UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-04739
The Zweig Fund, Inc
(Exact name of registrant as specified in charter)
900 Third Avenue
New York, NY 10022
(Address of principal executive offices) (Zip code)
Bank of New York.
101 Barclay St., 13E
New York, NY 10286
(Name and address of agent for service)
Registrant's telephone number, including area code: (212) 298-1635
Date of fiscal year end: December 31, 2003
Date of reporting period: December 31, 2003
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
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 Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. (S) 3507.
Item 1. Reports to Stockholders.
February 1, 2004
Dear Shareholder:
When we think about 2003, we'll remember a year in which financial services
underwent significant change. National news events reflected regulatory concern
regarding the business conduct of a few mutual fund companies. As a result,
certain industry-wide practices came under increased scrutiny. Your fund's
Board of Trustees recognizes the seriousness of these issues. As a result, it
has expanded its review of policies and procedures to insure compliance with
applicable rules and regulations. Additionally, the Board has undertaken a
review of its own structure and governance protocols to insure that our
practices are not only compliant with regulatory standards, but, whenever
practical, also conform to best practices that value your interests and help
you invest wisely.
The Zweig Fund announced new management effective April 1, 2003. Carlton
Neel and David Dickerson have managed the Fund since that time in conjunction
with the asset allocation strategies provided by Dr. Martin Zweig and his
advisory firm Zweig Consulting LLC. Mr. Neel and Mr. Dickerson currently manage
several other funds in the Phoenix open-end mutual fund complex, including the
Phoenix-Market Neutral fund, and several small-cap value portfolios. The Fund's
investment objectives have remained the same under the new management.
I hope that you'll take time to review the activities and performance
information included in this Zweig Fund Annual Report.
The Zweig Fund's net asset value gained 6.97% for the three months ended
December 31, 2003, including the $0.090 distribution paid on October 27, 2003.
During the same period, the Standard & Poor's 500 Index increased 12.17%,
including dividends. Consistent with our policy of seeking to earn reasonable
returns while minimizing risk, the Fund's average exposure in U.S. common
stocks during the period was approximately 58%. We also had an average exposure
of 21% in short-term U.S. Government bonds. The Fund's average equity exposure
during the period was approximately 56%.
For the year ended December 31, 2003, the Fund's net asset value, including
the $0.497 in reinvested distributions, rose 14.85%. During the same period,
the S&P 500 Index increased 28.71%, including dividends. The Fund's average
exposure in U.S. common stocks for the year was approximately 58%. We also had
an average exposure of 5% in short-term U.S. Government bonds.
The Fund recently announced a distribution of $0.046 payable on January 12,
2004 to shareholders of record on December 31, 2003. Including this
distribution, the Fund's total payout since its inception is now $17.971.
Sincerely,
/s/ Philip R. McLoughlin
Philip R. McLoughlin
Chairman
MARKET OUTLOOK
After slipping for three consecutive years, the stock market surged in 2003.
The Dow Jones Industrial Average gained 28.04%, the Standard & Poor's 500 Index
climbed 28.71%, and the NASDAQ Composite Index jumped 50%.
Several factors were responsible for the market's strong performance. First,
there was the outcome of the Iraq war. When it started, many people worried
about its duration and sold stock. When the war went well, the market started
to bounce back from an oversold position. Secondly, investors awoke to the fact
that the economy was actually improving and earnings were coming in nicely.
I believe the rally in the last three or four months of the year was spurred
by economic news exceeding even the most bullish expectations. Gross Domestic
Product soared 8.2% in the third quarter and the fourth quarter appeared quite
strong. Also, earnings were extremely good, rising 11.6% for the third quarter,
the biggest quarterly increase since 1992.
Traditionally, the market does not do well when the GDP is extraordinarily
high or when earnings are really great. That's usually when inflation begins to
pick up and the Federal Reserve starts to tighten. But that hasn't happened
this time. Instead, the Fed held its interest rate at one percent despite the
rising economy. With interest rates low and the economy advancing, all the
speculative money went into the stock market.
When the Fed held interest rates steady at its December meeting, it
reiterated that its cheap money policy can be maintained for "a considerable
period." It also said that the risk of a fall in inflation was almost equal to
a rise. In addition, the Fed saw equal upside and downside risks for achieving
sustainable economic growth over the next few quarters.
I think that the Fed is right about the diverse pressures on prices but
that's about the only thing I agree with. There are some deflationary threats
in the world, especially from the constant lowering of prices on imported goods
stemming from low foreign labor costs. However commodity prices around the
world have leaped. China, whose economy is booming, is possibly the biggest
buyer of oil, copper, and a host of other commodities. This translates into
some inflationary pressures.
Right now I think we are heading into bubble number two. It's not like
bubble number one but the market is extremely overvalued and there's an awful
lot of optimism, as measured by my sentiment model. I believe many people
rationalize the high price/earnings ratios because short interest rates are so
low. In my opinion, rates have nowhere to go on the downside but there's plenty
of room on the upside and we are getting inflationary pressures. Should rates
rise, it will be impossible to justify the current price to earnings ratios.
However if earnings continue to be strong, then who knows? Maybe the market can
continue to rise.
Incidentally, there were many headlines and much comment when the Dow
crossed the 10,000 mark, a round-trip it has made 19 times since 1999. I
remember the same hullabaloo with 1,000, 2,000, and 3,000. When we had a bear
market in 1990 it couldn't get much above 3,000. People put stock in round
numbers but you really have to look at the overall economy, sentiment,
earnings, and similar hard facts.
The stock market was much less volatile last year. There were only 15 days
in which the Dow gained or declined 2% compared with 48 in 2002, 25 in 2001,
and 31 in 2000. Ironically, the market historically does best coming off a
period of very high volatility. Although this indicator doesn't work all the
time, the lack of volatility frequently is a sign of complacency.
Meanwhile, money is pouring into stock mutual funds. The public invested
more than $150 billion in the funds since the market began
2
to rally last March, the fastest inflow since the market peak in 2000.
November's inflow of $15 billion was the eighth consecutive month of positive
inflows. Despite three years of losses, mutual fund assets are up 13% since the
end of 2002. So far inflows have helped the market but at some point they will
be overdone. If this is a bubble, it is very possible that the high inflows
could continue for a year or two or even longer. The last bubble began in 1996
and didn't end until 2000.
When it comes to investing now, the public has a choice. People can keep
their cash in money funds or Treasury bills and earn almost nothing. So what do
you do? You can buy bonds but the bond market cracked in midyear and there have
been net outflows from bond funds. The other alternative is stocks and, again,
stocks look cheap if you compare them with the low short-term rates. So the
money is flowing into the stock market and it is rising.
There is nothing wrong with the stock market rising but, at these
valuations, I just don't know. Because these valuations are totally out of
whack with previous market bottoms, I still don't believe the bottoms we have
seen will be the final market bottom. Last year the price/earnings ratio of the
S&P 500 fell to about 27 from 32. However this is still substantially above the
historical average of 16. Meanwhile the NASDAQ 100 is selling at 40 times
estimated 2004 earnings. Incidentally, I still believe that many earnings are
overstated. We still have many of the accounting problems and, for the most
part, there is a non-recognition of the expense of stock options.
One of the reasons I don't think the major trend bear market is over is the
low level of cash at mutual funds. In November, the last month for which
figures are available, the average stock mutual fund had only 4.6% of its
assets in cash.* Normally at a stock market bottom you would see something like
9% or 10% in cash. I believe one reason for the present figure is that index
funds are not holding any cash. Another reason is that portfolio managers are
afraid to carry cash because they think the real risk is lagging the market and
not of the market crashing while they are 100% invested. Until I see higher
levels of cash, I will remain skeptical.
Although the mutual fund scandals continue to make headlines, I don't see a
heck of a lot of impact on the market. It does affect what some people are
doing with their money. They are taking it out of the funds with the scandals
and putting it into the funds that so far are clean. Generally it seems people
are ignoring the scandals, which is kind of amazing. With stocks up so much,
it's obvious the scandals are not hurting the market.
As analysts are getting more bullish, insiders are selling more stock.
During November insiders sold $43 in stock for every dollar's worth they
bought. It was the seventh consecutive month in which the sell-buy ratio topped
twenty to one.* We have tested the insider numbers extensively. Because some
insider sales involve the exercise of options, we just look at the amount
they're buying. We have found that their purchases, relative to market
capitalization, are very, very low. It doesn't mean that insiders are always
right-they sometimes are not-but it is one of the negative signs for the market
in my sentiment model.
Another negative in the model is margin debt. Although it is down roughly
half from its 2000 peak, it hasn't dropped nearly enough relative to what has
occurred historically after major bear markets. It does not mean that the
market can't go higher but I would not be wild about any further increases in
margin debt. Short-selling indicators, on the other hand, are decent. The short
interest ratio, which is the short position divided by the average daily
volume, isn't bad, especially on NASDAQ. It is one of my few sentiment
indicators that is okay, in my opinion.
One market positive last year was the tax bill that lowered the tax on
dividends. That has
3
helped the market. Companies in the S&P 500 are estimated to have paid a record
of $160.6 billion to shareholders in 2003, up from $147.8 billion in 2002. More
companies are initiating disbursements and others are increasing theirs.
Unfortunately, dividend yields are very low. The S&P yield now is 1.6% and the
Dow is 2%. Although yields look good relative to short-term rates, I think they
don't offer much protection on the downside.
In a market where the dividend yield is, say, 6%, which we get at major
market bottoms, investors have real protection if the market declines. Many
investors seeking value would come into the market. Should the market dip
moderately or mark time, the 6% figure would look good. If short-term interest
rates rise, the current dividend yields would not look nearly as attractive as
they are today.
Reflecting higher stock prices, the initial public offering market is
showing signs of life and mergers are rebounding. So far the new issues market
doesn't seem excessive to me. It's not nearly like what we had in 1998, 1999,
and early 2000. That was truly a wild scene. Mergers were up 19% last year.
However typically they are only helpful to the market if they are cash
takeovers. There you are taking stock off the market and adding cash, which
tends to be re-deployed into other stocks.
Although consumer confidence has climbed quite a bit from its lows, with the
Conference Board reporting a 91.3 figure for December, I see danger on the
horizon. The Fed reported that total consumer debt hit a record of $1.98
trillion in October. Since consumer spending accounts for about 75% of the GDP,
the extremely high debt presents a troubling question: Where will the juice
come to keep this economy going? Consumers have carried the economy but I don't
know how they can keep increasing their debt at a fast enough rate. The problem
might ease if more people get jobs or real income rises but with all the
foreign competition, I believe that will be difficult.
Even more troublesome is the growing federal deficit that some analysts say
could hit $500 billion this year. This number is staggering. I can't even
comprehend $500 billion in deficits. I believe it's fine to run a deficit to
stimulate the economy during a recession, but when the economy is growing the
deficit should be narrowing. If it keeps widening, at some point it would put
upward pressure on interest rates that could hurt the economy.
Indicating a strong economy, the Institute for Supply Management's index of
manufacturing activity surged to 66.2 in December from 62.8 in November and was
the highest in twenty years. But, historically, this figure has a downside.
When it has been in the bottom 20% of all readings, anything below 47, the
market has gone up at a 16.9% annual rate. In the top 20% of all readings, any
number above 59, the market has gone up only three-tenths of a percent.
That's because the stock market is a forward looking, discounting mechanism.
So when the economy is limp and the ISM index is weak, I think it is usually a
good time to buy stocks. Turn back the clock a year or so, and that's the
period we were going through. Now with the economy booming, we've had several
great quarters in a row and the ISM index is off the charts. Historically, when
we get these kinds of readings, the Fed would be tightening. If the Fed
continues to sit on its hands, it is possible that the stock market momentum
will continue and we will get further into bubble number two.
These are very unusual times. We have a political situation the likes of
which we have never seen. If there is a major terrorist attack on our country,
the whole stock market could fall apart. We are running a budget deficit, which
is okay in a recession, but we are not in a recession anymore. A lot of the
spending is mandated for homeland security and we have to support our troops
overseas. But if we don't narrow our deficit, it is likely the dollar will get
weaker. It is already down 20% against the Euro and 10% against the Japanese
yen.
4
Worse to me than the budget deficit is the massive trade deficit. Some
believe that the weak dollar is great for our economy because it helps our
exports. But if we buy more expensive Japanese television sets or German cars
or Italian shoes, or other foreign products are we really better off
economically? What's more, if the weak dollar causes foreigners to sell their
U.S. assets it could put upward pressure on bond yields and downward pressure
on stocks. If we don't do something to strengthen the dollar we could wind up
with a real economic headache.
Summing up, in my opinion the positives include the tape action with its
very favorable ratio of advances versus declines. The strong earnings are also
a positive, although they have a negative potential. As long as earnings are
good, people feel confident about the market. The problem is that the expanding
economy usually leads to higher interest rates. We haven't seen them yet. So
another positive for the time being is the Fed keeping its gas pedal to the
metal but eventually that will create difficulties down the road.
On the negative side are my sentiment indicators that are terrible on
balance, the horrible valuations and the weak dollar. So far the weak dollar
has helped to stimulate the economy but, if it slides further, it could be
nasty.
If nothing disastrous happens to the world and the Fed keeps cheap money, I
could see the market going up 20% to 30% but it would be kind of a bubble
period. If bad things occur in the world, I could see the market dropping 20%
to 30%.
Because of the risks involved on all sides, I am currently on the fence. We
are about 57% invested in U.S. common stocks. Could I go to 60%? Yes, but I
don't want to increase too much because of the downside risk. My mandate is to
mitigate this risk. If we are lagging the market a bit, fine. But, if there's a
sharp downturn, I would kick myself for being heavily invested because I know
about all the previously mentioned important negatives.
If everything stays comfortably stable for the next three or six months,
this market could go a lot higher. However it just doesn't have a good feel to
me because I still don't think we have touched the final bottom yet. The
current situation reminds me of when the Japanese market peaked at the end of
1989. For the next thirteen years or so they had a long-term bear market.
Within that span they had three or four really big upward moves that were
small bull markets. Of course a small bull market could be up 50% and that's
what we have already seen in the NASDAQ. While NASDAQ is nowhere near its high,
some averages have actually made new highs. However the whole picture just
doesn't make me feel comfortable and I don't want to roll the dice with other
people's money. I am not straddling the fence because I think the market will
go sideways. I believe it could be volatile on the upside or the downside.
Sincerely,
/s/ Martin E. Zweig, Ph.D.
Martin E. Zweig, Ph.D.
President
Zweig Consulting LLC
--------
* Source: Zweig Consulting LLC
5
PORTFOLIO COMPOSITION
Unchanged from the previous listing, our leading industry groups at the
year-end included financials, health care, technology, consumer discretionary,
and consumer staples.
We increased our holdings in consumer discretionary during the quarter and
trimmed our position in financials.
Our leading individual holdings in December 31, 2003 included Wells Fargo,
Citigroup, Pfizer, Cisco Systems, Dell, Occidental Petroleum, Freeport-McMoRun,
Microsoft, Alcoa, and Proctor & Gamble. New to this listing are
Freeport-McMoRun and Alcoa. No longer in this listing are Amgen, which we
trimmed, and Mylan Laboratories.
Sincerely,
[SIGNATURE]
/s/ Carlton Neel
Carlton Neel
Executive Vice President
Phoenix/Zweig Advisers LLC
6
THE ZWEIG FUND, INC.
INVESTMENTS AND SECURITIES SOLD SHORT
December 31, 2003
Number of
Shares Value
--------- -----------
INVESTMENTS
DOMESTIC COMMON STOCKS 56.57%
CONSUMER DISCRETIONARY 8.00%
AutoZone, Inc................................. 35,000(a) $ 2,982,350
Best Buy Co., Inc............................. 70,000(a) 3,656,800
Delphi Corp................................... 220,000 2,246,200
GAP (The), Inc................................ 242,000 5,616,820
Home Depot, Inc............................... 139,000(b) 4,933,110
Liz Claiborne, Inc............................ 90,000 3,191,400
Lowe's Cos., Inc.............................. 70,500(b) 3,904,995
Tribune Co.................................... 80,500 4,153,800
Visteon Corp.................................. 256,000 2,664,960
-----------
33,350,435
-----------
CONSUMER STAPLES 5.37%
Altria Group, Inc............................. 75,000(b) 4,081,500
Coca-Cola Enterprises, Inc.................... 137,000 2,996,190
Kimberly-Clark Corp........................... 70,000 4,136,300
PepsiCo, Inc.................................. 58,900 2,745,918
Procter & Gamble Co........................... 56,600 5,653,208
Wal-Mart Stores, Inc.......................... 52,000 2,758,600
-----------
22,371,716
-----------
ENERGY 3.50%
ConocoPhillips................................ 76,000 4,983,320
Halliburton Co................................ 127,000 3,302,000
Occidental Petroleum Corp..................... 149,500 6,314,880
-----------
14,600,200
-----------
FINANCIALS 11.31%
AFLAC, Inc.................................... 92,000(b) 3,328,560
Allstate Corp................................. 69,400 2,985,588
Aon Corp...................................... 135,000 3,231,900
Bank of America Corp.......................... 40,000 3,217,200
Capital One Financial Corp.................... 62,000(c) 3,799,980
Citigroup, Inc................................ 165,000 8,009,100
First Tennessee National Corp................. 85,000 3,748,500
Morgan Stanley................................ 50,000 2,893,500
See notes to financial statements
7
Number of
Shares Value
--------- -----------
FINANCIALS (CONTINUED)
National City Corp............................ 94,000 $ 3,190,360
Wachovia Corp................................. 96,000 4,472,640
Wells Fargo & Co.............................. 140,200 8,256,377
-----------
47,133,705
-----------
HEALTH CARE 10.42%
Amgen, Inc.................................... 70,000(a) 4,326,000
Angiotech Pharmaceuticals, Inc................ 75,000(a) 3,450,000
Bristol-Myers Squibb Co....................... 115,000 3,289,000
C. R. Bard, Inc............................... 43,000 3,493,750
Caremark RX, Inc.............................. 175,000(a) 4,432,750
Guidant Corp.................................. 44,000 2,648,800
McKesson Corp................................. 88,000 2,830,080
Merck & Co., Inc.............................. 60,000 2,772,000
Mylan Laboratories, Inc....................... 214,500 5,418,270
Pfizer, Inc................................... 190,000 6,712,700
UnitedHealth Group, Inc....................... 69,600 4,049,328
-----------
43,422,678
-----------
INDUSTRIALS 5.52%
Boeing Co..................................... 52,100 2,195,494
Deere & Co.................................... 55,000(b) 3,577,750
L-3 Communications Holdings, Inc.............. 75,000(a) 3,852,000
Lockheed Martin Corp.......................... 70,000 3,598,000
Norfolk Southern Corp......................... 150,000 3,547,500
Northrop Grumman Corp......................... 29,000 2,772,400
PACCAR, Inc................................... 40,000 3,404,800
Quality Distribution, Inc..................... 1,900(a) 37,145
-----------
22,985,089
-----------
INFORMATION TECHNOLOGY 6.94%
Amdocs Ltd.................................... 158,000(a) 3,551,840
Cisco Systems, Inc............................ 269,000(a) 6,534,010
Dell, Inc..................................... 186,000(a) 6,316,560
First Data Corp............................... 69,300 2,847,537
Internet Security Systems, Inc................ 203,000(a) 3,822,490
Microsoft Corp................................ 212,000 5,838,480
-----------
28,910,917
-----------
MATERIALS 2.40%
Alcoa, Inc.................................... 150,000 5,700,000
Georgia-Pacific Corp.......................... 140,000 4,293,800
-----------
9,993,800
-----------
See notes to financial statements
8
Number of
Shares Value
--------- ------------
TELECOMMUNICATION SERVICES 0.82%
CenturyTel, Inc.............................. 105,000 $ 3,425,100
------------
UTILITIES 2.29%
Entergy Corp................................. 52,900 3,022,177
Exelon Corp.................................. 65,000(b) 4,313,400
PPL Corporation.............................. 50,000 2,187,500
------------
9,523,077
------------
Total Domestic Common Stocks (cost $202,856,689). 235,716,717
------------
FOREIGN COMMON STOCKS 7.69%
CONSUMER DISCRETIONARY 0.81%
Honda Motor Co., Ltd. ADR Japan.............. 150,000 3,375,000
------------
ENERGY 1.40%
Tallsman Energy, Inc. (Canada)............... 51,200 2,897,920
Total S.A., ADR (France)..................... 32,000 2,960,320
------------
5,858,240
------------
INFORMATION TECHNOLOGY 1.02%
Nokia Corp., ADR (Finland)................... 251,000 4,267,000
------------
MATERIALS 4.46%
BHP Billiton Ltd. (Australia)................ 405,032 3,720,034
Freeport-McMoRan Copper & Gold, Inc., Class B
(Indonesia)................................ 140,000 5,898,199
Newcrest Mining Ltd. (Australia)............. 266,563 2,600,899
Rio Tinto Ltd. (Australia)................... 128,086 3,590,033
WMC Resources Ltd. (Australia)............... 650,343(a) 2,758,701
------------
18,567,866
------------
Total Foreign Common Stocks (cost $26,866,619)... 32,068,106
------------
PREFERRED STOCKS 2.92%
FINANCIALS 2.92%
ABN Amro North America, 144A, 8.75% Pfd...... 11,500(d) 11,949,225
Citibank NA Series A, 6.34% Pfd.............. 2,000(a) 202,500
------------
Total Preferred Stocks (cost $12,461,172)........ 12,151,725
------------
See notes to financial statements
9
Principal
Amount Value
----------- ------------
U.S. GOVERNMENT SECURITIES 22.15%
United States Treasury Notes, 12.75%
11/15/10 (cost $93,289,803).................... $77,000,000 $ 92,306,830
------------
AGENCY NON-MORTGAGE BACKED SECURITIES 6.29%
Federal National Mortgage Association, 3.00%,
6/15/04 (cost $26,226,102)..................... 26,000,000 26,219,544
------------
SHORT-TERM INVESTMENT 4.13%
Federal National Mortgage Association, 0.75%,
1/02/04 (cost $17,199,642)..................... 17,200,000 17,199,642
------------
Total Investments -- 99.75% (cost $378,900,027)....... 415,662,564
Securities Sold Short -- (4.65)% (proceeds $17,397,579) (19,383,700)
Other assets less liabilities -- 4.90%................ 20,428,200
------------
Net Assets -- 100%.................................... $416,707,064
============
--------
(a) Non-income producing security.
(b) Position, or portion thereof, with an aggregate market value of
$30,876,205 has been segregated to collateralize securities sold short.
(c) Position is segregated as collateral for written options.
(d) Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At December 31,
these securities amounted to a value of $11,949,225 or 2.87% of net assets.
Glossary:
ADR --American Depositary Receipt
For Federal income tax purposes, the tax basis of investments owned at
December 31, 2003 was $380,617,395 and net unrealized depreciation of
investments consisted of:
Gross unrealized appreciation.. $ 45,215,488
Gross unrealized depreciation.. (10,170,319)
------------
Net unrealized appreciation.... $ 35,045,169
============
See notes to financial statements
10
Number of
Shares Value
--------- -----------
SECURITIES SOLD SHORT 4.65%
DOMESTIC COMMON STOCKS 4.65%
CONSUMER DISCRETIONARY 1.85%
Circuit City Stores, Inc..................... 275,000 $ 2,785,750
Ford Motor Co................................ 250,000 4,000,000
Tiffany & Co................................. 20,000 904,000
-----------
7,689,750
-----------
FINANCIALS 1.60%
Bank of New York Co., Inc. (The)............. 100,000 3,312,000
Marsh & McLennan Cos., Inc................... 70,000 3,352,300
-----------
6,664,300
-----------
HEALTH CARE 0.76%
Cephalon, Inc................................ 65,000 3,146,650
-----------
INDUSTRIALS 0.44%
Expeditors International of Washington, Inc.. 50,000 1,883,000
-----------
Total Securities Sold Short (proceeds $17,397,579) $19,383,700
===========
--------
For Federal income tax purposes, the tax basis of securities sold short at
December 31, 2003 was $17,397,579 and net unrealized depreciation of
investments consisted of
Gross unrealized appreciation............. $ 91,710
Gross unrealized depreciation............. (2,077,831)
-----------
Net unrealized appreciation............... $(1,986,121)
===========
See notes to financial statements
11
THE ZWEIG FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2003
ASSETS
Investments, at value (identified cost $378,900,027).... $ 415,662,564
Foreign currency at value (identified cost $33,996)..... 34,824
Cash.................................................... 115,904
Deposits with broker for securities sold short.......... 19,383,699
Interest receivable..................................... 1,318,963
Dividends receivable.................................... 331,296
Prepaid expenses........................................ 18,508
-------------
Total Assets........................................ 436,865,758
-------------
LIABILITIES
Securities sold short, at value (proceeds $17,397,579).. 19,383,700
Options written, at value (premiums received $100,435).. 117,800
Payable for investment securities purchased............. 40,564
Accrued advisory fees (Note 4).......................... 295,560
Accrued administration fees (Note 4).................... 45,203
Other accrued expenses.................................. 275,867
-------------
Total Liabilities................................... 20,158,694
-------------
NET ASSETS $ 416,707,064
=============
NET ASSET VALUE, PER SHARE
($416,707,064 /73,233,013 shares outstanding -- Note 5). $ 5.69
=============
Net Assets consist of
Capital paid-in......................................... $ 585,578,686
Undistributed net investment income..................... 240,006
Accumulated net realized loss on investments............ (203,871,507)
Net unrealized appreciation on investments.............. 36,746,000
Net unrealized depreciation on securities held short.... (1,986,121)
-------------
$ 416,707,064
=============
See notes to financial statements
12
THE ZWEIG FUND, INC.
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2003
INVESTMENT INCOME
Income
Dividends (net of foreign withholding taxes of $26,288)................ $ 4,253,020
Interest............................................................... 3,167,473
------------
Total Income........................................................ 7,420,493
------------
Expenses
Investment advisory fees............................................... 3,370,369
Administrative fees.................................................... 515,468
Transfer agent fees.................................................... 364,354
Printing and postage expenses.......................................... 246,055
Directors' fees and expenses........................................... 141,558
Professional fees...................................................... 137,844
Custodian fees......................................................... 71,739
Miscellaneous.......................................................... 209,993
------------
Expenses before dividends on short sales............................ 5,057,380
Dividends on short sales............................................ 231,238
------------
Net Expenses........................................................ 5,288,618
------------
Net Investment Income........................................... 2,131,875
------------
NET REALIZED AND UNREALIZED GAIN (LOSSES)
Net realized gain (loss) on:
Investments............................................................ (21,997,344)
Foreign currency transactions.......................................... (13,556)
Short sales............................................................ (4,270,483)
Net change in unrealized appreciation (depreciation) on:
Investments............................................................ 79,093,282
Options written........................................................ (17,365)
Foreign currency and foreign currency transactions..................... 828
Short sales............................................................ (1,986,121)
------------
Net realized and unrealized gain.................................... 50,809,241
------------
Net increase in net assets resulting from operations............ $ 52,941,116
============
See notes to financial statements
13
THE ZWEIG FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Year Ended
December 31,
---------------------------
2003 2002
------------ -------------
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income................................................ $ 2,131,875 $ 624,793
Net realized loss.................................................... (26,281,383) (137,974,324)
Net change in unrealized appreciation (depreciation)................. 77,090,624 21,342,523
------------ -------------
Net increase (decrease) in net assets resulting from
operations...................................................... 52,941,116 (116,007,008)
------------ -------------
Dividends and distributions to shareholders from
Net investment income................................................ (2,018,671) (624,793)
Tax return of capital................................................ (34,378,160) (45,982,141)
------------ -------------
Total dividends and distributions to shareholders................. (36,396,831) (46,606,934)
------------ -------------
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
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
------------ -------------
Net increase (decrease) in net assets................................ 16,544,285 (89,098,531)
NET ASSETS
Beginning of year........................................................ 400,162,779 489,261,310
------------ -------------
End of year.............................................................. $416,707,064 $ 400,162,779
============ =============
See notes to financial statements
14
THE ZWEIG FUND, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2003
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. The Fund's objective is to increase capital primarily through
investment in equity securities consistent with capital preservation and the
reduction of risk.
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
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, in determining value, utilizes information with respect to recent sales,
market transactions in comparable securities, quotations from dealers and
various relationships between securities. Short-term investments having a
remaining maturity of 60 days or less are valued at amortized cost which
approximates market value. Securities for which market quotations are not
readily available (of which there were none at December 31, 2003) 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 is
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
15
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 tax
regulations that may differ from generally accepted accounting principles.
These differences include the treatment of premium amortization, losses
deferred due to wash sales, differing treatment of certain income and gain
transactions, 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, 2003, the Fund
increased undistributed net investment income by $126,802, decreased
accumulated net realized loss by $13,556 and decreased paid in capital by
$140,358.
The components of distributable earnings on a tax basis (excluding
unrealized appreciation (depreciation) which is disclosed in the schedule of
Investments and Securities Sold Short) consist of undistributed ordinary income
of $0 and undistributed long-term capital gains of $0.
The Fund has $202,154,139 of capital loss carryovers, $38,468,937 expiring
in 2009, $136,883,040 expiring in 2010 and 26,802,162 expiring in 2011 which
may be used to offset future capital gains. The Fund may not realize the
benefits of these losses to the extent it does not realize gains on investments
prior to the expiration of the capital loss carryovers. In addition, under
certain conditions, the Fund may lose the benefit of these losses to the extent
that distributions to shareholders exceed required distribution amounts as
defined under the Internal Revenue Code. Shareholders may also pay additional
taxes on these excess distributions.
E. 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 separate that portion of the results of operations arising from
changes in exchange rates and that portion arising from changes in the market
prices of the securities.
F. Forward currency contracts
The Fund may enter into forward currency contracts in conjunction with the
planned purchase or sale of foreign denominated securities in order to hedge
the U.S. dollar cost or proceeds. Forward currency contracts involve, to
varying degrees, elements of market risk in excess of the amount recognized in
the Statement of Assets and Liabilities. Risks arise from the possible
movements in foreign exchange rates or if the counterparty does not perform
under the contract.
A forward currency contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any number of days from the
date of the contract agreed upon by the parties, at
16
a price set at the time of the contract. These contracts are traded directly
between currency traders and their customers. The contract is marked-to-market
daily and the change in market value is recorded by each Fund as an unrealized
gain or loss. When the contract is closed or offset with the same counterparty,
the Fund records a realized gain or loss equal to the change in the value of
the contract when it was opened and the value at the time it was closed or
offset.
G. Options
The Fund may write covered options or purchase options contracts for the
purpose of hedging against changes in the market value of the underlying
securities of foreign currencies.
The Fund will realize a gain or loss upon the expiration or closing of the
option transaction. Gains and losses on written options are reported separately
in the Statement of Operations. When a written option is exercised, the
proceeds on sales or amounts paid are adjusted by the amount of premium
received. Options written are reported as a liability in the Statement of
Assets and Liabilities and subsequently marked-to-market to reflect the current
value of the option. The risk associated with written options is that the
change in value of options contracts may not correspond to the change in the
value of the hedged instruments.
The Fund may purchase options which are included in the Fund's Schedules of
Investments and subsequently marked-to-market to reflect the current value of
the option. When a purchased option is exercised, the cost of the security is
adjusted by the amount of the premium paid.
H. Short Sales
A short sale is a transaction in which the Fund sells a security it does not
own in anticipation of a decline in market price. To sell a security short, the
Fund must borrow the security. The Fund's obligation to replace the security
borrowed and sold short will be fully collateralized at all times by the
proceeds from the short sale retained by the broker and by cash and securities
deposited in a segregated account with the Fund's custodian. If the price of
the security sold short increases between the time of the short sale and the
time the Fund replaces the borrowed security, the Fund will realize a loss, and
if the price declines during the period, the Fund will realize a gain. Any
realized gain will be decreased by, and any realized loss increased by, the
amount of transaction costs. Dividends on short sales are recorded as an
expense to the Fund on ex-dividend date. At December 31, 2003, the value of
securities sold short amounted to $19,383,700 against which collateral of
$30,876,205 was held. The collateral includes the deposits with broker for
securities held short and the value of the segregated investments held long, as
shown in the schedule of Investments and Securities Sold Short. 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 appreciate in
value, thereby increasing potential losses.
NOTE 3 -- Portfolio Transactions
During the year ended December 31, 2003, purchases and sales transactions
(excluding short-term instruments, securities sold short, written options and
forward currency contracts) were as follows:
Purchases Sales
------------ ------------
Investment securities...... $175,326,592 $199,618,117
U.S. government securities. 93,624,232 --
17
Transactions in written options for the year ended December 31, 2003, were
as follows:
Number of Premiums
Contracts Received
--------- --------
Option contracts outstanding at December 31, 2002 -- $ --
Option contracts written......................... 620 100,435
Option contract sold............................. -- --
Option contracts exercised....................... -- --
Option contracts expired......................... -- --
--- --------
Option contracts outstanding at December 31,2003. 620 $100,435
=== ========
As of December 31, 2003, the Fund had outstanding written options as follows:
Par Subject Par Subject Expiration Exercise Market
Call Option to Call to Put Date Price Value
----------- ----------- ----------- ---------- -------- --------
Capital One Financial Corp. 620 n/a 03/20/2004 $65.00 $117,800
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, 2003, the Fund accrued
advisory fees of $3,370,369.
Zweig Consulting LLC (the "Sub-Adviser"), which serves as the Sub-Adviser
for the Fund performs certain asset allocation research and analysis and
provides such advice to the Adviser. The Sub-Adviser's fees are paid by the
Adviser.
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.
Under the terms of the Agreement, the Administrator receives a fee for
financial reporting, tax services and oversight of the subagent's performance
at a rate of 0.13% of the Fund's average daily net assets. During the year
ended December 31, 2003, the Fund accrued administration fees of $515,468.
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 Commissions: During the year ended December 31, 2003, the Fund
paid PXP Securities Corp., a wholly-owned subsidiary of PXP, brokerage
commissions of $0 in connection with portfolio transactions effected through
them. In addition, PXP Securities Corp. charged $105,004 in
18
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, 2003, 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 year ended
December 31, 2003 and the year ended December 31, 2002, 0 and 787,167 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 15, 2003, the Fund announced a distribution of $0.046 per share
to shareholders of record on December 31, 2003. This distribution has an
ex-dividend date of January 5, 2004 and is payable on January 12, 2004.
NOTE 6 -- Financial Highlights
Selected data for a share outstanding throughout each year:
Year Ended December 31,
--------------------------------------------------
2003 2002 2001 2000 1999
-------- -------- -------- -------- --------
Per Share Data
Net asset value, beginning of period....................... $ 5.46 $ 7.96 $ 10.32 $ 12.20 $ 12.03
-------- -------- -------- -------- --------
Income From Investment Operations
Net investment income...................................... 0.03 0.01 -- 0.20 0.20
Net realized and unrealized gains (losses)................. 0.70 (1.76) (1.47) (0.90) 1.16
-------- -------- -------- -------- --------
Total from investment operations........................... 0.73 (1.75) (1.47) (0.70) 1.36
-------- -------- -------- -------- --------
Dividends and Distributions
Dividends from net investment income....................... (0.03) (0.01) (0.01) (0.21) (0.19)
Distributions from net realized gains ..................... -- -- (0.07) (0.97) (1.00)
Tax return of capital ..................................... (0.47) (0.68) (0.81) -- --
-------- -------- -------- -------- --------
Total dividends and distributions.......................... (0.50) (0.69) (0.89) (1.18) (1.19)
-------- -------- -------- -------- --------
Effect on net asset value as a result of rights offering*.. -- (0.06) -- -- --
-------- -------- -------- -------- --------
Net asset value, end of period.......................... $ 5.69 $ 5.46 $ 7.96 $ 10.32 $ 12.20
======== ======== ======== ======== ========
Market value, end of period**........................... $ 4.90 $ 4.93 $ 7.90 $ 9.81 $ 10.06
======== ======== ======== ======== ========
Total investment return***................................. 9.53% (29.78)% (11.27)% 9.45% 3.61%
======== ======== ======== ======== ========
Ratios/Supplemental Data
Net assets, end of period (in thousands) .................. $416,707 $400,163 $489,261 $620,354 $733,523
Ratio of expenses to average net assets
(excluding dividends on short sales)...................... 1.28% 1.20% 1.19% 1.12% 1.12%
Ratio of expenses to average net assets
(includes the dividends on short sales)................... 1.33% 1.20% 1.19% 1.12% 1.12%
Ratio of net investment income (loss) to average net assets 0.54% 0.14% (0.03)% 1.74% 1.68%
Portfolio turnover rate ................................... 74.8% 104.8% 80.3% 114.8% 114.9%
19
--------
* 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 purpose 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 the end of such periods.
UNAUDITED DISCLOSURES
Proxy Voting Procedures
The Adviser votes proxies relating to portfolio securities in accordance
with procedures that have been approved by the Fund's Board of Trustees. You
may obtain a description of these procedures, free of charge, by calling
"toll-free" 800-243-1574. This information is also available through the
Securities and Exchange Commission's website at http://www.sec.gov.
Tax Information Notice (Unaudited)
For Federal income tax purposes, 100% of the current year net income earned
dividends paid by the Zweig Fund will qualify for the dividends received
deduction for corporate shareholders when paid.
Effective for the calendar year 2003, qualified dividends will be taxed at
a lower rate for individual shareholders. 100% of the ordinary income
dividends distributed by the Zweig Fund and applicable to qualifying dividends
received after January 1, 2003, will qualify for the lower tax rate. This Fund
plans to designate the maximum amount allowable under the Jobs and Growth Tax
Relief Reconciliation Act. The actual percentage for the calendar year will be
designated in the year-end tax statements.
20
Report of Independent Auditors
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 securities sold short, 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, 2003, 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, 2003 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
New York, New York
February 18, 2004
21
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
------------------------- ----------------- ----------- --------------------------------------------------------
DISINTERESTED DIRECTORS
Charles H. Brunie (73)...... Term: Until 2006. 2 Director of The Zweig Total Return Fund, Inc. (since
Brunie Associates Served since: 1998); Chairman, Brunie Associates (investments)
600 Third Avenue, 17th Floor 1988. (since April 2001); Chairman, Oppenheimer Capital
New York, NY 10016 (1969 to 2000); Chairman Emeritus, Board of Trustees,
Manhattan Institute (since 1990). Trustee, Milton and
Director Rose D. Friedman Foundation for Vouchers (1999-
present). Trustee, Hudson Institute (since 2002).
Trustee, American Spectator (since 2002).
Wendy Luscombe (52)......... Term: Until 2005. 2 Director of The Zweig Total Return Fund, Inc. (since
480 Churchtown Road Served since: 2002); Principal, WKL Associates, Inc. (investment
Craryville, NY 12521 2002. management) (since 1994). Fellow, Royal Institution of
Chartered Surveyors. Member, Chartered Institute of
Director Arbitrators. Director, Endeavour Real Estate Securities,
Ltd. REIT Mutual Fund (since 2000). Director, PXRE,
Corp. (reinsurance) (since 1994). Member and
Chairman of Management Oversight Committee,
Deutsche Bank Real Estate Opportunities Fund (since
2003)
Alden C. Olson (76)......... Term: Until 2004. 2 Director of The Zweig Total Return Fund, Inc. (since
2711 Ramparte Path Served since: 1996); currently retired. Chartered Financial Analyst
Holt, MI 48842 1996. (since 1964). Professor of Financial Management,
Investments at Michigan State University (1959 to
Director 1990).
James B. Rogers, Jr. (61)... Term: Until 2006. 2 Director of The Zweig Total Return Fund, Inc. (since
352 Riverside Drive Served since: 1986); private investor (since 1980). Chairman, Beeland
New York, NY 10025 1988. Interests (investments and media) (since 1980). Regular
Commentator on CNBC (1998). Author of "Investment
Director Biker: On the Road with Jim Rogers" (1994) and
"Adventure Capitalist" (2003). Visiting Professor,
Columbia University (1998). Columnist, WORTH
Magazine (since 1995). Director, Emerging Markets
Brewery Fund (1993-2002). Director, Levco Series Trust
(since 1996).
22
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
------------------------- ---------------- ----------- ---------------------------------------------------------
INTERESTED DIRECTORS
Philip R. McLoughlin (57) Term: until 2004 78 Chairman of the Board and President of The Zweig
56 Prospect Street Served since: Total Return Fund, Inc. (since 2002); Consultant,
Hartford, CT 06115 2002. Phoenix Investment Partners, Ltd. (since 2002).
Director, PXRE Corporation (Delaware) (since 1985),
Chairman of the Board and World Trust Fund (since 1991). Chairman (1997-2002),
President Director (1995-2002), Vice Chairman (1995-1997) and
Chief Executive Officer (1995-2002), Phoenix
Investment Partners, Ltd. Director, Executive Vice
President and Director Chief Investment Officer, The
Phoenix Companies, Inc. (2000-2002). (1994-2002)
and Executive Vice President, Investments (1987-2002),
Phoenix Life Insurance Company. Director (1983-2002)
and Chairman (1995-2002), Phoenix Investment
Counsel, Inc. Director (1982-2002) and President
(1990-2000), Phoenix Equity Planning Corporation.
Chairman and Chief Executive Officer, Phoenix/Zweig
Advisers LLC (2000-2002). Director (2001-2002) and
President (April 2002-September 2002), Phoenix
Investment Management Company. Director and
Executive Vice President, Phoenix Life and Annuity
Company (1996-2002). Director (1995-2002) and
Executive Vice President (1994-2002), PHL Variable
Insurance Company. Director, Phoenix National Trust
Company (1996-2002). Director (1985-2002) and Vice
President (1986-2002), PM Holdings, Inc. Director,
WS Griffith Associates, Inc. (1995-2002). Director
(1992-2002) and President (1993-1994), WS Griffith
Securities, Inc.
DIRECTOR NOMINEES
R. Keith Walton (39)..... 2 Secretary of the University at Columbia University
15 Claremont Avenue (since 1996). Director (since 2000); Chair, Nominating
No. 43 Committee (since 2002); Member, Executive Committee
New York, NY 10027 (since 2002); Chair, Audit Committee (since 2003),
Apollo Theater Foundation, Inc. Director, Orchestra of
St. Luke's (since 2000). Director, American Friends of
the Royal Court Theatre (since 2003). Member, Steering
Committee, Association for a Better New York (since
2001). Member, Education Committee of the Board,
Trinity School (since 2003). Vice President (since 2000),
Chair, Finance Committee (since 2000), Riverside
Church. Member, Advisory Board, North General
Hospital (since 2002). Member, NY Advisory Board,
Enterprise Foundation (since 1999). Member, Council
on Foreign Relations (since 1997). Member, The
American Law Institute (since 1999). Member, Council
for the United States and Italy (since 1999). Member,
Century Association (since 2000).
23
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
------------------------- -------------- ----------- ------------------------------------------------------
OFFICERS WHO ARE NOT DIRECTORS
Carlton Neel (36)........ Served since: Executive Vice President of The Zweig Total Return
900 Third Ave. 2003. Fund, Inc. (since 2003); Senior Vice President and
New York, NY 10022 Portfolio Manager, Phoenix/Zweig Advisers LLC
(since 2003). Managing Director and Co-Founder,
Executive Vice President Shelter Rock Capital Partners, LP (2002-2003). Senior
Vice President and Portfolio Manager, Phoenix/Zweig
Advisers LLC (1995-2002). Vice President, JP Morgan &
Co. (1990-1995).
David Dickerson (36)..... Served since: Senior Vice President of The Zweig Total Return Fund,
900 Third Ave. 2003. Inc. (since 2003); Senior Vice President and Portfolio
New York, NY 10022 Manager, Phoenix/Zweig Advisers LLC (since 2003).
Managing Director and Co-Founder, Shelter Rock
Vice President Capital Partners, LP (2002-2003). Vice President
and Portfolio Manager, Phoenix/Zweig Advisers LLC
(1993-2002).
Nancy J. Engberg (47).... Served since: Secretary of The Zweig Total Return Fund, Inc. (since
56 Prospect Street 2000. 2000); Vice President and Chief Compliance Officer
Hartford, CT 06115 (since December 2003) and Vice President and
Investment Counsel (2002-2003), The Phoenix
Secretary Companies, Inc. and its insurance company
subsidiaries; Vice President and Counsel, Phoenix
Investment Partners, Ltd. (since 1999). Counsel,
Phoenix Home Life Mutual Insurance Company (1994
to 1999).
Nancy Curtiss (51)....... Served since: Treasurer of The Zweig Total Return Fund, Inc. (since
56 Prospect Street 2003. 2003); Vice President, Operations (since 2003); Vice
Hartford, CT 06115 President, Fund Accounting (1994-2003) and Treasurer
(1996-2003), Phoenix Equity Planning Corporation.
Treasurer Treasurer, multiple funds in Phoenix Fund Complex
(since 1994).
24
THE ZWEIG FUND, INC.
YEAR END RESULTS
Total Return
on Net Asset Net Asset NYSE Premium
Value Value Share Price (Discount)
------------ --------- ----------- ----------
Year ended 12/31/2003..... 14.85% $ 5.69 $ 4.9000 (13.88%)
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, 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.
-----------------
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.
25
OFFICERS AND DIRECTORS
Philip R. McLoughlin
Chairman of the Board and President
Carlton Neel
Executive Vice President
David Dickerson
Senior Vice President
Nancy J. Engberg
Secretary
Nancy Curtis
Treasurer
Charles H. Brunie
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.
PO Box 43010
Providence, RI 02940-3010
Legal Counsel
Katten Muchin Zavis Rosenman
575 Madison Avenue
New York, NY 10022
Independent Auditors
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 12/03
Annual Report
Zweig
The Zweig Fund, Inc.
December 31, 2003
[GRAPHIC]
Item 2. Code of Ethics.
(a) The registrant, as of the end of the period covered by this report,
has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party.
(b) There have been no amendments, during the period covered by this
report, to a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are
employed by the registrant or a third party, and that relates to any
element of the code of ethics description.
(c) The registrant has not granted any waivers during the period covered
by this report, including an implicit waiver, from a provision of the
code of ethics that applies to the registrant's principal executive
officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions, regardless of
whether these individuals are employed by the registrant or a third
party, that relates to one or more of the items set forth in paragraph
(b) of this item's instructions.
Item 3. Audit Committee Financial Expert.
The registrant does not have an audit committee financial expert at this time
because none of the registrant's board of directors meets the technical
definition of such an expert in form N-CSR. The audit committee of the board is
in compliance with I) applicable rules of the listing requirements for
closed-end fund audit committees, including the requirement that all members of
the audit committee be "financially literate" and that at least one member of
the audit committee have "accounting or related financial management expertise",
as determined by the board."
Item 4. Principal Accountant Fees and Services.
Audit Fees
(a) The aggregate fees billed for each of the last two fiscal years for
professional services rendered by the principal accountant for the
audit of the registrant's annual financial statements or services that
are normally provided by the accountant in connection with statutory
and regulatory filings or engagements for those fiscal years are
$55,500 and $58,000.
Audit-Related Fees
(b) The aggregate fees billed in each of the last two fiscal years for
assurance and related services by the principal accountant that are
reasonably related to the performance of the audit of the registrant's
financial statements and are not reported under paragraph (a) of this
Item are $0 and $1,000.
These services are for a review of the semi annual report.
Tax Fees
(C) The aggregate fees billed in each of the last two fiscal years for
professional services rendered by the principal accountant for tax compliance,
tax advice, and tax planning are $7,000 and $5,700. "Tax Fees" are those
primarily associated with review of year-end distributions by the Fund to avoid
excise tax for the Trust, periodic discussion with management on tax issues
affecting the Trust, and reviewing and signing the Fund's federal income and
excise tax returns.
All Other Fees
(d) The aggregate fees billed in each of the last two fiscal years for
products and services provided by the principal accountant, other
than the services reported in paragraphs (a) through (c) of this
Item are $0.
(e)(1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
The Zweig Fund, Inc. (the "Fund") Board has adopted policies and procedures
with regard to the pre-approval of services provided by PwC. The Audit Committee
pre-approves: (i) all audit and no-audit services to be rendered to the Fund by
PwC; and (ii) all non-audit services to be rendered to the Fund financial
reporting of the Fund provided by PwC to the Adviser or any affiliate thereof
that provides ongoing services to the Fund (collectively, "Covered Services").
The Audit Committee has adopted pre-approval procedures authorizing a member of
the Audit Committee to pre-approve from time to time, on behalf of the Audit
Committee, all Covered Services to be provided by PwC which are not otherwise
pre-approved at a meeting of the Audit committee, provided that such delegate
reports to the full Audit Committee at its next meeting. The pre-approval
procedures do not include delegation of the Audit committee's responsibilities
to management. Pre-approval has not been waived with respect to any of the
services described above since the date on which the Audit Committee adopted its
current pre-approval procedures.
(e) (2) The percentage of services described in each of paragraphs (b)
through (d) of this Item that were approved by the audit committee
pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X
are as follows:
(b) 100%
(c) 100%
(d) Not applicable
(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most
recent fiscal year that were attributed to work performed by persons
other than the principal accountant's full-time, permanent employees
was less than fifty percent.
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen
by another investment adviser), and any entity controlling, controlled
by, or under common control with the adviser that provides ongoing
services to the registrant for each of the last two fiscal years of
the registrant was $46,250 and $248,000 respectively.
(h) The registrant's audit committee of the board of directors has
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser (not including any
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser), and any
entity controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
Item 5. Audit Committee of Listed registrants.
Not applicable.
Item 6. [Reserved]
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
THE ZWEIG FUND, INC
STATEMENT OF POLICY WITH RESPECT TO PROXY VOTING
I. Definitions. As used in this Statement of Policy, the following terms shall
have the meanings ascribed below:
A. "Adviser" refers to Phoenix/Zweig Advisers LLC.
B. "Corporate Governance Matters" refers to changes involving the
corporate ownership or structure of an issuer whose securities are
within a Portfolio Holding, including changes in the state of
incorporation, changes in capital structure, including increases and
decreases of capital and preferred stock issuance, mergers and other
corporate restructurings, and anti-takeover provisions such as
staggered boards, poison pills, and supermajority voting provisions.
C. "Delegate" refers to the Adviser or Subadviser to whom responsibility
has been delegated to vote proxies for the applicable Portfolio
Holding, including any qualified, independent organization engaged by
the Adviser to vote proxies on behalf of such delegated entity.
D. "Fund" shall individually and collectively mean and refer to The Zweig
Fund, Inc. and The Zweig Total Return Fund, Inc., and each of them.
E. "Management Matters" refers to stock option plans and other management
compensation issues.
F. "Portfolio Holding" refers to any company or entity whose securities
is held within the investment portfolio(s) of one or more of the Fund
as of the date a proxy is solicited.
G. "Proxy Contests" refer to any meeting of shareholders of an issuer for
which there are at least two sets of proxy statements and proxy cards,
one solicited by management and the others by a dissident or group of
dissidents.
H. "Social Issues" refers to social and environmental issues.
I. "Takeover" refers to "hostile" or "friendly" efforts to effect radical
change in the voting control of the board of directors of a company.
II. General Policy. It is the intention of the Fund to exercise stock ownership
rights in Portfolio Holdings in a manner that is reasonably anticipated to
further the best economic interests of shareholders of the Fund.
Accordingly, the Fund or its Delegate(s) shall endeavor to analyze and vote
all proxies that are considered likely to have financial implications, and,
where appropriate,
to participate in corporate governance, shareholder proposals, management
communications and legal proceedings. The Fund and its Delegate(s) must
also identify potential or actual conflicts of interests in voting proxies
and address any such conflict of interest in accordance with this Statement
of Policy.
III. Factors to consider when voting.
A. A Delegate may abstain from voting when it concludes that the effect on
shareholders' economic interests or the value of the Portfolio Holding is
indeterminable or insignificant.
B. In analyzing anti-takeover measures, the Delegate shall vote on a
case-by-case basis taking into consideration such factors as overall
long-term financial performance of the target company relative to its
industry competition. Key measures which shall be considered include,
without limitation, five-year annual compound growth rates for sales,
operating income, net income, and total shareholder returns (share
price appreciation plus dividends). Other financial indicators that
will be considered include margin analysis, cash flow, and debit
levels.
C. In analyzing contested elections, the Delegate shall vote on a
case-by-case basis taking into consideration such factors as the
qualifications of all director nominees. The Delegate shall also
consider the independence and attendance record of board and key
committee members. A review of the corporate governance profile shall
be completed highlighting entrenchment devices that may reduce
accountability.
D. In analyzing corporate governance matters, the Delegate shall vote on
a case-by-case basis taking into consideration such factors as tax and
economic benefits associated with amending an issuer's state of
incorporation, dilution or improved accountability associated with
changes in capital structure, management proposals to require a
supermajority shareholder vote to amend charters and bylaws and
bundled or "conditioned" proxy proposals.
E. In analyzing executive compensation proposals and management matters,
the Adviser shall vote on a case-by-case basis taking into
consideration such factors as executive pay and spending on
perquisites, particularly in conjunction with sub-par performance and
employee layoffs.
F. In analyzing proxy contests for control, the Delegate shall vote on a
case-by-case basis taking into consideration such factors as long-term
financial performance of the target company relative to its industry;
management's track record; background to the proxy contest;
qualifications of director nominees (both slates); evaluation of what
each side is offering shareholders as well as the likelihood that the
proposed objectives and goals can be met; and stock ownership
positions.
G. A Delegate shall generally vote against shareholder social matters
proposals.
IV. Delegation.
A. In the absence of a specific direction to the contrary from the Board
of Trustees of the Fund, the Adviser will be responsible for voting
proxies for all Portfolio Holdings in accordance with this Statement
of Policy, or for delegating such responsibility as described below.
B. The Adviser delegated with authority to vote proxies for Portfolio
Holdings shall be deemed to assume a duty of care to safeguard the
best interests of the Fund and its shareholders. No Delegate shall
accept direction or inappropriate influence from any other client,
director or employee of any affiliated company and shall not cast any
vote inconsistent with this Statement of Policy without obtaining the
prior approval of the Fund or its duly authorized representative(s).
C. With regard to each Series for which there is a duly appointed
Subadviser acting pursuant to an investment advisory agreement
satisfying the requirements of Section 15(a) of the Investment Company
Act of 1940, as amended, and the rules thereunder, the Subadviser may,
pursuant to delegated authority from the Adviser, vote proxies for
Portfolio Holdings with regard to the Series or portion of the assets
thereof for which the Subadviser is responsible. In such case, the
Subadviser shall vote proxies for the Portfolio Holdings in accordance
with Sections II, III and V of this Statement of Policy, provided,
however, that the Subadviser may vote proxies in accordance with its
own proxy voting policy/procedures ("Subadviser Procedures") if the
following two conditions are satisfied: (1) the Adviser must have
approved the Subadviser Procedures based upon the Adviser's
determination that the Subadviser Procedures are reasonably designed
to further the best economic interests of the affected Fund
shareholders, and (2) the Subadviser Procedures are reviewed and
approved annually by the Board of Trustees. The Subadviser will
promptly notify the Adviser of any material changes to the Subadviser
Procedures. The Adviser will periodically review the votes by the
Subadviser for consistency with this Statement of Policy.
V. Conflicts of Interest
A. The Fund and its Delegate(s) seek to avoid actual or perceived
conflicts of interest in the voting of proxies for Portfolio Holdings
between the interests of Fund shareholders, on one hand, and those of
the Adviser, Delegate, principal underwriter, or any affiliated person
of the Fund, on the other hand. The Board of Trustees may take into
account a wide array of factors in determining whether such a conflict
exists, whether such conflict is material in nature, and how to
properly address or resolve the same.
B. While each conflict situation varies based on the particular facts
presented and the requirements of governing law, the Board of Trustees
or its delegate(s) may take the following actions, among others, or
otherwise give weight to the following factors, in addressing material
conflicts of interest in voting (or directing Delegates to vote)
proxies pertaining to Portfolio Holdings: (i) rely on the
recommendations of an established, independent third party with
qualifications to vote proxies such as Institutional Shareholder
Services; (ii) vote pursuant to the recommendation of the proposing
Delegate; (iii) abstaining; or (iv) where two or more Delegates
provide conflicting requests, vote shares in proportion to the assets
under management of the each proposing Delegate.
C. The Adviser shall promptly notify the President of the Fund once any
actual or potential conflict of interest exists and their
recommendations for protecting the best interests of Fund's
shareholders. No Adviser shall waive any conflict of interest or vote
any conflicted proxies without the prior written approval of the Board
of Trustees or the President of the Fund pursuant to section D of this
Article.
D. In the event that a determination, authorization or waiver under this
Statement of Policy is requested at a time other than a regularly
scheduled meeting of the Board of Trustees, the President of the Fund
shall be empowered with the power and responsibility to interpret and
apply this Statement of Policy and provide a report of his or her
determinations at the next following meeting of the Board of Trustees.
VI. Miscellaneous.
A. A copy of the current Statement of Policy with Respect to Proxy Voting and
the voting records for the Fund reconciling proxies with Portfolio Holdings
and recording proxy voting guideline compliance and justification, shall be
kept in an easily accessible place and available upon request.
B. The Adviser shall present a report of any material deviations from this
Statement of Policy at every regularly scheduled meeting of the Board of
Trustees and shall provide such other reports as the Board of Trustees may
request from time to time. The Adviser shall provide to the Fund or any
shareholder a record of its effectuation of proxy voting pursuant to this
Statement of Policy at such times and in such format or medium as the Fund
shall reasonably request. The Adviser shall be solely responsible for
complying with the disclosure and reporting requirements under applicable
laws and regulations, including, without limitation, Rule 206(4)-6 under
the Investment Advisers Act of 1940. The Adviser shall gather, collate and
present information relating to the its proxy voting activities of those of
each Delegate in such format and medium as the Fund shall determine from
time to time in order for the Fund to discharge its disclosure and
reporting obligations pursuant to Rule 30b1-4 under the Investment Company
Act of 1940, as amended.
C. The Adviser shall pay all costs associated with proxy voting for Portfolio
Holdings pursuant to this Statement of Policy and assisting the Fund in
providing public notice of the manner in which such proxies were voted.
D. The Adviser may delegate its responsibilities hereunder to a proxy
committee established from time to time by the Adviser, as the case
may be. In performing its duties hereunder, the Adviser, or any duly
authorized committee, may engage the services of a research and/or
voting adviser or agent, the cost of which shall be borne by such
entity.
E. This Statement of Policy shall be presented to the Board of Trustees
annually for their amendment and/or approval.
Item 8. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 9. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 10. 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 their 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 half-year (the registrant's second fiscal half-year in the case
of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over
financial reporting.
Item 11. Exhibits.
(a)(1) Code of ethics, or any amendment thereto, that is the subject of
disclosure required by Item 2 is attached hereto.
(a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) The Zweig Fund, Inc.
By (Signature and Title)* /s/ Daniel T. Geraci
-------------------------------------------------------
Daniel T. Geraci, President
(principal executive officer)
Date March 5, 2004
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/ Daniel T. Geraci
-------------------------------------------------------
Daniel T. Geraci, President
(principal executive officer)
Date March 5, 2004
By (Signature and Title)* /s/ Nancy G. Curtiss
-------------------------------------------------------
Nancy G. Curtiss, Treasurer
(principal financial officer)
Date March 5, 2004
* Print the name and title of each signing officer under his or her signature.