companies bought in their own stock rather than issue dividends and
paid outrageous prices. I think that was an atrocious misallocation of capital.
If a company doesn't need retained earnings for its business, it should pay out
the dividends rather than purchase its own stock. If an investor can get these
dividends, especially without paying an extra tax, he could invest it where he
sees fit and help support the market. Incidentally, I have no problem with
companies buying back their own stock if prices are low enough.

I do have a problem with a recent comment by Fed chairman Alan Greenspan
that deflation is more of a threat to economic growth than inflation. As I see
it, neither inflation nor deflation is a problem. The problem is what causes
inflation or deflation. It's like saying that when the temperature outside
reads zero, the thermometer is at fault because it is registering cold, meaning
deflation. The thermometer is not the problem--it's the weather pattern.
Something in the atmosphere is causing it.

If excess capacity and excess debt are causing deflation, that is the
problem. Obviously, the solution is to get rid of the excesses. It's not easy
to do, and it takes a long time. It has been suggested that the Fed could fight
deflation by printing money and flooding the system with reserves. That would
be horrible. If you doubled the money supply, you would roughly double the
price level. It would be easier for companies to pay off debt. The flip side is
that those who were owed money would suffer. The economy would not benefit.

As far as the economy is concerned, corporate leaders are more skeptical
than the Fed. That's because the Fed has an ax to grind. They don't want to say
everything is terrible or everything is great. They are always playing the
game, and then there is Greenspan speak. Half the time you're not supposed to
know what he is really saying. The people running the corporations have their
own ax to grind. If they are telling you prospects are great, they're usually
trying to pump up their stock. If they say business is lousy, they're probably
telling you the truth. At least that's the way I see it. Regardless of either
perspective, we have gone through the worst Christmas season in 30 years.
However, the economy is not a disaster right now. It's just kind of limp. While
it is on the plus side, it is not growing very rapidly.

The state of the economy is reflected in the fact that for the first time
since 1988 net outflows from stock mutual funds topped inflows in 2002. When
the public sells mutual funds en masse for a long time, as it did in much of
1973 and 1974, the market tends to underperform. That's a problem now because
the market was boosted through the 1990s mainly by money pouring into mutual
funds. To some extent, it was a great con game. I'm not saying that the mutual
funds were creating a game--it was the whole bubble business.

People were buying technology stocks at any price and putting their IRAs,
Keoghs, and 401(k)s in the market because the market always does well in the
long run. However, the long run may be 20 or 30 years down the road. If things
get too exuberant in the short run, you have a problem. The inflow was overdone
and helped propel the market higher.

Now I think people are scared. They look at their portfolios, which are down
a third or a half

or something like that. Sick of losing money, they're buying fewer mutual funds
and even withdrawing money. This may continue for a long time because the
inflows poured in for years and years. After the 1987 crash, we had outflows
for most of 1988 and part of 1989. After that, except for an occasional month,
we had inflows for 10 or 11 years, and it was overdone. Now we have had
outflows for a year or so. However, the outflows, relative to assets, are very
small. If it does go on, it will not help the markets.

Meanwhile, the flow of European funds into the U.S. is at a pace to reach
the lowest level since 1988, the last time Europe was a net seller of stock. In
September, the last month for which we have figures, the 12 euro countries were
net sellers of $2.8 billion of U.S. equities. In the long run, and I have the
data back to 1940, it is usually not good for the market when foreigners are
heavy buyers, and it's good when they are heavy sellers. At the last 14 major
market bottoms, foreigners were sellers at 11 of them. On a quarterly basis,
all foreigners, including Europeans, haven't turned to the sell side. The
one-month result is encouraging, but I don't think we have seen enough of it.

Some analysts see a potential bright side for the markets in the so-called
cash on the sidelines. About $6.6 trillion is now in low return vehicles like
savings accounts and money market funds. With interest rates so low, they say,
where else can people put their money? Well, I think the public's holding of
cash is too low relative to people's own debt and needs. I don't know if much
of the cash is destined to go into the market. I just don't think there is so
much idle cash available for investment.

The total value of U.S. mergers and acquisitions fell 41% to $447.8 billion
in 2002, the lowest level since 1994. From the peak in 2000, the value of deals
has dropped 74%. I think it is encouraging that mergers have slowed down.
During the bubble years, we had a feeding frenzy and corporations felt they had
to join the feast. Now we are in the cooling off period. These cycles have been
seen many times. I don't know when we will reach the bottom. It was almost like
death in 1974. There were very few mergers. I guess corporations have to go
through the hangover period.

We are also in the hangover mode as far as initial public offerings are
concerned. There were just 83 IPO deals in 2002, raising just $22.2 billion,
the lowest figure since the early 1990s. In the past too much money was raised
by too many low quality companies. The good news is that the better quality
companies have come into the market. That's because the weaker companies are
having a very hard time getting financing. Again, going back to 1975, there
were very few IPOs after the two-year bear market. We may have to go to much
lower levels before the current cycle is over. I would like to see it go a lot
lower relative to market capitalization. We are nowhere near as low as this
activity has gone in previous major bear markets.

Similarly, the sentiment of investment advisors has not gotten to levels
generally seen at market bottoms. About half of all investment advisors
recently were bullish, more than twice the number at the October bottom.
Historically, going back 40 years, we have had about two bears for every bull
at market bottoms. Recently we have had perhaps three weeks when there were
slightly more bears than bulls. We just haven't seen the kind of pessimism we
had in 1970, 1974, and 1982. It hasn't happened. Given that we had the biggest
bubble of all time, I don't think that's a good sign.

On the positive side, the Fed has recently cut interest rates for the
twelfth time and that may be helpful. The money supply is growing and that's
okay. Also, the recession of 2001 is over; last quarter saw the fifth
consecutive gain in gross domestic product. However, the recovery has been
anemic and there is a chance we will see a double-dip recession.

We should have had a much better stock market recovery than we've seen, and
my sentiment indicators are just not very good. Although they were pretty
decent, they didn't get to bear-killing levels in September and October and
have deteriorated since. I considered valuations too high the whole time, and
the recent rally only made them worse. Although the rally may carry further in
the short run, I am not convinced there are enough positives to overcome the
negatives in the long run. Right now I am cautious. We are at about 64%
invested, which is lower than our norm. I probably would go down lower if it
weren't the beginning of the year, which is a seasonally strong period.

PORTFOLIO COMPOSITION

Except for small changes in percentages held, our leading industry groups at
year-end were basically unchanged from the close of the third quarter. They
included financial services, health care, technology, consumer products and
services, energy, and media.

Our largest individual holdings include Microsoft, Pfizer, IBM, Bank of
America, General Electric, Wells Fargo, Johnson & Johnson, Citigroup, American
International Group, and Dell. New to this grouping are IBM, Dell, and AIG,
where we added to our positions, and Citigroup. No longer in this listing are
Tenet Healthcare, which we sold out completely, and Procter & Gamble, United
Healthcare, and Wal-Mart, where we trimmed our holdings.

Sincerely,
/s/ Martin E. Zweig, Ph.D.
Chairman
Martin E. Zweig, Ph.D.
President
Zweig Consulting LLC

THE ZWEIG FUND, INC.

STATEMENT OF INVESTMENTS

December 31, 2002

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

COMMON STOCKS 61.64%
AEROSPACE & AIR TRANSPORT 2.77%
Boeing Co..................................... 69,400 $ 2,289,506
L-3 Communications Holdings, Inc.............. 42,000 (a) 1,886,220
Northrop Grumman Corp......................... 21,000 2,037,000
Raytheon Co................................... 68,500 2,106,375
United Technologies Corp...................... 44,400 2,750,136
------------
11,069,237
------------
BUILDING & FOREST PRODUCTS 1.33%
International Paper Co........................ 54,700 1,912,859
Smurfit-Stone Container Corp.................. 120,400 (a) 1,853,077
Temple-Inland Inc............................. 35,000 1,568,350
------------
5,334,286
------------
CHEMICALS 0.67%
E.I. du Pont de Nemours & Co.................. 62,900 2,666,960
------------
COMMERCIAL SERVICES 0.61%
First Data Corp............................... 69,300 2,453,913
------------
CONSUMER PRODUCTS & SERVICES 5.58%
Anheuser-Busch Cos., Inc...................... 69,400 3,358,960
Avon Products, Inc............................ 84,500 4,552,015
Black & Decker Corp........................... 52,800 2,264,592
Kimberly-Clark Corp........................... 52,500 2,492,175
PepsiCo, Inc.................................. 41,400 1,747,908
Procter & Gamble Co........................... 56,600 4,864,204
Unilever NV, ADR.............................. 49,000 3,023,790
------------
22,303,644
------------
EXCHANGE TRADED FUNDS 1.94%
iShares Dow Jones U.S. Consumer Non-Cyclical
Sector Index Fund........................... 70,000 2,845,500
Pharmaceutical HOLDRs Trust................... 66,500 4,933,635
------------
7,779,135
------------
FINANCE -- FINANCIAL SERVICES 11.72%
Allstate Corp................................. 86,800 3,210,732
American International Group, Inc............. 103,100 5,964,335
Bank of America Corp.......................... 103,800 7,221,366
Citigroup, Inc................................ 172,300 6,063,237
Fannie Mae.................................... 52,300 3,364,459

See notes to financial statements

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

FINANCE -- FINANCIAL SERVICES (CONTINUED)
Freddie Mac.................................. 52,400 $ 3,094,220
Lehman Brothers Holdings, Inc................ 59,100 3,149,439
Merrill Lynch & Co., Inc..................... 56,000 2,125,200
Morgan Stanley............................... 62,500 2,495,000
Washington Mutual, Inc....................... 105,000 3,625,650
Wells Fargo & Co............................. 140,200 6,571,174
-----------
46,884,812
-----------
FOOD, BEVERAGES, TOBACCO 0.67%
Kraft Foods, Inc., Class A................... 68,500 2,666,705
-----------
HEALTH CARE 9.53%
AmerisourceBergen Corp....................... 35,400 1,922,574
Amgen, Inc................................... 68,500 (a) 3,311,290
Barr Laboratories, Inc....................... 28,000 (a) 1,822,520
Baxter International, Inc.................... 91,000 2,548,000
Johnson & Johnson............................ 116,300 6,246,473
MedImmune, Inc............................... 51,100 (a) 1,388,387
Medtronic, Inc............................... 52,500 2,394,000
Pfizer, Inc.................................. 291,100 8,898,927
St. Jude Medical, Inc........................ 70,000(a) 2,780,400
UnitedHealth Group, Inc...................... 34,800 2,905,800
Wyeth........................................ 105,000 3,927,000
-----------
38,145,371
-----------
MANUFACTURING 2.37%
General Electric Co.......................... 275,800 6,715,730
Pitney Bowes, Inc............................ 84,800 2,769,568
-----------
9,485,298
-----------
MEDIA 3.73%
Clear Channel Communications, Inc............ 85,700(a) 3,195,753
Gannett Co., Inc............................. 35,000 2,513,000
Tribune Company.............................. 80,500 3,659,530
Viacom, Inc., Class B........................ 87,500(a) 3,566,500
Walt Disney Co............................... 122,900 2,004,499
-----------
14,939,282
-----------
METALS 0.30%
Inco Ltd..................................... 56,000(a) 1,188,320
-----------
OIL & OIL-GAS DRILLING 3.82%
Anadarko Petroleum Corp...................... 34,000 1,628,600
ConocoPhillips............................... 34,000 1,645,260
Exxon Mobil Corp............................. 103,300 3,609,302
Occidental Petroleum Corp.................... 118,000 3,357,100

See notes to financial statements

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

OIL & OIL-GAS DRILLING (CONTINUED)
Talisman Energy, Inc......................... 68,200 $ 2,466,794
Valero Energy Corp........................... 70,000 2,585,800
------------
15,292,856
------------
RAILROADS 0.52%
Union Pacific Corp........................... 35,000 2,095,450
------------
RESTAURANTS 0.47%
Wendy's International, Inc................... 70,000 1,894,900
------------
RETAILING 3.25%
Best Buy Co., Inc............................ 70,000(a) 1,690,500
Kroger Co.................................... 105,000(a) 1,622,250
Lowe's Cos., Inc............................. 70,500 2,643,750
Reebok International Ltd..................... 52,000(a) 1,528,800
Wal-Mart Stores, Inc......................... 108,900 5,500,539
------------
12,985,839
------------
TECHNOLOGY 9.03%
Applied Materials, Inc....................... 70,700(a) 921,221
Cisco Systems, Inc........................... 207,300(a) 2,715,630
Dell Computer Corp........................... 222,100(a) 5,938,954
Intel Corp................................... 294,400 4,583,808
International Business Machines Corp......... 108,500 8,408,750
Microsoft Corp............................... 196,200(a) 10,143,540
Nokia Corp., ADR............................. 104,700 1,622,850
Texas Instruments, Inc....................... 120,500 1,808,705
------------
36,143,458
------------
TELECOMMUNICATIONS 1.70%
AT&T Corp.................................... 54,820 1,431,350
CenturyTel, Inc.............................. 87,500 2,570,750
SBC Communications, Inc...................... 103,400 2,803,174
------------
6,805,274
------------
UTILITIES -- ELECTRIC & GAS 1.63%
DTE Energy Co................................ 49,000 2,273,600
Entergy Corp................................. 52,900 2,411,711
Exelon Corp.................................. 35,000 1,846,950
------------
6,532,261
------------
Total Common Stocks (Cost $288,997,746).......... 246,667,001
------------

See notes to financial statements

Principal
Amount Value
----------- ------------

SHORT-TERM INVESTMENTS 38.41%
7-Eleven Inc., 1.32%, 1/10/03................. $ 7,000,000 $ 6,997,690
BP America Inc., 1.20%, 1/02/03............... 20,000,000 19,999,333
Diageo Capital PLC, 1.31%, 1/03/03............ 20,000,000 19,998,545
General RE Financial Products Corp., 1.28%,
1/07/03..................................... 20,000,000 19,995,733
Knight-Ridder Inc., 1.20%, 1/09/03............ 8,700,000 8,699,710
New York Life Cap. Corp., 1.34%, 1/06/03...... 20,000,000 19,996,278
Philip Morris Co. Inc., 1.32%, 1/13/03........ 18,000,000 17,992,080
SLM Corp., 1.22%, 1/02/03..................... 20,000,000 19,999,322
UBS Financial Corp., 1.20%, 1/02/03........... 20,000,000 19,999,333
------------
Total Short-Term Investments (Cost $153,678,024).. 153,678,024
------------
Total Investments (Cost $442,675,770) -- 100.05%.. 400,345,025
Other assets less liabilities -- 0.05%............ (182,246)
------------
Net Assets -- 100%................................ $400,162,779
============

--------
(a) Non-income producing security

For Federal income tax purposes, the tax basis of investments owned at
December 31, 2002 was $444,927,473 and net unrealized depreciation of
investments consisted of:

Gross unrealized appreciation................................. $ 7,144,733
Gross unrealized depreciation................................. (51,727,181)
------------
Net unrealized depreciation................................... $(44,582,448)
============

See notes to financial statements

THE ZWEIG FUND, INC.

STATEMENT OF ASSETS AND LIABILITIES

December 31, 2002

ASSETS
Investments, at value (identified cost $442,675,770)..... $ 400,345,025
Cash..................................................... 99,992
Dividends receivable..................................... 225,317
Prepaid expenses......................................... 25,693
-------------
Total Assets......................................... 400,696,027
-------------
LIABILITIES
Accrued advisory fees (Note 4)........................... 292,029
Accrued administration fees (Note 4)..................... 44,663
Other accrued expenses................................... 196,556
-------------
Total Liabilities.................................... 533,248
-------------
NET ASSETS $ 400,162,779
=============
NET ASSET VALUE, PER SHARE
($400,162,779 / 73,233,013 shares outstanding -- Note 5). $ 5.46
=============

Net Assets consist of
Capital paid-in.......................................... $ 620,097,204
Accumulated net realized loss on investments............. (177,603,680)
Net unrealized depreciation on investments............... (42,330,745)
-------------
$ 400,162,779
=============

See notes to financial statements

THE ZWEIG FUND, INC.

STATEMENT OF OPERATIONS

For the Year Ended December 31, 2002

INVESTMENT INCOME
Income..........................................................
Interest.................................................... $ 1,408,293
Dividends (net of foreign withholding taxes of $13,064)..... 4,448,141
-------------
Total Income............................................. 5,856,434
-------------
Expenses........................................................
Investment advisory fees (Note 4)........................... 3,693,363
Administrative fees (Note 4)................................ 564,867
Transfer agent fees......................................... 344,465
Printing and postage expenses............................... 167,095
Professional fees (Note 4).................................. 102,638
Directors' fees and expenses (Note 4)....................... 92,111
Custodian fees.............................................. 71,234
Miscellaneous............................................... 195,868
-------------
Total Expenses........................................... 5,231,641
-------------
Net Investment Income................................ 624,793
-------------
NET REALIZED AND UNREALIZED LOSSES
Net realized loss on investments................................ (137,974,324)
Decrease in unrealized depreciation on investments.............. 21,342,523
-------------
Net realized and unrealized loss on investments............. (116,631,801)
-------------
Net decrease in net assets resulting from operations........ $(116,007,008)
=============

See notes to financial statements

THE ZWEIG FUND, INC.

STATEMENT OF CHANGES IN NET ASSETS

For the Year Ended
December 31
----------------------------
2002 2001
------------- -------------

INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income (loss)..................................... $ 624,793 $ (174,304)
Net realized loss on investments................................. (137,974,324) (38,614,009)
Decrease (increase) in unrealized depreciation of
investments.................................................... 21,342,523 (50,005,448)
------------- -------------
Net decrease in net assets resulting from operations.......... (116,007,008) (88,793,761)
------------- -------------
Dividends and distributions to shareholders from
Net investment income............................................ (624,793) (477,795)
Net realized short-term gains on investments..................... -- (4,254,673)
Tax return of capital............................................ (45,982,141) (49,117,006)
------------- -------------
Total dividends and distributions to shareholders............. (46,606,934) (53,849,474)
------------- -------------
Capital share transactions
Net asset value of shares issued to shareholders in
reinvestment of distributions resulting in the issuance of
common stock................................................... 6,178,332 11,550,317
Net proceeds from the sales of shares during rights offering..... 67,337,079 --
------------- -------------
Net increase in net assets derived from capital share
transactions................................................... 73,515,411 11,550,317
------------- -------------
Net decrease in net assets....................................... (89,098,531) (131,092,918)
NET ASSETS
Beginning of year.................................................... 489,261,310 620,354,228
------------- -------------
End of year.......................................................... $ 400,162,779 $ 489,261,310
============= =============

See notes to financial statements

THE ZWEIG FUND, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2002

NOTE 1 -- Organization

The Zweig Fund, Inc. (the "Fund") is a closed-end, diversified management
investment company registered under the Investment Company Act of 1940 (the
"Act"). The Fund was incorporated under the laws of the State of Maryland on
June 18, 1986.

NOTE 2 -- 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 accordance with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates.

A. Portfolio Valuation

Portfolio securities that are traded only on stock exchanges are valued at
the last sale price. Secu- rities traded in the over-the-counter market which
are National Market System securities are valued at the last sale price. Other
over-the-counter securities are valued at the most recently quoted bid price
provided by the principal market makers. Portfolio securities which are traded
both in the over-the-counter market and on a stock exchange are valued
according to the broadest and most representative market, as determined by the
Adviser. Debt securities may be valued on the basis of prices provided by an
independent pricing service, when such prices are believed by the Adviser to
reflect the fair market value of such securities. Short-term investments having
a remaining maturity of 60 days or less when purchased are valued at amortized
cost (which approximates market value). Futures contracts traded on commodities
exchanges are valued at their closing settlement price on such exchange.
Securities for which market quotations are not readily available (of which
there were none at December 31, 2002) and other assets, if any, are valued at
fair value as determined under procedures approved by the Board of Directors of
the Fund.

B. Security Transactions and Investment Income

Security transactions are recorded on trade date. Dividend income and
distributions to shareholders are recorded on the ex-dividend date. Interest
income is recorded on the accrual basis. Discount and premium on securities
purchased other than short-term securities are accreted on the constant yield
method over the life of the respective securities.

Realized gains and losses on sales of investments are determined on the
identified cost basis for financial reporting and tax purposes.

C. Federal Income Tax Information

It is the policy of the Fund to comply with the requirements of the Internal
Revenue Code ("the Code"), applicable to regulated investment companies, and to
distribute all of its taxable income to its shareholders. In addition, the Fund
intends to distribute an amount sufficient to avoid the imposition of any
excise tax under Section 4982 of the Code. Therefore, no provision for federal
income taxes or excise taxes has been made.

D. Dividends and Distributions to Shareholders

Distributions to shareholders are recorded on the ex-dividend date. Income
and capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences include the treatment of net operating losses, losses
deferred due to wash sales and the timing of distributions. For financial
reporting purposes, book basis capital accounts are adjusted to reflect the tax
character of permanent book/tax differences. The reclassifications have no
impact on the net assets or net asset value of the Fund. As of December 31,
2002, the Fund increased the accumulated net realized loss on investments by
$11,981,945 and increased capital paid-in by $11,981,945.

As of December 31, 2002, the components of distributable earnings on a tax
basis (excluding unrealized appreciation/(depreciation) which is disclosed in
the schedule of investments) were as follows:

Undistributed Ordinary Income........ $0
Undistributed Long-term Capital Gains $0
Capital Loss Carryovers.............. $38,468,937 expiring 2009
$136,883,040 expiring 2010

Capital loss carryovers may be used to offset future capital gains. The
differences between the book basis and tax basis components of distributable
earnings relate principally to the timing of recognition of income and gains
and distributions for federal income tax purposes. Short term gain
distributions reported in the statement of changes in net assets are reported
as ordinary income for federal tax purposes.

NOTE 3 -- Portfolio Transactions

During the year ended December 31, 2002, purchases and sales of investments,
excluding short-term investments were:

Common
Stocks
------------

Purchases.................................... $371,382,124
============
Sales........................................ $463,611,797
============

NOTE 4 -- Investment Advisory Fees and Other Transactions with Affiliates

a) Investment Advisory Fee: The Investment Advisory Agreement (the
"Agreement") between Phoenix/Zweig Advisers LLC (the "Adviser"), the Fund's
investment adviser, and the Fund provides that, subject to the direction of the
Board of Directors of the Fund and the applicable provisions of the Act, the
Adviser is responsible for the actual management of the Fund's portfolio.
Phoenix/Zweig Advisers LLC is a wholly-owned subsidiary of Phoenix Investment
Partners, Ltd. ("PXP"). PXP is an indirect, wholly-owned subsidiary of The
Phoenix Companies, Inc. ("PNX"). The responsibility for making decisions to
buy, sell or hold a particular investment rests with the Adviser, subject to
review by the Board of Directors and the applicable provisions of the Act. For
the services provided by the Adviser under the Agreement, the Fund pays the
Adviser a monthly fee equal, on an annual basis, to 0.85% of the Fund's average
daily net assets. During the year ended December 31, 2002, the Fund accrued
advisory fees of $3,693,363.

b) Administration Fee: Phoenix Equity Planning Corporation ("PEPCO"), an
indirect wholly-owned subsidiary of PNX, serves as the Fund's Administrator
(the "Administrator") pursuant to an Administration Agreement with the Fund.
The Administrator generally assists in all aspects of the Fund's operations,
other than providing investment advice, subject to the overall authority of the
Fund's Board of Directors. The Administrator determines the Fund's net asset
value daily, prepares such figures for publication on a weekly basis, maintains
certain of the Fund's books and records that are not maintained by the Adviser,
custodian or transfer agent, assists in the preparation of financial
information for the Fund's income tax returns, proxy statements, quarterly and
annual shareholder reports, and responds to shareholder inquiries. Under the
terms of the Agreement, the Fund pays the Administrator a monthly fee equal, on
an annual basis, to 0.13% of the Fund's average daily net assets. During the
year ended December 31, 2002, the Fund accrued administration fees of $564,867.

c) Directors' Fee: The Fund pays each Director who is not an interested
person of the Fund or the Adviser a fee of $10,000 per year plus $1,500 per
Directors' or committee meeting attended, together with the out-of-pocket costs
relating to attendance at such meetings. Any Director of the Fund who is an
interested person of the Fund or the Adviser receives no remuneration from the
Fund.

d) Brokerage Commission: During the year ended December 31, 2002, the Fund
paid PXP Securities Corp., a wholly-owned subsidiary of PXP, brokerage
commissions of $33,396 in connection with portfolio transactions effected
through them. In addition, PXP Securities Corp. charged $70,352 in commissions
for transactions effected on behalf of the participants in the Fund's Automatic
Reinvestment and Cash Purchase Plan.

NOTE 5 -- Capital Stock and Reinvestment Plan

At December 31, 2002, the Fund had one class of common stock, par value $.10
per share, of which 100,000,000 shares are authorized and 73,233,013 shares are
outstanding.

Registered shareholders may elect to receive all distributions in cash paid
by check mailed directly to the shareholder by EquiServe as dividend paying
agent. Pursuant to the Automatic Reinvestment and Cash Purchase Plan (the
"Plan") shareholders not making such election will have all such amounts
automatically reinvested by EquiServe, as the Plan agent, in whole or
fractional shares of the Fund, as the case may be. During the years ended
December 31, 2002 and 2001, 787,167 and 1,310,223 shares, respectively, were
issued pursuant to the Plan.

In a non transferable rights offering ended June 17, 2002, shareholders
exercised rights to purchase 11,000,000 shares of common stock at an offering
price of $6.17 per share for proceeds, net of expenses, of $67,337,079.

On December 16, 2002, the Board of Directors declared a distribution of the
greater of 2.5% of its net value on December 13, 2002 or all available net
investment income plus net short and long term gains. On January 2, 2003, the
Fund announced a distribution of $0.137 per share to shareholders of record on
December 31, 2002. This distribution had an ex-dividend date of January 3, 2003
and was payable on January 10, 2003.

NOTE 6 -- Financial Highlights

Selected data for a share outstanding throughout each year:

Year Ended December 31
--------------------------------------------------
2002 2001 2000 1999 1998
-------- -------- -------- -------- --------

Per Share Data
Net asset value, beginning of year. $ 7.96 $ 10.32 $ 12.20 $ 12.03 $ 12.63
-------- -------- -------- -------- --------
Income From Investment Operations
Net investment income.............. 0.01 -- 0.20 0.20 0.23
Net realized and unrealized gains
(losses).......................... (1.76) (1.47) (0.90) 1.16 0.55
-------- -------- -------- -------- --------
Total from investment operations... (1.75) (1.47) (0.70) 1.36 0.78
-------- -------- -------- -------- --------
Dividends and Distributions
Dividends from net investment
income............................ (0.01) (0.01) (0.21) (0.19) (0.35)
Distributions from net realized
gains............................. -- (0.07) (0.97) (1.00) (0.87)
Tax return of capital.............. (0.68) (0.81) -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions.. (0.69) (0.89) (1.18) (1.19) (1.22)
-------- -------- -------- -------- --------
Effect on net asset value as a
result of rights offering*........ (0.06) -- -- -- (0.16)
-------- -------- -------- -------- --------
Net asset value, end of year.... $ 5.46 $ 7.96 $ 10.32 $ 12.20 $ 12.03
======== ======== ======== ======== ========
Market value, end of year**..... $ 4.93 $ 7.90 $ 9.81 $ 10.06 $ 10.81
======== ======== ======== ======== ========
Total investment return***......... (29.78)% (11.27)% 9.45% 3.61% (8.68)%
======== ======== ======== ======== ========
Ratios/Supplemental Data
Net assets, end of period (in
thousands)........................ $400,163 $489,261 $620,354 $733,523 $723,521
Ratio of expenses to average net
assets............................ 1.20% 1.19% 1.12% 1.12% 1.12%
Ratio of net investment income
(loss) to average net assets...... 0.14% (0.03)% 1.74% 1.68% 1.90%
Portfolio turnover rate............ 104.8% 80.3% 114.8% 114.9% 68.7%

--------
* Shares were sold at a 5% discount from the average market price.
** Closing Price -- New York Stock Exchange.
*** Total investment return is calculated assuming a purchase of common
stock on the opening of the first business day and a sale on the closing
of the last business day of each period reported. Dividends and
distributions, if any, are assumed for the purposes of this calculation,
to be reinvested at prices obtained under the Fund's Automatic
Reinvestment and Cash Purchase Plan. Generally, total investment return
based on net asset value will be higher than total investment return
based on market value in periods where there is an increase in the
discount or a decrease in the premium of the market value to the net
assets from the beginning to the end of such years. Conversely, total
investment return based on net asset value will be lower than total
investment return based on market value in periods where there is a
decrease in the discount or an increase in the premium of the market
value to the net asset value from the beginning to end of such periods.

Report of Independent Accountants

To the Board of Directors and Shareholders of The Zweig Fund, Inc.:

In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in
all material respects, the financial position of The Zweig Fund, Inc. (the
"Fund") at December 31, 2002, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and the financial highlights for each of the five years in the
period then ended, in conformity with accounting principles generally accepted
in the United States of America. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirmation
of securities at December 31, 2002 by correspondence with the custodian,
provide a reasonable basis for our opinion.

PRICEWATERHOUSECOOPERS LLP
New York, New York
February 13, 2003

FUND MANAGEMENT

Information pertaining to the Directors and officers of the Fund is set
forth below. The address of each individual, unless otherwise noted, is c/o
Phoenix/Zweig Advisers LLC, 900 Third Avenue, New York, NY 10022.

Number of
Portfolios
in Fund
Term of Office Complex
Name, (Age), Address and Length of Overseen Principal Occupation(s)
and Position(s) with Fund Time Served by Director During Past 5 Years and Other Directorships Held
------------------------- ----------------- ----------- -------------------------------------------------------

INDEPENDENT DIRECTORS
Charles H. Brunie (72)........ Term: Until 2003. 2 Chairman, Brunie Associates (investments) since April
Brunie Associates Served since: 2001; Chairman, Oppenheimer Capital (1969-2000);
600 Third Avenue, 1988. Chairman Emeritus, Board of Trustees, Manhattan
17th Floor Institute (since 1990); Trustee, Milton and Rose D.
New York, NY 10016 Friedman Foundation for Vouchers (since 1999).
Trustee, Hudson Institute (since 2002). Trustee,
Director American Spectator (since 2002).

Elliot S. Jaffe (76).......... Term: Until 2005. 2 Chairman of The Dress Barn, Inc. (since 1963).
30 Dunnigan Drive Served since: Director, National Retail Federation (since 1994);
Suffern, NY 10901 1988. Stamford Hospital Foundation (since 1997). Member,
Board of Overseers of The School of Arts and Sciences,
Director University of Pennsylvania (since 1998); Trustee,
Teachers College, Columbia University (since 1996).
Director of Citigroup Funds (since 1990).

Wendy Luscombe (51)........... Term: Until 2005. 2 Principal, WKL Associates, Inc. (investment
c/o Phoenix/Zweig Advisers LLC Served since: management) (since 1994). Fellow, Royal Institution of
900 Third Avenue 2001. Chartered Surveyors. Member, Chartered Institute of
New York, NY 10022 Arbitrators. Director, Amadeus Vision Capital, plc
(since 1999). Director, Endeavour Real Estate
Director Securities, Ltd. (since 2000). Director, PXRE Corp.
(reinsurance) (since 1994).

Alden C. Olson, Ph.D. (74).... Term: Until 2004. 2 Currently retired. Chartered Financial Analyst (since
2711 Ramparte Path Served since: 1964). Professor of Financial Management, Investments
Holt, MI 48842 1996. at Michigan State University (1959 to 1990).

Director

James B. Rogers, Jr. (60)..... Term: Until 2003. 2 Private investor (since 1980). Chairman, Beeland
352 Riverside Drive Served since: Interests (Media and Investments) (since 1980). Regular
New York, NY 10025 1986. Commentator on CNBC (1998). Author of "Investment
Biker: On the Road with Jim Rogers" (1994). Visiting
Director Professor, Columbia University (1998). Columnist,
WORTH Magazine (since 1995). Director, Emerging
Markets Brewery Fund (1993-2002). Director, Levco
Series Trust 2 portfolios (since 1996).

INTERESTED DIRECTOR
Philip R. McLoughlin (56)... Term: Until 2003. 49 Director, PXRE Corporation (Delaware) (1985-present),
56 Prospect Street Served since: World Trust Fund (1991-present). Chairman (1997-
Hartford, CT 06115-0480 2002. 2002), Director (1995-2002), Vice Chairman (1995-1997)
Chairman and President and Chief Executive Officer (1995-2002), Phoenix
Investment Partners, Ltd. Director, Executive Vice
President and Chief Investment Officer, The Phoenix
Companies, Inc. (2001-2002). Director (1994-2002) and
Executive Vice President, Investments (1988-2002),
Phoenix Life Insurance Company. Director (1983-2002)
and Chairman (1995-2002), Phoenix Investment
Counsel, Inc. Director (1984-2002) and President (1990-
2000), Phoenix Equity Planning Corporation. Chairman
and Chief Executive Officer, Phoenix/Zweig Advisers
LLC (1999-2002). Director and President, Phoenix
Investment Management Company (2001-2002).
Director and Executive Vice President, Phoenix Life
and Annuity Company (1996-2002). Director and
Executive Vice President, PHL Variable Insurance
Company (1995-2002). Director, Phoenix National Trust
Company (1996-2002). Director and Vice President, PM
Holdings, Inc. (1985-2002). Director, PHL Associates,
Inc. (1995-2002). Director (1992-2002) and President
(1992-1994), WS Griffith Securities, Inc.

OFFICERS WHO ARE NOT DIRECTORS
Jeffrey Lazar (43).......... Served since Vice President, Phoenix/Zweig Advisers LLC (since
Executive Vice President and 1988. 1999). Director and Vice President, The Zweig Fund,
Treasurer Inc. (until 1999); Vice President and Treasurer, The
Zweig Advisors, Inc. (until 1999).

Christopher M. Capano (35).. Served since: Investment Professional, Phoenix/Zweig Advisers LLC
Vice President 1996. (since 1994).

Nancy J. Engberg (46)....... Served since: Vice President and Counsel, Phoenix Investment
56 Prospect Street 1999. Partners, Ltd. since 1999. Counsel, Phoenix Home Life
Hartford, CT 06115 Mutual Insurance Company (1994 to 1999).
Secretary

THE ZWEIG FUND, INC.

YEAR END RESULTS

Total Return
on Net Asset Net Asset NYSE Premium
Value Value Share Price (Discount)
------------ --------- ----------- ----------

Year ended 12/31/2002..... (22.8%) $ 5.46 $ 4.9300 (9.7%)
Year ended 12/31/2001..... (15.0%) 7.96 7.9000 (0.8%)
Year ended 12/31/2000..... (5.1%) 10.32 9.8125 (4.9%)
Year ended 12/31/1999..... 12.9% 12.20 10.0625 (17.5%)
Year ended 12/31/1998..... 6.6% 12.03 10.8125 (10.1%)
Year ended 12/31/1997..... 22.0% 12.63 13.2500 4.9%
Year ended 12/31/1996..... 14.5% 11.45 10.8750 (5.0%)
Year ended 12/31/1995..... 18.3% 11.06 11.2500 1.7%
Year ended 12/31/1994..... (2.7%) 10.33 10.3750 0.4%
Year ended 12/31/1993..... 13.3% 11.68 13.7500 17.7%
Year ended 12/31/1992..... 0.4% 11.36 13.0000 14.4%
Year ended 12/31/1991..... 30.1% 12.40 13.7500 10.9%
Year ended 12/31/1990..... 1.9% 10.48 11.0000 5.0%
Year ended 12/31/1989..... 22.3% 11.43 12.3750 8.3%
Year ended 12/31/1988..... 17.9% 10.35 10.3750 0.2%
Year ended 12/31/1987..... 14.7% 9.73 9.0000 (7.5%)
Inception 10/2/86-12/31/86 (0.4%) 9.31 9.1250 (2.0%)

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

KEY INFORMATION

1-800-272-2700 Zweig Shareholder
Relations:
For general information and literature

1-800-272-2700 The Zweig Fund Hot Line:
For 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.

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

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.

OFFICERS AND DIRECTORS
Philip R. McLoughlin
Chairman of the Board and President

Jeffrey Lazar
Executive Vice President and Treasurer

Nancy J. Engberg
Secretary

Christopher M. Capano
Vice President

Charles H. Brunie
Director

Elliot S. Jaffe
Director

Wendy Luscombe
Director

Alden C. Olson, Ph.D.
Director

James B. Rogers, Jr.
Director

Investment Adviser
Phoenix/Zweig Advisers LLC
900 Third Avenue
New York, NY 10022

Fund Administrator
Phoenix Equity Planning Corporation
56 Prospect St.
PO Box 150480
Hartford, CT 06115-0480

Custodian
The Bank of New York
One Wall Street
New York, NY 10286

Transfer Agent
EquiServe Trust Co., N.A.
P.O. Box 43010
Providence, RI 02940-3010

Legal Counsel
Katten Muchin Zavis Rosenman
575 Madison Avenue
New York, NY 10022

Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036

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

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.

PXP 1337
4902-ANN 12/02

Annual Report

Zweig

The Zweig Fund, Inc.

December 31, 2002

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