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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-Q
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QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY
INVESTMENT COMPANY ACT FILE NUMBER 811-04739
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THE ZWEIG FUND, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
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900 THIRD AVE, 31ST FLOOR
NEW YORK, NY 10022-4728
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
KEVIN J. CARR, ESQ.
VICE PRESIDENT, CHIEF LEGAL OFFICER, COUNSEL AND SECRETARY FOR REGISTRANT
100 PEARL STREET
HARTFORD, CT 06103-4506
(NAME AND ADDRESS OF AGENT FOR SERVICE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 800-272-2700
DATE OF FISCAL YEAR END: DECEMBER 31
DATE OF REPORTING PERIOD: MARCH 31, 2010
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Form N-Q is to be used by management investment companies, other than small
business investment companies registered on Form N-5 ((S)(S) 239.24 and 274.5
of this chapter), to file reports with the Commission, not later than 60 days
after the close of the first and third fiscal quarters, pursuant to rule 30b1-5
under the Investment Company Act of 1940 (17 CFR 270.30b1-5). The Commission
may use the information provided on Form N-Q in its regulatory, disclosure
review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-Q, and
the Commission will make this information public. A registrant is not required
to respond to the collection of information contained in Form N-Q unless the
Form displays a currently valid Office of Management and Budget ("OMB") control
number. Please direct comments concerning the accuracy of the information
collection burden estimate and any suggestions for reducing the burden to the
Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC
20549. The OMB has reviewed this collection of information under the clearance
requirements of 44 U.S.C. (S) 3507.
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ITEM 1.SCHEDULE OF INVESTMENTS.
The Schedule(s) of Investments is attached herewith.
THE ZWEIG FUND, INC.
SCHEDULE OF INVESTMENTS
MARCH 31, 2010
(UNAUDITED)
NUMBER OF
SHARES VALUE
($ REPORTED IN THOUSANDS) --------- -------
INVESTMENTS
COMMON STOCKS 75.4%
CONSUMER DISCRETIONARY -- 1.8%
McDonald's Corp.............................. 94,000 $ 6,272
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6,272
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CONSUMER STAPLES -- 10.2%
Altria Group, Inc............................ 279,000 5,725
Bunge Ltd.................................... 88,000 5,423
Clorox Co. (The)............................. 98,000 6,286
Costco Wholesale Corp........................ 98,000 5,852
PepsiCo, Inc................................. 96,000 6,351
Philip Morris International, Inc............. 120,000 6,259
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35,896
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ENERGY -- 14.7%
Chesapeake Energy Corp....................... 225,000 5,319
Chevron Corp................................. 76,000 5,763
ConocoPhillips............................... 115,000 5,885
Halliburton Co............................... 195,000 5,875
Massey Energy Co............................. 111,000 5,804
Occidental Petroleum Corp.................... 81,000 6,848
Petroleo Brasileiro SA ADR................... 130,000 5,784
Valero Energy Corp........................... 245,000 4,826
Williams Cos., Inc. (The).................... 256,000 5,914
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52,018
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FINANCIALS -- 3.1%
Goldman Sachs Group, Inc. (The).............. 34,000 5,801
Hudson City Bancorp, Inc..................... 360,000 5,098
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10,899
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HEALTH CARE -- 10.0%
Biogen Idec, Inc./(2)/....................... 105,000 6,023
Gilead Sciences, Inc./(2)/................... 129,000 5,867
Johnson & Johnson............................ 91,000 5,933
Shire plc ADR................................ 92,000 6,068
See Notes to Schedule of Investments
1
NUMBER OF
SHARES VALUE
($ REPORTED IN THOUSANDS) --------- --------
HEALTH CARE (CONTINUED)
St. Jude Medical, Inc./(2)/............... 142,000 $ 5,829
UnitedHealth Group, Inc................... 172,000 5,619
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35,339
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INDUSTRIALS -- 9.6%
Caterpillar, Inc.......................... 94,000 5,908
Continental Airlines, Inc. Class B/(2)/... 292,000 6,415
Dryships, Inc./(2)/....................... 943,000 5,507
Foster Wheeler AG/(2)/.................... 160,000 4,343
L-3 Communications Holdings, Inc.......... 65,000 5,956
Union Pacific Corp........................ 80,000 5,864
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33,993
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INFORMATION TECHNOLOGY -- 14.0%
Cisco Systems, Inc./(2)/.................. 280,500 7,302
Corning, Inc.............................. 315,000 6,366
Hewlett-Packard Co........................ 117,000 6,219
International Business Machines Corp...... 45,000 5,771
Microsoft Corp............................ 187,500 5,488
Nokia OYJ Sponsored ADR................... 345,000 5,361
QUALCOMM, Inc............................. 170,000 7,138
Research In Motion Ltd./(2)/.............. 81,000 5,990
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49,635
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MATERIALS -- 7.2%
Alcoa, Inc................................ 428,000 6,095
Freeport-McMoRan Copper & Gold, Inc....... 81,000 6,767
Nucor Corp................................ 135,000 6,126
Potash Corp. of Saskatchewan, Inc......... 54,000 6,445
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25,433
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TELECOMMUNICATION SERVICES -- 3.3%
AT&T, Inc................................. 220,000 5,685
Verizon Communications, Inc............... 192,000 5,956
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11,641
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UTILITIES -- 1.5%
Exelon Corp............................... 119,000 5,213
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5,213
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TOTAL COMMON STOCKS (Identified Cost $242,855) 266,339
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See Notes to Schedule of Investments
2
NUMBER OF
SHARES VALUE
($ REPORTED IN THOUSANDS) ----------- --------
EXCHANGE TRADED FUNDS 2.4%
PowerShares Deutsche Bank Agriculture Fund/(2)/.. 206,000 $ 4,993
Templeton Dragon Fund, Inc....................... 130,000 3,367
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TOTAL EXCHANGE TRADED FUNDS (Identified Cost $9,076).. 8,360
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TOTAL LONG TERM INVESTMENTS -- 77.8% (Identified cost
$251,931)........................................... 274,699
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SHORT-TERM INVESTMENTS 27.9%
MONEY MARKET MUTUAL FUNDS -- 3.5%
Dreyfus Cash Management Fund -- Institutional
Shares (seven-day effective yield 0.070%)...... 12,400,725 12,401
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PAR
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U.S. TREASURY BILLS/(3)/ -- 24.4%
U.S. Cash Management Bill 0.455%, 4/1/10......... $ 20,000 20,000
U.S. Treasury Bill
0.140%, 7/15/10.............................. 20,000 19,991
0.174%, 8/26/10.............................. 12,000 11,990
0.230%, 10/21/10............................. 34,000 33,955
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85,936
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TOTAL SHORT-TERM INVESTMENTS (Identified Cost $98,341) 98,337
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TOTAL INVESTMENTS (Identified Cost $350,272) --
105.7%/(1)/......................................... 373,036
OTHER ASSETS AND LIABILITIES, NET -- (5.7%)........... (20,061)
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NET ASSETS -- 100.0%.................................. $352,975
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(1) Federal Income Tax Information: For tax information at March 31, 2010, see
Note 2 Federal Income Tax Information in the Notes to Schedules of
Investments.
(2) Non-income producing.
(3) The rate shown is the discount rate.
COUNTRY WEIGHTINGS AS OF 3/31/10+
United States (includes short-term investments). 86%
Bermuda......................................... 3
Canada.......................................... 3
Brazil.......................................... 2
Switzerland..................................... 2
United Kingdom.................................. 2
Greece.......................................... 1
Other........................................... 1
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TOTAL........................................... 100%
===
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+ % of total investments as of March 31, 2010
See Notes to Schedule of Investments
3
The following table provides a summary of inputs used to value the Fund's
net assets as of March 31, 2010 (see Security Valuation Note 1A in the Notes to
Schedule of Investments):
LEVEL 2
TOTAL LEVEL 1 SIGNIFICANT
VALUE AT QUOTED OBSERVABLE
MARCH 31, 2010 PRICE INPUT
-------------- -------- -----------
INVESTMENTS IN SECURITIES:
Equity Securities:
Common Stocks................. $266,339 $266,339 $ --
Exchange Traded Funds......... 8,360 8,360 --
Short-Term Investments........ 12,401 12,401 --
Debt Securities:
Short-Term Investments........
U.S. Treasury Obligations..... 85,936 -- 85,936
-------- -------- -------
Total...................... $373,036 $287,100 $85,936
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There are no Level 3 (significant unobservable inputs) priced securities.
See Notes to Schedule of Investments
4
THE ZWEIG FUND, INC.
NOTES TO SCHEDULE OF INVESTMENTS
MARCH 31, 2010
(UNAUDITED)
NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with accounting principals
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amount of increases and decreases in
net assets from operations during the reporting period. Actual results could
differ from those estimates and those differences could be significant.
A. SECURITY VALUATION:
The Fund utilizes a fair value hierarchy which prioritizes the inputs to
valuation techniques used to measure fair value into three broad levels.
. Level 1 -- quoted prices in active markets for identical securities
. Level 2 -- prices determined using other significant observable inputs
(including quoted prices for similar securities, interest rates,
prepayment speeds, credit risk, etc.)
. Level 3 -- prices determined using significant unobservable inputs
(including the Fund's own assumptions in determining the fair value of
investments)
A description of the valuation techniques applied to the Funds major
categories of assets and liabilities measured at fair value on a recurring
basis is as follows:
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 and are categorized as Level
1 in the hierarchy. Restricted equity securities and private placements that
are not widely traded, are illiquid or are internally fair valued by the
advisor, are generally categorized as Level 3 in the hierarchy.
Certain foreign securities may be fair valued in cases where closing prices
are not readily available or are deemed not reflective of readily available
market prices. For example, significant events (such as movement in the U.S.
securities market, or other regional and local developments) may occur between
the time that foreign markets close (where the security is principally traded)
and the time that the Fund calculates its net asset value (generally, the close
of the NYSE) that may impact the value of securities traded in these foreign
markets. In such cases the Fund fair values foreign securities using an
external pricing service which considers the correlation of the trading
patterns of the foreign security to the intraday trading in the U.S. markets
for investments such as American depositary receipts, financial futures,
exchange-traded funds, and certain indexes as well as prices for similar
securities. Such fair valuations are categorized as Level 2 in the hierarchy.
Because the frequency of significant events is not predictable, fair valuation
of certain foreign common stocks may occur on a frequent basis.
5
Debt securities, including restricted securities, are valued based on
evaluated quotations received from independent pricing services or from dealers
who make markets in such securities. For most bond types, the pricing service
utilizes matrix pricing which considers yield or price of bonds of comparable
quality, coupon, maturity, current cash flows, type, and current day trade
information, as well as dealer supplied prices. These valuations are generally
categorized as Level 2 in the hierarchy. Structured debt instruments also
incorporate collateral analysis and utilize cash flow models for valuation and
are generally categorized as Level 2 in the hierarchy. Pricing services do not
provide pricing for all securities and therefore dealer supplied prices are
utilized representing indicative bids based on pricing models used by market
makers in the security and are generally categorized as Level 2 in the
hierarchy. Debt securities that are not widely traded, are illiquid, or are
internally fair valued by the advisor are generally categorized as Level 3 in
the hierarchy.
Listed derivatives that are actively traded are valued based on quoted
prices from the exchange and are categorized as Level 1 in the hierarchy. Over
the counter (OTC) derivative contracts, which include forward currency
contracts and equity linked instruments, do not require material subjectivity
as pricing inputs are observed from actively quoted markets and are categorized
as Level 2 in the hierarchy.
Investments in open-end mutual funds are valued at their closing net asset
value determined as of the close of business of the New York Stock Exchange
(generally 4:00 p.m. Eastern time) each business day and are categorized as
Level 1 in the hierarchy.
Short-term Notes having a remaining maturity of 60 days or less are valued
at amortized cost, which approximates market.
A summary of the inputs used to value the Funds' net assets by each major
security type is disclosed at the end of the Schedule of Investments for each
Fund. The inputs or methodology used for valuing securities are not necessarily
an indication of the risk associated with investing in those securities.
B. SECURITY TRANSACTIONS AND RELATED INCOME:
Security transactions are recorded on the trade date. Dividend income is
recorded on the ex-dividend date, or in the case of certain foreign securities,
as soon as the Fund is notified. Interest income is recorded on the accrual
basis. The Fund amortizes premiums and accretes discounts using the effective
interest method. Realized gains and losses are determined on the identified
cost basis.
C. FOREIGN CURRENCY TRANSLATION:
Foreign securities and other assets and liabilities are valued using the
foreign currency exchange rate effective at the end of the reporting period.
Cost of investments is translated at the currency exchange rate effective at
the trade date. The gain or loss resulting from a change in currency exchange
rates between the trade and settlement dates of a portfolio transaction is
treated as a gain or loss on foreign currency. Likewise, the gain or loss
resulting from a change in currency exchange rates between the date income is
accrued and paid is treated as a gain or loss on foreign currency. The Fund
does not isolate that portion of the results of operations arising from changes
in exchange rates and that portion arising from changes in the market prices of
securities.
6
NOTE 2 -- FEDERAL INCOME TAX INFORMATION
($ REPORTED IN THOUSANDS)
At March 31, 2010, federal tax cost and aggregate gross unrealized
appreciation (depreciation) of securities held by the Fund were as follows:
NET UNREALIZED
FEDERAL UNREALIZED UNREALIZED APPRECIATION
TAX COST APPRECIATION DEPRECIATION (DEPRECIATION)
-------------- -------------- -------------- --------------
$352,269 $43,052 $(22,285) $20,767
NOTE 3 -- SUBSEQUENT EVENT EVALUATIONS
Management has evaluated the impact of all subsequent events on the Fund
through the date the financial statements were issued, and has determined that
the following subsequent event requires recognition or disclosure in these
financial statements.
The Annual Meeting of Shareholders of The Zweig Fund, Inc. was held on May
11, 2010. Shareholders of the fund re-elected George R. Aylward and Alden C.
Olson to serve as Directors until the third succeeding Annual Meeting in 2013.
7
ITEM 2.CONTROLS AND PROCEDURES.
(a)The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the "1940
Act") (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days
of the filing date of the report that includes the disclosure required
by this paragraph, based on the evaluation of these controls and
procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)).
(b)There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17
CFR 270.30a-3(d)) that occurred during the registrant's last fiscal
quarter that have materially affected, or are reasonably likely to
materially affect, the registrant's internal control over financial
reporting.
ITEM 3.EXHIBITS.
Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of
the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) The Zweig Fund, Inc.
By (Signature and Title)* /s/ George R. Aylward
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George R. Aylward, President
(principal executive officer)
Date May 25, 2010
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ George R. Aylward
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George R. Aylward, President
(principal executive officer)
Date May 25, 2010
By (Signature and Title)* /s/ W. Patrick Bradley
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W. Patrick Bradley, Treasurer
(principal financial officer)
Date May 24, 2010
* Print the name and title of each signing officer under his or her signature.