-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BxyfrBW7pyk4hz6UXu2sCZB0/oDJjKLkGDk1ciBqO2yAB8nE7Kx7sDbMusRdvcqP IGasiQh2DZNqTtc5EIkAQg== 0000940180-96-000038.txt : 19960513 0000940180-96-000038.hdr.sgml : 19960513 ACCESSION NUMBER: 0000940180-96-000038 CONFORMED SUBMISSION TYPE: N-30B-2 PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960510 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ZWEIG TOTAL RETURN FUND INC CENTRAL INDEX KEY: 0000836412 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 133474242 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30B-2 SEC ACT: 1940 Act SEC FILE NUMBER: 811-05620 FILM NUMBER: 96559476 BUSINESS ADDRESS: STREET 1: 5 HANOVER SQUARE CITY: NEW YORK STATE: NY ZIP: 10004 BUSINESS PHONE: 2125100360 MAIL ADDRESS: STREET 1: 5 HANOVER SQUARE CITY: NEW YORK STATE: NY ZIP: 10004 N-30B-2 1 FORM 10-Q 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 Charles H. Brunie Director Elliot S. Jaffe Director Alden C. Olson, Ph.D. Director James B. Rogers, Jr. Director Anthony M. Santomero, Ph.D. Director Robert E. Smith Director INVESTMENT ADVISER Zweig Total Return Advisors, Inc. 900 Third Avenue New York, New York 10022 FUND ADMINISTRATOR Zweig/Glaser Advisers 5 Hanover Square New York, New York 10004 CUSTODIAN Boston Safe Deposit and Trust Company One Boston Place Boston, MA 02109 TRANSFER AGENT First Data Investor Services Group, Inc. P.O. Box 1376 Boston, MA 02104 LEGAL COUNSEL Rosenman & Colin LLP 575 Madison Avenue New York, New York 10022 - -------------------------------------------------------------------------------- This report is transmitted to the shareholders of The Zweig Total Return Fund, Inc. for their information. This is not a prospectus, circular or repre- sentation intended for use in the purchase of shares of the Fund or any securi- ties mentioned in this report. [LOGO OF THE ZWEIG TOTAL RETURN FUND, INC.] QUARTERLY REPORT MARCH 31,1996 May 1, 1996 Dear Shareholder: The Zweig Total Return Fund's net asset value decreased 0.1% during the quarter ended March 31, 1996, including $0.21 in reinvested distributions. To put our performance in perspective, it is important to note that the stock and bond markets decoupled during the quarter, with stocks advancing and bonds falling. For example, the Lehman Bond Long Index declined 6.7% during the quarter while the S&P 500 Index gained 5.4%. DISTRIBUTION DECLARED In accordance with our policy of distributing 10% of net asset value per year, which equals 0.83% per month (10% divided by 12 months), the Fund recently announced a distribution of $0.07 per share payable on May 28, 1996 to shareholders of record on May 13, 1996. The value of a distribution depends on the exact net asset value at the time of declaration. For the May distribution, 0.83% of the Fund's net asset value was equivalent to $0.07 per share. Including this distribution, the Fund's payout since its inception is now $6.98. MARKET OUTLOOK At this writing our bond holdings are at about 44% compared with 55% on December 31, 1995. If fully invested, we would be at about 62 1/2% for bonds. Consequently we are at about 70% of a full position (44%/62 1/2%). Also the average duration of our bond portfolio is 3.5 years, significantly lower than the average bond fund's duration of approximately 5 years. Reflecting a stronger than anticipated economy, rising interest rates, job growth, and higher commodity prices, the first quarter was one of the worst ever for bonds. Consequently, we have substantially reduced the bond portion of our portfolio. Signs of economic strength tend to be negative for bonds. This category cur- rently includes greater consumer confidence, the Commodity Research Bureau's Price Index, higher prices for such key industrial commodities as crude oil, copper, and lumber. The positive indicators include the stronger dollar and the purchasing managers' index. So far the price weakness in bonds has been mainly in the long end. Short rates have not moved much, which is why my overall bond model is holding at low neutral. If bond prices continue to decline, it would increase the risk for stocks. Our equity holdings are at about 28% compared with about 30% at year-end. With full investment in stocks at 37 1/2% for our Fund, we are presently at about 75% of a full position (28%/37 1/2%). This is roughly in line with my high neutral reading for the stock market. Our models can change swiftly and, as always, we will remain flexible to adjust our portfolio holdings as conditions warrant. PORTFOLIO COMPOSITION Conforming to our investment policy guidelines, all of our bonds are U.S. Government obligations. As mentioned earlier, the average duration of the bond portion of our fund is 3.5 years. As has been the case since the beginning of last year, the majority of our stocks are picked on the basis of a proprietary computer-driven model that uses various market criteria to evaluate and rank stocks. We currently consider about 750 stocks with the highest dividend yields from a list of approximately 1,500 of the most liquid stocks. The composition of our leading industry groups showed little change in the quarter. Utilities now represent our largest individual sector with oil in second place, a reversal of the positions that prevailed at year-end. In order of ranking, our top ten groups also include chemicals, telecommunications, paper, metals, finance, technology, aerospace and banks. The only new sector in the top ten is finance, which replaces transportation. Our top ten holdings include Sprint, duPont, Union Carbide, Reynolds Metals, Telefonica de Espana, CSX, BankAmerica, Occidental Petroleum, Aluminum Company of America and Dow Chemical. Still in our portfolio, but no longer among the top ten rankings, are Mobil, British Petroleum, Atlantic Richfield, Xerox and GTE. Sincerely, /s/ Martin E. Zweig Martin E. Zweig, Ph.D. Chairman 2 THE ZWEIG TOTAL RETURN FUND, INC. STATEMENT OF NET ASSETS MARCH 31, 1996 (UNAUDITED)
NUMBER OF SHARES VALUE --------- ----------- Common Stocks 36.69% Aerospace & Defense 1.28% General Motors Corp., Class H.......................... 32,200 $ 2,036,650 Rockwell International Corp. .......................... 26,700 1,571,963 Textron, Inc. ......................................... 23,200 1,856,000 Thiokol Corp. ......................................... 2,800 122,850 United Technologies Corp. ............................. 22,700 2,548,075 ----------- 8,135,538 ----------- Automotive 0.73% Chrysler Corp. ........................................ 32,700 2,035,575 General Motors Corp. .................................. 48,300 2,571,975 ----------- 4,607,550 ----------- Banks 1.13% Bancorp Hawaii, Inc. .................................. 15,200 533,900 BankAmerica Corp. ..................................... 48,800 3,782,000 Chase Manhattan Corp. ................................. 31,100 2,192,550 Hibernia Corp. ........................................ 60,900 647,062 ----------- 7,155,512 ----------- Chemicals 3.81% ARCO Chemical Co. ..................................... 13,900 721,062 Dow Chemical Co. ...................................... 41,000 3,561,875 du Pont (E.I.) de Nemours & Co. ....................... 55,100 4,573,300 Eastman Chemical Co. .................................. 48,500 3,352,563 Goodrich (B.F.) & Co. ................................. 20,400 1,621,800 Imperial Chemical Industries Plc, ADR.................. 20,300 1,157,100 Olin Corp. ............................................ 20,900 1,818,300 PPG Industries Inc. ................................... 23,600 1,153,450 Rhone-Poulenc Co., S.A., ADR........................... 55,300 1,437,800 Rohm & Haas Co. ....................................... 6,700 445,550 Union Carbide Corp. ................................... 87,800 4,357,075 ----------- 24,199,875 ----------- Conglomerates 0.53% Xerox Corp. ........................................... 27,000 3,388,500 ----------- Consumer Durables 0.20% Goodyear Tire & Rubber Co. ............................ 25,200 1,285,200 -----------
3 THE ZWEIG TOTAL RETURN FUND, INC. STATEMENT OF NET ASSETS--(CONTINUED) MARCH 31, 1996 (UNAUDITED)
NUMBER OF SHARES VALUE --------- ----------- Finance & Financial Services 2.11% Alex Brown Inc. ................................................ 10,000 $ 518,750 Allstate Corp. ................................................. 33,000 1,390,125 American Bankers Insurance Group, Inc. ......................... 11,500 405,375 American Financial Group, Inc. ................................. 15,700 474,925 Bear Stearns & Co., Inc. ....................................... 56,100 1,388,475 Edwards, (A.G.) Inc. ........................................... 51,900 1,291,013 Fremont General Corp. .......................................... 13,400 316,575 Merrill Lynch & Co., Inc. ...................................... 53,200 3,231,900 PHH Corp. ...................................................... 10,000 556,250 Ryder Systems Inc. ............................................. 68,000 1,853,000 Salomon Inc. ................................................... 52,900 1,983,750 ----------- 13,410,138 ----------- Food & Beverage 0.24% Adolph Coors Co., Class B....................................... 30,300 541,612 Michael Foods, Inc. ............................................ 2,900 30,450 Unilever N.V. .................................................. 7,100 963,825 ----------- 1,535,887 ----------- Healthcare 0.04% McKesson Corp. ................................................. 5,300 271,625 ----------- Investment Companies 0.93% Alliance Global Environment Fund.............................. 13,000 157,625 Blackrock 2001 Term Trust, Inc. .............................. 29,000 217,500 Blackrock Strategic Term Trust, Inc. ......................... 29,000 217,500 Clemente Global Growth Fund, Inc. ............................ 13,100 108,075 Emerging Germany Fund, Inc. .................................. 28,400 213,000 Europe Fund, Inc. ............................................ 14,300 187,688 France Growth Fund, Inc. ..................................... 8,200 83,025 Gabelli Equity Trust, Inc. ................................... 40,500 394,875 Gabelli Global Multimedia Trust Fund.......................... 23,600 162,250 Global Health Science Fund, Inc. ............................. 31,800 572,400 Italy Fund, Inc. ............................................. 5,400 43,875 John Hancock Bank & Thrift Opportunity Fund................... 18,700 427,762 Liberty All-Star Growth Fund, Inc. ........................... 20,200 189,375 MFS Intermediate Income Trust Fund............................ 29,000 188,500 New Age Media Fund, Inc. ..................................... 17,300 257,338 New Germany Fund, Inc. ....................................... 21,000 257,250 Pilgrim Regional Bank Shares, Inc. ........................... 17,400 219,675
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NUMBER OF SHARES VALUE --------- ----------- Investment Companies (Continued) Royce Value Trust, Inc. ............................... 22,060 $ 270,235 Scudder New Europe Fund, Inc. ......................... 20,800 241,800 Spain Fund, Inc. ...................................... 14,400 135,000 Swiss Helvetia Fund, Inc. ............................. 31,900 701,800 Templeton Dragon Fund, Inc. ........................... 9,200 128,800 Tri-Continental Corp. ................................. 18,800 448,850 United Kingdom Fund, Inc. ............................. 8,100 97,200 ----------- 5,921,398 ----------- Manufacturing 1.47% Albany International Corp. Class A..................... 21,800 436,000 Avery Dennison Corp. .................................. 11,000 594,000 Dana Corp. ............................................ 36,300 1,211,512 Duriron Co., Inc. ..................................... 8,900 244,750 Harsco Corp. .......................................... 5,800 384,250 Johnson Controls, Inc. ................................ 10,400 776,100 Miller (Herman), Inc. ................................. 17,300 536,300 Parker-Hannifin Corp. ................................. 38,300 1,436,250 Timken Co. ............................................ 28,300 1,305,338 TRW, Inc. ............................................. 27,000 2,406,375 ----------- 9,330,875 ----------- Metals & Mining 3.10% Allegheny Ludlum Corp. ................................ 6,900 127,650 Aluminum Company of America............................ 58,700 3,676,087 ASARCO, Inc. .......................................... 77,000 2,695,000 British Steel, Plc, ADR................................ 49,400 1,457,300 Cyprus Amax Minerals Co. .............................. 107,600 3,039,700 Phelps Dodge Corp. .................................... 51,800 3,554,775 Reynolds Metal Co. .................................... 67,500 3,990,937 USX-U.S. Steel Group................................... 33,500 1,159,938 ----------- 19,701,387 ----------- Oil & Oil Services 4.80% Amoco Corp. ........................................... 20,500 1,481,125 Atlantic Richfield Co. ................................ 21,300 2,534,700 British Petroleum Co., Plc, ADR........................ 20,300 2,156,875 Elf Aquitaine, ADR..................................... 42,000 1,422,750 Helmerich & Payne, Inc. ............................... 21,400 722,250 Kerr-McGee Corp. ...................................... 44,900 2,851,140
5 THE ZWEIG TOTAL RETURN FUND, INC. STATEMENT OF NET ASSETS--(CONTINUED) MARCH 31, 1996 (UNAUDITED)
NUMBER OF SHARES VALUE --------- ------------ Oil & Oil Services (Continued) Mobil Corp. .......................................... 27,600 $ 3,198,150 Occidental Petroleum Corp. ........................... 141,300 3,779,775 Pennzoil Co. ......................................... 18,600 739,350 Phillips Petroleum Co. ............................... 46,700 1,844,650 Quaker State Corp. ................................... 10,900 152,600 Repsol S.A., ADR...................................... 75,800 2,833,025 Sun, Inc. ............................................ 43,000 1,241,625 Texaco Inc. .......................................... 35,900 3,087,400 USX-Marathon Group, Inc. ............................. 126,600 2,437,050 ------------ 30,482,475 ------------ Paper & Forest Products 3.35% Boise Cascade Corp. .................................. 30,100 1,264,200 Bowater, Inc. ........................................ 45,000 1,676,250 Chesapeake Corp. ..................................... 5,800 175,450 Consolidated Papers, Inc. ............................ 24,700 1,389,375 Georgia-Pacific Corp. ................................ 25,900 1,796,813 Glatfelter (P.H.) & Co. .............................. 6,900 119,888 International Paper Co. .............................. 59,500 2,342,812 James River Corp. of Virginia......................... 45,500 1,171,625 Longview Fibre Co. ................................... 3,000 50,625 Mead Corp. ........................................... 34,200 1,846,800 Potlatch Corp. ....................................... 8,700 371,925 Rayonier Inc. ........................................ 8,600 311,750 Sonoco Products Co. .................................. 21,800 594,050 Stone Container Corp. ................................ 83,500 1,169,000 Union Camp Corp. ..................................... 2,800 138,950 Westvaco Corp. ....................................... 68,750 2,019,531 Weyerhaeuser Co. ..................................... 57,200 2,638,350 Willamette Industries, Inc. .......................... 36,100 2,175,025 ------------ 21,252,419 ------------ Retail Trade & Services 0.77% American Stores Co.................................... 42,800 1,412,400 Ross Stores, Inc...................................... 25,200 633,150 Smith's Food & Drug Centers, Inc...................... 21,400 513,600 Supervalu, Inc........................................ 38,000 1,173,250 TJX Companies Inc..................................... 47,200 1,185,900 ------------ 4,918,300 ------------
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NUMBER OF SHARES VALUE --------- ----------- Technology 2.09% Applied Materials, Inc. ............................. 11,600(a) $ 404,550 Dell Computer Corp. ................................. 20,400(a) 683,400 Digital Equipment Corp. ............................. 32,300(a) 1,780,537 EG&G Inc. ........................................... 39,100 874,862 Harris Corp. ........................................ 35,500 2,196,563 Intel Corp. ......................................... 12,800 728,000 International Business Machines Corp. ............... 17,800 1,978,025 Microsoft Corp. ..................................... 14,600(a) 1,505,625 Philips Electronics N.V. ............................ 86,600 3,150,075 ----------- 13,301,637 ----------- Telecommunications 3.43% 360 Communications Co. .............................. 31,166 791,848 Cincinnati Bell Inc. ................................ 22,000 1,144,000 GTE Corp. ........................................... 72,100 3,163,388 NYNEX Corp. ......................................... 69,800 3,481,275 Sprint Corp. ........................................ 124,500 4,731,000 Telefonica de Espana, S.A., ADS...................... 81,000 3,847,500 Telefonos de Mexico, S.A., ADS....................... 77,900 2,560,963 U.S. West Inc. ...................................... 63,700 2,062,287 ----------- 21,782,251 ----------- Tobacco 0.34% RJR Nabisco Holdings Corp. .......................... 71,300 2,156,825 ----------- Transportation 0.83% Atlantic Southeast Airlines, Inc. ................... 16,500 422,812 British Airways Plc, ADR............................. 8,100 664,200 CSX Corp. ........................................... 84,100 3,837,063 KLM Royal Dutch Airlines, Inc. ...................... 10,100 350,975 ----------- 5,275,050 ----------- Utilities 5.51% Allegheny Power Systems, Inc. ....................... 12,900 391,838 American Electric Power Co., Inc. ................... 55,100 2,300,425 Carolina Power & Light Co., Inc. .................... 41,500 1,545,875 CINergy Corp. ....................................... 7,500 2,250,000 CMS Energy Corp. .................................... 29,400 867,300 DQE Inc. ............................................ 37,250 1,075,594 DTE Energy Co. ...................................... 41,200 1,385,350 Eastern Enterprises.................................. 10,500 372,750
7 THE ZWEIG TOTAL RETURN FUND, INC. STATEMENT OF NET ASSETS--(CONTINUED) MARCH 31,1996 (UNAUDITED)
NUMBER OF SHARES/ PRINCIPAL AMOUNT VALUE ----------- ------------ Utilities (Continued) Enova Corp. ..................................... 36,200 $ 828,075 Entergy Corp. ................................... 32,000 896,000 FPL Group, Inc. ................................. 27,100 1,226,275 General Public Utilities Corp. .................. 46,500 1,534,500 Illinova Corp. .................................. 40,500 1,139,062 MCN Corp. ....................................... 36,400 841,750 New England Electric Systems, Inc. .............. 21,600 826,200 NIPSCO Industries, Inc. ......................... 33,000 1,229,250 Noram Energy Corp. .............................. 116,500 1,077,625 Northern States Power Co. ....................... 10,200 497,250 Pacificorp....................................... 28,600 597,025 PanEnergy Corp. ................................. 66,600 2,072,925 Pinnacle West Capital Corp. ..................... 29,200 843,150 Portland General Corp. .......................... 85,500 2,629,125 Texas Utilities Co. ............................. 55,700 2,304,587 Transcanada Pipeline Ltd. ....................... 56,700 786,712 Unicom Corp. .................................... 73,100 1,973,700 United Illuminating Co. ......................... 6,500 239,688 Western Resources Inc. .......................... 29,500 899,750 Williams Companies Inc. ......................... 47,400 2,387,775 ------------ 35,019,556 ------------ Total Common Stocks............................ 233,131,998 ------------ United States Government & Agency Obligations48.51% Federal Home Loan Mortgage Corp., 6.85%, 4/5/2004........................................ $10,385,000 10,475,111 United States Treasury Bonds, 10.75%, 5/15/2003.. 15,000,000 18,735,915 United States Treasury Bonds, 7.50%, 11/15/2024.. 29,200,000 31,572,500 United States Treasury Bonds, 7.625%, 2/15/2025.. 5,200,000 5,720,000 United States Treasury Notes, 6.125%, 5/15/98.... 45,000,000 45,295,245 United States Treasury Notes, 8.25%, 7/15/98..... 22,000,000 23,120,592 United States Treasury Notes, 6.125%, 7/31/2000.. 64,000,000(b) 64,080,000 United States Treasury Notes, 6.25%, 8/31/2000... 17,300,000 17,397,312 United States Treasury Notes, 5.625%, 11/30/2000. 19,745,000 19,356,241 United States Treasury Notes, 7.50%, 11/15/2001.. 29,000,000 30,785,269 United States Treasury Notes, 7.50%, 2/15/2005... 14,000,000 15,015,000 United States Treasury Notes, 6.50%, 5/15/2005... 26,600,000 26,716,375 ------------ Total United States Government & Agency Obligations................................... 308,269,560 ------------
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PRINCIPAL AMOUNT/NUMBER OF CONTRACTS VALUE ------------- ------------ Short-Term Money Market In- struments 12.47% Bell Atlantic Network Funding, 5.43%, 4/9/96... $ 20,600,000 $ 20,575,143 Ford Motor Credit Co., 5.37%, 4/2/96............ 1,000,000 999,851 Ford Motor Credit Co., 5.48%, 4/5/96............ 4,500,000 4,497,260 Philip Morris Capital Corp., 5.45%, 4/4/96..... 18,700,000 18,691,507 Smithkline Beecham Corp., 5.45%, 4/4/96............ 15,000,000 14,993,187 U.S. West Telecommunica- tions, Inc., 5.37%, 4/3/96................... 10,000,000 9,997,017 Wal-Mart Stores Inc., 5.33%, 4/1/96............ 9,500,000 9,500,000 ------------ Total Short-Term Money Market Instruments..... 79,253,965 ------------ Net Unrealized Depreciation on Futures Contracts 0.04% Standard & Poor's 500 In- dex, June 1996 Short (248,275) futures.................. (90)(c) ------------ Total Investments........... 97.63 % 620,407,248 Cash and Other Assets, Less 2.37 15,045,757 Liabilities................ ------ ------------ Net Assets (Equivalent to $8.41 per share based on 74,541,514 shares of capi- 100.00 % $635,453,005 tal stock outstanding)..... ====== ============
- -------- (a) Non-income producing security. (b) $2,000,000 of this security has been pledged as collateral for futures transactions. (c) The market value of the short futures was $29,286,000 (representing 4.61% of the Fund's net assets) with a cost of $29,037,725. 9 THE ZWEIG TOTAL RETURN FUND, INC. FINANCIAL HIGHLIGHTS MARCH 31, 1996 (UNAUDITED)
NET ASSET VALUE TOTAL NET ASSETS PER SHARE -------------------------- ----------------- NET ASSET VALUE: Beginning of period: 12/31/95.. $647,523,415 $8.63 Net investment income......... $ 6,716,748 $ 0.09 Net realized and unrealized losses on investments........ (7,161,899) (0.10) Dividends from net investment income and distributions from net long-term and short-term capital gains................ (15,794,770) (0.21) Net asset value of shares is- sued to shareholders for re- investment of dividends and distributions................ 4,169,511 0.00 ------------ -------- Net decrease in net assets/net asset value...... (12,070,410) (0.22) ------------ ------- End of period: 3/31/96......... $635,453,005 $8.41 ============ =======
10 KEY INFORMATION 1-800-331-1710 FIRST DATA INVESTOR SERVICES GROUP, INC.: For questions regarding shareholder accounts P.O. Box 1376 Bos- ton, MA 02104 (212) 486-3122 THE ZWEIG TOTAL RETURN FUND HOT LINE: For updates on net asset value, share price, major industry groups and other key information 1-800-272-2700 ZWEIG SHAREHOLDER RELATIONS: For general information and literature 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 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. 11 -----END PRIVACY-ENHANCED MESSAGE-----