<PAGE>
This report is transmitted to the shareholders of The Zweig Fund, Inc. for
their information. This is not a prospectus, circular or representation intend-
ed for use in the purchase of shares of the Fund or any securities mentioned in
this report.
[LOGO OF THE ZWEIG FUND APPEARS HERE]
QUARTERLY REPORT
SEPTEMBER 30, 1995
<PAGE>
November 1, 1995
Dear Shareholder:
The Zweig Fund's net asset value increased 4.4% during the three months ended
September 30, 1995, including the $0.27 distribution paid on July 26, 1995.
During the same period, the Standard & Poor's 500 Index gained 7.9%, including
dividends. Maintaining our risk-averse policy, the Fund's equity exposure
during the third quarter averaged approximately 63%.
For the nine months ended September 30, 1995 the Fund's net asset value
climbed 14.6%, including $0.79 in distributions. During this span, the Standard
& Poor's 500 Index rose 29.8%, including dividends. Our average exposure for
this period was 49%.
Looking backward, I wish our exposure had been higher. Concerned about the
market's short-term prospects, I was just too cautious at the beginning of the
year. But, as I always say, if I make a mistake, it will be by holding too much
cash in a rising market rather than holding too much stock in a falling market.
As I see it, we are paid to be defensive managers and, if I make a mistake, I
want it to be on the side of caution.
As soon as the bond market improved early in the year, we increased our
equity exposure. We did the same when the momentum of the stock market turned
up. Right now our exposure in stocks is 63% against 59% on June 30. Let me put
this in perspective. In recent years I have tried to use as a benchmark for
full investment in our fund about 80% stock and 20% bonds. Using 80% as a fully
invested equity position, we are about 79% long (63%/80%), which for me is a
moderately bullish position. In the bond segment we are about 19% invested out
of a potential 20%, which makes us about 95% invested (19%/20%), a bullish
position. Also, the average duration of our bond portfolio is 6.6 years. This
is significantly greater than the average bond fund's duration of approximately
4.5 years.
DISTRIBUTION DECLARED
On September 18, 1995, the Fund announced a distribution of $0.28 payable on
October 26, 1995 to shareholders of record on October 12, 1995. Including this
distribution, our total payout since the Fund's inception is now $9.95.
At this point I would like to inform you that William M. Batten recently
announced his retirement from the board of directors of both The Zweig Fund,
Inc. and The Zweig Total Return Fund, Inc. Prior to serving on the Zweig Fund
boards, Mr. Batten was chairman of the board of The New York Stock Exchange and
before that chairman of the board of J.C. Penney.
We are honored to have had William Batten on our board. We wish to thank him
for his years of service and wish him the best on his retirement.
MARKET OUTLOOK
Perhaps the most significant market factor in recent weeks has been the
strength in bonds after the summer selloff. With the economy showing signs of
slight weakness and with inflation remaining in check, bond prices have
rallied. Although bonds have still not attained their peak levels of late 1993,
they have regained a big chunk of the 1994 bear market losses. As bonds do
well, they improve the status of our monetary model, a key indicator of stock
market trends.
Other stock market positives include the continued record cash flows into
mutual funds.
<PAGE>
Although there have been heavy amounts of stock offerings--not a positive--
these have been largely offset by takeovers and buybacks. Overall, there
probably still is a small shrinkage of stocks.
Another positive factor is the continued skepticism on the part of portfolio
managers and advisors. There is no euphoria out there. Most money managers
polled about market projections six months down the road voice flat
expectations. This is surprising. Near a bull market top, you would normally
expect very upbeat predictions. The fact that optimism is relatively under
control is a plus.
On the negative side, the tape action has slowed in recent weeks and could be
better. Another negative is the low levels of cash held by mutual funds but
this may be offset by the huge amounts of money pouring into them. There have
been some speculative pockets in the market--perhaps in the high tech area--but
a lot of that was corrected during the selloffs in September and October.
In sum, there are probably more market positives than negatives right now. My
indicators suggest that the bulls have a moderate edge although the gains are
unlikely to equal the torrid pace of early this year. As always, we will
maintain our flexible approach and be ready to revise our exposures as new
conditions warrant.
PORTFOLIO COMPOSITION
In accordance with the policy put into effect at the beginning of this year,
the majority of our stocks have been picked on the basis of a proprietary
computer-driven stock selection model that uses various criteria to rank the
most liquid higher dividend-yielding stocks.
Aside from a slight shuffling in ranking, the composition of the leading
industry groups in our portfolio showed little change during the past three
months. Reflecting improved performance after lagging in the first half, oil
and oil services is now our largest industry group. Paper and forest products,
utilities, chemicals, and banks round out our top five industry positions.
Among other industry groups, producer manufacturing showed a significant gain.
Chemical Bank, which will shortly merge with Chase Manhattan, has appreciated
in value and is now our largest individual holding. Bank stocks generally have
improved during the quarter and Citibank and BankAmerica are also among our
most prominent positions.
Our top individual companies now include Burlington Northern Santa Fe, a
large U.S. railroad system that operates about 25,000 miles of track in 25
western states and two Canadian provinces. Also new to our leading holdings is
Halliburton, which produces oilfield equipment and offers design, engineering,
and construction services.
In addition to the above mentioned companies, our leading individual
positions include Exxon, GTE, Alcoa, Sprint, and Xerox.
We have cut back our holdings in IBM, International Paper and Bowater.
Sincerely,
/s/ Martin E. Zweig
Martin E. Zweig, Ph.D.
Chairman
2
<PAGE>
THE ZWEIG FUND, INC.
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- -----------
<S> <C> <C>
Common Stocks 54.37%
Aerospace & Defense 2.88%
GenCorp. Inc. ......................................... 18,600 $ 197,625
Lockheed Martin Corp. ................................. 35,115 2,357,094
Northrup Grumman Corp. ................................ 46,700 2,842,863
Raytheon Co. .......................................... 32,300 2,745,500
Rockwell International Corp. .......................... 78,300 3,699,675
Thiokol Corp. ......................................... 5,400 193,050
United Technologies Corp. ............................. 39,400 3,481,975
-----------
15,517,782
-----------
Automotive 0.80%
General Motors Corp. .................................. 91,900 4,307,813
-----------
Banks 3.84%
Bank of Boston Corp. .................................. 18,300 871,538
BankAmerica Corp. ..................................... 85,000 5,089,375
Chemical Banking Corp. ................................ 86,900 5,290,037
Citicorp. ............................................. 73,700 5,214,275
First Interstate Bancorp............................... 15,200 1,531,400
Republic N.Y. Corp. ................................... 46,800 2,737,800
-----------
20,734,425
-----------
Chemicals 4.28%
ARCO Chemical Co. ..................................... 21,900 1,067,625
Dow Chemical Co. ...................................... 43,200 3,218,400
du Pont (E.I.) de Nemours & Co. ....................... 66,100 4,544,375
Eastman Chemical Co. .................................. 38,600 2,470,400
Ferro Corp. ........................................... 13,100 325,863
Goodrich (B.F.) & Co. ................................. 21,000 1,383,375
Imperial Chemical Industries PLC, ADR.................. 24,800 1,258,600
Lyondell Petrochemical Co. ............................ 98,000 2,535,750
Olin Corp. ............................................ 28,400 1,952,500
Union Carbide Corp. ................................... 109,400 4,348,650
-----------
23,105,538
-----------
Conglomerates 0.82%
Xerox Corp. ........................................... 32,900 4,420,937
-----------
Construction & Farm Equipment 0.73%
Deere & Co. ........................................... 48,600 3,954,825
-----------
Consumer Durables 0.94%
Goodyear Tire & Rubber Co. ............................ 106,500 4,193,438
Jostens Inc. .......................................... 26,500 622,750
Toro Co. .............................................. 8,200 258,300
-----------
5,074,488
-----------
</TABLE>
3
<PAGE>
THE ZWEIG FUND, INC.
STATEMENT OF NET ASSETS--(CONTINUED)
SEPTEMBER 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- -----------
<S> <C> <C>
Finance & Financial Services 0.97%
Alex Brown Inc. ....................................... 26,000 $ 1,517,750
American Bankers Insurance Group, Inc. ................ 25,300 942,425
Fremont General Corp. ................................. 20,400 563,550
GATX Corp. ........................................... 20,500 1,060,875
PHH Corp. ............................................. 18,500 832,500
Raymond James Financial, Inc. ......................... 15,000 326,250
-----------
5,243,350
-----------
Food & Beverage 0.01%
Michael Foods Inc. .................................... 5,200 69,550
-----------
Health Services 0.83%
Baxter International Inc. ............................. 97,500 4,009,687
McKesson Corp. ........................................ 10,400 468,000
-----------
4,447,687
-----------
Industrial Services 0.22%
Browning-Ferris Industries Inc. ....................... 39,100 1,187,662
-----------
Investment Companies 0.94%
Alliance Global Environment Fund ...................... 13,100 126,088
Blue Chip Value Fund, Inc. ............................ 29,700 226,462
Emerging Markets Infrastructure, Inc. ................. 26,000 263,250
France Growth Fund, Inc. .............................. 31,200 304,200
Global Health Sciences Fund, Inc. ..................... 52,200 769,950
Growth Fund Spain, Inc. ............................... 18,300 194,437
John Hancock Bank & Thrift Opportunity Fund ........... 15,800 369,325
New Age Media Fund, Inc. .............................. 31,400 478,850
Pilgrim Regional Bank Shares, Inc. .................... 15,600 193,050
Royce Value Trust, Inc. ............................... 13,100 176,850
Salomon Brothers Fund, Inc. ........................... 26,200 347,150
Scudder New Europe Fund, Inc. ......................... 26,000 279,500
Templeton Dragon Fund, Inc. ........................... 13,100 163,750
The Charles Allmon Trust, Inc. ........................ 13,100 121,175
The Swiss Helvetia Fund, Inc. ......................... 39,100 811,325
Tri Continental Corp. ................................. 10,400 244,400
-----------
5,069,762
-----------
Manufacturing 3.75%
Avery Dennison Corp. .................................. 29,300 1,230,600
Crane Co. ............................................. 12,500 431,250
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- -----------
<S> <C> <C>
Manufacturing-(Continued)
Dana Corp. ............................................ 52,000 $ 1,501,500
Duriron Inc. .......................................... 15,600 456,300
Eaton Corp. ........................................... 49,200 2,607,600
Gleason Corp. ......................................... 13,100 429,025
Harsco Corp. .......................................... 10,400 578,500
Johnson Controls Inc. ................................. 15,800 999,350
Kennametal Inc. ....................................... 44,800 1,624,000
PACCAR Inc. ........................................... 20,800 972,400
Parker-Hannifin Corp. ................................. 89,700 3,408,600
Timken Co. ........................................... 49,500 2,109,938
Trinity Industries Inc. .............................. 36,900 1,143,900
TRW Inc. .............................................. 36,700 2,729,562
-----------
20,222,525
-----------
Metals & Mining 3.34%
Aluminum Company of America............................ 86,600 4,578,975
Cyprus Amax Minerals Co................................ 73,300 2,061,562
Homestake Mining Co.................................... 45,100 766,700
Lukens Inc. ........................................... 12,500 364,063
Phelps Dodge Corp. .................................... 72,100 4,515,262
Quanex Corp. .......................................... 26,000 562,250
Reynolds Metals Co. ................................... 52,100 3,008,775
USX-U.S. Steel Group .................................. 70,000 2,170,000
-----------
18,027,587
-----------
Oil & Oil Services 9.17%
Amoco Corp. ........................................... 40,300 2,584,238
Atlantic Richfield Co. ................................ 39,700 4,262,787
British Petroleum Co., PLC, ADS........................ 34,400 3,091,700
Chevron Corp. ......................................... 96,300 4,682,588
Elf Aquitaine, ADR..................................... 21,000 706,125
Exxon Corp. ........................................... 68,200 4,927,450
Halliburton Co. ....................................... 109,700 4,579,975
Imperial Oil, Ltd. .................................... 49,500 1,843,875
Kerr-McGee Corp. ...................................... 59,700 3,313,350
Louisiana Land & Exploration Co. ...................... 26,000 926,250
Mobil Corp. ........................................... 39,200 3,905,300
Nova Corp. ............................................ 61,600 485,100
Occidental Petroleum Corp. ............................ 136,200 2,996,400
Phillips Petroleum Co. ................................ 60,100 1,953,250
Repsol S.A., ADR....................................... 70,100 2,225,675
Sun Inc. .............................................. 28,700 739,025
Texaco Inc. ........................................... 13,100 846,587
Unocal Corp. .......................................... 134,000 3,819,000
USX-Marathon Group Inc. ............................... 78,300 1,546,425
-----------
49,435,100
-----------
</TABLE>
5
<PAGE>
THE ZWEIG FUND, INC.
STATEMENT OF NET ASSETS--(CONTINUED)
SEPTEMBER 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- -----------
<S> <C> <C>
Paper & Forest Products 6.91%
Boise Cascade Corp. ................................. 91,300 $ 3,686,238
Bowater, Inc. ....................................... 84,400 3,935,150
Federal Paper Board Inc. ............................ 57,000 2,187,375
Georgia-Pacific Corp. ............................... 46,500 4,068,750
International Paper Co. ............................. 96,600 4,057,200
James River Corp. of Virginia........................ 59,100 1,891,200
Mead Corp. .......................................... 48,100 2,819,200
Sonoco Products Co. ................................. 61,500 1,706,625
Temple-Inland Inc. .................................. 31,300 1,666,725
Union Camp Corp. .................................... 52,200 3,008,025
Westvaco Corp. ...................................... 41,300 1,884,313
Weyerhaeuser Co. .................................... 70,400 3,212,000
Willamette Industries Inc. .......................... 46,900 3,130,575
-----------
37,254,038
-----------
Retail Trade & Services 0.48%
Bruno's Inc. ....................................... 2,626 31,521
CPI Corp. ........................................... 12,300 272,138
Giant Food Inc. ..................................... 17,300 542,787
Great Atlantic & Pacific Tea Co. ................... 18,100 506,800
Ross Stores Inc. .................................... 39,100 615,825
Ruddick Corp. ....................................... 77,400 280,800
Shopko Stores Inc. .................................. 27,700 321,750
-----------
2,571,621
-----------
Technology 2.62%
Applied Materials, Inc. ............................. 10,400(a) 1,063,400
Dell Computer Corp. ................................. 18,000(a) 1,530,000
Digital Equipment Corp. ............................. 36,200(a) 1,651,625
Harris Corp. ........................................ 60,600 3,235,425
Intel Corp. ......................................... 22,800 1,370,850
International Business Machines Corp. ............... 30,000 2,831,250
Microsoft Corp. ..................................... 25,800(a) 2,334,900
-----------
14,107,450
-----------
Telecommunications 2.99%
Cable & Wireless Ltd., ADR........................... 85,300 1,674,013
Cincinnati Bell Inc. ................................ 38,700 1,044,900
GTE Corp. ........................................... 109,600 4,301,800
NYNEX Corp. ......................................... 90,800 4,335,700
Southern New England Telecommunications Corp. ....... 21,200 749,950
Sprint Corp. ........................................ 114,400 4,004,000
-----------
16,110,363
-----------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES/
PRINCIPAL
AMOUNT VALUE
---------- ------------
<S> <C> <C>
Textiles 0.05%
Guilford Mills Inc. ................................. 2,800 $ 67,900
Interface Inc. ...................................... 11,800 202,075
------------
269,975
------------
Transportation 1.70%
British Airways PLC, ADR ............................ 22,300 1,591,662
Burlington Northern Santa Fe Corp. .................. 65,500 4,748,750
CSX Corp. ........................................... 33,500 2,818,188
------------
9,158,600
------------
Utilities 6.10%
Centerior Energy Corp. .............................. 38,700 420,862
DQE Inc.............................................. 41,650 1,103,725
Eastern Enterprises ................................. 5,200 167,050
FPL Group Inc. ...................................... 105,100 4,295,962
Illinova Corp. ...................................... 30,600 830,025
MDU Resources Group Inc. ............................ 5,200 165,750
New York State Electric & Gas Corp. ................. 33,900 889,875
Nipsco Industries Inc. .............................. 26,000 906,750
Oneok Inc. .......................................... 7,900 183,675
Pacific Enterprises ................................. 64,000 1,608,000
Pacific Gas & Electric Co. .......................... 130,500 3,898,688
Panhandle Eastern Corp. ............................. 140,900 3,839,525
Peco Energy Co. ..................................... 39,100 1,119,238
Portland General Corp. .............................. 139,300 3,569,563
Rochester Gas & Electric Corp. ...................... 28,700 678,037
San Diego Gas & Electric Co. ........................ 39,100 904,187
SCEcorp. ............................................ 152,400 2,705,100
Southwest Gas Corp. ................................. 10,400 162,500
Tenneco Inc. ........................................ 26,200 1,211,750
Transcanada Pipeline Ltd. ........................... 10,400 136,500
Unicom Corp. ........................................ 123,500 3,735,875
United Illuminating Co. ............................. 10,400 365,300
------------
32,897,937
------------
Total Common Stocks ............................... 293,219,015
------------
Corporate Bonds 0.63%
Exxon Capital Corp., 7.875%, 8/15/97 ................ $1,590,000 1,639,145
General Electric Capital Corp., 8.375%, 3/1/2001 .... 1,590,000 1,733,628
------------
Total Corporate Bonds ............................. 3,372,773
------------
</TABLE>
7
<PAGE>
THE ZWEIG FUND, INC.
STATEMENT OF NET ASSETS--(CONCLUDED)
MARCH 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT/
NUMBER OF
CONTRACTS VALUE
----------- ------------
<S> <C> <C>
United States Government & Agency Obligations16.75%
Federal Home Loan Mortgage Corp., 7.05%,
3/24/2004 ...................................... $ 3,195,000 $ 3,235,244
Federal Home Loan Mortgage Corp., 7.61%,
9/1/2004 ....................................... 1,100,000 1,127,028
Federal National Mortgage Association 6.20%,
7/10/2003 ...................................... 1,180,000 1,139,062
Federal National Mortgage Association 6.48%,
2/18/2004 ...................................... 1,100,000 1,076,991
Federal National Mortgage Association 6.90%,
3/10/2004 ...................................... 1,300,000 1,301,559
Federal National Mortgage Association 6.85%,
4/5/2004 ...................................... 2,765,000 2,838,032
Federal National Mortgage Association 7.60%,
4/14/2004 ...................................... 1,810,000 1,827,108
United States Treasury Notes, 4.625%, 2/15/96 ... 700,000 697,593
United States Treasury Notes, 4.25%, 5/15/96 .... 5,000 4,955
United States Treasury Notes, 6.125%, 5/15/98 ... 24,000,000 24,135,000
United States Treasury Notes, 6.125%, 7/31/2000 . 18,000,000 18,073,098
United States Treasury Notes, 6.50%, 5/15/2005 .. 7,200,000 7,362,000
United States Treasury Bonds, 8.125%, 8/15/2019 . 5,000,000 5,870,305
United States Treasury Bonds, 7.625%, 2/15/2025 . 19,100,000(b) 21,630,750
----------- ------------
Total United States Government & Agency 90,318,725
Obligations .................................. ------------
Short-Term Money Market Instruments 27.57%
Bell Atlantic Financial Services, 5.73%,
10/4/95 ........................................ 17,200,000 17,191,787
Cargill Financial Services Corp., 5.72%,
10/12/95 ....................................... 24,000,000 23,958,053
Coca-Cola Finance Corp., 5.70%, 10/6/95 ......... 19,000,000 18,984,958
Ford Motor Credit Co., 5.73%, 10/3/95 ........... 17,800,000 17,794,334
Monsanto Inc., 5.80%, 10/5/95 ................... 9,900,000 9,893,620
Philip Morris Capital Corp., 5.70%, 10/2/95...... 23,400,000 23,396,295
Raytheon Co., 5.74%, 10/6/95 .................... 23,800,000 23,781,026
Sara Lee Corp., 5.73%, 10/3/95 .................. 8,600,000 8,597,263
UPS Inc., 6.50%, 10/2/95 ........................ 5,100,000 5,099,079
------------
Total Short-Term Money Market Instruments ..... 148,696,415
------------
Net Unrealized Appreciation on Futures
Contracts 0.18%
Standard & Poor's 500 Index, December 1995 Long
futures ........................................ 161(c) 994,939
Total Investments ............................... 99.50% 536,601,867
Cash And Other Assets, Less Liabilities ......... 0.50 2,709,119
----------- ------------
Net Assets (Equivalent to $10.99 per share based
on 49,053,003 shares of capital stock 100.00% $539,310,986
outstanding) ................................... =========== ============
</TABLE>
- --------
(a) Non-income producing security.
(b) $2,900,000 of this security has been pledged as collateral for futures
transactions.
(c) The market value of the long futures was $47,350,100 (representing 8.78% of
the Fund's net assets) with a cost of $46,355,161.
8
<PAGE>
THE ZWEIG FUND, INC.
FINANCIAL HIGHLIGHTS
SEPTEMBER 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
NET ASSET VALUE
TOTAL NET ASSETS PER SHARE
------------------------- -----------------
<S> <C> <C> <C> <C>
NET ASSET VALUE:
Beginning of period: 12/31/94..... $492,003,507 $10.33
Net investment income............ $14,098,631 $ 0.29
Net realized and unrealized gains
from
security transactions........... 56,143,972 1.16
Dividends from net investment
income and distributions from
net short-term capital gains.... (38,001,700) (0.79)
Net asset value of shares issued
to shareholders for reinvestment 15,066,576 0.00
of dividends and distributions.. ----------- -------
Net increase in net asset value. 47,307,479 0.66
------------ --------
End of period: 9/30/95............ $539,310,986 $10.99
============ ========
</TABLE>
9
<PAGE>
KEY INFORMATION
THE BANK OF NEW YORK
P.O. Box 11258
Church Street Station
New York, New York 10286-1258
Attn: Reinvestment Service
For questions about our Reinvestment and Cash Purchase Plan, shareholders
may write to The Bank of New York or call 1-800-432-8224.
THE ZWEIG FUND, INC.
GENERAL INFORMATION
1-800-272-2700
THE ZWEIG FUND HOTLINE
For weekly updates on the Fund's major industry holdings, our market stance
and our net asset value (NAV) call (212) 644-2188.
- --------------------------------------------------------------------------------
REINVESTMENT PLAN
Many of you have questions about the 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 in-to 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 of
10% or more from their net asset value.
10
<PAGE>
OFFICERS AND DIRECTORS
Martin E. Zweig, Ph.D.
Chairman of the Board and President
Jeffrey Lazar
Vice President and Treasurer
Stuart B. Panish
Vice President and Secretary
Edward S. Babbitt, Jr.
Director
Eugene J. Glaser
Director
Elliot S. Jaffe
Director
James B. Rogers, Jr.
Director
Anthony M. Santomero, Ph.D.
Director
Robert E. Smith
Director
INVESTMENT ADVISER
Zweig Advisors Inc.
900 Third Avenue
New York, New York 10022
FUND ADMINISTRATOR
Zweig/Glaser Advisers
5 Hanover Square
New York, New York 10004
CUSTODIAN AND TRANSFER AGENT
The Bank of New York
48 Wall Street
New York, New York 10015
LEGAL COUNSEL
Rosenman & Colin
575 Madison Avenue
New York, New York 10022
11
