<PAGE> 1
As filed with the Securities and Exchange Commission on April 30, 1996
Registration No. 2-93538
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No. ___ / /
Post-Effective Amendment No. 42 /X/
and/or
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 43 /X/
---------------
ZWEIG SERIES TRUST
(Exact Name of Registrant as Specified in Charter)
5 Hanover Square, New York, New York 10004
(Address of Principal Executive Offices) (Zip code)
Registrant's Telephone Number, including Area Code: (212) 635-9800
EUGENE J. GLASER
President
Zweig/Glaser Advisers
5 Hanover Square
New York, New York 10004
(Name and Address of Agent for Service)
Copy to:
PAUL S. SCHREIBER, Esq.
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Approximate Date of Proposed Public Offering: Effective date of this
Post-Effective Amendment.
It is proposed that this filing will become effective on May 1, 1996,
pursuant to paragraph (b) of Rule 485 under the Securities Act of 1933, as
amended.
DECLARATION PURSUANT TO RULE 24f-2
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, as
amended, the Registrant has registered an indefinite number or amount of
securities under the Securities Act of 1933, as amended. A Rule 24f-2 Notice for
the Registrant's fiscal year ended December 31, 1995 was filed on February 23,
1996.
<PAGE> 2
By this amendment to the Registration Statement (No. 2-93538) on Form N-1A of
Zweig Series Trust, the Board of Trustees of Zweig Series Trust, a Delaware
business trust, adopts the registration statement of Zweig Series Trust, a
Massachusetts business trust, under the Securities Act of 1933 and the
notification of registration and the registration statement of Zweig Series
Trust under the Investment Company Act of 1940.
<PAGE> 3
ZWEIG SERIES TRUST
CONTENTS
This Post-Effective Amendment No. 42 to the Registration Statement on Form N-1A
consists of the following:
1. Facing Sheet
2. Contents
3. Cross-Reference Sheet
4. Part A - Prospectus for all shares other than Class M Shares
of Zweig Cash Fund
- Prospectus for Class M Shares of Zweig Cash Fund
5. Part B - Statement of Additional Information for all shares
other than Class M Shares of Zweig Cash Fund
- Statement of Additional Information for Class M
Shares of Zweig Cash Fund
6. Part C - Other Information
7. Signature Sheet
8. Exhibits
<PAGE> 4
ZWEIG SERIES TRUST
Cross-Reference Sheet pursuant to Rule 495(a)
for all shares other than Class M Shares of the Zweig Cash Fund
<TABLE>
<CAPTION>
Form N-1A
Item No. Location
- --------- --------
<S> <C>
Part A - Prospectus
1. Cover Page Cover Page
2. Synopsis Fee Table
3. Condensed Financial Information Financial Highlights; Performance
Information
4. General Description of Registrant Zweig Series Trust; Organization of the
Funds; Portfolio Securities; Investment
Objectives of the Zweig Mutual Funds;
Risk Factors and Managing Exposure to
Market Risk; Stock Selection and Bond
Duration; Other Investment Policies
5. Management of the Registrant Risk Factors and Managing Exposure to
Market Risk; Dr. Martin E. Zweig; The
Portfolio Managers; The Manager and
Management Fee
5A. Management's Discussion of Fund Performance Information
Performance
6. Capital Stock and Other Securities Organization of the Funds; Net Asset
Value; Distributions and Taxes; Choosing
Among Classes of Shares
7. Purchase of Securities Being Offered How to Invest in the Zweig Mutual Funds;
Choosing Among Classes When Purchasing of
Shares; Net Asset Value; Distributions
and Taxes
8. Redemption or Repurchase Choosing Among Classes When Purchasing of
Shares; How to Redeem your Shares; Exchange
Privilege
9. Legal Proceedings Not Applicable
</TABLE>
-i-
<PAGE> 5
<TABLE>
<CAPTION>
Part B - Statement of Additional
Information
- --------------------------------
<S> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Not Applicable
13. Investment Objectives and Policies Investment Objectives and Policies;
Investment Restrictions
14. Management of the Fund Trustees and Officers of the Trust
15. Control Persons and Principal Trustees and Officers of the Trust
Holders of Securities
16. Investment Advisory and Other Investment Management and Other Services
Services
17. Brokerage Allocation and Other Portfolio Transactions and Brokerage
Practices
18. Capital Stock and Other Securities Purchase and Redemption of Shares
19. Purchase, Redemption and Pricing of Purchase and Redemption of Shares; Net
Securities Being Offered Asset Value and Taxes
20. Tax Status Net Asset Value and Taxes
21. Underwriters Investment Management and Other Services
22. Calculation of Performance Data Yield and Performance Information
23. Financial Statements Financial Statements
</TABLE>
-ii-
<PAGE> 6
ZWEIG SERIES TRUST
Cross-Reference Sheet pursuant to Rule 495(a)
for Class M Shares of the Zweig Cash Fund
<TABLE>
<CAPTION>
Form N-1A
Item No. Location
- --------- --------
<S> <C>
Part A - Prospectus for Class M Shares of
Zweig Cash Fund
1. Cover Page Cover Page
2. Synopsis Fee Table
3. Condensed Financial Information Financial Highlights; Performance
Information
4. General Description of Registrant Organization and Management; The Fund's
Investments and Risk Factors
5. Management of the Registrant Organization and Management; How to Buy Shares
6. Capital Stock and Other Securities Organization and Management; Net Asset
Value, Distributions and Taxes; How to
Buy Shares
7. Purchase of Securities Being Offered How to Buy Shares; Net Asset Value,
Distributions and Taxes
8. Redemption or Repurchase How to Redeem Shares
9. Legal Proceedings Not Applicable
</TABLE>
<TABLE>
<CAPTION>
Part B - Statement of Additional
Information for Class M Shares of Zweig
Cash Fund
- ---------------------------------------
<S> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Not Applicable
</TABLE>
-iii-
<PAGE> 7
<TABLE>
<S> <C>
13. Investment Objectives and Policies Investment Objective and Policies;
Investment Restrictions
14. Management of the Fund Trustees and Officers of the Trust
15. Control Persons and Principal Trustees and Officers of the Trust
Holders of Securities
16. Investment Advisory and Other Investment Management and Other Services
Services
17. Brokerage Allocation and Other Portfolio Transactions
Practices
18. Capital Stock and Other Securities How to Purchase and Redeem Shares
19. Purchase, Redemption and Pricing of How to Purchase and Redeem Shares; Net
Securities Being Offered Asset Value and Taxes
20. Tax Status Net Asset Value and Taxes
21. Underwriters Investment Management and Other Services
22. Calculation of Performance Data Yield and Performance Information
23. Financial Statements Financial Statements
</TABLE>
Part C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Post-Effective Amendment No. 42
to the Registration Statement on Form N-1A.
-iv-
<PAGE> 8
ZWEIG
Series Trust
PROSPECTUS
Zweig Strategy Fund
Zweig Appreciation Fund
Zweig Managed Assets
Zweig Government Fund
Zweig Cash Fund
May 1, 1996
Zweig Series Trust offers investors the opportunity to invest in one or more of
five mutual funds. The five funds, or series, of the Trust, are:
[] Zweig Strategy Fund
[] Zweig Appreciation Fund
[] Zweig Managed Assets
[] Zweig Government Fund
[] Zweig Cash Fund
Each fund has its own investment objectives and policies. A shareholder's
interest is limited to the fund in which she or he owns shares.
The funds are designed for investors who intend to invest for the long term,
including those who wish to purchase shares for tax-qualified retirement plans
and Individual Retirement Accounts (IRAs). The funds are not appropriate for
investors who intend to liquidate their investment after a short period of time.
Each fund offers three classes of shares: Class A, Class B and Class C Shares.
Investors in Class A Shares pay an initial sales charge. Investors in Class B
Shares pay no initial sales charge, but are subject to a declining contingent
deferred sales charge (CDSC) if they sell their shares within six years of
purchase. Investors in Class C Shares pay no initial sales charge, but are
subject to a CDSC if they sell their shares within one year of purchase. Class
B and Class C Shares have higher annual operating expenses than Class A Shares.
Class B Shares convert to Class A Shares after a holding period of seven years
from the initial purchase. Class C Shares have a shorter CDSC period than Class
B Shares, but they do not convert to Class A Shares. When choosing among
classes of shares, you should consider the amount of the purchase, the planned
length of time for the investment and other relevant circumstances. Zweig Cash
Fund, a money market fund, also offers Class M Shares, which are described in a
separate prospectus.
Zweig/Glazer Advisers is the investment manager of the funds. Zweig Securities
Corp. is the principal distributor of the fund's shares.
Shares of the Zweig Mutual Funds are not deposits or obligations of, or
guaranteed, endorsed or insured by, the U.S. Government, any bank, the Federal
Deposit Insurance Corp., the Federal Reserve Board, or any other agency, entity
or person. There can be no assurance that the Zweig Cash Fund will be able to
maintain a stable net asset value of $1.00 a share.
This Prospectus contains important information that you should know before
investing. Please keep it for future reference. A Statement of Additional
Information (SAI) dated May 1, 1996, has been filed with the Securities and
Exchange Commission. The SAI is incorporated by reference into this
Prospectus. You can obtain a copy without charge by calling 1-800-272-2700.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS, ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
Zweig Series Trust
5 Hanover Square-17th Floor
New York, NY 10004
1-800-272-2700
<PAGE> 9
FEE TABLE
We've provided the following table to help you understand the expenses of
investing in the Zweig Mutual Funds. Mutual fund investors bear two types of
expenses: transaction expenses and operating expenses. You pay transaction
expenses when you buy shares in a fund. The fund as a whole pays operating
expenses, which reduce the fund's annual return to you.
<TABLE>
<CAPTION>
CLASS CLASS CLASS
A B C
SHARES SHARES SHARES
------ ------ ------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Initial Sales Charge on purchases
(as % of Offering Price)
Zweig Strategy Fund, Zweig Appreciation Fund and Zweig Managed Assets..... 5.50% None None
Zweig Government Fund..................................................... 4.75% None None
Zweig Cash Fund........................................................... None* None None
Maximum Contingent Deferred Sales Charge (CDSC)............................... None** 5.00%*** 1.25 ****
</TABLE>
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* Sales charges apply on exchanges of Class A Shares of Zweig Cash Fund (on
which no initial sales charge was paid) for Class A Shares of any other
fund.
** A 1% CDSC is imposed on redemptions within 18 months of purchases of $1
million or more as described in "Quantity discounts on Class A Shares,"
except for shares of Zweig Cash Fund originally purchased without an
initial sales charge.
*** The maximum CDSC is imposed on Class B Shares redeemed in the first year.
For shares held longer than one year, the CDSC declines according to the
schedules set forth under "Class B Shares" in this Prospectus.
**** The CDSC on Class C Shares applies only if redemption occurs in the first
year.
EXAMPLES -- The table below is based on operating expenses for the last fiscal
year for Class A Shares and Class C Shares. The expenses for Class B Shares are
based on expenses that would have been incurred if Class B Shares had been in
existence for such fiscal year. The table does not represent future expense
levels, which may be greater or less than those shown. Federal regulations
require the examples to assume a 5% annual return, but actual annual returns
have varied as shown in the column headed "Total Return" in the table on the
following page.
<TABLE>
<CAPTION>
EXAMPLE: You would pay the
following
expenses on a $1,000
investment
ANNUAL FUND assuming (1) 5% annual return
OPERATING EXPENSES and (2) redemption at the end
(As % of average net assets) of each time period:
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Total Fund
Management 12b-1 Other Operating 1 3 5
FUND Fees Fees(2) Expenses Expenses Year Years Years
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A SHARES
Zweig Strategy Fund................. 0.75% 0.30% 0.22% 1.27% $ 67 $ 93 $ 121
Zweig Appreciation Fund............. 1.00 0.30 0.33 1.63 71 104 139
Zweig Managed Assets................ 1.00 0.30 0.29 1.59 70 102 137
Zweig Government Fund(4)............ 0.39* 0.30 0.36 1.05* 58 79 103
Zweig Cash Fund(1).................. --* 0.30 0.35* 0.65* 7 21 36
CLASS B SHARES
Zweig Strategy Fund................. 0.75 1.00 0.22 1.97 70 92 126
Zweig Appreciation Fund............. 1.00 1.00 0.33 2.33 74 103 145
Zweig Managed Assets................ 1.00 1.00 0.29 2.29 73 102 143
Zweig Government Fund(4)............ 0.39* 1.00 0.36 1.75* 68 85 115
Zweig Cash Fund(1).................. --* 1.00 0.35 1.35* 64 73 94
CLASS C SHARES
Zweig Strategy Fund................. 0.75 1.00 0.22 1.97 33 62 106
Zweig Appreciation Fund............. 1.00 1.00 0.33 2.33 36 73 125
Zweig Managed Assets................ 1.00 1.00 0.29 2.29 36 72 123
Zweig Government Fund(4)............ 0.39* 0.75 0.36 1.50* 28 47 82
Zweig Cash Fund(1).................. --* 0.30 0.35 0.65* 19 21 36
<CAPTION>
EXAMPLE: You would pay the following
expenses on a $1,000 investment
assuming (1) 5% annual return
and (2) no redemption:
- -----------------------------------------------------------------------------------------------
10 1 3 5 10
FUND Years Year Years Years Years
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS A SHARES
Zweig Strategy Fund................. $200 $ 67 $ 93 $ 121 $200
Zweig Appreciation Fund............. 238 71 104 139 298
Zweig Managed Assets................ 234 70 102 137 234
Zweig Government Fund(4)............ 170 58 79 103 170
Zweig Cash Fund(1).................. 81 7 21 36 81
CLASS B SHARES
Zweig Strategy Fund................. 203(3) 20 62 106 203(3)
Zweig Appreciation Fund............. 244(3) 24 73 125 241(3)
Zweig Managed Assets................ 237(3) 23 72 123 233(3)
Zweig Government Fund(4)............ 179(3) 18 55 95 179(3)
Zweig Cash Fund(1).................. 134(3) 14 43 74 134(3)
CLASS C SHARES
Zweig Strategy Fund................. 230 20 62 106 230
Zweig Appreciation Fund............. 267 24 73 125 267
Zweig Managed Assets................ 263 23 72 123 263
Zweig Government Fund(4)............ 179 15 47 82 179
Zweig Cash Fund(1).................. 81 7 21 36 81
</TABLE>
- --------------------------------------------------------------------------------
* After expense reimbursement
(1) The manager has voluntarily undertaken to limit the expenses of Zweig Cash
Fund (exclusive of taxes, interest, brokerage commissions, 12b-1 fees and
extraordinary expenses) for the current fiscal year to 0.35% of its average
net assets. The manager reserves the right to discontinue this policy at any
time. The Management Fees noted above, without reimbursement, would be 0.50%
for each Class, Other Expenses would be as shown above except for Class A
which would be 0.54%, and Total Fund Operating Expenses would be 1.34% for
Class A, 1.85% for Class B and 1.15% for Class C assuming Other Expenses for
Class B Shares (as a percent of average net assets) are the same for Class C
Shares.
(2) The 12b-1 Fees include a 0.25% Service Fee, 100% of which is reallocated to
National Association of Securities Dealers, Inc. ("NASD") member firms
(commencing one year after purchase with respect to Class B and Class C
Shares) for continuous personal service by such members to investors in the
Trust, such as responding to shareholder inquiries, quoting net asset
values, providing current marketing materials and attending to other
shareholder matters. The distributor retains all or a portion of the
asset-based sales charge also included in the 12b-1 Fees; the remainder is
paid to brokers for promoting sales of the Trust's shares. The NASD limits
asset based sales charges to 6.25% of new sales, plus interest. Long-term
shareholders may pay more than the economic equivalent of the maximum
front-end sales charges permitted by the NASD.
(3) Class B Shares automatically convert to Class A Shares after seven years
(see Class B Share Conversion Feature). Years eight through ten reflect
expenses of the Class A Shares.
(4) The manager has voluntarily undertaken to limit the expenses of Zweig
Government Fund (exclusive of taxes, interest, brokerage commissions, 12b-1
fees and extraordinary expenses) for the remainder of the current fiscal
year to 0.75% of its average net assets effective May 1, 1996. The manager
reserves the right to discontinue this policy at any time after December 31,
1996. The Management Fees noted above, without reimbursement, would be 0.60%
for each Class and Total Fund Operating Expenses would be 1.26% for Class A,
1.96% for Class B and 1.71% for Class C.
2
<PAGE> 10
FINANCIAL HIGHLIGHTS
The following table sets forth financial history for a Class A Share and
Class C Share of each of the Zweig Mutual Funds. The distribution of Class B
Shares commenced on April 8, 1996.
Coopers & Lybrand L.L.P., the funds' independent accountants, has audited
this information. Their report for each of the last five years is included in
the 1995 Annual Report of the Trust. The report is available upon request and is
incorporated by reference into the Statement of Additional Information (SAI).
<TABLE>
<CAPTION>
NET DISTRIBU-
REALIZED TIONS DISTRIBU-
NET ASSET AND DIVIDENDS FROM TIONS
VALUE NET UNREALIZED TOTAL FROM FROM NET REALIZED FROM TOTAL
YEAR BEGINNING INVESTMENT GAINS INVESTMENT INVESTMENT CAPITAL CAPITAL DISTRIBU-
ENDED OF YEAR INCOME (LOSSES) OPERATIONS INCOME GAINS PAID-IN TIONS
-------- --------- ---------- ---------- ---------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ZWEIG STRATEGY FUND CLASS A
1995 $ 12.36 $ 0.27 $ 2.80 $ 3.07 $(0.37) $ (0.55) $ -- $ (0.92)
1994 12.52 0.24 (0.10) 0.14 (0.20) (0.10) -- (0.30)
1993 13.60 0.13 1.72 1.85 (0.12) (2.81) -- (2.93)
1992 13.03 0.17 0.80 0.97 (0.21) (0.19) -- (0.40)
1991 10.81 0.21 2.27 2.48 (0.26) -- -- (0.26)
1990 11.36 0.42 (0.67) (0.25) (0.30) -- -- (0.30)
1989(1) 11.34 -- 0.02 0.02 -- -- -- --
ZWEIG STRATEGY FUND CLASS C
1995 12.35 0.16 2.82 2.98 (0.22) (0.55) -- (0.77)
1994 12.51 0.15 (0.10) 0.05 (0.11) (0.10) -- (0.21)
1993 13.61 0.05 1.71 1.76 (0.05) (2.81) -- (2.86)
1992(2) 12.89 0.08 0.69 0.77 (0.05) -- -- (0.05)
ZWEIG APPRECIATION FUND CLASS A
1995 13.54 0.16 3.05 3.21 (0.33) (0.51) -- (0.84)
1994 14.33 0.16 (0.43) (0.27) (0.06) (0.46) -- (0.52)
1993 13.10 0.07 1.83 1.90 (0.06) (0.61) -- (0.67)
1992 12.03 0.06 1.07 1.13 (0.03) (0.03) -- (0.06)
1991(3) 11.34 0.03 0.66 0.69 -- -- -- --
ZWEIG APPRECIATION FUND CLASS C
1995 13.36 0.06 3.03 3.09 (0.11) (0.51) -- (0.62)
1994 14.19 0.06 (0.43) (0.37) -- (0.46) -- (0.46)
1993 13.01 (0.01) 1.80 1.79 -- (0.61) -- (0.61)
1992(2) 12.33 (0.02) 0.70 0.68 -- -- -- --
ZWEIG MANAGED ASSETS CLASS A
1995 11.76 0.47 1.40 1.87 (0.75) (0.40) -- (1.15)
1994 12.38 0.33 (0.69) (0.36) (0.26) -- -- (0.26)
1993(4) 11.34 0.22 1.13 1.35 (0.14) (0.17) -- (0.31)
ZWEIG MANAGED ASSETS CLASS C
1995 11.73 0.38 1.40 1.78 (0.62) (0.40) -- (1.02)
1994 12.36 0.23 (0.68) (0.45) (0.18) -- -- (0.18)
1993(4) 11.34 0.15 1.13 1.28 (0.09) (0.17) -- (0.26)
ZWEIG GOVERNMENT FUND CLASS A
1995 9.63 0.52 0.77 1.29 (0.53) -- -- (0.53)
1994 10.43 0.50 (0.79) (0.29) (0.51) -- -- (0.51)
1993 10.01 0.55 0.46 1.01 (0.59) -- -- (0.59)
1992 10.21 0.65 (0.22) 0.43 (0.63) -- -- (0.63)
1991 9.60 0.68 0.62 1.30 (0.69) -- -- (0.69)
1990 9.75 0.70 (0.15) 0.55 (0.70) -- -- (0.70)
1989 9.29 0.66 0.46 1.12 (0.66) -- -- (0.66)
1988 9.54 0.68 (0.25) 0.43 (0.68) -- -- (0.68)
1987 10.70 0.70 (0.92) (0.22) (0.70) (0.11) (0.13) (0.94)
1986 10.87 0.76 0.28 1.04 (0.92) (0.29) -- (1.21)
ZWEIG GOVERNMENT FUND CLASS C
1995 9.62 0.48 0.76 1.24 (0.48) -- -- (0.48)
1994 10.40 0.46 (0.79) (0.33) (0.45) -- -- (0.45)
1993 10.02 0.52 0.41 0.93 (0.55) -- -- (0.55)
1992(2) 9.86 0.52 0.09 0.61 (0.45) -- -- (0.45)
ZWEIG CASH FUND CLASS A(5)
1995 1.00 0.05 -- 0.05 (0.05) -- -- (0.05)
1994(6) 1.00 0.03 -- 0.03 (0.03) -- -- (0.03)
ZWEIG CASH FUND CLASS C(5)
1995 1.00 0.05 -- 0.05 (0.05) -- -- (0.05)
1994(6) 1.00 0.03 -- 0.03 (0.03) -- -- (0.03)
<CAPTION>
RATIOS TO AVERAGE
NET ASSETS
-----------------------
NET ASSET NET PORTFOLIO END OF YEAR
VALUE END TOTAL INVESTMENT TURNOVER NET ASSETS
OF YEAR RETURN EXPENSES INCOME RATE (IN THOUSANDS)
--------- ------ -------- ---------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
ZWEI
$ 14.51 25.12% 1.27% 1.92% 95% $558,286
12.36 1.14 1.40 1.90 70 424,805
12.52 14.97 1.43 1.00 359 405,884
13.60 7.61 1.63 1.32 249 358,318
13.03 23.34 1.58 1.79 179 367,343
10.81 (2.16) 1.67 3.89 105 298,734
11.36 0.18 N/A N/A N/A 333,391
ZWEI
14.56 24.26 1.97 1.22 95 530,300
12.35 0.41 2.10 1.20 70 307,011
12.51 14.18 2.13 0.30 359 188,631
13.61 6.00 2.43* 0.40* 249 64,697
ZWEI
15.91 24.00 1.63 1.10 68 272,590
13.54 (1.83) 1.70 1.09 97 213,400
14.33 14.65 1.73 0.52 69 230,230
13.10 9.52 1.96 0.49 61 200,656
12.03 6.08 2.19* 1.27* 8 157,948
ZWEI
15.83 23.20 2.33 0.40 68 195,204
13.36 (2.55) 2.40 0.39 97 139,397
14.19 13.84 2.43 (0.18) 69 105,957
13.01 5.52 2.80* (0.32)* 61 42,089
ZWEI
12.48 16.26 1.59 3.69 239 141,110
11.76 (2.93) 1.68 2.70 299 154,441
12.38 11.98 1.67* 1.93* 196 121,620
ZWEI
12.49 15.44 2.29 2.99 239 527,432
11.73 (3.66) 2.38 2.00 299 570,710
12.36 11.34 2.37* 1.23* 196 429,088
ZWEI
10.39 13.84 1.26 5.22 195 42,207
9.63 (2.83) 1.28 5.07 191 47,622
10.43 10.35 1.30 5.46 256 60,207
10.01 4.51 1.30 6.58 200 70,062
10.21 14.35 1.42 7.10 361 83,859
9.60 6.09 1.44 7.44 263 102,209
9.75 12.46 1.88 7.04 445 119,742
9.29 4.63 1.91 7.27 24 203,999
9.54 (2.02) 1.81 7.09 58 350,614
10.70 10.23 1.87 6.93 169 421,837
ZWEI
10.38 13.27 1.71 4.77 195 19,778
9.62 (3.18) 1.73 4.62 191 22,599
10.40 9.48 1.75 5.01 256 21,301
10.02 6.31 1.81* 5.93* 200 9,210
ZWEI
1.00 5.08 0.87 4.97 N/A 3.661
1.00 2.55** 0.62** 2.52** N/A 4,303
ZWEI
1.00 5.08 0.87 4.97 N/A 1,458
1.00 2.55** 0.61** 2.52** N/A 5,040
</TABLE>
- ---------------
(1) Commenced operations December 29, 1989.
(2) Commenced operations February 4, 1992.
(3) Commenced operations October 7, 1991.
(4) Commenced operations February 8, 1993.
(5) During 1995, the manager voluntarily reimbursed Zweig Cash Fund Class A and
Class C $0.005 and $0.003 per share (0.47% and 0.28% ratio of operating
expenses to average net assets), respectively.
(6) Commenced operations May 1, 1994.
* Annualized.
** Not annualized.
3
<PAGE> 11
ZWEIG SERIES TRUST
Zweig Series Trust offers investors the opportunity to pool their money to
achieve the benefits of a mutual fund: economies of scale, diversification and
professional money management. Economies of scale result in lower costs per
investor, due to the large number of investors sharing the expenses of the
funds. Investors can achieve greater diversification in a mutual fund than they
could by investing in individual securities. The Trust offers investors access
to the professional investment expertise of Zweig/Glaser Advisers, the manager.
Dr. Martin E. Zweig, Ph.D., is Chairman of the manager and President of the
Trust.
INVESTMENT OBJECTIVES OF THE ZWEIG MUTUAL FUNDS
ZWEIG STRATEGY FUND seeks long-term capital appreciation through investment
primarily in "Blue Chip Stocks" (see Portfolio Securities), consistent with
preservation of capital and reduction of portfolio exposure to market risk. The
fund is managed using risk management strategies and a stock selection model
developed by Dr. Zweig and his staff.
Dr. Zweig's risk management strategies rely on a series of monetary, sentiment
and market indicators. The indicators measure risk levels in the stock and bond
markets. As the indicators point to increasing levels of market risk, the
portfolio manager reduces, or can offset entirely, the fund's market exposure by
gradually selling portions of the fund's stock holdings and buying cash
equivalents, such as money market securities. Stock index futures or options
also may be used as a means of adjusting the fund's exposure to market risk, but
not for the purpose of leverage (see Risk Factors and Managing Exposure to
Market Risk). As long as the indicators continue to show high levels of risk in
the securities markets, Zweig Strategy Fund will continue to maintain its
exposure to market risk at lower than normal levels. Under normal conditions,
Dr. Zweig's investment models will not reallocate more than 10% of a fund's
assets among asset classes at any one time.
ZWEIG APPRECIATION FUND seeks long-term capital appreciation through investment
primarily in "Small Company Stocks" (see Portfolio Securities), consistent with
preservation of capital and reduction of portfolio exposure to market risk.
Current income is not an objective. Under normal circumstances, the fund will
have between 50% and 65% of its invested assets in Small Company Stocks and may
invest up to 35% in large company stocks. The risk management strategies
described in the preceding paragraph also are used in managing this fund. As
long as the indicators continue to show high levels of risk in the securities
markets, Zweig Appreciation Fund will continue to maintain its exposure to
market risk at lower than normal levels.
ZWEIG MANAGED ASSETS seeks a high level of total return over the long-term from
capital appreciation, dividends and interest, with a reduction of portfolio
exposure to market risk by allocating its assets among domestic and foreign
stocks, bonds, short-term debt instruments, currencies and currency-related
instruments. Up to 50% of the fund's assets may be invested in foreign
securities, as conditions warrant (see Portfolio Securities). The asset
allocation mix will be determined using risk management strategies and
investment models developed by Dr. Zweig and his staff.
The fund's assets normally will be allocated within the following parameters:
0-60% in stocks, 0-60% in bonds and 0-100% in short-term debt instruments. A
neutral mix will consist of 35% stocks, 35% bonds and 30% cash equivalents. This
will occur when the research indicates that conditions do not favor one asset
class over another. The fund may use futures, forward currency contracts, and
options to increase or decrease its exposure to changing securities prices,
interest rates or currency exchange rates.
ZWEIG GOVERNMENT FUND seeks a high total return from current income and capital
appreciation consistent with preservation of capital over the long term by
investing primarily in U.S. Government and agency securities, including
Government National Mortgage Association mortgage-backed certificates, and
repurchase agreements collateralized by such securities. The fund may use
futures contracts and options as a means of hedging against changes in interest
rates.
ZWEIG CASH FUND seeks high current income consistent with maintaining liquidity
and preserving capital. The goal of the fund is to maintain a stable share price
of $1.00. The fund invests exclusively in short-term securities issued or
guaranteed as to the payment of principal and interest by the U.S. Government,
its agencies or instrumentalities, and repurchase agreements collateralized by
such obligations. Zweig Cash Fund also offers Class M Shares which are described
in a separate Prospectus. Class M Shares have different distribution fees and
expenses, which may affect performance. You may obtain more information about
Class M Shares by calling 1-800-272-2700. Class M Shares of Zweig Cash
4
<PAGE> 12
Fund have no exchange privileges with other funds in the Trust.
The investment objectives described in the first sentence under the name of each
fund above, except for those of Zweig Managed Assets, are fundamental. They can
be changed only by vote of a majority of the outstanding shares of a fund. A
majority for this purpose is defined as the lesser of either: (a) 67% of the
shares represented at a meeting if more than 50% of all shares are represented,
or (b) more than 50% of all outstanding shares. We do not anticipate that Zweig
Managed Assets will change its objectives or alter its "neutral" asset mix. If
the fund should change its investment objective, we will notify shareholders 30
days prior to making the change.
Please read the Risk Factors and Managing Exposure to Market Risk, Stock
Selection and Bond Duration, and Portfolio Securities sections of this
prospectus for more detailed information about the investment practices of each
fund. The SAI has further details. As with any mutual fund, there is no
assurance that a fund's objectives will be achieved.
DR. MARTIN E. ZWEIG
Dr. Martin E. Zweig has created and refined a risk-averse style of money
management over a 25-year career providing investment advisory and portfolio
management services. Investment advisers affiliated with Dr. Zweig presently
manage over $10.3 billion of assets. This $10.3 billion includes approximately
$4.2 billion in institutional accounts, $1.2 billion in publicly traded
closed-end investment companies and $2.4 billion in open-end mutual funds, as
well as other accounts.
Dr. Zweig is the Chairman of the manager and President of the Trust. He has been
a regular panelist on PBS television's Wall Street Week with Louis Rukeyser for
22 years and, in 1992, became the ninth person selected for the program's Hall
of Fame. Dr. Zweig is the author of various investment advisory newsletters,
including The Zweig Forecast. He is also the author of the books Winning on Wall
Street, The ABCs of Market Forecasting and Winning with New IRAs.
Dr. Zweig determines the asset allocation strategy for each of the Zweig Mutual
Funds; he does not select the individual securities to implement the strategy.
The portfolio manager of each individual fund selects the specific securities
for that fund (see Stock Selection and Bond Duration).
THE PORTFOLIO MANAGERS
David Katzen has been the portfolio manager for Zweig Strategy Fund and Zweig
Appreciation Fund since their inceptions. Mr. Katzen is a Senior Vice President
of the funds. He has been with the Zweig Organization since 1986. Mr. Katzen
received his B.A. in Mathematics from City University of New York and an M.A. in
Mathematics from Dartmouth College, where he was admitted to the Ph.D. program.
Carlton Neel has been the portfolio manager for Zweig Managed Assets and Zweig
Government Fund since July 5, 1995. Mr. Neel is a First Vice President of the
funds. Mr. Neel received a dual B.A. in Economics and Political Science from
Brown University. Prior to joining the Zweig Organization, he was a Vice
President with J.P. Morgan & Co., Inc.
STOCK SELECTION AND BOND DURATION
The portfolio manager of the Zweig Strategy Fund and Zweig Appreciation Fund
uses a proprietary computer-driven model developed by Dr. Zweig and his staff to
choose stocks for the funds. The model evaluates and ranks 3,000 stocks based
primarily upon earnings momentum, relative valuation, changes in analysts'
earnings estimates and price momentum. The stock selection model may evolve or
be replaced by other techniques intended to select stocks with the potential for
growth. We will notify shareholders of any material change to the stock
selection model.
Out of the 1,400 most liquid stocks, the portfolio manager selects up to 300
stocks for the Zweig Strategy Fund. The manager of the Zweig Appreciation Fund
selects a larger number of stocks (presently more than 600) primarily from the
2,500 stocks immediately after the 500 largest stocks ranked by market
capitalization or trading volume. The Zweig Appreciation Fund also may invest up
to 35% of its assets in large-company stocks.
U.S. stocks in Zweig Managed Assets are selected using a model that is comprised
of industry-specific background indicators and momentum components. These
indicators determine the optimal weighting in each major industry group. The
selection of the individual securities is determined by ranking approximately
750 stocks that the portfolio manager considers to be comparable in market
capitalization and liquidity to the
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<PAGE> 13
stocks in the Standard & Poor's 500 Index. Up to 200 stocks are selected in
accordance with the weightings of the industry groups.
Each foreign country in which Zweig Managed Assets intends to invest has a
currency model, as well as stock and bond models similar to those used for
determining the domestic asset allocation strategy. Zweig Managed Assets may
invest in groups of foreign stocks that, in the aggregate, are expected to
perform similarly to the major stock market index of the country in which the
stocks are located, in investment vehicles structured to track a particular
major foreign stock market index, and in investment companies, commonly referred
to as "Country Funds", that invest in the securities of a particular country.
Zweig Government Fund invests in U.S. Government securities. These obligations
of the United States Government and its agencies and instrumentalities are
considered to have the lowest risk of default. Therefore, the primary
consideration in choosing U.S. Government bonds is managing risks related to
changes in interest rate levels. A bond's duration measures its sensitivity to
changes in interest rates (interest rate risk). In concept, duration is the
weighted average "maturity" of all cash flows of a bond (the interest payments
as well as the principal repayment). The longer the duration, the greater the
bond's price movement will be as interest rates change. The portfolio manager
adjusts duration by altering the mix of short-, medium- and long-term bonds, and
by buying or selling Treasury futures contracts.
Investments for the Zweig Government Fund are chosen primarily by utilizing a
model that incorporates various indicators, such as: momentum of bond prices,
short-term interest rate trends, inflation indicators, general economic and
liquidity indicators, and other market indicators and statistics.
PORTFOLIO SECURITIES
The securities described below may be used in pursuit of a fund's investment
objectives. Percentage limitations on investments are considered at the time of
purchase; the sale of portfolio securities is not required in the event of a
subsequent change in value or in a fund's net assets.
STOCKS and other equity securities represent an ownership interest in a company.
Securities in this category include common stocks, fixed-rate preferred stocks,
bonds convertible into equity securities, warrants, rights, depository receipts
and other equity securities. Common stocks have a history of long-term growth in
value. However, stock prices fluctuate in response to general market and
economic conditions, as well as to factors affecting individual companies. Zweig
Government Fund and Zweig Cash Fund may not invest in stocks.
"BLUE CHIP STOCKS" (the primary investments of Zweig Strategy Fund) are
stocks with a minimum market capitalization (the total value of their
shares) of $400 million, average daily trading volume of 50,000 shares or
$425 million of total assets, that the portfolio manager considers to be
comparable to the stocks included in the Standard & Poor's 500 Index. Blue
Chip Stocks are traded on the New York Stock Exchange (NYSE), the American
Stock Exchange (AMEX), over the counter (OTC) or on foreign exchanges.
"SMALL COMPANY STOCKS" (the primary investments of Zweig Appreciation Fund)
are the 2,500 stocks traded on the NYSE, AMEX or OTC that are positioned
immediately after the 500 largest stocks ranked in terms of market
capitalization and/or trading volume. These 2,500 stocks have a market
capitalization ranging from approximately $177 million to $3.9 billion.
Their average daily trading volume is approximately $4.5 million. Small
Company Stocks historically have presented greater potential for capital
appreciation and greater risk, and they tend to be more volatile, than
stocks of larger, more established companies.
BONDS and other debt instruments represent a loan from the investor to the
issuer of the security. The issuer pays the investor a fixed or variable rate of
interest, and must repay the amount borrowed when the bond matures. The value of
bonds and other debt instruments fluctuates primarily based on the maturity and
coupon (interest rate), changes in the general level of interest rates, and the
credit quality of the issuer. Zweig Strategy Fund may not invest in bonds. Zweig
Appreciation Fund may invest only in U.S. Government securities with remaining
maturities of five years or less. Zweig Managed Assets may invest in foreign and
domestic bonds rated "A" or higher by Moody's Investors Service, Inc. or
Standard & Poor's Corporation, or if unrated, the bonds must be judged by the
portfolio manager to be of comparable quality.
U.S. GOVERNMENT SECURITIES are debt instruments issued or guaranteed by the
U.S. Treasury or by a U.S. Gov-
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<PAGE> 14
ernment agency or instrumentality. Not all U.S. Government securities are
backed by the full faith and credit of the United States. Some are
supported only by the credit of the agency or instrumentality that issued
them. Agencies and instrumentalities include: Bank for Cooperatives,
Export-Import Bank of the U.S., Farmers Home Administration, Federal
Financing Bank, Federal Home Loan Banks, Federal Home Loan Mortgage Corp.,
Federal Housing Administration, Federal Intermediate Credit Banks, Federal
Land Banks, Federal National Mortgage Association, Government National
Mortgage Association (GNMA), Resolution Funding Corp., Student Loan
Marketing Association, Tennessee Valley Authority and the U.S. Postal
Service.
MORTGAGE SECURITIES are debt instruments that include mortgage-backed
securities (for example, GNMA certificates) and collateralized mortgage
obligations. In addition to price fluctuations based on changes in interest
rates and the market's perception of the issuer, mortgage securities also
are subject to prepayment risk which can result in the proceeds being
reinvested at a lower rate of interest and loss of any premium. This
typically occurs when large numbers of homeowners refinance their mortgages
at lower rates.
MONEY MARKET INSTRUMENTS are short-term, high-quality debt securities that
present minimal risk of loss. We use these securities to reduce fluctuations in
a fund's net asset value and often refer to them as "cash" or "cash
equivalents." Money market securities include: short-term U.S. Government
obligations, commercial paper, other short-term corporate obligations, bank
deposits (including time deposits with a maturity of less than one year) and
other financial institution obligations.
REPURCHASE AGREEMENTS are arrangements by which a fund buys a security at one
price and at the same time agrees to sell the security back to the seller at a
higher price, usually on the next business day (or within seven days for foreign
repurchase agreements). Repurchase agreements offer a means of generating income
from excess cash that a fund might otherwise hold. Delays in payment or losses
may result if the other party to the agreement defaults or becomes bankrupt. A
fund will enter into repurchase agreements only with member banks of the Federal
Reserve System or primary dealers in U.S. Government securities. The fund's
repurchase agreements must be fully backed by collateral (U.S. Government
securities in the case of the Zweig Government Fund and Zweig Cash Fund) that is
marked to market, or priced, each day.
FOREIGN STOCKS AND BONDS may involve additional risks. These include currency
fluctuations and risks related to political and economic conditions in foreign
countries. These factors could make foreign investments less liquid and more
volatile. Foreign companies may not be subject to accounting standards or
governmental supervision comparable to U.S. companies, and there may be less
information available about their operations. Foreign investments also may be
subject to possible nationalization of issuers or expropriation of their assets,
which would adversely affect a fund's ability to liquidate its investment. Zweig
Government Fund and Zweig Cash Fund may not invest in foreign securities. The
other Zweig Mutual Funds may invest in foreign securities and American
depository receipts that are publicly traded in the U.S. In addition, Zweig
Strategy Fund and Zweig Appreciation Fund may invest up to 15% of their assets
in foreign securities not publicly traded in the U.S. Zweig Managed Assets may
invest up to 50% of its assets in foreign securities not publicly traded in the
U.S., but not more than 15% of its assets in any one country.
ILLIQUID AND RESTRICTED SECURITIES may be difficult to sell promptly at an
acceptable price, or may be sold only pursuant to certain legal restrictions.
Difficulty in selling securities may result in a loss or entail expenses not
normally associated with the sale of a portfolio security. Illiquid securities
include securities not listed on a recognized foreign securities exchange and
repurchase agreements having more than seven days remaining to maturity. No more
than 15% of a fund's net assets (10% for Zweig Cash Fund) may be invested in
illiquid securities.
INDEXED SECURITIES are securities whose value depends on the price of securities
indexes, other securities, foreign currencies or other assets. Among the more
traditional indexed securities are futures and options. Futures and options are
standardized contracts that have been used by mutual funds for many years to
manage their portfolios more efficiently. Index futures, for example, enable the
manager to position assets in the market immediately, with a modest margin
deposit (roughly 5% to 10% of the position size) to simulate a much larger
invested position. Transaction costs also may be lower than purchasing or
selling the underlying securities. A fund will purchase or sell indexed
securities for hedging purposes only, including increasing or
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<PAGE> 15
decreasing exposure to changing securities prices, but not to leverage assets.
(See Risk Factors and Managing Exposure to Market Risk.)
RISK FACTORS AND MANAGING EXPOSURE TO MARKET RISK
Investing in stocks and bonds, directly or through a mutual fund, involves risks
that are not found in federally insured money market and savings accounts and
CDs. The most significant is the risk of losing your principal. The prices of
individual stocks and bonds, and markets as a whole, move up and down. Markets
move based on economic factors, such as interest rates, and market conditions,
such as investor sentiment. Individual stock or bond prices also are affected by
results of the issuer's operations and factors peculiar to its industry.
Diversification can reduce the risks of investing. Diversifying includes
limiting the amount invested in any one company or, on a broader scale, limiting
the amount invested in any one industry, any one class of assets (e.g. stocks)
or any one country. The funds' Annual and Semi-Annual Reports to Shareholders
detail the holdings of each fund. Call 1-800-272-2700 to obtain the most recent
Report.
Like most mutual funds, the Zweig Mutual Funds use diversification to minimize
the effect of a loss in any one investment. U.S. Government securities (the
primary investments of Zweig Government Fund and Zweig Cash Fund) avoid the
risks related to factors affecting a particular company or industry, but they do
not eliminate market (interest rate) risk.
Unlike most mutual funds, the Zweig Mutual Funds also manage exposure to market
risk by significantly adjusting the amount of a fund's assets that are invested
in stocks or bonds and the duration (risk) of a bond portfolio. While the Zweig
Funds manage exposure to risk, we cannot eliminate risk.
We manage the Zweig Mutual Funds by diversifying portfolios very broadly (other
than funds comprised of U.S. Government securities) and by increasing or
reducing the amount of the fund's assets that are invested in stocks or bonds,
using the strategies developed by Dr. Zweig and his associates. As the research
indicates that risk levels are rising in the stock and/or bond markets, the
portfolio manager gradually sells a portion of each fund's stocks and/or bonds
and buys money market securities. As the research indicates decreasing levels of
risk in stocks and/or bonds, the portfolio manager sells some of the money
market securities and buys stocks and/or bonds. The shifts in the asset mix of a
fund are made incrementally. Under normal conditions, a fund will not adjust its
asset mix by more than 10% at any one time.
In addition to buying and selling money market securities, the portfolio manager
may use other methods to increase or reduce market exposure. The portfolio
manager may buy or sell futures contracts and options. He also may sell short
and enter into currency exchange contracts. These strategies allow the fund to
increase or decrease its exposure to changes in interest rates, exchange rates
and movements in stock prices. Used cautiously, they may be effective tools that
lend greater stability to fund assets. They also may help to reduce the cost of
administering a portfolio and allow managers to buy and sell relatively large
positions without distorting prices. The portfolio managers use these techniques
to adjust the risk and return characteristics of a fund. They do not use these
practices to leverage the fund. If a manager misjudges market conditions or
employs a strategy that does not correlate well with the fund's primary
investments, use of these techniques may result in a loss, regardless of the
manager's original intent to reduce risk. Descriptions of these strategies
follow, and the SAI contains more detailed explanations. You should understand
these investment practices and be sure that you are able to withstand the
potential risks inherent in their use.
FUTURES CONTRACTS AND OPTIONS. Each of the Zweig Mutual Funds except Zweig Cash
Fund may use futures contracts and options to manage its exposure to changing
stock and bond prices, or to alter its asset mix. A fund may use any type of
future or option related to its investments. These include: stock index futures
and options, foreign stock index futures and options, interest rate futures and
options, and foreign currency futures and options, including those traded on
foreign exchanges and options not traded on exchanges. Some futures and options
strategies hedge against price fluctuations. These include: selling futures as a
portfolio hedge, buying puts and writing covered calls. Other strategies
increase market exposure. These include buying futures, writing puts and buying
calls.
A fund will not purchase puts if more than 10% of its assets would be invested
in premiums on puts. A fund will write calls only if they are covered throughout
the life of the call. A fund will write puts only if: (a) the
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<PAGE> 16
aggregate value of the obligations underlying the puts does not exceed 50% of a
fund's assets, and (b) the puts are fully secured by high-quality debt
obligations in a segregated account with the fund's custodian, The Bank of New
York. Call options on futures must be similarly secured.
Futures and options involve, to varying degrees, market risk in excess of their
value. Futures and options may be used or combined with each other, or with
forward contracts, in order to adjust the risk and return characteristics of an
overall strategy; however, there may be an imperfect correlation between the
prices of options and futures contracts and the price movements of the
securities being hedged. Another risk associated with options and futures is a
potential lack of liquidity. A fund may be unable to close out, or sell, its
futures or options positions at all times. Each fund seeks to limit losses from
all options transactions to 5% of its average net assets per year. If necessary,
a fund will cease options transactions in order to comply with the 5%
limitation.
CURRENCY EXCHANGE CONTRACTS. Only Zweig Managed Assets may enter into forward
currency exchange contracts. Currency exchange contracts are agreements to
exchange one currency for another at a set rate on a future date. Currency
exchange contracts may be used to lock in an exchange rate for purchases of
securities denominated in foreign currencies or used for investment purposes.
These contracts involve the risk that currency movements will be inaccurately
predicted, in which case the fund's return would be adversely affected. To
manage its exposure to fluctuations in currency exchange rates, Zweig Managed
Assets may enter into forward currency exchange contracts, may buy and sell
options and futures contracts relating to foreign currencies, or may purchase
securities indexed to foreign currencies.
Some futures and forward foreign currency contracts are customized financial
contracts between two parties. Such contracts are subject to the additional risk
that the counterparty will not meet its obligations under the contract. They
also may be less liquid and more difficult to value than standardized contracts
traded on a regulated exchange.
SELLING SHORT. Zweig Cash Fund may not sell short. A fund sells a security,
future or currency short when the manager believes the price of the security,
future or currency will decline. A fund may sell a stock index future short to
offset a potential decline in a group of stocks the fund owns. A fund may make
such short sales if the manager believes reducing portfolio exposure to changing
securities prices can be accomplished at a lower cost than if the securities
themselves were sold. A fund also may sell a security short to protect against a
decline in the price of a security it already owns, but wishes to defer the
realization of a capital gain. To sell a security short, the fund must borrow
the security. A fund's obligation to replace the security borrowed and sold
short will be fully secured at all times by cash or U.S. Government securities
deposited with the lender of the security or in a segregated account with the
fund's custodian. A fund may not sell securities short if: (a) the market value
of all securities sold short will be more than 25% of the fund's assets, or (b)
the market value of unlisted securities sold short will be more than 10% of the
fund's assets.
The Board of Trustees, which has the primary responsibility for the overall
management of the Zweig Mutual Funds, has determined that, while there are
certain risks inherent in futures, options, currency exchange contracts and
short sales, Zweig/Glaser Advisers has demonstrated its expertise and ability to
use these hedging techniques effectively. The flexibility and potential for
enhanced long-term performance and risk reduction provided by such investment
techniques warrant their use, in the opinion of the Board of Trustees.
OTHER INVESTMENT COMPANIES. A direct investment by a fund in securities,
financial instruments, currencies, futures and forward contracts, and related
options involves risks described elsewhere in this prospectus. An investment in
them made through another investment company will also involve an investment
manager and service providers (e.g., custodians) over which the Trust will have
no direct control; and there will be an additional layer of expenses, including
the fee of such investment manager. Closed-end investment companies frequently
trade at a discount from net asset value. Only if the discount is sufficiently
large will the additional income earned by a portfolio purchased at a discount
offset the additional layer of expenses. If shares of another investment company
are purchased at a discount which subsequently declines, performance will be
better than it would have been had the underlying instruments been purchased
directly. Of course, such discount could increase rather than decrease and
adversely affect performance. The risks of investing in funds are discussed more
fully in the SAI. A fund will invest in another investment company only if the
portfolio manager
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<PAGE> 17
believes that a fund's investment objective will be furthered thereby. No more
than 10% of a fund's assets will be invested in other investment companies, or
more than 5% in any one. Zweig Cash Fund will not normally invest in any other
investment companies.
MEASURING RISK. In choosing an investment that is right for you, it is important
to consider the level of risk that you can withstand. There are many ways to
measure risk when comparing mutual funds. One that is easily understood is
maximum decline in net asset value (NAV). Many national newspapers measure the
extent to which a fund's net asset value has changed from day to day. Micropal
Inc., an independent fund rating service, takes this concept one step further by
measuring the largest high-to-low drop in the month-end to month-end net asset
value of a fund during any given period, and expressing it as a percentage
decline. When comparing the maximum NAV declines of different funds, ask
yourself if you could have experienced each particular drop without selling the
fund. The maximum NAV declines for Class A Shares and Class C Shares from the
end of the month of inception through December 31, 1995, computed by Micropal
Inc., are shown below for the Zweig Mutual Funds and for the average fund with a
comparable investment objective (distribution of the Class B Shares commenced on
April 8, 1996). Also shown are the maximum declines for a relevant standard
measure of securities prices. In all cases, distributions have been reinvested,
and maximum NAV declines do not reflect sales charges. Please remember that past
performance does not predict future results; any fund can decline more in the
future than it has in the past.
<TABLE>
<CAPTION>
CLASS A SHARES CLASS C SHARES*
-------------- --------------
<S> <C> <C>
Max NAV Decline of ZWEIG STRATEGY FUND from inception -7.13% (3rd lowest of 246 -4.30% (9th lowest of 309
in December 1989 growth funds) growth funds)
Max NAV Decline of Average Growth Fund for period -18.46% -8.59%
Max Decline of S&P 500 for period+ -14.69% -6.95%
Max NAV Decline of ZWEIG APPRECIATION FUND from -6.04% (8th lowest of 109 -6.20% (11th lowest of 119
inception in October 1991 small-cap funds) small-cap funds)
Max NAV Decline of Average Small-Cap Fund for period+ -13.68% -11.78%
Max Decline of Value Line Geometric Index for period -9.87% -9.87%
Max NAV Decline of ZWEIG MANAGED ASSETS from inception -4.88% (4th lowest of 30 -5.44% (7th lowest of 30
in February 1993 multi-asset global multi-asset global
funds) funds)
Max NAV Decline of Average Multi-Asset Global Fund for -9.50% -9.50%
period**
Max NAV Decline of ZWEIG GOVERNMENT FUND from September -4.79% (10th lowest of 80 -5.18% (17th lowest of 104
1989*** U.S. Gov't Securities U.S. Gov't Securities
funds) funds)
Max NAV Decline of Average U.S. Govt. Fund for period+ -8.00% -6.88%
Max Decline of Lehman Composite Government Bond Index -5.41% -5.41%
</TABLE>
- ---------------
Definitions of Indices used for comparison:
The Standard & Poor's 500 Index is a broad-based measurement of changes in
stock market conditions based on the average performance of 500 widely held
common stocks.
The Multi-Asset Global Fund category was recently created by Morningstar. It
consists of mutual funds with investment objectives too broad and flexible
to allow them to fit comfortably into any other objective. The information
is based on 30 funds, and Micropal Inc. calculated the maximum NAV decline.
The Lehman Composite Government Bond Index measures the return of government
bonds ranging in maturity from one to 30 years.
The Value Line Geometric Index measures the returns of 1,700 stocks ranging
from large-cap to small-cap on an unweighted basis.
* From inception in February 1992 (February 1993 for Zweig Managed Assets).
** Sources: Morningstar and Micropal Inc.
*** Zweig/Glaser Advisers assumed responsibility for managing the fund in
September 1989. Under the prior manager, from inception in March 1985, the
maximum NAV decline was -10.87% for the fund, -7.50% for the Average U.S.
Government Fund and -5.41% for the Lehman Composite Government Bond Index.
+ The maximum NAV decline for funds with a comparable investment objective is
an unweighted average of all such funds tracked by Micropal Inc.
Comparable information for other mutual funds, prepared by Micropal Inc., is
available by calling 1-800-444-2706.
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<PAGE> 18
OTHER INVESTMENT POLICIES
PORTFOLIO TURNOVER RATE. The length of time a fund has held a stock or bond is
not usually considered when making investment decisions. As a result of the
Zweig style of money management, a fund's turnover rate may be higher than that
of other mutual funds. (A portfolio turnover rate in excess of 100% may be
deemed to be high.) Portfolio turnover may result in realization of taxable
capital gains and generally involves expense, including brokerage costs. (The
SAI contains a detailed explanation of certain relevant tax considerations.) The
portfolio managers consider the cost of making portfolio adjustments when
deciding whether to implement a strategy by selling stocks or bonds and
investing the proceeds in money market securities, or by using futures or
options to reduce exposure to market risk. See the table under Financial
Highlights for portfolio turnover rates.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS. A fund may purchase a bond or
stock with delivery of the security and payment deferred to a future date. The
money to purchase such securities will be invested in other securities until the
fund receives delivery. This could increase the possibility that the fund's net
asset value would increase or decrease faster than would otherwise be the case.
LENDING SECURITIES. A fund may lend securities to broker/dealers and
institutions as a means of earning income. Delays or losses could result if a
borrower becomes bankrupt or defaults in its obligation to return the loaned
security. The Zweig Mutual Funds may lend securities only if: (a) the loan is
fully backed by collateral at all times, and (b) the value of all loaned
securities is less than one-third of the fund's total assets.
BORROWING. All Zweig Mutual Funds may make temporary borrowings from banks to
cover redemptions. Although they have not done so in the past, Zweig Strategy
Fund and Zweig Appreciation Fund also may borrow from banks for investment if
all borrowings would not exceed 20% of the fund's assets. Thereafter, the amount
borrowed must never exceed one-third of the fund's assets. If the performance of
the fund's investments fails to cover the cost of borrowing, including interest,
the net asset value of its shares will decrease faster than if the fund had no
borrowings outstanding.
NET ASSET VALUE
Zweig Mutual Funds determine the net asset value of each class of shares on each
day that the New York Stock Exchange (NYSE) is open. Net asset values are
calculated as of 2:00 P.M. New York time for Zweig Cash Fund shares and as of
the close of regular trading on the NYSE for Zweig Cash Fund and the other
funds.
We subtract the non-class specific liabilities of a fund from the fund's assets
to determine its total net assets. We then determine each class's proportionate
interest in the fund's net assets. The liabilities attributable to that class,
including its distribution fees, are then deducted and the resulting amount is
divided by the number of shares of that class outstanding to produce its net
asset value per share.
Portfolio securities for which market quotations are readily available are
stated at market value. Securities for which market quotations are not readily
available are valued at fair value as determined using procedures determined by
the Board of Trustees. Foreign forward currency contracts are valued using
forward currency exchange rates supplied by a quotation service. Shortterm
obligations having a remaining maturity of 60 days or less are valued at
amortized cost (which approximates market value). Zweig Cash Fund attempts to
stabilize the net asset value of its shares at $1.00 and uses the amortized cost
method to value all its securities.
DISTRIBUTIONS AND TAXES
Each of the Zweig Mutual Funds intends to qualify as a regulated investment
company for federal income tax purposes and to distribute to its shareholders
all income and net capital gains so as to be relieved of federal taxes so long
as, in management's view, such qualification is in the shareholders' interest.
Distributions are declared separately for each class of shares of a fund.
Distributions will be reinvested at net asset value unless you elect to receive
distributions in cash. Shareholders who have elected to receive distributions in
cash but whose accounts have been classified as "stop mail" accounts because two
consecutive mailings have been returned as "undeliverable", will automatically
have their future distributions reinvested at net asset value.
The Zweig Cash Fund declares a dividend at 2:00 P.M. New York time on each day
the NYSE is open. Zweig Cash Fund's dividends include all accrued interest,
earned discounts, and realized gains and losses, less amortized premiums and
accrued expenses. The fund pays or reinvests these dividends on the last
business day of each month.
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<PAGE> 19
Zweig Government Fund declares and pays net investment income dividends monthly.
Zweig Strategy Fund and Zweig Managed Assets declare and pay net investment
income dividends semi-annually. Zweig Appreciation Fund declares and pays net
investment income, if any, at least annually. Any net realized capital gains
will be paid at least annually, except that net short-term capital gains may be
paid more frequently, together with the dividends from net investment income.
Because Class B and Class C Shares have higher distribution fees, dividends on
Class A Shares will be higher than dividends on Class B and Class C Shares of
the same fund.
Distributions of income and short-term capital gains are taxed as dividends.
Long-term capital gain distributions are taxed as long-term capital gains.
Distributions are taxable when paid, whether taken in cash or reinvested, except
that distributions declared in November and December and paid in January are
taxable as if paid on December 31st.
By January 31 of each year, we will send you a statement showing the tax status
of your distributions for the prior year and the proceeds of your redemptions
(including exchanges), if any. You should keep your account statements with your
other tax records. When you sell your shares, their tax basis is the total of
your cash investments plus all distributions that have been reinvested, less any
return of capital distributions.
The foregoing is a summary of certain federal income tax consequences. Be sure
to consult your own tax adviser to determine the precise effect of your
investments in the Zweig Mutual Funds on your particular tax situation, and any
state and local tax consequences.
EXCHANGE PRIVILEGE
You can exchange shares of one Zweig Mutual Fund for shares of the same class of
another Zweig Mutual Fund at their respective net asset values (except that
Class A Shares of Zweig Cash Fund purchased without a sales charge are
exchangeable at net asset value plus the applicable sales charge). All exchanges
are effected as of the close of regular trading on the NYSE. You can exchange
shares either through your investment dealer or, if the shares are registered in
your name, through the transfer agent. You may exchange through the transfer
agent by mail, telephone, or systematically on the 15th day of each month or
quarter (see Application Form in this Prospectus).
Each exchange is a sale of shares of one fund and a purchase of the same class
of shares of another fund. An exchange may produce a gain or a loss for tax
purposes, and is subject to the terms and conditions applicable to telephone
redemptions and the minimum investment requirement of each fund. We reserve the
right to reject any exchange request, or to modify or terminate exchange
privileges upon 60 days' written notice to shareholders.
CHOOSING AMONG CLASSES WHEN PURCHASING SHARES
Zweig Mutual Funds offer investors three classes of shares (Class A, Class B and
Class C) which bear sales charges in different forms and amounts and which bear
different levels of expenses (see Fee Table on page 2). You should choose the
class of shares that is most beneficial given the amount of your purchase, the
length of time you expect to hold the shares and other relevant circumstances.
Class A shares are sold with an initial sales charge that varies based upon the
amount invested as shown in the table below. Class B Shares have no initial
sales charge, but are subject to a declining contingent deferred sales charge
(CDSC) if sold within six years of purchase. Class C Shares have no initial
sales charge, but are subject to a CDSC if sold within one year of purchase.
Class B and Class C Shares have higher annual operating expenses than Class A
Shares. Class B Shares of Zweig Government Fund and Zweig Cash Fund have higher
annual operating expenses than their corresponding Class C Shares. Class B
Shares convert to Class A Shares after a holding period of seven years from the
initial purchase. Class C Shares have a shorter CDSC period than Class B Shares,
but they do not convert to Class A Shares.
CONTINGENT DEFERRED SALES CHARGE (CDSC). The applicable CDSC rate for each class
of shares is set forth in the Fee Table on page 2. The CDSC is imposed on the
lesser of: (a) the current market value, or (b) the initial cost of the shares
being redeemed. No CDSC is imposed upon shares acquired by reinvesting
distributions. In determining whether a CDSC applies, the order of redemption is
first of shares purchased through reinvestment and then of shares held the
longest. Any CDSC imposed on a redemption is paid to the distributor or directly
to a third party at the direction of the distributor.
We may waive the CDSC on redemption(s): (a) following the death of a
shareholder; (b) if a shareholder becomes unable to engage in any substantial
gainful activity because of a medically determinable
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<PAGE> 20
physical or mental impairment which can be expected to result in death or be of
long-continued and indefinite duration; (c) when a total or partial redemption
is made in connection with a distribution from (i) retirement plans after
reaching age 59 1/2, except that if, immediately prior to the redemption, the
aggregate amount invested by the retirement plan in Class B Shares of the Zweig
Mutual Funds (excluding the reinvestment of distributions) during the prior four
year period equals 50% or more of the total value of the retirement plan's
assets in the Zweig Mutual Funds, then the CDSC will not be waived, or (ii)
certain other Class A Share retirement plans; (d) under the systematic
withdrawal program if the amount being withdrawn is no more than 1% per month of
the value of the account at the time the program was established; and (e)
effected pursuant to the Fund's right to liquidate a shareholder's account if
the aggregate net asset value of the shares held in the account is less than the
then effective minimum account size.
CLASS A SHARES. Class A Shares of all funds except Zweig Cash Fund are sold at
net asset value plus the applicable sales charge. The offering price applies to
purchases made by a single purchaser or by a single trust account. An
individual, his or her spouse, and children under 21 are considered to be a
single purchaser. The sales charge on Class A Shares is allocated between your
investment dealer and Zweig Securities Corp., the distributor, as shown below.
QUANTITY DISCOUNTS ON CLASS A SHARES. When you invest in Class A Shares of the
Zweig Mutual Funds, you may receive quantity discounts at certain dollar levels,
or breakpoints. The more you invest, the smaller percentage you pay in sales
charges, as shown below.
<TABLE>
<CAPTION>
AS A PERCENTAGE OF
------------------
NET
OFFERING ASSET
PRICE VALUE
OF OF
THE THE DEALER'S
SHARES SHARES SALES
AMOUNT INVESTED PURCHASED PURCHASED CONCESSION
- ------------------------------------------------------------ --------- --------- ----------
<S> <C> <C> <C>
ZWEIG STRATEGY FUND, ZWEIG APPRECIATION FUND
AND ZWEIG MANAGED ASSETS:
Less than $50,000........................................... 5.50% 5.82% 4.75%
$50,000 but less than $100,000.............................. 4.75% 4.99% 4.00%
$100,000 but less than $250,000............................. 3.75% 3.90% 3.25%
$250,000 but less than $500,000............................. 2.75% 2.83% 2.25%
$500,000 but less than $1,000,000........................... 1.75% 1.78% 1.50%
$1,000,000 or more.......................................... 0.00% 0.00% (see below)
ZWEIG GOVERNMENT FUND:
Less than $50,000........................................... 4.75% 4.99% 4.00%
$50,000 but less than $100,000.............................. 4.00% 4.17% 3.50%
$100,000 but less than $250,000............................. 3.00% 3.09% 2.50%
$250,000 but less than $500,000............................. 2.25% 2.30% 1.75%
$500,000 but less than $1,000,000........................... 1.75% 1.78% 1.50%
$1,000,000 or more.......................................... 0.00% 0.00% (see below)
</TABLE>
- --------------------------------------------------------------------------------
Commissions (as set forth below) will be paid to dealers who initiate and are
responsible for purchases of $1 million or more and for purchases at net asset
value made by unallocated accounts held by third party administrators,
registered investment advisers, trust companies, and bank trust departments
which exercise discretionary authority or hold accounts in fiduciary, agency,
custodial or similar capacity if in the aggregate such accounts equal or exceed
$1,000,000 and by retirement plans with assets of $1,000,000 or more or at least
50 eligible employees. No initial sales charge applies on these investments;
however, a 1% CDSC will apply on redemptions within 18 months of purchase,
except for redemptions of shares purchased by an investor in amounts of
$1,000,000 or more where such investor's dealer of record, due to the nature of
the investor's account, notifies the distributor prior to the
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<PAGE> 21
time of the investment that the dealer waives the commission otherwise payable
to the dealer as described below.
<TABLE>
<CAPTION>
DEALER'S
AMOUNT PURCHASED COMMISSION
- ---------------- ----------
<S> <C>
(AS % OF
PURCHASE)
ZWEIG STRATEGY FUND, ZWEIG
APPRECIATION FUND
AND ZWEIG MANAGED ASSETS:
$1,000,000 to
$2,000,000.............. 0.75%
$3,000,000 to
$5,000,000.............. 0.50%
Amount over $5,000,000.... 0.25%
ZWEIG GOVERNMENT FUND:
$1,000,000 to
$2,000,000.............. 0.50%
Amount over $2,000,000.... 0.25%
</TABLE>
Class A Shares also may be purchased at net asset value by any officer, trustee,
director or full-time employee, and their families, of Zweig Mutual Funds,
Zweig/Glaser Advisers, Zweig Securities Corp. and any company affiliated with
these companies, or by employees and their families of securities dealers that
are members of the NASD. Class A Shares also may be sold at net asset value
through certain investment dealers registered under the Investment Advisers Act
of 1940 and other financial services firms that adhere to certain standards
established by the principal distributor, including a requirement that such
shares be sold for the benefit of their clients participating in a "wrap
account" or similar program under which such clients pay an ongoing fee to the
investment adviser or other firm. Such shares are sold for investment purposes
and on the condition that they will not be resold except through redemption or
repurchase by the fund. Class A Shares also may be purchased at net asset value
for shareholders by dealers where the amount invested represents redemption
proceeds from funds distributed other than by the distributor, and where the
shareholder has paid a sales charge in connection with the purchase of such
other fund's shares; provided that (i) such Class A Shares are purchased within
30 days after redemption of such other fund's shares; and (ii) sufficient
documentation of such redemption as the distributor may require shall be
provided at the time the Class A Shares are purchased. This provision is not
available where the shares of a fund being redeemed were subject to a deferred
sales load or redemption fee.
CUMULATIVE QUANTITY DISCOUNTS ON CLASS A SHARES. A new purchase may be combined
with Class A Shares already in your account to qualify for a discount. The sales
charge on the shares being purchased will be at the rate shown in the table
above applicable to the net asset value of the shares then owned plus the amount
of the new purchase. To receive this discount, you or your investment dealer
must request it when placing the order and give the transfer agent or
distributor sufficient information to confirm that your purchase qualifies for
the discount. We reserve the right to change or terminate quantity discounts at
any time.
QUANTITY DISCOUNTS THROUGH A LETTER OF INTENTION. You may pay a reduced sales
charge on Class A Shares if you sign a Letter of Intention at the time of your
purchase. The Letter also may be back-dated to include purchases made within 90
days prior to signing the Letter of Intention. The Letter, included on the
Application Form in this Prospectus, states your intention to purchase a
sufficient quantity of Class A Shares of the funds indicated within the 13-month
period specified to qualify for a reduced sales charge. Purchases under the
Letter are made at the sales charge applicable to the entire amount to be
purchased under the Letter, as if purchased in a single transaction.
The Letter of Intention is not binding. During the period covered by the Letter,
the transfer agent will hold shares in escrow representing 5% of the intended
purchase. A price adjustment based upon the actual amount invested will be made
if the purchase is not completed, by redeeming escrowed shares. A Letter of
Intention can be amended: (a) during the 13-month period by filing an amended
Letter with the same expiration date as the original, and (b) automatically
after the end of the period, if the total purchases credited to the Letter
qualify for an additional reduction in sales charges.
CLASS B SHARES. Class B Shares are sold without an initial sales charge. For
sales of Class B Shares, dealers will receive from the distributor 4% of the
purchase amount. Although you pay no sales charge at the time
14
<PAGE> 22
of purchase, if you redeem within six years, you are charged a declining CDSC as
follows:
<TABLE>
<CAPTION>
THE CDSC IS
EQUAL TO
YEAR SINCE PURCHASE WAS MADE
- ----------------------------------- -----------
<S> <C>
First......................... 5%
Second........................ 4%
Third......................... 3%
Fourth........................ 3%
Fifth......................... 2%
Sixth......................... 1%
Seventh....................... None*
</TABLE>
- ---------------
* Class B Shares convert to Class A Shares as described below.
CLASS B SHARE CONVERSION FEATURE. After a holding period of seven years from the
initial date of purchase, Class B Shares automatically convert, at respective
net asset values, on the 10th business day of the month following the
anniversary date, to Class A Shares of the same fund. At the time of conversion,
Class B Shares of a fund acquired through reinvestment of distributions will
convert to the corresponding Class A Shares of that fund pro-rata with Class B
Shares of that fund not acquired through reinvestment. The conversion of Class B
Shares will relieve the Class B Shares that have been held for at least seven
years from the higher ongoing distribution fees. Only Class B Shares have this
conversion feature.
CLASS C SHARES. Class C Shares are sold without an initial sales charge. For
sales of Class C Shares, dealers will receive from the distributor 1% (0.75% for
Zweig Government Fund and 0.30% for Zweig Cash Fund) of the purchase amount. If
you redeem within one year of your purchase, you will be charged a CDSC equal to
1.25%.
Class B and Class C Shares offer the benefit of putting all of your dollars to
work immediately; however, they have higher annual expenses and pay lower
dividends than Class A Shares. Class C Shares have a shorter CDSC period than
Class B Shares; however, they do not convert to Class A Shares.
Zweig Securities Corp. will reallow up to 0.15% to any dealer with sales of
Zweig Mutual Fund shares at an annual rate of $4 million or more, provided that
the dealer has agreed to supply special assistance in marketing shares of the
Zweig Mutual Funds, including providing access to the dealer's sales personnel
and information dissemination systems such as computer screens, internal
publications, publications sent to clients and mailing lists. These reallowances
are in addition to the sales concessions shown in the above tables, and may be
subject to chargeback for redemptions within one year. An alternative
arrangement, available to any dealer that has agreed to provide marketing,
record keeping and related administrative services to tax-qualified employee
benefit plans, including the processing of orders for investment and
reinvestment of plan assets in shares of the funds at net asset value, provides
for compensation at an annual rate of up to 0.20% of plan participant holdings
of Zweig Mutual Funds. In addition, Zweig Securities Corp. also may pay dealers
who maintain an omnibus account with the transfer agent a fee at the annual rate
of 0.10% of the average daily net assets held in any sub-account that has been
continually invested in Zweig Mutual Funds for more than four years. Zweig
Securities Corp. also may pay dealers a fee of up to 0.10% of the average daily
net assets invested through such dealers in Zweig Mutual Fund shares by
participants in programs sponsored by such dealers. Zweig Securities Corp.
reserves the right to alter or discontinue paying any of the foregoing fees at
any time. These fees will be paid from Zweig Securities Corp.'s or the manager's
own funds, including past profits or any other source available to them.
The above arrangements relate to purchases effected in the United States.
Purchases outside the United States may be subject to local rules and customs,
and different sales charges, fees and dealer compensation may apply. Certain
dealers may not sell all classes of shares.
HOW TO INVEST IN THE ZWEIG MUTUAL FUNDS
You can buy shares in the Zweig Mutual Funds directly from the funds' transfer
agent, through an investment professional, or automatically through a regular
investment plan. The minimum initial investment is $1,000 for a regular account
and $250 for IRA and other retirement accounts, pension and profit sharing
plans, custodial accounts under the Uniform Gifts to Minors Act, trust and
estate or qualifying group plans. There is no minimum amount for additional
investments. We reserve the right to change or waive minimums or to reject any
order.
Purchases of Zweig Cash Fund become effective after receipt of Federal funds by
the transfer agent. Purchases for all other Zweig Mutual Funds will be at the
offering price next determined after the transfer agent or investment dealer
receives the order, provided the dealer transmits the order to the transfer
agent that day.
15
<PAGE> 23
BUYING SHARES FROM AN INVESTMENT DEALER. If you invest through an investment
dealer or agent, that firm may have its own service features, transaction
charges and fees. This Prospectus should be read in conjunction with such firms'
material regarding their fees and services. If you wish us to refer you to an
investment professional, call us at 1-800-272-2700. Investment professionals
receive compensation for providing investment advice, and such compensation may
differ for selling shares of different classes of the Zweig Mutual Funds.
BUYING SHARES THROUGH THE TRANSFER AGENT. Send the Application Form in this
Prospectus or a letter with your check to the transfer agent. The address is:
Zweig Series Trust
c/o State Street Bank & Trust Company
P.O. Box 8505
Boston, MA 02266-8505
Make your check payable to State Street Bank & Trust Company or to a Zweig fund.
Third party checks (i.e., any checks which are not made payable to the order of
State Street Bank & Trust Company or a Zweig Fund) will not be accepted. If you
send a letter, please specify the fund(s) and the class of shares you wish to
buy. You may deliver your order by courier or overnight mail to State Street's
offices at:
2 Heritage Drive (3rd floor)
North Quincy, MA 02171
Attention: Zweig Mutual Funds
Purchases of Zweig Cash Fund shares made directly through the transfer agent by
check or money order do not earn dividends until converted into Federal funds,
which can take up to two business days. You also may wire Federal funds with
your order to avoid this delay. For wiring instructions, call 1-800-628-0441.
BUYING SHARES THROUGH AN INVESTMENT PLAN. You can invest in the Zweig Mutual
Funds through an automatic investment plan. You can automatically move money
from your bank account or via payroll deduction into any of your Zweig accounts
on any day of each month or quarter. For further details, see the Application
Form or call 1-800-272-2700.
HOW TO REDEEM YOUR SHARES
You can redeem your shares on any day the NYSE is open through the transfer
agent if the shares are registered in your name, or through your investment
dealer. The price you receive will be the net asset value next determined after
the transfer agent or investment dealer receives your request in proper form
(described below), less any CDSC, provided the dealer transmits the order to the
transfer agent that day. Payment for your redemption generally will be mailed to
you within seven days after your request is received. If shares are purchased
with an uncertified check and are being redeemed within 15 days following
purchase, the redemption proceeds may not be paid until 15 days following
purchase (or earlier if the Trust has evidence of cleared funds).
THROUGH AN INVESTMENT DEALER. If your account has been established by your
investment dealer, contact your investment professional, who will assist you
with your redemption.
THROUGH THE TRANSFER AGENT BY MAIL. If the shares are registered in your name,
send a letter of instruction signed exactly as the shares are registered,
together with any certificates that represent the shares you wish to redeem. If
the shares you redeem have a value of $10,000 or more, the signatures of
registered owners or their legal representatives must be guaranteed by an
appropriate guarantor. Mail your redemption request to:
Zweig Series Trust
c/o State Street Bank & Trust Company
P.O. Box 8505
Boston, MA 02266-8505
Appropriate signature guarantors include: banks and savings associations, credit
unions, member firms of a national securities exchange, municipal securities
dealers and government securities dealers. See the SAI or call 1-800-272-2700
for more information.
Redemption instructions by corporate and fiduciary shareholders also must be
accompanied by appropriate documentation establishing the authority of the
person seeking to act on behalf of the account.
THROUGH THE TRANSFER AGENT BY TELEPHONE. You may issue a telephone redemption
request (unless you have notified Zweig Mutual Funds of an address change within
the preceding 15 days) directly to the transfer agent at 1-800-628-0441 if: (a)
your account is registered for telephone/expedited redemption privileges and (b)
your shares are held at the transfer agent without certificates. The proceeds
must be mailed to the address of record. If you have designated a domestic
16
<PAGE> 24
bank on the Application Form when you opened your account, you may have
redemption proceeds of $1,000 or more wired to the bank. Subsequent directions
for wiring proceeds require a signature guarantee from an appropriate guarantor.
The transfer agent must receive your instructions before 2:00 P.M. New York time
for Zweig Cash Fund in order to wire the redemption proceeds to you that day.
For the other funds, the transfer agent must receive your order before the close
of regular trading on the NYSE (presently 4:00 P.M. New York time) in order to
redeem shares that day.
The maximum amount that may be redeemed for joint accounts by telephone is
$25,000. Neither the Zweig Mutual Funds, the distributor, nor the transfer agent
will be liable for any loss in acting on telephone instructions reasonably
believed to be authentic. In the event of a fraudulent telephone redemption, the
investor will bear the risk of loss. Because the funds may otherwise be liable
for any losses due to unauthorized or fraudulent instructions, reasonable
procedures are employed to confirm that instructions given by phone are genuine.
These include: requiring a form of personal identification from the caller and
recording telephone instructions. For identification purposes, the transfer
agent may require such information as it deems necessary before accepting
redemption instructions.
During periods of extremely drastic economic or market changes, it may become
difficult to implement a telephone redemption. In the event that you have
difficulty reaching the transfer agent at its toll-free number, you should
consider sending written redemption instructions in the manner explained above.
We reserve the right to refuse telephone redemption requests and to limit their
amount or frequency. If, however, we determine not to accept a telephone
redemption request, we will seek to advise you promptly of that decision and, to
the extent feasible, will communicate that decision by telephone.
Redemptions normally will be made in cash, but redemptions may be made in kind
pursuant to an election under Rule 18f-1 of the Investment Company Act of 1940
(the 1940 Act), as discussed more fully in the SAI. Rights of redemption may be
suspended if the NYSE is closed, other than customary weekend or holiday
closings, or for such other periods as the Securities and Exchange Commission
has permitted.
REINSTATEMENT PRIVILEGE. A shareholder who has made a partial or complete
redemption of shares may reinvest all or part of the redemption proceeds and
receive a pro rata credit for any CDSC or initial sales charge paid, provided
the reinvestment is made within 30 days after the redemption. This privilege may
be exercised only once a year by a shareholder.
SYSTEMATIC CASH WITHDRAWAL PROGRAMS are available for shareholders with accounts
of $5,000 or more who wish to receive a specific amount of cash either monthly
or quarterly. Contact your investment professional or complete the Application
Form in this Prospectus. Under these programs, all distributions must be
reinvested. Purchasing additional shares while receiving payments under these
programs ordinarily will be disadvantageous because of sales charges. Shares
redeemed may be subject to a CDSC. We may modify or terminate these programs at
any time.
MINIMUM ACCOUNT SIZE. If your account balance falls below $1,000 as a result of
redeeming shares, you may be given 60 days' notice to reestablish the minimum
balance. If you do not increase your balance, we reserve the right to close your
account and send the proceeds to you. Your shares will be redeemed at the net
asset value on the day your account is closed. We normally will not close an
account maintained in connection with a tax-deferred retirement plan.
THE DISTRIBUTOR
Zweig Securities Corp. serves as principal distributor of shares of the Zweig
Mutual Funds. At any given time, the distributor may incur expenses in
distributing shares of the funds that are in excess of the total payments made
by the funds under the Rule 12b-1 Plans for distribution. Because there is no
requirement that the distributor be reimbursed for all its expenses, or that a
plan be continued from year to year, this excess does not constitute a liability
of the funds. Although there is no legal obligation for the funds to pay
expenses in excess of payments made to the distributor under the plans, if for
any reason a plan is terminated, the Board of Trustees will consider the manner
in which to treat such expenses. Any cumulative unreimbursed expenses may or may
not be recovered through future distribution fees. If the distributor receives
any Rule 12b-1 payments in excess of actual distribution expenses (a situation
which has not occurred to date), the difference could be viewed as profit to the
distributor for
17
<PAGE> 25
that year. Accordingly, the Trust's Rule 12b-1 Plans are classified as
compensation plans.
The distributor reallows the 0.25% service fee to dealer firms that are members
of the National Association of Securities Dealers, Inc. who have signed a dealer
agreement and for continuous personal service by such members to investors in
the Trust, plus a portion of the asset based sales charges so that these dealers
receive such reallowances at the following aggregate annual rates: (i) 0.25%
commencing from date of purchase for the Class A Shares, (ii) 0.25% commencing
one year after purchase for the Class B Shares, and (iii) 0.95% (0.70% and 0.25%
for the Zweig Government Fund and Zweig Cash Fund, respectively) commencing one
year after purchase for the Class C Shares.
THE MANAGER AND MANAGEMENT FEE
The investments of the Zweig Mutual Funds are managed by Zweig/Glaser Advisers,
5 Hanover Square, 17th Floor, New York, NY 10004. The general partners of
Zweig/Glaser Advisers are: Glaser Corp., a Delaware corporation controlled by
Eugene J. Glaser, and Zweig Management Corp., a Delaware corporation controlled
by Dr. Zweig.
Zweig/Glaser Advisers receives a fee based on the average daily net assets of
each fund at the following annual rates: Zweig Strategy Fund, 0.75%; Zweig
Appreciation Fund, 1.00%; Zweig Managed Assets, 1.00%; Zweig Government Fund,
0.60%; Zweig Cash Fund, 0.50%. These rates are constant and do not diminish with
an increase in the net assets of a fund. The management fees are comparable to
the fees paid by mutual funds with similar investment policies. The fees of
Zweig Strategy Fund, Zweig Appreciation Fund and Zweig Managed Assets, however,
are higher than the fees paid by most mutual funds.
In addition to managing the funds' investments, Zweig/Glaser Advisers also:
makes recommendations with respect to the funds' business affairs; furnishes
certain administrative services, office space and equipment; and permits its
employees to serve as the officers of the Trust without additional compensation
from the funds. All other expenses incurred in the operation of the funds are
borne by the funds, including: interest, taxes, fees and commissions of every
kind; expenses of issue, repurchase or redemption of shares; costs of
registering or qualifying shares for sale (including printing costs, legal fees
and other expenses relating to the preparation and filing of the funds'
registration statement with the appropriate regulatory authorities and the
production and filing of the funds' prospectus); costs of insurance; association
membership dues; all charges of custodians, including fees as custodian, escrow
agent, and fees for keeping books and performing portfolio valuations; all
charges of transfer agents, registrars, pricing services, independent
accountants and legal counsel; expenses of preparing, printing and distributing
prospectuses and all proxy materials, reports and notices to shareholders;
expenses of distribution of shares pursuant to Rule 12b-1 Plans; out-of-pocket
expenses of trustees; fees of trustees who are not "affiliated persons" as
defined in the 1940 Act; and all other costs incident to the Trust's existence
as a business trust. The distributor purchases copies of the fund's prospectus
and shareholder reports used for sales purposes at printer's overrun cost.
BROKERAGE TRANSACTIONS. To buy and sell securities for the Zweig Mutual Funds,
Zweig/Glaser Advisers may use its broker/dealer affiliates or other firms that
sell shares of the funds, provided they have the execution capability and that
their commission rates are comparable to those of other unaffiliated
broker/dealers.
ORGANIZATION OF THE FUNDS
The Trust was established as a Massachusetts business trust on September 24,
1984, and reorganized as a Delaware business trust on April 30, 1996. The Board
of Trustees directs the management of the business of the Trust. The Board has
duties and responsibilities comparable to those of the boards of directors of
corporations, not to those of trustees under customary trust principles. The
Trustees oversee the Trust's activities, elect the officers of the Trust who are
responsible for its day-to-day operations, review contractual arrangements with
the companies that provide services to the Trust, and review investment
performance.
The Trust is a mutual fund, or, in the technical terms of the 1940 Act under
which it is regulated, an open-end, diversified management investment company.
It has an unlimited number of shares of beneficial interest which, without
shareholder approval, may be divided by the Trustees into an unlimited number of
classes and funds. The shares presently are divided into three classes of shares
in four funds, and four classes of shares in Zweig Cash Fund. Voting rights are
based on a shareholder's total dollar interest in a Series and are thus
allocated in
18
<PAGE> 26
proportion to the value of each shareholder's investment. Shares vote together
on matters that concern the entire Trust, or by individual fund or class when
the Board of Trustees determines that the matter affects only the interests of a
particular fund or class.
PERFORMANCE INFORMATION
The net asset value of a fund (other than Zweig Cash Fund) and the income it
generates will vary from day to day. This fluctuation reflects the composition
of the fund's portfolio, as well as changes in market conditions, company and
economic developments, interest rates, and other factors. Performance will
reflect Zweig/Glaser Advisers' skill in managing each fund's portfolio, the
period of time during which the investment is held, and the class of shares and
its annual operating expenses. When you sell your shares, they may be worth more
or less than what you paid for them.
Occasionally, advertisements for the Zweig Mutual Funds may include:
MAXIMUM NAV DECLINE since a fund's inception, or for shorter periods.
Micropal Inc., an independent fund rating service, measures the largest
high-to-low drop in a fund's month-end net asset value over a particular
period. The decline is expressed as a percentage of the fund's NAV per
share at the high point during the period measured. See Measuring Risk on
page 10 for the maximum NAV declines of the Zweig Mutual Funds compared to
declines for the same period of the average comparable fund and a benchmark
index for each type of fund. Maximum NAV declines are historical and are
not intended to indicate future performance; and they do not reflect any
sales charges.
TOTAL RETURN for the most recent one-, three-, five- and ten-year periods,
and since the inception of a class of shares through the most recent
calendar quarter. Total return represents the average annual compounded
rate of return on an investment of $1,000 at the maximum public offering
price (in the case of Class A Shares) or reflecting the deduction of any
applicable CDSC. All data are based on past investment results. Total
return also may be presented for other periods, or be based on an
investment at reduced sales charge levels. Total return does not include
the effect of taxes and does not predict future performance.
YIELD, or the rate of income earned, expressed as a percentage of a fund's
share price. We calculate yield according to accounting methods that are
standardized for all stock and bond mutual funds by taking the interest and
dividend income a fund earns in a 30-day period, net of expenses, and
dividing that amount by the average number of shares entitled to receive
dividends. We express the result as an annualized percentage rate based on
the share price at the end of the 30-day period. This yield does not
reflect gains or losses from selling securities or from transactions in
options and futures contracts. Yield accounting methods differ from methods
used for other accounting purposes. Therefore, yield may not be the same as
the distribution rate or the income reported in the funds' financial
statements. Yield figures are based on historical earnings and are not
intended to indicate future performance.
SEVEN-DAY CURRENT YIELD for the Zweig Cash Fund refers to the income
generated by an investment in the fund over a seven-day period specified in
the advertisement. This income is assumed to be generated each week for 52
weeks. This 52-week income is then shown as a percentage of the investment.
EFFECTIVE YIELD is calculated similarly to yield or seven-day current yield
but, when annualized, the income earned is assumed to be reinvested. The
effective yield will be slightly higher than the yield or seven-day current
yield because of the compounding effect of the assumed reinvestment.
The Zweig Mutual Funds also may include in advertising or marketing materials
for their shares data from financial and other publications and reference
surveys that deal with industry or investment statistics. The SAI lists the
principal industry publications.
The following is an assessment of the 1995 performance of Class A and Class C
Shares of each of the Zweig Mutual Funds (other than Zweig Cash Fund). Class B
Shares were not offered in 1995. We've included a graph comparing each fund's
performance since inception with the appropriate benchmarks.
19
<PAGE> 27
ZWEIG STRATEGY FUND
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN ZWEIG STRATEGY FUND
CLASS A SHARES, THE STANDARD & POOR'S 500 INDEX AND THE
CONSUMER PRICE INDEX FOR THE PERIOD ENDED DECEMBER 31, 1995.
<TABLE>
<CAPTION>
MEASUREMENT PERIOD ZWEIG CONSUMER
(FISCAL YEAR COVERED) STRATEGY FUND S&P 500 INDEX PRICE INDEX
<S> <C> <C> <C>
1988 9450 10000 10000
1989 9466 10078 10010
1990 9261 9690 10636
1991 11431 12660 10953
1992 12301 13623 11278
1993 14134 15003 11587
1994 14295 15198 11895
1995 17885 20903 12164
</TABLE>
- ----------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN -- CLASS A SHARES
<TABLE>
<S> <C> <C>
1 YEAR 5 YEAR FROM INCEPTION ON 12/29/89
25.1% 14.1% 11.2%
</TABLE>
CLASS C SHARES -- ZWEIG STRATEGY FUND ALSO OFFERS CLASS C SHARES. THE
PERFORMANCE OF CLASS C SHARES WILL BE GREATER OR LESS THAN CLASS A SHARES
DEPENDING ON SALES CHARGES, FEES AND THE LENGTH OF TIME THE SHARES ARE HELD.
- ----------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN -- CLASS C SHARES
<TABLE>
<S> <C>
1 YEAR FROM INCEPTION ON 2/4/92
24.3% 11.1%
</TABLE>
Zweig Strategy Fund solidly participated in the stock market gains of 1995. The
Class A and Class C Shares were up 25.1% and 24.3%, respectively. We achieved
our returns while taking considerably less risk than the average fund. Our
average cash position during the year was 37%.
We entered 1995 cautiously with an invested exposure of 30%, but we became more
heavily invested along the way as the results of our research became more
positive. Our stock selection process, which focuses on identifying companies
with above-average earnings growth and below-average valuations, made a strong
contribution to the fund's return. Overweightings in the technology and banking
stocks, two of the top-performing sectors, proved beneficial. The fourth quarter
saw a sharp rotation away from technology stocks, but the favorable value
characteristics cushioned our results, although we still lagged the Standard &
Poor's 500 Index during the quarter.
ZWEIG MANAGED ASSETS
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN ZWEIG MANAGED ASSETS
CLASS A SHARES AND CLASS C SHARES, THE STANDARD & POOR'S 500 INDEX AND THE
CONSUMER PRICE INDEX FOR THE PERIOD ENDED DECEMBER 31, 1995.
<TABLE>
<CAPTION>
ZWEIG MANAGED ZWEIG MANAGED
MEASUREMENT PERIOD ASSETS CLASS ASSETS CLASS CONSUMER
(FISCAL YEAR COVERED) A C PRICE IND EX S&P 500 INDEX
<S> <C> <C> <C> <C>
2/8/93 9450.00 10000.00 10000.00 10000.00
12/31/93 10582.00 11009.00 10252.00 10675.00
12/31/94 10372.00 10606.00 10526.00 10813.00
12/31/94 11942.23 12244.00 10764.00 14872.00
12/31/94 00000.00 00000.00 00000.00 00000.00
</TABLE>
- ----------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN -- CLASS A SHARES
<TABLE>
<S> <C>
1 YEAR FROM INCEPTION ON 2/8/93
16.3% 8.4%
</TABLE>
- ----------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN -- CLASS C SHARES
<TABLE>
<S> <C>
1 YEAR FROM INCEPTION ON 2/8/93
15.4% 7.7%
</TABLE>
Foreign stock markets were laggards in 1995, however, U.S. stocks and bonds
posted banner years, which helped propel the Fund to returns of 16.3% and 15.4%
for the Class A and Class C Shares, respectively. Zweig Managed Assets
participated solidly in the gains of foreign and domestic stocks and bonds
during 1995, capturing nearly 95% of the 17.4% return of the Lipper Global
Flexible Fund Average.
Throughout 1995, central banks in Europe responded to weaker economic conditions
by lowering key short-term interest rates. Expectations of continued central
bank measures, combined with low inflation, helped bond markets across Europe
rally to new highs late in 1995. After declining more than 25% in the first six
months of 1995, Japanese stocks recovered, ending December above where they had
begun the year. We concentrated our investments in Japanese bonds as interests
rates fell during the early part of the year, and then moved into Japanese
stocks as the market rallied.
20
<PAGE> 28
ZWEIG APPRECIATION FUND
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN ZWEIG APPRECIATION FUND
CLASS A SHARES, THE VALUE LINE GEOMETRIC INDEX AND THE CONSUMER PRICE INDEX FOR
THE PERIOD ENDED DECEMBER 31, 1995.
<TABLE>
<CAPTION>
ZWEIG VALUE LINE
MEASUREMENT PERIOD APPRECIATION GEOMETRIC CONSUMER
(FISCAL YEAR COVERED) FUND INDEX PRICE INDEX
<S> <C> <C> <C>
1990 9450 10000 10000
1991 10025 10457 10088
1992 10980 11260 10388
1993 12589 12549 10673
1994 12360 12047 10958
1995 15326 14673 11208
</TABLE>
- ----------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN -- CLASS A SHARES
<TABLE>
<S> <C>
1 YEAR FROM INCEPTION ON 10/7/91
24.0% 12.1%
</TABLE>
CLASS C SHARES -- ZWEIG APPRECIATION FUND ALSO OFFERS CLASS C SHARES. THE
PERFORMANCE OF CLASS C SHARES WILL BE GREATER OR LESS THAN CLASS A SHARES
DEPENDING ON SALES CHARGES, FEES AND THE LENGTH OF TIME THE SHARES ARE HELD.
- ----------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN -- CLASS C SHARES
<TABLE>
<S> <C>
1 YEAR FROM INCEPTION ON 2/4/92
23.2% 9.8%
</TABLE>
We've delivered on our goal of generating attractive returns during this
unusually kind phase in the market. Zweig Appreciation Fund Class A and C Shares
were up 24.0% and 23.2%, respectively, in 1995. These returns surpassed the
21.8% earned by the Value Line Geometric Index. The average small-company stock
fund, meanwhile, was up 31.5%.
We also delivered on our goal of controlling risk. Our average cash position
during the year was 35%. Thus, we captured 75% of the gains of our peers with a
market exposure of only 65% -- a superior risk-adjusted return. Beyond holding
cash, we also kept risk low through prudent industry diversification. We
participated in the gains of the technology sector, although the amount invested
in this sector never exceeded 20%. The Fund's risk control is evidenced in a
number of ways, from its much broader diversification among stocks and sectors,
to the substantially lower price-to-earnings ratios of its stocks.
ZWEIG GOVERNMENT FUND
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN ZWEIG GOVERNMENT FUND
CLASS A SHARES, THE LEHMAN COMPOSITE GOVERNMENT BOND INDEX AND THE CONSUMER
PRICE INDEX FOR THE PERIOD ENDED DECEMBER 31, 1995.
<TABLE>
<CAPTION>
LEHMAN
ZWEIG COMPOSITE
MEASUREMENT PERIOD GOVERNMENT GOVERNMENT CONSUMER
(FISCAL YEAR COVERED) FUND INDEX PRICE INDEX
<S> <C> <C> <C>
1984 9525 10000 10000
1986 10960 11792 10253
1987 12080 13598 10375
1988 11860 13896 10834
1989 12462 14874 11311
1990 14073 16991 11836
1991 14966 18475 12576
1992 17157 21307 12951
1993 17932 22847 13335
1994 19487 25282 13701
1995 18936 24427 14067
1996 21556 28906 14385
</TABLE>
- ----------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN -- CLASS A SHARES
<TABLE>
<S> <C> <C>
1 YEAR 5 YEAR FROM INCEPTION ON 3/25/85
13.8% 7.8% 7.9%
</TABLE>
CLASS C SHARES -- ZWEIG GOVERNMENT FUND SERIES ALSO OFFERS CLASS C SHARES. THE
PERFORMANCE OF CLASS C SHARES WILL BE GREATER OR LESS THAN CLASS A SHARES
DEPENDING ON SALES CHARGES, FEES AND THE LENGTH OF TIME THE SHARES ARE HELD.
- ----------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN -- CLASS C SHARES
<TABLE>
<S> <C>
1 YEAR FROM INCEPTION ON 2/4/92
13.3% 6.4%
</TABLE>
What a difference a year makes! In stark contrast to a dismal 1994, 1995 was a
banner year for bonds. In 1994, the Lehman Brothers Bond Index fell 3.4%, its
worst annual performance in over a decade. But 1995 more than made up for it, as
the Index rallied 18.3% for the year.
Since the Federal Reserve embarked on a series of six interest rates hikes
commencing in February 1994, and was still tightening in early 1995, we elected
to maintain a low exposure to interest rate fluctuations. However, the economy
cooled rapidly, and bonds began to rally to new highs. Beginning in the second
quarter, we gradually increased the Fund's duration to 5.4 years, where it
remained at year-end. Zweig Government Fund captured nearly 80% of the gains of
the average government bond fund last year, with an average duration for 1995 of
4.1 years, which was lower than that of the average fund.
21
<PAGE> 29
APPLICATION (DO NOT USE FOR ZWEIG RETIREMENT PLANS)
FOR APPLICATION ASSISTANCE CALL 1-800-272-2700.
................................................................................
Zweig
Mutual Funds
<TABLE>
<S> <C>
MAIL ALL FORMS AND CHECKS BY COURIER TO:
TO:
The Zweig Mutual Funds The Zweig Mutual Funds
c/o State Street Bank and c/o State Street Bank and
Trust Company Trust Company
P.O. Box 8505 2 Heritage Drive, 3rd
Boston, MA 02266-8505 Floor
North Quincy, MA 02171
</TABLE>
IF YOUR ACCOUNT IS ALREADY ESTABLISHED
ENTER THE ACCOUNT NUMBER HERE: ------------------------------------------
1. ACCOUNT NAME (Check only one box)
/ / INDIVIDUAL OR JOINT OWNERS*
-------------------------------------------------------------------
Your Name (first, middle, last)
-------------------------------------------------------------------
Joint Owner Name (first, middle, last)
-------------------------------------------------------------------
Social Security Number (to be used for tax reporting)
/ / GIFT TO MINOR A minor is the beneficial owner of the account with an adult
Custodian managing the account until the minor becomes of age, as specified
in the Uniform Gifts/Transfers to Minors Act (UGMA/UTMA). The Custodian's
signature is required for all transactions.
-------------------------------------------------------------------
Custodian Name (first, middle, last)
-------------------------------------------------------------------
Minor Name (first, middle, last)
-------------------------------------------------------------------
Minor Social Security Number Minor State of Residence
/ / TRUST Account is established in accordance with provisions of a trust
agreement. The Trustee's or designated agent's signature is required for all
transactions.
<TABLE>
<S> <C>
---------------------------------------------------------------
Trust Title Date of Trust Agreement
---------------------------------------------------------------
Trustee Name Trust Tax ID Number
---------------------------------------------------------------
Additional Trustee Name
</TABLE>
/ / CORPORATION OR OTHER ENTITY
<TABLE>
<S> <C>
---------------------------------------------------------------
Name
---------------------------------------------------------------
Tax ID Number Type of entity
---------------------------------------------------------------
Officer or Partner authorized to act on the account
</TABLE>
2. ADDRESS AND CITIZENSHIP
- -------------------------------------------------------------------
Street or P.O. Box
- -------------------------------------------------------------------
City State Zip Code
- -------------------------------------------------------------------
Daytime Phone
- -------------------------------------------------------------------
Evening Phone
Citizenship: / / U.S. Citizen
/ / Resident Alien
/ / Non-Resident Alien: ----------------------------------------
Country
- -------------------------------------------------------------------
Name of Employer
- -------------------------------------------------------------------
Address
* Joint tenancy with right of survivorship unless you reside in a community
property state or prefer otherwise. NOTE: Both signatures will be required for
changes to an account with joint ownership.
3. INVESTMENT INFORMATION
Minimum initial investment for each fund: $1,000; $250 for IRA and other
Retirement Plans, pension and profit sharing plans, custodial accounts under the
Uniform Gifts to Minors Act, trust and estate or qualifying group plans. There
is no minimum amount for subsequent investments.
<TABLE>
<S> <C> <C> <C>
A. Fund Name: ------------------------------------------------
/ / Class A / / Class B / / Class C
Investment Amount:
$ ----------------------------------------------------
B. Fund Name: ------------------------------------------------
/ / Class A / / Class B / / Class C
Investment Amount:
$ ----------------------------------------------------
C. Fund Name: ------------------------------------------------
/ / Class A / / Class B / / Class C
Investment Amount: $ ----------------------------------------------------
4. INVESTMENT SOURCE
/ / BY CHECK Please make check payable to State Street
Bank and Trust Company or to a Zweig fund. No other
check will be accepted. $ -----------------------------------------------
/ / BY WIRE Call 1-800-628-0441 for instructions.
$ ----------------------------------------------------
Account No. --------------------------------------------------
5. DISTRIBUTION OPTION
See Prospectus for details. If box is not checked, all
distributions will be reinvested. (Check only one box)
/ / All dividends and capital gains reinvested
/ / Income dividends in cash, capital gains reinvested
/ / All dividends and capital gains paid in cash
/ / Income dividends reinvested, capital gains in cash
6. SHAREHOLDER PRIVILEGES
TELEPHONE EXCHANGE You may use the telephone to make
exchanges among any series in the Trust with the same
registration. Unless the box below is checked, the telephone
service WILL be established. In the event of a fraudulent
telephone redemption, the investor will bear the risk of
loss. See Prospectus. (Exchanges are processed only in the
same class of shares). The minimum exchange is $1,000 if
establishing a new account.
/ / I do NOT want to make exchanges by telephone.
SYSTEMATIC EXCHANGES You can automatically exchange $100 or
more on the same day each month or quarter from one fund
account to any other fund accounts on or about the 15th of
the month.
/ / I/We authorize Zweig Series Trust to exchange $ -------------------------
</TABLE>
from
------------------------------ to ------------------------------
Fund Name Fund Name
/ / Class A / / Class B / / Class C
beginning with the month of -----------------------------------
on a / / monthly / / quarterly basis.
<PAGE> 30
TELEPHONE/EXPEDITED REDEMPTION You may redeem shares by telephone. Proceeds will
be sent by check to the address of record. If the redemption is by wire ($1,000
minimum for wire redemption), please provide us with bank account information
below or attach a voided check to establish this service. Unless the box is
checked the telephone service WILL be established.
/ / I do NOT want to redeem my shares by telephone or wire.
WIRE INSTRUCTIONS:
---------------------------------
Name of Bank (Savings, Savings & Loan and Credit Union;
provide Correspondent Bank information)
------------------------------------------------------------
Bank Account Title
------------------------------------------------------------
Bank Account Number (include branch # and ABA #)
In the event of a fraudulent telephone redemption, the investor will bear the
risk of loss, since the Trust and its agents disclaim liability for acting upon
telephone instructions reasonably believed to be authentic. Reasonable
procedures are employed to confirm that instructions given by telephone are
genuine, such as requiring a form of personal identification from the caller,
providing written confirmation of these transactions and recording telephone
instructions.
SYSTEMATIC CASH WITHDRAWAL PROGRAM You may receive a check monthly or quarterly
(minimum $25). There must be a minimum of $5,000 in the selected Series to
initiate this plan. Under this plan dividends and distributions must be
reinvested regardless of the option chosen in Section 5, and all shares must be
on deposit with State Street Bank and Trust Company, not in certificate form.
(Shares redeemed may be subject to a CDSC.) The amount you state will be
redeemed or exchanged on or about the 20th of the month.
/ / I/We authorize Zweig Series Trust to withdraw $ ---------
from
-------------------------------- / / Class A / / Class B
Fund Name / / Class C
beginning with the month of -----------------------------------
on a / / monthly / / quarterly basis.
If you wish to have your check mailed to an address other than the address
named in Section 2, complete the next section and sign where indicated.
------------------------------------------------------------------
Name (first, middle, last)
------------------------------------------------------------------
Address
------------------------------------------------------------------
City State Zip Code
PLEASE SIGN:
------------------------------------------------------------------
Signature Signature
AUTOMATIC INVESTMENT PLAN You can automatically move $100 or more (no minimum
for IRA and other plans as described in Section 3) from your bank account /
/ Savings / / Checking into any of your fund accounts on any day of the month.
Please attach a voided check or deposit slip from your bank account. If your
investment is by wire please provide bank information below.
/ / I authorize Zweig to make regular investments of $ --------
into my account in ---------------------------------------------
Fund Name
/ / Class A / / Class B / / Class C
beginning with the month of ------------------------------------
on the -------------- day (choose any day from the 1st to the 31st) of each
/ / month / / quarter
WIRE INSTRUCTIONS:
----------------------------------
Name of Bank (Savings, Savings & Loan and Credit Union;
provide Correspondent Bank information)
-------------------------------------------------------------
Bank Account Title
-------------------------------------------------------------
Bank Account Number (include branch # and ABA #)
ZWEIG SAVINGS PLAN The Trust will send you an invoice each month or quarter in
order to make regular investments into the Trust. The minimum amount is $100
($25 for retirement plans). You are under no obligation to make these payments.
/ / YES, I want to join the Savings Plan and make regular
investments of $ ------------ into my account.
Please send me an invoice each / / month / / quarter.
7. LETTER OF INTENTION
You may qualify for a reduced sales charge by electing this item. I agree to the
Letter of Intention provisions outlined in the prospectus, and intend to invest
over a 13-month period beginning ------------- , 19---- (purchase date not more
than 90 days prior to this Letter):
/ / $50,000 / / $100,000 / / $250,000 / / $500,000 / / $1,000,000
8. DEALERS AND ADVISERS ONLY
If certification below is executed, duplicate statements will be sent to the
address indicated below. Please be sure to enter the correct Financial
Professional Number and Branch Number.
- -------------------------------------------------------------------
Financial Professional's Name Financial Professional's Number
- -------------------------------------------------------------------
Dealer/Adviser's Name Telephone
- -------------------------------------------------------------------
Dealer/Adviser's Address Branch Number
9. YOUR ACCEPTANCE
ALL REGISTRANTS MUST SIGN. UNTIL A PROPERLY COMPLETED SIGNED APPLICATION HAS
BEEN RECEIVED BY STATE STREET BANK, NO REDEMPTIONS OR EXCHANGES FROM THE ACCOUNT
WILL BE PROCESSED.
I (we) have full right, authority, and legal capacity and am (are) of legal
age in state of residence to purchase shares of the designated Series. I (we)
affirm that I (we) have received the current prospectus of the designated Series
and agree to its terms.
I (we) agree that State Street Bank and Trust Company, Zweig Series Trust,
Zweig Securities Corp., or their officers or employees, will not be liable for
any loss, expense or cost for acting upon any instructions or inquiries believed
to be genuine.
I (we) acknowledge that unless I (we) have elected not to have telephone
privileges in Section 6 above, the account will be subject to the telephone
exchange and redemption privileges described in the current prospectus and agree
that the Trust, the Distributor and Transfer Agent will not be liable for any
loss in acting on written or telephone instructions reasonably believed by them
to be authentic.
Under penalties of perjury, each undersigned certifies that the social
security or taxpayer identification number given above is correct and that I
(we) am (are) not subject to backup withholding because I (we) have not been
notified that I (we) am (are) subject to backup withholding or that the IRS has
notified me (us) that I (we) am (are) no longer subject. Sign below exactly as
the account is to be registered (corporations, etc., indicate titles):
- -------------------------------------------------------------------
Individual or Custodian Name Date
- -------------------------------------------------------------------
Joint Registrant, if any
- -------------------------------------------------------------------
Officer, Partner, Trustee, etc. Date Title
- -------------------------------------------------------------------
Officer, Partner, Trustee, etc. Date Title
IMPORTANT:
No investment can be redeemed from an account within 15 days following purchase
if an investor purchases shares with a check which has not cleared. This
limitation does not apply to investments made by wire transfer. The Internal
Revenue Service requires that all taxpayers provide their Taxpayer
Identification Number (Social Security Number) in the space provided in Section
1 of the Application and certify to its correctness. Failure by non-exempt
taxpayers to furnish State Street Bank with their correct Taxpayer
Identification Number WILL result in withholding 31% of all taxable dividends
paid to the account and/or withholding on certain other payments to the account
(this is referred to as "backup withholding").
CONFIRMATION OF ACCOUNT ESTABLISHMENT--Within a few days after the Application
is received by State Street Bank, a confirmation statement(s) showing the
account number(s), amount received, shares purchased and price paid per share
should be received by the registered shareholder for each Series selected.
SUBSEQUENT PAYMENTS--A new application need not be submitted with additional
payments to an existing account if a current Application is on file with State
Street Bank. Subsequent purchases should be identified by account number and
account registration. This can be accomplished by using the payment stub
attached to the statement which you will receive shortly after making an
investment.
FOR APPLICATION ASSISTANCE OR RETIREMENT PLAN INFORMATION CALL 1-800-272-2700.
<PAGE> 31
<TABLE>
<S> <C>
TABLE OF CONTENTS
Fee table 2
Financial highlights 3
Zweig Series Trust 4
Investment objectives of the Zweig Mutual Funds 4
Dr. Martin E. Zweig 5
The portfolio managers 5
Stock selection and bond duration 5
Portfolio securities 6
Risk factors and managing exposure to market risk 8
Other investment policies 11
Net asset value 11
Distributions and taxes 11
Exchange privilege 12
Choosing among classes when purchasing shares 12
How to invest in the Zweig Mutual Funds 15
How to redeem your shares 16
The distributor 17
The manager and management fee 18
Organization of the funds 18
Performance information 19
</TABLE>
INVESTMENT MANAGER
Zweig/Glaser Advisers
5 Hanover Square-17th Floor
New York, New York 10004
PRINCIPAL DISTRIBUTOR
Zweig Securities Corp.
5 Hanover Square-17th Floor
New York, New York 10004
CUSTODIAN
The Bank of New York
48 Wall Street
New York, New York 10286
TRANSFER AGENT AND DIVIDEND PAYING AGENT
State Street Bank & Trust Co.
225 Franklin Street
Boston, Massachusetts 02110
COUNSEL
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand LLP
1301 Avenue of the Americas
New York, New York 10019
No dealer, salesman or other person has been authorized to give any information
or to make any representations, other than those contained in this Prospectus,
in connection with the offer contained in this Prospectus, and, if given or
made, such other information or representations must not be relied upon as
having been authorized by the Trust, the Investment Manager or the Distributor.
This prospectus does not constitute an offering in any state in which such
offering may not lawfully be made.
ZWEIG
SERIES TRUST
PROSPECTUS
ZWEIG STRATEGY FUND
ZWEIG APPRECIATION FUND
ZWEIG MANAGED ASSETS
GOVERNMENT SECURITIES SERIES
ZWEIG CASH FUND
May 1, 1996
<PAGE> 32
[ZWEIG SERIES TRUST LOGO]
PROSPECTUS
ZWEIG CASH FUND
May 1, 1996
ZWEIG CASH FUND is a professionally managed money market fund that seeks high
current income consistent with liquidity and preservation of capital. The fund
invests in short-term securities issued or guaranteed as to the payment of
principal and interest by the United States Government, its agencies or
instrumentalities, and repurchase agreements with respect to such securities.
Shares of the fund are sold at net asset value.
The fund is one of five different funds, or series, of Zweig Series Trust. Each
fund has its own investment objectives and policies and each offers different
classes of shares. This prospectus describes Class M Shares of Zweig Cash Fund.
Class A Shares, Class B Shares and Class C Shares of the fund are described in
a separate prospectus, which includes a description of the other series of the
Trust.
Zweig/Glaser Advisers selects and manages the fund's investments. Zweig
Securities Corp. is the principal distributor of the fund's shares.
Shares of the Fund are not deposits or obligations of, or guaranteed, endorsed
or insured by, the U.S. Government, any bank, the Federal Deposit Insurance
Corp., the Federal Reserve Board, or any other agency, entity, or person. The
Zweig Cash Fund seeks to maintain a stable share price of $1.00. There can be
no assurance that the fund will meet this goal.
This prospectus contains important information that you should know before
investing. Please keep it for future reference. A Statement of Additional
Information (SAI) dated May 1, 1996, has been filed with the Securities and
Exchange Commission. The SAI is incorporated by reference into this prospectus.
You can obtain a copy without charge by calling 1-800-272-2700.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
Zweig Series Trust
5 Hanover Square, 17th floor
New York, NY 10004
1-800-272-2700
<PAGE> 33
FEE TABLE
We've provided the following table to help you understand the expenses of
investing in the Zweig Cash Fund. Mutual fund investors bear two types of
expenses: transaction expenses and operating expenses. You pay transaction
expenses when you buy shares in a fund. The fund as a whole pays operating
expenses, which reduce the fund's annual return to you.
<TABLE>
<CAPTION>
ZWEIG CASH FUND
CLASS CLASS CLASS CLASS
M A B C
---- ---- ---- ----
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge
(as % of Offering Price)................................. 0% 0% 0% 0%
Maximum Contingent Deferred Sales Charge (CDSC)(1)........... 0% 0% 5.00% 1.25%
ANNUAL OPERATING EXPENSES (as % of average net assets)
Management Fees (after expense reimbursement)................ 0.18% --% --% --%
Rule 12b-1 Fees(2)........................................... 0.07% 0.30% 1.00% 0.30%
Other Expenses (after expense reimbursement)................. 0.17% 0.35% 0.35% 0.35%
---- ---- ---- ----
TOTAL FUND OPERATING EXPENSES (after expense reimbursement)... 0.42%* 0.65%* 1.35%* 0.65%*
==== ==== ==== ====
</TABLE>
- ---------------
* The manager has voluntarily undertaken to limit the expenses of Zweig Cash
Fund (exclusive of taxes, interest, brokerage commissions, Rule 12b-1 fees
and extraordinary expenses) for the current fiscal year to 0.35% of its
average net assets. The manager reserves the right to discontinue this policy
at any time. The Management Fees noted above, without reimbursement, would be
0.50% for each Class, Other Expenses would be as shown above except for Class
A which would be 0.54%, and Total Fund Operating Expenses would be 0.74% for
Class M, 1.34% for Class A, 1.85% for Class B and 1.15% for Class C, assuming
Other Expenses for Class B Shares (as a percent of average net assets) are
the same as for Class C Shares.
(1) The CDSC on Class C Shares applies only if redemption occurs within one year
from purchase. The maximum CDSC is imposed on Class B shares redeemed in the
first year; for shares held longer than one year, the CDSC declines over the
succeeding six years to zero.
(2) The Rule 12b-1 distribution plan for Class M shares is described under "The
distributor". A separate Rule 12b-1 plan for Class A, Class B and Class C
shares provides for a 0.25% Service Fee, 100% of which is reallocated to
National Association of Securities Dealers, Inc. (NASD) member firms for
continuous personal service by such members to investors in the Trust, such
as responding to shareholder inquiries, quoting net asset values, providing
current marketing materials and attending to other shareholder matters. The
Distributor retains 0.05% of the asset based sales charge also included in
the Rule 12b-1 Fees.
EXAMPLES -- The table below is based on operating expenses for the last fiscal
year for Class M Shares, Class A Shares and Class C Shares. The expenses for
Class B Shares are based on expenses that would have been incurred if Class B
Shares had been in existence for such fiscal year. The table does not represent
future expense levels, which may be greater or less than those shown. Federal
regulations require the examples to assume a 5% annual return, but actual annual
returns have varied as shown in the column headed "Total Return" in the table on
the following page.
<TABLE>
<CAPTION>
EXAMPLE: You would pay the following expenses EXAMPLE: You would pay the following expenses on
on a $1,000 investment assuming (1) 5% annual a $1,000 investment assuming (1) 5% annual
return and (2) redemption at the return and (2) no redemption:
end of each time period:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
1 3 5 10 1 3 5 10
YEAR YEARS YEARS YEARS YEAR YEARS YEARS YEARS
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class M Shares....... 4 13 23 52 4 13 23 52
Class A Shares....... 7 21 36 81 7 21 36 81
Class B Shares....... 64 73 94 134 14 43 74 134
Class C Shares....... 19 21 36 81 7 21 36 81
</TABLE>
- --------------------------------------------------------------------------------
2
<PAGE> 34
FINANCIAL HIGHLIGHTS
The following table sets forth financial history for a share of each class
of Zweig Cash Fund. Data for Class M Shares of Zweig Cash Fund prior to May 1,
1994, is from Zweig Cash Fund Inc., its predecessor by merger.
Coopers & Lybrand L.L.P., the fund's independent accountants, has audited
this information. Their report for each of the last five years is included in
the 1995 Annual Report of Zweig Series Trust. The report is available upon
request and is incorporated by reference into the Statement of Additional
Information.
<TABLE>
<CAPTION>
RATIOS
TO
AVERAGE
NET
ASSETS
NET ASSET DIVIDENDS --------
VALUE NET TOTAL FROM FROM NET NET ASSET
YEAR BEGINNING INVESTMENT INVESTMENT INVESTMENT TOTAL VALUE TOTAL
ENDED OF YEAR INCOME OPERATIONS INCOME DIVIDENDS END OF YEAR RETURN EXPENSES
-------- --------- ---------- ---------- ---------- --------- ----------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ZWEIG CASH FUND CLASS M(1)
1995 $1.00 $ 0.05 $ 0.05 $(0.05) $ (0.05) $1.00 5.32% 0.64%
1994 1.00 0.04 0.04 (0.04) (0.04) 1.00 3.67 0.70
1993 1.00 0.03 0.03 (0.03) (0.03) 1.00 2.86 0.70
1992 1.00 0.03 0.03 (0.03) (0.03) 1.00 3.40 0.70
1991 1.00 0.06 0.06 (0.06) (0.06) 1.00 5.63 0.66
1990 1.00 0.07 0.07 (0.07) (0.07) 1.00 7.53 0.72
1989 1.00 0.08 0.08 (0.08) (0.08) 1.00 8.53 0.77
1988 1.00 0.07 0.07 (0.07) (0.07) 1.00 7.16 0.63
1987 1.00 0.06 0.06 (0.06) (0.06) 1.00 6.08 0.65
1986 1.00 0.06 0.06 (0.06) (0.06) 1.00 6.52 0.68
ZWEIG CASH FUND CLASS A(2)
1995 1.00 0.05 0.05 (0.05) (0.05) 1.00 5.08 0.87
1994(3) 1.00 0.03 0.03 (0.03) (0.03) 1.00 2.55* 0.62*
ZWEIG CASH FUND CLASS C(2)
1995 1.00 0.05 0.05 (0.05) (0.05) 1.00 5.08 0.87
1994(3) 1.00 0.03 0.03 (0.03) (0.03) 1.00 2.55* 0.61*
<CAPTION>
RATIOS
TO
AVERAGE
NET
ASSETS
-------- NET ASSETS
END OF YEAR
INVESTMENT (IN
INCOME THOUSANDS)
---------- -----------
<S> <C>
ZWEIG CASH FUND CLASS M(1)
5.20% $ 48,515
3.58 78,149
2.83 92,471
3.35 145,169
5.63 126,019
7.27 189,943
8.24 163,288
6.93 291,836
5.89 332,773
6.25 318,962
ZWEIG CASH FUND CLASS A(2)
4.97 3,661
2.52* 4,303
ZWEIG CASH FUND CLASS C(2)
4.97 4,458
2.52* 5,040
</TABLE>
- ---------------
(1) During 1995, 1994, 1993, 1992 and 1991, the manager voluntarily reimbursed
Zweig Cash Fund Class M $.001 per share (0.10% ratio of operating expenses
to average net assets), $.002 per share (0.15% ratio of operating expenses
to average net assets), $.001 per share (0.08% ratio of operating expenses
to average net assets), $.002 per share (0.15% ratio of operating expenses
to average net assets) and $.001 per share (0.15% ratio of operating
expenses to average net assets), respectively.
(2) During 1995, the manager voluntarily reimbursed Zweig Cash Fund Class A and
Class C $.005 and $.003 per share (0.47% and 0.28% ratio of operating
expenses to average net assets), respectively.
(3) Commenced operations May 1, 1994.
* Not Annualized.
- --------------------------------------------------------------------------------
ZWEIG CASH FUND is a convenient way to invest idle cash in a money market
fund that invests in short-term securities issued or guaranteed as to the
payment of principal and interest by the U.S. Government, its agencies or
instrumentalities, and repurchase agreements with respect to such obligations.
The fund is a series of Zweig Series Trust.
The fund seeks high current income consistent with maintaining liquidity
and preserving capital. The goal of the fund is to maintain a stable share price
of $1.00.
3
<PAGE> 35
INVESTMENTS AND RISK FACTORS
The fund invests in short-term securities issued or guaranteed as to the payment
of principal and interest by the United States Government, its agencies or
instrumentalities and repurchase agreements with respect to such securities. Not
all U.S. Government securities are backed by the full faith and credit of the
United States. Some are supported only by the credit of the agency or
instrumentality that issued them. Obligations of the U.S. Government and its
agencies and instrumentalities are considered to have the lowest risk of
default, but they are subject to other risks, including those related to changes
in interest rate levels. The value of debt securities, including those held by
the fund, varies inversely with changes in interest rate levels.
U.S. Government agencies and instrumentalities include: Bank for Cooperatives,
Export-Import Bank of the U.S., Farmers Home Administration, Federal Financing
Bank, Federal Home Loan Banks, Federal Home Loan Mortgage Corp., Federal Housing
Administration, Federal Intermediate Credit Banks, Federal Land Banks, Federal
National Mortgage Association, Government National Mortgage Association,
Resolution Funding Corp., Student Loan Marketing Association, Tennessee Valley
Authority and the U.S. Postal Service.
Repurchase agreements are arrangements by which the fund buys a security at one
price and at the same time agrees to sell the security back to the seller at a
higher price, usually on the next business day. Repurchase agreements offer a
means of generating income from excess cash that the fund might otherwise hold.
Delays in payment or losses may result if the other party to the agreement
defaults or becomes bankrupt. The fund will enter into repurchase agreements
only with member banks of the Federal Reserve System or primary dealers in U.S.
Government securities. The fund's repurchase agreements must be fully backed by
collateral (U.S. Government securities) that is marked to market, or priced,
each day.
The fund may purchase a security on a when-issued or delayed-delivery basis,
i.e., with delivery and payment deferred to a future date. The money to purchase
such securities will be invested in other securities until the fund receives
delivery. This could increase the possibility that the fund's net asset value
might be affected by changes in interest rates.
Although it has not used these practices in the past, the fund may: lend its
securities to other financial institutions to earn income; borrow money for
temporary purposes; and invest up to 10% of its net assets in illiquid
securities, such as repurchase agreements maturing in more than seven days. The
investment objective and these practices can be changed only by vote of a
majority of the outstanding shares of the fund. A majority for this purpose is
defined as the lesser of either: (a) 67% of the shares represented at a meeting
if at least 50% of all shares are represented; or (b) more than 50% of all
outstanding shares.
The Statement of Additional Information has further details about the
investments and policies of the fund. As with any mutual fund, there is no
assurance that the fund's objective will be achieved.
NET ASSET VALUE, DISTRIBUTIONS AND TAXES
NET ASSET VALUE. The net asset value of each class of shares is determined as of
2:00 P.M. New York time and as of the close of regular trading on the New York
Stock Exchange ("NYSE") on each day the NYSE is open. The non-class specific
liabilities of the fund are subtracted from the fund's assets to determine its
total net assets. Each class's proportionate interest in the fund's net assets
is determined. The liabilities attributable to that class, including its
distribution fees, are then deducted and the resulting amount is divided by the
number of shares of that class outstanding to produce its net asset value per
share. The fund attempts to stabilize its share price at $1.00 and uses the
amortized cost method of valuing its investments.
DISTRIBUTIONS AND TAXES. The fund intends to qualify as a regulated investment
company for federal income tax purposes and to distribute to its shareholders
all income and net capital gains so as to be relieved of federal taxes. The fund
declares dividends at 2:00 P.M. New York time on each day the NYSE is open for
trading of all its net income, including: accrued interest, earned discounts,
and realized gains and losses, less amortized premiums and accrued expenses.
Dividends are declared separately for each class of shares. The fund pays or
reinvests these dividends at net asset value on the last business day of each
month unless a shareholder elects to receive distributions in cash.
Distributions of income and short-term capital gains are taxed as dividends (the
fund does not expect to realize any long-term capital gains). Distributions are
taxable when paid, whether taken in cash or reinvested. By
4
<PAGE> 36
January 31 of each year, we will send you a statement showing the tax status of
your distributions for the prior year. The foregoing is a summary of certain
federal income tax consequences. Be sure to consult your own tax adviser to
determine the precise effect on your particular tax situation, as well as any
state and local tax consequences.
HOW TO BUY SHARES
Class M shares of the fund are sold at net asset value without the imposition of
a sales charge. You can buy shares directly from the fund's transfer agent,
through an investment professional, or automatically through a regular
investment plan. The minimum initial investment is $10,000 except for service
organizations whose clients have made aggregate minimum purchases of $1,000,000,
the minimum is $1,000. There is no minimum amount for additional investments.
Purchase orders received by the transfer agent by 2:00 P.M. New York time become
effective and earn dividends that day provided payment is received in Federal
funds by 4:00 P.M. New York time. We reserve the right to change or waive
minimums or to refuse any order.
BUYING SHARES FROM AN INVESTMENT DEALER. If you invest through a broker, bank or
other institution, that firm or institution may have its own service features
and/or fees. If you wish us to refer you to an investment professional, call us
at 1-800-272-2700. Investment professionals receive compensation for providing
investment advice, and such compensation differs for selling shares of different
classes of the Zweig Mutual Funds.
AUTOMATICALLY THROUGH SWEEP PROGRAMS. Customers of participating securities
dealers and banks may participate in sweep programs by which an account with the
dealer or bank is coordinated with an account in the fund. Purchases and sales
are made by the participating securities dealer or bank as agent of their
customer. For further information about the sweep program, see the Statement of
Additional Information or call us at 1-800-272-2700.
BUYING SHARES THROUGH THE TRANSFER AGENT. Send a letter to the transfer agent
directing that Zweig Cash Fund Class M Shares are to be purchased with your
check. The address is: Zweig Cash Fund c/o State Street Bank & Trust Company,
P.O. Box 8505, Boston, MA 02266-8505. Make your check payable to State Street
Bank & Trust Company or Zweig Cash Fund. Third party checks (i.e. any checks
which are not made payable to the order of State Street Bank & Trust Company or
Zweig Cash Fund) will not be accepted. You may deliver your order by courier or
overnight mail to State Street's offices at: 2 Heritage Drive (3rd floor), North
Quincy, MA 02171, Attention: Zweig Mutual Funds. You also may wire your order
with Federal funds. For wiring instructions, call the transfer agent at
1-800-628-0441.
BUYING SHARES THROUGH AN INVESTMENT PLAN. You can invest in the fund through an
automatic investment plan. For further details, call us at 1-800-272-2700.
HOW TO REDEEM SHARES
You can redeem your shares at net asset value on any day the NYSE is open
through the transfer agent if the shares are registered in your name, or through
the investment dealer or institution through which you purchased your shares.
THROUGH YOUR INVESTMENT DEALER. If your account has been established by your
investment dealer or other institution, contact your investment professional,
who will assist you with your redemption.
THROUGH THE TRANSFER AGENT BY MAIL. If the shares are registered in your name,
send a letter of instruction signed exactly as the shares are registered, with
signature guarantees from an appropriate guarantor, and any certificates that
represent the shares you wish to redeem. A signature guarantee is required
whether or not certificates are involved. Mail the information to: Zweig Cash
Fund c/o State Street Bank & Trust Company, P.O. Box 8505, Boston, MA
02266-8505. Appropriate signature guarantors include: banks, savings
associations, credit unions, member firms of a national securities exchange,
municipal securities dealers and government securities dealers. See the
Statement of Additional Information or call us at 1-800-272-2700 for more
information. Redemption instructions by corporate and fiduciary shareholders
also must be accompanied by appropriate documentation establishing the authority
of the person seeking to act on behalf of the account.
THROUGH THE TRANSFER AGENT BY TELEPHONE. The transfer agent must receive your
instructions before 2:00 P.M. in order to redeem shares and remit proceeds that
day. You may issue a telephone redemption request directly to the transfer agent
at 1-800-628-0441 if: (a) your account is registered for telephone/expedited
redemption privileges, and (b) your shares are held at the transfer agent
without certificates. If you designated a domestic bank
5
<PAGE> 37
on the Application Form when you opened your account, you may have redemption
proceeds of $1,000 or more wired to that bank. Subsequent directions for wiring
proceeds require a signature guarantee from an appropriate guarantor. The
maximum amount that may be redeemed for joint accounts by telephone is $25,000.
Neither the fund, the distributor, nor the transfer agent will be liable for any
loss in acting on telephone instructions reasonably believed to be authentic. In
the event of a fraudulent telephone redemption, the investor will bear the risk
of loss. Because the fund may otherwise be liable for any losses due to
unauthorized or fraudulent instructions, reasonable procedures are employed to
confirm that instructions given by phone are genuine. These include: requiring a
form of personal identification from the caller and recording telephone
instructions. For identification purposes, the transfer agent may require such
information as it deems necessary before accepting redemption instructions.
During periods of extremely drastic economic or market changes, it may become
difficult to implement a telephone redemption. In the event that you have
difficulty reaching the transfer agent at its toll-free number, you should
consider sending written redemption instructions in the manner explained above.
We reserve the right to refuse telephone redemption requests and to limit their
amount or frequency. If, however, we determine not to accept a telephone
redemption request, we will seek to advise you promptly of that decision and, to
the extent feasible, will communicate that decision by telephone.
THROUGH THE TRANSFER AGENT BY CHECK. You may establish a Check Service with
State Street Bank and Trust Company. Checks must be in amounts of $500 or more.
To obtain redemption checks, complete an application form which can be obtained
by calling us at 1-800-272-2700. When a check is presented for payment, State
Street will redeem full and fractional shares in your account to cover the
amount of the check. State Street will not honor a check for less than $500 or
for an amount exceeding the value of your account at the time the check is
presented. We reserve the right to impose a service charge for check
redemptions, stop payment orders and returned checks.
AUTOMATICALLY THROUGH SWEEP PROGRAMS. See "Purchase of Shares" above.
MINIMUM ACCOUNT SIZE. If your account balance falls below $10,000 as a result of
redeeming shares, you may be given 60 days' notice to reestablish the minimum
balance. If you do not increase your balance, we reserve the right to close your
account and send the proceeds to you. We normally will not close an account
maintained in connection with a tax-deferred retirement plan.
ORGANIZATION AND MANAGEMENT
The Trust was established as a Massachusetts business trust on September 24,
1984 and reorganized as a Delaware business trust on April 30, 1996. The Trust
is a mutual fund, or, in the technical terms of the Investment Company Act of
1940 (the 1940 Act) under which it is regulated, an open-end, diversified
management investment company. It has an unlimited number of shares of
beneficial interest which, without shareholder approval, may be divided by the
trustees into an unlimited number of classes and funds. The shares presently are
divided into four classes of shares in the fund and three classes of shares in
the four other funds. Voting rights are based on a shareholder's total dollar
interest in a Series and are thus allocated in proportion to the value of each
shareholder's investment. Shares vote together on matters that concern the
entire Trust, or by individual fund or class when the Board of Trustees
determines that the matter affects only the interests of a particular fund or
class.
The Board of Trustees directs the management of the business of the Trust. The
Board has duties and responsibilities comparable to those of the boards of
directors of corporations, not to those of trustees under customary trust
principles. The trustees oversee the Trust's activities, elect the officers of
the Trust who are responsible for its day-to-day operations, review contractual
arrangements with the companies that provide services to the Trust, and review
investment performance.
THE MANAGER AND MANAGEMENT FEE. The fund's investments are managed by
Zweig/Glaser Advisers, 5 Hanover Square, 17th floor, New York, NY 10004. The
general partners of Zweig/Glaser Advisers are: Glaser Corp., a Delaware
corporation controlled by Eugene J. Glaser, and Zweig Management Corp., a
Delaware corporation controlled by Dr. Martin E. Zweig. The manager also: makes
recommendations with respect to the fund's
6
<PAGE> 38
business affairs; furnishes certain administrative services, office space and
equipment; and permits its employees to serve as the officers of the Trust
without additional compensation from the fund. All other expenses incurred in
the operation of the fund are borne by the fund, including: interest, taxes,
fees and commissions of every kind; expenses of issue, repurchase or redemption
of shares; costs of registering or qualifying shares for sale (including
printing costs, legal fees and other expenses relating to the preparation and
filing the Trust's registration statement with the appropriate regulatory
authorities and the production and filing of the Trust's prospectus); costs of
insurance; association membership dues; all charges of custodians, including
fees as custodian, escrow agent, and fees for keeping books and performing
portfolio valuations; all charges of transfer agents, registrars, pricing
services, independent accountants and legal counsel; expenses of preparing,
printing and distributing prospectuses and all proxy materials, reports and
notices to shareholders; expenses of distribution of shares pursuant to the Rule
12b-1 Plan described below; out-of-pocket expenses of trustees; fees of trustees
who are not "independent persons" as defined in the 1940 Act; and all other
costs incident to the Trust's existence as a business trust. Zweig/Glaser
Advisers receives a fee equal to 0.50% of its average daily net assets for
managing the fund.
THE DISTRIBUTOR. Zweig Securities Corp. serves as principal distributor of
shares of the Zweig Mutual Funds. Class M Shares have a distribution sharing
plan pursuant to Rule 12b-1 under the Investment Company Act of 1940. The plan
provides that the distributor may enter into service agreements with securities
dealers, financial institutions, banks, and other industry professionals for
distribution, promotion and administration and servicing investors in the fund's
Class M Shares. Under the plan, the fund and the manager reimburse the
distributor in equal shares for service payments to service organizations of up
to 0.30% of the average daily net assets of the fund's Class M Shares. The plan
also provides that the fund will pay up to an additional $100,000 per annum for
marketing costs, although it is not anticipated that the fund will pay the full
$100,000 during the present year.
PERFORMANCE INFORMATION
Occasionally, the fund may advertise current yield or effective yield. Yield
figures are based on historical earnings and are not intended to indicate future
performance. Current yield refers to the income generated by an investment in
the fund over a seven-day period specified in the advertisement. This income is
assumed to be generated each week for 52 weeks. This 52-week income is then
shown as a percentage of the investment. Effective yield is calculated similarly
but, when annualized, the income earned is assumed to be reinvested. The
effective yield will be slightly higher than the current yield because of the
compounding effect of the assumed reinvestment. The fund also may include in
advertising or marketing materials data from financial and other publications or
from surveys that deal with mutual fund or investment statistics. The Statement
of Additional Information lists some of such publications and sources of data.
7
<PAGE> 39
TABLE OF CONTENTS
Fee table
Financial Highlights
Investments and risk factors
Net asset value, distributions and taxes
How to buy shares
How to redeem shares
Organization and management
Performance information
INVESTMENT MANAGER
Zweig/Glaser Advisers
5 Hanover Square-17th Floor
New York, New York 10004
CUSTODIAN
The Bank of New York
48 Wall Street
New York, New York 10286
TRANSFER AGENT AND DIVIDEND PAYING AGENT
State Street Bank & Trust Company
P.O. Box 8505
Boston, Massachusetts 02266-8505
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
1301 Avenue of the Americas
New York, New York 10019
COUNSEL
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
PRINCIPAL DISTRIBUTOR
Zweig Securities Corp.
5 Hanover Square-17th Floor
New York, New York 10004
No dealer, salesperson or other person has been authorized to give any
information or to make any representations, other than those contained in this
Prospectus, in connection with the offer contained in this Prospectus, and, if
given or made, such other information or representations must not be relied
upon as having been authorized by the Trust, the Investment Manager or the
Distributor. The prospectus does not constitute an offering in any state in
which such offering may not lawfully be made.
ZWEIG SERIES TRUST
PROSPECTUS
ZWEIG CASH FUND
May 1, 1996
<PAGE> 40
ZWEIG SERIES TRUST
5 Hanover Square, New York, N.Y. 10004
STATEMENT OF ADDITIONAL INFORMATION
ZWEIG SERIES TRUST (the "Trust"), a Delaware business trust, is a
professionally managed, open-end, diversified, investment company which offers
investors the opportunity to invest in five Series. Each Series has distinct
investment objectives and policies, and a shareholder's interest is limited to
the Series and to the Class in which he or she owns shares. The five Series are:
Zweig Strategy Fund; Zweig Appreciation Fund; Zweig Managed Assets; Zweig
Government Fund; and Zweig Cash Fund (each a "Series").
The Trust has a distribution system that allows each Series to offer
investors the option of purchasing shares either subject to a front-end sales
charge coupled with a Rule 12b-1 Distribution Plan and service fee (except that
Zweig Cash Fund is offered without a sales charge) ("Class A Shares"); subject
to a declining contingent deferred sales charge ("CDSC"), a Rule 12b-1
Distribution Plan and a service fee ("Class B Shares"); or subject to a one year
CDSC, a Rule 12b-1 Distribution Plan and a service fee ("Class C Shares"). Zweig
Cash Fund also issues a fourth class of shares (Class M Shares), which is
described in a separate Statement of Additional Information. The Trust's
distribution system is described more fully in the Prospectus under the headings
"Choosing Among Classes of Shares," "How to Invest in the Zweig Mutual Funds"
and "Redemption of Shares."
The Trust is designed for long-term investors, including those who wish to
use shares of one or more Series as a funding vehicle for tax-deferred
retirement plans (including tax-qualified retirement plans and Individual
Retirement Account (IRA) plans), and not for investors who intend to liquidate
their investments after a short period of time.
Zweig/Glaser Advisers (the "Manager"), manages the investments of each Series
and Zweig Securities Corp. (the "Distributor"), an affiliate of the Manager, is
the principal distributor of the Trust's shares.
This Statement of Additional Information, which should be kept for future
reference, is not a prospectus. It should be read in conjunction with the
Prospectus of the Trust (the "Prospectus"), dated May 1, 1996, which can be
obtained without cost by contacting your financial consultant or by calling or
writing the Trust at the telephone number and address printed on this cover
page. This Statement of Additional Information is intended to provide you with
further information about the Trust.
Zweig Series Trust
(Toll Free--1-800-272-2700)
May 1, 1996
<PAGE> 41
<TABLE>
<CAPTION>
TABLE OF CONTENTS Page
<S> <C>
INVESTMENT OBJECTIVES AND POLICIES................................................................................ 3
INVESTMENT RESTRICTIONS........................................................................................... 8
PURCHASE AND REDEMPTION OF SHARES................................................................................. 11
REINSTATEMENT PRIVILEGE .......................................................................................... 11
EXCHANGE PRIVILEGE ............................................................................................... 11
INVOLUNTARY REDEMPTIONS........................................................................................... 11
RETIREMENT PLANS.................................................................................................. 11
NET ASSET VALUE AND TAXES......................................................................................... 12
TRUSTEES AND OFFICERS OF THE TRUST................................................................................ 15
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES............................................................... 18
INVESTMENT MANAGEMENT AND OTHER SERVICES.......................................................................... 18
Manager .................................................................................................... 18
Distributor................................................................................................. 19
Distribution Plans.......................................................................................... 19
Custodian, Fund Accounting Agent, Transfer Agent and Dividend Paying Agent.................................. 21
Independent Accountants..................................................................................... 21
Counsel..................................................................................................... 21
PORTFOLIO TRANSACTIONS AND BROKERAGE.............................................................................. 21
YIELD AND PERFORMANCE INFORMATION................................................................................. 23
REGISTRATION STATEMENT............................................................................................ 24
FINANCIAL STATEMENTS.............................................................................................. 25
APPENDIX I........................................................................................................ 26
</TABLE>
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INVESTMENT OBJECTIVES AND POLICIES
The Trust's investment objectives and policies and permitted investments are
described briefly in the Prospectus under the headings "Investment Objectives of
the Zweig Mutual Funds," "Portfolio Securities," "Stock Selection and Bond
Duration" and "Risk Factors and Managing Exposure to Market Risk." There can be
no assurance that a Series' investment objectives will be achieved. Set forth
below is additional information with respect to the investment objectives and
policies of certain Series and a description of certain financial instruments
and techniques utilized by certain Series.
Repurchase Agreements (All Series)
Repurchase agreements involve purchases of securities by a Series. In such a
transaction, at the time the Series purchases the security, it simultaneously
agrees to resell and redeliver the security to the seller who also
simultaneously agrees to buy back the security at a fixed price and time. This
assumes a predetermined yield for the Series during its holding period, since
the resale price is always greater than the purchase price and reflects an
agreed-upon market rate. Such transactions afford an opportunity for the Series
to invest temporarily available cash. Repurchase agreements may be considered
loans to the seller collateralized by the underlying securities. The risk to the
Series is limited to the ability of the seller to pay the agreed-upon sum on the
repurchase date; in the event of default, the repurchase agreement provides that
the Series is entitled to sell the underlying collateral. If the value of the
collateral declines after the agreement is entered into, however, and if the
seller defaults under a repurchase agreement when the value of the underlying
collateral is less than the repurchase price, the Series could incur a loss of
both principal and interest. The manager monitors the value of the collateral at
the time the transaction is entered into and at all times subsequent during the
term of the repurchase agreement in an effort to determine that the value of the
collateral always equals or exceeds the agreed-upon repurchase price to be paid
to the Series. If the seller were to be subject to a Federal bankruptcy
proceeding, the ability of the Series to liquidate the collateral could be
delayed or impaired because of certain provisions of the bankruptcy laws.
Options (All Series except Zweig Cash Fund)
When a Series writes an option, an amount equal to the premium received by
the Series is recorded as an asset and as an offsetting liability. The amount of
the liability is "marked-to-market" daily to reflect the current market value of
the option, which is the last sale price on the principal exchange on which such
option is traded or, in the absence of a sale, the mean between the latest bid
and offering prices. If an option written by Series expires, or a Series enters
into a closing purchase transaction, such Series will realize a gain (or, in the
latter case, a loss, if the cost of a closing transaction exceeds the premium
received) and the liability related to such option will be extinguished.
The premium paid by a Series for the purchase of a put option (its cost) is
recorded initially as an investment, the value of which is subsequently adjusted
to the current market value of the option. If the current market value of a put
option exceeds its premium, the excess represents unrealized appreciation;
conversely, if the premium exceeds the current market value, the excess
represents unrealized depreciation. The current market value of an option
purchased by a Series equals the option's last sale price on the principal
exchange on which it is traded or, in the absence of a sale, the mean between
the latest bid and offering prices.
An option position may be closed out only on an exchange which provides a
secondary market for an option of the same series. Although a Series generally
will purchase or write only those options for which there appears to be an
active secondary market, there is no assurance that a liquid secondary market on
an exchange will exist for any particular option, or at any particular time, and
for some options no secondary market on an exchange may exist. In such event, it
might not be possible to effect closing transactions in particular options, with
the result that the Series would have to exercise its options in order to
realize any profit and would incur transaction costs on the sale of underlying
securities pursuant to the exercise of put options. If a Series, as a covered
call option writer, is unable to effect a closing purchase transaction in a
secondary market, it will not be able to sell the underlying security until the
option expires or it delivers the underlying security upon exercise.
Reasons for the absence of a liquid secondary market on an exchange include
the following: (a) there may be insufficient interest in trading certain
options; (b) restrictions may be imposed by an exchange on opening transactions
or closing transactions or both; (c) trading halts, suspensions or other
restrictions may be imposed with respect to particular classes or series of
options or underlying securities; (d) unusual or unforeseen circumstances may
interrupt normal operations on an exchange; (e) the facilities of an exchange or
the Options Clearing Corporation (the "OCC") may not at all times be adequate to
handle current trading volume; or (f) one or more exchanges might, for economic
or other reasons, decide or be compelled at some future date to discontinue the
trading of options (or a particular class or series of options), in which event
the secondary market on that exchange (or in that class or series of options)
would cease to exist, although outstanding options on that exchange that had
been issued by the OCC as a result of trades on that exchange would continue to
be exercisable in accordance with their terms.
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In addition, there is no assurance that higher than anticipated trading
activity or other unforeseen events might not, at times, render certain of the
facilities of the OCC inadequate, and thereby result in the institution by an
exchange of special procedures which may interfere with the timely execution of
customers' orders.
The amount of the premiums which a Series may pay or receive may be adversely
affected as new or existing institutions, including other investment companies,
engage in or increase their option purchasing and writing activities.
In the event of a shortage of the underlying securities deliverable on
exercise of a listed option, the OCC has the authority to permit other,
generally comparable securities to be delivered in fulfillment of option
exercise obligations. If the OCC exercises its discretionary authority to allow
such other securities to be delivered, it may also adjust the exercise prices of
the affected options by setting different prices at which otherwise ineligible
securities may be delivered. As an alternative to permitting such substitute
deliveries, the OCC may impose special exercise settlement procedures.
Futures Contracts (All Series except Zweig Cash Fund)
Upon entering into a futures contract, a Series will initially be required to
deposit with the custodian an amount of "initial margin" of cash or U.S.
Treasury bills equal to approximately 1 1/2% of the contract amount. The nature
of initial margin in futures transactions is different from that of margin in
securities transactions in that futures contract initial margin does not involve
the borrowing of funds by customers to finance the transactions. Rather, the
initial margin is in the nature of a performance bond or good faith deposit on
the contract which is returned to the Series upon termination of the futures
contract, assuming all contractual obligations have been satisfied. In addition
to initial margin, the Series is required to deposit cash, high-grade liquid
debt securities or cash equivalents in an amount equal to the notional value of
all long futures contracts, less the initial margin amount, in a segregated
account with the custodian to ensure that the use of such futures contracts is
not leveraged. If the value of the securities placed in the segregated account
declines, additional securities, cash or cash equivalents must be placed in the
segregated account so that the value of the account will at least equal the
amount of the Series' commitments with respect to such futures contracts.
Subsequent payments, called maintenance margin, to and from the broker, will
be made on a daily basis as the price of the underlying security fluctuates,
making the long and short positions in the futures contract more or less
valuable, a process known as "marking to the market." For example, when the
Series has purchased a futures contract and the price of the underlying security
has risen, that position will have increased in value and the Series will
receive from the broker a maintenance margin payment equal to that increase in
value. Conversely, when the Series has purchased a futures contract and the
price of the underlying security has declined, the position would be less
valuable and the Series would be required to make a maintenance margin payment
to the broker. At any time prior to expiration of the futures contract, the
Series may elect to close the position by taking an opposite position which will
operate to terminate the Series' position in the futures contract. A final
determination of maintenance margin is then made, additional cash is required to
be paid by or released to the Series, and the Series realizes a loss or a gain.
While futures contracts based on securities do provide for the delivery and
acceptance of securities, such deliveries and acceptances are very seldom made.
Generally, the futures contract is terminated by entering into an offsetting
transaction. An offsetting transaction for a futures contract sale is effected
by the Series entering into a futures contract purchase for the same aggregate
amount of the specific type of financial instrument with the same delivery date.
If the price in the sale exceeds the price in the offsetting purchase, the
Series immediately is paid the difference and thus realizes a gain. If the
offsetting purchase price exceeds the sales price, the Series pays the
difference and realizes a loss. Similarly, the closing out of a futures contract
purchase is effected by the Series entering into a futures contract sale. If the
offsetting sale price exceeds the purchase price, the Series realizes a gain,
and if the purchase price exceeds the offsetting price, the Series realizes a
loss.
There are several risks in connection with the use of futures contracts as a
hedging device. One risk arises due to the imperfect correlation between
movements in the price of the futures contracts and movements in the price of
the subject of the hedge. The price of the futures contract may move more than
or less than the price of the securities or currency being hedged.
If the price of the futures contracts moves less than the price of the
securities or currency hedged, the hedge will not be fully effective, but, if
the price of the securities or currency being hedged has moved in an unfavorable
direction, the Series would be in a better position than if it had not hedged at
all. If the price of the securities or currency being hedged has moved in a
favorable direction, this advantage will be partially offset by the movement in
the price of the futures contract. If the price of the futures contract moves
more than the price of the security or currency, the Series will experience
either a loss or gain on the futures which will not be completely offset by
movements in the prices of the securities or currency which is the subject of
the hedge.
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To compensate for the imperfect correlation of such movements in price, the
Series may buy or sell futures contracts in a greater dollar amount than the
dollar amount of the securities or currency being hedged if the historical
volatility of the prices of such securities or currency has been greater than
the historical volatility of the futures contracts. Conversely, the Series may
buy or sell fewer futures contracts if the historical volatility of the price of
the securities or currency being hedged is less than the historical volatility
of the futures contracts.
It is also possible that, where a Series has sold futures to hedge its
portfolio against a decline in the market, the market may advance and the value
of securities held in the Series' portfolio may decline. If this occurred, the
Series would lose money on the futures contracts and also experience a decline
in value in its portfolio securities. However, while this could occur for a very
brief period or to a very small degree, over time the value of a diversified
portfolio will tend to move in the same direction as the futures contracts.
Where futures are purchased to hedge against a possible increase in the cost
of securities before a Series is able to invest its cash (or cash equivalents)
in an orderly fashion, it is possible that the market may decline instead; if
the Series then concludes not to invest in the relevant securities at that time
because of concern as to possible further market decline or for other reasons,
the Series will realize a loss on the futures contract that is not offset by a
reduction in the price of securities purchased.
Another risk arises because the market prices of futures contracts may be
affected by certain factors. First, all participants in the futures market are
subject to initial margin and maintenance margin requirements. Rather than
meeting maintenance margin requirements, investors may close futures contracts
through offsetting transactions which could distort the normal relationship
between the debt securities and futures markets. Second, from the point of view
of speculators, the margin requirements in the futures market are less onerous
than margin requirements in the securities market. Therefore, increased
participation by speculators in the futures market may also cause temporary
price distortions.
Due to the possibility of price distortion in the futures market and because
of the imperfect correlation between movements in securities and movements in
the prices of futures contracts, a correct forecast of interest rate trends by
the Manager may still not result in a successful hedging transaction over a very
short period of time.
The hours of trading for futures contracts may not conform to the hours
during which the underlying securities are traded. To the extent that the
futures contracts markets close after the markets for the underlying securities,
significant price movements can take place in the futures contracts markets that
cannot be reflected in the markets of the underlying securities.
Positions in futures contracts may be closed out only on an exchange or board
of trade which provides a secondary market for such futures. Although the Trust
intends to purchase or sell futures only on exchanges or boards of trade where
there appears to be an active secondary market, there is no assurance that a
liquid secondary market on an exchange or board of trade will exist for any
particular contract or at any particular time. In such event, it may not be
possible to close a futures position and, in the event of adverse price
movements, the Series would continue to be required to make daily cash payments
of maintenance margin. However, in the event futures contracts have been used to
hedge portfolio securities, such securities will not be sold until the futures
contracts can be terminated. In such circumstances, an increase in the price of
the securities, if any, may partially or completely offset losses on the futures
contract. However, as described above, there is no guarantee that the price of
the securities will, in fact, correlate with the price movements in the futures
contract and thus provide an offset to losses on a futures contract.
Successful use of futures contracts by the Trust is also subject to the
Manager's ability to correctly predict movements in the direction of interest
rates and other factors affecting markets for securities. For example, if a
Series has hedged against the possibility of an increase in interest rates which
would adversely affect securities held in its portfolio and prices of such
securities increase instead, the Series will lose part or all of the benefit of
the increased value of its securities which it has hedged because it will have
offsetting losses in its futures positions. In addition, in such situations, if
the Series has insufficient cash, it may have to sell securities to meet
maintenance margin requirements. Such sales of securities may be, but will not
necessarily be, at increased prices which reflect the rising market. The Series
may have to sell securities at a time when it may be disadvantageous to do so.
Investment Companies (All Series except Zweig Cash Fund)
Investments by the Trust in investment companies will be effected by
independent investment managers, and the Trust will have no control over the
investment management, custodial arrangements or operations of any investments
made by such investment managers. Some of the funds in which a Series may invest
could also incur more risks than would be the case for direct investments. For
example, they may engage in investment practices that entail greater risks or
invest in companies whose securities and other investments are more volatile. In
addition, the funds in which a Series of the Trust invests may or may not have
the same fundamental investment limitations as those of the Series itself. While
a
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potential benefit of investing in closed-end investment companies would be to
realize value from a decrease in the discount from net asset value at which some
closed-end funds trade, there is also the potential that such discount could
grow, rather than decrease.
By investing in investment companies indirectly through the Trust, a
shareholder of the investing Series will bear not only a proportionate share of
the expenses of that Series (including operating costs and investment advisory
and administrative fees) but also, indirectly, similar expenses of the
investment companies in which the Series invests. A shareholder may also
indirectly bear expenses paid by investment companies in which the Series invest
related to the distribution of such investment companies' shares. Some of the
open-end investment companies in which the Series may invest may limit the
ability of shareholders (including a Series of the Trust) to redeem their
shares.
Zweig Cash Fund may not invest in securities of investment companies,
except as they may be acquired as part of a merger, consolidation or acquisition
of assets. The other Zweig Mutual Funds may not invest in investment companies
except by purchase in the open market involving only customary brokers'
commissions, in connection with a merger, consolidation, reorganization, or
acquisition of assets, or as otherwise permitted by applicable law. Current law
prohibits any Series from (i) owning more than 3% of the voting securities of
any one investment company; (ii) investing more than 5% of its assets in the
securities of any one investment company; or (iii) investing more than 10% of
its assets in securities issued by investment companies. Any Series is also
prohibited from owning more than 10% of the voting securities of a registered
closed-end investment company. If the investment securities of another
investment company were the only investment securities held by a Series, these
restrictions would not apply to that Series. All Series may also invest in other
investment companies to facilitate the implementation of a master-feeder
structure.
Zweig Government Fund
Zweig Government Fund seeks a high total return from current income and
capital appreciation consistent with preservation of capital over the long term
by investing primarily in U.S. Government and agency securities, including
Government National Mortgage Association ("GNMA") mortgage-backed certificates,
and repurchase agreements collateralized by such securities.
It is the Series' policy that at least 65% of its total assets will be
invested in U.S. Government securities (including GNMA certificates), except
during times when the Manager believes that adoption of a temporary defensive
position is desirable. For temporary defensive purposes, the Series may hold
cash or invest in money market instruments without limit.
The Series may write covered call options and secured put options, and
purchase put options on U.S. Government securities which are traded on an
exchange or over-the-counter. The Series also may purchase and sell interest
rate futures contracts and purchase and write put and call options on such
futures contracts as a means of hedging against changes in interest rates.
Options on Government Securities
(i) On Treasury Bonds and Notes. Because the trading interest in Treasury
bonds and notes tends to center on the most recently auctioned issues, the
exchanges will not continue indefinitely to introduce new expirations with
respect to such options to replace expiring options on particular issues. The
expirations introduced at the commencement of options trading on a particular
issue will be allowed to run, with the possible addition of a limited number of
new expirations, as the original expirations expire. Options trading on each
issue of bonds or notes will thus be phased out as new options are listed on
more recent issues, and a full range of expirations will not ordinarily be
available on the exchange for every issue on which options are traded.
(ii) On Treasury Bills. Because the deliverable Treasury bill changes from
week to week, writers of Treasury bill calls cannot provide in advance for their
potential exercise settlement obligations by acquiring and holding the
underlying security. However, if the Series holds a long position in Treasury
bills with a principal amount corresponding to the contract size of the option,
it may be hedged from a risk standpoint. In addition, the Series will maintain
Treasury bills, maturing no later than those which would be deliverable in the
event of exercise of a call option it has written, in a segregated account with
its custodian so that it will be treated as being covered for margin purposes.
(iii) On GNMA Certificates. Options on GNMA certificates are not currently
traded on any national securities exchange, although the Securities and Exchange
Commission (the "Commission") has approved such options for trading on the
Chicago Board Options Exchange. Since the remaining principal balance of GNMA
certificates declines each month as mortgage payments are made, the Series as a
writer of a GNMA call may find that the GNMA certificates it holds no longer
have a sufficient remaining principal balance to satisfy its delivery obligation
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in the event of exercise of the call option it has written. Should this occur,
additional GNMA certificates from the same pool (if obtainable), or replacement
GNMA certificates, will have to be purchased in the cash market to meet delivery
obligations. The Series will either replace GNMA certificates representing cover
for call options it has written, or maintain in a segregated account with its
custodian cash or U.S. Government securities or other appropriate high grade
debt obligations having an aggregate value equal to the market value of the GNMA
certificates underlying the call options it has written.
The hours of trading for options on U.S. Government securities may not
conform to the hours during which the underlying securities are traded. To the
extent that the options markets close before the markets for the underlying
securities, significant price and rate movements can take place in the
underlying markets that cannot be reflected in the options markets.
Options are traded on exchanges on only a limited number of U.S. Government
securities and exchange regulations limit the maximum number of options which
may be written or purchased by a single investor or a group of investors acting
in concert. The Trust and other clients advised by the Manager may be deemed to
constitute a group for these purposes. In light of these limits, the Trust's
Board of Trustees (the "Board of Trustees" or the "Board") may determine at any
time to restrict or terminate the public offering of the Series' shares
(including through exchanges from the other Series).
Exchange markets in options on U.S. Government securities are a relatively
new and untested concept and it is impossible to predict the amount of trading
interest that may exist in such options. There can be no assurance that viable
exchange markets will develop or continue.
Futures Contracts on Government Securities
Currently futures contracts can be purchased and sold with respect to U.S.
Treasury bonds, U.S. Treasury notes and GNMA certificates on the Chicago Board
of Trade, and with respect to U.S. Treasury bills on the International Monetary
Market at the Chicago Mercantile Exchange.
Options on Futures Contracts
Currently, options can be purchased or sold with respect to futures contracts
on U.S. Treasury bonds on the Chicago Board of Trade.
The Series is required to deposit initial margin and maintenance margin with
respect to put and call options on futures contracts written by it pursuant to
brokers' requirements similar to those applicable to interest rate futures
contracts described above, and, in addition, net option premiums are included as
initial margin deposits. As with options on debt securities, the writer of an
option on a futures contract may terminate his position by selling or purchasing
an option of the same series. The ability to establish and close out positions
on such options is subject to the existence of a liquid secondary market. The
Series will not purchase options on futures contracts on any exchange unless and
until, in the Manager's opinion, the market for such options is sufficiently
liquid that the risks in connection with options on futures contracts are not
greater than the risks in connection with futures contracts.
Compared to the purchase or sale of futures contracts, the purchase of
options on futures contracts involves less potential risk to the Series because
the maximum amount at risk is the premium paid for the options (plus transaction
costs). However, there may be circumstances when the use of an option on a
futures contract would result in a loss to the Series when the use of a futures
contract would not, such as when there is no movement in the prices of debt
securities. Writing an option on a futures contract involves risks similar to
those arising in the sale of futures contracts, as described above.
In purchasing and selling futures contracts and in purchasing options on
futures contracts, the Series will comply with rules and interpretations of the
Commodity Futures Trading Commission ("CFTC") under which it is exempted from
regulation as a commodity pool operator. The CFTC regulations which exempt the
Series from regulation as a commodity pool operator require, among other things,
(i) that futures and related options be used solely for "bona fide hedging"
purposes, as defined in CFTC regulations or, alternatively, with respect to each
long futures or options position, the Series will ensure that the underlying
commodity value of such contract does not exceed the sum of segregated cash or
money market instruments, margin deposits on such contracts, cash proceeds from
investments due in 30 days and accrued profits on such contracts held by the
commodity broker, and (ii) that the Series not enter into futures and related
options for which the aggregate initial margin and premiums exceed 5% of the
fair market value of the Series' total assets. There is no other limitation on
the percentage of the Series' assets that may be invested in futures and related
options. The Internal Revenue Code's requirements for qualification as a
regulated investment company may limit the extent to which the Series can engage
in futures transactions.
Zweig Cash Fund
Zweig Cash Fund may invest in U.S. Treasury issues, such as bills,
certificates of indebtedness, notes and bonds, and issues of U.S. Government
agencies and instrumentalities which are established under the authority
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of an act of Congress, such as the Government National Mortgage Association,
Tennessee Valley Authority, Bank for Cooperatives, Farmers Home Administration,
Federal Home Loan Banks, Federal Intermediate Credit Banks, Federal Land Banks,
Export- Import Bank of the U.S., Federal Housing Administration ("FHA"), Federal
Home Loan Mortgage Corporation, U.S. Postal Service, Federal Financial Bank,
Federal National Mortgage Association and Student Loan Marketing Association.
Some of these securities, such as Federal Housing Administration debenture
obligations, are supported by the full faith and credit of the U.S. Treasury;
others, such as obligations of Federal Home Loan Banks, are supported by the
right of the issuer to borrow from the U.S. Treasury; others, such as those of
the Federal National Mortgage Association, are supported by the discretionary
authority of the U.S. Government to purchase the agency's obligations; and still
others, such as those of the Student Loan Marketing Association, are supported
only by the credit of the instrumentality. The Series will not invest in
obligations of the International Bank for Reconstruction and Development (the
"World Bank"), the Asian Development Bank, or the Inter-American Development
Bank, or in FHA or VA pooled mortgages.
INVESTMENT RESTRICTIONS
The investment restrictions set forth below are fundamental policies of each
Series (other than Zweig Cash Fund, the investment restrictions of which are set
forth separately below), which cannot be changed with respect to a Series
without the approval of the holders of a majority of the outstanding voting
securities of that Series as defined in the Investment Company Act of 1940, as
amended (the "1940 Act") as the lesser of: (1) 67% or more of a Series' voting
securities present at a meeting of shareholders, if the holders of more than 50%
of a Series' outstanding voting securities are present in person or by proxy, or
(2) more than 50% of a Series' outstanding voting securities. However, these
policies may be modified by the Trustees, in their discretion, without
shareholder approval, to the extent necessary to facilitate the implementation
of a master-feeder structure for any or all of the Series (i.e., a structure
under which a particular Series acts as a feeder and invests all of its assets
in a single pooled master fund with substantially the same investment objectives
and policies). Unless otherwise indicated, all percentage limitations apply to
each Series on an individual basis, and apply only at the time an investment is
made; a later increase or decrease in percentage resulting from changes in
values or net assets will not be deemed to be an investment that is contrary to
these restrictions. Pursuant to such restrictions and policies, except as stated
above with respect to a master-feeder structure, no Series may:
- Purchase the securities of issuers conducting their principal business
activities in the same industry if immediately after such purchase the value of
its investments in such industry would be 25% or more of the value of the total
assets of the Series (there is no such limitation with respect to obligations of
the U.S. Government, its agencies and instrumentalities or with respect to
investments in other investment companies complying with such policy);
- With respect to 75% of a Series' assets, purchase the securities of any
one issuer, if immediately after such purchase (i) more than 5% of the value of
the total assets of any Series would be invested in such issuer or (ii) the
Series would own more than 10% of the outstanding voting securities of such
issuer (such limitations do not apply to securities issued by the U.S.
Government, its agencies or instrumentalities or with respect to investments in
other investment companies complying with such policy);
- Invest in real estate or real estate mortgage loans, interests in oil, gas
and/or mineral exploration or development programs, provided that this
limitation shall not prohibit the purchase of securities issued by companies,
which invest in real estate or interests therein, including real estate
investment trusts;
- Make loans, except that this restriction shall not prohibit the purchase
and holding of a portion of an issue of publicly distributed debt securities,
the lending of portfolio securities (if the aggregate value of the loaned
securities does not at any time exceed one-third of the total assets of the
Series), or the entry into repurchase agreements;
- Issue "senior securities," except as permitted under the Investment Company
Act of 1940;
- Act as an underwriter, except that a Series may technically be deemed an
underwriter under the Securities Act of 1933, as amended ("1933 Act"), in a
registration under such Act necessary to resell certain restricted securities;
- Invest in commodities or commodity contracts, except as described in the
Prospectus or purchase or sell physical commodities unless acquired as a result
of ownership of securities, provided that this limitation shall not prevent a
Series from purchasing and selling options and futures contracts; and
- Zweig Strategy Fund, Zweig Appreciation Fund and Zweig Government Fund
may not borrow amounts in excess of 20% of its total assets taken at cost or at
market value, whichever is lower, and then only from banks as a temporary
measure for extraordinary or emergency purposes. If such borrowings exceed 5% of
the Series' total assets, the Series will make no further investments until such
borrowing is repaid. It is the current intention of the Series not to borrow
money in excess of 5% of their assets. Each such Series may pledge up to 10% of
8
<PAGE> 48
its total assets as security for such borrowing. For purposes of these
restrictions, the deposit of initial or maintenance margin in connection with
futures contracts will not be deemed to be a pledge of such Series' assets.
Zweig Managed Assets may not borrow money, unless from a bank, for temporary or
emergency purposes (not for leveraging or investment) in an amount not exceeding
1/3 of the value of the total assets of Zweig Managed Assets less liabilities
(other than borrowings). Any borrowings that come to exceed 1/3 of the value of
Zweig Managed Assets' total assets by reason of a decline in net assets will be
reduced within three days to the extent necessary to comply with the 1/3
limitations. Zweig Managed Assets does not intend to purchase any security while
borrowings representing more than 5% of its total assets are outstanding. This
5% limitation is not a fundamental policy of Zweig Managed Assets.
Non-Fundamental Restrictions
The investment restrictions set forth below are other investment policies of
each Series (except Zweig Cash Fund) that are non-fundamental that can be
changed by the Board of Trustees without a shareholder vote. Pursuant to such
restrictions and policies, no Series may:
- Borrow money, except from banks for temporary purposes in an amount up
to 10% of the value of the Series' total assets. The Series may only pledge its
assets in an amount up to 10% of the value of its total assets, and then only to
secure such borrowings. The Series will borrow money only to accommodate
requests for the redemption of shares to effect an orderly liquidation of
portfolio securities or to clear securities transactions and not for leveraging
purposes; accordingly, it is anticipated that any such borrowing will be repaid
before additional investments are made. The Series currently does not intend to
borrow money to an extent exceeding 5% of its total assets.
- Purchase securities of any other investment company, except (i) by
purchase in the open market involving only customary brokers' commissions, (ii)
in connection with a merger, consolidation, reorganization or acquisition of
assets, or (iii) as otherwise permitted by applicable law;
- Make investments in securities for the purpose of exercising control over
or management of the issuer;
- Participate on a joint or a joint and several basis in any trading account
in securities. (The "bunching" of orders of two or more Series, or one or more
Series and of other accounts under the investment management of the Manager or
its affiliates, for the sale or purchase of portfolio securities shall not be
considered participation in a joint securities trading account);
- Purchase securities on margin, except for such short-term credits as are
necessary for the clearance of transactions and initial and variation margin
payments in connection with transactions in futures contracts and options
contracts;
- Invest in securities of an issuer which, together with any predecessor, has
been in continuous operation for less than three years if, as a result, more
than 5% of the total assets of the Series would then be invested in such
securities;
- Sell securities short, except as described in the Prospectus and in
accordance with the following:
When a Series makes a short sale, the proceeds it receives will be
retained by the broker until the Series replaces the borrowed security. The
Series may, but will not necessarily, receive interest on such proceeds. In
order to deliver the security to the buyer, the Series must arrange through a
broker to borrow the security and, in so doing, the Series will become obligated
to replace the security borrowed at its market price at the time of replacement,
whatever that price may be. The Series may have to pay a premium to borrow the
security. The Series must pay to the broker any dividends or interest payable on
the security until the Series replaces the security;
A Series' obligation to replace the security borrowed in connection
with a short sale will be secured by collateral deposited with the broker,
consisting of cash or U.S. Government securities or other securities acceptable
to the broker. In addition, a Series will be required to deposit cash or U.S.
Government securities as collateral in a segregated account with a custodian in
an amount such that the value of both collateral deposits is at all times equal
to at least 100% of the current market value of the securities sold short. The
Series will receive the interest accruing on any U.S. Government securities held
as collateral in the segregated account with the custodian. The deposits do not
necessarily limit the Series' potential loss on a short sale, which may exceed
the entire amount of the collateral deposits;
If the price of the security sold short increases between the time of
the short sale and the time the Series replaces the borrowed security, the
Series will incur a loss, and if the price declines during this period, the
Series will realize a short-term capital gain. Any realized short-term capital
gain will be decreased, and any incurred loss
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<PAGE> 49
increased, by the amount of transaction costs and any premium, dividend or
interest which the Series may have to pay in connection with such short sale;
- Purchase the securities of an issuer if, to the Manager's knowledge, one or
more of the trustees or officers of the Trust or the officers of the Manager
individually own beneficially more than 1/2 of 1% of the outstanding securities
of such issuer and together such trustees and officers owning more than 1/2 of
1% own beneficially more than 5% of such securities;
- Purchase securities which are not readily marketable, such as certain
securities which are subject to legal or contractual restrictions on resale or
securities which are otherwise illiquid including "non-marketable" securities
and repurchase agreements having more than seven days remaining to maturity, if,
as a result, more than 15% of the Series' net assets would consist of such
securities;
- Invest more than 5% of its net assets in warrants valued at the lower of
cost or market (other than those that have been acquired in units or attached to
other securities). Included within that amount, no more than 2% of a Series' net
assets may be invested in warrants not traded on the NYSE or American Stock
Exchange. Zweig Government Fund and Zweig Cash Fund may not invest in warrants;
and
- A Series may lend its portfolio securities to a limited extent. Such loans
entitle the Series to cash collateral, and the extra cash thus obtained may be
invested in short-term, interest-bearing securities. The Series may make such
loans only to brokers or dealers who are members of the New York Stock Exchange
("NYSE"), or who have net capital, under the rules and regulations applicable to
such broker or dealer, of at least $10,000,000. Such loans will not be made
against less than 100% cash collateral, and the borrower will be required to
maintain the collateral at 100% of the market value (marked-to-market daily) of
the securities on loan. Loans will be made only if: (1) the Series retains the
right to obtain any dividend, interest or other distribution benefits on the
securities and any increase in their market value; and (2) the Series is able to
terminate the loan at any time (such right of termination will be exercised,
among other things, to obtain the return of the securities on loan for the
purpose of voting on any matters considered material by the Series' management).
It is the current intention of each Series not to engage in such activities to
an extent in excess of 5% of the value of the Series' total assets.
Restrictions Applicable to Zweig Cash Fund
Zweig Cash Fund concentrates its investments in U.S. Government securities
and issues of U.S. Government agencies and instrumentalities as set forth in its
investment objective and has adopted certain restrictions and fundamental
policies which cannot be changed without approval by the holders of a majority
of the outstanding voting securities of Zweig Cash Fund as defined in the 1940
Act as the lesser of: (1) 67% or more of the Fund's voting securities present at
a meeting of shareholders, if the holders of more than 50% of the Fund's
outstanding voting securities are present in person or by proxy, or (2) more
than 50% of the Fund's voting securities. However, these policies may also be
modified by the Trustees, in their discretion, without shareholder approval, to
the extent necessary to facilitate the implementation of a master-feeder
structure for Zweig Cash Fund. Pursuant to such restrictions and policies,
except as stated above with respect to a master-feeder structure, Zweig Cash
Fund may not:
- Purchase common stocks, preferred stocks, warrants, other equity
securities, state bonds, municipal bonds, industrial revenue bonds or corporate
bonds or debentures;
- Borrow money, except from banks for temporary purposes in an amount up to
10% of the value of its total assets. Zweig Cash Fund may only pledge its assets
in an amount up to 10% of the value of its total assets, and then only to secure
such borrowings. Zweig Cash Fund will borrow money only to accommodate requests
to redeem shares to effect an orderly liquidation of portfolio securities or to
clear securities transactions and not for leveraging purposes; accordingly, it
is anticipated that any such borrowing will be repaid before additional
investments are made. Zweig Cash Fund currently does not intend to borrow money
to an extent exceeding 5% of its total assets. Zweig Cash Fund may not issue any
securities which would be deemed to be "senior securities" in contravention of
the 1940 Act;
- With respect to 75% of the value of the Zweig Cash Fund's total assets,
invest more than 5% of the value of its total assets in the securities of any
one issuer, except securities issued or guaranteed as to the payment of
principal and interest by the U.S. Government, its agencies or
instrumentalities;
- Sell securities short;
- Write or purchase put or call options;
- Underwrite the securities of other issuers;
- Purchase or sell real estate, real estate investment trust securities,
commodities or oil and gas interests;
- Make loans to others, except that engaging in permissible activities
specified in the Prospectus under the heading "Risk Factors and Managing
Exposure to Market Risk" and in this Statement of Additional Information
10
<PAGE> 50
under the headings "Investment Objectives and Policies" and "Investment
Restrictions" shall not be viewed as loans for this purpose;
- Invest more than an aggregate of 10% of Zweig Cash Fund's net assets (taken
at current value) in repurchase agreements maturing in more than seven days and
other "illiquid investments" (such as non-negotiable certificates of deposit,
non-negotiable time deposits or other "non-marketable" securities);
- Invest in companies for the purpose of exercising control; or
- Invest in securities of other investment companies, except as they may be
acquired as part of a merger, consolidation or acquisition of assets.
The foregoing percentage restrictions apply at the time an investment is
made; a later increase or decrease in percentage may result from changes in
values or Zweig Cash Fund's net assets but will not be deemed to result in an
investment which is contrary to these restrictions.
PURCHASE AND REDEMPTION OF SHARES
Reference is made to the materials in the Prospectus under the headings
"Choosing Among Classes When Purchasing Shares," "How to Invest in the Zweig
Mutual Funds" and "How to Redeem Your Shares," which describe the methods of
purchase and redemption of Trust shares.
No stock certificates will be issued unless specifically requested in writing
by an investor. Instead, an account will be established for each investor and
all shares purchased or received, including those obtained through reinvestment
of distributions, will be registered on the books of the Trust and credited to
such account.
If the Board of Trustees should determine that it is advisable in the
interest of the remaining shareholders of a Series or Class to make payment
wholly or partly in cash, the Series may pay redemption proceeds in whole or in
part by a distribution in kind of securities from the portfolio of a Series, in
lieu of cash, in conformity with the applicable rules of the Commission. If
shares are redeemed in kind, the redeeming shareholder might incur brokerage
costs in converting the assets into cash. Where the Trust makes a redemption in
kind, such redemption will be made in readily marketable securities whose value
is easily ascertainable. The method of valuing portfolio securities for this
purpose is as described under "Net Asset Value and Taxes." The Trust has,
however, elected to be governed by Rule 18f-1 under the 1940 Act pursuant to
which it is obligated to redeem shares solely in cash up to the lesser of
$250,000 or 1% of its net assets during any 90-day period for any one
shareholder.
REINSTATEMENT PRIVILEGE
Reinvestment of redemption proceeds under the reinstatement privilege
described in the prospectus will be made at the net asset value next determined
after receipt of the reinstatement order.
If the shareholder has realized a gain on the redemption, the transaction is
taxable and reinvestment will not alter any capital gains tax payable. If there
has been a loss on the redemption, some or all of the loss may not be allowed as
a tax deduction depending on the amount reinvested.
For purposes of determining the amount of CDSC payable on any subsequent
redemptions, the purchase payment made through exercise of the reinvestment
privilege will be deemed to have been made at the time of the initial purchase
(rather than at the time the reinvestment was effected).
EXCHANGE PRIVILEGE
Participating securities dealers who have signed a Selling Agreement with the
Distributor may exchange their clients' shares by telephone.
The minimum value of any class of shares that may be exchanged into a Series
in which shares are not already held is $1,000 and no exchange out of a Series
(other than by a complete exchange of all the shares of that Series) may be made
if it would reduce the shareholder's interest in that Series to less than
$1,000.
The Trust reserves the right at any time to modify or terminate the exchange
privilege with respect to one or more Series or classes of shares, if the Board
of Trustees determines that continuing the privilege may be detrimental to
shareholders.
INVOLUNTARY REDEMPTIONS
As with voluntary redemptions, an involuntary redemption may result in the
payment of a tax by the shareholder. (See "Distributions and Taxes" in the
Prospectus.)
RETIREMENT PLANS
Shares may be purchased in connection with all types of tax-deferred
retirement plans. Shares of one or more Series may be purchased in a single
application establishing a single plan account.
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<PAGE> 51
The minimum initial investment in connection with tax-deferred retirement
plans is $250 and the minimum may be waived on payments made directly to the
Transfer Agent. There is no minimum for additional purchase payments for
tax-deferred retirement plans.
NET ASSET VALUE AND TAXES
For all Series except Zweig Cash Fund, the net asset value per share of each
class of shares is determined as of the close of regular trading on the NYSE, on
each day that the NYSE is open. The NYSE is closed on the following holidays (or
the weekdays on which these holidays are celebrated when they fall on a
weekend): New Year's Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas.
Shares are entitled to dividends as declared by the Board and, on liquidation
of a Series, are entitled to receive their share of the net assets of the
Series. Shareholders have no preemptive rights. The Trust's fiscal year ends on
December 31.
Securities listed on a U.S. exchange and NASDAQ are valued on the basis of
the last sale prior to the time of valuation. If there has been no sale since
the immediately preceding valuation, then the mean between the current bid and
asked prices is used. Quotations are taken from the market in which the security
is primarily traded. Over-the-counter securities for which market quotations
are readily available are valued at the mean between the current bid and asked
prices. Securities for which market quotations are not readily available are
valued at fair value as determined by the Manager pursuant to procedures adopted
by the Board of Trustees. Notwithstanding the above, bond and other fixed-income
securities may be valued on the basis of prices provided by an established
pricing service when the Board believes that such prices reflect market values.
Foreign securities are valued on the basis of quotations from the primary market
in which they are traded and are translated from local currency into U.S.
dollars using current exchange rates.
Zweig Cash Fund. The net asset value per share of each class of shares is
determined at 2:00 p.m. New York time and as of the close of regular trading on
the NYSE, on each day the NYSE is open. The Board of Trustees of the Trust (the
"Board" or "Board of Trustees") has determined that it is in the best interests
of Zweig Cash Fund and its shareholders to seek to maintain a stable net asset
value per share, and that the appropriate method for valuing portfolio
securities is the amortized cost method, provided that such method continues to
fairly reflect the market-based net asset value per share. The Board shall
continuously review this method of valuation and make changes that may be
necessary to assure that Zweig Cash Fund's instruments are valued at their fair
value as determined by the Board in good faith.
The Board has determined that Zweig Cash Fund will comply with the conditions
of Rule 2a-7 under the Act regarding the amortized cost method of valuing
portfolio securities. Under Rule 2a-7, the Board is obligated, as a particular
responsibility within the overall duty of care owed to the Series' shareholders,
to establish procedures reasonably designed, taking into account current market
conditions and the Series' investment objectives, to stabilize the net asset
value per share of the Series for purposes of distribution and redemption, at
$1.00 per share. These procedures include periodically monitoring, as the Board
deems appropriate, at such intervals as are reasonable in light of current
market conditions, the relationship between the net asset value per share based
upon the amortized cost method of valuation and the net asset value per share
based upon available indications of market value. The Board will consider what
steps should be taken, if any, in the event of a difference of more than 1/2 of
1% between the amortized cost value and the market value per share. The Board
will take such steps as it considers appropriate (e.g., redemption in kind,
selling portfolio instruments prior to maturity to realize capital gains or
losses, shortening the average portfolio maturity, withholding dividends, or
utilizing a net asset value per share determined by using market quotations) to
minimize any material dilution or other unfair results that might arise from
differences between the net asset value per share based upon the amortized cost
method of valuation and the net asset value per share based upon market value.
Rule 2a-7 requires that a dollar-weighted average portfolio maturity of not
more than 90 days, appropriate to the objective of maintaining a stable net
asset value of $1.00 per share, be maintained, and precludes the purchase of any
instrument with a remaining time to maturity of more than 397 calendar days.
However, the underlying securities used as collateral for repurchase agreements
are not subject to these restrictions, because a repurchase agreement is deemed
to have a maturity equal to the period remaining until the date on which the
repurchase of the underlying securities is deemed to occur. Should the
disposition of a portfolio security result in a dollar-weighted average
portfolio maturity of more than 90 days, Zweig Cash Fund will invest its
available cash in a manner that will reduce such average maturity to 90 days or
less as soon as reasonably practicable. Rule 2a-7 also requires Zweig Cash Fund
to limit its investments to instruments that the Board determines present
minimal credit risks and that have been given one of the two highest rating
categories by nationally recognized statistical
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rating organizations, or, in the case of instruments that are not so rated, are
of comparable quality as determined under procedures established by the Board.
It is the normal practice of Zweig Cash Fund to hold portfolio securities to
maturity and realize their par values, unless a prior sale or other disposition
thereof is mandated by redemption requirements or other extraordinary
circumstances. A debt security held to maturity is redeemable by its issuer at
its principal amount plus accrued interest. Under the amortized cost method of
valuation traditionally employed by institutions for valuation of money market
instruments, neither the amount of daily income nor the net asset value is
affected by any unrealized appreciation or depreciation of the portfolio. In
periods of declining interest rates, the indicated daily yield on shares of
Zweig Cash Fund (computed by dividing the annualized daily income on the Series'
portfolio by the net asset value computed as above) may tend to be higher than a
similar computation made by utilizing a method of valuation based upon market
prices and estimates. Zweig Cash Fund may, to a limited extent, engage in
short-term trading to attempt to take advantage of short-term market variations,
or may dispose of a portfolio security prior to its maturity if the Manager
believes such disposition advisable, or necessary to generate cash to satisfy
redemptions. In such cases, Zweig Cash Fund may realize a gain or loss.
Tax Status
Each Series of the Trust will be treated as a separate corporation for
purposes of the Internal Revenue Code of 1986, as amended (the "Code") (except
for purposes of the definitional requirements for regulated investment companies
under Code Section 851(a)). By paying dividends representing its investment
company taxable income within the time periods specified in the Code and by
meeting certain other requirements, each Series intends to qualify as a
regulated investment company under the Code. Since each Series will distribute
annually its investment company taxable income, net capital gains, and capital
gain net income, it will not be subject to income or excise taxes otherwise
applicable to undistributed income of a regulated investment company. If a
Series were to fail to distribute all its income and gains, it would be subject
to income tax and, in certain circumstances, a 4% excise tax.
Taxation of Shareholders
Dividends from net investment income and distributions from short-term
capital gains are taxable to shareholders as ordinary income. Distributions from
net capital gains that are properly designated as capital gains dividends are
taxable to shareholders as long-term capital gains regardless of the length of
time the shares in respect of which such distributions are received have been
held.
Dividends from Zweig Cash Fund and the Zweig Government Fund are not expected
to qualify for the 70% dividends received deduction available to corporate
shareholders. Distributions by other Series out of their dividend income from
domestic corporations may qualify in whole or in part for the deduction if the
distributing Series does not sell the stock in respect of which it received such
dividends before satisfying a 46-day holding period requirement (91 days for
certain preferred stock), and the shareholder holds his Trust shares in the
distributing Series for at least 46 days. For this purpose, the distributing
Series holding period in such stock may be reduced for periods during which the
Series reduces its risk of loss from holding the stock (e.g., by entering into
option contracts).
Investors who purchase shares shortly before the record date for a
distribution will pay a share price that includes the value of the anticipated
distribution and will be taxed on the distribution when it is received even
though with respect to them the distribution represents in effect a return of a
portion of their purchase price. Any loss realized on a sale or exchange of
shares will be disallowed if the shares disposed of are replaced within a period
of 61 days beginning 30 days before the shares are sold or exchanged. If
disallowed, the loss will be reflected in an adjustment to the basis of the
shares acquired.
Individuals and certain other non-exempt payees will be subject to a 31%
backup Federal withholding tax on dividends and other distributions from the
Series, as well as on the proceeds of redemptions of Series other than Zweig
Cash Fund, if the affected Series is not provided with the shareholder's correct
taxpayer identification number and certification that the shareholder is not
subject to such backup withholding, or if the Internal Revenue Service notifies
such Series that the shareholder has failed to report proper interest or
dividends. For most individuals, the taxpayer identification number is the
taxpayer's social security number.
Tax Treatment of Certain Transactions
In general, and as explained more fully below, if the Trust enters into
combinations of investment positions by virtue of which its risk of loss from
holding an investment position is reduced on account of one (or more) other
positions (i) losses realized on one position may be deferred to the extent of
any unrecognized gain on another position and (ii) long-term capital gains or
short-term capital losses may be recharacterized, respectively, as short-term
gains and long-term losses. Investments in foreign currency denominated
instruments or securities may generate, in whole or in part, ordinary income or
loss. The Federal income tax treatment of gains and losses
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realized from transactions involving options on stock or securities entered into
by a Series will be as follows: Gain or loss from a closing transaction with
respect to options written by a Series, or gain from the lapse of any such
option, will be treated as short-term capital gain or loss. Gain or loss from
the sale of put and call options that a Series purchases, and loss attributable
to the lapse of such options, will be treated as capital gain or loss. The
capital gain or loss will be long- or short-term depending on whether or not the
affected option has been held for more than one year. For this purpose, an
unexercised option will be deemed to have been sold on the date it expired. It
should be noted, however, that if a put is acquired at a time when the
underlying stock or security has been held for not more than one year, or if
shares of the underlying stock or security are acquired while such put is held,
any gain on the subsequent exercise, sale or expiration of the put will
generally be short-term gain.
Any regulated futures contract or listed non-equity option held by a Series
at the close of its taxable year will be treated as sold for its fair market
value on the last business day of such taxable year. Sixty percent of any gain
or loss with respect to such deemed sales, as well as the gain or loss from the
termination during the taxable year of the Series' obligation (or rights) with
respect to such contracts by offsetting, by taking or making delivery, by
exercise or being exercised, by assignment or being assigned, by lapse, or
otherwise, will be treated as long-term capital gain or loss and the remaining
forty percent will be treated as short term capital gain or loss. A Series may
make certain elections that modify the above tax treatment with respect to
regulated futures contracts or listed non-equity options that are part of a
"mixed straddle," as defined by the Code.
The Trust may invest in certain investments that may cause it to realize
income prior to the receipt of cash distributions, including securities bearing
original issue discount. The level of such investments is not expected to affect
a Series' ability to distribute adequate income to qualify as a regulated
investment company.
Treasury Regulations pursuant to Section 1092 provide for the coordination of
the "wash sale" rules and the "short sale" rules with the "straddle rules."
Generally, the "wash sale" rules prevent the recognition of loss where a
position is sold at a loss and a substantially identical position is acquired
within a prescribed period. The "short sale" rules generally prevent the use of
short sales to convert short-term capital gain to long-term capital gain and
long-term capital loss to short-term capital loss.
In addition to the Federal income tax consequences described above relating
to an investment in the Trust, there may be other Federal, state, local or
foreign tax considerations that depend upon the circumstances of each particular
investor. Prospective shareholders are therefore urged to consult their tax
advisers with respect to the effects of this investment on their specific
situations.
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TRUSTEES AND OFFICERS OF THE TRUST
The trustees and officers of the Trust and their business affiliations for
the past five years are as follows:
<TABLE>
<CAPTION>
Name and Address Position With the Trust Principal Occupation During Past 5 Years
- ---------------- ----------------------- ----------------------------------------
<S> <C> <C>
CLAIRE B. BENENSON Trustee Consultant on Financial Conferences; Director of The Burnham
870 U.N. Plaza Fund Inc. Former Director of Financial Conferences and Chairman,
New York, NY 10017 Department of Business and Financial Affairs, The New School for
Social Research, President of the Money Marketeers of New York
University and Trustee of Simms Global Fund and Former Director
of Zweig Tax-Free Fund Inc. and Zweig Cash Fund Inc.
RICHARD E. DEEMS Trustee Director and Member of the Executive and Finance Committees of
959 Eighth Avenue The Hearst Corporation; Publishing Consultant to the Hearst
New York, NY 10019 Magazines Division of The Hearst Corporation; Director of The
Burnham Fund Inc., ISS International Service System, Inc. and
Oriole Homes Corporation. Former Director of Zweig Tax-Free
Fund Inc. and Zweig Cash Fund Inc.
S. LELAND DILL Trustee Retired; Director of Coutts & Co. Trust Holdings Limited, Coutts
5070 North Ocean Dr. & Co. Group, Coutts & Co. (USA), Trustee of BT Portfolios and BT
Singer Island, FL 33404 Investment Funds. Former partner of Peat Marwick Mitchell & Co.
and Director of Zweig Tax-Free Fund Inc., Zweig Cash Fund Inc.
and Vintners International Company, Inc.
EUGENE J. GLASER* Chairman, President of the Manager and President and Director of the
5 Hanover Square Chief Executive Distributor; Director of The Zweig Fund, Inc. Former Director
New York, NY 10004 Officer and Trustee of Zweig Tax-Free Fund Inc. and Zweig Cash Fund Inc.
DONALD B. ROMANS Trustee President of Romans & Company, Private Investors and Financial
233 East Wacker Dr. Consultants; Director of the Burnham Fund Inc. Former
Chicago, IL 60601 Consultant to and Executive Vice President and Chief Financial
Officer of Bally Manufacturing Corporation, and Director of
Zweig Tax-Free Fund Inc. and Zweig Cash Fund Inc.
</TABLE>
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<PAGE> 55
<TABLE>
<CAPTION>
Name and Address Position With the Trust Principal Occupation During Past 5 Years
- ---------------- ----------------------- ----------------------------------------
<S> <C> <C>
MARTIN E. ZWEIG President Chairman of the Manager; Chairman of the Board and President of
900 Third Avenue The Zweig Total Return Fund, Inc. and The Zweig Fund, Inc.;
New York, NY 10022 President and Director of Zweig Total Return Advisors, Inc.,
Zweig Advisors Inc., Zweig-DiMenna International Managers, Inc.,
and Zweig Securities Advisory Service Inc.; Co-Chairman of
Research of Avatar Investors Associates Corp.; Managing Director
of the Managing General Partner of Zweig-DiMenna Partners, L.P.
and Zweig-DiMenna Special Opportunities, L.P.; President and
Director of Gotham Advisors, Inc.and Euclid Advisors, Inc.;
Member of the Undergraduate Executive Board of the Wharton
School, University of Pennsylvania. Former President of Zweig
Tax-Free Fund Inc. and Zweig Cash Fund Inc.; General Partner of
Zweig Katzen Investors, L.P.; President and Director of
Davis/Zweig Futures, Inc., and Director of Zweig/Avatar Capital
Management, Inc.
DAVID KATZEN Senior Vice President Senior Vice President of the Manager; Vice President of Zweig
900 Third Avenue Advisors, Inc.; Executive Vice President of Euclid Advisors,
New York, NY 10022 Inc.; Director of Quantitative Research at Avatar Investors
Associates Corp. Former Vice President of Zweig Fund Inc.
and ZZK Management, Inc.; Director of Equity Research for
Zweig Total Return Advisors, Inc.; and Research Director of
Zweig Advisors, Inc.
BARRY MANDINACH First Vice President Executive Vice President of the Distributor and Senior Vice
5 Hanover Square President of the Manager.
New York, NY 10004
CARLTON NEEL First Vice President First Vice President of the Manager. Former Vice President of
900 Third Avenue J.P. Morgan & Co., Inc.
New York, NY 10022
ALFRED J. RATCLIFFE First Vice President, First Vice President of the Manager. Former Vice President of
5 Hanover Square Treasurer, Principal The Bank of New York.
New York, NY 10004 Accounting Officer
and Assistant Secretary
CHARLES I. LEONE First Vice President Chief Financial Officer and First Vice President of the Manager
5 Hanover Square and Assistant Secretary and the Distributor. Former Assistant Treasurer of Zweig Cash
New York, NY 10004 Fund Inc.
</TABLE>
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<PAGE> 56
<TABLE>
<CAPTION>
Name and Address Position With the Trust Principal Occupation During Past 5 Years
- ---------------- ----------------------- ----------------------------------------
<S> <C> <C>
ANNEMARIE GILLY Vice President First Vice President of the Manager and the Distributor. Former
5 Hanover Square Vice President of Concord Financial Group and Executive Vice
New York, NY 10004 President and Chief Operating Officer of The Gabelli Equity
Trust, Inc.
JEFFREY LAZAR Vice President Vice President and Treasurer of The Zweig Fund, Inc. and The
900 Third Avenue Zweig Total Return Fund, Inc.; Vice President, Treasurer and
New York, NY 10022 Secretary of Zweig Advisors, Inc. and Zweig Total Return
Advisors, Inc.
BETH ABRAHAM Assistant Vice Assistant Vice President of the Manager. Former self-employed
900 Third Avenue President consultant to the mutual fund industry and Senior Compliance
New York, NY 10022 Examiner in the New York Regional Office of the U.S. Securities
and Exchange Commission.
TOM DISBROW Assistant Treasurer Assistant Vice President of the Manager
5 Hanover Square
New York, NY 10004
MARC BALTUCH Secretary First Vice President of the Manager; First Vice President,
900 Third Avenue Director, Chief Compliance Officer and Secretary of the
New York, NY 10022 Distributor.; Director and Vice President of Watermark
Securities, Inc.; Assistant Secretary of Gotham Advisors, Inc.,
Zweig Total Return Advisors, Inc. and Zweig Advisors, Inc.
Former Chief of the Branch of Investment Adviser Examiners and
Chief Regional Securities Examiner in the New York Regional
Office of the Securities and Exchange Commission and Secretary
of Zweig Cash Fund Inc. and Zweig Tax-Free Fund Inc.
</TABLE>
*Designates a Trustee who is an "interested person" of the Trust within the
meaning of the 1940 Act.
Set forth below is a table showing the compensation of the Board of Trustees:
<TABLE>
<CAPTION>
Total Compensation
Aggregate Compensation from the Trust Paid to
Name of Person, Position from the Trust the Trustees
<S> <C> <C>
Claire B. Benenson, Trustee $13,250 $13,250
Richard E. Deems, Trustee 13,250 13,250
S. Leland Dill, Trustee 13,250 13,250
Eugene J. Glaser, Chairman, Chief 0 0
Executive Officer and Trustee
Donald B. Romans, Trustee 13,250 13,250
</TABLE>
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<PAGE> 57
Those trustees and officers of the Trust who are affiliated with the
Distributor or the Manager are not separately compensated for their services as
trustees or officers of the Trust in-person. The Trust pays each of its
"disinterested" trustees a fee of $5,000 per year, plus $1,500 per meeting
attended ($500 per phone meeting) and reimburses their expenses for attendance
at meetings, all of which is prorated on the basis of the assets of each Series.
In addition, each such trustee receives a fee of $1,000 per year from each
Series. For the fiscal year ended December 31, 1995, the fees and expenses of
disinterested trustees, as a group, were $59,397. As of December 31, 1995,
except for Dr. Zweig, the trustees and officers of the Trust, as a group, owned
less than 1% of any Series of the Trust.
Trustees may be removed from office at any meeting of shareholders by a vote
of two-thirds of the outstanding shares of the Trust. Except as set forth above,
the trustees shall continue to hold office and may appoint their successors.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of April 26, 1996, to the Trust's knowledge, except for Dr. Martin E.
Zweig (900 Third Avenue, New York, NY 10022) and members of his immediate
family, who own 5.02% of Zweig Cash Fund Class M Shares (of which he has shared
voting and investment power as to 1.51%, and disclaims beneficial ownership as
to 0.15%), Gotham Advisors Inc. (900 Third Avenue, 30th Floor, New York, NY
10022-4728), who owns 7.33% of Zweig Cash Fund Class M Shares (sole dispositive
and voting power), Prudential Securities f/b/o Roger Markle (100 Gold Street,
New York, NY 10292-0001), who owns 5.15% of Zweig Cash Fund Class A Shares (sole
dispositive and voting power), State Street Bank and Trust Company f/b/o Edwin
H. Updike (P.O. Box 789, 125 Hart Road, Pisgah Forest, North Carolina
28768-0789), who owns 7.38% of Zweig Cash Fund Class A Shares (sole dispositive
and voting power) and Prudential Securities f/b/o Stanley E. Coleby and Sharon
E. Coleby (100 Gold Street, New York, NY 10292-001), who own 7.69% of Zweig Cash
Fund Class C Shares (sole dispositive and voting power), no person is the
beneficial owner of 5% or more of the outstanding voting shares of any class of
shares of any Series of the Trust.
INVESTMENT MANAGEMENT AND OTHER SERVICES
MANAGER
The Trust and the Manager entered into an amended management agreement, dated
April 29, 1994, which the Board had previously approved on December 14, 1993
(the "Management Agreement"), pursuant to which the Manager reviews the
portfolio of securities and investments of each Series, and advises and assists
each Series with respect to the selection, acquisition, holding or disposal of
securities and makes recommendations with respect to other aspects and affairs
of each Series. The Manager also furnishes the Trust with certain administrative
services, office space and equipment, and permits its officers and employees who
may be elected trustees or officers of the Trust to serve in the capacities to
which they are elected.
The Management Agreement will continue in effect from year to year if
specifically approved annually by a majority of the Board of Trustees who are
not parties to such contract or "interested persons" of any such party. The
Management Agreement may be terminated without penalty by either of the parties
on 60 days' written notice and must terminate in the event of its assignment.
The continuance of the Management Agreement was last approved by the Trustees on
June 22, 1995.
The Management Agreement provides that the Manager is liable only for its
acts or omissions caused by its willful misfeasance, bad faith, or gross
negligence in the performance of its duties or reckless disregard of its
obligations under the Management Agreement. The Management Agreement permits the
Manager to render services to others and to engage in other activities.
The Trust pays the Manager for its services pursuant to the Management
Agreement a monthly fee at the annual rate of 0.50% of the average daily net
assets of Zweig Cash Fund, 0.60% of the average daily net assets of the Zweig
Government Fund, 0.75% of the average daily net assets of Zweig Strategy Fund
and 1.00% of the average daily net assets of Zweig Appreciation Fund and Zweig
Managed Assets. For the fiscal year ended December 31, 1995, the management fees
paid to the Manager by each Series were as follows: Zweig Strategy Fund:
$6,702,163; Zweig Appreciation Fund: $4,141,179; Zweig Government Fund:
$393,803; Zweig Managed Assets: $6,994,435; Zweig Cash Fund: $358,589. For the
years ended December 31, 1994 and 1993, the fees paid to the Manager for each
Series were as follows: Zweig Strategy Fund: $5,172,202 and $3,753,277; Zweig
Appreciation Fund: $3,612,972 and $2,928,819; Zweig Government Fund: $460,359
and $474,955; Zweig Managed Assets: $7,161,203 and $2,744,103; and Zweig Cash
Fund: $485,384 and $0.
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<PAGE> 58
The fee of a Series will be reduced, or the Manager will reimburse the Series
(up to the amount of its fee), by an amount necessary to prevent the total
expenses of the Series (excluding taxes, interest, brokerage commissions or
transaction costs, certain distribution fees, certain custodial expenses and
extraordinary expenses) from exceeding limits applicable to the Series in any
state in which its shares then are qualified for sale. Currently, the most
restrictive expense limitation is 2.5% of the first $30 million of a Series' net
assets, 2% of the next $70 million of a Series' net assets and 1.5% of the
remaining net assets. The expense limitation provision applies separately to
each Series. From time to time, the Manager may make certain commitments which
are more restrictive than any state-imposed limitation. In such a case, the
Manager will reserve the right to discontinue any such commitment. These expense
reimbursements, if any, are estimated, reconciled and paid on a monthly basis to
the Trust.
The Manager has voluntarily undertaken to limit the expenses of Zweig Cash
Fund (exclusive of taxes, interest, brokerage commissions, Rule 12b-1
fees and extraordinary expenses) to 0.35% of its average net assets effective
November 9, 1995. During the years ended December 31, 1995 and 1994, the
manager's reimbursements to Zweig Cash Fund aggregated $94,925 and $161,853,
respectively, under the prior voluntary expense limitations. The Manager
reserves the right to discontinue this policy at any time. In addition, the
Manager has voluntarily undertaken to limit the expenses of Zweig Government
Fund (exclusive of taxes, interest, brokerage commissions, 12b-1 fees and
extraordinary expenses) to 0.75% of its average net assets effective May 1,
1996. The Manager reserves the right to discontinue this policy at any time
after December 31, 1996.
The Manager may draw upon the resources of the Distributor and its qualified
affiliates in rendering its services to the Trust. The Distributor or its
affiliates may provide the Manager (without charge to the Trust) with investment
information and recommendations that may serve as the principal basis for
investment decisions with respect to certain Series of the Trust.
The Manager has adopted a Code of Ethics ("the Code") that requires all
persons subject to the Code to pre-clear any proposed non-exempt personal
securities transaction. Permission for any proposed transaction will be granted
provided it is determined that such would not negatively impact activity in
client accounts. In the event that a client of Manager's affiliates also owns
such security, or it is proposed that such client purchase such security,
available investments or opportunities for sales will be allocated in a manner
deemed to be equitable by the Manager.
DISTRIBUTOR
Pursuant to its Distribution Agreement with the Trust (the "Distribution
Agreement"), Zweig Securities Corp. acts as distributor of the Trust's shares
and receives, with respect to Class A Shares, a front-end sales commission, as
described in the Prospectus under "Choosing Among Classes of Shares;" and a 1%
CDSC which may apply on redemptions within 18 months of purchases not subject to
a sales charge; with respect to Class B Shares, the Distributor receives a
declining CDSC ranging from 5% to 1% of the gross proceeds of a redemption of
shares held for less than six years; and, with respect to Class C Shares, the
Distributor receives a CDSC of 1.25% of the gross proceeds of a redemption of
shares held for less than one year. The Distributor also is compensated under
the Rule 12b-1 distribution plans as described more fully below. The continuance
and amendment of the Distribution Agreement was last approved by the Trustees on
June 22, 1995.
The Distributor may reallow amounts in excess of the sales concessions listed
in the Prospectus, and pay certain costs, to dealers who provide additional
services and special assistance in selling shares of the Trust. These additional
services and special assistance vary significantly from dealer to dealer,
resulting in payments that currently range from 8 to 15 basis points.
DISTRIBUTION PLANS
The Trust has adopted a distribution plan for each class of shares of each
Series (i.e., a plan for the Class A and C Shares, a plan for the Class B
Shares, and a plan for the Class M Shares; collectively the "Plans") in
accordance with Rule 12b-1 under the Act, to compensate the Distributor for the
services it provides and for the expenses it bears under the Distribution
Agreement. Each class of shares of each Series (other than Class M Shares of
Zweig Cash Fund) pay a service fee at a rate of 0.25% per annum of the daily
average net assets of such class of the Series and a distribution fee based on
average daily net assets at the following rates: for Class A Shares of all
Series -0.05% per annum; for Class B Shares of all Series - 0.75% per annum; for
Class C Shares - 0.75% per annum for Zweig Appreciation Fund, Zweig Strategy
Fund, Zweig Managed Assets, 0.50% per annum for Zweig Government Fund and 0.05%
per annum for Zweig Cash Fund.
For the fiscal year ended December 31, 1995, $305,671 in CDSCs was collected
on Class C Shares. The CDSC will be waived under certain circumstances described
in the Prospectus. In addition, the CDSC will be waived on redemptions of shares
by employee benefit plans for the benefit of employees of the Distributor and
its affiliates.
The Rule 12b-1 Plan for the Class M Shares issued by Zweig Cash Fund (the
"Class M Plan") provides that the Distributor may enter into Service Agreements
with securities dealers, financial institutions, banks, and other industry
professionals for distribution, promotion and administration of and/or servicing
investors in Class M Shares.
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<PAGE> 59
Such service organizations are paid directly or indirectly by Zweig Cash Fund
and the Manager. Service payments under the Class M Plan are paid in equal
amounts by Zweig Cash Fund and the Manager, or Zweig Cash Fund and the Manager
reimburse the Distributor equally for service payments to a service
organization, in an amount not exceeding 0.30% per annum of the average daily
net asset value of the Class M Shares. The Class M Plan also provides that Zweig
Cash Fund will pay the costs and expenses connected with the printing and
distribution of Zweig Cash Fund's prospectuses, shareholder reports, and any
promotional material for other than current Fund shareholders, in an amount not
to exceed $100,000 per annum.
A report of the amounts expended under the Plans must be made to the Board of
Trustees and reviewed by the Board at least quarterly. In addition, the Plans
provide that they may not be amended to increase materially the costs which the
Trust may bear for distribution pursuant to the Plans without shareholder
approval and that other material
amendments to the Plans must be approved by a majority of the Board, including a
majority of the Board who are neither "interested persons" of the Trust (as
defined in the 1940 Act) nor have any direct or indirect financial interest in
the operation of the Plans (the "Qualified Trustees"), by vote cast in person at
a meeting called for the purpose of considering such amendments.
The Plans are subject to annual approval by a majority of the Board of
Trustees, including a majority of the Qualified Trustees, by vote cast in person
at a meeting called for the purpose of voting on the Plans. The Plans are
terminable at any time by vote of a majority of the Qualified Trustees or, with
respect to any Class or Series, by vote of a majority of the shares of such
Class or Series. Pursuant to the Plans, any new trustees who are not "interested
persons" must be nominated by existing trustees who are not "interested
persons."
If the Plans are terminated (or not renewed) with respect to one or more
Classes or Series, they may continue in effect with respect to any Class or
Series as to which they have not been terminated (or have not been renewed).
For the fiscal year ended December 31, 1995, the Class A Shares of the Zweig
Strategy Fund, Zweig Appreciation Fund, Zweig Government Fund, Zweig Managed
Assets and Zweig Cash Fund paid a total of $1,466,005, $745,906, $134,454,
$453,720 and $12,009, pursuant to the Trust's distribution plan, in connection
with expenses incurred by the Distributor for compensation to broker/dealers
($2,312,225), marketing ($1,302,647) and firm overhead allocation ($40,732).
For the fiscal year ended December 31, 1995, the Class C Shares of the Zweig
Strategy Fund, Zweig Appreciation Fund, Zweig Government Fund, Zweig Managed
Assets and Zweig Cash Fund paid a total of $4,049,535, $1,654,829, $156,113,
$5,482,036 and $15,103, respectively, pursuant to the Trust's distribution plan,
in connection with expenses incurred by the Distributor for compensation to
broker/dealers ($9,882,936), marketing ($3,696,716) and firm overhead allocation
($108,471).
For the fiscal year ended December 31, 1995, the Class M Shares of the Zweig
Cash Fund and the Distributor each paid $44,714 pursuant to the Trust's Class M
distribution and service plan to service organizations.
Because all amounts paid pursuant to the Plans are paid to the Distributor,
the Distributor and its officers, directors and employees, all may be deemed to
have a direct or indirect financial interest in the operation of the Plans. None
of the Trustees who is not an interested person of the Trust has a direct or
indirect financial interest in the operation of the Plans.
Benefits from the Plans may accrue to the Trust and its shareholders from the
growth in assets due to sales of shares to the public pursuant to the Plans.
Increases in a Series' net assets from sales pursuant to its Plan may benefit
shareholders by reducing per share expenses, permitting increased investment
flexibility and diversification of the Series' assets, and facilitating
economies of scale (e.g., block purchases) in the Series' securities
transactions. Under their terms, the Plans will continue from year to year,
provided that such continuance is approved annually by a vote of the Trustees in
the manner described above.
The continuance of the Plan for Class A , Class C and Class M Shares and the
adoption of a Plan for Class B Shares was approved by the Board of Trustees,
including a majority of the Qualified Trustees, at a meeting held on June 22,
1995. Prior to approving the continuance of the Plan and the adoption of the
Class B Plan, the Board requested and received from the Distributor all the
information which it deemed necessary to arrive at an informed determination as
to such continuance and adoption of the Plans. In making its determination to
continue the Plan and adopt the Class B Plan, the Board considered, among other
factors: (1) the Trust's experience under the Plan's and the previous Rule 12b-1
Plan's of the Trust, and whether such experience indicates that the Plans would
operate as anticipated; (2) the benefits the Trust had obtained under the Plans
and would be likely to obtain under the Plans; (3) what services would be
provided under the Plans by the Distributor to the Trust and its shareholders;
and (4) the reasonableness of the fees to be paid to the Distributor for its
services under the Plans. Based upon their review, the Board, including each of
the Qualified Trustees, determined that the continuance of the Plans and the
adoption of the Class B Plan would be in the best interest of the Trust, and
that there was a
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<PAGE> 60
reasonable likelihood that the Plans would benefit the Trust and its
shareholders. In the Board's quarterly review of the Plans, they will consider
their continued appropriateness and the level of compensation provided therein.
The Board of Trustees has the right to terminate the Rule 12b-1 Plan for the
Class B Shares, and in the event of such termination, no further payments would
be made thereunder. However, in the event the Board of Trustees were to
terminate the Rule 12b-1 Plan for the Class B Shares for any Series, the Trust
may not thereafter adopt a new Rule 12b-1 Plan for a class of that Series
having, in the good faith determination of the Board of Trustees, substantially
similar economic characteristics to the Class B Shares. Termination of the Rule
12b-1 Plan for the Class B Shares or the Distribution Agreement does not affect
the obligation of the Class B shareholders to pay CDSCs. The Distributor has
sold its right to receive certain payments under the Distribution Agreement to a
financial institution in order to finance the distribution of the Class B
Shares.
The Board of Trustees has also adopted a Rule 18f-3 Multi-Class Share Plan
permitting the issuance of shares in multiple classes.
The Trust has acknowledged that it has obtained its name by consent of Dr.
Martin E. Zweig and agreed that if (i) the Manager should cease to be the
Trust's investment manager or (ii) if Dr. Zweig should no longer be affiliated
with the Manager, the Trust, upon request of Zweig Securities Corp. or Dr.
Zweig, shall submit to the Trustees for their vote a proposal to delete the word
"Zweig" from its name and cease to use the name "Zweig Series Trust" or any
component or combination thereof or any name deceptively similar thereto, and
indicate on all letterheads and other promotional material that the Manager is
no longer the Trust's investment manager or Dr. Zweig is no longer affiliated
with the Manager, as the case may be. The Trust has agreed that Dr. Zweig or
Zweig Securities Corp. or any of its successors or assigns may use or permit the
use of the word "Zweig," alone or with any other words, for, by or in connection
with any other entity or business, other than the Trust and its business,
whether or not the same directly or indirectly competes or conflicts with the
Trust or its business in any manner.
CUSTODIAN, FUND ACCOUNTING AGENT, TRANSFER AGENT AND DIVIDEND PAYING AGENT
The Bank of New York, 48 Wall Street, New York, New York 10286 serves as
custodian and fund accounting agent, and State Street Bank and Trust Company,
P.O. Box 8505, Boston, Massachusetts 02260-8505, serves as the transfer agent
and dividend paying agent for the Trust.
For the convenience of shareholders, the Transfer Agent maintains in book
account form the records of shares owned by Trust shareholders. Shareholders may
request in writing that the Transfer Agent issue to them certificates
representing their ownership of Trust shares.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., 1301 Avenue of the Americas, New York, New York
10019, serves as independent accountants for the Trust. In addition to reporting
annually on the financial statements of the Trust, the Trust's accountants also
review certain filings of the Trust with the Securities and Exchange Commission.
COUNSEL
Shearman & Sterling, 599 Lexington Avenue, New York, New York 10022, is
counsel to the Trust. The firm also acts as counsel to the Manager and the
Distributor.
PORTFOLIO TRANSACTIONS AND BROKERAGE
All Series Other Than Zweig Cash Fund
Officers and Trustees of the Trust and officers of the Manager who are also
officers or directors of the Distributor or its affiliates receive indirect
benefits from the Trust as a result of its usual and customary brokerage
commissions which the Distributor or its affiliates may receive for acting as
broker to the Trust in the purchase and sale of portfolio securities. The
Management Agreement does not provide for a reduction of the advisory fee by any
portion of the brokerage fees generated by portfolio transactions of the Trust
which the Distributor may receive. For the year ended December 31, 1995, Zweig
Strategy Fund, Zweig Appreciation Fund, Zweig Managed Assets and the Zweig
Government Fund paid total brokerage commissions of $1,335,463, $819,613,
$1,980,954 and $0, respectively. The amount paid by Zweig Managed Assets for the
year ended December 31, 1994 and for the period February 8, 1993 (commencement
of operations) to December 31, 1993 was $1,232,085 and $423,239, respectively.
For the years ended December 31, 1994 and 1993, respectively, Zweig Strategy
Fund, Zweig Appreciation Fund, and the Zweig Government Fund paid total
brokerage commissions of $525,987, $782,620 and $7,938, respectively, and
$2,341,216, $495,058 and $20,007, respectively.
For the year ended December 31, 1995, the Trust paid Zweig Securities Corp.
$468,501 in brokerage commissions or 11.33% of total brokerage commissions for
the year ended December 31, 1995. For the years
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<PAGE> 61
ended December 31, 1994 and 1993, $431,060 and $288,556, respectively, was paid
to Zweig Securities Corp. Allocation of transactions, including their frequency,
to various dealers is determined by the Manager in its best judgment and in a
manner deemed fair and reasonable to shareholders. The primary consideration is
prompt and efficient execution of orders in an effective manner at the most
favorable price. Subject to this consideration, dealers who provide supplemental
investment research, statistical or other services to the Manager may receive
orders for transactions by the Trust. Information so received will enable the
Manager to supplement its own research and analysis with the views and
information of other securities firms. Such information may be useful and of
value to the Manager and its affiliates in servicing other clients as well as
the Trust; in addition, information obtained by the Manager and its affiliates
in servicing other clients may be useful and of value to the Manager in
servicing the Trust. No principal transactions are effected with Zweig
Securities Corp. or any of its affiliated companies.
The Trust may from time to time allocate brokerage commissions to firms that
furnish research and statistical information to the Manager. The supplementary
research supplied by such firms is useful in varying degrees and is of
indeterminable value. Such research may, among other things, include advice
regarding economic factors and trends, advice as to occasional transactions in
specific securities and similar information relating to securities. No formula
has been established for the allocation of business to such brokers.
Consideration may be given to research provided and payment may be made of a fee
higher than that charged by another broker-dealer which does not furnish
research services or which furnishes research services deemed to be of lesser
value, so long as the criteria of Section 28(e) of the Securities Exchange Act
of 1934, as amended (the "1934 Act") are met. Section 28(e) of the 1934 Act
specifies that a person with investment discretion shall not be "deemed to have
acted unlawfully or to have breached a fiduciary duty" solely because such
person has caused the account to pay a higher commission than the lowest
available under certain circumstances. To obtain the benefit of Section 28(e),
the person so exercising investment discretion must make a good faith
determination that the commissions paid are reasonable in relation to the value
of the brokerage and research services provided viewed in terms of either that
particular transaction or his overall responsibilities with respect to the
accounts as to which he exercises investment discretion.
Currently, it is not possible to determine the extent to which commissions
that reflect an element of value for research services might exceed commissions
that would be payable for execution series alone, nor generally can the value of
research services be measured. Research services furnished might be useful and
of value to the Manager and its affiliates in serving other clients as well as
the Trust, but on the other hand any research service obtained by the Manager or
the Distributor from the placement of portfolio brokerage of other clients might
be useful and of value to the Manager in carrying out its obligation to the
Trust.
There are no fixed limitations regarding the Trust's portfolio turnover rate.
In computing the portfolio turnover rate, all securities, including options, the
maturities or expiration dates of which at the time of acquisition are one year
or less, are excluded. Subject to this exclusion, the turnover rate is
calculated by dividing (A) the lesser of purchases or sales of portfolio
securities of a particular Series for the fiscal year by (B) the monthly average
of the value of portfolio securities owned by the particular Series during the
fiscal year.
The options activities of the Zweig Government Fund, Zweig Appreciation Fund
and Zweig Strategy Fund may affect their respective turnover rates, the amount
of brokerage commissions paid by each Series and the realization of net
short-term capital gains which, when distributed, are taxed to shareholders
(other than retirement plans) at ordinary income tax rates. There are no fixed
limitations regarding the Zweig Strategy Fund's portfolio turnover. Securities
satisfying the basic policies and objectives of the Zweig Strategy Fund may be
disposed of when they are no longer deemed to be suitable. High portfolio
turnover involves correspondingly greater brokerage commissions, other
transaction costs, and a possible increase in short-term capital gains or
losses. See "Net Asset Value and Taxes."
The exercise of calls written by a Series may cause the Series to sell
portfolio securities, thus increasing its turnover rate. The exercise of puts
also may cause a sale of securities and increase turnover; although such
exercise is within the Series' control, holding a protective put might cause the
Series to sell the underlying securities for reasons which would not exist in
the absence of the put. A Series will pay a brokerage commission each time it
buys or sells a security in connection with the exercise of a put or call. Some
commissions may be higher than those which would apply to direct purchases or
sales of portfolio securities.
For the fiscal year ended December 31, 1995, the portfolio turnover rates for
Zweig Strategy Fund, Zweig Appreciation Fund, Zweig Managed Assets and Zweig
Government Fund were 95%, 68%, 239% and 195%, respectively.
Zweig Cash Fund
The Manager places orders for the purchase and sale of securities for Zweig
Cash Fund. All of Zweig Cash Fund's portfolio transactions are principal
transactions with major dealers in money market instruments, on which
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<PAGE> 62
no brokerage commission is paid. Purchases from or sales to dealers serving as
market-makers include the spread between the bid and asked prices. Transactions
are allocated to various dealers according to the best judgment of the Manager
and in a manner deemed fair and reasonable to shareholders. The primary
consideration is prompt and effective execution of orders at the most favorable
price. Subject to this consideration, dealers who provide supplemental
investment research, statistical or other services to the Manager may receive
orders for transactions by Zweig Cash Fund.
YIELD AND PERFORMANCE INFORMATION
Zweig Cash Fund
From time to time, the Trust determines a "current yield" and "effective
yield" for each class of shares of Zweig Cash Fund. For a further discussion of
how the Trust calculates yield, see "Performance Information" in the Prospectus.
The effective yield is an annualized yield based on a compounding of the
unannualized base period return. These yields are each computed in accordance
with a standard method prescribed by the rules of the Commission, by first
determining the "net change in account value" for a hypothetical account having
a share balance of one share at the beginning of a seven-day period (the
"beginning account value"). The net change in account value equals the value of
additional shares purchased with dividends from the original share and dividends
declared on both the original share and any such additional shares. The
unannualized "base period return" equals the net change in account value divided
by the beginning account value. Realized gains or losses or changes in
unrealized appreciation or depreciation are not taken into account in
determining the net change in account value.
The yields are then calculated as follows:
Current Yield = Net Change in Account Value X 365
--------------------------- ---
Beginning Account Value 7
Effective Yield = [(1 + Base Period Return) 365/7 ] - 1
For the seven days ended December 31, 1995, the Zweig Cash Fund's effective
(compounded) and current yields were 5.18% and 5.06%, respectively, for Class A
Shares, 5.18% and 5.06%, respectively, for Class C Shares and 5.45% and 5.32%,
respectively, for Class M Shares.
Yield is a function of portfolio quality and composition, portfolio maturity
and operating expenses. Yields fluctuate and do not necessarily indicate future
results. While yield information may be useful in reviewing the performance of
the Series, it may not provide a basis for comparison with bank deposits, other
fixed rate investments or other investment companies that may use a different
method of calculating yield.
Other Series
The Trust will include performance data for both Class A, Class B and Class C
Shares of each Series in its advertisements, sales literature and other
information distributed to the public that includes performance data of a
Series. Such performance information will be based on investment yields or total
returns for the Series.
YIELD. Yield will be calculated, using a one-month base period, according to
the following formula:
Yield = 2 X [(a-b/cd) + 1]6 - 1
Where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the period that
were entitled to receive dividends
d = the maximum offering price per share on the last day of the period. The
annualized yield for the Class A and Class C Shares of Zweig Government Fund at
December 31, 1995 was 4.27% and 4.03%, respectively.
AVERAGE ANNUAL TOTAL RETURN. Average annual total return for a given period
is computed by finding the average annual compounded rate of return over the
period that would equate the initial amount invested to the ending redeemable
value, according to the following formula:
P(1 + T)n = ERV
Where:
P = a hypothetical initial investment in the Series of $1,000
T = average annual total return
n = number of years in period
23
<PAGE> 63
ERV = ending redeemable value, at the end of the period, of a hypothetical
$1,000 investment in the Series made at the beginning of the period.
The average annual total return for the Class A and Class C Shares of each of
the Series for the one and five year periods ended December 31, 1995 and for the
periods from commencement of operations to December 31, 1995 (including the
effect of the maximum sales charge) is as follows:
AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
Class A Shares Yr Ended Five Yrs Ended Commencement of Operations
-------------- 12/31/95 12/31/95 to 12/31/95
-------- -------------- --------------------------
<S> <C> <C> <C>
Zweig Appreciation Fund +17.2% N/A +10.6%*
Zweig Strategy Fund +18.2% +12.8% +10.2%**
Zweig Government Fund +8.4% +6.8% +6.5%***
Zweig Managed Assets +9.9% N/A +6.3%****
</TABLE>
*For the period beginning October 7, 1991
**For the period beginning December 29, 1989
***For the period beginning March 25, 1985
****For the period beginning February 8, 1993
<TABLE>
<CAPTION>
Class C Shares Year Ended Five Years Ended Commencement to
-------------- 12/31/95 12/31/95 12/31/95
---------- ---------------- ---------------
<S> <C> <C> <C>
Zweig Appreciation Fund +21.7% N/A +9.8%*
Zweig Strategy Fund +22.7% N/A +11.1%*
Zweig Government Fund +11.9% N/A +6.4%*
Zweig Managed Assets +14.0% N/A +7.7%**
</TABLE>
*For the period beginning February 3, 1992 (commencement of offering of Class
C shares).
**For the period beginning February 8, 1993 (commencement of operations).
The investment results of the Class A, Class B and Class C Shares of a Series
will tend to fluctuate over time, so that historical yields, current
distributions and total returns should not be considered representations of what
an investment may earn in any future period. Actual dividends will tend to
reflect changes in market yields, and will also depend upon the level of a
Class' or Series' expenses, realized or unrealized investment gains and losses,
and the results of such Series' investment policies. Thus, at any point in time,
investment yields, current distributions or total returns may be either higher
or lower than past results, and there is no assurance that any historical
performance record will continue.
The Fund also may include in its advertisements data from Age Wave, Inc.; the
American Association of Retired Persons; Barron's; Business Week;
CDA/Wiesenberger Investment Companies Service; Dalbar Surveys; Donoghue's Money
Fund Report; Financial Planning; Financial World; Forbes; Fortune; Hulbert
Financial Digest; Ibbotson Associates; Individual Investor; Investment Advisor;
Investors Business Daily; The Liscio Report; Lipper Analytical Services, Inc.;
Micropal Inc.; Money; Morningstar Mutual Funds; Mutual Fund Forecaster; Mutual
Funds Magazine; The National Center for Education Statistics; The New York
Times; The Philatelic Foundation; Smart Money; USA Today; U.S. News & World
Report; The Wall Street Journal; Worth and other industry publications.
REGISTRATION STATEMENT
This Statement of Additional Information and the Prospectus do not contain
all the information included in the Registration Statement filed with the
Commission under the 1933 Act with respect to the securities offered by the
Prospectus. The Registration Statement, including the exhibits filed therewith,
may be examined at the office of the Commission in Washington, D.C.
Statements contained in this Statement of Additional Information and the
Prospectus as to the contents of any contract or other document are not complete
and, in each instance, reference is made to the copy of such contract
24
<PAGE> 64
or other document filed as an exhibit to the Registration Statement of which
this Statement of Additional Information and the Prospectus form a part, each
such statement being qualified in all respects by such reference.
FINANCIAL STATEMENTS
The audited financial statements of the Trust for the year ended December 31,
1995 and the report of the Trust's independent accountants in connection
therewith, are included in the 1995 Annual Report to Shareholders of the Trust,
which is incorporated by reference into this Statement of Additional
Information.
25
<PAGE> 65
APPENDIX I
CORPORATE BOND RATINGS
Description of Moody's Corporate Bond Ratings:
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa--Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Description of S&P Corporate Bond Ratings:
AAA--Bonds rated AAA have the highest rating assigned by Standard & Poor's to
a debt obligation. Capacity to pay interest and repay principal is extremely
strong.
AA--Bonds rated AA have a strong capacity to pay interest and repay principal
and differ from the highest rated issues only in small degrees.
A--Bonds rated A have a strong capacity to pay interest and repay principal
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than for bonds in higher rated categories.
BB, B, CCC--Bonds rated "BB," "B" or "CCC" are regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. "BB" indicates the
lowest degree of speculation and "CCC" a higher degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
Bonds rated BBB or lower by S&P and Bonds rated Baa or less by Moody's
("non-investment grade securities") are considered to be speculative in nature.
Non-investment grade securities will generally be less sensitive to interest
rate changes than investment grade securities (those rated A or higher by S&P
and BBB or higher by Moody's) but will be more sensitive to adverse economic
changes or specific corporate developments. The liquidity risk of non-investment
grade securities will be higher than investment grade securities and their value
will be more difficult to ascertain due to the lack of an established secondary
market. These securities may also be adversely affected by new laws or proposed
new laws on the high yield market (e.g., tax proposals).
26
<PAGE> 66
COMMERCIAL PAPER RATINGS
Description of Moody's Commercial Paper Ratings:
The rating Prime-1 is the highest commercial paper rating assigned by
Moody's. Among the factors considered by Moody's in assigning ratings are the
following: (1) evaluation of the management of the issuer; (2) economic
evaluation of the issuer's industry or industries and an appraisal of
speculative type risks which may be inherent in certain areas; (3) evaluation of
the issuer's products in relation to competition and customer acceptance; (4)
liquidity; (5) amount and quality of long-term debt; (6) trend of earnings over
a period of ten years; (7) financial strength of a parent company and the
relationships which exist with the issuer; and (8) recognition by the management
of obligations which may be present or may arise as a result of public interest
questions and preparations to meet obligations.
DESCRIPTION OF S&P'S COMMERCIAL PAPER RATINGS:
Commercial paper rated A-1 by S&P has the following characteristics:
Liquidity ratios are adequate to meet cash requirements: long-term senior debt
is rated "A" or better, the issuer has access to at least two additional
channels of borrowing; and basic earnings and cash flow have an upward trend
with allowance made for unusual circumstances. Typically, the issuer's industry
is well established and the issuer has a strong position in the industry. The
reliability and quality of management are unquestioned. Relative strength or
weakness of the above factors determines whether the issuer's commercial paper
is rated A-1, A-2 or A-3.
27
<PAGE> 67
ZWEIG SERIES TRUST
ZWEIG CASH FUND--Class M Shares
5 Hanover Square, New York, N.Y. 10004
STATEMENT OF ADDITIONAL INFORMATION
ZWEIG CASH FUND (the "Fund"), a Series of Zweig Series Trust (the "Trust"),
is a professionally managed money market fund which seeks high current income
consistent with liquidity and preservation of capital. The Fund invests
exclusively in short-term securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and repurchase agreements with
respect to such securities. The Fund issues its shares in four classes. This
Statement of Additional Information describes Class M Shares of the Fund only
and relates to the Prospectus describing such Class M Shares. Class M Shares
currently have no exchange feature, and may not be exchanged for Class A,
Class B or Class C Shares of the Fund, or shares of any other Series of the
Trust.
Zweig/Glaser Advisers (the "Manager") selects and manages the investments of
the Fund and Zweig Securities Corp. (the "Distributor"), an affiliate of the
Manager, is the principal distributor of the Fund.
This Statement of Additional Information is not a prospectus. It should be
read in conjunction with the Prospectus relating to the Class M Shares of the
Fund, dated May 1, 1996, which can be obtained without cost by contacting your
financial consultant or by calling or writing the Fund at the telephone numbers
and address printed on this page. This Statement of Additional Information is
intended to provide you with additional information regarding the activities and
operations of the Fund.
Toll Free--1-800-272-2700
May 1, 1996
<PAGE> 68
<TABLE>
<CAPTION>
TABLE OF CONTENTS Page
<S> <C>
INVESTMENT OBJECTIVE AND POLICIES ......................................... 3
Description of Permitted Investments ............................. 3
INVESTMENT RESTRICTIONS ................................................... 4
HOW TO PURCHASE AND REDEEM SHARES ......................................... 4
"Sweep" Programs ................................................. 4
Check Service .................................................... 5
RETIREMENT PLANS .......................................................... 5
NET ASSET VALUE AND TAXES ................................................. 6
Tax Status ....................................................... 6
Taxation of Shareholders ......................................... 7
TRUSTEES AND OFFICERS OF THE TRUST ........................................ 7
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES ....................... 10
INVESTMENT MANAGEMENT AND OTHER SERVICES .................................. 10
The Management Agreement ......................................... 10
The Distributor and Distribution Plans ........................... 11
Custodian, Fund Accounting Agent, Transfer Agent and Dividend
Paying Agent ................................................... 12
Independent Accountants .......................................... 12
Counsel .......................................................... 12
PORTFOLIO TRANSACTIONS .................................................... 12
YIELD AND PERFORMANCE INFORMATION ......................................... 12
REGISTRATION STATEMENT .................................................... 13
FINANCIAL STATEMENTS ...................................................... 13
</TABLE>
2
<PAGE> 69
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective and policies and permitted investments are
described in the Prospectus under the headings "Zweig Cash Fund" and
"Investments and Risk Factors." There can be no assurance that the Fund's
investment objective will be achieved.
As a general matter, the current value of debt securities held in the Fund
varies inversely with changes in prevailing interest rates. If prevailing
interest rates increase after a security is purchased, the value of the security
will normally decline. Conversely, should prevailing interest rates decrease
after a security is purchased, its market price will normally rise. However,
these market fluctuations generally will not result in any significant permanent
change in value (or realized gains or losses) to the Fund because it invests
primarily in short-term obligations and does not intend to dispose of the
securities it purchases prior to their maturity unless, in the opinion of the
Manager, it is in the best interest of the Fund to do so.
The Fund may, from time to time, loan its securities to brokers, dealers and
financial institutions and receive collateral from the borrower in the form of
U.S. Government obligations, which will be maintained at all times in an amount
equal to at least 100% of the current market value of the loaned securities. The
Fund, which retains the incidents of ownership of the loaned securities,
continues to be entitled to the interest payable on the loaned securities and,
in addition, receives interest on the amount of the loan at a rate negotiated
with the borrower. The loans will be terminable by the Fund at any time and will
not be made to the Manager or to any of its affiliates. The Fund may pay
reasonable finder's fees to persons unaffiliated with it responsible for
arranging the loans. In determining whether to loan securities to a particular
broker/dealer or financial institution, the Manager will consider all relevant
facts and circumstances, including the creditworthiness of the broker/ dealer or
institution. The Fund will not enter into any securities lending agreement
having a duration exceeding one year, and any security with a maturity longer
than one year received as collateral for a particular loan will not become part
of the Fund at the time of the loan or in the event the borrower defaults. The
Fund has never loaned securities and the Fund has no current intention of doing
so during the current year.
Description of Permitted Investments
The following are descriptions of instruments in which the Fund may invest.
(i) U.S. Government Obligations--include U.S. Treasury issues, such as bills,
certificates of indebtedness, notes and bonds, and issues of U.S. Government
agencies and instrumentalities which are established under the authority of an
act of Congress, such as the Government National Mortgage Association, Tennessee
Valley Authority, Bank for Cooperatives, Farmers Home Administration, Federal
Home Loan Banks, Federal Intermediate Credit Banks, Federal Land Banks,
Export-Import Bank of the U.S., Federal Housing Administration ("FHA"), Federal
Home Loan Mortgage Corporation, U.S. Postal Service, Federal Financial Bank,
Federal National Mortgage Association and Student Loan Marketing Association.
Some of these securities, such as FHA debenture obligations, are supported by
the full faith and credit of the U.S. Treasury; others, such as obligations of
Federal Home Loan Banks, are supported by the right of the issuer to borrow from
the U.S. Treasury; others, such as those of the Federal National Mortgage
Association, are supported by the discretionary authority of the U.S. Government
to purchase the agency's obligations; and still others, such as those of the
Student Loan Marketing Association, are supported only by the credit of the
instrumentality. The Fund will not invest in obligations of the International
Bank for Reconstruction and Development (the "World Bank"), the Asian
Development Bank, or the Inter-American Development Bank, or in FHA or VA pooled
mortgages; and
(ii) Repurchase Agreements--involve purchases of debt securities. In such a
transaction, at the time the Series purchases the security, it simultaneously
agrees to resell and redeliver the security to the seller who also
simultaneously agrees to buy back the security at a fixed price and time. This
assumes a predetermined yield for the Fund during its holding period, since the
resale price is always greater than the purchase price and reflects an
agreed-upon market rate. Such transactions afford an opportunity for the Fund to
invest temporarily available cash. The Fund may enter into repurchase agreements
with respect to obligations of the U.S. Government, its agencies or
instrumentalities. Repurchase agreements may be considered loans to the seller
collateralized by the underlying securities. The risk to the Fund is limited to
the ability of the seller to pay the agreed-upon sum on the repurchase date; in
the event of default, the repurchase agreement provides that the Series is
entitled to sell the underlying collateral. If the value of the collateral
declines after the agreement is entered into, however, and if the seller
defaults under a repurchase agreement when the value of the underlying
collateral is less than the repurchase price, the Fund could incur a loss of
both principal and interest. The Manager monitors the value of the collateral at
the time the transaction is entered into and at all times subsequent during the
term of the repurchase agreement in an effort to determine that the value of the
collateral always equals or exceeds the agreed-upon repurchase price to be paid
to the Fund. If the seller were to be subject to a Federal bankruptcy
proceeding, the ability of the Fund to liquidate the collateral could be delayed
or impaired because of certain provisions of the bankruptcy laws. The Fund
enters into
3
<PAGE> 70
repurchase agreements only with members of the Federal Reserve System or primary
dealers in U.S. Government securities.
INVESTMENT RESTRICTIONS
Zweig Cash Fund concentrates its investments in U.S. Government securities
and issues of U.S. Government agencies and instrumentalities as set forth in its
investment objective and has adopted certain restrictions and fundamental
policies which cannot be changed without approval by the holders of a majority
of the outstanding voting securities of the Fund as defined in the Investment
Company act of 1940, as amended (the "1940 Act") as the lesser of: (1) 67% or
more of the Fund's voting securities present at a meeting of shareholders, if
the holders of more than 50% of the Fund's outstanding voting securities are
present in person or by proxy, or (2) more than 50% of the Fund's voting
securities. However, these policies may also be modified by the Trustees, in
their discretion, without shareholder approval, to the extent necessary to
facilitate the implementation of a master-feeder structure for Zweig Cash Fund
(i.e., a structure under which a particular Series acts as a feeder and invests
all of its assets in a single pooled master fund with substantially the same
investment objectives and policies). Pursuant to such restrictions and policies,
except as stated above, the Fund may not:
- Purchase common stocks, preferred stocks, warrants, other equity
securities, state bonds, municipal bonds, industrial revenue bonds or corporate
bonds or debentures;
- Borrow money, except from banks for temporary purposes in an amount up to
10% of the value of its total assets. The Fund may only pledge its assets in an
amount up to 10% of the value of its total assets, and then only to secure such
borrowings. The Fund will borrow money only to accommodate requests to redeem
shares to effect an orderly liquidation of portfolio securities or to clear
securities transactions and not for leveraging purposes; accordingly, it is
anticipated that any such borrowing will be repaid before additional investments
are made. The Fund currently does not intend to borrow money to an extent
exceeding 5% of its total assets. The Fund may not issue any securities which
would be deemed to be "senior securities" in contravention of the 1940 Act;
- With respect to 75% of the value of the Fund's total assets, invest more
than 5% of the value of its total assets in the securities of any one issuer,
except securities issued or guaranteed as to the payment of principal and
interest by the U.S. Government, its agencies or instrumentalities;
- Sell securities short;
- Write or purchase put or call options;
- Underwrite the securities of other issuers;
- Purchase or sell real estate, real estate investment trust securities,
commodities or oil and gas interests;
- Make loans to others, except that engaging in permissible activities
specified in the Prospectus under the heading "Investments and Risk Factors" and
in this Statement of Additional Information under the headings "Investment
Objective and Policies" and "Description of Permitted Investments" shall not be
viewed as loans for this purpose;
- Invest more than an aggregate of 10% of the Fund's net assets (taken at
current value) in repurchase agreements maturing in more than seven days and
other "illiquid investments" (such as non-negotiable certificates of deposit,
non-negotiable time deposits or other "non-marketable" securities);
- Invest in companies for the purpose of exercising control; or
- Invest in securities of other investment companies, except as they may be
acquired as part of a merger, consolidation or acquisition of assets.
The foregoing percentage restrictions apply at the time an investment is
made; a later increase or decrease in percentage may result from changes in
values or the Fund's net assets but will not be deemed to result in an
investment which is contrary to these restrictions.
HOW TO PURCHASE AND REDEEM SHARES
Reference is made to the materials in the Prospectus under the headings "How
to buy shares" and "How to redeem shares," which describe the methods of
purchase and redemption of Fund shares. The following is additional information
related to certain of those methods.
"Sweep" Programs
Class M Shares of the Fund may be purchased through certain participating
securities dealers and/or banks ("Institutions") which have established "sweep"
programs under which a portion of their customers' accounts may be automatically
invested in the Fund. The customers' rights under these programs are governed by
the provisions of the particular Institution's program and the details of the
programs vary. The description below, while generally followed, should be
considered as illustrative of how such programs work, but may not be true of a
particular program.
4
<PAGE> 71
Typically, in these programs each participating customer, pursuant to an
agreement executed with a particular Institution, becomes the beneficial owner
of specific shares of the Fund which may be purchased, redeemed and held by the
Institution in accordance with the customer's instructions and may fully
exercise all rights as a shareholder. The participating Institution holds shares
registered in its name, as agent for the customer, on the books of the Fund. A
statement regarding the customer's shares is generally supplied to the customer
monthly, and confirmations of all transactions for the account of the customer
normally are available to the customer promptly upon request. In addition, each
customer is sent proxies, periodic reports and other information from the Trust
with regard to the shares. The customer's shares are fully assignable and may be
encumbered by the customer. The "sweep" agreement can be terminated by the
customer at any time, without affecting its beneficial ownership of the shares.
In order to obtain the benefits of this service, a customer typically is
required to maintain a minimum balance subject to a monthly maintenance fee, or
a higher minimum balance for which no monthly fee would be imposed. In either
case, a penalty fee is imposed if the minimum is not maintained. In general, the
automatic investment in shares of the Fund occurs on the same day that
withdrawals are made from the customer's account by the participating
Institution, but there may be a greater time lag between the removal of funds
from an account and their investment in shares of the Fund. Depending on the
particular program of the participating Institution, the customer may or may not
earn interest on the funds being swept during this lag.
All agreements which relate to the service are with the participating
Institution. Neither the Distributor nor the Trust is a party to any of those
agreements and no part of the compensation received by the participating
Institution flows to the Trust or to the Distributor or to any of their
affiliates either directly or indirectly. Information concerning those programs
and any related charges or fees is provided by the particular Institution prior
to purchases of the Class M Shares. Any fees charged by a participating
Institution effectively reduces the Fund's yield for those customers.
If a participating bank were prohibited from offering the "sweep" program, it
is expected that customers of the participating bank who seek to invest in the
Fund would have to purchase and redeem shares directly through the Trust's
transfer agent, State Street Bank and Trust Company ("State Street," or the
"transfer agent").
Check Service
An investor may request in writing that the Trust establish a check service
("Check Service") with State Street as agent to draw against the investor's Fund
account. Upon receipt of such request, the Trust will provide checks ("Checks").
Checks may be made payable to the order of anyone in an amount of $500 or more.
Class M Shares held under retirement plans or IRAs are not eligible for the
Check Service. The Check Service is subject to State Street's customary rules
and regulations governing checking accounts, and the Trust and State Street each
reserve the right to change or suspend the Check Service. The Check Service may
be discontinued at any time or for any investor. The Check Service does not
create a checking or other bank account relationship between the shareholder and
State Street, the Trust or the Distributor.
When a Check is presented to State Street for payment, through normal banking
channels, State Street, as your agent, causes the Trust to redeem at the net
asset value a sufficient number of full and fractional Class M Shares to cover
the amount of the Check. If there is an insufficient number of shares in your
account, the Check is marked "insufficient funds" and is returned unpaid to the
presenting bank. Checks will only clear State Street if drawn against funds
which have been invested for at least 15 days, except for wire investments.
Cancelled (paid) Checks are returned to you; however, this practice may be
discontinued in the future or a charge for such service may be imposed. By
requesting the Check Service, you agree to indemnify and hold harmless State
Street, the Trust, the Distributor and any of their agents from any liability
for honoring Checks or for effecting or facilitating redemptions pursuant to the
Check Service or for returning Checks which have not been accepted. The Check
Service enables you to receive the daily dividends declared on the shares to be
redeemed until the day that the Check is presented to State Street for payment.
Since the aggregate amount in your account changes each day because of the daily
dividend, you should not attempt to withdraw the full amount in your account by
using the Check Service.
The Trust reserves the right in its sole discretion to reject any purchase
order in whole or in part for any reason that it deems sufficient and to change
the minimum investment and subsequent purchases in the Trust.
No stock certificates will be issued unless specifically requested in writing
by an investor. Instead, an account will be established for each investor and
all shares purchased or received, including those obtained through reinvestment
of distributions, will be registered on the books of the Trust and credited to
such account.
RETIREMENT PLANS
Shares may be purchased in connection with all types of tax-deferred
retirement plans. Shares of one or more Series of the Trust may be purchased in
a single application establishing a single plan account.
5
<PAGE> 72
NET ASSET VALUE AND TAXES
The net asset value of the Class M Shares is determined at 2:00 p.m. New
York time and as of the close of regular trading on the New York Stock Exchange
("NYSE"), on each day the NYSE is open. The NYSE is closed on the following
holidays (or the weekdays on which these holidays are celebrated when they fall
on a weekend): New Year's Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas. The Board of Trustees
of the Trust (the "Board" or "Board of Trustees") has determined that it is in
the best interests of the Fund and its shareholders to seek to maintain a stable
net asset value per share, and that the appropriate method for valuing portfolio
securities of the Fund is the amortized cost method, provided that such method
continues to fairly reflect the market-based net asset value per share. The
Board shall continuously review this method of valuation and make changes that
may be necessary to assure that the Fund's instruments are valued at their fair
value as determined by the Board in good faith.
Class M Shares are entitled to dividends as declared by the Board and, on
liquidation of the Fund, are entitled to receive their share of the net assets
of the Fund. Shareholders have no preemptive rights. The Trust's fiscal year
ends on December 31.
The Board of Trustees has determined that the Fund will comply with the
conditions of Rule 2a-7 under the 1940 Act regarding the amortized cost method
of valuing portfolio securities. Under Rule 2a-7, the Board is obligated, as a
particular responsibility within the overall duty of care owed to the Fund's
shareholders, to establish procedures reasonably designed, taking into account
current market conditions and the Fund's investment objectives, to stabilize the
net asset value per share of the Fund for purposes of distribution and
redemption, at $1.00 per share. These procedures include periodically
monitoring, as the Board deems appropriate, at such intervals as are reasonable
in light of current market conditions, the relationship between the net asset
value per share based upon the amortized cost method of valuation and the net
asset value per share based upon available indications of market value. The
Board will consider what steps should be taken, if any, in the event of a
difference of more than 1/2 of 1% between the amortized cost value and the
market value per share. The Board will take such steps as it considers
appropriate (e.g., redemption in kind, selling portfolio instruments prior to
maturity to realize capital gains or losses, shortening the average portfolio
maturity, withholding dividends, or utilizing a net asset value per share
determined by using market quotations) to minimize any material dilution or
other unfair results that might arise from differences between the net asset
value per share based upon the amortized cost method of valuation and the net
asset value per share based upon market value.
Rule 2a-7 requires that a dollar-weighted average portfolio maturity of not
more than 90 days, appropriate to the objective of maintaining a stable net
asset value of $1.00 per share, be maintained, and precludes the purchase of any
instrument with a remaining time to maturity of more than 397 calendar days.
However, the underlying securities used as collateral for repurchase agreements
are not subject to these restrictions, because a repurchase agreement is deemed
to have a maturity equal to the period remaining until the date on which the
repurchase of the underlying securities is deemed to occur. Should the
disposition of a portfolio security result in a dollar-weighted average
portfolio maturity of more than 90 days, the Fund will invest its available cash
in a manner that will reduce such average maturity to 90 days or less as soon as
reasonably practicable. Rule 2a-7 also requires the Fund to limit its
investments to instruments that the Board determines present minimal credit
risks and that have been given one of the two highest rating categories by
nationally recognized statistical rating organizations, or, in the case of
instruments that are not so rated, are of comparable quality as determined under
procedures established by the Board.
It is the normal practice of the Fund to hold portfolio securities to
maturity and realize their par values, unless a prior sale or other disposition
thereof is mandated by redemption requirements or other extraordinary
circumstances. A debt security held to maturity is redeemable by its issuer at
its principal amount plus accrued interest. Under the amortized cost method of
valuation traditionally employed by institutions for valuation of money market
instruments, neither the amount of daily income nor the net asset value is
affected by any unrealized appreciation or depreciation of the portfolio. In
periods of declining interest rates, the indicated daily yield on shares of the
Fund (computed by dividing the annualized daily income on the Fund's portfolio
by the net asset value computed as above) may tend to be higher than a similar
computation made by utilizing a method of valuation based upon market prices and
estimates. The Fund may, to a limited extent, engage in short-term trading to
attempt to take advantage of short-term market variations, or may dispose of a
portfolio security prior to its maturity if the Manager believes such
disposition advisable, or necessary to generate cash to satisfy redemptions. In
such cases, the Fund may realize a gain or loss.
Tax Status
The Fund will be treated as a separate corporation for purposes of the
Internal Revenue Code of 1986, as amended (the "Code") (except for purposes of
the definitional requirements for regulated
6
<PAGE> 73
investment companies under Code Section 851(a)). The Fund intends to pay
dividends representing its investment company taxable income within certain time
periods specified in the Code and to meet certain other requirements in order to
qualify as a regulated investment company under the Code. Since the Fund will
distribute annually its investment company taxable income, net capital gains,
and capital gain net income, it will not be subject to income or excise taxes
otherwise applicable to undistributed income of a regulated investment company.
If the Fund were to fail to distribute substantially all its income and gains,
it would be subject to income tax and, in certain circumstances, a 4% excise
tax.
Taxation of Shareholders
Dividends from net investment income and distributions from short-term
capital gains are taxable to shareholders as ordinary income. Dividends from the
Fund are not expected to qualify for the 70% dividends received deduction
available to corporate shareholders, nor is it expected that there will be any
long-term capital gains distributions.
Individuals and certain other non-exempt payees will be subject to a 31%
backup Federal withholding tax on dividends and other distributions from the
Fund, if the Trust is not provided with the shareholder's correct taxpayer
identification number and certification that the shareholder is not subject to
such backup withholding, or if the Internal Revenue Service notifies the Trust
that the shareholder has failed to report proper interest or dividends. For most
individuals, the taxpayer identification number is the taxpayer's social
security number.
TRUSTEES AND OFFICERS OF THE TRUST
The trustees and officers of the Trust and their business affiliations for
the past five years are as follows:
<TABLE>
<CAPTION>
Name and Address Position With the Trust Principal Occupation During Past 5 Years
- ---------------- ----------------------- ----------------------------------------
<S> <C> <C>
CLAIRE B. BENENSON Trustee Consultant on Financial Conferences; Director of The
870 U.N. Plaza Burnham Fund Inc. Former Director of Financial
New York, NY 10017 Conferences and Chairman, Department of Business and
Financial Affairs, The New School for Social Research,
President of the Money Marketeers of New York University
and Trustee of Simms Global Fund and Former Director of
Zweig Tax-Free Fund Inc. and Zweig Cash Fund Inc.
RICHARD E. DEEMS Trustee Director and Member of the Executive and Finance
959 Eighth Avenue Committees of The Hearst Corporation; Publishing
New York, NY 10019 Consultant to the Hearst Magazines Division of The Hearst
Corporation; Director of The Burnham Fund Inc., ISS
International Service System, Inc. and Oriole Homes
Corporation. Former Director of Zweig Tax-Free Fund Inc.
and Zweig Cash Fund Inc.
S. LELAND DILL Trustee Retired; Director of Coutts & Co. Trust Holdings Limited,
5070 North Ocean Dr. Coutts & Co. Group, Coutts & Co. (USA), Trustee of BT
Singer Island, FL Portfolios and BT Investment Funds. Former partner of
33404 Peat Marwick Mitchell & Co. and Director of Zweig Tax-
Free Fund Inc., Zweig Cash Fund Inc. and Vintners
International Company, Inc.
EUGENE J. GLASER* Chairman, President of the Manager and President and Director of
5 Hanover Square Chief Executive the Distributor; Director of The Zweig Fund, Inc. Former
New York, NY 10004 Officer and Trustee Director of Zweig Tax-Free Fund Inc. and Zweig Cash
Fund Inc.
DONALD B. ROMANS Trustee President of Romans & Company, Private Investors and
233 East Wacker Dr. Financial Consultants; Director of the Burnham Fund Inc.
Chicago, IL 60601 Former Consultant to and Executive Vice President and
Chief Financial Officer of Bally Manufacturing Corporation,
and Director of Zweig Tax-Free Fund Inc. and Zweig Cash
Fund Inc.
</TABLE>
7
<PAGE> 74
<TABLE>
<CAPTION>
Name and Address Position With the Trust Principal Occupation During Past 5 Years
- ---------------- ----------------------- ----------------------------------------
<S> <C> <C>
MARTIN E. ZWEIG President Chairman of the Manager; Chairman of the Board and
900 Third Avenue President of The Zweig Total Return Fund, Inc. and The
New York, NY 10022 Zweig Fund, Inc.; President and Director of Zweig Total
Return Advisors, Inc., Zweig Advisors Inc., Zweig-DiMenna
International Managers, Inc., and Zweig Securities Advisory
Service Inc.; Co-Chairman of Research of Avatar Investors
Associates Corp.; Managing General Partner of Zweig-
DiMenna Partners, L.P. and Zweig-DiMenna Special
Opportunities, L.P.; President and Director of Gotham
Advisors, Inc., Euclid Advisors, Inc. and Zanoba Asset
Management, Inc.; Member of the Undergraduate Executive
Board of the Wharton School, University of Pennsylvania.
Former President of Zweig Tax-Free Fund Inc. and Zweig Cash
Fund Inc.; General Partner of Zweig Katzen Investors, L.P.;
President and Director of Davis/Zweig Futures, Inc., and
Director of Zweig/Avatar Capital Management, Inc.
DAVID KATZEN Senior Vice President Senior Vice President of the Manager; Vice President of
900 Third Avenue Zweig Advisors, Inc.; Executive Vice President of Euclid
New York, NY 10022 Advisors, Inc.; Director of Quantitative Research at Avatar
Investors Associates, Corp. Former Vice President of
Zweig Fund Inc. and ZZK Management, Inc.; Director of
Equity Research for Zweig Total Return Advisors, Inc.; and
Research Director of Zweig Advisors, Inc.
BARRY MANDINACH First Vice President Executive Vice President of the Distributor and Senior Vice
5 Hanover Square President of the Manager.
New York, NY 10004
CARLTON NEEL First Vice President First Vice President of the Manager; Former Vice President
900 Third Avenue of J.P. Morgan & Co., Inc.
New York, NY 10022
ALFRED J. RATCLIFFE First Vice President, First Vice President of the Manager. Former Vice President
5 Hanover Square Treasurer, Principal of The Bank of New York.
New York, NY 10004 Accounting Officer
and Assistant
Secretary
CHARLES I. LEONE First Vice President Chief Financial Officer and First Vice President of the
5 Hanover Square and Assistant Manager and the Distributor. Former Assistant Treasurer
New York, NY 10004 Secretary of Zweig Cash Fund Inc.
ANNEMARIE GILLY Vice President First Vice President of the Manager and the Distributor.
5 Hanover Square Former Vice President of Concord Financial Group and
New York, NY 10004 Executive Vice President and Chief Operating Officer of
The Gabelli Equity Trust, Inc.
</TABLE>
8
<PAGE> 75
<TABLE>
<CAPTION>
Name and Address Position With the Trust Principal Occupation During Past 5 Years
- ---------------- ----------------------- ----------------------------------------
<S> <C> <C>
JEFFREY LAZAR Vice President Vice President, Treasurer and Secretary of The Zweig
900 Third Avenue Fund, Inc. and The Zweig Total Return Fund, Inc.; Vice
New York, NY 10022 President, Treasurer and Secretary of Zweig Advisors, Inc.
and Zweig Total Return Advisors, Inc.
BETH ABRAHAM Assistant Vice Assistant Vice President of The Manager. Former self-
900 Third Avenue President employed consultant to the mutual fund industry and Senior
New York, NY 10022 Compliance Examiner in the New York Regional Office of
the U.S. Securities and Exchange Commission.
TOM DISBROW Assistant Treasurer Assistant Vice President of the Manager
5 Hanover Square
New York, NY 10004
MARC BALTUCH Secretary First Vice President of the Manager; First
900 Third Avenue Vice President, Director, Chief Compliance Officer and
New York, NY 10022 Secretary of the Distributor.; Director and Vice President of
Watermark Securities, Inc. and Assistant Secretary of
Gotham Advisors, Inc., Zweig Total Return Advisors, Inc.
and Zweig Advisors. Former Chief of the Branch of
Investment Adviser Examiners and Chief Regional
Securities Examiner in the New York Regional Office of the
Securities and Exchange Commission and Secretary of
Zweig Cash Fund Inc. and Zweig Tax-Free Fund Inc.
</TABLE>
* Designates a Trustee who is an "interested person" of the Trust within the
meaning of the 1940 Act.
Set forth below is a table showing the compensation of the Board of Trustees:
<TABLE>
<CAPTION>
Aggregate Compensation Total Compensation from the
Name of Person, Position from the Trust Trust Paid to the Trustees
- ------------------------ -------------- --------------------------
<S> <C> <C>
Claire B. Benenson, Trustee $13,250 $13,250
Richard E. Deems, Trustee 13,250 13,250
S. Leland Dill, Trustee 13,250 13,250
Eugene J. Glaser, Chairman, 0 0
Chief Executive Officer and
Trustee
Donald B. Romans, Trustee 13,250 13,250
</TABLE>
Those trustees and officers of the Trust who are affiliated with the
Distributor or the Manager are not separately compensated for their services as
trustees or officers of the Trust per year. The Trust pays each of its
"disinterested" trustees a fee of $5,000 per year, plus $1,500 per meeting
attended in-person ($500 per phone meeting) and reimburses their expenses for
attendance at meetings, all of which is prorated on the basis of the assets of
each Series, plus $1,000 for each Series per year. For the fiscal year ended
December 31, 1995, the fees and expenses of disinterested trustees, as a group,
were $59,397. As of December 31, 1995, except for Dr. Zweig, the trustees and
officers of the Trust, as a group, owned less than 1% of any Series of the
Trust.
Trustees may be removed at any meeting of shareholders by a vote of
two-thirds of the outstanding shares of the Trust. Except as set forth above,
the trustees shall continue to hold office and may appoint their successors.
9
<PAGE> 76
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of April 26, 1996, to the Trust's knowledge, except for Dr. Martin E.
Zweig (900 Third Avenue, New York, NY 10022) and members of his immediate
family, who own 5.02% of Zweig Cash Fund Class M Shares (of which he has
shared voting and investment power as to 1.51%, and disclaims beneficial
ownership as to 0.15%), Gotham Advisors Inc. (900 Third Avenue, 30th Floor,
New York, NY 10022-4728), who owns 7.33% of Zweig Cash Fund Class M Shares
(sole dispositive and voting power), Prudential Securities f/b/o Roger Markle
(100 Gold Street, New York, NY 10292-0001), who owns 5.15% of Zweig Cash Fund
Class A Shares (sole dispositive and voting power), State Street Bank and
Trust Company f/b/o Edwin H. Updike (P.O. Box 789, 125 Hart Road, Pisgah
Forest, North Carolina 28768-0789), who owns 7.38% of Zweig Cash Fund Class A
Shares (sole dispositive and voting power) and Prudential Securities f/b/o
Stanley E. Coleby and Sharon E. Coleby (100 Gold Street, New York, NY
10292-001), who own 7.69% of Zweig Cash Fund Class C Shares (sole dispositive
and voting power), no person is the beneficial owner of 5% or more of the
outstanding voting shares of any class of shares of any Series of the Trust.
INVESTMENT MANAGEMENT AND OTHER SERVICES
The Management Agreement
The Trust and the Manager entered into an amended management agreement, dated
April 29, 1994 (the "Management Agreement"), pursuant to which the Manager
reviews the portfolio of securities and investments of each Series, and advises
and assists each Series with respect to the selection, acquisition, holding or
disposal of securities and makes recommendations with respect to other aspects
and affairs of each Series. The Board of Trustees considered and approved the
adoption of the Management Agreement with respect to the Fund at a meeting held
on December 14, 1993. The initial shareholders of the Fund approved the
Management Agreement on April 25, 1994. The continuance of the management
agreement was last approved by the Trustees on June 22, 1995. The Manager also
furnishes the Trust with certain administrative services, office space and
equipment, and permits its officers and employees who may be elected trustees or
officers of the Trust to serve in the capacities to which they are elected.
The Management Agreement will continue in effect with respect to the Fund
from year to year if specifically approved annually by a majority of the Board
of Trustees who are not parties to such contract or "interested persons" of
any such party. The Management Agreement may be terminated without penalty by
either of the parties on 60 days' written notice and must terminate in the
event of its assignment.
The Management Agreement provides that the Manager is liable only for its
acts or omissions caused by its willful misfeasance, bad faith, or gross
negligence in the performance of its duties or reckless disregard of its
obligations under the Management Agreement. The Management Agreement permits the
Manager to render services to others and to engage in other activities.
The Manager is paid a management fee equal to 0.50% per annum of the average
daily net assets of the Fund. The Trust currently pays the Manager for its
services pursuant to the Management Agreement a monthly fee at the annual rate
of .60% of the average daily net assets of the Zweig Government Fund, .75% of
the average daily net assets of Zweig Strategy Fund and 1.00% of the average
daily net assets of Zweig Appreciation Fund and Zweig Managed Assets.
The fee of a Series will be reduced, or the Manager will reimburse
the Series (up to the amount of its fee), by an amount necessary to prevent the
total expenses of the Series (excluding taxes, interest, brokerage commissions
or transaction costs, certain distribution fees, certain custodial expenses and
extraordinary expenses) from exceeding limits applicable to the Series in any
state in which its shares then are qualified for sale. Currently, the most
restrictive expense limitation is 2.5% of the first $30 million of a Series'
net assets, 2% of the next $70 million of a Series' net assets and 1.5% of the
remaining net assets. The expense limitation provision applies separately to
each Series. From time to time, the Manager may make certain commitments which
are more restrictive than any state-imposed limitation. In such a case, the
Manager reserves the right to discontinue any such commitment. The Manager has
voluntarily undertaken to limit expenses of the Fund (exclusive of taxes,
interest, brokerage commissions and transaction costs, certain distribution
fees described below and extraordinary expenses) to 0.35% of its average net
assets and reserves the right to discontinue this policy at any time. These
expense reimbursements, if any, are estimated, reconciled and paid on a
monthly basis to the Trust.
The Manager may draw upon the resources of the Distributor and its qualified
affiliates in rendering its services to the Trust. The Distributor or its
affiliates may provide the Manager (without charge to the Trust) with investment
information and recommendations that may serve as the principal basis for
investment decisions with respect to certain Series of the Trust.
10
<PAGE> 77
The Manager has adopted a Code of Ethics ("the Code") that requires all
persons subject to the Code to pre-clear any proposed non-exempt personal
securities transaction. Permission for any proposed transaction will be granted
provided it is determined that such would not negatively impact activity in
client accounts. In the event that a client of the Manager's affiliates also
owns such security, or its proposed that such client purchase such security,
available investments or opportunities for sales will be allocated in a manner
deemed to be equitable by the Manager.
The Distributor and Distribution Plans
Pursuant to its Distribution Agreement with the Trust (the "Distribution
Agreement"), Zweig Securities Corp. acts as distributor of the Trust's shares.
The Trust has adopted a Rule 12b-1 Plan for the Class M Shares (the "Class M
Plan"), which is described in the Prospectus under the heading "Organization and
management - The Distributor." The continuance and amendment of the Distribution
Agreement was last approved by the Trustees on June 22, 1995.
The Trust has also adopted a distribution plan for the Class A and Class C
Shares and for the Class B Shares of each Series of the Trust (the "Class A, C
and B Plans"), including the Class A and C and B Shares of the Fund, in
accordance with Rule 12b-1 under the 1940 Act, to compensate the Distributor for
the services it provides and for the expenses it bears under the Distribution
Agreement. Each class of shares subject to the Class A,C and B Plans pays a
service fee at the rate of 0.25% per annum of the daily average net assets of
such class and a distribution fee based on average daily net assets at the
following rates: for Class A Shares 0.05% per annum; for Class B Shares - 0.75%
per annum and for Class C Shares - 0.05% per annum.
A report of the amounts expended under the Class M Plan and the Class A, C
and B Plans (collectively, the "Plans") must be made to the Board of Trustees
and reviewed by the Board at least quarterly. In addition, the Plans provide
that they may not be amended to increase materially the costs which the Trust
may bear for distribution pursuant to the Plans without shareholder approval and
that other material amendments to the Plans must be approved by a majority of
the Board, including a majority of the Board who are neither "interested
persons" of the Trust (as defined in the 1940 Act) nor have any direct or
indirect financial interest in the operation of the Plans (the "Qualified
Trustees"), by vote cast in person at a meeting called for the purpose of
considering such amendments.
The Plans are subject to annual approval by a majority of the Board of
Trustees, including a majority of the Qualified Trustees, by vote cast in person
at a meeting called for the purpose of voting on the Plans. The Plans are
terminable at any time by vote of a majority of the Qualified Trustees or, with
respect to any Class of a Series, by vote of a majority of the shares of such
Class. Pursuant to the Plans, any new trustees who are not "interested persons"
must be nominated by existing trustees who are not "interested persons." If the
Plans are terminated (or not renewed) with respect to one or more Classes of
shares, they may continue in effect with respect to any Class or Series as to
which they have not been terminated (or have been renewed).
Because all amounts paid pursuant to the Plans are paid to the Distributor,
the Distributor and its officers, directors and employees, all may be deemed to
have a direct or indirect financial interest in the operation of the Plans. None
of the Trustees who is not an interested person of the Trust has a direct or
indirect financial interest in the operation of the Plans.
Benefits from the Plans may accrue to the Trust and its shareholders from the
growth in assets due to sales of shares to the public pursuant to the Plans.
Increases in a Series' net assets from sales pursuant to its Plan may benefit
shareholders by reducing per share expenses, permitting increased investment
flexibility and diversification of the Series' assets, and facilitating
economies of scale (e.g., block purchases) in the Series' securities
transactions. Under their terms, the Plans will continue from year to year,
provided that such continuance is approved annually by a vote of the Trustees in
the manner described above.
The continuance of the Plan was last approved by the Board of Trustees,
including a majority of the Qualified Trustees, at a meeting held on June 22,
1995. The adoption of the Class M Plan was approved by the Board of Trustees at
a meeting held on December 14, 1993, and was approved by the initial
shareholders of the Class M Shares on April 25, 1994. Prior to approving the
continuance of the Plan and the adoption of the Class M Plan, the Board
requested and received from the Distributor all the information which it deemed
necessary to arrive at an informed determination as to such continuance and
adoption of the Plans. In making its determination to continue the Plan and
adopt the Class M Plan, the Board considered, among other factors: (1) the
Trust's experience under the Plan and the previous Rule 12b-1 Plan for the Class
A Shares of the Trust, and whether such experience indicates that the Plans
would operate as anticipated; (2) the benefits the Trust had obtained under the
Plan and the previous Class A Rule 12b-1 Plan and would be likely to obtain
under the Plans; (3) what services would be provided under the Plans by the
Distributor to the Trust and its shareholders; and (4) the reasonableness of the
fees to be paid to the Distributor for its services under the Plans. Based upon
its review, the Board, including each of the Qualified Trustees, determined that
the continuance of the Plan and the adoption of the Class M Plan would be in the
best interest of the Trust, and that there was a reasonable likelihood that the
Plans would benefit the Trust and its shareholders. In the Board's quarterly
review of the Plans, they will consider their continued appropriateness and the
level of compensation provided therein.
11
<PAGE> 78
The Board of Trustees has also adopted a Rule 18f-3 Multi-Class Share Plan
permitting the issuance of shares in multiple classes.
The Trust acknowledges that it has obtained its name by consent of Dr. Martin
E. Zweig and agrees that if (i) the Manager should cease to be the Trust's
investment Manager or (ii) if Dr. Zweig should no longer be affiliated with the
Manager, the Trust, upon request of Zweig Securities Corp. or Dr. Zweig, shall
submit to the Trustees for their vote a proposal to delete the word "Zweig" from
its name and cease to use the name "Zweig Series Trust" or any component or
combination thereof or any name deceptively similar thereto, and indicate on all
letterheads and other promotional material that the Manager is no longer the
Trust's investment Manager or Dr. Zweig is no longer affiliated with the
Manager, as the case may be. The Trust has agreed that Dr. Zweig or Zweig
Securities Corp. or any of its successors or assigns may use or permit the use
of the word "Zweig," alone or with any other words, for, by or in connection
with any other entity or business, other than the Trust and its business,
whether or not the same directly or indirectly competes or conflicts with the
Trust or its business in any manner.
Custodian, Fund Accounting Agent, Transfer Agent and Dividend Paying Agent
[/R]
The Bank of New York, 48 Wall Street, New York, New York 10286 serves as
custodian and fund accounting agent, and State Street Bank and Trust Company,
P.O. Box 8505, Boston, Massachusetts 02260-8505, serves as the transfer agent
and dividend paying agent for the Trust. Compensation for such services is based
on schedules of charges agreed on by the Trust and the custodian and the Trust
and the transfer agent.
For the convenience of shareholders, the transfer agent maintains in book
account form the records of shares owned by Trust shareholders. Shareholders may
request that the transfer agent issue to them certificates representing their
ownership of Trust shares.
Independent Accountants
Coopers & Lybrand L.L.P., 1301 Avenue of the Americas, New York, New York
10019, serves as independent accountants for the Trust. In addition to reporting
annually on the financial statements of the Trust, the Trust's accountants also
review certain filings of the Trust with the Securities and Exchange Commission.
Counsel
Shearman & Sterling, 599 Lexington Avenue, New York, New York 10022, is
counsel to the Trust. The firm also acts as counsel to the Manager and the
Distributor.
PORTFOLIO TRANSACTIONS
The Manager places orders for the purchase and sale of securities for the
Zweig Cash Fund. All of the Zweig Cash Fund's portfolio transactions are
principal transactions with major dealers in money market instruments, on which
no brokerage commission is paid. Purchases from or sales to dealers serving as
market-makers include the spread between the bid and asked prices. Transactions
are allocated to various dealers according to the best judgment of the Manager
and in a manner deemed fair and reasonable to shareholders. The primary
consideration is prompt and effective execution of orders at the most favorable
price. Subject to this consideration, dealers who provide supplemental
investment research, statistical or other services to the Manager may receive
orders for transactions by the Fund. Information so received will enable the
Manager to supplement its own research and analysis with the views and
information of other securities firms. Such information may be useful and of
value to the Manager in servicing other clients as well as the Trust;
conversely, information obtained by the Manager in servicing other clients may
be useful and of value to the Manager in servicing the Trust.
YIELD AND PERFORMANCE INFORMATION
From time to time, the Trust determines a "current yield" and "effective
yield" for the shares of the Fund. The Trust will include performance data for
Class M Shares, Class A Shares, Class B Shares and Class C Shares of the Fund
in its advertisements, sales literature and other information distributed to
the public that includes performance data of the Fund. For a further discussion
of how the Trust calculates yield, see "Performance Information" in the
Prospectus.
The effective yield is an annualized yield based on a compounding of the
unannualized base period return. These yields are each computed in accordance
with a standard method prescribed by the rules of the Commission, by first
determining the "net change in account value" for a hypothetical account having
a share balance of one share at the beginning of a seven-day period (the
"beginning account value"). The net change in account value equals the value of
additional shares purchased with dividends from the original share and dividends
declared on both the original share and any such additional shares. The
unannualized "base period return" equals the net change in account value divided
by the beginning account value. Realized gains or losses or changes in
unrealized appreciation or depreciation are not taken into account in
determining the net change in account value.
12
<PAGE> 79
The yields are then calculated as follows
Current Yield = Net Change in Account Value X 365
---------------------------- ---
Beginning Account Value 7
Effective Yield = [(1 + Base Period Return) 365/7 ] - 1
For the seven days ended December 31, 1995, the effective (compounded) and
current yields of the Class M Shares of the Fund, were 5.45% and 5.32%,
respectively.
Yield is a function of portfolio quality and composition, portfolio maturity
and operating expenses. Yields fluctuate and do not necessarily indicate future
results. While yield information may be useful in reviewing the performance of
the Fund, it may not provide a basis for comparison with bank deposits, other
fixed rate investments or other investment companies that may use a different
method of calculating yield.
The Fund also may include in its advertisements data from Age Wave, Inc.; the
American Association of Retired Persons; Barron's; Business Week;
CDA/Wiesenberger Investment Companies Service; Dalbar Surveys; Donoghue's Money
Fund Report; Financial Planning; Financial World; Forbes; Fortune; Hulbert
Financial Digest; Ibbotson Associates; Individual Investor; Investment Advisor;
Investors Business Daily; The Liscio Report; Lipper Analytical Services, Inc.;
Micropal Inc.; Money; Morningstar Mutual Funds; Mutual Fund Forecaster; Mutual
Funds Magazine; The National Center for Education Statistics; The New York
Times; The Philatelic Foundation; Smart Money; USA Today; U.S. News & World
Report; The Wall Street Journal; Worth and other industry publications.
REGISTRATION STATEMENT
This Statement of Additional Information and the Prospectus do not contain
all the information included in the Registration Statement filed with the
Commission under the Securities Act of 1933 with respect to the securities
offered by the Prospectus. The Registration Statement, including the exhibits
filed therewith, may be examined at the office of the Commission in Washington,
D.C.
Statements contained in this Statement of Additional Information and the
Prospectus as to the contents of any contract or other document are not complete
and, in each instance, reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement of which this
Statement of Additional Information and the Prospectus form a part, each such
statement being qualified in all respects by such reference.
FINANCIAL STATEMENTS
The audited financial statements of Zweig Cash Fund for the year ended
December 31, 1995 and the report of the Trust's independent accountants in
connection therewith are included in the 1995 Annual Report to Shareholders of
the Trust, which is incorporated by reference into this Statement of Additional
Information.
13
<PAGE> 80
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
The following report and financial statements for Zweig Series
Trust (the "Trust") are incorporated in Part B by reference to
the Trust's Annual Report to Shareholders for the year ended
December 31, 1995: Report of Coopers & Lybrand L.L.P.,
Independent Accountants; Statement of Assets and Liabilities,
dated December 31, 1995; Statement of Operations for the year
ended December 31, 1995; Statements of Changes in Net Assets
for each of the two years in the period ended December 31,
1995; Statement of Net Assets for each Series dated December
31, 1995; and Notes to Financial Statements.
[continued on next page]
C-1
<PAGE> 81
(b) Exhibits:
(1) *(a) Amended and Restated Agreement and
Declaration of Trust (predecessor
Massachusetts Trust).
**(b) Further Amendment to the Amended and
Restated Agreement and Declaration of Trust
(predecessor Massachusetts Trust).
***(c) Additional Amendment to the Amended and
Restated Agreement and Declaration of Trust
(predecessor Massachusetts Trust).
+++(d) Additional Amendment to the Amended and
Restated Agreement and Declaration of Trust
(predecessor Massachusetts Trust).
(e) Agreement and Declaration of Trust (Delaware
Trust).
(2) ****(a) Amended By-Laws of the Trust (predecessor
Massachusetts Trust).
(b) Bylaws of the Trust (Delaware Trust).
(3) Inapplicable.
(4) +(a) Specimen stock certificate for shares of
beneficial interest in Zweig Strategy Fund,
Zweig Managed Assets, Priority Selection
List Series and Government Securities Series
(predecessor Massachusetts Trust).
+++(b) Forms of specimen stock certificates for
Class A and C (f/k/a B Shares) Shares of
beneficial interest of the Trust
(predecessor Massachusetts Trust).
++(c) Forms of specimen stock certificate for
shares of beneficial interest of Zweig
Appreciation Fund (predecessor Massachusetts
Trust).
++++(d) Form of specimen stock certificate for
shares of beneficial interest of Zweig
Managed Assets (predecessor Massachusetts
Trust).
- ---------------------
* Incorporated by reference to Post-Effective Amendment No. 8 to the
Registration Statement of the Trust on Form N-1A, filed previously on
July 20, 1987.
** Incorporated by reference to Post-Effective Amendment No. 18 to the
Registration Statement of the Trust on Form N-1A, filed previously on
October 20, 1989.
*** Incorporated by reference to Post-Effective Amendment No. 29 to the
Registration Statement on Form N-1A, filed previously on October 4,
1991.
**** Incorporated by reference to Post-Effective Amendment No. 21 to the
Registration Statement of the Trust on Form N-1A, filed previously on
March 1, 1990.
+ Incorporated by reference to Post-Effective Amendment No. 22 to the
Registration Statement of the Trust on Form N-1A, filed previously on
April 20, 1990.
++ Incorporated by reference to Post-Effective Amendment No. 26 to the
Registration Statement of the Trust on Form N-1A, filed previously on
June 20, 1991.
+++ Incorporated by reference to Post-Effective Amendment No. 34 to the
Registration Statement of the Trust on Form N-1A, filed previously on
March 2, 1992.
++++ Incorporated by reference to Post-Effective Amendment No. 36 to the
Registration Statement of the Trust on Form N-1A, filed previously on
October 8, 1992.
C-2
<PAGE> 82
*(e) Forms of specimen stock certificates for
shares of beneficial interest of Zweig Cash
Fund (predecessor Massachusetts Trust).
+++++(f) Forms of specimen stock certificates for
Class B Shares of beneficial interest of the
Trust (predecessor Massachusetts Trust).
*****(g) Forms of specimen stock certificates for
shares of beneficial interest of the Trust
(Delaware Trust).
(5) **(a) Amended Management Agreement between the
Trust and Zweig/Glaser Advisers.
*(b) Form of Amended Management Agreement (to
include Zweig Cash Fund).
+++(c) Subadvisory Agreement between Zweig/Glaser
Advisers and Ned Davis Research, Inc.
(6) (a) (i) Amended Distribution Agreement.
***(ii) Purchase Agreement (Underwriting
Agreement) for Zweig Strategy
Fund.
****(iii) Purchase Agreement (Underwriting
Agreement) for Zweig
Appreciation Fund.
**(iv) Purchase Agreement (Underwriting
Agreement) for Zweig Managed
Assets.
++++(b) Selling Agreement.
(7) Inapplicable.
++(8) Custodian Agreement.
(9)+(a) Transfer Agency Agreement.
(b) Amended and Restated Agreement and Plan of
Conversion and Termination.
(c) Assignment and Assumption Agreement.
(10) Consent of independent accountants.
- ---------------------
* Incorporated by reference to the Registration Statement of the Trust on
Form N-14, filed previously on January 18, 1994.
** Incorporated by reference to Post-Effective Amendment No. 37 to the
Registration Statement of the Trust on Form N-1A, filed previously on
February 26, 1993.
*** Incorporated by reference to Post-Effective Amendment No. 18 to the
Registration Statement of the Trust on Form N-1A, filed previously on
October 20, 1989.
**** Incorporated by reference to Post-Effective Amendment No. 29 to the
Registration Statement of the Trust on Form N-1A, filed previously on
October 4, 1991.
***** To be filed.
+ Incorporated by reference to Post-Effective Amendment No. 22 to the
Registration Statement of the Trust on Form N-1A, filed previously on
April 20, 1990.
++ Incorporated by reference to Post-Effective Amendment No. 3 to the
Registration Statement of the Trust on Form N-1A, filed previously on
February 28, 1986.
+++ Incorporated by reference to Post-Effective Amendment No. 23 to the
Registration Statement of the Trust on Form N-1A, filed previously on
May 2, 1990.
++++ Incorporated by reference to Post-Effective Amendment No. 38 to the
Registration Statement of the Trust on Form N-1A, filed previously on
March 2, 1994.
+++++ Incorporated by reference to Post-Effective Amendment No. 40 to the
Registration Statement of the Trust on Form N-1A, filed previously on
July 5, 1995.
C-3
<PAGE> 83
(11) Inapplicable.
(12) ++(a) Subscription Agreement for Shares of the
Government Securities Series.
*(b) Subscription Agreement for Shares of the
Priority Selection List Series.
**(c) Subscription Agreement for Shares of the
Zweig Strategy Fund.
***(d) Subscription Agreement for Shares of the
Zweig Global Bond Fund.
****(e) Subscription Agreement for Shares of the
Zweig Appreciation Fund.
+++(f) Subscription Agreement for Class C (f/k/a B
Shares) Shares of the Trust.
++++(g) Subscription Agreement for Shares of Zweig
Managed Assets.
(13) +(a) Individual Retirement Account.
+(b) Paired Defined Contribution Prototype Plan.
+(c) 401(k) Prototype Plan.
+(d) 403(b)(7) Custodial Account.
(14) (a) Amended Rule 12b-1 Distribution Plan.
+++++(b) Form of Rule 12b-1 Plan for the Class M
Shares of Zweig Cash Fund.
**(15) Schedule for Computation of Performance Quotations.
-------------
* Incorporated by reference to Post-Effective Amendment No. 8 to the
Registration Statement of the Trust on Form N-1A, filed previously on
July 20, 1987.
** Incorporated by reference to Post-Effective Amendment No. 18 to the
Registration Statement of the Trust on Form N-1A, filed previously on
October 20, 1989.
*** Incorporated by reference to Post-Effective Amendment No. 29 to the
Registration Statement on Form 1-A, filed previously on October 4,
1991.
**** Incorporated by reference to the Trust's Registration Statement on Form
N-1A, filed previously on September 28, 1984.
***** Incorporated by reference to Post-Effective Amendment No. 40 to the
Registration Statement of the Trust on Form N-1A, filed previously on
July 5, 1995.
+ Incorporated by reference to Post-Effective Amendment No. 22 to the
Registration Statement of the Trust on Form N-1A, filed previously on
April 20, 1990.
++ Incorporated by reference to Post-Effective Amendment No. 2 to the
Registration Statement of the Trust on Form N-1A, filed previously on
November 27, 1985.
+++ Incorporated by reference to Post-Effective Amendment No. 34 to the
Registration Statement of the Trust on Form N-1A, filed previously on
March 2, 1992.
++++ Incorporated by reference to Post-Effective Amendment No. 37 to the
Registration Statement of the Trust on Form N-1A, filed previously on
February 26, 1993.
+++++ Incorporated by reference to the Registration Statement of the Trust on
Form N-14, filed previously on January 18, 1994.
C-4
<PAGE> 84
(16) Powers of Attorney.
*(17) Rule 18f-3 Plan.
(18) Financial Data Schedules
(18) (a) Zweig Strategy Fund - Class A
(18) (b) Zweig Strategy Fund - Class C
(18) (c) Zweig Appreciation Fund - Class A
(18) (d) Zweig Appreciation Fund - Class C
(18) (e) Zweig Managed Assets - Class A
(18) (f) Zweig Managed Assets - Class C
(18) (g) Zweig Government Fund - Class A
(18) (h) Zweig Government Fund - Class C
(18) (i) Zweig Cash Fund - Class A
(18) (j) Zweig Cash Fund - Class C
(18) (k) Zweig Cash Fund - Class M
- ---------------
* Incorporated by reference to Post-Effective Amendment No. 40 to the
Registration Statement of the Trust on Form N-1A, filed previously on
July 5, 1995.
C-5
<PAGE> 85
Item 25. Persons Controlled by or Under Common Control with the Trust
The Trust does not control and is not under common control
with any other person.
Item 26. Number of Holders of Securities
<TABLE>
<CAPTION>
Number of Record Holders as of
Shares of Beneficial Interest of: January 31, 1996
--------------------------------- ----------------
<S> <C>
Zweig Appreciation Fund
Class A 21,698
Class C 14,693
Zweig Strategy Fund
Class A 39,235
Class C 32,172
Government Securities Series
Class A 3,393
Class C 917
Zweig Managed Assets
Class A 8,882
Class C 32,639
Zweig Cash Fund
Class A 435
Class C 232
Class M 1,039
</TABLE>
Item 27. Indemnification
All officers, trustees, employees and agents of the Trust are
to be indemnified as set forth in Article VII of the Agreement
and Declaration of Trust filed herewith. To this end, the
Trust maintains an Officers' and Trustees' Errors and
Omissions Insurance Policy.
Insofar as indemnification for liability arising under the
Securities Act of 1933, as amended (the "1933 Act"), may be
permitted to trustees, officers and controlling persons of the
Trust pursuant to the foregoing provisions, or otherwise, the
Trust has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Trust
of expenses incurred or paid by a trustee, officer or
controlling person of the Trust in the successful defense of
any action, suit or proceeding) is asserted by such trustee,
officer or controlling person in connection with the
securities being registered, the Trust will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it
is against public policy as expressed in the 1933 Act and will
be governed by the final adjudication of such issue.
C-6
<PAGE> 86
Item 28. Business and Other Connections of Investment Manager
The investment manager of the Trust, Zweig/Glaser Advisers, a
general partnership ("ZGA"), engages in no business other than
that of investment counselling for clients, including the
Trust. The Officers and Directors of ZGA and their
relationships with Zweig Securities Corp.
(the "Distributor") are as follows:
<TABLE>
<CAPTION>
POSITION WITH POSITION POSITIONS WITH THE
NAME ZGA WITH THE TRUST DISTRIBUTOR
- ---- ------------- -------------- ------------------
<S> <C> <C> <C>
Eugene J. Glaser President Chairman, Chief President and Director
Executive Officer
and Trustee
Dr. Martin E. Zweig Chairman President None
Barry Mandinach Senior Vice President First Vice President Executive Vice President
and Director
David J. Malat First Vice President None None
Marc Baltuch First Vice President Secretary First Vice President,
Chief Compliance Officer,
Secretary and Director
Carlton Neel First Vice President First Vice President None
David Katzen Senior Vice President Senior Vice President None
Annemarie Gilly First Vice President Vice President First Vice President
Charles I. Leone Chief Financial Officer First Vice President and Chief Financial Officer
and First Vice President Assistant Secretary and First Vice President
Alfred J. Ratcliffe First Vice President First Vice President, None
Treasurer, Principal
Accounting Officer and
Assistant Secretary
Fran Renzi Assistant Vice President None None
Mona Lee Assistant Vice President None None
Toni Ann Stapleton Controller and None None
Vice President
Beth Abraham Assistant Vice President Assistant Vice President None
Tom Disbrow Assistant Vice President Assistant Treasurer None
</TABLE>
The principal occupation of all of such persons other than Dr. Zweig, Mr. Malat
and Mr. Baltuch is with Zweig/Glaser Advisers and the business address of
such persons is 5 Hanover Square, New York, New York 10004. Dr. Zweig's
principal occupation is as an investment adviser and analyst, Mr. Malat's
principal occupation is Executive Financial Officer of various Zweig affiliates
and Mr. Baltuch's principal
C-7
<PAGE> 87
occupation is Chief Compliance Officer of the Distributor and the Trust; their
business address is 900 Third Avenue, New York, New York 10022.
Item 29. Principal Underwriters
(a) Zweig Securities Corp., the Distributor, acts as
principal distributor of the Trust's shares.
(b) The officers and directors of the Distributor who
also serve on behalf of the Trust are as follows:
<TABLE>
<CAPTION>
NAME POSITION WITH THE DISTRIBUTOR POSITION WITH THE TRUST
- ---- ----------------------------- -----------------------
<S> <C> <C>
Eugene J. Glaser President and Director Chairman, Chief Executive Officer
and Trustee
Barry Mandinach Executive Vice President First Vice President
and Director
Marc Baltuch First Vice President, Secretary
Chief Compliance Officer,
Secretary and Director
Annemarie Gilly First Vice President Vice President
Charles I. Leone Chief Financial Officer First Vice President and Assistant
and First Vice President Secretary
</TABLE>
The principal business address of all such persons is 5
Hanover Square, New York, New York 10004, except that Mr.
Baltuch's address is 900 Third Avenue, New York, New York
10022.
(c) Not applicable.
Item 30. Location of Accounts and Records
Zweig Series Trust
5 Hanover Square
New York, New York 10004
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02266
Item 31. Management Services
The Trust has not entered into any management-related service
contracts.
Item 32. Not Applicable.
C-8
<PAGE> 88
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, the Registrant has
duly caused this Post-Effective Amendment No. 42 on Form N-1A to be signed on
its behalf by the undersigned, thereunto duly authorized in the City and State
of New York on the 30th day of April, 1996.
ZWEIG SERIES TRUST
By /s/ Eugene J. Glaser
---------------------------------
Eugene J. Glaser
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Post-Effective Amendment No. 42 to the Registration Statement of
the Trust on Form N-1A has been signed below by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Eugene J. Glaser
- --------------------------- Chairman, Chief Executive April 30, 1996
Eugene J. Glaser Officer and Trustee
/s/ Alfred J. Ratcliffe
- --------------------------- First Vice President, April 30, 1996
Alfred J. Ratcliffe Treasurer, Principal
Accounting Officer and
Assistant Secretary
* Trustee April 30, 1996
- ---------------------------
Claire B. Benenson
* Trustee April 30, 1996
- ---------------------------
Richard E. Deems
* Trustee April 30, 1996
- ---------------------------
Donald B. Romans
* Trustee April 30, 1996
- ---------------------------
S. Leland Dill
</TABLE>
*By /s/ Eugene J. Glaser
-------------------------
Eugene J. Glaser
Attorney-in-fact
<PAGE> 89
EXHIBITS
TO
POST-EFFECTIVE AMENDMENT NO. 42
TO THE
REGISTRATION STATEMENT
ON
FORM N-1A
<PAGE> 90
Exhibits:
(1) *(a) Amended and Restated Agreement and
Declaration of Trust (predecessor
Massachusetts Trust).
**(b) Further Amendment to the Amended and
Restated Agreement and Declaration of Trust
(predecessor Massachusetts Trust).
***(c) Additional Amendment to the Amended and
Restated Agreement and Declaration of Trust
(predecessor Massachusetts Trust).
+++(d) Additional Amendment to the Amended and
Restated Agreement and Declaration of Trust
(predecessor Massachusetts Trust).
(e) Agreement and Declaration of Trust (Delaware
Trust).
(2) ****(a) Amended By-Laws of the Trust (predecessor
Massachusetts Trust).
(b) Bylaws of the Trust (Delaware Trust).
(3) Inapplicable.
(4) +(a) Specimen stock certificate for shares of
beneficial interest in Zweig Strategy Fund,
Zweig Managed Assets, Priority Selection
List Series and Government Securities Series
(predecessor Massachusetts Trust).
+++(b) Forms of specimen stock certificates for
Class A and C (f/k/a B Shares) Shares of
beneficial interest of the Trust
(predecessor Massachusetts Trust).
++(c) Forms of specimen stock certificate for
shares of beneficial interest of Zweig
Appreciation Fund (predecessor Massachusetts
Trust).
++++(d) Form of specimen stock certificate for
shares of beneficial interest of Zweig
Managed Assets (predecessor Massachusetts
Trust).
- ---------------------
* Incorporated by reference to Post-Effective Amendment No. 8 to the
Registration Statement of the Trust on Form N-1A, filed previously on
July 20, 1987.
** Incorporated by reference to Post-Effective Amendment No. 18 to the
Registration Statement of the Trust on Form N-1A, filed previously on
October 20, 1989.
*** Incorporated by reference to Post-Effective Amendment No. 29 to the
Registration Statement on Form N-1A, filed previously on October 4,
1991.
**** Incorporated by reference to Post-Effective Amendment No. 21 to the
Registration Statement of the Trust on Form N-1A, filed previously on
March 1, 1990.
+ Incorporated by reference to Post-Effective Amendment No. 22 to the
Registration Statement of the Trust on Form N-1A, filed previously on
April 20, 1990.
++ Incorporated by reference to Post-Effective Amendment No. 26 to the
Registration Statement of the Trust on Form N-1A, filed previously on
June 20, 1991.
+++ Incorporated by reference to Post-Effective Amendment No. 34 to the
Registration Statement of the Trust on Form N-1A, filed previously on
March 2, 1992.
++++ Incorporated by reference to Post-Effective Amendment No. 36 to the
Registration Statement of the Trust on Form N-1A, filed previously on
October 8, 1992.
<PAGE> 91
*(e) Forms of specimen stock certificates for
shares of beneficial interest of Zweig Cash
Fund (predecessor Massachusetts Trust).
+++++(f) Forms of specimen stock certificates for
Class B Shares of beneficial interest of the
Trust (predecessor Massachusetts Trust).
*****(g) Forms of specimen stock certificates for
shares of beneficial interest of the Trust
(Delaware Trust).
(5) **(a) Amended Management Agreement between the
Trust and Zweig/Glaser Advisers.
*(b) Form of Amended Management Agreement (to
include Zweig Cash Fund).
+++(c) Subadvisory Agreement between Zweig/Glaser
Advisers and Ned Davis Research, Inc.
(6) (a) (i) Amended Distribution Agreement.
***(ii) Purchase Agreement (Underwriting
Agreement) for Zweig Strategy
Fund.
****(iii) Purchase Agreement (Underwriting
Agreement) for Zweig
Appreciation Fund.
**(iv) Purchase Agreement (Underwriting
Agreement) for Zweig Managed
Assets.
++++(b) Selling Agreement.
(7) Inapplicable.
++(8) Custodian Agreement.
(9)+(a) Transfer Agency Agreement.
(b) Amended and Restated Agreement and Plan of
Conversion and Termination.
(c) Assignment and Assumption Agreement.
(10) Consent of independent accountants.
- ---------------------
* Incorporated by reference to the Registration Statement of the Trust on
Form N-14, filed previously on January 18, 1994.
** Incorporated by reference to Post-Effective Amendment No. 37 to the
Registration Statement of the Trust on Form N-1A, filed previously on
February 26, 1993.
*** Incorporated by reference to Post-Effective Amendment No. 18 to the
Registration Statement of the Trust on Form N-1A, filed previously on
October 20, 1989.
**** Incorporated by reference to Post-Effective Amendment No. 29 to the
Registration Statement of the Trust on Form N-1A, filed previously on
October 4, 1991.
***** To be filed.
+ Incorporated by reference to Post-Effective Amendment No. 22 to the
Registration Statement of the Trust on Form N-1A, filed previously on
April 20, 1990.
++ Incorporated by reference to Post-Effective Amendment No. 3 to the
Registration Statement of the Trust on Form N-1A, filed previously on
February 28, 1986.
+++ Incorporated by reference to Post-Effective Amendment No. 23 to the
Registration Statement of the Trust on Form N-1A, filed previously on
May 2, 1990.
++++ Incorporated by reference to Post-Effective Amendment No. 38 to the
Registration Statement of the Trust on Form N-1A, filed previously on
March 2, 1994.
+++++ Incorporated by reference to Post-Effective Amendment No. 40 to the
Registration Statement of the Trust on Form N-1A, filed previously on
July 5, 1995.
<PAGE> 92
(11) Inapplicable.
(12) ++(a) Subscription Agreement for Shares of the
Government Securities Series.
*(b) Subscription Agreement for Shares of the
Priority Selection List Series.
**(c) Subscription Agreement for Shares of the
Zweig Strategy Fund.
***(d) Subscription Agreement for Shares of the
Zweig Global Bond Fund.
****(e) Subscription Agreement for Shares of the
Zweig Appreciation Fund.
+++(f) Subscription Agreement for Class C (f/k/a B
Shares) Shares of the Trust.
++++(g) Subscription Agreement for Shares of Zweig
Managed Assets.
(13) +(a) Individual Retirement Account.
+(b) Paired Defined Contribution Prototype Plan.
+(c) 401(k) Prototype Plan.
+(d) 403(b)(7) Custodial Account.
(14) (a) Amended Rule 12b-1 Distribution Plan.
+++++(b) Form of Rule 12b-1 Plan for the Class M
Shares of Zweig Cash Fund.
**(15) Schedule for Computation of Performance Quotations.
-------------
* Incorporated by reference to Post-Effective Amendment No. 8 to the
Registration Statement of the Trust on Form N-1A, filed previously on
July 20, 1987.
** Incorporated by reference to Post-Effective Amendment No. 18 to the
Registration Statement of the Trust on Form N-1A, filed previously on
October 20, 1989.
*** Incorporated by reference to Post-Effective Amendment No. 29 to the
Registration Statement on Form 1-A, filed previously on October 4,
1991.
**** Incorporated by reference to the Trust's Registration Statement on Form
N-1A, filed previously on September 28, 1984.
***** Incorporated by reference to Post-Effective Amendment No. 40 to the
Registration Statement of the Trust on Form N-1A, filed previously on
July 5, 1995.
+ Incorporated by reference to Post-Effective Amendment No. 22 to the
Registration Statement of the Trust on Form N-1A, filed previously on
April 20, 1990.
++ Incorporated by reference to Post-Effective Amendment No. 2 to the
Registration Statement of the Trust on Form N-1A, filed previously on
November 27, 1985.
+++ Incorporated by reference to Post-Effective Amendment No. 34 to the
Registration Statement of the Trust on Form N-1A, filed previously on
March 2, 1992.
++++ Incorporated by reference to Post-Effective Amendment No. 37 to the
Registration Statement of the Trust on Form N-1A, filed previously on
February 26, 1993.
+++++ Incorporated by reference to the Registration Statement of the Trust on
Form N-14, filed previously on January 18, 1994.
<PAGE> 93
(16) Powers of Attorney.
*(17) Rule 18f-3 Plan.
(18) Financial Data Schedules
(18) (a) Zweig Strategy Fund - Class A
(18) (b) Zweig Strategy Fund - Class C
(18) (c) Zweig Appreciation Fund - Class A
(18) (d) Zweig Appreciation Fund - Class C
(18) (e) Zweig Managed Assets - Class A
(18) (f) Zweig Managed Assets - Class C
(18) (g) Zweig Government Fund - Class A
(18) (h) Zweig Government Fund - Class C
(18) (i) Zweig Cash Fund - Class A
(18) (j) Zweig Cash Fund - Class C
(18) (k) Zweig Cash Fund - Class M
- ---------------
* Incorporated by reference to Post-Effective Amendment No. 40 to the
Registration Statement of the Trust on Form N-1A, filed previously on
July 5, 1995.
<PAGE> 1
Exhibit 1(e)
AGREEMENT AND DECLARATION OF TRUST
OF
ZWEIG SERIES TRUST
THIS AGREEMENT AND DECLARATION OF TRUST is made and entered
into as of the date set forth below by the Trustees named hereunder for the
purpose of forming a Delaware business trust in accordance with the provisions
hereinafter set forth,
NOW, THEREFORE, the Initial Trustees hereby direct that the
Certificate of Trust be filed with Office of the Secretary of State of the State
of Delaware, and the Initial Trustees do hereby declare that the Trustees will
hold in trust all cash, securities and other assets that the Trust now possesses
or may hereafter acquire from time to time in any manner and manage and dispose
of the same upon the following terms and conditions for the benefit of the
holders of Shares in the Trust.
ARTICLE I
Name and Definitions
Section 1. Name. This Trust shall be known as "Zweig Series
Trust" and the Trustees shall conduct the business of the Trust under that name
or any other name as they may from time to time determine.
Section 2. Definitions. Whenever used herein, unless otherwise
required by the context or specifically provided:
(a) "By-Laws" shall mean the By-Laws of the Trust as amended
from time to time, which By-Laws are expressly herein incorporated by reference
as part of the "governing instrument" within the meaning of the Delaware Act;
(b) "Certificate of Trust" means the certificate of trust, as
amended or restated from time to time, filed by the Trustees in the Office of
the Secretary of State of the State of Delaware in accordance with the Delaware
Act;
(c) "Class" means a class of Shares of a Series of the Trust
established in accordance with the provisions of Article III hereof;
(d) "Commission" and "Principal Underwriter" shall have the
meanings given them in the 1940 Act;
<PAGE> 2
(e) "Declaration of Trust" means this Agreement and
Declaration of Trust, as amended or restated from time to time;
(f) "Delaware Act" means the Delaware Business Trust Act, 12
Del. C. Sections 3801 et seq., as amended from time to time;
(g) "Initial Trustees" means the person or persons who have
signed this Declaration of Trust;
(h) "Manager" means a party furnishing services to the Trust
pursuant to any contract described in Article IV, Section 8(a) hereof;
(i) "1940 Act" means the Investment Company Act of 1940 and
the Rules and Regulations thereunder, all as amended from time to time;
(j) "Person" means and includes individuals, corporations,
partnerships, trusts, associations, joint ventures, estates and other entities,
whether or not legal entities, and governments and agencies and political
subdivisions thereof, whether domestic or foreign;
(k) "Series" means each Series of Shares established and
designated under or in accordance with the provisions of Article III;
(l) "Shareholder" means a record owner of outstanding Shares;
(m) "Shares" means the Shares of beneficial interest into
which the beneficial interest in the Trust shall be divided from time to time
and includes fractions of Shares as well as whole Shares;
(n) "Trust" means the Delaware business trust established
under the Delaware Act by this Declaration of Trust and the filing of the
Certificate of Trust in the Office of the Secretary of State of the State of
Delaware;
(o) "Trust Property" means any and all property, real or
personal, tangible or intangible, that is from time to time owned or held by or
for the account of the Trust; and
(p) "Trustees" means the Initial Trustees, and all other
Persons who may from time to time be duly elected or appointed to serve as
Trustees in accordance with the provisions hereof, in each case so long as such
Person shall continue in office in accordance with the terms of this Declaration
of Trust, and reference herein to a Trustee or the Trustees shall refer to such
Person or Persons in her or his or their capacity as trustees hereunder.
2
<PAGE> 3
ARTICLE II
Purpose of Trust
The purpose of the Trust is to conduct, operate and carry on
the business of a management investment company registered under the 1940 Act
through one or more Series investing primarily in securities, and to carry on
such other business as the Trustees may from time to time determine pursuant to
their authority under this Declaration of Trust.
ARTICLE III
Shares
Section 1. Division of Beneficial Interest. The beneficial
interest in the Trust may be divided into one or more Series. Each Series may be
divided into one or more Classes. Subject to the further provisions of this
Article III and any applicable requirements of the 1940 Act, the Trustees shall
have full power and authority, in their sole discretion, and without obtaining
any authorization or vote of the Shareholders of any Series or Class thereof,
(i) to divide the beneficial interest in the Trust or in each Series or Class
thereof into Shares, with or without par value as the Trustees shall determine,
(ii) to issue Shares without limitation as to number (including fractional
Shares), to such Persons and for such amount and type of consideration,
including cash or securities, at such time or times and on such terms as the
Trustees may deem appropriate, (iii) to establish and designate and to change in
any manner any Series or Class thereof and to fix such preferences, voting
powers, rights, duties and privileges and business purpose of each Series or
Class thereof as the Trustees may from time to time determine, which
preferences, voting powers, rights, duties and privileges may be senior or
subordinate to (or in the case of business purpose, different from) any existing
Series or Class thereof and may be limited to specified property or obligations
of the Trust or profits and losses associated with specified property or
obligations of the Trust, (iv) to divide or combine the Shares of any Series or
Class thereof into a greater or lesser number, or issue dividends in Shares with
respect to Shares of any Series or Class, without thereby materially changing
the proportionate beneficial interest of the Shares of such Series or Class in
the assets held with respect to that Series or Class thereof, (v) to classify or
reclassify any issued Shares of any Series or Class thereof into Shares of one
or more Series or Classes thereof and (vi) to take such other action with
respect to the Shares as the Trustees may deem desirable.
Subject to the distinctions permitted among Classes or
otherwise in Shares of the same Series as established by the Trustees consistent
with the requirements of the 1940 Act, each Share of a Series of the Trust shall
represent an equal beneficial interest in the net assets of such Series, and
each holder of Shares of a Series shall be entitled to receive such holder's pro
rata share of distributions of income and capital gains, if any, made with
respect to such Series. Upon redemption of the Shares of any Series or Class
thereof, the applicable
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Shareholder shall be entitled to be paid solely out of, the funds and property
of such Series or Class thereof of the Trust.
All references to Shares in this Declaration of Trust shall be
deemed to be Shares of any or all Series or Classes thereof, as the context may
require. All provisions herein relating to the Trust shall apply equally to each
Series of the Trust and each Class thereof, except as the context otherwise
requires.
All Shares issued hereunder, including, without limitation,
Shares issued in connection with a dividend in Shares or a split or reverse
split of Shares, shall be fully paid and non-assessable. Except as otherwise
provided by the Trustees, Shareholders shall have no appraisal, preemptive or
other right to subscribe to any additional Shares or other securities issued by
the Trust.
Section 2. Ownership of Shares. The Ownership of Shares shall
be recorded on the books of the Trust or a transfer or similar agent for the
Trust, which books shall be maintained separately for the Shares of each Series
(or Class). No certificates certifying the ownership of Shares shall be issued
except as the Trustees may otherwise determine from time to time. The Trustees
may make such rules as they consider appropriate for the issuance of Share
certificates, the transfer of Shares of each Series (or Class) and similar
matters. The record books of the Trust as kept by the Trust or any transfer or
similar agent, as the case may be, shall be conclusive as to the identity of the
Shareholders of each Series (or Class) and as to the number of Shares of each
Series (or Class) held from time to time by each Shareholder.
Section 3. Transfer of Shares. Except as otherwise provided by
the Trustees, Shares shall be transferable on the books of the Trust only by the
record holder thereof or by his duly authorized agent upon delivery to the
Trustees or the Trust's transfer agent of a duly executed instrument of
transfer, together with a Share certificate if one is outstanding, and such
evidence of the genuineness of the execution and authorization thereof as may be
required by the Trustees and of such other matters as may be required by the
Trustees. Upon such delivery, and subject to any further requirements specified
by the Trustees or contained in the By-Laws, the transfer shall be recorded on
the books of the Trust. Until a transfer is so recorded, the Shareholder of
record of Shares shall be deemed to be the holder of such Shares for all
purposes hereunder and neither the Trustees nor the Trust, nor any transfer
agent, Shareholder servicing agent or similar agent, any officer, employee or
agent of the Trust, shall be affected by any notice of a proposed transfer.
Section 4. Investments in the Trust. Investments may be
accepted by the Trust from such Persons, at such times, on such terms, and for
such consideration as the Trustees from time to time may authorize.
Section 5. Status of Shares and Limitation of Personal
Liability. Shares shall be deemed to be personal property giving only the rights
provided in this instrument. Every
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Shareholder by virtue of having become a Shareholder shall be held to have
expressly assented and agreed to the terms hereof. The death, incapacity,
dissolution, termination or bankruptcy of a Shareholder during the existence of
the Trust shall not operate to terminate the Trust, nor entitle the
representative of any such Shareholder to an accounting or to take any action in
court or elsewhere against the Trust or the Trustees, but entitles such
representative only to the rights of such Shareholder under this Trust.
Ownership of Shares shall not entitle the Shareholder to any title in or to the
whole or any part of the Trust Property or right to call for a partition or
division of the same or for an accounting, nor shall the ownership of Shares
constitute the Shareholders as partners. Neither the Trust nor the Trustees, nor
any officer, employee or agent of the Trust shall have any power to bind
personally any Shareholder, nor, except as specifically provided herein, to call
upon any Shareholder for the payment of any sum of money or assessment
whatsoever other than such as the Shareholder may at any time personally agree
to pay. Except as specifically provided herein, no Shareholder shall be
personally liable for the debts, liabilities, obligations or expenses incurred
by, contracted for, or otherwise existing with respect to, the Trust or by or on
behalf of any Series or Class. Every note, bond, contract or other understanding
issued by or on behalf of the Trust or Trustees relating to the Trust or to a
Series or Class may include a recitation limiting the obligation represented
thereby to the Trust or to one or more Series or Class and its respective assets
(but the omission of such a recitation shall not operate to bind any Shareholder
or Trustee of the Trust).
Section 6. Establishment and Designation of Series (or Class).
Without obtaining any authorization or vote of the Shareholders of any Series or
Class thereof (except as otherwise required by the 1940 Act), the establishment
and designation of any Series (or Class) of Shares shall be effective upon the
adoption by a majority of the then Trustees of a resolution that sets forth such
establishment and designation and the relative rights and preferences of such
Series (or Class), whether directly in such resolution or by reference to
another document including, without limitation, any registration statement of
the Trust, or as otherwise provided in such resolution.
Shares of each Series (or Class) established pursuant to this
Article III, unless otherwise provided in the resolution establishing such
Series, shall have the following relative rights and preferences:
(a) Assets Held with Respect to a Particular Series (or
Class). All consideration received by the Trust for the issue or sale of Shares
of a particular Series or Class thereof, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits, and
proceeds thereof from whatever source derived, including, without limitation,
any proceeds derived from the sale, exchange or liquidation of such assets, and
any funds or payments derived from any reinvestment of such proceeds in whatever
form the same may be, shall irrevocably be held with respect to that Series (or
Class) for all purposes, subject only to the rights of creditors of such Series
(or Class thereof to the extent provided below), and shall be so recorded upon
the books of account of the Trust. Such consideration, assets, income, earnings,
profits and proceeds thereof, from
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whatever source derived, including, without limitation, any proceeds derived
from the sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds, in whatever form the same may
be, are herein referred to as "assets held with respect to" that Series (or
Class thereof). In the event that there are any assets, income, earnings,
profits and proceeds thereof, funds or payments that are not readily
identifiable as assets held with respect to any particular Series (and the
Classes thereof) (collectively "General Assets"), the Trustees shall allocate
such General Assets to, between or among any one or more of the Series (and the
Classes thereof) in such manner and on such basis as the Trustees, in their sole
discretion, deem fair and equitable, and any General Assets so allocated to a
particular Series (and the Classes thereof) shall be assets held with respect to
that Series and such Classes. Each such allocation by the Trustees shall be
conclusive and binding upon the Shareholders of all Series and Classes for all
purposes. Separate and distinct records shall be maintained for each Series (and
the Classes thereof) and the assets held with respect to each Series (and the
Classes thereof) shall be held and accounted for separately from the assets held
with respect to all other Series (and the Classes thereof) and the General
Assets of the Trust not allocated to such Series or Classes.
(b) Liabilities Attributable to a Particular Series (or
Class). The assets of the Trust held with respect to each particular Series (or
Class thereof) shall be charged exclusively with the liabilities of the Trust
attributable to that Series or Class and all expenses, costs, charges and
reserves attributable to that Series or Class. Any general liabilities of the
Trust that are not readily identifiable as being attributable to any particular
Series (and the Classes thereof) shall be allocated and charged by the Trustees
to and among any one or more of the Series (and the Classes thereof) in such
manner and on such basis as the Trustees in their sole discretion deem fair and
equitable. All liabilities, expenses, costs, charges, and reserves so charged to
a Series (and the Classes thereof) are herein referred to as "liabilities
attributable to" that Series (or Class thereof). Each allocation of liabilities,
expenses, costs, charges and reserves by the Trustees shall be conclusive and
binding upon the Shareholders of all Series and Classes for all purposes. All
liabilities attributable to a particular Series shall be enforceable against the
assets held with respect to such Series only and not against the assets of the
Trust generally or against the assets held with respect to any other Series.
Notice of this limitation on the liability of each Series shall be set forth in
the Certificate of Trust or in an amendment thereto prior to the issuance of any
Shares of a Series. To the extent that the Trustees, pursuant to Section 2 of
Article VII hereof, include a Class limitation on liability in any note, bond,
contract, instrument, certificate or undertaking made with respect to any Class,
the parties to such note, bond, contract, instrument, certificate or undertaking
shall look only to the assets of such Class in satisfaction of the liabilities
arising thereunder and not to the assets of any other Class of the applicable
Series.
(c) Dividends, Distributions, Redemptions and Repurchases.
Notwithstanding any other provision of this Declaration of Trust, including,
without limitation, Article VI, no dividend or distribution, including, without
limitation, any distribution paid upon termination of the Trust or of any Series
(or Class) thereof with respect to, nor any redemption or repurchase of, the
Shares of any Series (or Class thereof)
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shall be effected by the Trust other than from the assets held with respect to
such Series (or Class thereof), nor shall any Shareholder of any particular
Series (or Class thereof) otherwise have any right or claim against the assets
held with respect to any other Series or Class except to the extent that such
Shareholder has such a right or claim hereunder as a Shareholder of such other
Series or Class. The Trustees shall have full discretion, to the extent not
inconsistent with the 1940 Act, to determine which items shall be treated as
income and which items as capital; and each such determination and allocation
shall be conclusive and binding upon the Shareholders.
(d) Equality. All the Shares of each particular Series (or
Class thereof) shall represent an equal proportionate interest in the assets
held with respect to that Series (or Class thereof), and each Share of any
particular Series shall be equal to each other Share of that Series (subject to
the liabilities attributable to that Series and such rights and preferences as
may have been established and designated with respect to Classes, or otherwise,
of Shares within such Series).
(e) Fractions. Any fractional Share of a Series (or Class
thereof) shall carry proportionately all the rights and obligations of a whole
Share of that Series or Class, including rights with respect to voting, receipt
of dividends and distributions, redemption of Shares and termination of the
Trust.
(f) Combination of Series. The Trustees shall have the
authority, without the approval of the Shareholders of any Series (or Class
thereof), unless otherwise required by applicable law, to combine the assets and
liabilities attributable to any two or more Series (or Classes) into assets and
liabilities attributable to a single Series or Class.
(g) Elimination of Series. At any time that there are no
Shares outstanding of any particular Series (or Class) previously established
and designated, the Trustees may by resolution of a majority of the Trustees
abolish that Series (or Class) and rescind the establishment and designation
thereof and may thereafter establish a new Series (or Class) with such
designation and otherwise as herein provided.
Section 7. Indemnification of Shareholders. If any Shareholder
or former Shareholder shall be exposed to liability by reason of a claim or
demand relating to such Person being or having been a Shareholder, and not
because of such Person's acts or omissions, the Shareholder or former
Shareholder (or such Person's heirs, executors, administrators, or other legal
representatives or in the case of a corporation or other entity, its corporate
or other general successor) shall be entitled to be held harmless from and
indemnified out of the assets of the Trust against all cost and expense
reasonably incurred in connection with such claim or demand, but only out of the
assets held with respect to the particular Series (or Class thereof) of Shares
of which such Person is or was a Shareholder and from or in relation to which
such liability arose. The Series (or Class thereof) may, at its option and
shall, upon request by the Shareholder, assume the defense of any claim made
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against the Shareholder for any act or obligation of the Series and satisfy any
judgment thereon.
ARTICLE IV
Trustees
Section 1. Election of Trustees. Upon the issuance of
beneficial interests of the Trust, Zweig Series Trust, a Massachusetts trust, as
initial shareholder of the Trust, shall elect five persons as Trustees of the
Trust; to the extent that persons so elected are different from the Initial
Trustees, such persons shall replace the Initial Trustees as Trustees of the
Trust.
Section 2. Number, Election and Tenure. The number of Trustees
shall initially be five, who shall be Claire B. Benenson, Richard E. Deems, S.
Leland Dill, Eugene J. Glaser and Donald B. Romans. After the initial election
of Trustees, the number of Trustees shall be five or such other number as shall,
from time to time, be determined by the Trustees pursuant to Section 5 of this
Article IV. Except as described above with respect to the Initial Trustees, each
Trustee shall serve during the continued term of the Trust until she or he dies,
resigns, is declared bankrupt or incompetent by a court of appropriate
jurisdiction, or is removed, or, if sooner, until the next meeting of
Shareholders called for the purpose of electing Trustees and until the election
and qualification of her or his successor. In the event that less than the
majority of the Trustees holding office have been elected by the Shareholders,
to the extent required by the 1940 Act, the Trustees then in office shall call a
Shareholders' meeting for the election of Trustees. Any Trustee may resign at
any time by written instrument signed by her or him and delivered to any officer
of the Trust or to the Secretary of any meeting of the Trustees. Such
resignation shall be effective upon receipt unless specified to be effective at
some other time. Except to the extent expressly provided in a written agreement
with the Trust, no Trustee resigning and no Trustee removed shall have any right
to any compensation for any period following her or his resignation or removal,
or any right to damages on account of such removal. The Shareholders may elect
Trustees at any meeting of Shareholders called by the Trustees for that purpose.
Any Trustee may be removed at any meeting of Shareholders by a vote of
two-thirds of the outstanding Shares of the Trust.
Section 3. Effect of Death, Resignation, etc. of a Trustee.
The death, declination to serve, resignation, retirement, removal, or incapacity
of one or more Trustees, or all of them, shall not operate to annul the Trust or
to revoke any existing agency created pursuant to the terms of this Declaration
of Trust. Whenever there shall be fewer than the designated number of Trustees,
until additional Trustees are elected or appointed as provided herein to bring
the total number of Trustees equal to the designated number, the Trustees in
office, regardless of their number, shall have all the powers granted to the
Trustees and shall discharge all the duties imposed upon the Trustees by this
Declaration of Trust. As
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conclusive evidence of such vacancy, a written instrument certifying the
existence of such vacancy may be executed by an officer of the Trust or by a
majority of the Trustees then in office. In the event of the death, declination,
resignation, retirement, removal, or incapacity of all the then Trustees within
a short period of time and without the opportunity for at least one Trustee
being able to appoint additional Trustees to replace those no longer serving,
the Trust's Managers are empowered to appoint new Trustees subject to the
applicable provisions of the 1940 Act.
Section 4. Powers. Subject to the provisions of this
Declaration of Trust, the business of the Trust shall be managed by the
Trustees; the Trustees shall have full power and authority to do any and all
acts and to make and execute any and all contracts and instruments that they may
consider necessary or appropriate in connection with the management of the
Trust, including the power to engage in securities transactions of all kinds on
behalf of the Trust. Without limiting the foregoing, the Trustees may: adopt
By-Laws not inconsistent with this Declaration of Trust providing for the
regulation and management of the affairs of the Trust and may amend and repeal
them to the extent that such By-Laws do not reserve that right to the
Shareholders; enlarge or reduce their number; remove any Trustee with or without
cause at any time by written instrument signed by at least two-thirds of the
number of Trustees prior to such removal, specifying the date when such removal
shall become effective and fill vacancies caused by enlargement of their number
or by the death, resignation or removal of a Trustee; elect and remove, with or
without cause, such officers and appoint and terminate such agents as they
consider appropriate; appoint from their own number and establish and terminate
one or more committees consisting of two or more Trustees which may exercise the
powers and authority of the Board of Trustees to the extent that the Board of
Trustees determine; deposit all or any part of such assets in a system or
systems for the central handling of securities or with a Federal Reserve Bank;
provide for the issuance and distribution of Shares by the Trust directly or
through one or more Principal Underwriters or otherwise; redeem, repurchase and
transfer Shares pursuant to applicable law; declare and pay dividends and
distributions to Shareholders from the assets available therefor; and in general
exercise, or delegate to any officer of the Trust, to any committee of the
Trustees and to any agent or employee of the Trust or to any such custodian,
transfer or Shareholder servicing agent, or Principal Underwriter, such
authority as they consider desirable. Any determination as to what is in the
interests of the Trust made by the Trustees in good faith shall be conclusive.
In construing the provisions of this Declaration of Trust, the presumption shall
be in favor of a grant of power to the Trustees. Unless otherwise specified
herein or in the By-Laws or required by law, any action by the Trustees shall be
deemed effective if approved or taken by a majority of the Trustees present at a
meeting of Trustees at which a quorum of Trustees is present, within or without
the State of Delaware.
Without limiting the foregoing, the Trustees shall have the
power and authority to cause the Trust (or to act on behalf of the Trust):
(a) To operate as and carry out the business of an investment
company, and exercise all the powers necessary or appropriate to the conduct of
such operations;
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(b) To invest and reinvest cash, to hold cash uninvested, and
to subscribe for, invest in, reinvest in, purchase or otherwise acquire, own,
hold, pledge, sell, assign, transfer, exchange, distribute, purchase or write
options on, lend, enter into contracts for the future acquisition or delivery
of, or otherwise deal in or dispose of, securities, indices, currencies,
commodities or other property of every nature and kind, including, without
limitation, all types of bonds, debentures, stocks, negotiable or non-negotiable
instruments, obligations, evidences of indebtedness, certificates of deposit or
indebtedness, commercial paper, repurchase agreements, bankers' acceptances, and
other securities, commodities or contracts of any kind, issued, created,
guaranteed, or sponsored by any and all Persons, including, without limitation,
states, territories, and possessions of the United States and the District of
Columbia and any political subdivision, agency, or instrumentality thereof, the
U.S. Government or any foreign government or any political subdivision of the
U.S. Government or any foreign government, or any domestic or international
instrumentality, or by any bank or savings institution, or by any corporation or
organization organized under the laws of the United States or of any state,
territory, or possession thereof, or by any corporation or organization
organized under any foreign law, or in "when issued" contracts for any such
securities; to change the investments of the assets of the Trust; and to
exercise any and all rights, powers, and privileges of ownership or interest in
respect of any and all such investments of every kind and description,
including, without limitation, the right to consent and otherwise act with
respect thereto, with power to designate one or more Persons to exercise any of
said rights, powers, and privileges in respect of any of said instruments;
(c) To sell, exchange, lend, pledge, mortgage, hypothecate,
lease, or write options (including options on futures contracts) with respect to
or otherwise deal in any property rights relating to any or all of the assets of
the Trust or any Series or Class thereof;
(d) To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities or property; and to execute
and deliver proxies or powers of attorney to such Person or Persons as the
Trustees shall deem proper, granting to such Person or Persons such power and
discretion with relation to securities or property as the Trustees shall deem
proper;
(e) To set record dates for the determination of Shareholders
with respect to various matters, which, for purposes of determining the
Shareholders of any Series (or Class) who are entitled to receive payment of any
dividend or of any other distribution shall be on or before the date for the
payment of such dividend or such other payment, as the record date for
determining the Shareholders of such Series (or Class) having the right to
receive such dividend or distribution; without fixing a record date, the
Trustees may for distribution purposes close the register or transfer books for
one or more Series (or Classes) at any time prior to the payment of a
distribution; nothing in this subsection shall be construed as precluding the
Trustees from setting different record dates for different Series (or Classes);
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(f) To exercise powers and rights of subscription or otherwise
which in any manner arise out of ownership of securities or other property;
(g) To hold any security or property in a form not indicating
any trust, whether in bearer, unregistered or other negotiable form, or in its
own name or in the name of a custodian or a nominee or nominees or otherwise;
(h) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or issuer of any
security or property which is held in the Trust; to consent to any contract,
lease, mortgage, purchase or sale of property by such corporation or issuer; and
to pay calls or subscriptions with respect to any security or property held in
the Trust;
(i) To join with other security or property holders in acting
through a committee, depositary, voting trustee or otherwise, and in that
connection to deposit any security or property with, or transfer any security or
property to, any such committee, depositary or trustee, and to delegate to them
such power and authority with relation to any security or property (whether or
not so deposited or transferred) as the Trustees shall deem proper, and to agree
to pay, and to pay, such portion of the expenses and compensation of such
committee, depositary or trustee as the Trustees shall deem proper;
(j) To compromise, arbitrate or otherwise adjust claims in
favor of or against the Trust or any matter in controversy, including, but not
limited to, claims for taxes;
(k) To enter into joint ventures, general or limited
partnerships and any other combinations or associations;
(l) To borrow funds or other property in the name of the Trust
or any Series thereof exclusively for Trust or the relevant Series purposes and
in connection therewith issue notes or other evidences of indebtedness; and to
mortgage and pledge the Trust Property or any part thereof to secure any or all
of such indebtedness;
(m) To endorse or guarantee the payment of any notes or other
obligations of any Person; to make contracts of guaranty or suretyship, or
otherwise assume liability for payment thereof; and to mortgage and pledge the
Trust Property or any part thereof to secure any of or all of such obligations;
(n) To purchase and pay for entirely out of Trust Property
such insurance as the Trustees may deem necessary or appropriate for the conduct
of the business, including, without limitation, insurance policies insuring the
assets of the Trust or payment of distributions and principal on its portfolio
investments, and insurance policies insuring the Shareholders, Trustees,
officers, employees, agents, investment advisers, principal underwriters, or
independent contractors of the Trust, individually against all claims and
liabilities of every nature arising by reason of holding Shares, holding, being
in or having
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held any such office or position, or by reason of any action alleged to have
been taken or omitted by any such Person as Trustee, officer, employee, agent,
investment adviser, principal underwriter, or independent contractor, including
any action taken or omitted that may be determined to constitute negligence,
whether or not the Trust would have the power to indemnify such Person against
liability;
(o) To adopt, establish and carry out pension, profit-sharing,
Share bonus, Share purchase, savings, thrift and other retirement, incentive and
benefit plans and trusts, including the purchasing of life insurance and annuity
contracts as a means of providing such retirement and other benefits, for any or
all of the Trustees, officers, employees and agents of the Trust;
(p) To enter into contracts of any kind and description;
(q) To interpret the investment policies, practices or
limitations of any Series or Class;
(r) To establish a registered office and have a registered
agent in the State of Delaware;
(s) To invest the assets of any Series in a single investment
company, including investment by means of transfer of such assets in exchange
for an interest or interests in such investment company;
(t) Subject to the 1940 Act, to engage in any other lawful act
or activity in which a business trust organized under the Delaware Act may
engage; and
(u) In general to carry on any other business in connection
with or incidental to any of the foregoing powers, to do everything necessary,
suitable or proper for the accomplishment of any purpose or the attainment of
any object or the furtherance of any power hereinbefore set forth, either alone
or in association with others, and to do every other act or thing incidental or
appurtenant to or growing out of or connected with the aforesaid business or
purposes, objects or powers.
The foregoing clauses shall be construed as objects and
powers, and the foregoing enumeration of specific powers shall not be held to
limit or restrict in any manner the general power of the Trustees. Any action by
one or more of the Trustees in their capacity as such hereunder shall be deemed
an action on behalf of the Trust or the applicable Series, and not an action in
an individual capacity.
The Trust shall not be limited to investing in obligations
maturing before the possible termination of the Trust or one or more of its
Series or Classes thereof. The Trust shall not in any way be bound or limited by
any present or future law or custom in regard to
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investment by fiduciaries. The Trust shall not be required to obtain any court
order to deal with any assets of the Trust or take any other action hereunder.
Section 5. Payment of Expenses by the Trust. The Trustees are
authorized to pay or cause to be paid out of the principal or income of the
Trust, or partly out of the principal and partly out of income, as they deem
fair, all expenses, fees, charges, taxes and liabilities incurred or arising in
connection with the Trust, or in connection with the management thereof,
including, but not limited to, the Trustees compensation and such expenses and
charges for the services of the Trust's officers, employees, investment adviser
or manager, Principal Underwriter, auditors, counsel, custodian, transfer agent,
Shareholder servicing agent, and such other agents or independent contractors
and such other expenses and charges as the Trustees may deem necessary or proper
to incur, which expenses, fees, charges, taxes and liabilities shall be
allocated in accordance with Article III, Section 6 hereof.
Section 6. Payment of Expenses by Shareholders. The Trustees
shall have the power to cause each Shareholder, or each Shareholder of any
particular Series or Class, to pay directly, at such intervals as the Trustees
may determine, in advance or arrears, for charges of the Trust's transfer agent,
Shareholder servicing or similar agent, an amount fixed from time to time by the
Trustees, by setting off such charges due from such Shareholder from declared
but unpaid dividends owed such Shareholder and/or by reducing the number of
Shares in the account of such Shareholder by that number of full and/or
fractional Shares which represents the outstanding amount of such charges due
from such Shareholder.
Section 7. Ownership of Assets of the Trust. The assets of the
Trust shall be held separate and apart from any assets now or hereafter held in
any capacity other than as Trustee hereunder by the Trustees. Title to all of
the assets of the Trust shall at all times be considered as vested in the Trust,
except that the Trustees shall have power to cause legal title to any Trust
Property to be held by or in the name of one or more of the Trustees, or in the
name of any other Person as nominee, on such terms as the Trustees may
determine. The right, title and interest of the Trustees in the Trust Property
shall vest automatically in each Person who may hereafter become a Trustee. Upon
the resignation, removal or death of a Trustee, she or he shall automatically
cease to have any right, title or interest in any of the Trust Property, and the
right, title and interest of such Trustee in the Trust Property shall vest
automatically in the remaining Trustees. Such vesting and cessation of title
shall be effective whether or not conveyancing documents have been executed and
delivered.
Section 8. Service Contracts.
(a) Subject to such requirements and restrictions as may be
set forth under federal and/or state law and in the By-Laws, including, without
limitation, at the date hereof the requirements of Section 15 of the 1940 Act,
or any successor provision, the Trustees may, at any time and from time to time,
contract for exclusive or nonexclusive advisory, management and/or
administrative services for the Trust or for any Series (or Class thereof)
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with any corporation, trust, association or other organization; and any such
contract may contain such other terms as the Trustees may determine, including,
without limitation, authority for the Manager or administrator to delegate
certain or all of its duties under such contracts to qualified investment
advisers and administrators and to determine from time to time without prior
consultation with the Trustees what investments shall be purchased, held, sold
or exchanged and what portion, if any, of the assets of the Trust shall be held
uninvested and to make changes in the Trust's investments, or such other
activities as may specifically be delegated to such party.
(b) The Trustees may also, at any time and from time to time,
contract with any corporation, trust, association or other organization,
appointing it exclusive or nonexclusive distributor or Principal Underwriter for
the Shares of one or more of the Series (or Classes) or other securities to be
issued by the Trust. Every such contract shall comply with such requirements and
restrictions as may be set forth under federal and/or state law and in the
By-Laws, including, without limitation, at the date hereof the requirements of
Section 15 of the 1940 Act, or any successor provision; and any such contract
may contain such other terms as the Trustees may determine.
(c) The Trustees are also empowered, at any time and from time
to time, to contract with any corporations, trusts, associations or other
organizations, appointing it or them the custodian, transfer agent and/or
Shareholder servicing agent for the Trust or one or more of its Series (or
Classes). Every such contract shall comply with such requirements and
restrictions as may be set forth under federal and/or state law and in the
By-Laws or stipulated by resolution of the Trustees. The Trustees are empowered,
at any time and from time to time, to retain subagents (foreign or domestic) in
connection with any service provider to the Trust or one or more of its Series
(or Classes).
(d) Subject to applicable law, the Trustees are further
empowered, at any time and from time to time, to contract with any entity to
provide such other services, including without limitation accounting and pricing
services, to the Trust or one or more of the Series (or Classes thereof), as the
Trustees determine to be in the best interests of the Trust and the applicable
Series (or Class).
(e) The fact that:
(i) any of the Shareholders, Trustees, or officers of
the Trust is a Shareholder, director, officer, partner,
trustee, employee, Manager, adviser, Principal Underwriter,
distributor, or affiliate or agent of or for any corporation,
trust, association, or other organization, or for any parent
or affiliate of any organization, with which an advisory,
management or administration contract, or principal
underwriter's or distributor's contract, or transfer,
Shareholder servicing or other type of service contract may
have been or may hereafter be
14
<PAGE> 15
made, or that any such organization, or any parent or
affiliate thereof, is a Shareholder or has an interest in the
Trust, or that
(ii) any corporation, trust, association or other
organization with which an advisory, management or
administration contract or principal underwriter's or
distributor's contract, or transfer, Shareholder servicing or
other type of service contract may have been or may hereafter
be made also has an advisory, management or administration
contract, or principal underwriter's or distributor's
contract, or transfer, Shareholder servicing or other service
contract with one or more other corporations, trusts,
associations, or other organizations, or has other business or
interests,
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing the
same, or create any liability or accountability to the Trust or its
Shareholders, provided approval of each such contract is made pursuant to the
requirements of the 1940 Act.
Section 9. Trustees and Officers as Shareholders. Any Trustee,
officer or agent of the Trust may acquire, own and dispose of Shares to the same
extent as if he were not a Trustee, officer or agent; and the Trustees may issue
and sell and cause to be issued and sold Shares to, and redeem such Shares from,
any such Person or any firm or company in which such Person is interested,
subject only to the general limitations contained herein or in the By-Laws
relating to the sale and redemption of such Shares.
ARTICLE V
Shareholders' Voting Powers and Meetings
Section 1. Voting Powers, Meetings, Notice and Record Dates.
The Shareholders shall have power to vote only (i) for the election or removal
of Trustees to the extent and as provided in Article IV, Section 2, and (ii)
with respect to such additional matters relating to the Trust as may be required
by applicable law, this Declaration of Trust, the By-Laws or any registration of
the Trust with the Commission (or any successor agency) or any state, or as the
Trustees may consider necessary or desirable. Each Shareholder shall be entitled
to one vote for each dollar of net asset value (determined as of the applicable
record date) of each Share owned by such Shareholder (number of Shares owned
times net asset value per Share) on any matter on which such Shareholder is
entitled to vote and each fractional dollar amount shall be entitled to a
proportionate fractional vote. Notwithstanding any other provision of this
Declaration of Trust, on any matter submitted to a vote of the Shareholders, all
Shares of the Trust then entitled to vote shall be voted in aggregate, except
(i) when required by the 1940 Act, Shares shall be voted by individual Series or
Class; and
15
<PAGE> 16
(ii) when the matter involves the termination of a Series or Class or any other
action that the Trustees have determined will affect only the interests of one
or more Series or Classes, then only Shareholders of such Series or Classes
shall be entitled to vote thereon. There shall be no cumulative voting in the
election of Trustees. Shares may be voted in person or by proxy. A proxy may be
given in writing. The By-Laws may provide that proxies may also, or may instead,
be given by any electronic or telecommunications device or in any other manner.
Notwithstanding anything else contained herein or in the By-Laws, in the event a
proposal by anyone other than the officers or Trustees of the Trust is submitted
to a vote of the Shareholders of one or more Series or Classes thereof or of the
Trust, or in the event of any proxy contest or proxy solicitation or proposal in
opposition to any proposal by the officers or Trustees of the Trust, Shares may
be voted only in person or by written proxy at a meeting. Until Shares are
issued, the Trustees may exercise all rights of Shareholders and may take any
action required by law, this Declaration of Trust or the By-Laws to be taken by
the Shareholders. Meetings of the Shareholders shall be called and notice
thereof and record dates therefor shall be given and set as provided in the
By-Laws.
Section 2. Quorum and Required Vote. Except when a larger
quorum is required by applicable law, by the By-Laws or by this Declaration of
Trust, (i) thirty-three and one-third percent (33-1/3%) of the Shares entitled
to vote shall constitute a quorum at a Shareholders' meeting and (ii) when any
one or more Series (or Classes) is to vote as a single class separate from any
other Shares, thirty-three and one-third percent (33-1/3%) of the Shares of each
such Series (or Class) entitled to vote shall constitute a quorum at a
Shareholders' meeting of that Series (or Class). Except when a larger vote is
required by any provision of this Declaration of Trust or the By-Laws or by
applicable law, when a quorum is present at any meeting, a majority of the
Shares voted shall decide any questions and a plurality of the Shares voted
shall elect a Trustee, provided that where any provision of law or of this
Declaration of Trust requires that the holders of any Series shall vote as a
Series (or that holders of a Class shall vote as a Class), then a majority of
the Shares of that Series (or Class) voted on the matter (or a plurality with
respect to the election of a Trustee) shall decide that matter insofar as that
Series (or Class) is concerned.
Section 3. Additional Provisions. The By-Laws may include
further provisions for Shareholders' votes and meetings and related matters.
ARTICLE VI
Net Asset Value, Distributions and Redemptions
Section 1. Determination of Net Asset Value, Net Income, and
Distributions. Subject to applicable law and Article III, Section 6 hereof, the
Trustees, in their absolute discretion, may prescribe and shall set forth in the
By-Laws or in a duly adopted resolution of the Trustees such bases and time or
times for determining the net asset value of the Shares of any Series or Class,
the net income attributable to the Shares of any Series or Class, or
16
<PAGE> 17
the declaration and payment of dividends and distributions on the Shares of any
Series or Class, as they may deem necessary or desirable from time to time.
Section 2. Redemptions and Repurchases.
(a) The Trust shall purchase such Shares as are offered by any
Shareholder for redemption, upon the presentation of a proper instrument of
transfer together with a request directed to the Trust or a Person designated by
the Trust that the Trust purchase such Shares or in accordance with such other
procedures for redemption as the Trustees may from time to time authorize; and
the Trust will pay therefor the net asset value thereof as determined by the
Trustees (or on their behalf), in accordance with any applicable provisions of
the By-Laws and applicable law. Unless extraordinary circumstances exist,
payment for said Shares shall be made by the Trust to the Shareholder within
seven (7) days after the date on which the request is made in proper form. The
obligation set forth in this Section 2 is subject to the provision that in the
event that any time the New York Stock Exchange (the "Exchange") is closed for
other than weekends or holidays, or if permitted by the rules and regulations or
an order of the Commission during periods when trading on the Exchange is
restricted or during any emergency which makes it impracticable for the Trust to
dispose of the investments of the applicable Series or Class or to determine
fairly the value of the net assets held with respect to such Series or Class or
during any other period permitted by order of the Commission for the protection
of investors, such obligations may be suspended or postponed by the Trustees. In
the case of a suspension of the right of redemption as provided herein, a
Shareholder may either withdraw the request for redemption or receive payment
based on the net asset value per Share next determined after the termination of
such suspension.
(b) The redemption price may in any case or cases be paid
wholly or partly in kind if the Trustees determine that such payment is
advisable in the interest of the remaining Shareholders of the Series or Class
for which the Shares are being redeemed. The fair value, selection and quantity
of securities or other property so paid or delivered as all or part of the
redemption price may be determined by or under authority of the Trustees. In no
case shall the Trust be liable for any delay of any corporation or other Person
in transferring securities selected for delivery as all or part of any payment
in kind.
(c) If the Trustees shall, at any time and in good faith,
determine that direct or indirect ownership of Shares of any Series or Class has
or may become concentrated in any Person to an extent that would disqualify any
Series as a regulated investment company under the Internal Revenue Code of
1986, as amended (or any successor statute thereto), then the Trustees shall
have the power (but not the obligation) by such means as they deem equitable (i)
to involuntarily redeem any number, or principal amount, of Shares of such
Person sufficient to maintain or bring the direct or indirect ownership of
Shares into conformity with the requirements for such qualification, and (ii) to
refuse to transfer or issue Shares to any Person whose acquisition of the Shares
in question would
17
<PAGE> 18
result in such disqualification. Any such redemption shall be effected at the
redemption price and in the manner provided in this Article VI.
(d) The holders of Shares shall upon demand disclose to the
Trustees in writing such information with respect to direct and indirect
ownership of Shares as the Trustees deem necessary to comply with the provisions
of the Internal Revenue Code of 1986, as amended (or any successor statute
thereto), or to comply with the requirements of any other taxing or regulatory
authority.
(e) Subject to the requirements of the 1940 Act, the Board of
Trustees may cause the Trust to redeem, at the price and in the manner provided
in this Article VI, Shares of any Series or Class held by any Person (i) if such
Person is no longer qualified to hold such Shares in accordance with such
qualifications as may be established by the Trustees, (ii) if the net asset
value of such Shares is below the minimum investment amount which initially
shall be $1,000 or such other amount as determined by the Trustees or (iii) if
otherwise deemed by the Trustees to be in the best interest of the Trust or that
particular Series (or Class) as a whole.
(f) Shares redeemed shall, upon redemption, be deemed to be
retired and restored to the status of unissued shares.
ARTICLE VII
Compensation and Limitation of
Liability of Trustees
Section 1. Compensation. The Trustees as such shall be
entitled to reasonable compensation from the Trust, and they may fix the amount
of such compensation. Nothing herein shall in any way prevent the employment of
any Trustee for advisory, management, legal, accounting, investment banking or
other services and payment for the same by the Trust.
Section 2. Indemnification and Limitation of Liability. A
Trustee, when acting in such capacity, shall not be personally liable to any
Person, other than the Trust or a Shareholder to the extent provided in this
Article VII, for any act, omission or obligation of the Trust, of such Trustee
or of any other Trustee. The Trustees shall not be responsible or liable in any
event for any neglect or wrongdoing of any officer, agent, employee, Manager or
Principal Underwriter of the Trust. The Trust (i) may indemnify an agent of the
Trust or any Person who is serving or has served at the Trust's request as an
agent of another organization in which the Trust has any interest as a
shareholder, creditor or otherwise and (ii) shall indemnify each Person who is,
or has been, a Trustee, officer or employee of the Trust and any Person who is
serving or has served at the Trust's request as a director, officer, trustee, or
employee of another organization in which the Trust has any interest as a
18
<PAGE> 19
shareholder, creditor or otherwise, in the case of (i) and (ii), to the fullest
extent consistent with the 1940 Act and in the manner provided in the By-Laws;
provided that such indemnification shall not be available to any of the
foregoing Persons in connection with a claim, suit or other proceeding by any
such Person against the Trust or a Series (or Class) thereof.
All persons extending credit to, contracting with or having
any claim against the Trust or the Trustees shall look only to the assets of the
appropriate Series (or Class thereof if the Trustees have included a Class
limitation on liability in the agreement with such person as provided below),
or, if the Trustees have yet to establish Series, of the Trust for payment under
such credit, contract or claim; and neither the Trustees nor the Shareholders,
nor any of the Trust's officers, employees or agents, whether past, present or
future, shall be personally liable therefor.
Every note, bond, contract, instrument, certificate or
undertaking and every other act or thing whatsoever executed or done by or on
behalf of the Trust or the Trustees by any of them in connection with the Trust
shall conclusively be deemed to have been executed or done only in or with
respect to his or their capacity as Trustee or Trustees, and such Trustee or
Trustees shall not be personally liable thereon. At the Trustees' discretion,
any note, bond, contract, instrument, certificate or undertaking made or issued
by the Trustees or by any officer or officers may give notice that the
Certificate of Trust is on file in the Office of the Secretary of State of the
State of Delaware and that a statutory limitation on liability of Series exists
and such note, bond, contract, instrument, certificate or undertaking may, if
the Trustees so determine, recite that the same was executed or made on behalf
of the Trust by a Trustee or Trustees in such capacity and not individually or
by an officer or officers in such capacity and not individually and that the
obligations of such instrument are not binding upon any of them or the
Shareholders individually but are binding only on the assets and property of the
Trust or a Series thereof, and may contain such further recital as such Person
or Persons may deem appropriate including, without limitation, a requirement, in
any note, bond, contract, instrument, certificate or undertaking made with
respect to one or more Classes of any Series that the parties thereto look only
to the assets of such Class or Classes in satisfaction of the liabilities
arising thereunder. The omission of any such notice or recital shall in no way
operate to bind any Trustees, officers or Shareholders individually.
Section 3. Trustee's Good Faith Action, Expert Advice, No Bond
or Surety. The exercise by the Trustees of their powers and discretions
hereunder shall be binding upon everyone interested. A Trustee shall be liable
to the Trust and to any Shareholder solely for her or his own willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee, and shall not be liable for
errors of judgment or mistakes of fact or law. The Trustees may take advice of
counsel or other experts with respect to the meaning and operation of this
Declaration of Trust, and shall be under no liability for any act or omission in
accordance with such advice nor for failing to
19
<PAGE> 20
follow such advice. The Trustees shall not be required to give any bond as
such, nor any surety if a bond is required.
Section 4. Insurance. The Trustees shall be entitled and
empowered to the fullest extent permitted by law to purchase with Trust assets
insurance for liability and for all expenses reasonably incurred or paid or
expected to be paid by a Trustee, officer, employee or agent of the Trust in
connection with any claim, action, suit or proceeding in which she or he becomes
involved by virtue of her or his capacity or former capacity with the Trust.
ARTICLE VIII
Miscellaneous
Section 1. Liability of Third Persons Dealing with Trustees.
No Person dealing with the Trustees shall be bound to make any inquiry
concerning the validity of any transaction made or to be made by the Trustees or
to see to the application of any payments made or property transferred to the
Trust or upon its order.
Section 2. Termination of Trust or Series.
(a) Unless terminated as provided herein, the Trust shall
continue without limitation of time. The Trust may be terminated at any time by
vote of a majority of the Shares of each Series entitled to vote, voting
separately by Series, or by the Trustees by written notice to the Shareholders.
Any Series of Shares or Class thereof may be terminated at any time by vote of a
majority of the Shares of such Series or Class entitled to vote or by the
Trustees by written notice to the Shareholders of such Series or Class.
(b) Upon the requisite Shareholder vote or action by the
Trustees to terminate the Trust or any one or more Series of Shares or any Class
thereof, after paying or otherwise providing for all charges, taxes, expenses
and liabilities, whether due or accrued or anticipated, of the Trust or of the
particular Series or any Class thereof as may be determined by the Trustees, the
Trust shall in accordance with such procedures as the Trustees consider
appropriate reduce the remaining assets of the Trust or of the affected Series
or Class to distributable form in cash or Shares (if any Series remain) or other
securities, or any combination thereof, and distribute the proceeds to the
Shareholders of the Series or Classes involved, ratably according to the number
of Shares of such Series or Class held by the several Shareholders of such
Series or Class on the date of distribution. Thereupon, the Trust or any
affected Series or Class shall terminate and the Trustees and the Trust shall be
discharged of any and all further liabilities and duties relating thereto or
arising therefrom, and the right, title and interest of all parties with respect
to the Trust or such Series or Class shall be canceled and discharged.
20
<PAGE> 21
(c) Upon termination of the Trust, following completion of
winding up of its business, the Trustees shall cause a certificate of
cancellation of the Trust's Certificate of Trust to be filed in accordance with
the Delaware Act, which certificate of cancellation may be signed by any one
Trustee.
Section 3. Reorganization.
(a) Notwithstanding anything else herein, the Trustees may,
without any Shareholder approval or vote unless such approval or vote is
required by applicable law, in order to change the form or jurisdiction of
organization of the Trust or for any other purpose (i) cause the Trust to merge
or consolidate with or into one or more trusts (or series thereof to the extent
permitted by law), partnerships, associations, corporations or other business
entities (including trusts, partnerships, associations, corporations or other
business entities created by the Trustees to accomplish such merger or
consolidation), (ii) cause the Shares to be exchanged under or pursuant to any
state or federal statute to the extent permitted by law or (iii) cause the Trust
to reorganize under the laws of any state or other political subdivision of the
United States, if such action is determined by the Trustees to be in the best
interests of the Trust. Any agreement of merger or consolidation or exchange or
certificate of merger may be signed by a majority of the Trustees and facsimile
signatures conveyed by electronic or telecommunication means shall be valid.
(b) Pursuant to and in accordance with the provisions of
Section 3815(f) of the Delaware Act, and notwithstanding anything to the
contrary contained in this Declaration of Trust, an agreement of merger or
consolidation approved by the Trustees in accordance with this Section 3 may
effect any amendment to the governing instrument of the Trust or effect the
adoption of a new trust instrument of the Trust if the Trust is the surviving or
resulting trust in the merger or consolidation.
(c) The Trustees may, without any Shareholder approval or vote
unless such approval or vote is required by applicable law, create one or more
business trusts to which all or any part of the assets, liabilities, profits or
losses of the Trust or any Series or Class thereof may be transferred and may
provide for the conversion of Shares in the Trust or any Series or Class thereof
into beneficial interests in any such newly created trust or trusts or any
series or classes thereof.
Section 4. Amendments. Except as specifically provided in this
section, the Trustees may, without Shareholder vote, restate, amend or otherwise
supplement this Declaration of Trust. Shareholders shall have the right to vote
(i) on any amendment that would affect their right to vote granted in Article V,
Section 1 hereof, (ii) on any amendment to this Section 4 of Article VIII, (iii)
on any amendment that may be required to be approved by Shareholders by
applicable law or by the Trust's registration statement filed with the
Commission, and (iv) on any amendment submitted to them by the Trustees. Any
amendment required or permitted to be submitted to the Shareholders that, as the
Trustees determine, shall affect the Shareholders of one or more Series (or
Classes thereof) shall be
21
<PAGE> 22
authorized by a vote of the Shareholders of each Series or Class affected and no
vote of Shareholders of a Series or Class not affected shall be required.
Notwithstanding anything else herein, no amendment hereof shall limit the rights
to insurance provided by Article VII, Section 4 with respect to any acts or
omissions of Persons covered thereby prior to such amendment nor shall any such
amendment limit the rights to indemnification referenced in Article VII, Section
2 hereof as provided in the By-Laws with respect to any actions or omissions of
Persons covered thereby prior to such amendment. The Trustees may, without
Shareholder vote, restate, amend, or otherwise supplement the Certificate of
Trust as they deem necessary or desirable.
Section 5. Filing of Copies, References, Headings. The
original or a copy of this instrument and of each restatement and/or amendment
hereto shall be kept at the office of the Trust where it may be inspected by any
Shareholder. Anyone dealing with the Trust may rely on a certificate by an
officer of the Trust as to whether or not any such restatements and/or
amendments have been made and as to any matters in connection with the Trust
hereunder; and, with the same effect as if it were the original, may rely on a
copy certified by an officer of the Trust to be a copy of this instrument or of
any such restatements and/or amendments. In this instrument and in any such
restatements and/or amendments, references to this instrument, and all
expressions such as "herein", "hereof" and "hereunder", shall be deemed to refer
to this instrument as amended or affected by any such restatements and/or
amendments. Headings are placed herein for convenience of reference only and
shall not be taken as a part hereof or control or affect the meaning,
construction or effect of this instrument. Whenever the singular number is used
herein, the same shall include the plural; and the neuter, masculine and
feminine genders shall include each other, as applicable. This instrument may be
executed in any number of counterparts each of which shall be deemed an
original.
Section 6. Applicable Law.
(a) The Trust is created under, and this Declaration of Trust
is to be governed by, and construed and enforced in accordance with, the laws of
the state of Delaware. The Trust shall be of the type commonly called a business
trust, and without limiting the provisions hereof, the Trust specifically
reserves the right to exercise any of the powers or privileges afforded to
business trusts or actions that may be engaged in by business trusts under the
Delaware Act, and the absence of a specific reference herein to any such power,
privilege or action shall not imply that the Trust may not exercise such power
or privilege or take such actions.
(b) Notwithstanding the first sentence of Section 6(a) of this
Article VIII, there shall not be applicable to the Trust, the Trustees or this
Declaration of Trust (x) the provisions of section 3540 of Title 12 of the
Delaware Code or (y) any provisions of the laws (statutory or common) of the
state of Delaware (other than the Delaware Act) pertaining to trusts that relate
to or regulate: (i) the filing with any court or governmental body or agency of
trustee accounts or schedules of trustee fees and charges, (ii) affirmative
requirements to
22
<PAGE> 23
post bonds for trustees, officers, agents or employees of a trust, (iii) the
necessity for obtaining a court or other governmental approval concerning the
acquisition, holding or disposition of real or personal property, (iv) fees or
other sums applicable to trustees, officers, agents or employees of a trust, (v)
the allocation of receipts and expenditures to income or principal, (vi)
restrictions or limitations on the permissible nature, amount or concentration
of trust investments or requirements relating to the titling, storage or other
manner of holding of trust assets, or (vii) the establishment of fiduciary or
other standards or responsibilities or limitations on the acts or powers of
trustees that are inconsistent with the limitations or liabilities or
authorities and powers of the Trustees set forth or referenced in this
Declaration of Trust.
Section 7. Provisions in Conflict with Law or Regulations.
(a) The provisions of the Declaration of Trust are severable,
and if the Trustees shall determine, with the advice of counsel, that any of
such provisions is in conflict with the 1940 Act, the regulated investment
company provisions of the Internal Revenue Code of 1986, as amended (or any
successor statute thereto), and the regulations thereunder, with the Delaware
Act or with other applicable laws and regulations, the conflicting provision
shall be deemed never to have constituted a part of the Declaration of Trust;
provided, however, that such determination shall not affect any of the remaining
provisions of the Declaration of Trust or render invalid or improper any action
taken or omitted prior to such determination.
(b) If any provision of the Declaration of Trust shall be held
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such jurisdiction and
shall not in any manner affect such provision in any other jurisdiction or any
other provision of the Declaration of Trust in any jurisdiction.
Section 8. Business Trust Only. It is the intention of the
Trustees to create a business trust pursuant to the Delaware Act. It is not the
intention of the Trustees to create a general partnership, limited partnership,
joint stock association, corporation, bailment, or any form of legal
relationship other than a business trust pursuant to the Delaware Act. Nothing
in this Declaration of Trust shall be construed to make the Shareholders, either
by themselves or with the Trustees, partners or members of a joint stock
association.
23
<PAGE> 24
IN WITNESS WHEREOF, the Trustees named below do hereby make
and enter into this Declaration of Trust as of April 17, 1996.
TRUSTEES
/s/ Claire B. Benenson /s/ Eugene J. Glaser
- --------------------------------- ----------------------------------
Claire B. Benenson, as Trustee Eugene J. Glaser, as Trustee
/s/ Richard E. Deems /s/ Donald B. Romans
- --------------------------------- ---------------------------------
Richard E. Deems, as Trustee Donald B. Romans, as Trustee
/s/ S. Leland Dill
- ---------------------------------
S. Leland Dill, as Trustee
24
<PAGE> 25
AGREEMENT AND DECLARATION OF TRUST
OF
ZWEIG SERIES TRUST
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I Name and Definitions........................................................................ 1
ARTICLE II Purpose of Trust..............................................................................3
ARTICLE III Shares........................................................................................3
Section 1. Division of Beneficial Interest..............................................................3
Section 2. Ownership of Shares..........................................................................4
Section 3. Transfer of Shares...........................................................................4
Section 4. Investments in the Trust.....................................................................4
Section 5. Status of Shares and Limitation of Personal Liability........................................4
Section 6. Establishment and Designation of Series (or Class)...........................................5
Section 7. Indemnification of Shareholders..............................................................7
ARTICLE IV Trustees......................................................................................8
Section 1. Withdrawal of Initial Trustee................................................................8
Section 2. Number, Election and Tenure..................................................................8
Section 3. Effect of Death, Resignation, etc. of a Trustee..............................................8
Section 4. Powers.......................................................................................9
Section 5. Payment of Expenses by the Trust............................................................13
Section 6. Payment of Expenses by Shareholders.........................................................13
Section 7. Ownership of Assets of the Trust............................................................13
Section 8. Service Contracts...........................................................................13
Section 9. Trustees and Officers as Shareholders.......................................................15
ARTICLE V Shareholders' Voting Powers and Meetings.....................................................15
Section 1. Voting Powers, Meetings, Notice and Record Dates............................................15
Section 2. Quorum and Required Vote....................................................................16
Section 3. Additional Provisions.......................................................................16
</TABLE>
(i)
<PAGE> 26
<TABLE>
<S> <C>
ARTICLE VI Net Asset Value, Distributions and Redemptions...............................................16
Section 1. Determination of Net Asset Value, Net Income, and Distributions.............................16
Section 2. Redemptions and Repurchases.................................................................17
ARTICLE VII Compensation and Limitation of Liability of Trustees.........................................18
Section 1. Compensation................................................................................18
Section 2. Indemnification and Limitation of Liability.................................................18
Section 3. Trustee's Good Faith Action, Expert Advice, No Bond or Surety...............................19
Section 4. Insurance...................................................................................20
ARTICLE VIII Miscellaneous................................................................................20
Section 1. Liability of Third Persons Dealing with Trustees............................................20
Section 2. Termination of Trust or Series..............................................................20
Section 3. Reorganization..............................................................................21
Section 4. Amendments..................................................................................21
Section 5. Filing of Copies, References, Headings......................................................22
Section 6. Applicable Law..............................................................................22
Section 7. Provisions in Conflict with Law or Regulations..............................................23
Section 8. Business Trust Only.........................................................................23
</TABLE>
(ii)
<PAGE> 1
Exhibit 2(b)
BY-LAWS
OF
ZWEIG SERIES TRUST
A Delaware Business Trust
INTRODUCTION
A. Agreement and Declaration of Trust. These By-Laws shall be
subject to the Agreement and Declaration of Trust, as from time to time in
effect (the "Declaration of Trust"), of Zwieg Series Trust, a Delaware business
trust (the "Trust"). In the event of any inconsistency between the terms hereof
and the terms of the Declaration of Trust, the terms of the Declaration of Trust
shall control.
B. Definitions. Capitalized terms used herein and not herein
defined are used as defined in the Declaration of Trust.
ARTICLE I
Offices
Section 1. Principal Office. The Trustees shall fix and, from
time to time, may change the location of the principal executive office of the
Trust at any place within or outside the State of Delaware.
Section 2. Delaware Office. The Trustees shall establish a
registered office in the State of Delaware and shall appoint as the Trust's
registered agent for service of process in the State of Delaware an individual
resident of the State of Delaware or a Delaware corporation or a corporation
authorized to transact business in the State of Delaware; in each case the
business office of such registered agent for service of process shall be
identical with the registered Delaware office of the Trust.
Section 3. Other Offices. The Trustees may at any time
establish branch or subordinate offices at any place or places where the Trust
intends to do business.
<PAGE> 2
ARTICLE II
Meetings of Shareholders
Section 1. Place of Meetings. Meetings of Shareholders shall
be held at any place designated by the Trustees. In the absence of any such
designation, Shareholders' meetings shall be held at the principal executive
office of the Trust.
Section 2. Call of Meetings. Meetings of the Shareholders may
be called at any time by the Trustees or by the President for the purpose of
taking action upon any matter requiring the vote or authority of the
Shareholders as herein provided or provided in the Declaration of Trust or upon
any other matter as to which such vote or authority is deemed by the Trustees or
the President to be necessary or desirable. To the extent required by the 1940
Act, meetings of the Shareholders for the purpose of voting on the removal of
any Trustee shall be called promptly by the Trustees upon the written request of
Shareholders holding at least ten percent (10%) of the outstanding Shares
entitled to vote.
Section 3. Notice of Meetings of Shareholders. All notices of
meetings of Shareholders shall be sent or otherwise given in accordance with
Section 4 of this Article II not less than ten (10) nor more than ninety (90)
days before the date of the meeting. The notice shall specify (i) the place,
date and hour of the meeting, and (ii) the general nature of the business to be
transacted. The notice of any meeting at which Trustees are to be elected also
shall include the name of any nominee or nominees whom at the time of the notice
are intended to be presented for election.
If action is proposed to be taken at any meeting for approval
of (i) a contract or transaction in which a Trustee has a direct or indirect
financial interest, (ii) an amendment of the Agreement and Declaration of Trust
of the Trust, (iii) a reorganization of the Trust, or (iv) a voluntary
dissolution of the Trust, the notice shall also state the general nature of that
proposal.
Section 4. Manner of Giving Notice; Affidavit of Notice.
Notice of any meeting of Shareholders shall be given either personally or by
first-class mail or telegraphic or other written communication, charges prepaid,
addressed to the Shareholder at the address of that Shareholder appearing on the
books of the Trust or its transfer agent or given by the Shareholder to the
Trust for the purpose of notice. If no such address appears on the Trust's books
or is given, notice shall be deemed to have been given if sent to that
Shareholder by first-class mail or telegraphic or other written communication to
the Trust's principal executive office, or if published at least once in a
newspaper of general circulation in the county where that office is located.
Notice shall be deemed to have been given at the time when delivered personally
or deposited in the mail or sent by telegram or other means of written
communication or, where notice is given by publication, on the date of
publication.
If any notice addressed to a Shareholder at the address of
that Shareholder appearing on the books of the Trust is returned to the Trust by
the United States Postal Service marked to indicate that the Postal Service is
unable to deliver the notice to the Shareholder at
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that address, all future notices or reports shall be deemed to have been duly
given without further mailing if these shall be available to the Shareholder on
written demand of the Shareholder at the principal executive office of the Trust
for a period of one year from the date of the giving of the notice.
An affidavit of the mailing or other means of giving any
notice of any meeting of Shareholders shall be filed and maintained in the
minute book of the Trust.
Section 5. Adjourned Meeting; Notice. Any meeting of
Shareholders, whether or not a quorum is present, may be adjourned from time to
time by the vote of the majority of the Shares represented at that meeting,
either in person or by proxy.
When any meeting of Shareholders is adjourned to another time
or place, notice need not be given of the adjourned meeting at which the
adjournment is taken, unless a new record date of the adjourned meeting is fixed
or unless the adjournment is for more than sixty (60) days from the date set for
the original meeting, in which case the Trustees shall set a new record date.
Notice of any such adjourned meeting shall be given to each Shareholder of
record entitled to vote at the adjourned meeting in accordance with the
provisions of Sections 3 and 4 of this Article II. At any adjourned meeting, the
Trust may transact any business which might have been transacted at the original
meeting.
Section 6. Voting. The Shareholders entitled to vote at any
meeting of Shareholders shall be determined in accordance with the provisions of
the Declaration of Trust of the Trust, as in effect at such time. The
Shareholders' vote may be by voice vote or by ballot, provided, however, that
any election for Trustees must be by ballot if demanded by any Shareholder
before the voting has begun. On any matter other than elections of Trustees, any
Shareholder may vote part of the Shares in favor of the proposal and refrain
from voting the remaining Shares or vote them against the proposal, but if the
Shareholder fails to specify the number of Shares which the Shareholder is
voting affirmatively, it will be conclusively presumed that the Shareholder's
approving vote is with respect to the total Shares that the Shareholder is
entitled to vote on such proposal.
Section 7. Waiver of Notice by Consent of Absent Shareholders.
The transactions of the meeting of Shareholders, however called and noticed and
wherever held, shall be as valid as though taken at a meeting duly held after
regular call and notice if a quorum be present either in person or by proxy and
if either before or after the meeting, each person entitled to vote who was not
present in person or by proxy signs a written waiver of notice or a consent to a
holding of the meeting or an approval of the minutes. The waiver of notice or
consent need not specify either the business to be transacted or the purpose of
any meeting of Shareholders.
Attendance by a person at a meeting shall also constitute a
waiver of notice of that meeting, except when the person objects at the
beginning of the meeting to the transaction of any business because the meeting
is not lawfully called or convened and except that attendance at a meeting is
not a waiver of any right to object to the consideration of matters not included
in the notice of the meeting if that objection is expressly made at the
beginning of the meeting.
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Section 8. Shareholder Action by Written Consent Without a
Meeting. Except as provided in the Declaration of Trust or the 1940 Act, any
action that may be taken at any meeting of Shareholders may be taken without a
meeting and without prior notice if a consent in writing setting forth the
action so taken is signed by Shareholders having not less than the minimum
number of votes that would be necessary to authorize or take that action at a
meeting at which all Shareholders entitled to vote on that action were present
and voted. All such consents shall be filed with the Secretary of the Trust and
shall be maintained in the Trust's records. Any Shareholder giving a written
consent or a transferee of the Shares or a personal representative of the
Shareholder or their respective proxy holders may revoke the consent by a
writing received by the Secretary of the Trust before written consents of the
number of votes required to authorize the proposed action have been filed with
the Secretary.
If the consents of all Shareholders entitled to vote have not
been solicited in writing and if the unanimous written consent of all such
Shareholders shall not have been received, the Secretary shall give prompt
notice of the action approved by the Shareholders without a meeting. This notice
shall be given in the manner specified in Section 4 of this Article II.
Section 9. Record Date for Shareholder Notice, Voting and
Giving Consents.
(a) For purposes of determining the Shareholders entitled to
vote or act at any meeting or adjournment thereof, the Trustees may fix in
advance a record date which shall not be more than ninety (90) days nor less
than ten (10) days before the date of any such meeting. Without fixing a record
date for a meeting, the Trustees may for voting and notice purposes close the
register or transfer books for one or more Series (or Classes) for all or any
part of the period between the earliest date on which a record date for such
meeting could be set in accordance herewith and the date of such meeting.
If the Trustees do not so fix a record date or close the
register or transfer books of the affected Series (or Classes), the record date
for determining Shareholders entitled to notice of or to vote at a meeting of
Shareholders shall be at the close of business on the business day next
preceding the day on which notice is given or if notice is waived, at the close
of business on the business day next preceding the day on which the meeting is
held.
(b) The record date for determining Shareholders entitled to
give consent to action in writing without a meeting, (a) when no prior action of
the Trustees has been taken, shall be the day on which the first written consent
is given, or (b) when prior action of the Trustees has been taken, shall be (x)
such date as determined for that purpose by the Trustees, which record date
shall not precede the date upon which the resolution fixing it is adopted by the
Trustees and shall not be more than 20 days after the date of such resolution,
or (y) if no record date is fixed by the Trustees the record date shall be the
close of business on the day on which the Trustees adopt the resolution relating
to that action. Nothing in this Section shall be construed as precluding the
Trustees from setting different record dates for different Series (or Classes).
Only Shareholders of record on the record date as herein determined shall have
any right to vote or to act at any meeting or give consent to any action
relating to such record date, notwithstanding any transfer of Shares on the
books of the Trust after such record date.
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Section 10. Proxies. Subject to the provisions of the
Declaration of Trust, every Person entitled to vote for Trustees or on any other
matter shall have the right to do so either in person or by proxy, provided that
either (i) an instrument authorizing such a proxy to act is executed by the
Shareholder in writing and dated not more than eleven (11) months before the
meeting, unless the instrument specifically provides for a longer period or (ii)
the Trustees adopt an electronic, telephonic, computerized or other alternative
to execution of a written instrument authorizing the proxy to act which
authorization is received not more than eleven (11) months before the meeting. A
proxy shall be deemed executed by a Shareholder if the Shareholder's name is
placed on the proxy (whether by manual signature, typewriting, telegraphic
transmission or otherwise) by the Shareholder or the Shareholder's
attorney-in-fact or other authorized agent. A valid proxy which does not state
that it is irrevocable shall continue in full force and effect unless (i)
revoked by the person executing it before the vote pursuant to that proxy by a
writing delivered to the Trust stating that the proxy is revoked, by a
subsequent proxy executed by or attendance at the meeting and voting in person
by the person executing that proxy or revoked by such person using any
electronic, telephonic, computerized or other alternative means authorized by
the Trustees for authorizing the proxy to act; or (ii) written notice of the
death or incapacity of the maker of that proxy is received by the Trust before
the vote pursuant to that proxy is counted. A proxy with respect to Shares held
in the name of two or more Persons shall be valid if executed by any one of them
unless at or prior to exercise of the proxy the Trust receives a specific
written notice to the contrary from any of them. A proxy purporting to be
executed by or on behalf of a Shareholder shall be deemed valid unless
challenged at or prior to its exercise and the burden of proving invalidity
shall rest on the challenger.
Section 11. Inspectors of Election. Before any meeting of
Shareholders, the Trustees may appoint any persons other than nominees for
office to act as inspectors of election at the meeting or its adjournment. If no
inspectors of election are so appointed, the Chairman of the meeting may appoint
inspectors of election at the meeting. The number of inspectors shall be two
(2). If any person appointed as inspector fails to appear or fails or refuses to
act, the Chairman of the meeting may appoint a person to fill the vacancy.
These inspectors shall:
(a) Determine the number of Shares outstanding and the
voting power of each, the Shares represented at the
meeting, the existence of a quorum and the
authenticity, validity and effect of proxies;
(b) Receive votes, ballots or consents;
(c) Hear and determine all challenges and questions in
any way arising in connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine when the polls shall close;
(f) Determine the result; and
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(g) Do any other acts that may be proper to conduct the
election or vote with fairness to all Shareholders.
ARTICLE III
Trustees
Section 1. Powers. Subject to the applicable provisions of the
1940 Act, the Declaration of Trust and these By-Laws relating to action required
to be approved by the Shareholders, the business and affairs of the Trust shall
be managed and all powers shall be exercised by or under the direction of the
Trustees.
Section 2. Number of Trustees. The exact number of Trustees
within any limits specified in the Declaration of Trust shall be fixed from time
to time by a resolution of the Trustees.
Section 3. Vacancies. Vacancies in the authorized number of
Trustees may be filled as provided in the Declaration of Trust.
Section 4. Place of Meetings and Meetings by Telephone. All
meetings of the Trustees may be held at any place that has been designated from
time to time by resolution of the Trustees. In the absence of such a
designation, regular meetings shall be held at the principal executive office of
the Trust. Any meeting, regular or special, may be held by conference telephone
or similar communication equipment, so long as all Trustees participating in the
meeting can hear one another and, except as provided under the 1940 Act, all
such Trustees shall be deemed to be present in person at the meeting.
Section 5. Regular Meetings. Regular meetings of the Trustees
shall be held without call at such time as shall from time to time be fixed by
the Trustees. Such regular meetings may be held without notice.
Section 6. Special Meetings. Special meetings of the Trustees
for any purpose or purposes may be called at any time by the President or any
Vice President or the Secretary or any two (2) Trustees.
Notice of the time and place of special meetings shall be
delivered personally or by telephone to each Trustee or sent by first-class
mail, by telegram or telecopy (or similar electronic means) or by nationally
recognized overnight courier, charges prepaid, addressed to each Trustee at that
Trustee's address as it is shown on the records of the Trust. In case the notice
is mailed, it shall be deposited in the United States mail at least seven (7)
calendar days before the time of the holding of the meeting. In case the notice
is delivered personally or by telephone or by telegram, telecopy (or similar
electronic means) or overnight courier, it shall be given at least forty-eight
(48) hours before the time of the holding of the meeting. Any oral notice given
personally or by telephone may be communicated either to the Trustee or to a
person at the office of the Trustee who the person giving the notice has reason
to believe will
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promptly communicate it to the Trustee. The notice need not specify the purpose
of the meeting or the place if the meeting is to be held at the principal
executive office of the Trust.
Section 7. Quorum. A third of the authorized number of
Trustees shall constitute a quorum for the transaction of business, except to
adjourn as provided in Section 9 of this Article III. Every act or decision done
or made by a majority of the Trustees present at a meeting duly held at which a
quorum is present shall be regarded as the act of the Trustees, subject to the
provisions of the Declaration of Trust. A meeting at which a quorum is initially
present may continue to transact business notwithstanding the withdrawal of
Trustees if any action taken is approved by at least a majority of the required
quorum for that meeting.
Section 8. Waiver of Notice. Notice of any meeting need not be
given to any Trustee who either before or after the meeting signs a written
waiver of notice, a consent to holding the meeting, or an approval of the
minutes. The waiver of notice or consent need not specify the purpose of the
meeting. All such waivers, consents, and approvals shall be filed with the
records of the Trust or made a part of the minutes of the meeting. Notice of a
meeting shall also be deemed given to any Trustee who attends the meeting
without protesting before or at its commencement the lack of notice to that
Trustee.
Section 9. Adjournment. A majority of the Trustees present,
whether or not constituting a quorum, may adjourn any meeting to another time
and place.
Section 10. Notice of Adjournment. Notice of the time and
place of holding an adjourned meeting need not be given unless the meeting is
adjourned for more than forty-eight (48) hours, in which case notice of the time
and place shall be given before the time of the adjourned meeting in the manner
specified in Section 6 of this Article III to the Trustees who were present at
the time of the adjournment.
Section 11. Action Without a Meeting. Unless the 1940 Act
requires that a particular action be taken only at a meeting at which the
Trustees are present in person, any action to be taken by the Trustees at a
meeting may be taken without such meeting by the written consent of a majority
of the Trustees then in office. Any such written consent may be executed and
given by telecopy or similar electronic means. Such written consents shall be
filed with the minutes of the proceedings of the Trustees. If any action is so
taken by the Trustees by the written consent of less than all of the Trustees,
prompt notice of the taking of such action shall be furnished to each Trustee
who did not execute such written consent, provided that the effectiveness of
such action shall not be impaired by any delay or failure to furnish such
notice.
Section 12. Fees and Compensation of Trustees. Trustees and
members of committees may receive such compensation, if any, for their services
and such reimbursement of expenses as may be fixed or determined by resolution
of the Trustees. This Section 12 shall not be construed to preclude any Trustee
from serving the Trust in any other capacity as an officer, agent, employee, or
otherwise and receiving compensation for those services.
Section 13. Delegation of Power to Other Trustees. Any Trustee
may, by power of attorney, delegate his or her power for a period not exceeding
six (6) months at any one time
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to any other Trustee or Trustees; provided that in no case shall fewer than two
(2) Trustees personally exercise the powers granted to the Trustees, except as
otherwise expressly provided herein or by resolution of the Trustees. Except
where applicable law may require a Trustee to be present in person, a Trustee
represented by another Trustee pursuant to such power of attorney shall be
deemed to be present for purposes of establishing a quorum and satisfying the
required vote of Trustees.
ARTICLE IV
Committees
Section 1. Committees of Trustees. The Trustees may by
resolution designate one or more committees, each consisting of two (2) or more
Trustees, to serve at the pleasure of the Trustees. The Trustees may designate
one or more Trustees as alternate members of any committee who may replace any
absent member at any meeting of the committee. Any committee to the extent
provided in the resolution of the Trustee, shall have the authority of the
Trustees, except with respect to:
(a) the approval of any action which under applicable law
requires approval by a majority of the entire
authorized number of Trustees or certain Trustees;
(b) the filling of vacancies of Trustees;
(c) the fixing of compensation of the Trustees for
services generally or as a member of any committee;
(d) the amendment or termination of the Declaration of
Trust or any Series or Class or amendment of the
By-Laws or the adoption of new By-Laws;
(e) the amendment or repeal of any resolution of the
Trustees which by its express terms is not so
amendable or repealable;
(f) a distribution to the Shareholders of the Trust,
except at a rate or in a periodic amount or within a
designated range determined by the Trustees; or
(g) the appointment of any other committees of the
Trustees or the members of such new committees.
Section 2. Meetings and Action of Committees. Meetings and
action of committees shall be governed by and held and taken in accordance with
the provisions of Article III of these By-Laws, with such changes in the context
thereof as are necessary to substitute the committee and its members for the
Trustees generally, except that the time of regular meetings of committees may
be determined either by resolution of the Trustees or by resolution of the
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committee. Special meetings of committees may also be called by resolution of
the Trustees. Alternate members shall be given notice of meetings of committees
and shall have the right to attend all meetings of committees. The Trustees may
adopt rules for the governance of any committee not inconsistent with the
provisions of these By-Laws.
ARTICLE V
Officers
Section 1. Officers. The officers of the Trust shall be a
President, a Secretary, and a Treasurer. The Trust may also have, at the
discretion of the Trustees, a Chairman of the Board (Chairman), one or more Vice
Presidents, one or more Assistant Secretaries, one or more Assistant Treasurers,
and such other officers as may be appointed in accordance with the provisions of
Section 3 of this Article V. Any number of offices may be held by the same
person. The Chairman, if there be one, shall be a Trustee and may but need not
be a Shareholder; and any other officer may but need not be a Trustee or
Shareholder.
Section 2. Election of Officers. The officers of the Trust,
except such officers as may be appointed in accordance with the provisions of
Section 3 or Section 5 of this Article V, shall be chosen by the Trustees, and
each shall serve at the pleasure of the Trustees, subject to the rights, if any,
of an officer under any contract of employment.
Section 3. Subordinate Officers. The Trustees may appoint and
may empower the President to appoint such other officers as the business of the
Trust may require, each of whom shall hold office for such period, have such
authority and perform such duties as are provided in these By-Laws or as the
Trustees may from time to time determine.
Section 4. Removal and Resignation of Officers. Subject to the
rights, if any, of an officer under any contract of employment, any officer may
be removed, either with or without cause, by the Trustees at any regular or
special meeting of the Trustees or by the principal executive officer or by such
other officer upon whom such power of removal may be conferred by the Trustees.
Any officer may resign at any time by giving written notice to
the Trust. Any resignation shall take effect at the date of the receipt of that
notice or at any later time specified in that notice; and unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the Trust under any contract to which the officer is a party.
Section 5. Vacancies in Offices. A vacancy in any office
because of death, resignation, removal, disqualification or other cause shall be
filled in the manner prescribed in these By-Laws for regular appointment to that
office. The President may make temporary appointments to a vacant office pending
action by the Trustees.
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Section 6. Chairman. The Chairman, if such an officer is
elected, shall if present preside at meetings of the Trustees, shall be the
chief executive officer of the Trust and shall, subject to the control of the
Trustees, have general supervision, direction and control of the business and
the officers of the Trust and exercise and perform such other powers and duties
as may be from time to time assigned to him by the Trustees or prescribed by the
Declaration of Trust or these By-Laws.
Section 7. President. Subject to such supervisory powers, if
any, as may be given by the Trustees to the Chairman, if there be such an
officer, the President shall be the chief operating officer of the Trust and
shall, subject to the control of the Trustees and the Chairman, have general
supervision, direction and control of the business and the officers of the
Trust. He or she shall preside at all meetings of the Shareholders, and in the
absence of the Chairman or if there be none, at all meetings of the Trustees. He
or she shall have the general powers and duties of management usually vested in
the office of President of a corporation and shall have such other powers and
duties as may be prescribed by the Trustees, the Declaration of Trust or these
By-Laws.
Section 8. Vice Presidents. In the absence or disability of
the President, the Vice Presidents, if any, in order of their rank as fixed by
the Trustees or if not ranked, the Executive Vice President (who shall be
considered first ranked) and such other Vice Presidents as shall be designated
by the Trustees, shall perform all the duties of the President and when so
acting shall have all powers of and be subject to all the restrictions upon the
President. The Vice Presidents shall have such other powers and perform such
other duties as from time to time may be prescribed for them respectively by the
Trustees or the President or the Chairman or by these By-Laws.
Section 9. Secretary. The Secretary shall keep or cause to be
kept at the principal executive office of the Trust or such other place as the
Trustees may direct a book of minutes of all meetings and actions of Trustees,
committees of Trustees and Shareholders with the time and place of holding,
whether regular or special, and if special, how authorized, the notice given,
the names of those present at Trustees' meetings or committee meetings, the
number of Shares present or represented at meetings of Shareholders and the
proceedings.
The Secretary shall keep or cause to be kept at the principal
executive office of the Trust or at the office of the Trust's transfer agent or
registrar, a Share register or a duplicate Share register showing the names of
all Shareholders and their addresses, the number and classes of Shares held by
each, the number and date of certificates issued for the same and the number and
date of cancellation of every certificate surrendered for cancellation.
The Secretary shall give or cause to be given notice of all
meetings of the Shareholders and of the Trustees (or committees thereof)
required to be given by these By-Laws or by applicable law and shall have such
other powers and perform such other duties as may be prescribed by the Trustees
or by these By-Laws.
Section 10. Treasurer. The Treasurer shall be the chief
financial officer and chief accounting officer of the Trust and shall keep and
maintain or cause to be kept and
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maintained adequate and correct books and records of accounts of the properties
and business transactions of the Trust and each Series and Class thereof,
including accounts of the assets, liabilities, receipts, disbursements, gains,
losses, capital and retained earnings of all Series and Classes thereof. The
books of account shall at all reasonable times be open to inspection by any
Trustee.
The Treasurer shall deposit all monies and other valuables in
the name and to the credit of the Trust with such depositaries as may be
designated by the Board of Trustees. He or she shall disburse the funds of the
Trust as may be ordered by the Trustees, shall render to the President and
Trustees, whenever they request it, an account of all of his or her transactions
as chief financial officer and of the financial condition of the Trust and shall
have other powers and perform such other duties as may be prescribed by the
Trustees or these By-Laws.
ARTICLE VI
Indemnification of Trustees, Officers,
Employees and Other Agents
Section 1. Agents, Proceedings, Expenses. For the purpose of
this Article, "agent" means any Person who is or was a Trustee, officer,
employee or other agent of the Trust or is or was serving at the request of the
Trust as a trustee, director, officer, employee or agent of another organization
in which the Trust has any interest as a Shareholder, creditor or otherwise:
"proceeding" means any threatened, pending or completed claim, action, suit or
proceeding, whether civil, criminal, administrative or investigative (including
appeals); and "expenses" includes, without limitation, attorneys' fees, costs,
judgments, amounts paid in settlement, fines, penalties and all other
liabilities whatsoever.
Section 2. Indemnification. Subject to the exceptions and
limitations contained in Section 3 below, every agent shall be indemnified by
the Trust to the fullest extent permitted by law against all liabilities and
against all expenses reasonably incurred or paid by him or her in connection
with any proceeding in which he or she becomes involved as a party or otherwise
by virtue of his or her being or having been an agent.
Section 3. Limitations, Settlements. No indemnification shall
be provided hereunder to an agent:
(a) who shall have been adjudicated by the court or other body
before which the proceeding was brought to be liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or her office
(collectively, "disabling conduct"); or
(b) with respect to any proceeding disposed of (whether by
settlement, pursuant to a consent decree or otherwise) without an adjudication
by the court or other body before which the proceeding was brought that such
agent was liable to the Trust or its
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Shareholders by reason of disabling conduct, unless there has been a
determination that such agent did not engage in disabling conduct:
(i) by the court or other body before which the
proceeding was brought;
(ii) by at least a majority of those Trustees who
are neither Interested Persons (within the meaning of the 1940 Act) of the Trust
nor are parties to the proceeding based upon a review of readily available facts
(as opposed to a full trial-type inquiry); or
(iii) by written opinion of independent legal counsel
based upon a review of readily available facts (as opposed to a full trial-type
inquiry);
provided, however, that indemnification shall be provided hereunder to an agent
with respect to any proceeding in the event of (1) a final decision on the
merits by the court or other body before which the proceeding was brought that
the agent was not liable by reason of disabling conduct, or (2) the dismissal of
the proceeding by the court or other body before which it was brought for
insufficiency of evidence of any disabling conduct with which such agent has
been charged.
Section 4. Insurance, Rights Not Exclusive. The rights of
indemnification herein provided may be insured against by policies maintained by
the Trust on behalf of any agent, shall be severable, shall not be exclusive of
or affect any other rights to which any agent may now or hereafter be entitled
and shall inure to the benefit of the heirs, executors and administrators of any
agent.
Section 5. Advance of Expenses. Expenses incurred by an agent
in connection with the preparation and presentation of a defense to any
proceeding may be paid by the Trust from time to time prior to final disposition
thereof upon receipt of an undertaking by or on behalf of such agent that such
amount will be paid over by him or her to the Trust if it is ultimately
determined that he or she is not entitled to indemnification under this Article
VI; provided, however, that (a) such agent shall have provided appropriate
security for such undertaking, (b) the Trust is insured against losses arising
out of any such advance payments or (c) either a majority of the Trustees who
are neither Interested Persons of the Trust nor parties to the proceeding, or
independent legal counsel in a written opinion, shall have determined, based
upon a review of readily available facts (as opposed to a trial-type inquiry or
full investigation), that there is reason to believe that such agent will be
found entitled to indemnification under this Article VI.
Section 6. Fiduciaries of Employee Benefit Plan. This Article
does not apply to any proceeding against any Trustee, investment manager or
other fiduciary of an employee benefit plan in that person's capacity as such,
even though that person may also be an agent of this Trust as defined in Section
1 of this Article. Nothing contained in this Article shall limit any right to
indemnification to which such a Trustee, investment manager, or other fiduciary
may be entitled by contract or otherwise which shall be enforceable to the
extent permitted by applicable law other than this Article.
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ARTICLE VII
Records and Reports
Section 1. Maintenance and Inspection of Share Registrar. The
Trust shall maintain at its principal executive office or at the office of its
transfer agent or registrar, if either be appointed and as determined by
resolution of the Trustees, a record of its Shareholders, giving the names and
addresses of all Shareholders and the number and Series (and, as applicable,
Class) of Shares held by each Shareholder. Subject to such reasonable standards
(including standards governing what information and documents are to be
furnished and at whose expense) as may be established by the Trustees from time
to time, the record of the Trust's Shareholders shall be open to inspection upon
the written request of any Shareholder at any reasonable time during usual
business hours for a purpose reasonably related to the holder's interests as a
Shareholder.
Section 2. Maintenance and Inspection of By-Laws. The Trust
shall keep at its principal executive office the original or a copy of these
By-Laws as amended to date, which shall be open to inspection by the
Shareholders at all reasonable times during office hours.
Section 3. Maintenance and Inspection of Other Records. The
accounting books and records and minutes of proceedings of the Shareholders and
the Trustees and any committee or committees of the Trustees shall be kept at
such place or places designated by the Trustees or in the absence of such
designation, at the principal executive office of the Trust. The minutes shall
be kept in written form and the accounting books and records shall be kept
either in written form or in any other form capable of being converted into
written form. Minutes and accounting books and records shall be open to
inspection upon the written request of any Shareholder at any reasonable time
during usual business hours for a purpose reasonably related to the holder's
interests as a Shareholder. Any such inspection may be made in person or by an
agent or attorney and shall include the right to copy and make extracts.
Notwithstanding the foregoing, the Trustees shall have the right to keep
confidential from Shareholders for such period of time as the Trustees deem
reasonable, any information which the Trustees reasonably believe to be in the
nature of trade secrets or other information the disclosure of which the
Trustees in good faith believe is not in the best interests of the Trust or
could damage the Trust or its business or which the Trust is required by law or
by agreement with a third party to keep confidential.
Section 4. Inspection by Trustees. Every Trustee shall have
the absolute right at any reasonable time to inspect all books, records, and
documents of every kind and the physical properties of the Trust. This
inspection by a Trustee may be made in person or by an agent or attorney and the
right of inspection includes the right to copy and make extracts of documents.
Section 5. Financial Statements. A copy of any financial
statements and any income statement of the Trust for each semi-annual period of
each fiscal year and accompanying balance sheet of the Trust as of the end of
each such period that has been prepared by the Trust shall be kept on file in
the principal executive office of the Trust for at least twelve (12) months
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<PAGE> 14
and each such statement shall be exhibited at all reasonable times to any
Shareholder demanding an examination of any such statement or a copy shall be
mailed to any such Shareholder.
The semi-annual income statements and balance sheets referred
to in this section shall be accompanied by the report, if any, of any
independent accountants engaged by the Trust or the certificate of an authorized
officer of the Trust that the financial statements were prepared without audit
from the books and records of the Trust.
ARTICLE VIII
General Matters
Section 1. Checks, Drafts, Evidence of Indebtedness. All
checks, drafts, or other orders for payment of money, notes or other evidences
of indebtedness issued in the name of or payable to the Trust shall be signed or
endorsed in such manner and by such person or persons as shall be designated
from time to time in accordance with the resolution of the Board of Trustees.
Section 2. Contracts and Instruments; How Executed. The
Trustees, except as otherwise provided in these By-Laws, may authorize any
officer or officers, agent or agents, to enter into any contract or execute any
instrument in the name of and on behalf of the Trust and this authority may be
general or confined to specific instances; and unless so authorized or ratified
by the Trustees or within the agency power of an officer, no officer, agent, or
employee shall have any power or authority to bind the Trust by any contract or
engagement or to pledge its credit or to render it liable for any purpose or for
any amount.
Section 3. Certificates for Shares. The Trustees may at any
time authorize the issuance of Share certificates for any one or more Series or
Classes. In that event, each Shareholder of an affected Series or Class shall be
entitled upon request to receive a certificate evidencing such Shareholder's
ownership of Shares of the relevant Series or Class (in such form as shall be
prescribed from time to time by the Trustees). All certificates shall be signed
in the name of the Trust by the President or Vice President and by the Treasurer
or an Assistant Treasurer or the Secretary or any Assistant Secretary,
certifying the number of Shares and the Series of Shares owned by the
Shareholders. Any or all of the signatures on the certificate may be facsimile.
In case any officer, transfer agent, or registrar who has signed or whose
facsimile signature has been placed on a certificate shall have ceased to be
that officer, transfer agent, or registrar before that certificate is issued, it
may be issued by the Trust with the same effect as if that person were an
officer, transfer agent or registrar at the date of issue. Notwithstanding the
foregoing, the Trust may adopt and use a system of issuance, recordation and
transfer of its Shares by electronic or other means.
Section 4. Lost Certificates. Except as provided in this
Section 4, no new certificates for Shares shall be issued to replace an old
certificate unless the latter is surrendered to the Trust and canceled at the
same time. The Trustees may, in the event any Share certificate or certificate
for any other security is lost, stolen, or destroyed, authorize the issuance of
a
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<PAGE> 15
replacement certificate on such terms and conditions as the Trustees may
require, including a provision for indemnification of the Trust secured by a
bond or other adequate security sufficient to protect the Trust against any
claim that may be made against it, including any expense or liability on account
of the alleged loss, theft, or destruction of the certificate or the issuance of
the replacement certificate.
Section 5. Representation of Shares of Other Entities held by
Trust. The President or any Vice President or any other person authorized by the
Trustees or by any of the foregoing designated officers, is authorized to vote
or represent on behalf of the Trust any and all Shares of any corporation,
partnership, trusts, or other entities, foreign or domestic, standing in the
name of the Trust. The authority granted may be exercised in person or by a
proxy duly executed by such designated person.
Section 6. Fiscal Year. The fiscal year of the Trust shall be
fixed and refixed or changed from time to time by the Trustees. The fiscal year
of the Trust shall be the taxable year of each Series and Class of the Trust.
Section 7. Seal. The seal of the Trust shall consist of a
flat-faced dye with the words "Zweig Series Trust, Delaware Business Trust,
1996" cut or engraved thereon. However, unless otherwise required by the
Trustees, the seal shall not be necessary to be placed on, and its absence shall
not impair the validity of, any document, instrument or other paper executed and
delivered by or on behalf of the Trust.
ARTICLE IX
Amendments
Section 1. Amendment. Except as otherwise provided by
applicable law or by the Declaration of Trust, these By-Laws may be restated,
amended, supplemented or repealed by the Trustees, provided that no restatement,
amendment, supplement or repeal hereof shall limit the rights to indemnification
or insurance provided in Article VI hereof with respect to any acts or omissions
of agents (as defined in Article VI) of the Trust prior to such amendment.
Section 2. Incorporation by Reference into Agreement and
Declaration of Trust by the Trust. These By-Laws and any amendments thereto
shall be deemed incorporated by reference in the Declaration of Trust.
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<PAGE> 1
Exhibit 6(a)(i)
ZWEIG SERIES TRUST
DISTRIBUTION AGREEMENT
September 1, 1989
as amended through
March 15, 1996
ZWEIG SECURITIES CORP.
5 Hanover Square
New York, New York 10004
Gentlemen:
The undersigned, Zweig Series Trust, a Massachusetts business
trust (the "Trust"), is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"). The Trust
currently offers shares of five series, Government Securities Series, Zweig
Strategy Fund, Zweig Appreciation Fund, Zweig Cash Fund and Zweig Managed
Assets, and each series currently issues three classes of shares designated as
Class A, Class B and Class C shares (the "Class A, Class B and Class C Shares").
Zweig Cash Fund also currently issues a Class of Shares designated as Class M
Shares. In the future, the Trust may authorize and issue other series and
classes of shares. The Trust may sell its shares to and redeem its shares from
the public. It may also repurchase its shares from the public.
SECTION 1. General Duties as Distributor of the Trust's Shares.
You are hereby engaged, as agent of the Trust, to sell and
solicit the sale of Class A, Class B, Class C and Class M Shares of each series
of the Trust established now or in the future, at the applicable Offering Price
as hereinafter defined. In the performance of
<PAGE> 2
2
these duties, you shall be guided by the requirements of this agreement, the
applicable provisions of the Trust's Amended and Restated Agreement and
Declaration of Trust and its By-Laws and applicable federal and state law, all
as amended from time to time, and the Trust's then-current Prospectuses and
Statements of Additional Information, which are from time to time in effect
under the Trust's Registration Statement filed with the Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the "1933
Act"), and the 1940 Act. During the term of this agreement, you will use your
best efforts to solicit or otherwise cause sales of the Trust's shares in
jurisdictions in which such shares are registered or qualified for sale. You
shall have the right to enter into Service Agreements, in an appropriate form
and consistent with this Agreement and the 1940 Act, with certain securities
dealers, financial institutions or other industry professionals (severally, a
"Service Organization") for distribution and promotion of, administration of,
and servicing investors in, the Trust's shares.
SECTION 2. Dealers and Service Organizations.
You may solicit qualified dealers for orders to purchase
shares of the Trust and may enter into dealer agreements with any such dealers,
the form thereof to be as mutually agreed upon and approved by the Trust and
you.
SECTION 3. Sales Literature and Advertisements.
All sales literature and advertisements used by you in
connection with the sale of the Trust's shares must be submitted to the Trust
for its advance approval. In connection
<PAGE> 3
3
with the sale or arranging for the sale of the Trust's shares, you are
authorized to give only such information and to make only such statements or
representations as are contained in the Trust's then-current Prospectuses and
Statements of Additional Information or in sales literature or advertisements
approved by the Trust.
SECTION 4. Minimum Initial and Subsequent Investments in the Trust by
Shareholders.
You shall not accept any initial investment in any series of
the Trust of less than $1,000, nor any subsequent investment in any of the
series of less than $100, except that in the case of fiduciary accounts or
qualifying group plans, as defined in the Trust's then-current Prospectuses and
Statements of Additional Information, the minimum initial investment is $250 and
there is no minimum subsequent investment. The Board of Trustees of the Trust
(the "Board") may modify or eliminate either or both of such investment
limitations, on written notice to you. Securities dealers who forward
investments may establish minimums in excess of these amounts.
SECTION 5. Offering Price; Net Asset Value Per Share.
All of the shares of the Trust sold under this agreement shall
be sold only at the price in effect at the time of such sale ("Offering Price"),
as described in the Trust's then-current Prospectuses and Statements of
Additional Information, and the Trust shall receive not less than the full net
asset value thereof. The (i) difference between the Offering Price and net asset
value, if any (the front-end sales charge), and (ii) any Contingent Deferred
Sales Charge ("CDSC") payable on redemptions of shares of the Trust in
<PAGE> 4
4
accordance with its then-current Prospectuses and Statements of Additional
Information, shall be retained by you or paid over to you by the Trust, as the
case may be, it being understood that such amounts will not exceed the maximum
sales commission or CDSC, as the case may be, as set forth in the Trust's
then-current Prospectuses or Statements of Additional Information. You may
re-allow to dealers all or any part of the discount you are allowed.
Shares of each series will be offered at their respective
Offering Prices. Any references herein to "net asset value per share" shall
refer to the net asset value per share computed separately for each series or
separate class of a series in accordance with the Amended and Restated Agreement
and Declaration of Trust, the Prospectuses and Statements of Additional
Information and the instructions of the Board, all as revised or amended from
time to time. The Trust or its investment manager will advise you as promptly as
practicable of the net asset value per share for each series or class of such
series on each day that it is determined.
SECTION 6. Duties Upon Sale of Shares of the Trust.
You shall remit to the custodian of the Trust all proceeds
from any shares of the Trust sold by you. The Trust will, as promptly as
practicable, cause the unissued certificate account of the purchaser of such
shares to be credited with the number of shares purchased or, upon request, will
cause certificates for the shares so purchased to be delivered to you or the
purchaser, or the nominee of either, in such amounts and in such names as shall
be specified by you.
<PAGE> 5
5
You shall reimburse the Trust for any loss caused to any
series of the Trust by the failure of a shareholder to confirm in writing any
purchase accepted by you. In the event that orders for the purchase of shares of
the Trust are placed and subsequently cancelled, you shall pay to the Trust, on
at least an annual basis, an amount equal to the losses (net of any gains)
realized by any series of the Trust as a result of such cancellations.
SECTION 7. Transactional Services.
In addition to your duties as Distributor, we understand that
you may, in your discretion, perform additional functions in connection with
transactions of Trust shares but without any additional charge by you to the
Trust other than as specified in this Agreement or the Trust's Rule 12b-1
Distribution Plans.
You may process or cause to be processed requests received
from your customers in connection with their purchase, redemption or submission
for repurchase of shares of any series, in the manner prescribed from time to
time by the Board, and shall arrange for payment for such shares to or from the
Trust's account with its custodian. Shares shall be redeemed at their net asset
value per share next computed after receipt of the redemption request by you,
and a CDSC, if applicable, as described above in Section 5, shall be imposed on
such redemptions, as set forth in the Trust's then-current Prospectuses and
Statements of Additional Information (and subject to the exceptions set forth
therein). Any share certificates delivered to you in proper form for redemption
or repurchase shall be deposited with the transfer agent for cancellation. You
shall reimburse the Trust for any loss caused by the failure of the shareholder
to confirm in writing any purchase, redemption or
<PAGE> 6
6
repurchase order accepted by you. In the event that orders for the purchase,
redemption or repurchase of shares of the Trust are placed and subsequently
cancelled, you shall pay to the Trust, on at least an annual basis, an amount
equal to the losses (net of any gains) realized by any series of the Trust as a
result of such cancellations.
The processing of Trust transactions may include, but is not
limited to: compilation of all share transactions from your office;
communication with your account executives in connection with the execution of
transactions; recording and reporting of these transactions as executed by the
Trust's transfer agent in your customer statements; rendering of periodic
customer statements; and the reporting of 1099 information at year end.
You may also provide other shareholder services, such as
communicating with Trust shareholders and other functions in administering
customer accounts for Trust shareholders. We understand that these services may
result in cost savings to the Trust or to the Trust's investment manager, and
the Trust's investment manager may compensate you for all or a portion of the
costs incurred in performing such functions on behalf of the Trust. Nothing
herein is intended, nor shall be construed, as requiring you to perform any of
the foregoing functions and none of these functions performed by you shall be
deemed distribution services.
SECTION 8. Information Relating to the Trust.
The Trust will keep you fully informed with regard to its
affairs, and will furnish you with a certified copy of all financial statements
and a signed copy of each report prepared by independent public accountants, and
will cooperate fully with you in your efforts
<PAGE> 7
7
to sell the Trust's shares, and in the performance by you of all your duties
under this agreement.
SECTION 9. Filing of Registration Statements, etc.
The Trust will from time to time file (and furnish you with
copies of) such registration statements, amendments thereto, and reports or
other documents as may be required under the 1933 Act, the 1940 Act, or the laws
of the states in which you desire to sell Trust shares.
SECTION 10. Multiple Capacities.
Nothing contained in this agreement shall be deemed to
prohibit you from acting, and being separately compensated for acting, in one or
more capacities on behalf of the Trust, including, but not limited to, the
capacities of investment manager, broker and distributor. The Trust understands
that you may act in one or more such capacities on behalf of other investment
companies and customers. You shall give the Trust equitable treatment under the
circumstances in supplying services in any capacity, but the Trust recognizes
that it is not entitled to receive preferential treatment from you as compared
with the treatment given to any other investment company or customer. Whenever
you shall act in multiple capacities on behalf of the Trust, you shall maintain
the appropriate separate accounts and records for each such capacity.
<PAGE> 8
8
SECTION 11. Payment of Fees and Expenses.
(a) For your services as Distributor, you shall receive the
fees in accordance with the plans adopted by each series (or class of a series)
of the Trust pursuant to Rule 12b-1 under the 1940 Act, and the fees set forth
herein or in the Trust's Prospectuses and Statements of Additional Information.
The Trust will pay you in consideration of your services in connection with the
distribution of Class B Shares of any series your "Allocable Portion", as
hereinafter defined, of the distribution fee allowable under the rules of fair
practice of the National Association of Securities Dealers (the "Rules of Fair
Practice") in respect of such Class of Shares of such series consisting of a
distribution fee at the rate of three quarters of one percent (0.75%) per annum
of the average daily net asset value of the Class B Shares of such series of the
Trust (the "Distribution Fee"). For purposes of applying the limitation set
forth in the Rules of Fair Practice on the maximum amount of the Distribution
Fee payable in respect of the Class B and Class C Shares of any series, the
Trust hereby elects to add to six and one quarter percent (6.25%) of the issue
price of the Class B Shares or Class C Shares, as the case may be, interest
thereon at the rate of prime plus one percent per annum. The Distribution Fee
shall be calculated and accrued daily and shall be paid to you, or at your
direction, as soon as practicable after the end of the calendar month in which
it accrues, but in any event not later than 10 days after the end of each such
month.
(b) For your services as Distributor of the Trust's shares,
you shall also receive the proceeds of any front-end sales charges or CDSCs
referred to in Section 5 hereof. The Trust shall withhold and pay over to you,
or at your direction, on the date
<PAGE> 9
9
redemption proceeds are paid to a Class B or Class C Shareholder of the Trust,
your Allocable Portion of the CDSC, if any, applicable to such redemption.
(c) Furthermore, the Trust shall assume and pay, or reimburse
you for, expenses of preparing and printing quarterly and annual reports for
distribution to the Trust's then existing shareholders, of maintaining current
prospectuses and statements of additional information, of qualification of the
Trust's shares for sale in various jurisdictions and of preparing and printing
prospectuses and statements of additional information for distribution to the
Trust's then existing shareholders. You shall pay, directly or by reimbursing
the Trust, the expenses of preparing, printing and distributing all sales
literature of the Trust, including printing and distributing prospectuses
required for your purposes, except to the extent payable by the Trust in
accordance with the terms of an effective plan pursuant to Rule 12b-1 under the
1940 Act.
(d) You will be deemed to have fully earned your Allocable
Portion of the Distribution Fee and CDSC, if any, (as the case may be) payable
in respect of Class B Shares of any series upon the sale of each "Initial Issue
Commission Share" (as hereinafter defined) of such Class B of such series taken
into account in determining your Allocable Portion of such Distribution Fee or
CDSC, if any, as the case may be.
(e) Except as provided in (f) below and notwithstanding
anything to the contrary set forth elsewhere is this Agreement, the Trust's
obligation to pay you your Allocable Portion of the Distribution Fee payable in
respect of the Class B Shares of each series shall be (to the extent you have
assigned your rights to your Allocable Portion) absolute and unconditional and
shall not be subject to dispute, offset, counterclaim or any
<PAGE> 10
10
defense whatsoever (it being understood that such provision is not a waiver of
the Trust's right to pursue you and enforce such claims against your assets
other than your right to the Distribution Fees and CDSCs in respect of the Class
B Shares of such series).
(f) The Trust's obligation to pay you your Allocable Portion
of the Distribution Fee payable in respect of the Class B Shares of each series
shall not be terminated or modified except to the extent required by a change in
the 1940 Act or the Rules of Fair Practice enacted or promulgated after January
31, 1996 (a "Change-in-Applicable Law"), or in connection with a "Complete
Termination" (as hereinafter defined) of the Rule 12b-1 distribution plan in
respect of the Class B Shares of such series.
(g) The Trust will not waive or change any CDSC in respect of
the Class B Shares of any series, except as provided in the Trust's Prospectuses
or Statements of Additional Information without your consent (or consent of your
assigns).
(h) Except to the extent required by a
Change-in-Applicable-Law, neither the termination of your role as principal
distributor of the Class B Shares of any series, nor the termination of this
Agreement nor the termination (other than a "Complete Termination," as
hereinafter defined) of the Rule 12b-1 distribution plan with respect to the
Class B Shares will terminate your right to your Allocable Portion of the CDSCs
in respect of the Class B Shares of such series that are sold prior to such
termination.
(i) Except as provided in the Trust's Prospectuses and
Statements of Additional Information, until you have been paid your Allocable
Portion of the Distribution Fees in respect of the Class B Shares of each
series, the Trust will not adopt a plan of
<PAGE> 11
11
liquidation in respect of such series without your consent (or the consent of
your assigns), which consent will not be unreasonably withheld.
(j) You may sell and assign your rights to your Allocable
Portion of the Distribution Fees and CDSCs (but not your obligations to the
Trust under this Distribution Agreement) in respect of the Class B Shares of any
series to raise funds to make the expenditures related to the distribution of
Class B Shares of such series and in connection therewith, upon receipt of
notice of such sale and assignment, the Trust shall pay to the purchaser or
assignee such portion of your Allocable Portion of the Distribution Fees and
CDSCs in respect of the Class B Shares of such series so sold or assigned.
(k) For purposes of this Agreement, the term "Allocable
Portion" means, in respect of Distribution Fees and CDSCs payable in respect of
the Class B Shares of any series as applied to you, the portion of such
Distribution Fees allocated to you in accordance with the Allocation Schedule
attached hereto as Exhibit A.
(l) For purposes of this Agreement, the term "Complete
Termination" means, in respect of the Rule 12b-1 distribution plan in respect of
the Class B Shares of any series, a termination of such plan involving the
cessation of payments of Distribution Fees thereunder in respect of Class B
Shares of such series and the cessation in payments of distribution fees
pursuant to every other rule 12b-1 plan of the Trust in respect of such series
for every future class of shares of such series which, in the good faith
determination of the Board of Trustees, has substantially similar economic
characteristics to the Class B Shares taking into account the total sales
charge, contingent deferred sales charge and other similar
<PAGE> 12
12
charges, it being understood that the existing Class A, existing Class M, and
existing Class C Shares do not have substantially similar economic
characteristics to the Class B Shares.
(m) For purposes of paragraph (d) above, the term "Initial
Issue Commission Share" shall mean, in respect of any series, a Class B Share
which is a Commission Share issued by such series under circumstances other than
in connection with a permitted free exchange with another fund. For purposes of
the foregoing definition a "Commission Share" shall mean, in respect of any
series, each Class B Share of such series which is issued under circumstances
which would normally give rise to an obligation of the holder of such Class B
Share to pay a CDSC upon redemption of such Share, including, without
limitation, any Class B Share of such series issued in connection with a
permitted free exchange as set forth in the Trust's then current Prospectuses
and Statements of Additional Information ("Permitted Free Exchange"), and any
such Class B Share shall not cease to be a Commission Share prior to the
redemption (including a redemption in connection with a Permitted Free Exchange)
or conversion even though the obligation to pay the CDSC shall have expired or
conditions for waivers thereof shall exist.
SECTION 12. Liability of the Distributor, etc.
You shall be liable for your own acts and omissions caused by
your willful misfeasance, bad faith or gross negligence in the performance of
your duties or by your reckless disregard of your obligations under this
agreement, and nothing herein shall protect you against any such liability to
the Trust or its shareholders. Subject to the first sentence of
<PAGE> 13
13
this section, you shall not be liable for any action taken or omitted on advice,
obtained in good faith, of counsel, provided such counsel is satisfactory to the
Trust.
SECTION 13. Use of Word "Zweig" in Name of Trust.
(a) The Trust and you each acknowledge that the name "Zweig"
has become distinctive in connection with investment advisory and related
services provided by Dr. Martin E. Zweig ("MEZ"), the word "Zweig" is a property
right of MEZ and the word "Zweig" (the "Name") in the name of the Trust is
understood to be used by the Trust with MEZ's consent, and MEZ hereby grants a
non-exclusive license to use the name "Zweig Series Trust" upon the conditions
hereinafter set forth; provided that, except as otherwise provided in Section
13(b), the Trust may use the Name only so long as (i) Zweig/Glaser Advisers
("the Manager"), which currently acts as investment manager of the Trust, shall
continue to be retained by the Trust as its investment manager pursuant to an
investment management agreement between the Trust and the Manager, as from time
to time amended or supplemented and (ii) MEZ shall continue to be affiliated in
a managerial capacity with the Manager.
(b) In the event that MEZ ceases to be affiliated in a
managerial capacity with the Manager other than by reason of his death (the
"Resignation"), and if at the time of such Resignation, the Manager and/or the
Distributor shall be party to the Purchase and Sale Agreement dated as of March
15, 1996 among the Distributor, Citibank, N.A. and Citicorp North America, Inc.
(the "1996 Agreement"), as amended or otherwise modified from time to time, or
any other agreement entered into by the Manager and/or the Distributor in
connection with any financing with respect to any shares of the Trust or any
successor
<PAGE> 14
14
agreement containing provisions relating to the use of the Name substantially
similar to the provisions in the 1996 Agreement regarding the Name (the 1996
Agreement and each such other agreement and successor agreement, as amended or
otherwise modified from time to time, being called a "Share Financing
Agreement"), then in such event (i) until the expiration of ten years following
the Resignation, (ii) until 180 days after the death of MEZ, or (iii) until all
obligations of the Manager and/or the Distributor under any Share Financing
Agreement are extinguished, whichever date first occurs, MEZ hereby grants the
Trust a royalty-free, paid up non-exclusive license to use the Name in
connection with the activities of the Trust in the manner used immediately prior
to the Resignation, provided and on condition that:
(i) The quality and manner of the services rendered by the
Trust to its investors shall be substantially consistent with such services
immediately prior to the Resignation;
(ii) The Trust shall not use the Name in a manner
substantially different from the use of the Name immediately prior to the
Resignation; and
(iii) Upon written request from MEZ, each use of the Name on
any document created thereafter shall be accompanied by the service mark of
Zweig.
(c) Any such use by the Trust pursuant to Section 13(a) or (b)
shall in no way prevent MEZ or you or any of his or your respective successors
or assigns from using or permitting the use of the Name or the name "Zweig
Series Trust" alone or with any other word or words, for, by or in connection
with any other entity or business, other than the Trust or its business, whether
or not the same directly or indirectly competes or conflicts
<PAGE> 15
15
with the Trust or its business in any manner. The Trust and you each acknowledge
that the Trust shall use the Name, for the period set forth in this Section 13,
in a manner not inconsistent with MEZ's interests and that the Trust's rights in
the Name are limited to the use of the Name as a component of its corporate name
and in connection with accurately describing the services supplied by the Trust.
The Trust and Distributor acknowledge that the Name is the sole property of MEZ
and neither the Trust nor the Distributor shall directly or indirectly contest
MEZ's rights in the Name or his right, title and interest therein. To the extent
permitted by the 1940 Act and rules and regulations thereunder, and more
particularly Investment Company Act Release No. 5510, in the event that the
Manager shall cease to be the investment manager of the Trust or MEZ shall cease
to be affiliated in a managerial capacity with the Manager, the Trust, at its
own expense, upon MEZ's or your written request, (i) shall submit to the Board
for their vote a proposal to amend its Declaration of Trust to delete from its
name the Name and shall thereafter cease to use the Name or any combination
thereof as part of its name or for any other commercial purpose, provided that
such submission and cessation shall not be required to the extent and for the
period of time that the terms and conditions of Section 13(b) shall be
applicable, (ii) shall make it clear for such period and in such manner as may
reasonably be required by MEZ or you, on all letterheads and other material
containing the Name designed to be read or used by salesmen, distributors or
investors, that MEZ has ceased to be affiliated in a managerial capacity with
the Manager or Zweig/Glaser Advisers has ceased to be the investment manager of
the Trust, as the case may be, and MEZ is no longer rendering services for or on
behalf of the Trust, and (iii) shall use its best efforts to cause the Trust's
officers, trustees and shareholders to
<PAGE> 16
16
take any and all actions which may be necessary or desirable to effect the
foregoing and to reconvey to MEZ all rights which the Trust may have to the
Name. The Distributor and Trust agree that they shall take any and all actions
as may be necessary or desirable to effect the foregoing.
SECTION 14. Termination of Agreement, Assignment, etc.
This agreement may be terminated with respect to the Trust at
any time, without the payment of any penalty, on sixty days' written notice (i)
by you; (ii) by the Trust, acting pursuant to a resolution adopted by the Board;
or (iii) by a vote of the holders of the lesser of (1) 67% of the Trust's
outstanding voting securities present at a meeting if the holders of more than
50% of the outstanding shares of the Trust are present or represented by proxy,
or (2) more than 50% of the outstanding shares of the Trust. This agreement
shall automatically terminate in the event of its assignment; provided, however,
that this agreement has been approved by the Board and the Disinterested
Trustees of the Board in anticipation of your transfer of the Allocable Portion
in order for you to raise funds to cover distribution expenses associated with
Class B Shares and therefore such transfer will not cause this agreement to
terminate. Termination shall not affect the rights of the parties which have
accrued prior thereto, including, without limitation, your right to be paid your
Allocable Portion as provided in Section 11 hereof (subject to the limitations
therein set forth).
<PAGE> 17
17
SECTION 15. Duration of Agreement.
Unless sooner terminated, this agreement shall continue in
effect for two years, and thereafter until terminated, provided that such
continuation of this agreement and the terms thereof are specifically approved
annually in accordance with the requirements of the 1940 Act by a majority of
the Trustees, including a majority of the Trustees who are not interested
persons of you or of the Trust, cast in person at a meeting called for the
purpose of voting on such approval.
SECTION 16. Definitions.
The terms "assignment" and "interested person" when used in
this agreement shall have the meanings given such terms in the 1940 Act and the
rules and regulations promulgated thereunder.
SECTION 17. Obligation of the Trust,etc.
The Trust's Amended and Restated Agreement and Declaration of
Trust is on file with the Secretary of the Commonwealth of Massachusetts and
notice is hereby given that this agreement is made and executed on behalf of the
Trust, and not by the Trustees or officers of the Trust individually, and the
obligations of or arising out of this agreement are not binding upon the
Trustees, officers or shareholders of the Trust individually but are binding
only upon the assets and property of the Trust. Notice is hereby given that the
debts, liabilities, obligations and expenses incurred, contracted for or
otherwise existing with
<PAGE> 18
18
respect to a particular series of the Trust shall be enforceable against the
assets of such series only, and not against the assets of the Trust generally.
SECTION 18. Counterparts
This Agreement may be executed by any one or more of the
parties in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
SECTION 19. Concerning Applicable Provisions of Law, etc.
This agreement is executed and delivered in New York, New
York, and the laws of the State of New York shall, except to the extent that any
applicable provisions of Federal law shall be controlling, govern the
construction, validity and effect of this agreement.
If the agreement set forth herein is acceptable to you, please
so indicate by executing the enclosed copy of this agreement and returning the
same to the undersigned, whereupon this contract shall constitute a binding
contract between the parties hereto effective upon such date on or after its
initial approval in accordance with the 1940 Act as may be agreed by the Trust
and Distributor consistent with the requirements of the 1940 Act.
<PAGE> 19
19
Very truly yours,
ZWEIG SERIES TRUST
By: /s/ Charles I. Leone
--------------------------------
Name: Charles I. Leone
Title: First Vice President
Accepted and agreed this
15th day of March, 1996
ZWEIG SECURITIES CORP.
By: /s/ Charles I, Leone
-------------------------------
Name: Charles I. Leone
Title: Chief Financial Officer,
First Vice President and
Assistant Secretary
Martin E. Zweig hereby agrees and consents to the use of the word "Zweig" upon
the terms and conditions set forth in Section 13 of the foregoing Distribution
Agreement.
/s/ Martin E. Zweig
------------------------------
Martin E. Zweig
Zweig/Glaser Advisers hereby agrees and consents to the use of the word "Zweig"
upon the terms and conditions set forth in Section 13 of the foregoing
Distribution Agreement.
ZWEIG/GLASER ADVISERS
By: /s/ Charles I. Leone By: /s/ Marc Baltuch
----------------------------------- --------------------------------
Name: Charles I. Leone Name: Marc Baltuch
Title: Attorney-in-Fact Title: President of Zweig
for Glaser Corp. Management Corp.
a general partner
<PAGE> 20
EXHIBIT A
ALLOCATION SCHEDULE
So long as the Distributor (as hereinafter defined) remains
the principal distributor of a class of Shares (as hereinafter defined) of any
Fund (as hereinafter defined), his "Allocable Portion" of the Sales Charges (as
hereinafter defined) and Contingent Deferred Sales Charges (as hereinafter
defined) in respect of such class of Shares of such Fund shall be 100%. In the
event that the Distributor shall cease to be the exclusive distributor of any
class of Shares of any Fund, the Sales Charges and Contingent Deferred Sales
Charges thereafter accruing in respect of such class of Shares of such Fund
shall be allocated among the Distributor and subsequent exclusive distributors
("Other Distributors") in accordance with the rules set forth in clauses (A),
(B) and (C) below. Clause (A) attributes each Share of such class of Shares of
any Fund either to the Other Distributors or to the Distributor. Clauses (B) and
(C) allocate the Sales Charges and Contingent Deferred Sales Charges to the
Other Distributors and to the Distributor with reference to the Shares which
have been attributed to each in accordance with clause (A). For purposes of this
Exhibit A, the following terms shall have the following meanings:
"Amortized Maximum Aggregate Sales Charge Allowable" shall
mean, with respect to the Receivables relating to any Shares of any
Fund as of any date of determination, (i) an amount equal to the
Maximum Aggregate Sales Charge Allowable payable in respect of such
Receivables, minus (ii) the aggregate amounts previously paid by such
Fund and the holders of such Shares relating thereto.
"Asset Based Sales Charge" shall have the meaning set forth in
Section 26(b)(8)(C) of the NASD Rules of Fair Practice.
"Business Day" shall mean any day on which banks and the New
York Stock Exchange are not authorized or required to close in New York
City.
"Contingent Deferred Sales Charge" or "CDSC" shall mean, with
respect to any class of Shares of any Fund, the contingent deferred
sales charges payable, either directly or by withholding from the
proceeds of the redemption of the Shares of such Fund, by the
Shareholders of such Fund in any redemption of Shares relating to such
Fund in accordance with the Prospectus relating to such Fund.
"Commission Share" shall mean, in respect of any Fund, each
Share of such Fund which is issued under circumstances which would
normally give rise to an obligation of the holder of such Share to pay
a Contingent Deferred Sales Charge upon redemption of such Share,
including, without limitation, any Share of such Fund issued in
connection with a Permitted Free Exchange, and any such Share shall not
cease to be a Commission Share prior to the redemption (including a
redemption in
<PAGE> 21
2
connection with a Permitted Free Exchange) or conversion, even though
the obligation to pay the Contingent Deferred Sales Charge shall have
expired or conditions for waivers thereof shall exist.
"Distributor" shall mean Zweig Securities Corp. together with
its successors and assigns.
"Distributor Sale Cutoff Date" means, in respect of any class
of Shares of any Fund, the date of the last sale of a Commission Share
of such class of Shares of such Fund during the term of this
Distribution Agreement in respect of such class of Shares of such Fund.
"Exchange Share" shall mean, in respect of any Fund, Shares of
such Fund that were issued in connection with a simultaneous redemption
of Shares of any other Fund where the proceeds of such redemption are
reinvested in the Shares in question pursuant to an exchange privilege
given to the holder of the redeemed Shares of the other Fund (whether
in a Permitted Free Exchange or otherwise).
"Free Share" shall mean, in respect of any Fund, each Share of
such Fund other than a Commission Share, including, without limitation,
any Share issued in connection with the reinvestment of dividends.
"Fund" shall mean Zweig Strategy Fund, Zweig Appreciation
Fund, Zweig Managed Assets, Government Securities Series and Zweig Cash
Fund.
"Inception Date" shall mean, with respect to any Fund, the
first date upon which Shares of such Fund were issued.
"Maximum Aggregate Sales Charge Allowable" shall mean, in
respect of Sales Charges Payable by any Fund, the maximum aggregate
Sales Charges which may be paid by such Fund to the Distributor
pursuant to this Distribution Agreement, the 12b-1 Distribution Plan
and the Prospectus, together with interest thereon at the Maximum
Interest Allowable, relating to such Shares and pursuant to the
"maximum sales charge rule" set forth in Section 26(d)(2)(A) of the
NASD Rules of Fair Practice, assuming such Fund pays a separate Service
Fee in connection with such Shares, unreduced by payments previously
made in respect thereof by such Fund.
"Maximum Interest Allowable" shall mean the maximum interest
which may be taken into account under Section 26 of the NASD Rules of
Fair Practice in computing the Maximum Aggregate Sales Charge
Allowable.
<PAGE> 22
3
"Net Assets" means, as of any date any determination thereof
is made and with respect to any Fund, the product obtained by
multiplying (i) the Net Asset Value of a Share of such Fund as of such
date, times (ii) the total number of Shares of such Fund issued and
outstanding as of such date.
"Net Asset Value" shall mean, with respect to any Share of any
Fund as of any date, the net asset value of such Share computed in the
manner such value is required to be computed by such Fund in accordance
with its then current Prospectus and the Investment Company Act.
"Non-Omnibus Shares" shall mean, in respect of any Fund, all
Shares of such Fund other than the Omnibus Shares relating to such
Fund.
"Omnibus Account" shall mean, in respect of any Fund, any
Shareholder Account the record owner of which is a registered
broker-dealer which has agreed with the Transfer Agent or the
Distributor to provide sub-transfer agent functions relating to each
Sub-Shareholder Account within such account in respect of such Fund.
"Omnibus Shares" shall mean, in respect of any Fund, the
Shares of such Fund held in the name of a broker-dealer street account
on the records maintained by the Transfer Agent and for which account
such broker-dealer provides sub-transfer agency services for such Fund.
"Permitted Conversion Feature" shall mean a conversion feature
which may become effective: (A) in respect of any Share of any Fund
(other than an Exchange Share or a Share issued in connection with the
reinvestment of dividends (a "Reinvestment Share")), no earlier than
the seventh anniversary of the calendar month in which such Share was
issued by such Fund, and (B) in respect of any Exchange Share of any
Fund, no earlier than the seventh anniversary of the calendar month in
which was issued the first Share of any Fund exchanged in one or more
Permitted Free Exchanges giving rise to such Exchange Share, which was
itself issued by a Fund other than in connection with a Permitted Free
Exchange; and (C) in respect of Reinvestment Shares of any Fund held
for a shareholder account (other than an Omnibus Account), in
proportion to the conversion of Shares of such Fund in such account
which are not Reinvestment Shares.
"Permitted Free Exchange" shall mean any exchange of Shares of
one Fund (the "Redeeming Fund") for Exchange Shares of another Fund
(the "Issuing Fund"), where, pursuant to the applicable constituent
documents of the Issuing Fund: (i) Exchange Shares of the Issuing Fund
are deemed for all purposes (including the computation of the amount
and timing of payments of the related CDSC) to have been
<PAGE> 23
4
acquired at the time the exchanged Shares of the Redeeming Fund were
acquired (or deemed to have been acquired) by the holder thereof; (ii)
the exchanging shareholder becomes obligated to pay the same CDSC in
respect of the Issuing Fund in respect of the Exchange Shares of the
Issuing Fund and on the same terms as such holder was obligated to pay
in respect of the Redeeming Fund in respect of the Shares of the
Redeeming Fund so exchanged; (iii) the date upon which such Exchange
Shares of the Issuing Fund received in the exchange are to be converted
pursuant to the Permitted Conversion Feature is the same as the date
the exchanged Shares of the Redeeming Fund were to be converted
pursuant to the Permitted Conversion Feature of the exchanged Shares;
(iv) (subject to reallocation, if any, as may be permitted by any
agreement by which the Distributor is bound) the Amortized Maximum
Aggregate Sales Charge Allowable in respect of the Shares of the
Issuing Fund to which such Exchange Shares belong and the Redeeming
Fund the Shares of which were so exchanged is increased or decreased,
depending upon whether the amount of the adjustment described below is
a positive or negative number, respectively, effective as of the
beginning of the calendar quarter immediately following the calendar
quarter in which such exchange occurred, by the product obtained by
multiplying (a) the "Net Asset Value Exchange Adjustment" (as
hereinafter defined, which may be a positive or negative number) for
Shares of such Fund for the calendar quarter in which such exchange
occurred by (b) a fraction the numerator of which is the Amortized
Maximum Aggregate Sales Charge Allowable in respect of Shares of such
Fund and the denominator of which is the Net Assets of such Fund, both
the numerator and denominator computed as of the end of the calendar
quarter immediately preceding the calendar quarter in which such
exchange occurred, it being understood that, for purposes of this
clause (iv), the term "Net Asset Value Exchange Adjustment" shall mean,
in respect of Shares of any Fund of any calendar quarter, the negative
or positive number obtained by adding (x) positive numbers equal to the
aggregate Net Asset Value of all Exchange Shares (determined in each
case as of the date of issuance of each such Share) issued by such Fund
during such calendar quarter in connection with such exchanges and (y)
negative numbers equal to the aggregate Net Asset Value of all Shares
(determined in each case as of the date of the redemption of each such
Share) redeemed by such Fund during such calendar quarter in connection
with such exchanges (the Fund may elect to perform this calculation
under this clause (iv) on a monthly basis); and (v) both the redemption
of the Shares of the Redeeming Fund so exchanged and the issuance of
the Shares of the Issuing Fund are effected at the Net Asset Value of
such Shares at the date of the exchange without any reduction for fees
or expenses attributable to such exchange.
"Person" shall mean an individual or a corporation (including
a business trust), partnership, trust, incorporated or unincorporated
association, cooperative, joint stock company, government (or an agency
or political subdivision thereof) or other entity of any kind.
<PAGE> 24
5
"Receivables" shall mean with respect to each Fund, all of the
Distributor's rights, under this Distribution Agreement, the related
12b-1 Distribution Plan and the related Prospectus, subject to the
applicable NASD Rules of Fair Practice, to receive amounts paid or
payable in respect of Asset Based Sales Charges (including interest at
the Maximum Interest Allowable) and CDSCs, in each case in respect of
any Shares issued by such Fund, including, without limitation, any
similar amount paid or payable under any replacement distribution
agreement, distribution plan, prospectus or the NASD Rules of Fair
Practice, and any continuation payments in respect thereof paid or
payable by such Fund in the event of a termination of the related
Distribution Plan or the related Distribution Agreement; it being
understood that such term does not include the Service Fee payable
pursuant to the related Distribution Agreement, the related 12b-1
Distribution Plan, the Prospectus and the NASD Rules of Fair Practice
or otherwise.
"Sales Charge" shall have the meaning set forth in Section
26(b)(8)(C) of the NASD Rules of Fair Practice.
"Service Fee" shall have the meaning set forth in Section
26(b)(9) of the NASD Rules of Fair Practice.
"Shareholder Account" shall mean, in respect of any Fund, a
separate account for each record owner of Shares of such Fund.
"Shares" shall mean, in respect of any Fund, the Class B
Shares of such Fund.
"Sub-Shareholder Account" shall mean, in respect of each
Omnibus Account, a separate account for each record owner of Shares
which are reflected in such Omnibus Account.
"Sub-Transfer Agent" shall mean, in respect of any Fund, the
record owner of any Omnibus Account.
"Transfer Agent" shall mean, in respect of any Fund, the
Person serving as the transfer agent and who maintains accounts for
each record holder of Shares of such Fund including record holders
which are record owners of Omnibus Accounts.
(A) Attribution of Shares: Shares of each class of Shares of
each Fund outstanding from time to time shall be attributed to either the
Distributor or the Other Distributors in accordance with the following rules:
(1) Commission Shares. Each Commission Share of each class of
Shares of each Fund is specifically tracked by the records maintained
by the Transfer Agent
<PAGE> 25
6
or Sub-Transfer Agents for such Fund with reference to an "original
issuance date" of the Commission Share in question or of the Commission
Share from which the Commission Share in question derived through one
or more Permitted Free Exchanges.
The following Commission Shares of each class of Shares of
each Fund outstanding from time to time shall be attributed to the
Distributor: (a) Commission Shares of such class of Shares of such Fund
issued other than in a Permitted Free Exchange, the issuance of which
occurs on or after the Inception Date for such class of Shares of such
Fund and on or prior to the Distributor Sale Cutoff Date for such class
of Shares of such Fund, and (b) Commission Shares of such class of
Shares of such Fund issued in a Permitted Free Exchange for Shares of
another Fund which were attributed to the Distributor in accordance
with this paragraph (1) of this clause (A), in each case determined in
accordance with the records maintained by the Transfer Agent or
Sub-Transfer Agents for such Fund.
The following Commission Shares of each class of Shares of
each Fund outstanding from time to time shall be attributed to the
Other Distributors: (a) Commission Shares of such class of Shares of
such Fund issued other than in a Permitted Free Exchange, the issuance
of which occurs after the Distributor Sale Cutoff Date for such class
of Shares of such Fund, and (b) Commission Shares of such class of
Shares of such Fund issued in a Permitted Free Exchange for Shares of
another Fund which were attributed to the Other Distributors in
accordance with this paragraph (1) of this clause (A), in each case
determined in accordance with the records maintained by the Transfer
Agent or Sub-Transfer Agents for such Fund.
(2) Free Shares. Free Shares of each class of Shares of each
Fund are not specifically tracked by the Transfer Agent or Sub-Transfer
Agents for such Fund and accordingly, the number of Free Shares of each
class of Shares of each Fund outstanding from time to time shall be
attributed to the Distributor and the Other Distributors in accordance
with records maintained by the Distributor in accordance with this
paragraph (2) of this clause (A).
(a) Free Shares of each class of Shares of each Fund
which are Non-Omnibus Shares issued during any calendar month
on or after the Inception Date for such class of Shares of
such Fund shall be attributed to the Distributor in a number
computed as follows:
FS X (PCS + PFS)
---------
(TCS + TFS)
where:
<PAGE> 26
7
FS = Total number of Non-Omnibus Shares of
such class of Shares of such Fund that
are Free Shares issued during such
calendar month.
PCS + PFS = Total number of Commission Shares and
Free Shares for such class of Shares of
such Fund which are Non-Omnibus Shares
attributed to the Distributor and
outstanding as of the close of business
on the last day of the immediately
preceding calendar month.
TCS + TFS = Total number of Commission Shares and
Free Shares for such class of Shares of
such Fund which are Non-Omnibus Shares
outstanding as of the close of business
on the last day of the immediately
preceding calendar month.
The balance of such Non-Omnibus Shares for such class of
Shares of such Fund issued during such calendar month shall be
attributed to the Other Distributors.
(b) Free Shares of each class of Shares of each Fund
which are Omnibus Shares issued during any calendar month on
or after the Inception Date for such class of Shares of such
Fund shall be attributed to the Distributor in a number
computed as follows:
OFS X (POCS + POFS)
-----------
(TOCS + TOFS)
where:
OFS = Total number of Omnibus Shares of such
class of Shares of such Fund which are
Free Shares issued during any calendar
month.
POCS + POFS = Total number of Commission Shares and
Free Shares of such class of Shares of
such Fund which are Omnibus Shares
attributed to the Distributor and
outstanding as of the close of business
on the last day of the immediately
preceding calendar month.
<PAGE> 27
8
TOCS + TOFS = Total number of Commission Shares and
Free Shares of such class of Shares of
such Fund which are Omnibus Shares
outstanding as of the close of business
on the last day of the immediately
preceding calendar month.
The balance of such Free Shares of such class of Shares of
such Fund issued on such date shall be attributed to the Other
Distributors.
(c) Free Shares of each class of Shares of each Fund
which are Non-Omnibus Shares redeemed or converted during any
calendar month shall be attributed to the Distributor in a
number computed as follows:
FSR X PFS
---
TFS
where:
FSR = Total Number of Non-Omnibus Shares of such
class of Shares of such Fund which are Free
Shares redeemed or converted during each
calendar month.
PFS = Total Number of Non-Omnibus Shares of such
class of Shares of such Fund which are Free
Shares attributed to the Distributor and
outstanding as of the close of business on
the last day of the immediately preceding
calendar month.
TFS = Total number of Non-Omnibus Shares of such
class of Shares of such Fund which are Free
Shares outstanding as of the close of
business on the last day of the immediately
preceding calendar month.
The balance of such Non-Omnibus Shares of such class of Shares
of such Fund which are Free Shares redeemed or converted
during such calendar month shall be attributed to the Other
Distributors.
(d) Free Shares of each class of Shares of each Fund
which are Omnibus Shares redeemed or converted during any
calendar month shall be attributed to the Distributor in a
number computed as follows:
OFSR X POFS
----
TOFS
<PAGE> 28
9
where:
OFSR = Total number of Free Shares of such class of
Shares of such Fund which are Omnibus Shares
redeemed or converted during such calendar
month.
POFS = Total number of Free Shares of such class of
Shares of such Fund which are Omnibus Shares
attributed to the Distributor and
outstanding as of the close of business on
the last day of the immediately preceding
calendar month.
TOFS = Total number of Free Shares of such class of
Shares of such Fund which are Omnibus Shares
outstanding as of the close of business on
the last day of the immediately preceding
calendar month.
The balance of such Free Shares of such class of Shares of
such Fund which are Omnibus Shares redeemed or converted
during such calendar month shall be attributed to the Other
Distributors.
(3) Timing of Attributions. The attributions of all
Non-Omnibus Shares of each class of Shares of each Fund shall be made
on a daily basis. The attribution of all Omnibus Shares of each class
of Shares of each Fund shall be made on a calendar month basis (unless
under any agreement by which the Distributor is bound more frequent
allocations are required) on or prior to the Asset Based Sales Charge
distribution date for the Omnibus Account, but in no event later than
the tenth (10th) Business Day of the calendar month immediately
succeeding the calendar month in which they accrue.
(B) Receivables Constituting Contingent Deferred Sales
Charges: Receivables constituting Contingent Deferred Sales Charges will be
allocated to the Distributor and the Other Distributors depending upon whether
the related redeemed Shares were attributed to the Distributor or the Other
Distributors in accordance with clause (A) above. Contingent Deferred Sales
Charges relating to Non-Omnibus Shares shall be allocated between the
Distributor and the Other Distributors on or prior to the third Business Day of
the immediately succeeding calendar week in which they are remitted, unless more
frequent allocations are required. Continent Deferred Sales Charges relating to
Omnibus Shares shall be allocated between the Distributor and the Other
Distributors on or prior to the tenth (10th) Business Day of the calendar month
immediately succeeding the calendar month
<PAGE> 29
10
in which they are remitted, unless under any agreement by which the Distributor
is bound more frequent allocations are required.
(C) Receivables Constituting Asset Based Sales Charges: The
Asset Based Sales Charges accruing in respect of each class of Shares of each
Fund to the Distributor during any calendar month shall be computed and
allocated as follows:
A X ( (B + C) / 2)
----------
( (D + E) / 2)
where:
A = Total amount of Asset Based Sales Charge accrued in
respect of such class of Shares of such Fund during
such calendar month.
B = Shares of such class of Shares of such Fund
attributed to the Distributor and outstanding as of
the close of business on the last day of the
immediately preceding calendar month, times Net Asset
Value per Share as of such time.
C = Shares of such class of Shares of such Fund
attributed to the Distributor and outstanding as of
the close of business on the last day of such
calendar month, times Net Asset Value per Share as of
such time.
D = Total Non-Omnibus Shares and Omnibus Shares of such
class of Shares of such Fund outstanding as of the
close of business on the last day of the immediately
preceding calendar month, times Net Asset Value per
Share as of such time.
E = Total Non-Omnibus Shares and Omnibus Shares of such
class of Shares of such Fund outstanding as of the
close of business on the last day of such calendar
month, times Net Asset Value per Share as of such
time.
The balance of the Asset Based Sales Charges in
respect of such class of Shares of such Fund accruing during such
calendar month shall be allocated to the Other Distributors. The
allocations contemplated by this paragraph shall be made on or prior to
the tenth (10th) Business Day of the immediately following calendar
month.
<PAGE> 1
Exhibit 9(b)
AMENDED AND RESTATED AGREEMENT AND
PLAN OF CONVERSION AND TERMINATION
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF CONVERSION AND
TERMINATION (the "Agreement") is made and entered into as of April 26, 1996, by
and between Zweig Series Trust, a Massachusetts business trust having an office
at 5 Hanover Square, New York, New York 10004 (the "Massachusetts Trust"), and
Zweig Series Trust, a Delaware business trust having an office at 5 Hanover
Square, New York, New York 10004 (the "Delaware Trust").
WHEREAS, the Board of Trustees of the Massachusetts Trust and
the Board of Trustees of the Delaware Trust have determined that it is in the
best interests of the Massachusetts Trust and the Delaware Trust, respectively,
that the assets of the Massachusetts Trust be acquired by the Delaware Trust
pursuant to this Agreement and in accordance with the applicable statutes of the
Commonwealth of Massachusetts and the State of Delaware;
WHEREAS, the parties desire to enter into a plan of exchange
pursuant to Section 368(a) of the Internal Revenue Code of 1986, as amended;
WHEREAS, the Board of Trustees of the Massachusetts Trust and
the Board of Trustees of the Delaware Trust have heretofore entered into an
Agreement and Plan of Conversion and Termination made and entered into as of
April 26, 1996 (the "Plan of Conversion"); and
WHEREAS, the Board of Trustees of the Massachusetts Trust and
the Board of Trustees of the Delaware Trust desire to amend the Plan of
Conversion in certain respects and to restate the Plan of Conversion in its
entirety;
NOW, THEREFORE, in consideration of the premises and of the
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:
1. Plan Of Exchange.
(a) Subject to the requisite approval of the
shareholders of the Massachusetts Trust and to the terms and conditions
contained herein, on the Exchange Date (as defined herein), the
Massachusetts Trust shall assign, transfer and convey the assets of
each of its series (i.e., Zweig Strategy Fund, Zweig Appreciation Fund,
Zweig Managed Assets, Government Securities Series, Zweig Cash Fund)
(collectively, the "Current Series" and each individually, a "Current
Series") (and
1
<PAGE> 2
relevant class thereof), including all securities and cash held by each
Current Series, to the corresponding series of the Delaware Trust
(i.e., in the case of Zweig Strategy Fund, Zweig Strategy Fund; in the
case of Zweig Appreciation Fund, Zweig Appreciation Fund; in the case
of Zweig Managed Assets, Zweig Managed Assets; in the case of
Government Securities Series, Zweig Government Fund; in the case of
Zweig Cash Fund, Zweig Cash Fund) (collectively, the "Successor Series"
and each individually, a "Successor Series") (and relevant class
thereof); each Successor Series shall acquire all of the assets of each
corresponding Current Series, and the Delaware Trust shall accept such
assignment, transfer and conveyance.
(b) Subject to the requisite approval of the
shareholders of the Massachusetts Trust and to the terms and conditions
contained herein, on the Exchange Date (as defined herein), the
Massachusetts Trust shall assign, transfer and convey the obligations,
duties and liabilities attributable to each such Current Series (and
relevant class thereof), to the corresponding Successor Series of the
Delaware Trust (and relevant class thereof), and each such Successor
Series (and relevant class thereof) shall acquire the obligations,
duties and liabilities attributable to each such Current Series (and
relevant class thereof).
(c) The Massachusetts Trust shall assign, transfer
and convey the assets of each Current Series, as provided in Section
1(a), in exchange for shares of beneficial interest of such Successor
Series (the "Delaware Trust Shares") equal in number and class thereof
to the corresponding number and class of the outstanding shares of each
Current Series. In lieu of delivering certificates for the Delaware
Trust Shares, the Delaware Trust shall credit the Delaware Trust Shares
to the Massachusetts Trust's account on the share record books of the
Delaware Trust and shall deliver a confirmation thereof to the
Massachusetts Trust. The Massachusetts Trust shall then deliver written
instructions to the Delaware Trust's transfer agent to establish
accounts for the shareholders of the respective Current Series on the
share record books relating to each corresponding Successor Series.
(d) The Massachusetts Trust agrees to distribute
Delaware Trust Shares equal in number and class thereof to the
corresponding number and class of the outstanding shares of each
Current Series to shareholders of each Current Series of the
Massachusetts Trust, subject to all obligations of each shareholder for
the payment of contingent deferred sales charges ("CDSCs").
(e) The Delaware Trust further assumes and agrees to
observe, perform and be bound by all of the grants, terms, covenants,
representations, warranties, and conditions contained in all contracts
and agreements currently in effect with the Massachusetts Trust,
including, but not limited to, the Management Agreement, the
Distribution Agreement, the Distribution and Service Plans under Rule
12b-1, the Rule 18f-3 Multi-Class Plan and the Irrevocable Payment
Instruction of Zweig Securities Corp. (the "Distributor") to the
Massachusetts Trust on behalf of
2
<PAGE> 3
each Current Series in the form of Exhibit F to the Purchase and Sale
Agreement between the Distributor and Citibank, N.A., dated as of March
15, 1996 (the "Instruction"), and the other documents delivered
thereunder which are binding upon, and to be observed or performed by,
the Massachusetts Trust thereunder, as though the Delaware Trust were
the Massachusetts Trust, and hereby ratifies and confirms the validity
of all contracts and agreements currently in effect with the
Massachusetts Trust, including, but not limited to, the Management
Agreement, the Distribution Agreement, the Distribution and Service
Plans under Rule 12b-1, the Rule 18f-3 Multi-Class Plan and the
Instruction. The foregoing assumption by the Delaware Trust is
expressly made for the benefit of the Massachusetts Trust, Zweig
Securities Corp., Citibank, N.A., Citicorp North America, Inc. and
their respective successors and assigns. Also without limiting the
foregoing the Delaware Trust agrees for the benefit of the
Massachusetts Trust, Zweig Securities Corp., Citibank, N.A., Citicorp
North America, Inc. and their respective successors and assigns to take
such actions as shall be required to approve and adopt each
Distribution and Service Plan under Rule 12b-1 in respect of each
Current Series (and class thereof) on behalf of each corresponding
Successor Series (and class thereof) and to perform and construe the
Distribution Agreement, the Distribution and Service Plans under Rule
12b-1 and the Instruction (the "Distribution Documents") as construed
by the Massachusetts Trust as though all Delaware Trust Shares issued
pursuant to the Plan of Conversion and this Agreement were initially
issued by the Delaware Trust pursuant to the Distribution Agreement and
Distribution and Service Plans under Rule 12b-1 at the time and at the
issue price the corresponding shares of each Current Series (and class
thereof) of the Massachusetts Trust were issued by the Massachusetts
Trust so that the rights of Zweig Securities Corp. and its successors
and assigns under the Distribution Documents are not altered by the
transactions contemplated by the Plan of Conversion and this Agreement.
The Massachusetts Trust and the Delaware Trust agree for the benefit of
the Massachusetts Trust, Zweig Securities Corp., Citibank, N.A.,
Citicorp North America, Inc. and their respective successors and
assigns that the asset based sales charge obligations of the
Massachusetts Trust in respect of each Current Series (and class
thereof) are assumed by the Delaware Trust without change and that the
Delaware Trust will, upon redemption of any Delaware Trust Shares
issued pursuant to the Plan of Conversion and the Agreement, withhold
from redemption proceeds and pay over pursuant to the Distribution
Agreement and Instruction the CDSC computed in the same manner as the
CDSC would have been computed if the Conversion had not occurred and
the corresponding share of the Current Series (or class) of the
Massachusetts Trust were being redeemed.
(f) All references to the Massachusetts Trust in all
agreements to which the Massachusetts Trust is a party will be deemed
to refer to the Delaware Trust.
(g) It is contemplated that the obligations of the
shareholders of the Massachusetts Trust, including without limitation,
asset based sale charge and CDSC
3
<PAGE> 4
obligations, will not be affected by the transactions contemplated
herein. It is further contemplated that the Net Asset Value of each
outstanding share of each class of each Successor Series of the
Delaware Trust immediately after the effectiveness of the Conversion
Plan will be equivalent to the Net Asset Value of each outstanding
share of each class of the correponding Current Series of the
Massachusetts Trust.
(h) Delivery of the assets of each of the Current
Series to be transferred shall be made not later than the next business
day following the Exchange Date. Assets transferred shall be delivered
to The Bank of New York, the Delaware Trust's custodian (the
"Custodian"). Such delivery shall be made for the account of the
Delaware Trust and the Successor Series, with all securities not in
bearer or book entry form duly endorsed, or accompanied by duly
executed separate assignments or stock powers, in proper form for
transfer, with signatures guaranteed, and with all necessary stock
transfer stamps, sufficient to transfer good and marketable title
thereto (including all accrued interest and dividends and rights
pertaining thereto) to the Custodian for the account of the Delaware
Trust and the Successor Series free and clear of all liens,
encumbrances, rights, restrictions and claims. All cash delivered shall
be in the form of immediately available funds payable to the order of
the Custodian for the account of the Delaware Trust and the Successor
Series. All assets delivered to the Custodian as provided herein shall
be allocated by the Delaware Trust to each Successor Series
corresponding to the Current Series from which, or on the account of
which, the assets were transferred. All of the liabilities of each
Current Series shall, on and as of the Effective Date, be deemed
liabilities of, and shall be deemed assumed by, the applicable
corresponding Successor Series.
(i) The Massachusetts Trust will pay or cause to be
paid to the Delaware Trust any interest received on or after the
Exchange Date with respect to assets transferred from any Current
Series to the corresponding Successor Series hereunder and the Delaware
Trust shall allocate any such interest to the appropriate Successor
Series. The Massachusetts Trust will transfer to the Delaware Trust any
distributions, rights or other assets received by the Massachusetts
Trust after the Exchange Date as distributions on or with respect to
the securities transferred from any Current Series to the corresponding
Successor Series hereunder. The Delaware Trust shall allocate any such
distributions, rights or other assets to the appropriate Successor
Series. All such assets shall be deemed included in assets transferred
to the Current Series on the Exchange Date and shall not be separately
valued.
(j) If the requisite number of shareholders of each
Current Series do not approve this Agreement, the Trust will continue
to operate as a Massachusetts business trust.
(k) The Exchange Date shall be April 30, 1996, or
such earlier or later date as may be mutually agreed upon by the
parties.
4
<PAGE> 5
(l) As soon as practicable after the Exchange Date,
and following distribution by the Massachusetts Trust of the Delaware
Trust Shares of each of the Successor Series received by it among the
shareholders of each corresponding Current Series in proportion to the
number of shares each such shareholder holds in each such Current
Series, the Massachusetts Trust will dissolve and terminate.
2. The Massachusetts Trust's Representations And Warranties.
The Massachusetts Trust represents and warrants to and agrees with the Delaware
Trust as follows:
(a) The Massachusetts Trust is a business trust duly
organized and validly existing under the laws of the Commonwealth of
Massachusetts and has power to own all of its properties and assets
and, subject to the approval of its shareholders as contemplated
hereby, to carry out this Agreement.
(b) The Massachusetts Trust and each Current Series
is registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), as an open-end, diversified, management investment
company, and such registration has not been revoked or rescinded and is
in full force and effect.
(c) On the Exchange Date, the Massachusetts Trust
will have full right, power and authority to sell, assign, transfer and
deliver the assets to be transferred by it hereunder.
3. The Delaware Trust's Representations And Warranties. The
Delaware Trust represents and warrants to and agrees with the Massachusetts
Trust as follows:
(a) The Delaware Trust is a business trust duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has power to carry on its business and to carry
out this Agreement.
(b) At the Exchange Date, the Delaware Trust Shares
to be issued to the Massachusetts Trust (the only Series Shares to be
issued as of the Exchange Date) will have been duly authorized and,
when issued and delivered pursuant to this Agreement, will be legally
and validly issued and will be fully paid and non-assessable by the
Delaware Trust. No Delaware Trust or Successor Series shareholder will
have any preemptive right of subscription or purchase in respect
thereof.
4. The Delaware Trust's Conditions Precedent. The obligations
of the Delaware Trust hereunder shall be subject to the following conditions:
5
<PAGE> 6
(a) The Massachusetts Trust shall have furnished to
the Delaware Trust a statement of the Massachusetts Trust's assets,
including a list of securities owned by the Massachusetts Trust with
their respective values.
(b) As of the Exchange Date, all representations and
warranties of the Massachusetts Trust made in this Agreement shall be
true and correct as if made at and as of such date, and the
Massachusetts Trust shall have complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied
at or prior to such date.
(c) A vote approving this Agreement and the
transactions and exchange contemplated hereby shall have been adopted
by the affirmative vote of at least a majority of the outstanding
shares (within the meaning of the 1940 Act) of the Massachusetts Trust
entitled to vote and the shareholders of the Massachusetts Trust and
each applicable Current Series shall have voted, by the vote specified
in the proxy materials of the Massachusetts Trust and the Current
Series relating to this Agreement, to direct the Massachusetts Trust to
vote, and the Massachusetts Trust shall have voted by or on the
Exchange Date, as sole shareholder of the Delaware Trust, (i) to vote
on each of the Proposals set forth in the Proxy Statements and approved
by the shareholders, so that the approval of the respective Proposals
may be made effective with respect to the Delaware Trust as well as the
Massachusetts Trust; (ii) to elect Clare B. Benenson, Richard E. Deems,
S. Leland Dill, Eugene J. Glaser, and Donald B. Romans as trustees of
the Delaware Trust, (iii) to render approval on such matters as may be
necessary, for regulatory purposes, in order to adopt or enter into any
agreements or plans on behalf of the Delaware Trust that had previously
been approved by shareholders of the Massachusetts Trust and are then
in effect with respect to the Massachusetts Trust, and (iv) to approve
all other contracts and agreements currently in effect with the Current
Trust, including, but not limited to, accounting, custody, transfer
agency, service, procedural and safekeeping and repurchase agreements.
5. The Massachusetts Trust's Conditions Precedent. The
obligations of the Massachusetts Trust hereunder shall be subject to the
condition that as of the Exchange Date all representations and warranties of the
Delaware Trust made in this Agreement shall be true and correct as if made at
and as of such date, and that the Delaware Trust shall have complied with all of
the agreements and satisfied all the conditions on its part to be performed or
satisfied at or prior to such date.
6. The Delaware Trust's And The Massachusetts Trust's
Conditions Precedent. The obligations of both the Delaware Trust and the
Massachusetts Trust hereunder shall be subject to this Agreement and the
transactions contemplated hereby having been approved by the affirmative vote of
at least a majority of the outstanding shares (within the meaning of the 1940
Act) of the Massachusetts Trust entitled to vote as of the close of
6
<PAGE> 7
business on February 9, 1996, or such earlier or later date as may be mutually
agreed upon by the parties.
7. Amendment Or Termination Of Agreement. This Agreement and
the transactions contemplated hereby may be amended or terminated and abandoned
by resolution of the Board of Trustees of the Massachusetts Trust or the Board
of Trustees of the Delaware Trust, at any time prior to the transfer of assets
on the Exchange Date (and notwithstanding any vote of the shareholders of the
Massachusetts Trust) if (i) there is a material breach by the other party of any
representation, warranty or agreement contained in this Agreement, (ii) it
reasonably appears that a party cannot meet a condition of this Agreement or
(iii) circumstances should develop that, in the opinion of either the Board of
Trustees of the Massachusetts Trust or of the Delaware Trust, make proceeding
with this Agreement in its current form inadvisable.
In addition, prior to the transfer of assets on the Exchange
Date, any provision of this Agreement may be amended or modified by the Board of
Trustees of the Massachusetts Trust and the Board of Trustees of the Delaware
Trust if such amendment or modification would not have a material adverse effect
upon the benefits intended under this Agreement and would be consistent with the
best interests of the shareholders.
If this Agreement is terminated and the exchange contemplated
hereby is abandoned pursuant to the provisions of this Section 7, this Agreement
shall become void and have no effect, without any liability on the part of any
party hereto or the trustees, officers or shareholders of the Delaware Trust or
the trustees, officers or shareholders of the Massachusetts Trust, in respect of
this Agreement.
8. Waiver. At any time prior to the Exchange Date, any of the
foregoing conditions may be waived by the Board of Trustees of the Massachusetts
Trust or the Board of Trustees of the Delaware Trust, if, in the judgment of the
waiving party, such waiver will not have a material adverse effect on the
benefits intended under this Agreement to the shareholders of the Massachusetts
Trust or the shareholders of the Delaware Trust, as the case may be.
9. No Survival Of Representations. None of the representations
and warranties included or provided for herein shall survive consummation of the
transactions contemplated hereby.
10. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of Delaware;
provided, however, that the due authorization, execution and delivery of this
Agreement, in the case of the Massachusetts Trust, shall be governed and
construed in accordance with the internal laws of the Commonwealth of
Massachusetts.
11. Counterparts. This Agreement may be executed in
counterparts, each of which, when executed and delivered, shall be deemed to be
an original.
7
<PAGE> 8
12. Capacity Of Trustees. With respect to the Massachusetts
Trust, the name "Zweig Series Trust" and the term "Trustees of the Massachusetts
Trust", refer, respectively, to the Massachusetts Trust created and the Trustees
of the Massachusetts Trust, as trustees but not individually or personally,
acting from time to time under an Amended and Restated Agreement and Declaration
of Trust dated April 11, 1986, as amended. The obligations of the Massachusetts
Trust entered into in the name and on behalf thereof by any of the Trustees of
the Massachusetts Trust, representatives or other agents, were not made
individually, but in such capacities, and are not binding upon any of the
Massachusetts Trustees, representatives or other agents, or the shareholders of
the Massachusetts Trust, but bind only the property of the Massachusetts Trust,
and all persons dealing with any Series or Class of shares of the Massachusetts
Trust must look solely to the Trust property belonging to such Series or Class
for the enforcement of any claims against the Massachusetts Trust.
8
<PAGE> 9
IN WITNESS WHEREOF, the Massachusetts Trust and the Delaware
Trust have caused this Agreement and Plan of Conversion and Termination to be
duly executed as of the day and year first above written.
Zweig Series Trust, Zweig Series Trust,
a Delaware Business Trust a Massachusetts Business Trust
By: /s/ Alfred J. Ratcliffe By: /s/ Eugene J. Glaser
---------------------------- ------------------------------
Title: First Vice President Title: Chairman and Chief
and Treasurer Executive Officer
<PAGE> 1
Exhibit 9(c)
ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement"), dated
April 30, 1996, between ZWEIG SERIES TRUST, a Massachusetts business trust (the
"Massachusetts Trust"), and ZWEIG SERIES TRUST, a Delaware business trust (the
"Delaware Trust").
WITNESSETH:
WHEREAS, the Massachusetts Trust and Delaware Trust are
parties to an Amended and Restated Agreement and Plan of Conversion and
Termination, dated April 26, 1996 (the "Plan of Conversion"); capitalized terms
used but not otherwise defined in this Agreement have the respective meanings
assigned to such terms in the Plan of Conversion;
WHEREAS, Massachusetts Trust desires, subject to and in
accordance with Section 1 of the Plan of Conversion, to assign to the Delaware
Trust all of the Massachusetts Trust's right, title and interest in the assets
of the Massachusetts Trust, and the Delaware Trust desires to assume all of the
liabilities attributable to the assets of the Massachusetts Trust as they
existed immediately before their transfer, commencing on the Exchange Date, upon
the terms and conditions hereof; and
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, effective at 10:00
a.m., New York City time, on the date hereof, the Massachusetts Trust and
Delaware Trust hereby agree as follows:
SECTION 1. Assignment and Assumption. (a) The Massachusetts
Trust hereby unconditionally and irrevocably assigns, transfers and conveys the
assets of each of the Massachusetts Trust's Current Series (and each class
thereof), including all securities and cash held by each Current Series, to the
corresponding Successor Series of the Delaware Trust (and corresponding class
thereof), and the Delaware Trust hereby unconditionally and irrevocably accepts
such assignment, transfer and conveyance. Each corresponding Successor Series
shall acquire all of the assets of each corresponding Current Series.
(b) The Massachusetts Trust hereby unconditionally and
irrevocably assigns, transfers and conveys to the Delaware Trust the
obligations, duties and liabilities attributable to each Current Series (and
each class thereof), and the Delaware Trust hereby unconditionally and
irrevocably assumes, agrees, on behalf of each Succesor Series (and each class
thereof), to observe and perform, and promises to pay, all such obligations,
duties and liabilities attributable to each corresponding Current Series (and
each corresponding class
<PAGE> 2
2
thereof). Each corresponding Successor Series shall acquire the obligations,
duties and liabilities attributable to the corresponding Current Series.
(c) The Delaware Trust hereby unconditionally and irrevocably
assigns, transfers and conveys to the Massachusetts Trust, and the Massachusetts
Trust hereby unconditionally and irrevocably accepts the assignment, transfer
and conveyance of Delaware Trust Shares equal in number and class thereof to the
corresponding number and class of the outstanding shares of each Current Series.
In lieu of delivering certificates for the Delaware Trust Shares, the Delaware
Trust shall credit the Delaware Trust Shares to the Massachusetts Trust's
account on the share record books of the Delaware Trust and shall deliver a
confirmation thereof to the Massachusetts Trust. The Massachusetts Trust shall
then deliver written instructions to the Delaware Trust's transfer agent to
establish accounts for the shareholders of the respective Current Series on the
share record books relating to each corresponding Successor Series.
(d) The Massachusetts Trust hereby unconditionally and
irrevocably agrees to distribute Delaware Trust Shares equal in number and class
thereof to the corresponding number and class of the outstanding shares of each
Current Series to shareholders of each Current Series of the Massachusetts
Trust, subject to all obligations of each shareholder for the payment of
contingent deferred sales charges.
(e) In furtherance of and not by limitation of the foregoing,
the Delaware Trust further assumes and agrees to observe, perform and be bound
by all of the grants, terms, covenants, representations, warranties, and
conditions contained in all contracts and agreements currently in effect with
the Massachusetts Trust, including, but not limited to, the Management
Agreement, the Distribution Agreement, the Distribution and Service Plans under
Rule 12b-1, the Rule 18f-3 Multi-Class Plan and the Irrevocable Payment
Instruction of Zweig Securities Corp. (the "Distributor") to the Massachusetts
Trust on behalf of each Current Series in the form of Exhibit F to the Purchase
and Sale Agreement between the Distributor and Citibank, N.A., dated as of March
15, 1996 (the "Instruction"), and the other documents delivered thereunder which
are binding upon, and to be observed or performed by, the Massachusetts Trust
thereunder, as though the Delaware Trust were the Massachusetts Trust, and
hereby ratifies and confirms the validity of all contracts and agreements
currently in effect with the Massachusetts Trust, including, but not limited to,
the Management Agreement, the Distribution Agreement, the Distribution and
Service Plans under Rule 12b-1, the Rule 18f-3 Multi-Class Plan and the
Instruction. The foregoing assumption by the Delaware Trust is expressly made
for the benefit of the Massachusetts Trust, Zweig Securities Corp., Citibank,
N.A., Citicorp North America, Inc. and their respective successors and assigns.
Also without limiting the foregoing the Delaware Trust agrees for the benefit of
the Massachusetts Trust, Zweig Securities Corp., Citibank, N.A., Citicorp North
America, Inc. and their respective successors and assigns to take such actions
<PAGE> 3
3
as shall be required to approve and adopt each Distribution and Service Plan
under Rule 12b-1 in respect of each Current Series (and class thereof) on
behalf of each corresponding Successor Series (and class thereof) and to perform
and construe the Distribution Agreement, the Distribution and Service Plans
under Rule 12b-1 and the Instruction (the "Distribution Documents") as construed
by the Massachusetts Trust as though all Delaware Trust Shares issued pursuant
to the Plan of Conversion and this Agreement were initially issued by the
Delaware Trust pursuant to the Distribution Agreement and Distribution and
Service Plans under Rule 12b-1 at the time and at the issue price the
corresponding shares of each Current Series (and class thereof) of the
Massachusetts Trust were issued by the Massachusetts Trust so that the rights of
Zweig Securities Corp. and its successors and assigns under the Distribution
Documents are not altered by the transactions contemplated by the Plan of
Conversion and this Agreement. The Massachusetts Trust and the Delaware Trust
agree for the benefit of the Massachusetts Trust, Zweig Securities Corp.,
Citibank, N.A., Citicorp North America, Inc. and their respective successors and
assigns that the asset based sales charge obligations of the Massachusetts Trust
in respect of each Current Series (and class thereof) are assumed by the
Delaware Trust without change and that the Delaware Trust will, upon redemption
of any Delaware Trust Shares issued pursuant to the Plan of Conversion and the
Agreement, withhold from redemption proceeds and pay over pursuant to the
Distribution Agreement and Instruction the CDSC computed in the same manner as
the CDSC would have been computed if the Conversion had not occurred and the
corresponding share of the Current Series (or class) of the Massachusetts Trust
were being redeemed.
(f) It is contemplated that the obligations of the
shareholders of the Massachusetts Trust, including without limitation, asset
based sale charge and CDSC obligations, will not be affected by the transactions
contemplated herein and in the Plan of Conversion. It is further contemplated
that the Net Asset Value of each outstanding share of each class of each
Successor Series of the Delaware Trust immediately after the effectiveness of
the Conversion Plan will be equivalent to the Net Asset Value of each
outstanding share of each class of the correponding Current Series of the
Massachusetts Trust.
SECTION 2. Power of Attorney. The Massachusetts Trust hereby
constitutes and appoints the Delaware Trust, its successors and assigns, the
true and lawful attorney and attorneys of the Massachusetts Trust, with full
power of substitution, in the name of the Delaware Trust or in the name and
stead of the Massachusetts Trust, but on behalf of and for the benefit of the
Massachusetts Trust, its successors and assigns.
SECTION 3. No Rights in Third Parties. Except as otherwise
expressly set forth herein, nothing in this Agreement is intended to confer upon
any person, other than the Delaware Trust and the Massachusetts Trust and their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
<PAGE> 4
4
SECTION 4. Successors and Assigns. This Agreement shall bind
and inure to the benefit of the Massachusetts Trust and the Delaware Trust and
their respective successors and permitted assigns.
SECTION 5. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York.
SECTION 6. Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which counterparts when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same instrument.
Delivery of an executed counterpart of a signature page to this Agreement by
telefacsimile shall be effective as delivery of a manually executed counterpart
of this Agreement.
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by its officer thereunto duly
authorized as of the date first above written.
ZWEIG SERIES TRUST,
a Massachusetts business trust
By: /s/ Eugene J. Glaser
--------------------------------
Name: Eugene J. Glaser
Title: Chairman and Chief
Executive Officer
ZWEIG SERIES TRUST,
a Delaware business trust
By: /s/ Alfred J. Ratcliffe
--------------------------------
Name: Alfred J. Ratcliffe
Title: First Vice President
and Treasurer
<PAGE> 1
Exhibit (10)
[COOPERS & LYBRAND LETTERHEAD]
CONSENT OF INDEPENDENT ACCOUNTANTS
_________________
We consent to the incorporation by reference in Post-Effective Amendment No. 42
to the Registration Statement of Zweig Series Trust on Form N- 1A (File No.
2-93538), to be filed with the Securities and Exchange Commission under the
provisions of the Securities Act of 1933 and the Investment Company Act of
1940, as amended, of our report dated January 22, 1996 included in the December
31, 1995 Annual Report to Shareholders of Zweig Series Trust.
We also consent to the reference to our firm under the captions, "Financial
Highlights" in the prospectus and "Independent Accountants" in the Statement of
Additional Information.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
New York, New York
April 29, 1996.
<PAGE> 1
Exhibit 14(a)
ZWEIG SERIES TRUST
Class B Shares
RULE 12b-1 DISTRIBUTION PLAN
This distribution plan (the "Rule 12b-1 Distribution Plan" or
the "Plan") has been adopted by the sole shareholder of the Class B Shares of
the Zweig Strategy Fund, the Zweig Appreciation Fund, the Zweig Managed Assets,
the Government Securities Series and the Zweig Cash Fund, each of which is a
series of Zweig Series Trust (the "Trust"), a Massachusetts business trust, on
March 15, 1996, pursuant to Rule 12b-1 under the Investment Company Act of 1940,
as amended (the "Act").
W H E R E A S:
The Trust is an open-end management investment company and is
registered as such under the Act. The Trust at present has five series which are
currently being offered, and the Board of Trustees may establish and offer
additional series in the future. Each series has a multi-class distribution
system that allows each series to offer investors the option of purchasing
shares either subject to a front-end sales charge (which may be reduced or
waived under certain circumstances as described in the Trust's Prospectus)
coupled with a Rule 12b-1 Plan distribution fee (except for the Zweig Cash Fund,
which is offered without the imposition of a front-end sales charge) (the "Class
A Shares"), subject to a contingent deferred sales charge, a Rule 12b-1 Plan
distribution fee and a service fee (the "Class B Shares") or subject to a
contingent deferred sales charge, a Rule 12b-1 Plan distribution fee and a
service fee (the "Class C Shares"). Zweig Cash Fund offers investors the option
of purchasing a fourth class of shares. This Plan, however, governs only the
Class B Shares of each series of the Trust. The Trust may, from time to time,
distribute shares of any class of
<PAGE> 2
2
any series through a contractual arrangement (the "Distribution Agreement") with
a principal distributor for such class of shares of such series duly qualified
to act on behalf of the Trust in such capacity (any such principal distributor,
the "Principal Distributor"), it being understood that the Trust may change the
Principal Distributor for any class of shares of any series from time to time.
The Board of Trustees, including a majority of the Qualified Trustees (as
defined in paragraph 5 herein), has determined to adopt the Plan. In voting to
approve the Plan, the Trustees have determined, in the exercise of their
reasonable business judgment and in light of their fiduciary duty, that there is
a reasonable likelihood that this Plan will benefit the Class B Shares of each
respective series of the Trust with respect to which this Plan will be effective
and its shareholders.
NOW, THEREFORE, in consideration of the foregoing, the Trust
hereby adopts this Plan in accordance with Rule 12b-1 under the Act on the
following terms and conditions:
1. The Trust shall pay to each Principal Distributor of Class
B Shares of any series its "Allocable Portion", as hereinafter defined, of the
distribution fee allowable under the rules of fair practice of the National
Association of Securities Dealers (the "Rules of Fair Practice") in respect of
such Class of Shares of such series, consisting of a distribution fee at the
rate of three quarters of one percent (0.75%) per annum of the average daily net
asset value of such Class of Shares (the "Distribution Fee") and a service fee
at a rate of one quarter of one percent (0.25%) of the average daily net asset
value of such Class of Shares of such series of the Trust (as described in the
Prospectus). For purposes of applying the limitation set forth in the Rules of
Fair Practice on the maximum amount of the Distribution Fee payable in respect
of the Class B Shares of any series, the Trust hereby elects to add to six and
one quarter percent (6.25%) of the issue price of the Class B Shares interest
thereon at the rate of prime plus one percent per annum. A contingent deferred
sales charge ("CDSC") also shall be payable by the holders of Class B Shares in
the case of early redemption of such Class B Shares (as described in the
Prospectus).
<PAGE> 3
3
2. The amounts set forth in paragraph 1 of this Plan shall be
paid for the Principal Distributor's services and expenses as distributor of the
Class B Shares of the Trust and may be spent by the Principal Distributor, in
its discretion, on, among other things, compensation to and expenses (including
overhead and telephone expenses) of account executives or other employees of the
Principal Distributor or of other broker-dealers who engage in or support
distribution of shares; printing of prospectuses and reports for other than
existing shareholders; advertising; preparation, printing and distribution of
sales literature; and allowances to other broker-dealers. In addition, whether
or not required to be provided for in this Rule 12b-1 Distribution Plan, to the
extent approved by the shareholders of a particular series and the Board of
Trustees of the Trust, the Class B Shares or a series may pay or reimburse the
Principal Distributor and others for all of its organizational and initial
offering expenses. Such amounts are in addition to and not limited by the
amounts as set forth in paragraph 1 herein.
3. Any Distribution Agreement in respect of Class B Shares of
any series may provide that: (I) the Principal Distributor in respect of such
Distribution Agreement will be deemed to have fully earned its Allocable Portion
of the Distribution Fee payable in respect of Class B Shares of such series upon
the sale of each "Initial Issue Commission Share" (as hereinafter defined) of
such series taken into account in determining such Principal Distributor's
Allocable Portion of such Distribution Fee; (II) except as provided in (III)
below, the Trust's obligation to pay such Principal Distributor its Allocable
Portion of the Distribution Fee payable in respect of the Class B Shares of such
series shall be absolute and unconditional and shall not be subject to dispute,
offset, counterclaim or any defense whatsoever (it being understood that such
provision is not a waiver of the Trust's right to pursue such Principal
Distributor and enforce such claims against the assets of such Principal
Distributor other than its right to the Distribution Fees and CDSCs in respect
of the Class B Shares of such series); (III) the Trust's obligation to pay such
Principal Distributor its Allocable Portion of the Distribution Fee payable in
respect of the Class B Shares of such series shall not be terminated or modified
except to the extent required by a change in the
<PAGE> 4
4
Act or the Rules of Fair Practice enacted or promulgated after September 15,
1995 (a "Change-in-Applicable-Law"), or in connection with a "Complete
Termination" (as hereinafter defined) of this Plan in respect of the Class B
Shares of such series; (IV) the Trust will not waive or change any CDSC in
respect of the Class B Shares of such series, except as provided in the Trust's
Prospectus or statement of additional information without the consent of the
Principal Distributor (or its assigns); (V) except to the extent required by a
Change-in-Applicable-Law, neither the termination of such Principal
Distributor's role as principal distributor of the Class B Shares of such
series, nor the termination of such Distribution Agreement nor the termination
of this Plan will terminate such Principal Distributor's right to its Allocable
Portion of the CDSCs in respect of Class B Shares of such series sold prior to
such termination; (VI) except as provided in the Trust's Prospectus and
statement of additional information, until such Principal Distributor has been
paid its Allocable Portion of the Distribution Fees in respect of the Class B
Shares of such series, the Trust will not adopt a plan of liquidation in respect
of such series without the consent of such Principal Distributor (or its
assigns); and (VII) such Principal Distributor may sell and assign its rights to
its Allocable Portion of the Distribution Fees and CDSCs (but not such Principal
Distributor's obligations to the Trust under the Distribution Agreement) to
raise funds to make the expenditures related to the distribution of Class B
Shares of such series and in connection therewith, upon receipt of notice of
such sale and assignment, the Trust shall pay to the purchaser or assignee such
portion of the Principal Distributor's Allocable Portion of the Distribution
Fees in respect of the Class B Shares of such series so sold or assigned. For
purposes of this Plan, the term "Allocable Portion" means, in respect of
Distribution Fees payable in respect of the Class B Shares of any series as
applied to any Principal Distributor, the portion of such Distribution Fees and
CDSCs allocated to such Principal Distributor in accordance with the Allocation
Schedule (as hereinafter defined). For purposes of this Plan, the term "Complete
Termination" of this Plan means, in respect of any series, a termination of this
Plan involving the cessation of payments of Distribution Fees hereunder in
respect of Class B Shares of such series and the cessation of payments of
distribution fees pursuant to every other rule 12b-1 plan of the Trust in
respect of such series for every future class of
<PAGE> 5
5
shares which, in the good faith determination of the Board of Trustees of the
Trust, has substantially similar economic characteristics to the Class B Shares
taking into account the total sales charge, contingent deferred sales charge and
other similar charges, it being understood that the existing Class A Shares and
the existing Class C Shares do not have substantially similar economic
characteristics to the Class B Shares. For purposes of this Plan, the term
"Allocation Schedule" means, in respect of the Class B Shares of any series, a
schedule which shall be approved in the same manner as this Plan as contemplated
by Section 5 hereof for assigning to each Principal Distributor of Class B
Shares of such series the portion of the total Distribution Fees payable by the
Trust in respect of the Class B Shares of such series which has been earned by
such Principal Distributor, which shall be attached to and become a part of any
Distribution Agreement in respect of Class B Shares. For purposes of clause (I)
of the first sentence of this Section 3, the term "Initial Issue Commission
Share" shall mean, in respect of any series, a Class B Share which is a
Commission Share issued by such series under circumstances other than in
connection with a permitted free exchange with another fund. For purposes of the
foregoing definition a "Commission Share" shall mean, in respect of any series,
each Class B Share of such series which is issued under circumstances which
would normally give rise to an obligation of the holder of such Class B Share to
pay a CDSC upon redemption of such Share, including, without limitation, any
Class B Share of such Fund issued in connection with a permitted free exchange,
and any such Class B Share shall not cease to be a Commission Share prior to the
redemption (including a redemption in connection with a permitted free exchange)
or conversion even though the obligation to pay the CDSC shall have expired or
conditions for thereof still exist.
4. This Plan shall not take effect until it has been approved
by a vote of at least a majority (as defined in the Act) of the outstanding
voting securities of Class B Shares of the Series. With respect to the
submission of this Plan for such a vote, it shall have been effectively approved
with respect to Class B Shares of any series if a majority of the outstanding
voting securities of Class B Shares of that series votes for the approval of
this
<PAGE> 6
6
Plan, notwithstanding that: (1) this Plan has not been approved by a majority of
the outstanding voting securities of Class B Shares of any other series, or (2)
the matter has not been approved by a majority of the outstanding voting
securities of Class B Shares of the Trust.
5. This Plan shall become effective with respect to the Class
B Shares of a series upon approval, together with any related agreements, by a
majority vote of both (i) the Board of Trustees and (ii) those Trustees who are
not "interested persons" of the Trust (as defined in the Act) and have no direct
or indirect financial interest in the operation of this Plan or any agreements
related to it (the "Qualified Trustees"), cast in person at a meeting called for
the purpose of voting on this Plan and such related agreements.
6. This Plan shall continue in effect for so long as such
continuance is specifically approved at least annually in the manner provided
for approval of this Plan in paragraph 5 herein.
7. In each year that this Plan remains in effect, any person
authorized to direct the disposition of monies paid or payable by the Trust
pursuant to this Plan or any related agreement shall prepare and furnish to the
Board and the Board shall review, at least quarterly, written reports, complying
with the requirements of Rule 12b-1 under the Act, of the amounts expended under
this Plan and purposes for which such expenditures were made.
8. This Plan may be terminated at any time with respect to the
Class B Shares of any series by a majority vote of the Qualified Trustees or by
vote of a majority of the outstanding voting securities of Class B Shares of
that series. This Plan may remain in effect with respect to the Class B Shares
of a series even if it has been terminated in accordance with this paragraph
with respect to one or more other series of the Trust.
<PAGE> 7
7
9. This Plan may not be amended in order to increase
materially the amount of distribution expenses provided for in paragraph 1
herein unless such amendment is approved by a majority (as defined in the Act)
of the outstanding voting securities of Class B Shares and no material amendment
to this Plan shall be made unless approved in the manner provided in paragraph 5
herein.
10. While this Plan shall be in effect, the selection and
nomination of Trustees who are not interested persons of the Trust (as defined
in the Act) shall be committed to the discretion of the Trustees then in office
who are not interested persons of the Trust.
The Trust shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 7 herein, for a period of
not less than six years from the date of this Plan, or the agreements or such
report, as the case may be, the first two years in an easily accessible place.
The Amended and Restated Agreement and Declaration of Trust of
the Trust is on file with the Secretary of the Commonwealth of Massachusetts and
notice is hereby given that this Plan is adopted on behalf of the Trust, and not
by the Trustees or officers of the Trust individually, and the obligations of or
arising out of this Plan are not binding upon the Trustees, officers or
shareholders of the Trust individually but are binding only upon the assets and
property of the Trust. Notice is hereby given that the debts, liabilities,
obligations and expenses incurred, contracted for or otherwise existing with
respect to a particular series of the Trust shall be enforceable against the
assets of such series only, and not against the assets of the Trust generally.
Date: March 15, 1996
<PAGE> 1
Exhibit (16)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer
and/or trustee of Zweig Series Trust, a Delaware business trust (the "Trust"),
does hereby constitute and appoint Eugene J. Glaser, Alfred J. Ratcliffe and
Marc Baltuch, or any of them, the true and lawful attorneys and agents of the
undersigned, with full power of substitution, to do any and all acts and things
and execute any and all instruments that said attorneys or agents, or any of
them, may deem necessary or advisable or which may be required to enable the
Trust to comply with the Securities Act of 1933, as amended, the Investment
Company Act of 1940, as amended, and the securities laws of the jurisdictions in
which securities of the Trust may be offered and sold, and any rules,
regulations, or requirements of the Securities and Exchange Commission ("SEC"),
or of the securities commission or other agency of any such jurisdiction in
respect thereof, in connection with the registration for sale of its securities
under the Securities Act of 1933, as amended, and the registration and
qualification, under the securities laws of any such jurisdiction, including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign in the name and on behalf of the undersigned officer
and/or trustee of the Trust (individually and as such officer and/or trustee),
the Trust's Registration Statement on Form N-1A and Notification of Registration
on Form N-8A, any registration statement on any other form adopted by the SEC,
any amendments or post-effective amendments of any of the foregoing and the
applicable form of any such jurisdiction, with respect to the Trust and its
shares of Beneficial Interest to be filed with the SEC and the securities
commission or other agency of any such jurisdiction under said Acts, any and all
amendments and supplements to said amendments or post-effective amendments and
any other instruments or documents filed as part of or in connection with said
Registration Statements, amendments, or supplements; and the undersigned does
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has subscribed these
presents as of this 18th day of April, 1996.
/s/ Donald B. Romans
-----------------------------------------------
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 18th day of April, 1996, before me personally came
Donald B. Romans, to me known to be the individual described in and who executed
the foregoing instrument, and he acknowledged to me that he executed the same.
/s/ Lola R. Bingham
-----------------------------------------------
Notary Public
State of New York
No. 30-4616369
Qualified in Nassau County
Certified in New York County
Commission Expires 12/31/97
<PAGE> 2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer
and/or trustee of Zweig Series Trust, a Delaware business trust (the "Trust"),
does hereby constitute and appoint Eugene J. Glaser, Alfred J. Ratcliffe and
Marc Baltuch, or any of them, the true and lawful attorneys and agents of the
undersigned, with full power of substitution, to do any and all acts and things
and execute any and all instruments that said attorneys or agents, or any of
them, may deem necessary or advisable or which may be required to enable the
Trust to comply with the Securities Act of 1933, as amended, the Investment
Company Act of 1940, as amended, and the securities laws of the jurisdictions in
which securities of the Trust may be offered and sold, and any rules,
regulations, or requirements of the Securities and Exchange Commission ("SEC"),
or of the securities commission or other agency of any such jurisdiction in
respect thereof, in connection with the registration for sale of its securities
under the Securities Act of 1933, as amended, and the registration and
qualification, under the securities laws of any such jurisdiction, including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign in the name and on behalf of the undersigned officer
and/or trustee of the Trust (individually and as such officer and/or trustee),
the Trust's Registration Statement on Form N-1A and Notification of Registration
on Form N-8A, any registration statement on any other form adopted by the SEC,
any amendments or post-effective amendments of any of the foregoing and the
applicable form of any such jurisdiction, with respect to the Trust and its
shares of Beneficial Interest to be filed with the SEC and the securities
commission or other agency of any such jurisdiction under said Acts, any and all
amendments and supplements to said amendments or post-effective amendments and
any other instruments or documents filed as part of or in connection with said
Registration Statements, amendments, or supplements; and the undersigned does
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has subscribed these
presents as of this 18th day of April, 1996.
/s/ Eugene J. Glaser
-----------------------------------------------
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 18th day of April, 1996, before me personally came
Eugene J. Glaser, to me known to be the individual described in and who executed
the foregoing instrument, and he acknowledged to me that he executed the same.
/s/ Lola R. Bingham
-----------------------------------------------
Notary Public
State of New York
No. 30-4616369
Qualified in Nassau County
Certified in New York County
Commission Expires 12/31/97
<PAGE> 3
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer
and/or trustee of Zweig Series Trust, a Delaware business trust (the "Trust"),
does hereby constitute and appoint Eugene J. Glaser, Alfred J. Ratcliffe and
Marc Baltuch, or any of them, the true and lawful attorneys and agents of the
undersigned, with full power of substitution, to do any and all acts and things
and execute any and all instruments that said attorneys or agents, or any of
them, may deem necessary or advisable or which may be required to enable the
Trust to comply with the Securities Act of 1933, as amended, the Investment
Company Act of 1940, as amended, and the securities laws of the jurisdictions in
which securities of the Trust may be offered and sold, and any rules,
regulations, or requirements of the Securities and Exchange Commission ("SEC"),
or of the securities commission or other agency of any such jurisdiction in
respect thereof, in connection with the registration for sale of its securities
under the Securities Act of 1933, as amended, and the registration and
qualification, under the securities laws of any such jurisdiction, including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign in the name and on behalf of the undersigned officer
and/or trustee of the Trust (individually and as such officer and/or trustee),
the Trust's Registration Statement on Form N-1A and Notification of Registration
on Form N-8A, any registration statement on any other form adopted by the SEC,
any amendments or post-effective amendments of any of the foregoing and the
applicable form of any such jurisdiction, with respect to the Trust and its
shares of Beneficial Interest to be filed with the SEC and the securities
commission or other agency of any such jurisdiction under said Acts, any and all
amendments and supplements to said amendments or post-effective amendments and
any other instruments or documents filed as part of or in connection with said
Registration Statements, amendments, or supplements; and the undersigned does
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has subscribed these
presents as of this 18th day of April, 1996.
/s/ Richard E. Deems
-----------------------------------------------
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 18th day of April, 1996, before me personally came
Richard E. Deems, to me known to be the individual described in and who executed
the foregoing instrument, and he acknowledged to me that he executed the same.
/s/ Lola R. Bingham
-----------------------------------------------
Notary Public
State of New York
No. 30-4616369
Qualified in Nassau County
Certified in New York County
Commission Expires 12/31/97
<PAGE> 4
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer
and/or trustee of Zweig Series Trust, a Delaware business trust (the "Trust"),
does hereby constitute and appoint Eugene J. Glaser, Alfred J. Ratcliffe and
Marc Baltuch, or any of them, the true and lawful attorneys and agents of the
undersigned, with full power of substitution, to do any and all acts and things
and execute any and all instruments that said attorneys or agents, or any of
them, may deem necessary or advisable or which may be required to enable the
Trust to comply with the Securities Act of 1933, as amended, the Investment
Company Act of 1940, as amended, and the securities laws of the jurisdictions in
which securities of the Trust may be offered and sold, and any rules,
regulations, or requirements of the Securities and Exchange Commission ("SEC"),
or of the securities commission or other agency of any such jurisdiction in
respect thereof, in connection with the registration for sale of its securities
under the Securities Act of 1933, as amended, and the registration and
qualification, under the securities laws of any such jurisdiction, including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign in the name and on behalf of the undersigned officer
and/or trustee of the Trust (individually and as such officer and/or trustee),
the Trust's Registration Statement on Form N-1A and Notification of Registration
on Form N-8A, any registration statement on any other form adopted by the SEC,
any amendments or post-effective amendments of any of the foregoing and the
applicable form of any such jurisdiction, with respect to the Trust and its
shares of Beneficial Interest to be filed with the SEC and the securities
commission or other agency of any such jurisdiction under said Acts, any and all
amendments and supplements to said amendments or post-effective amendments and
any other instruments or documents filed as part of or in connection with said
Registration Statements, amendments, or supplements; and the undersigned does
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has subscribed these
presents as of this 18th day of April, 1996.
/s/ S. Leland Dill
-----------------------------------------------
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 18th day of April, 1996, before me personally came S.
Leland Dill, to me known to be the individual described in and who executed the
foregoing instrument, and he acknowledged to me that he executed the same.
/s/ Lola R. Bingham
-----------------------------------------------
Notary Public
State of New York
No. 30-4616369
Qualified in Nassau County
Certified in New York County
Commission Expires 12/31/97
<PAGE> 5
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer
and/or trustee of Zweig Series Trust, a Delaware business trust (the "Trust"),
does hereby constitute and appoint Eugene J. Glaser, Alfred J. Ratcliffe and
Marc Baltuch, or any of them, the true and lawful attorneys and agents of the
undersigned, with full power of substitution, to do any and all acts and things
and execute any and all instruments that said attorneys or agents, or any of
them, may deem necessary or advisable or which may be required to enable the
Trust to comply with the Securities Act of 1933, as amended, the Investment
Company Act of 1940, as amended, and the securities laws of the jurisdictions in
which securities of the Trust may be offered and sold, and any rules,
regulations, or requirements of the Securities and Exchange Commission ("SEC"),
or of the securities commission or other agency of any such jurisdiction in
respect thereof, in connection with the registration for sale of its securities
under the Securities Act of 1933, as amended, and the registration and
qualification, under the securities laws of any such jurisdiction, including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign in the name and on behalf of the undersigned officer
and/or trustee of the Trust (individually and as such officer and/or trustee),
the Trust's Registration Statement on Form N-1A and Notification of Registration
on Form N-8A, any registration statement on any other form adopted by the SEC,
any amendments or post-effective amendments of any of the foregoing and the
applicable form of any such jurisdiction, with respect to the Trust and its
shares of Beneficial Interest to be filed with the SEC and the securities
commission or other agency of any such jurisdiction under said Acts, any and all
amendments and supplements to said amendments or post-effective amendments and
any other instruments or documents filed as part of or in connection with said
Registration Statements, amendments, or supplements; and the undersigned does
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has subscribed these
presents as of this 18th day of April, 1996.
/s/ Claire B. Benenson
-----------------------------------------------
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 18th day of April, 1996, before me personally came
Claire B. Benenson, to me known to be the individual described in and who
executed the foregoing instrument, and he acknowledged to me that he executed
the same.
/s/ Lola R. Bingham
-----------------------------------------------
Notary Public
State of New York
No. 30-4616369
Qualified in Nassau County
Certified in New York County
Commission Expires 12/31/97
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<DISTRIBUTIONS-OF-INCOME> (6,393)
<DISTRIBUTIONS-OF-GAINS> (18,613)
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<ACCUMULATED-GAINS-PRIOR> (6,257)
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<PER-SHARE-NII> .16
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<NAME> ZWEIG SERIES TRUST
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<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
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<INVESTMENTS-AT-VALUE> 468,316
<RECEIVABLES> 1,408
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<TOTAL-LIABILITIES> (2,190)
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<SHARES-COMMON-PRIOR> 15,762
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<OVERDISTRIBUTION-NII> (214)
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<OVERDISTRIBUTION-GAINS> 0
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<DIVIDEND-INCOME> 6,288
<INTEREST-INCOME> 4,996
<OTHER-INCOME> 0
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<NET-CHANGE-FROM-OPS> 88,726
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<DISTRIBUTIONS-OF-INCOME> (5,429)
<DISTRIBUTIONS-OF-GAINS> (8,373)
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<SHARES-REINVESTED> 756
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<ACCUMULATED-GAINS-PRIOR> 7,117
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (7,895)
<AVERAGE-NET-ASSETS> 248,679
<PER-SHARE-NAV-BEGIN> 13.54
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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