Snapshot:  Over half of the Zweig Total Return Fund's (NYSE: ZTR) portfolio is in risk-free U.S. Treasuries. The balance is mostly in blue-chip dividend-payers like pharmaceutical giant Bristol-Myers (NYSE: BMY) and chemical maker Dow Chemical (NYSE: DOW). The bonds carry the highest credit rating possible with virtually no risk of default. They have an average duration of about six years, making the fund well positioned for a stable interest rate environment.

Register for Carla Pasternak's High-Yield Investing newsletter today and you'll receive as many as SIX in-depth research reports absolutely FREE!

Dividend:  The fund has paid dividends every month for the past two decades. Its latest monthly payment of $0.043 a share equates to $0.52 annually, providing a 9.3% yield at today's share price. A 1.02% management fee brings the effective yield to 8.3%.

The fund follows a managed distribution policy, which virtually guarantees investors receive a fixed monthly income. As we have described in our premium High-Yield Investing newsletter, the downside of a managed distribution policy is that management may chip away at a fund's asset base to meet its monthly payments if its interest income and capital gains do not provide enough distributable income. That's why we zeroed in on a fund that has increased its asset base while still providing a set monthly income to shareholders. The distribution represents 10% of the fund's net asset value. So far this year, the fund's net asset value has grown +6.65%, which bodes well for future dividend hikes.

The distribution comes from investment income earned on the fund's stocks and bonds, capital gains, and return of capital. For 2005, 47% of the fund's distribution was taxed as ordinary income, 46% was a non-taxable return of capital, and 7% qualified for the lower dividend tax rate.

The fund's Automatic Reinvestment Plan allows shareholders acquire additional shares in lieu of cash distributions. You can contact the fund at 1-800-272-2700 for more information on this plan.

Performance:  The fund's diversified portfolio of stocks and bonds helped it weather a difficult first half of 2006. Gains in the fund's stock holdings more than offset losses in its bond portfolio due to rising interest rates. In addition, the fund protected its assets by moving into cash and by taking short positions. As a result, for the six months ended June 30th, the fund's net asset value gained +0.52%, including reinvested distributions.

More recently, the fund benefited from the sharp rally in the Treasury market in the past few months. The benchmark 10-year Treasury note fell from a 5.15% yield at the end of June to a 4.61% yield at the end of October. Since bond prices move in the opposite direction of yields, the value of the fund's bond holdings rose during the period. The +8.5% rise in S&P 500 over the same four-month stretch was also favorable for the fund's equity holdings. 

Valuation/Outlook:  Over the past three years, the fund has averaged healthy annual returns of +13%, and so far this year, ZTR has returned an impressive +28% to shareholders. For the past three years, the fund has traded at a discount to its net asset value, but the recent rise in the value of Treasuries has attracted buying interest. As a result, the fund is now selling at a 7.9% premium and its shares are trading near their 52-week highs.

ZTR's share price moves up and down with U.S. Treasuries. However, under the expert hand of seasoned portfolio manager Dr. Martin E. Zweig, its diversified stock/bond portfolio has continued to add value whether interest rates were rising or falling. The fund's share price may rise or fall in reaction to the Federal Reserve's next interest rate decision on December 12th, but whatever happens at that time, we expect the fund's diverse portfolio of stocks and bonds to continue to generate secure distributions as it has every month since 1988.

Action To Take --->  With its high-quality portfolio of Triple-A bonds and blue-chip stocks, this fund is a solid long-term investment with low to medium risk.

Good investing!

Carla Pasternak
Editor
High-Yield Investing
http://www.StreetAuthority.com

Carla has been employed in the investment industry for more than two decades. In addition to her work as a writer for several other nationally recognized financial publishers, her previous experience includes a position as President of a well-respected investor relations firm. She has also been writing shareholder reports for public companies (annual reports, speeches, corporate profiles, slide shows, etc.) since 1980.

A highly successful investment analyst, Carla specializes in high-yield, income-paying stocks. In that pursuit, she's always mindful to select companies that not only pay rich dividends, but that also have the potential to deliver strong long-term capital gains.

On the educational front, Carla holds both MBA and Ph.D. degrees. When she's not watching the market, she's teaching business courses at the college level and managing several million dollars in portfolio assets.

Income Security of the Month If you're looking for high yields, monthly payments and unprecedented safety from your investments, then you need to learn more about our "Income Security of the Month" for November 2008. This stable preferred stock has a long track record of paying some of the most solid dividends in Wall Street history. In fact, the preferred issue pays a monthly dividend totaling 10.3% annually and has outperformed the S&P 500 by more than +44 percentage points over the last year!

Top 10 Stocks for 2008! Since we began publishing this report back in 2003, the picks we've featured have consistently beaten the broader market -- delivering average gains of +21.3% per year and outperforming the S&P by a nearly 2-to-1 margin. Act now to reserve your copy of our newest report -- Top Ten Stocks for 2008.

 

Success Trading -- 365 Days Without a Loss Success Trading Group scored 52 wins in 52 weeks! Get their weekend newsletters free.  High-Yield Investing If you're looking for both high yields and enormous capital gains, then you need to learn more about our "Income Stock of the Month."	Stephen Leeb's Market Forecast Receive a free ongoing, PhD level Wall Street education in how the markets work so that you can see into the future and position yourself accordingly. Investor's Business Daily (IBD) Get 10 Free Issues of Investor's Business Daily (IBD) – Plus 2 Free Weeks of Investors.com