-----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, M7LeJfS9ZhO/Jhj3PdYLC0gqOj61/FhWb6yyZPw9uPYMcALbInLAjBZKUpNodKLk 3bqI+XaVC9xz+X5CuTt6Hw== 0000950109-95-004504.txt : 19951108 0000950109-95-004504.hdr.sgml : 19951108 ACCESSION NUMBER: 0000950109-95-004504 CONFORMED SUBMISSION TYPE: N-30B-2 PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951107 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: 95587766 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 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 The Shareholder Services Group, Inc. P.O. Box 1376 Boston, MA 02104 LEGAL COUNSEL Rosenman & Colin 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 ZWEIG TOTAL RETURN FUND, INC. APPEARS HERE] QUARTERLY REPORT SEPTEMBER 30, 1995 November 1, 1995 Dear Shareholder: The Zweig Total Return Fund's net asset value increased 2.7% during the quarter ended September 30, 1995, including $0.21 in reinvested distributions. For the nine months ended September 30, 1995, the Fund's net asset value increased 13.1% including $0.63 in reinvested distributions. Maintaining our risk-averse policy, the Fund's average overall exposure during the period was 61%. DISTRIBUTION DECLARED In accordance with our policy of distributing 10% of net assets per year, which equals 0.83% per month (10% divided by 12 months), the Fund announced a distribution of $0.07 per share payable on November 27, 1995 to shareholders of record on November 13, 1995. The amount of the distribution depends on the exact net asset value at the time of declaration. For the November 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 $6.56. 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 service 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 At this writing our bond holdings are at about 54% compared with 25% on June 30. If fully invested, we would be at about 62 1/2% for bonds. Consequently we are at about 86% of a full position (54%/62 1/2%). 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. Following the summer selloff, the bond market has been strong again in recent weeks. Inflation--the prime threat to bond prices--seems under control, a bullish factor for bonds. While bonds are still not up to where they were in late 1993, they have regained a big chunk of the bear market losses of 1994. Overall, the readings of our bond indicators are at the best levels of the past two years. Remember, signs of economic weakness tend to be positive for bonds and this has been the case recently. Among economic indicators, capacity utilization, consumer confidence, and the purchasing managers' index remain on the favorable side. Commodity prices are also positive with copper, lumber, and crude oil down. In sum, with the slight signs of economic slowdown and inflation sufficiently under control, we are bullish on bonds. However, our bond model can change quickly and we will remain flexible to adjust our holdings as conditions warrant. Our equity holdings are at about 30%, virtually unchanged from 29% on June 30. With full investment in stocks at 37 1/2% for our fund, we are presently at 80% of a full position (30%/37 1/2%). This reflects the current readings of our stock market indicators which are mostly positive. It appears that the bulls have a moderate edge but the gains are unlikely to continue at the torrid pace of earlier this year. PORTFOLIO COMPOSITION Consistent with our investment policy guidelines, most of our bonds are U.S. Government obligations. We also own a small percentage of high grade corporate bonds. As mentioned earlier, the average duration of the bond portion of the Fund is 6.6 years. Since 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. Reflecting improved market performance after lagging in the first half, oil and oil services is now our largest industry group. Rounding out our top five are paper and forest products, utilities, chemicals, and banks. 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 the largest individual holding in our portfolio. Citibank and BankAmerica are also among our most prominent positions. Other top individual companies include Exxon, Burlington Northern Santa Fe, GTE, Alcoa, Sprint, and Xerox. We have reduced our positions in IBM, International Paper and Bowater. Sincerely, /s/ Martin E. Zweig Martin E. Zweig, Ph.D. Chairman 2 THE ZWEIG TOTAL RETURN FUND, INC. STATEMENT OF NET ASSETS SEPTEMBER 30, 1995 (UNAUDITED)
NUMBER OF SHARES VALUE --------- ------------ Common Stocks 26.58% Aerospace & Defense 1.33% GenCorp. Inc. ........................................ 10,700 $ 113,687 Lockheed Martin Corp. ................................ 18,308 1,228,924 Northrop Grumman Corp. ............................... 26,700 1,625,363 Raytheon Co. ......................................... 11,600 986,000 Rockwell International Corp. ......................... 46,600 2,201,850 Thiokol Corp. ........................................ 2,800 100,100 United Technologies Corp. ............................ 24,600 2,174,025 ------------ 8,429,949 ------------ Automotive 0.38% General Motors Corp. ................................. 51,300 2,404,687 ------------ Banks 1.81% Bank of Boston Corp. ................................. 10,100 481,012 BankAmerica Corp. .................................... 47,400 2,838,075 Chemical Banking Corp. ............................... 48,400 2,946,350 Citicorp ............................................. 47,500 3,360,625 First Interstate Bancorp.............................. 2,900 292,175 Republic N.Y. Corp. .................................. 26,100 1,526,850 ------------ 11,445,087 ------------ Chemicals 2.10% ARCO Chemical Co. .................................... 12,400 604,500 Dow Chemical Co. ..................................... 25,000 1,862,500 du Pont (E.I.) de Nemours & Co. ...................... 38,100 2,619,375 Eastman Chemical Co. ................................. 21,500 1,376,000 Ferro Corp. .......................................... 7,200 179,100 Goodrich (B.F.) & Co. ................................ 11,500 757,563 Imperial Chemical Industries PLC, ADR................. 15,600 791,700 Lyondell Petrochemical Co. ........................... 59,800 1,547,325 Olin Corp. ........................................... 15,700 1,079,375 Union Carbide Corp. .................................. 63,000 2,504,250 ------------ 13,321,688 ------------ Conglomerates 0.44% Xerox Corp. .......................................... 20,700 2,781,563 ------------ Construction & Farm Equipment 0.35% Deere & Co. .......................................... 27,600 2,245,950 ------------
3 THE ZWEIG TOTAL RETURN FUND, INC. STATEMENT OF NET ASSETS--(CONTINUED) SEPTEMBER 30, 1995 (UNAUDITED)
NUMBER OF SHARES VALUE --------- ------------ Consumer Durables 0.47% Goodyear Tire & Rubber Co. ........................ 61,500 $ 2,421,562 Jostens Inc. ...................................... 17,500 411,250 Toro Co. .......................................... 4,800 151,200 ------------ 2,984,012 ------------ Finance & Financial Services 0.39% Alex Brown Inc. ................................... 14,500 846,438 American Bankers Insurance Group, Inc. ............ 14,400 536,400 Fremont General Corp. ............................. 5,800 160,225 GATX Corp. ........................................ 8,700 450,225 PHH Corp. ......................................... 10,000 450,000 ------------ 2,443,288 ------------ Food & Beverage 0.01% Michael Foods Inc. ................................ 2,900 38,787 ------------ Health Services 0.38% Baxter International Inc. ......................... 52,100 2,142,613 McKesson Corp. .................................... 5,800 261,000 ------------ 2,403,613 ------------ Industrial Services 0.10% Browning-Ferris Industries Inc. ................... 21,700 659,138 ------------ Investment Companies 0.44% Alliance Global Environment Fund................... 7,200 69,300 Blue Chip Value Fund, Inc. ........................ 16,500 125,812 Emerging Markets Infrastructure, Inc. ............. 14,500 146,812 France Growth Fund, Inc. .......................... 17,400 169,650 Global Health Sciences Fund, Inc. ................. 28,900 426,275 Growth Fund Spain, Inc. ........................... 10,100 107,313 John Hancock Bank & Thrift Opportunity Fund ....... 8,600 201,025 New Age Media Fund, Inc. .......................... 17,300 263,825 Pilgrim Regional Bank Shares, Inc. ................ 8,700 107,663 Royce Value Trust, Inc. ........................... 7,200 97,200 Salomon Brothers Fund, Inc. ....................... 14,400 190,800 Scudder New Europe Fund, Inc. ..................... 14,500 155,875 Templeton Dragon Fund, Inc. ....................... 7,200 90,000 The Charles Allmon Trust, Inc. .................... 7,200 66,600 The Swiss Helvetia Fund, Inc. ..................... 21,700 450,275 Tri Continental Corp. ............................. 5,800 136,300 ------------ 2,804,725 ------------
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NUMBER OF SHARES VALUE --------- ------------ Manufacturing 1.86% Avery Dennison Corp. .............................. 16,800 $ 705,600 Crane Co. ......................................... 7,100 244,950 Dana Corp. ........................................ 29,000 837,375 Duriron Inc. ...................................... 8,900 260,325 Eaton Corp. ....................................... 30,500 1,616,500 Gleason Corp. ..................................... 7,200 235,800 Harsco Corp. ...................................... 5,800 322,625 Johnson Controls Inc. ............................. 8,600 543,950 Kennametal Inc. ................................... 28,300 1,025,875 PACCAR Inc. ....................................... 11,600 542,300 Parker-Hannifin Corp. ............................. 51,500 1,957,000 Timken Co. ........................................ 25,400 1,082,675 Trinity Industries Inc. ........................... 24,000 744,000 TRW Inc. .......................................... 22,600 1,680,875 ------------ 11,799,850 ------------ Metals & Mining 1.73% Aluminum Company of America ....................... 59,900 3,167,212 Cyprus Amax Minerals Co. .......................... 44,900 1,262,813 Homestake Mining Co. .............................. 26,300 447,100 Lukens Inc. ....................................... 4,200 122,325 Phelps Dodge Corp. ................................ 42,600 2,667,825 Quanex Corp. ...................................... 14,500 313,562 Reynolds Metals Co. ............................... 29,100 1,680,525 USX-U.S. Steel Group............................... 41,300 1,280,300 ------------ 10,941,662 ------------ Oil & Oil Services 4.54% Amoco Corp. ....................................... 27,100 1,737,788 Atlantic Richfield Co. ............................ 22,600 2,426,675 British Petroleum Co., PLC, ADS ................... 20,200 1,815,475 Chevron Corp. ..................................... 54,500 2,650,062 Elf Aquitaine, ADR ................................ 13,400 450,575 Exxon Corp. ....................................... 41,900 3,027,275 Halliburton Co. ................................... 68,000 2,839,000 Imperial Oil, Ltd. ................................ 28,500 1,061,625 Kerr-McGee Corp. .................................. 36,300 2,014,650 Louisiana Land & Exploration Co. .................. 14,500 516,563 Mobil Corp. ....................................... 21,700 2,161,862 Nova Corp. ........................................ 35,700 281,137
5 THE ZWEIG TOTAL RETURN FUND, INC. STATEMENT OF NET ASSETS--(CONTINUED) SEPTEMBER 30, 1995 (UNAUDITED)
NUMBER OF SHARES VALUE --------- ------------ Oil & Oil Services--(Continued) Occidental Petroleum Corp. ....................... 82,500 $ 1,815,000 Phillips Petroleum Co. ........................... 19,600 637,000 Repsol S.A., ADR.................................. 53,500 1,698,625 Sun Inc. ......................................... 15,900 409,425 Texaco Inc. ...................................... 7,200 465,300 Unocal Corp. ..................................... 81,000 2,308,500 USX-Marathon Group Inc. .......................... 24,100 475,975 ------------ 28,792,512 ------------ Paper & Forest Products 3.44% Boise Cascade Corp. .............................. 55,100 2,224,663 Bowater, Inc. .................................... 48,200 2,247,325 Federal Paper Board Inc. ......................... 33,300 1,277,887 Georgia-Pacific Corp. ............................ 23,800 2,082,500 International Paper Co. .......................... 56,200 2,360,400 James River Corp. of Virginia..................... 34,400 1,100,800 Mead Corp. ....................................... 28,600 1,676,675 Sonoco Products Co. .............................. 38,400 1,065,600 Temple-Inland Inc. ............................... 18,200 969,150 Union Camp Corp. ................................. 33,200 1,913,150 Westvaco Corp. ................................... 25,900 1,181,687 Weyerhaeuser Co. ................................. 40,900 1,866,063 Willamette Industries Inc. ....................... 27,600 1,842,300 ------------ 21,808,200 ------------ Retail Trade & Services 0.23% Bruno's Inc. ..................................... 1,994 23,938 CPI Corp. ........................................ 7,100 157,088 Giant Food Inc. .................................. 9,800 307,475 Great Atlantic & Pacific Tea Co. ................. 10,200 285,600 Ross Stores Inc. ................................. 21,700 341,775 Ruddick Corp. .................................... 5,800 156,600 Shopko Stores Inc. ............................... 14,500 179,438 ------------ 1,451,914 ------------ Technology 1.22% Applied Materials, Inc. .......................... 5,800(a) 593,050 Dell Computer Corp. .............................. 10,200(a) 867,000 Digital Equipment Corp. .......................... 20,400(a) 930,750 Harris Corp. ..................................... 35,000 1,920,625
6
NUMBER OF SHARES VALUE --------- ------------ Technology--(Continued) Intel Corp. ...................................... 12,800 $ 769,600 International Business Machines Corp. ............ 14,200 1,340,125 Microsoft Corp. .................................. 14,600(a) 1,321,300 ------------ 7,742,450 ------------ Telecommunications 1.55% Cable & Wireless Ltd., ADR........................ 50,100 983,212 Cincinnati Bell Inc. ............................. 22,200 599,400 GTE Corp. ........................................ 67,600 2,653,300 NYNEX Corp. ...................................... 59,400 2,836,350 Southern New England Telecommunications Corp. .... 13,400 474,025 Sprint Corp. ..................................... 64,300 2,250,500 ------------ 9,796,787 ------------ Textiles 0.02% Guilford Mills Inc. .............................. 1,700 41,225 Interface Inc. ................................... 6,500 111,313 ------------ 152,538 ------------ Transportation 0.84% British Airways PLC, ADR.......................... 12,800 913,600 Burlington Northern Santa Fe Corp. ............... 38,100 2,762,250 CSX Corp. ........................................ 19,600 1,648,850 ------------ 5,324,700 ------------ Utilities 2.95% Centerior Energy Corp. ........................... 21,800 237,075 DQE Inc. ......................................... 24,050 637,325 Eastern Enterprises............................... 2,900 93,163 FPL Group Inc. ................................... 60,400 2,468,850 Illinova Corp. ................................... 18,800 509,950 MDU Resources Group Inc. ......................... 2,900 92,438 New York State Electric & Gas Corp. .............. 18,800 493,500 Nipsco Industries Inc. ........................... 14,500 505,687 Oneok Inc. ....................................... 4,300 99,975 Pacific Enterprises............................... 38,100 957,262 Pacific Gas & Electric Co. ....................... 77,000 2,300,375 Panhandle Eastern Corp. .......................... 82,700 2,253,575 Peco Energy Co. .................................. 21,700 621,162 Portland General Corp. ........................... 74,100 1,898,812 Rochester Gas & Electric Corp. ................... 15,900 375,638
7 THE ZWEIG TOTAL RETURN FUND, INC. STATEMENT OF NET ASSETS--(CONTINUED) SEPTEMBER 30, 1995 (UNAUDITED)
NUMBER OF SHARES/ PRINCIPAL AMOUNT VALUE ---------- ------------ Utilities--(Continued) San Diego Gas & Electric Co. .................. 21,700 $ 501,813 SCEcorp. ...................................... 83,900 1,489,225 Southwest Gas Corp. ........................... 5,800 90,625 Tenneco Inc. .................................. 14,400 666,000 Transcanada Pipeline Ltd. ..................... 5,800 76,125 Unicom Corp. .................................. 71,300 2,156,825 United Illuminating Co. ....................... 5,800 203,725 ------------ 18,729,125 ------------ Total Common Stocks.......................... 168,502,225 ------------ Corporate Bonds 2.01% Exxon Capital Corp., 7.875%, 8/15/97........... $6,000,000 6,185,454 General Electric Capital Corp., 8.375%, 3/1/2001...................................... 6,000,000 6,541,992 ------------ Total Corporate Bonds........................ 12,727,446 ------------ United States Government & Agency Obliga- tions 52.17% Federal Home Loan Mortgage Corp., 7.05%, 3/24/2004..................................... 12,185,000 12,338,482 Federal Home Loan Mortgage Corp., 7.61%, 9/1/2004...................................... 4,000,000 4,098,284 Federal National Mortgage Association 6.20%, 7/10/2003..................................... 4,490,000 4,334,229 Federal National Mortgage Association 6.48%, 2/18/2004..................................... 4,000,000 3,916,332 Federal National Mortgage Association 6.90%, 3/10/2004..................................... 4,600,000 4,605,515 Federal National Mortgage Association 6.85%, 4/5/2004...................................... 10,385,000 10,659,299 Federal National Mortgage Association 7.60%, 4/14/2004..................................... 6,810,000 6,874,368 United States Treasury Notes, 4.625%, 2/15/96.. 2,640,000 2,630,921 United States Treasury Notes, 6.125%, 5/15/98.. 87,000,000 87,489,375 United States Treasury Notes, 6.125%, 7/31/2000..................................... 65,000,000 65,263,965 United States Treasury Notes, 6.50%, 5/15/2005. 26,600,000 27,198,500 United States Treasury Bonds, 8.125%, 8/15/2019..................................... 19,000,000 22,307,159 United States Treasury Bonds, 7.625%, 2/15/2025..................................... 69,700,000(b) 78,935,250 ------------ Total United States Government & Agency Obli- gations..................................... 330,651,679 ------------ Short-Term Money Market Instruments 18.13% AT&T Co., 5.71%, 10/10/95...................... 18,500,000 18,473,591 Bell Network Funding Inc., 5.70%, 10/3/95...... 14,600,000 14,595,377 Ford Motor Credit Co., 5.73%, 10/4/95.......... 17,800,000 17,791,501 Nestle Capital Corp., 5.70%, 10/5/95........... 10,000,000 9,993,667 Raytheon Co., 5.74%, 10/6/95................... 24,900,000 24,880,149
8
PRINCIPAL AMOUNT/NUMBER OF CONTRACTS VALUE ------------- ------------ Short-Term Money Market Instruments--(Contin- ued) Sara Lee Corp., 5.73%, 10/2/95............... $13,600,000 $ 13,597,835 U.S. West Telecommunications Inc., 5.75%, 10/11/95.................................... 15,600,000 15,575,083 ------------ Total Short-Term Money Market Instruments.. 114,907,203 ------------ Net Unrealized Appreciation on Futures Con- tracts 0.08% Standard & Poor's 500 Index, December 1995 519,351 Long futures................................ 89(c) ------------ TOTAL INVESTMENTS............................ 98.97% 627,307,904 CASH AND OTHER ASSETS, LESS LIABILITIES...... 1.03 6,531,599 ------ ------------ Net Assets (Equivalent to $8.50 per share based on 74,540,794 shares of capital stock 100.00% $633,839,503 outstanding)................................ ====== ============
- -------- (a) Non-income producing security. (b) $2,152,000 of this security has been pledged as collateral for futures transactions. (c) The market value of the long futures was $26,174,900 (representing 4.13% of the Fund's net assets) with a cost of $25,655,549. 9 THE ZWEIG TOTAL RETURN FUND, INC. FINANCIAL HIGHLIGHTS SEPTEMBER 30, 1995 (UNAUDITED)
NET ASSET VALUE TOTAL NET ASSETS PER SHARE -------------------------- ----------------- NET ASSET VALUE: Beginning of period: 12/31/94.... $591,658,838 $8.11 Net investment income........... $ 21,212,476 $ 0.29 Net realized and unrealized gains from security transac- tions.......................... 54,084,549 0.73 Dividends from net investment income and distributions from net short-term capital gains... (46,404,242) (0.63) -------- Net asset value of shares issued to shareholders for reinvest- ment of dividends and distribu- tions.......................... 13,287,882 ------------ Net increase in net asset val- ue............................ 42,180,665 0.39 ------------ ------- End of period: 9/30/95........... $633,839,503 $8.50 ============ =======
10 KEY INFORMATION The Shareholder Services Group, Inc. P.O. Box 1376 Boston, MA 02104 For questions about our Reinvestment Plan, shareholders may write to The Shareholder Services Group or call 1-800 331-1710. THE ZWEIG TOTAL RETURN FUND HOTLINE For weekly updates on the Fund's major industry holdings, our market stance and our net asset value call (212) 486-3122. THE ZWEIG TOTAL RETURN FUND, INC. GENERAL INFORMATION 1-800-272-2700 - -------------------------------------------------------------------------------- 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-----